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As Filed with the Securities and Exchange Commission on June 26, 1996
Registration Nos. 33-72424
811-8194
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 4 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
AMENDMENT NO. 7
(Check appropriate box or boxes) / /
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FGIC Public Trust
(Exact Name of Registrant as Specified in Charter)
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 623-2579
W. Robert Alexander
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
(Name and Address of Agent for Service)
Copy to:
Steven R. Howard, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10022
It is proposed that this filing will become effective (check appropriate
box):
immediately upon filing pursuant to paragrpah (b)
----
on (date) pursuant to paragraph (b)
----
x 60 days after filing pursuant to paragraph (a)
----
75 days after filing pursuant to paragraph (a)(2)
----
on (date) pursuant to paragraph (a) of Rule 485
----
Registrant has elected to register an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment Company Act of
1940 and will file the Notice required by Rule 24f-2 for the fiscal year
ended April 30, 1996.
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Total Pages:
Exhibit Index:
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FGIC PUBLIC TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
U.S. TREASURY MONEY MARKET FUND
PART A PROSPECTUS CAPTION
Item 1. Cover Page.............................Cover Page
Item 2. Synopsis...............................Expense Summary
Item 3. Condensed Financial Information........Financial Highlights
Item 4. General Description of
Registrant............................Fund Operations
Item 5. Management of the Fund.................Management of the Fund;
Item 6. Capital Stock and Other
Securities............................Fund Operations; Taxes;
Other Information
Item 7. Purchase of Securities
Being Offered.........................Fund Operations; How to Invest
in the Fund; Shareholder
Services
Item 8. Redemption or Repurchase...............How to Redeem Shares
Item 9. Pending Legal Proceedings..............Not Applicable
U.S. GOVERNMENT MONEY MARKET FUND
PART A PROSPECTUS CAPTION
Item 1. Cover Page.............................Cover Page
Item 2. Synopsis...............................Expense Summary
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Item 3. Condensed Financial Information........Financial Highlights
Item 4. General Description of
Registrant............................Fund Operations
Item 5. Management of the Fund.................Management of the Fund
Item 6. Capital Stock and Other
Securities............................Fund Operations; Taxes;
Other Information
Item 7. Purchase of Securities
Being Offered.........................Fund Operations; How to Invest
in the Fund; Shareholder
Services
Item 8. Redemption or Repurchase...............How to Redeem Shares
Item 9. Legal Proceedings......................Not Applicable
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FGIC PUBLIC TRUST July __, 1996
THIS FUND IS NOT INSURED BY FGIC, THE FDIC OR ANY OTHER INSURER 370
Seventeenth Street, Suite 2700, Denver, Colorado 80202 For additional
information, call (800)298-FGIC (3442)
U.S. GOVERNMENT MONEY MARKET FUND (FORMERLY THE SHORT-TERM U.S. GOVERNMENT
INCOME FUND)
This Prospectus describes the U.S. Government Money Market Fund (the
"Fund"), a diversified no-load money market fund offered to municipal and
other institutional investors by FGIC Public Trust (the "Trust"), a Delaware
business trust. Neither the Fund nor any of the securities in which the Fund
invests are insured by Financial Guaranty Insurance Company ("FGIC"), the
Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board or
any other agency or insurer. Shares of the Fund are sold without the
imposition of Rule 12b-1 fees or other sales-related charges.
The Fund seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and liquidity by
investing exclusively in obligations issued or guaranteed as to principal and
interest by the U.S. Government or by any of its agencies or
instrumentalities and repurchase agreements collateralized to 102% by these
obligations. The Fund is required to maintain a dollar-weighted portfolio
maturity of 90 days or less and seeks to maintain its net asset value per
share at $1.00 for purposes of purchases and redemptions.
Shares of the Fund are sold directly and exclusively to municipal
investors which include municipalities, counties and state agencies as well
as other institutional investors, including broker/dealers, investment
advisers, investment banks, insurance companies and other financial
institutions.
The Fund is sponsored and distributed by ALPS Mutual Funds Services,
Inc. ("ALPS" or the "Administrator" or "Distributor") and is advised by FGIC
Advisors, Inc. (the "Adviser").
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT INSURED BY FGIC, THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY OR INSURER AND THEY MAY INVOLVE INVESTMENT
RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This Prospectus sets forth concisely the information you should
consider before investing in the Fund. Please read this Prospectus and keep
it for future reference. Additional information about the Fund is contained
in a Statement of Additional Information (the "Statement of Additional
Information") which has been filed with the Securities and Exchange
Commission and is available upon request without charge by writing to or
calling the Trust at the address and telephone number listed above. The
Statement of Additional Information bears the same date as this Prospectus
and is incorporated herein by reference.
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 UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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TABLE OF CONTENTS Page
EXPENSE SUMMARY......................................................... 3
FINANCIAL HIGHLIGHTS.................................................... 4
FUND OPERATIONS......................................................... 6
SUITABILITY............................................................. 9
MANAGEMENT OF THE FUND..................................................10
HOW TO INVEST IN THE FUND...............................................13
HOW TO REDEEM SHARES....................................................15
SHAREHOLDER SERVICES....................................................17
TAXES...................................................................18
OTHER INFORMATION.......................................................19
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EXPENSE SUMMARY
The summary below shows shareholder transaction expenses imposed by the
Fund and annual Fund operating expenses based on the actual operating
expenses for the fiscal year ended April 30, 1996, restated to reflect
current fees of the Fund. A hypothetical example based on the summary is
also shown. "Shareholder Transaction Expenses" are charges you pay when
buying or selling shares of the Fund whereas "Expected Annual Fund Operating
Expenses" are paid out of the Fund's assets and include fees for portfolio
management, Fund administration and other services.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load on Purchases
of Fund Shares None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees
(Net of Fee Waivers)(1) 0.00%
12b-1 Fees None
All Other Expenses(2) 0.20%
Total Fund Operating Expenses
(Net of Fee Waivers) 0.20%
(1) The Adviser has stated that it will voluntarily waive a portion of the
Management fee otherwise payable by the Fund, as well as voluntarily assuming a
portion of the fund expenses, to the extent necessary for the Fund to maintain a
total expense ratio of not more than 0.20% of the average net assets of the
Fund. Without this voluntary fee waiver and assumption of expenses, Management
Fees, All Other Expenses and Total Fund Operating Expenses would be 0.15%,
0.25% and 0.40%, respectively, of the average net assets of the Fund. The
Adviser reserves the right to modify or terminate the fee waiver at any time.
(2) The amount for "All Other Expenses" includes administration fees
payable to the Administrator calculated daily and payable monthly, at an
annual rate of the greater of $90,000 or 0.18% of average daily net assets of
the Trust up to $500 million, 0.15% of average daily net assets of the Trust
in excess of $500 million up to $1 billion and 0.12% of average daily net
assets of the Trust in excess of $1 billion.
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THE FOLLOWING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
FUTURE EXPENSES. THE EXPENSES SET FORTH ABOVE AND THE EXAMPLE SET FORTH
BELOW REFLECT THE NON-IMPOSITION OF CERTAIN FEES AND EXPENSES. THE ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
EXAMPLE:
Based upon the above summary of expenses and assuming a 5% annual rate
of return and the reinvestment of all dividends and distributions, you would
pay the following expenses on a $1,000 investment in the Fund.
1 YEAR $2
3 YEARS $6
5 YEARS $11
10 YEARS $26
OTHER INFORMATION:
The Expense Summary and Example are intended to help you understand the
expenses you would bear either directly (as with the Transaction Expenses) or
indirectly (as with the Expected Annual Fund Operating Expenses) as a Fund
shareholder. As stated above, the Fund does not impose any sales-related
charges in connection with purchases of its shares, although certain service
institutions may charge their clients fees in connection with purchases and
sales for the accounts of their clients. These fees are in addition to the
expenses shown in the Expense Summary and Example. For a more complete
description of the Fund's operating expenses, see "Management of the Fund" in
this Prospectus and the Statement of Additional Information.
FINANCIAL HIGHLIGHTS
The financial highlights have been derived from the Fund's financial
statements, which have been audited by Deloitte & Touche LLP, independent
auditors, whose report on the financial statement of the Fund is included in
the Statement of Additional Information. The financial highlights reflect the
operations of the Short-Term U.S. Government Income Fund which was not a
money market fund. You should read the financial highlights with the
financial statements and related notes included in the Statement of
Additional Information. Further information about the performance of the
Fund is available in the annual report to shareholders. You may obtain both
the Statement of Additional Information and the annual report to shareholders
free of charge by calling FGIC Public Trust or writing to the Trust at the
telephone or address listed on the first page.
THE FINANCIAL HIGHLIGHTS CONTINUE ON PAGE 5.
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FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT MONEY MARKET FUND
(Formerly Short-Term U.S. Government Income Fund)
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
For the Year Ended For the Period Ended
April 30,1996 April 30, 1995(1)
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Net asset value - beginning of period $10.00
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INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.44
Net realized and unrealized loss on investments (0.03)
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Total income from investment operations 0.41
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.44)
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Net asset value - end of period $9.97
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Total Return 4.73%(2)
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $41,893
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Ratio of expenses to average net assets 0.45%(2)
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Ratio of net investment income to average
net assets 5.23%(2)
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Ratio of expenses to average net assets without
fee waivers .65%(2)
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Ratio of net investment income to average
net assets without fee waivers 5.03%(2)
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Portfolio turnover rate (3) 827.35%(2)
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(1) Operations commenced on June 7, 1994.
(2) Annualized.
(3) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding securities
with a maturity date of one year or less at the time of acquisition) for a
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 period ended April 30, 1996 were
$___________ and $____________, respectively.
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FUND OPERATIONS
INVESTMENT OBJECTIVE
The Adviser will use its best efforts to achieve the investment
objective of the Fund as described below, although the achievement of the
investment objective, of course, cannot be assured. You should not consider
the Fund, by itself, to be a complete investment program. The Fund is a
diversified, open-end management investment company.
The Fund's investment objective is to seek as high a level of current
income as is consistent with the preservation of capital and liquidity. The
securities held by the Fund have remaining maturities of thirteen months or
less. The average weighted maturity of the securities held by the Fund will
not exceed 90 days. The Fund's investment objective may not be changed
without approval of a majority of the Fund's outstanding shares.
In seeking to achieve its investment objective, the Fund will invest
exclusively in obligations issued or guaranteed as to principal and interest
by the U.S. Government or by any of its agencies or instrumentalities, and
may engage in repurchase agreement transactions with respect to such
obligations.
U.S. Government securities are high quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. Government. Not all U.S. Government securities are backed by the full
faith and credit of the United States. Some U.S. Government securities, such
as those issued by the Federal National Mortgage Association, are supported
by an instrumentality's or agency's right to borrow money from the U.S.
Treasury under certain circumstances. Other U.S. Government securities may be
supported only by the credit of the entity that issues them. Due to
fluctuations in interest rates, the market value of such securities may vary
during the period a shareholder owns shares of the Fund. Neither the United
States, nor any agency or instrumentality thereof, has guaranteed, sponsored
or approved the Fund or its shares. The Fund will seek to maintain a stable
net asset value at $1.00 per share. There is no assurance that the Fund's
investment objectives will be achieved.
INVESTMENT POLICIES
Securities held by the Fund may be subject to repurchase agreements. A
repurchase agreement is a transaction in which the Fund agrees to purchase
portfolio securities from financial institutions, such as banks and
broker-dealers, subject to the seller's agreement to repurchase them at an
agreed upon time and price. Although the securities subject to a repurchase
agreement might bear maturities exceeding thirteen months, the Fund does not
intend to enter into repurchase agreements with maturities in excess of 7
days. The seller under a repurchase agreement will be required to maintain
the value of the securities subject to the repurchase agreement at not less
than 102% of the principal value of the repurchase agreement, including any
accrued interest earned on the repurchase agreement, and that the Fund's
custodian or subcustodian will take possession of such collateral. The
seller
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will collateralize the repurchase agreement with U.S. Treasury obligations
and other direct obligations of the U.S. Government or its agencies or
instrumentalities. Default by or bankruptcy of the seller may, however,
expose the Fund to possible loss because of adverse market action or delay or
transaction costs in connection with the disposition of the underlying
obligations. The Fund may enter into agreements with a single counterparty
that constitutes more than 5% of Fund assets.
Subject to the investment restrictions described below, the Fund may,
from time to time, lend securities from its portfolio to brokers, dealers and
financial institutions and receive collateral in cash or U.S. Treasury
obligations which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. The Fund
will be entitled to the interest paid upon investment of the cash collateral
in its permitted investments or to the payment of a premium or fee for the
loan. The Fund may at any time call such loans and obtain the securities
loaned. However, if the borrower of the securities should default on its
obligation to return the securities borrowed, the value of the collateral may
be insufficient to permit the Fund to reestablish its position by making a
comparable investment due to changes in market conditions. The Fund may pay
reasonable fees to persons unaffiliated with the Fund in connection with
arranging such loans. The Fund will only engage in securities lending
transactions with broker-dealers registered with the Securities and Exchange
Commission, or with federally supervised banks or savings and loan
associations.
The Fund intends to purchase U.S. Treasury securities at auction from
the Federal Reserve.
INVESTMENT RESTRICTIONS
The Fund is subject to a number of Investment Restrictions which reflect
self-imposed standards as well as federal and state regulatory limitations.
These limitations are designed to minimize certain risks associated with
investing in specified types of securities or engaging in certain
transactions. The Investment Restrictions may be changed only by a vote of a
majority of the Fund's outstanding shares.
The Fund may not:
1) Purchase securities other than direct obligations of the U.S.
Government or its agencies or instrumentalities, some of which may be subject
to repurchase agreements, and repurchase agreements collateralized to 102% by
direct obligations of the U.S. Government or its agencies or
instrumentalities.
2) Make loans, except that the Fund may purchase or hold debt
instruments, lend portfolio securities, and enter into repurchase agreements
in accordance with its investment objective and policies.
3) Borrow money or issue senior securities, except that the Fund may
borrow from banks for temporary purposes in amounts up to 10% of the value of
its total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowings and in
amounts not in excess of the dollar amounts borrowed or 10% of the value of
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the Fund's assets at the time of borrowing. The Fund may not purchase
securities while its borrowings are outstanding.
4) Enter into repurchase agreements providing for settlement more than
seven days after notice if such investment exceeds 10% of the Fund's net
assets.
5) Purchase municipal bonds issued by an issuer any of whose outstanding
bonds are insured by FGIC.
6) Purchase collateralized mortgage obligations, inverse floaters or any
other securities commonly known as "derivatives".
7) Purchase illiquid securities, except fully collateralized repurchase
agreements that, because of term limitations, are deemed to be illiquid.
8) Purchase reverse repurchase agreements.
DETERMINATION OF NET ASSET VALUE
The value of the Fund's shares is referred to as "net asset value". Net
asset value per share for purposes of pricing purchases and redemptions is
calculated by adding the value of all securities and other assets belonging
to the Fund, subtracting its liabilities and dividing the result by the
number of the Fund's outstanding shares. Net asset value is determined as of
5:00 p.m. Eastern Time on each day the New York Federal Reserve or the New
York Stock Exchange is open for business and as of 12:00 noon Eastern Time on
each day the Public Securities Association recommends (each such day referred
to as a "Half Day"). Currently, the New York Federal
Reserve or the New York
Stock Exchange is closed on New Years Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
The Board of Trustees has established procedures designed to maintain a
stable net asset value of $1.00 per share, to the extent reasonably possible.
The Board of Trustees has approved and adopted procedures under Rule 2a-7
under the Investment Company Act which was enacted by the SEC with the intent
of stabilizing money market funds at $1.00 per share. Under the guidelines
of Rule 2a-7, the Fund uses the amortized cost method to value its portfolio
securities. The amortized cost method involves valuing a security at its cost
and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security. Rule 2a-7 also provides that the Fund must also do a
"mark-to-market" analysis, where it is determined the degree to which any
variations may exist between the amortized pricing method and the actual
market price of the securities in the Fund. If there is a deviation of 1/4
of 1% (1/4 of a cent) the Board is notified immediately. If there is a
deviation of 1/2 of 1% (1/2 of a cent) the Board will promptly consider what
action, if any, will be initiated. In the event the Board determines that a
deviation exists which may result in material dilution or other unfair
results to investors or existing shareholders, the Board will take such
corrective action as it regards as necessary and appropriate, including the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity.
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Rule 2a-7 also requires the Fund to maintain a dollar weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities of 13 months or less and invest only in securities determined by
the Trusts' Board of Trustees to be "eligible securities" and that present
minimal credit risks. The Board of Trustees reviews the portfolio securities
monthly and at regularly scheduled quarterly Board of Trustees meetings.
There can be no assurance that at all times the $1.00 price per share can be
maintained. See the Statement of Additional Information for more details.
DIVIDENDS AND DISTRIBUTIONS
The Fund's net income is declared daily as a dividend at the close of
business on the day of declaration. Your shares begin earning dividends on
the day you purchase them, and continue to earn dividends through and
including the day before you redeem them. See "How to Invest in the Fund".
The Fund pays dividends not later than five business days after the end of
each month in the form of additional shares of the Fund, unless you elect
prior to the date of distribution to receive payment in cash. Reinvested
dividends and distributions receive the same tax treatment as those paid in
cash. If you redeem all of your shares in the Fund, the Fund will pay your
dividends in cash not later than five business days after the redemption.
SUITABILITY
The Fund is designed as an economical and convenient professionally
managed investment vehicle for Municipal Investors and other institutional
investors with cash balances or cash reserves who seek as high a level of
current income as is consistent with the preservation of capital and
liquidity. "Municipal Investors" include any State, county, municipality,
school district or special district in the United States. While the Fund is
designed to meet the specific cash management needs of Municipal Investors,
it may also be suitable for other institutional investors, such as banks,
service organizations, credit unions or investment advisers.
Legislation in each state sets forth guidelines and limitations with
respect to investments by Municipal Investors located within the state. In
addition, Municipal Investors may be subject to local laws or have their own
guidelines and policies prescribing acceptable investments for cash
management purposes. Each Municipal Investor planning to invest in the Fund
must independently verify that the Fund meets all of the criteria of
investment policies and guidelines applicable to such Municipal Investor.
Future statutory or regulatory changes, as well as future judicial or
administrative decisions and interpretations of present and future statutes
and regulations could prevent a Municipal Investor from continuing its
investment in the Fund. Each Municipal Investor should therefore remain
aware of any changes in the applicable regulation of permitted investments.
The Fund offers the advantages of purchasing power efficiencies and
diversification of risk. Generally, in purchasing debt instruments from
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dealers, the percentage difference between the bid and asked price tends to
decrease as the size of the transaction increases. The Fund also offers the
Municipal Investor the opportunity to participate in a portfolio of
obligations of the U.S. Government or its agencies or instrumentalities which
is more diversified in terms of issuers and maturities than a portfolio a
single Municipal Investor may otherwise be able to invest in.
Investment in the Fund relieves the Municipal Investor of money
management and administrative burdens usually associated with the direct
purchase and sale of debt instruments issued by the U.S. Government, or its
agencies or instrumentalities. This includes the selection of the portfolio
investments; surveying the market for the best terms at which to buy and
sell; scheduling and monitoring maturities and reinvestments; receipt,
delivery and safekeeping of securities; and portfolio recordkeeping.
The Fund qualifies as an eligible investment for federally chartered
credit unions pursuant to Section 107 of the Federal Credit Union Act and
Part 703 of the National Credit Union Administration Rules and Regulations.
The Fund intends to review changes in the applicable laws, rules and
regulations governing eligible investments for federally chartered credit
union, and to take such action as may be necessary so that the investments of
the Fund qualify as eligible investments under the Federal Credit Union Act
and the regulations thereunder. Shares of the Fund, however, may or may not
qualify as eligible investments for particular state chartered credit unions.
The Fund encourages each state chartered credit union to consult qualified
legal counsel concerning whether the Fund is a permissible investment under
the laws applicable to it.
MANAGEMENT OF THE FUND
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 firm's 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 Insurors, the American Bar Association, the Arts &
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.
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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
currently a member of the Board of Trustees of the Colorado Trust, Colorado's
largest foundation, as well as a Trustee of the Hunter and Hughes 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 July,
1987 to December, 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"). Prior to his tenure as Director of Finance and
Chief Financial Officer, Mr. Cochran was the Executive Director of the
Hartford Development Commission from October, 1981 and served the City in
other responsible financial capacities beginning in 1971. In 1993, Mr.
Cochran was elected to the Executive Board of the National GFOA and has also
served on its Debt and Fiscal Policy Committee. Mr. Cochran is a member of
the Connecticut Government Finance Officers Association, the Board of
Trustees of the Connecticut Resources Recovery Authority, 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,
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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".
INVESTMENT ADVISER
FGIC Advisors, Inc. serves as the Investment Adviser to the Fund. The
Adviser is a subsidiary of FGIC Holdings, Inc., which in turn is a wholly
owned subsidiary of General Electric Capital Corporation. The principal
address of the Adviser is 115 Broadway, New York, New York 10006.
The Investment Adviser is an affiliate of Financial Guaranty Insurance
Company ("FGIC"), a leading insurer of debt securities. FGIC guarantees
timely payment of principal and interest on municipal securities, including
newly issued bonds, those held in mutual funds and those traded in the
secondary markets. FGIC also guarantees a variety of non-municipal
structured securities. Securities insured by FGIC have been, without
exception, rated Aaa/AAA/AAA, the highest ratings assigned by Moody's
Investors Service, Inc., Standard & Poor's Corp. and Fitch Investors Service,
respectively. As a result of FGIC's insurance, the value and marketability
of a bond are enhanced, and an issuer can sell its bonds at a lower interest
rate than that of uninsured, lower rated investment grade securities.
Pursuant to the Advisory Contract, the Adviser has agreed to provide a
continuous investment program for the Fund, including investment research and
management with respect to the assets of the Fund. The Adviser is entitled
to receive a fee, calculated daily and payable monthly, at the annual rate of
0.15% of the Fund's average daily net assets. The Adviser may from time to
time voluntarily waive with respect to the Fund all or a portion of its
advisory fee; however, the Adviser may modify or terminate this waiver at any
time without the Fund's consent. The Adviser has agreed under the Advisory
Contract to waive its advisory fee to the extent necessary to insure that the
total expense ratio of the Fund does not exceed 0.20% of the Fund's average
daily net assets.
ADMINISTRATOR AND BOOKKEEPING AND PRICING AGENT
ALPS serves as the Fund's Administrator. As Administrator, ALPS has
agreed to: assist in maintaining the Fund's office; furnish the Fund with
clerical and certain other services; compile data for and prepare notices and
semi-annual reports to the Securities and Exchange Commission; prepare
filings with state securities commissions; coordinate Federal and state tax
returns; monitor the Fund's expense accruals; monitor compliance with the
Fund's investment policies and limitations; and generally assist in the
Fund's operations. ALPS is entitled to receive a fee from the Fund for its
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administrative services computed daily and payable monthly, at the annual
rate of the greater of $90,000 or 0.18% of average daily net assets of the
Trust up to $500 million, 0.15% of average daily net assets of the Trust in
excess of $500 million up to $1 billion and 0.12% of average daily net assets
of the Trust in excess of $1 billion. ALPS may voluntarily waive all or any
portion of its administration fee from time to time.
ALPS also serves as the Fund's Bookkeeping and Pricing Agent. In this
capacity, ALPS has agreed to maintain the financial accounts and records of
the Fund and to compute the net asset value and certain other financial
information relating to the Fund.
CUSTODIAN
State Street Bank and Trust Company of Connecticut, N.A., located at 750
Main Street, Suite 1114, Hartford, Connecticut 06103, serves as Custodian
for the Fund.
SUB-CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company, located at P.O. Box 1978, Boston,
Massachusetts 02015, serves as Sub-Custodian and Transfer Agent for the Fund.
HOW TO INVEST IN THE FUND
Shares in the Fund are distributed on a continuous basis by ALPS, the
Fund's Sponsor and Distributor. ALPS has its principal office at 370
Seventeenth Street, Suite 2700, Denver, Colorado 80202 and may be reached at
(800) 298-FGIC (3442).
GENERAL PROCEDURES
You may purchase Fund shares through ALPS or the Fund's Transfer Agent.
You may pay for your purchase of Fund shares by check, money order or by
using the Federal Reserve Wire System. The check or money order must be
payable in U.S. dollars and be drawn on a bank located within the United
States. Shares of the Fund may be purchased at the net asset value next
determined after an order is received and accepted. The Fund does not impose
any sales-related charges in connection with purchases of shares. The Fund
may discontinue offering its shares in any state without notice to
shareholders.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. The application should be forwarded to:
FGIC Public Trust
P.O. Box 1978
Boston, Massachusetts 02015
Purchases by telephone can be made after an account has been
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established by the Transfer Agent. The Trust reserves the right to reject
any purchase order.
PURCHASE PRICE
Your purchase of Fund shares will be effected at the net asset value
next determined after the Fund receives your purchase order in proper form
and payment in the form of Federal Funds. If you pay by check, your purchase
of Fund shares will be effected at the net asset value next determined after
the receipt of your check. Your account will begin accruing dividends when
your check is credited to your account in the form of Federal Funds
(generally two Business Days after receipt of your check). If your order is
accompanied by Federal Funds, or is converted into Federal Funds by 5:00 p.m.
Eastern Time on a Business Day or 12:00 noon on a Half Day, it will be
executed on that day. If the Fund receives your order and payment in the
form of Federal Funds after 5:00 p.m. Eastern Time on a Business Day or after
12:00 noon Eastern Time on a Half Day, your order will be processed the next
Business Day. A "Business Day" is any day on which the New York Federal
Reserve and the New York Stock Exchange is open for business.
TELEPHONE AND FACSIMILE PURCHASES
You can purchase Fund shares by telephone or facsimile once you have
established your account with the Fund and your telephone and facsimile
privileges have been approved by the Fund. In order to qualify for dividends
on the day of purchase, telephone or facsimile orders must be placed and
Federal Funds must be in the Fund's custody account by 5:00 p.m. Eastern Time
on Business Days. In order to qualify for dividends on the day of purchase
on Half Days, telephone or facsimile orders must be placed and Federal Funds
must be in the Fund's custody account by 12:00 noon that day. If Federal
Funds arrive in the Fund's custody account after the stated deadlines for
both Business Days and Half Days, the account will be credited the next
Business Day. Monies received for the purchase of Fund shares will be
credited to the shareholder's account the next Business Day if customers do
not notify the Fund of purchases by telephone or facsimile by 4:00 p.m. on
Business Days and 11:00 a.m. on Half Days.
MINIMUM INVESTMENT AND ACCOUNT BALANCES
The minimum initial investment in the Fund is $2,000,000 and additional
investments may be made in any amount. The minimum purchase requirements do
not apply to reinvested dividends. If an account balance falls below
$2,000,000 due to redemptions or exchanges, the account may be closed and the
proceeds wired to the bank account of record, or a check will be issued and
sent to the party of record. An investor will be given 30 days notice that
the account will be closed unless an additional investment is made to
increase the account balance to the $2,000,000 minimum.
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STATEMENTS AND REPORTS
The Trust will send you a statement of your account after every
transaction that affects your share balance or your account registration. A
statement with tax information and an annual statement will be mailed to you
by January 31 of each year, and also will be filed with the IRS. At least
twice a year, you will receive financial statements in the form of Annual and
Semi-Annual Reports of the Fund.
HOW TO REDEEM SHARES
GENERAL PROCEDURES
Shareholders may redeem all or any part of the value of their
account(s) on any Business Day. You may redeem by mail, telephone or
facsimile if you have established that capability with the Fund. Redemption
orders are processed at the net asset value per share next determined after
the Fund receives your order. If the Fund receives your redemption order
before 1:00 p.m. Eastern Time, on a Business Day other than a Half Day, or by
11:00 a.m. Eastern Time on a Half Day, the Fund will pay for your redeemed
shares on the next Business Day. Otherwise, the Fund will pay for your
redeemed shares on the day following the next Business Day. The Fund
reserves the right to pay for redeemed shares within seven days after
receiving your redemption order if, in the judgment of the Adviser, an
earlier payment could adversely affect the Fund.
REGULAR REDEMPTION
You may redeem shares by sending a written request to FGIC Public Trust,
P.O. Box 1978, Boston, Massachusetts 02015. You must sign a redemption
request. (All individuals with authority on the account must co-sign.)
Your written redemption request must:
(i) state the number of shares to be redeemed;
(ii) identify your shareholder account number; and
(iii) provide your tax identification number.
Each signature must be guaranteed by either a bank that is a member of
the FDIC, a trust company or a member firm of a national securities exchange
or other eligible guarantor institution. The Fund will not accept guarantees
from notaries public. Guarantees must be signed by an authorized person at
the guarantor institution, and the words "Signature Guaranteed" must appear
with the signature. You must obtain a signature guarantee for signatures on
endorsed certificates submitted for redemption. A redemption request will
not be deemed to be properly received until the Fund receives all required
documents in proper form.
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If the Fund wires your redemption proceeds, the wire must be paid to the
same bank and account as designated on the Trust's Account Application or in
your written instructions to the Fund. If your bank is not a member of the
Federal Reserve System, your redemption proceeds will be wired to a
correspondent bank. Immediate notification by the correspondent bank to your
bank will be necessary to avoid a delay in crediting the funds to your bank
account.
TELEPHONE REDEMPTION
You may redeem shares by telephone. Shareholders must check the
appropriate box on the Account Application to activate the telephone
redemption privilege. Shares may be redeemed by telephoning the Fund at
(800) 298-FGIC (3442) and giving the account name, account number, Personal
Identification Number (PIN#), name of Fund and amount of redemption.
Proceeds from redemptions may be wired or mailed directly to your account at
a commercial bank within the United States or mailed to you at your address
on the Fund's books. Only redemptions of $1,000 or more will be executed by
telephone.
In order to arrange for telephone redemptions after you have opened your
account, or to change the bank, account or address designated to receive
redemption proceeds, send a written request to the Fund at the address listed
under "Regular Redemption". The request must be signed by you and each other
shareholder of the account involved, with the signatures guaranteed as
described above. The Trust may modify or terminate procedures for redeeming
shares by telephone.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If you are unable to contact the
Fund by telephone, you may redeem your shares by mail as described above
under "Regular Redemption".
By electing the telephone redemption option, you may be giving up a
measure of security which you might have had if you were to redeem in
writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, such as recording
telephone calls, providing written confirmation of transactions, or requiring
a form of personal identification prior to acting on instructions received by
telephone. To the extent the Trust does not employ reasonable procedures, it
and/or its service contractors may be liable for any losses due to
unauthorized or fraudulent instructions. Neither the Trust, the Transfer
Agent nor ALPS will be liable for following instructions communicated by
telephone that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone redemption
transactions.
GENERAL REDEMPTION INFORMATION
Except for the presence of certain exceptional circumstances described
in the Investment Company Act of 1940, the Fund will pay for redeemed shares
by mail within seven days after the Fund receives your order and
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<PAGE>
supporting documents in proper form (except as provided by the rules of the
Securities and Exchange Commission). The Fund will wire redemption proceeds
the next Business Day on which your redemption order is received, provided it
is received before 1:00 p.m. Eastern Time on Business Days and 11:00 a.m.
Eastern Time on Half Days. However, if any of the shares are to be redeemed
by check, the Fund may delay the payment of redemption proceeds until the
Transfer Agent is reasonably satisfied that the check has been collected,
which could take up to 15 days from the purchase date.
There is no charge for share redemptions. The Fund may redeem an
account that has a balance of less than $2,000,000 if the shareholder does
not increase the amount of the account to at least $2,000,000 upon 30 days'
notice.
Please direct questions concerning the proper form for redemption
requests to the Fund at (800) 298-FGIC (3442).
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
You may sell your Fund shares and buy shares of the U.S. Treasury Money
Market Fund, another portfolio of the Trust, in exchange by written request.
There are no fees or commissions for exchanging Trust shares. If you have
checked the appropriate box on your Account Application, you may also
initiate exchanges by telephone. Exchange requests should be directed to the
Fund at (800) 298-FGIC (3442).
Exchange transactions must be for amounts of $1,000 or more. Exchanges
may have tax consequences, so you should consult your tax adviser for further
information. The U.S. Treasury Money Market Fund must be registered for sale
in your state and must meet the investment criteria for your institution.
See "Suitability". Prior to requesting an exchange of Fund shares you should
call the Fund at 1-800-298-FGIC(3442). You should read the current
prospectus for the U.S. Treasury Money Market Fund.
During periods of significant economic or market change, telephone
exchanges may be difficult to complete. If you are unable to contact the
Fund by telephone, you may also mail the exchange request to the Fund at the
address listed under "Regular Redemption". Neither the Trust, the Transfer
Agent nor ALPS will be responsible for the authenticity of exchange
instructions received by telephone except as set forth under "How to Redeem
Shares - Telephone Redemption".
The Trust can provide you with information concerning certain
limitations on the exchange privilege, including those related to frequency.
The Trust may modify or terminate the exchange privilege but will not
materially change or terminate it without giving shareholders 60 days'
written notice.
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TAXES
While municipal investors are generally exempt from Federal income
taxes, each investor should independently ascertain its tax status. With
respect to investors who are not exempt from Federal income taxes, dividends
derived from net investment income and short term capital gains are taxable
as ordinary income distributions and are taxable when paid, whether investors
receive distributions in cash or reinvest them in additional shares, except
that distributions declared in December and paid in January are taxable as if
paid on December 31. The Fund will send to non-exempt investors an IRS Form
1099-DIV showing their taxable distributions for the past calendar year.
The Fund intends to continue to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code").
This qualification will relieve the Fund of liability for Federal income
taxes, to the extent its earnings are distributed in accordance with the Code.
The information above is only a summary of some of the federal tax
consequences generally affecting the Fund and its shareholders, and no
attempt has been made to discuss individual tax consequences. In addition to
Federal taxes, investors may be subject to state or local taxes on their
investment. Investors should consult their tax advisor to determine whether
the Fund is suitable to their particular tax situation.
When investors sign their account application, they will be asked to
certify that their social security or taxpayer identification number is
correct and that they are not subject to 31% backup withholding for failing
to report income to the IRS. If investors violate IRS regulations, the IRS
can require the Fund to withhold 31% of taxable distributions and redemptions.
The Fund declares dividends from net investment income daily and pays
such dividends monthly. The Fund intends to distribute substantially all of
its net investment income and capital gains, if any, to shareholders within
each calendar year as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived
from earned interest, it is anticipated that all dividends paid by the Fund
will be taxable as ordinary income to those shareholders who are not exempt
from Federal income taxes, and that no part of any distribution will be
eligible for the dividends received deduction for corporations.
OTHER INFORMATION
CAPITALIZATION
FGIC Public Trust was organized as a Delaware Business Trust on November
30, 1993 and consists of two separate portfolios or series, one of which is
offered in this Prospectus. The Board of Trustees may establish additional
series in the future. The capitalization of the Trust consists solely of an
unlimited number of shares of beneficial interest with a par value of $0.001
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each. When issued, shares of the Trust are fully paid and non-assessable.
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of a series of the Trust but only
to the extent of the shareholder's investment in such series. However, the
Trust Instrument disclaims liability of the shareholders, Trustees or
Officers of the Trust for acts or obligations of the Trust, which are binding
only on the assets and property of each series of the Trust and requires that
notice of the disclaimer be given in each contract or obligations entered
into or executed by the Trust or the Trustees. The risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its
obligations and should be considered remote and is limited to the amount of
the shareholder's investment in the Fund.
VOTING
Shareholders have the right to vote in the election of Trustees and on
any and all matters on which, by law or under the provisions of the Trust
Instrument, they may be entitled to vote. The Trust is not required to hold
regular annual meetings of the Fund's shareholders and does not intend to do
so. The Fund may vote separately on items which affect only the Fund.
The Trust Instrument provides that the holders of not less than
two-thirds of the outstanding shares of the Trust may remove a person serving
as Trustee either by declaration in writing or at a meeting called for such
purpose. The Trustees are required to call a meeting of shareholders for the
purpose of considering the removal of a person serving as Trustee if
requested in writing to do so by the holders of not less than 10% of the
outstanding shares of the Trust or the Fund.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote
of a majority of the outstanding shares" of the Fund (or the Trust) means the
vote of the lesser of: (1) 67% of the shares of the Fund (or the Trust)
present at a meeting if the holders of more than 50% of the outstanding
shares are present in person or by proxy: or (2) more than 50% of the
outstanding shares of the Fund.
PERFORMANCE INFORMATION
From time to time, the Fund may quote its "yield" and "effective yield"
in advertisements or in communications to shareholders. Both yield figures
are based on historical earnings and are not intended to indicate future
performance. The "yield" quoted in advertisements refers to the income
generated by an investment in the Fund over a specified seven-day period.
This income is then "annualized". That is, the amount of income generated by
the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
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compounding effect of the assumed reinvestment.
Additionally, the yield of the Fund may be compared in advertisements or
in reports to shareholders to those of other mutual funds with similar
investment objectives and to other relevant indices or to rankings prepared
by independent services or other financial or industry publications that
monitor the performance of mutual funds. For example, the Funds' yields may
be compared to the IBC/Donoghue's Money Fund Average, which is an average
complied by IBC/Donoghue's Money Fund Report. In addition, yields may be
compared to the average yields reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift
institutions in the top five standard metropolitan statistical areas.
Yield data as reported in national financial publications, including
Money Magazine, Forbes, Barron's, The Wall Street Journal and The New York
Times, or in publications of a local or regional nature, may also be used in
comparing the yields of the Fund.
Since yields fluctuate, you cannot necessarily use yield data to compare
an investment in the Funds' shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Yield is generally a function of
the kind and quality of the instruments held in a portfolio, portfolio
maturity, operating expenses and market conditions. Any fees charged by
service institutions directly to their customer accounts in connection with
investments in shares of the Fund will not be included in the Fund's
calculations of yield.
INQUIRIES
Please write or call the Trust at the address or telephone number listed
on the cover of this Prospectus with any inquiries you may have regarding the
Fund or any other investment portfolios of the Trust that are not offered by
this Prospectus.
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INVESTMENT ADVISER INDEPENDENT AUDITORS
FGIC Advisors, Inc. Deloitte & Touche LLP
115 Broadway 555 Seventeenth Street
New York, New York 10006 Suite 3600
Denver, Colorado 80202
DISTRIBUTOR & CUSTODIAN
ADMINISTRATOR State Street Bank and Trust
ALPS Mutual Funds Services, Inc. Company of Connecticut N.A.
370 Seventeenth Street 750 Main Street
Suite 2700 Suite 1114
Denver, Colorado 80202 Hartford, Connecticut 06103
LEGAL COUNSEL SUB-CUSTODIAN &
Baker & McKenzie TRANSFER AGENT
805 Third Avenue State Street Bank & Trust
New York, New York 10022 Company
P.O. Box 1978
Boston, Massachusetts
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION
WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
20
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U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
PART B .........................................STATEMENT OF ADDITIONAL
INFORMATION CAPTION
Item 10. Cover Page...............................Cover Page
Item 11. Table of Contents........................Table of Contents
Item 12. General Information and
History.................................Not Applicable
Item 13. Investment Objective and
Policies................................Investment Policies;
Investment Restrictions
Item 14. Management of the
Registrant..............................Management
Item 15. Control Persons and Principal
Holders of Securities...................Management; Shares of
Beneficial Interest
Item 16. Investment Advisory and
Other Services..........................Management; Custodian; Experts
Item 17. Brokerage Allocation and Other
Practices...............................Portfolio Transactions
Item 18. Capital Stock and Other
Securities..............................Shares of Beneficial Interest
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered...........................How to Invest in the Fund
(Part A);Redemptions; How to
Redeem Shares (Part A);
Determination of Net Asset
Value; Exchange Privilege
Item 20. Tax Status..............................Fund Operations; Federal
Income Taxes
Item 21. Underwriters............................Management
-iii-
<PAGE>
Item 22. Calculation of Performance
Data...................................Calculation of Yields and
Performance Information
Item 23. Financial Statements....................Financial Statements
-iv-
<PAGE>
FGIC PUBLIC TRUST
U.S. Treasury Money Market Fund
U.S. Government Money Market Fund
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
[July __, 1996]
General
Information: (800) 298-FGIC (3442)
STATEMENT OF ADDITIONAL INFORMATION
FGIC Public Trust (the "Trust") is an open-end, diversified management
investment company with multiple investment portfolios, including the U.S.
Treasury Money Market Fund (the "Treasury Fund") and the U.S. Government Money
Market Fund, formerly the Short-Term U.S. Government Income Fund,(the
"Government Fund")(collectively, the "Funds").
THE TREASURY FUND seeks to provide investors with as high a level of
current income as is consistent with preservation of capital and liquidity by
investing exclusively in U.S. Treasury bills, notes and other direct obligations
of the U.S. Treasury and repurchase agreements fully collateralized by direct
U.S. Treasury obligations. The Fund is required to maintain a dollar-weighted
average portfolio maturity of 90 days or less and seeks to maintain its net
asset value per share at $1.00 for purposes of purchases and redemptions.
THE GOVERNMENT FUND seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital and liquidity
by investing exclusively in obligations of the U.S. Government, its agencies
and instrumentalities. The Fund is required to maintain a dollar-weighted
average portfolio maturity of 90 days or less and seeks to maintain its net
asset value per share at $1.00 for purposes of purchases and redemptions.
Shares of the Funds are offered for sale by ALPS Mutual Funds Services,
Inc., the Sponsor and Distributor, as an investment vehicle for municipal and
other institutions.
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Funds'
Prospectuses dated July __, 1996. This Statement of Additional Information
contains additional and more detailed information than that set forth in each
Prospectus and should be read in conjunction with the Prospectuses,
<PAGE>
additional copies of which may be obtained without charge from the Trust.
2
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- - ------------------------------------------------------------------------------
Table of Contents
Page No.
Investment Policies...................................... -
Investment Restrictions.................................. -
Management............................................... -
Calculation of Yields and Performance Information........ -
Determination of Net Asset Value......................... -
Portfolio Transactions................................... -
Portfolio Turnover....................................... -
Exchange Privilege....................................... -
Redemptions.............................................. -
Federal Income Taxes..................................... -
Shares of Beneficial Interest............................ -
Other Information........................................ -
Custodian and Sub-Custodian.............................. -
Experts.................................................. -
Financial Statements..................................... -
- - ------------------------------------------------------------------------------
INVESTMENT POLICIES
The following information supplements the discussion of the investment
objective and policies of the Funds found under "Investment Objective" and
"Investment Policies" in each Prospectus.
U.S. TREASURY OBLIGATIONS. Each Fund may invest, and the Treasury Fund
invests exclusively, in direct obligations of the United States Treasury which
have remaining maturities of 13 months or less and related repurchase
agreements. The United States Treasury issues various types of marketable
securities consisting of bills, notes, bonds and other debt securities. They
are direct obligations of the United States Government and differ primarily in
the length of their maturity. Treasury bills, the most frequently issued
marketable United States Government security, have a maturity of up to one year
and are issued on a discount basis.
U.S. GOVERNMENT AGENCIES. (GOVERNMENT FUND ONLY) The Government Fund may
invest in obligations issued or guaranteed by the United States Government or
its agencies or instrumentalities which have remaining maturities not exceeding
thirteen months. Agencies and instrumentalities which issue or guarantee debt
securities and which have been established or sponsored by the
3
<PAGE>
United States Government include the Banks for Cooperatives, the
Export-Import Bank, the Federal Farm Credit System, the Federal Home Loan
Banks, the Federal Home Loan Mortgage Corporation, the Federal Intermediate
Credit Banks, the Federal Land Banks, the Federal National Mortgage
Association and the Student Loan Marketing Association. United States
Government agency and instrumentality obligations include master notes issued
by these entities but do not include obligations of the World Bank, The
Inter-American Development Bank or the Asian Development Bank.
MORTGAGE-RELATED SECURITIES. (GOVERNMENT FUND ONLY) The Government
Fund, may, consistent with its respective investment objective and policies,
invest in mortgage-related securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities.
Mortgage-related securities, for purposes of the Fund's Prospectus and
this SAI, represent pools of mortgage loans assembled for sale to investors
by various governmental agencies such as the Government National Mortgage
Association and government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, as well
as by nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If the Fund purchases a mortgage-related
security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest rates
or prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse
is not necessarily true since in periods of declining interest rates the
mortgages underlying the securities are prone to prepayment. For this and
other reasons, a mortgage-related security's stated maturity may be shortened
by unscheduled prepayments on the underlying mortgages and, therefore, it is
not possible to predict accurately the security's return to the Fund. In
addition, regular payments received in respect of mortgage-related securities
include both interest and principal. No assurance can be given as to the
return a Fund will receive when these amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they
4
<PAGE>
issue. Mortgage-related securities created by the Government National
Mortgage Association ("GNMA") include GNMA Mortgage Pass-Through Certificates
(also known as "Ginnie Maes") which are guaranteed as to the timely payment
of principal and interest and such guarantee is backed by the full faith and
credit of the United States. GNMA is a wholly-owned U.S. Government
corporation within the Department of Housing and Urban Development. GNMA
certificates also are supported by the authority of GNMA to borrow funds from
the U.S. Government to make payments under its guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of the FNMA and are not
backed by or entitled to the full faith and credit of the United States. The
FNMA is a government-sponsored organization owned entirely by private
stock-holders. Fannie Maes are guaranteed as to timely payment of the
principal and interest by FNMA. Mortgage-related securities issued by the
Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC Mortgage
Participation Certificates (also known as ("Freddie Macs" or "PCs"). The
FHLMC is a corporate instrumentality of the United States, created pursuant
to an Act of Congress, which is owned entirely by Federal Home Loan Banks.
Freddie Macs are not guaranteed by the United States or by any Federal Home
Loan Banks and do not constitute a debt or obligation of the United States or
of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely
payment of interest, which is guaranteed by the FHLMC. The FHLMC currently
guarantees timely payment of interest and either timely payment of principal
or eventual payment of principal, depending upon the date of issue. When the
FHLMC does not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at
any time after default on an underlying mortgage, but in no event later than
one year after it becomes payable.
REPURCHASE AGREEMENTS. Each Fund may invest in securities pursuant to
repurchase agreements, whereby the seller agrees to repurchase such
securities at the Fund's cost plus interest within a specified time
(generally one day). The securities underlying the repurchase agreements will
consist exclusively of U.S. Government obligations in which the Funds are
otherwise permitted to invest. While repurchase agreements involve certain
risks not associated with direct investments in the underlying securities,
the Funds will follow procedures designed to minimize such risks. These
procedures include effecting repurchase transactions only with large,
well-capitalized banks and registered broker-dealers having creditworthiness
determined by the Adviser to be substantially equivalent to that of issuers
of debt securities rated investment grade. In addition, the Funds'
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repurchase agreements will provide that the value of the collateral
underlying the repurchase agreement will always be at least equal to the
repurchase price, including any accrued interest earned on the repurchase
agreement, and that the Funds' custodian will take possession of such
collateral. In the event of a default or bankruptcy by the seller, the Funds
will seek to liquidate such collateral. However, the exercise of the Funds'
right to liquidate such collateral could involve certain costs or delays and,
to the extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, a Fund could suffer a loss.
Repurchase agreements are considered to be loans by an investment company
under the Investment Company Act of 1940 (the "1940 Act"). There is no limit
on the amount of the Funds' net assets that may be subject to repurchase
agreements having a maturity of seven days or less. The Funds will not enter
into repurchase agreements which will cause more than 10% of a Fund's net
assets to be subject to repurchase agreements having a maturity beyond seven
days.
LOANS OF PORTFOLIO SECURITIES. The Government Fund may, subject to the
restrictions set forth under "Investment Restrictions" in the Prospectus,
lend its portfolio securities to brokers, dealers and financial institutions
if cash or cash equivalent collateral, including letters of credit, equal to
at least 100% of the current market value of the securities loaned (including
accrued dividends and interest thereon) plus the interest payable with
respect to the loan is maintained by the borrower with the lending Fund in a
segregated account. Cash collateral will be invested only in securities in
which the Government Fund is otherwise permitted to invest. In determining
whether to lend a security to a particular broker, dealer or financial
institution, the Adviser will consider all relevant facts and circumstances,
including the creditworthiness of the broker, dealer or financial
institution. The Government Fund will not enter into any portfolio security
lending arrangement having a duration of longer than one year. Any
securities which the Government Fund may receive as collateral will not
become part of the Fund's portfolio at the time of the loan and, in the event
of a default by the borrower, the Fund will, if permitted by law, dispose of
such collateral except for such part thereof which is a security in which the
Fund is permitted to invest. During the time securities are on loan, the
borrower will pay the Fund an amount equal to any accrued income on those
securities, and the Fund may invest the cash collateral and earn additional
income or receive an agreed upon fee from a borrower which has delivered cash
equivalent collateral.
The Government Fund will not lend securities having a value
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which exceeds 10% of the current value of the Fund's total assets. Loans of
securities will be subject to termination at the lender's or the borrower's
option. The Fund may pay reasonable administrative and custodial fees in
connection with a securities loan and may pay a negotiated portion of the
interest or fee earned with respect to the collateral to the borrower or the
placing broker. Borrowers and placing brokers may not be affiliated,
directly or indirectly, with the Fund or its Adviser.
INVESTMENT RESTRICTIONS
The Funds observe the following fundamental investment restrictions
which can be changed only when permitted by law and approved by a majority of
a Fund's outstanding voting securities. A "majority of a Fund's outstanding
voting securities" means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented in
person or by proxies or (ii) more than 50% of the outstanding shares.
The Funds may not:
(1) purchase securities on margin or purchase real estate or
interests therein, commodities or commodity contracts, or make loans,
except loans of portfolio securities with respect to the Government Fund
and except that the Funds may purchase or hold short-term debt securities
and enter into repurchase agreements with respect to its portfolio
securities as described in the Prospectus. For this purpose, repurchase
agreements are considered loans;
(2) invest more than 5% of the current value of the total assets of a
Fund in the securities of any one issuer, other than obligations of the
United States Government or its agencies or instrumentalities, and
repurchase agreements fully collateralized by direct obligations of the
U.S. Government;
(3) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase
and as a result thereof, the value of the investments of a Fund in that
industry would exceed 25% of the current value of the total assets of the
Fund, except that there is no limitation with respect to investments in
obligations of the United States Government, its agencies or
instrumentalities;
(4) engage in the underwriting of securities of other issuers, except
to the extent that a Fund may be deemed to
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be an underwriter in selling, as part of an offering registered
under the Securities Act of 1933, as amended, securities which it has
acquired; or participate on a joint or joint-and-several basis in any
securities trading account. The "bunching" of orders with other
accounts under the management of the Adviser to save commissions or to
average prices among them is not deemed to result in a securities
trading account;
(5) effect a short sale of any security, or issue senior securities
except as permitted in paragraph (6). For purpose of this restriction, the
purchase and sale of financial futures contracts and related options does
not constitute the issuance of a senior security;
(6) issue senior securities or otherwise borrow money, except that
each Fund may borrow from banks as a temporary measure for emergency
purposes where such borrowings would not exceed 10% of a Fund's total
assets (including the amount borrowed) taken at market value; or pledge,
mortgage or hypothecate its assets, except to secure indebtedness permitted
by this paragraph and then only if such pledging, mortgaging or
hypothecating does not exceed 10% of the Fund's total assets taken at
market value.
(7) invest more than 10% of the total assets of a Fund in the
securities of other investment companies, subject to the limitations of
Section 12(d)(1) of the 1940 Act;
(8) invest in any security, including repurchase agreements maturing
in over seven days or other illiquid investments which are subject to legal
or contractual delays on resale or which are not readily marketable, if as
a result more than 10% of the market value of a Fund's assets would be so
invested;
(9) purchase interests in oil, gas, or other mineral exploration
programs of real estate and real estate mortgage loans except as provided
in the Prospectus;
(10) have dealings on behalf of a Fund with Officers and Trustees of
the Fund, except for the purchase or sale of securities on an agency or
commission basis, or make loans to any officers, directors or employees of
the Fund; and
(11) purchase equity securities or other securities convertible into
equity securities.
There will be no violation of any investment restriction if
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that restriction is complied with at the time the relevant action is taken
notwithstanding a later change in the market value of an investment, in the
net or total assets of a Fund, in the securities rating of the investment, or
any other later change.
MANAGEMENT
TRUSTEES AND OFFICERS
The principal occupations for the past five years of the Trustees and
executive officers of the Trust are listed below. The address of each,
unless otherwise indicated, is 370 Seventeenth Street, Suite 2700, Denver,
Colorado 80202. Trustees deemed to be "interested persons" of the Trust for
purposes of the Investment Company Act of 1940, as amended, are indicated by
an asterisk.
* ANN C. STERN, 44, - 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 firm's 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 Insurors, the American Bar Association, the Arts &
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, 68, - 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 currently a member of the Board of
Trustees of the Colorado Trust, Colorado's largest foundation as well
as a Trustee of the Hunter and Hughes Trusts. Because of his
affiliation with ALPS, Mr. Alexander is considered an
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"interested" Trustee of FGIC Public Trust.
BEVERLY S. BUNCH, 39, - TRUSTEE. Ms. Bunch is Assistant Professor at
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, 48, - TRUSTEE - Mr. Cochran served as Director of
Finance and Chief Financial Officer of the City of Hartford,
Connecticut from July, 1987 to December 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"). Prior to his tenure as Director of
Finance and Chief Financial Officer, Mr. Cochran was the Executive
Director of the Hartford Development Commission from October, 1981 and
served the City in other responsible financial capacities beginning in
1971. In 1993, Mr. Cochran was elected to the Executive Board of the
national GFOA and has also served on its Debt and Fiscal Policy
Committee. Mr. Cochran is a member of the Connecticut Government
Finance Officers Association, the Board of Trustees of the Connecticut
Resources Recovery Authority, and is a Founder and Trustee of the
Hartford Partnership for Scholarships.
MAYNARD H. JACKSON, JR., 58, - 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
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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.
___________________, - VICE PRESIDENT. [insert biography]
WILLIAM PASTON, 40, - VICE PRESIDENT AND TREASURER. 370 Seventeenth
Street, Suite 2700, Denver, Colorado 80202. Product Development
Manager of ALPS Mutual Funds Services. Prior to joining ALPS, Mr.
Paston was an associate with Lipper Analytical Services, coordinating
that firm's marketing effort in the banking industry.
STEVEN R. HOWARD, 43, - SECRETARY. 805 Third Avenue, New York, New
York 10022. Partner, Baker & McKenzie since April 1991; Secretary,
HSBC Funds Trust and HSBC Mutual Funds Trust since 1987.
Trustees of the Trust receive from the Trust an annual fee of $5,000.00
and a fee in the amount of $500.00 for attending each meeting of the Trustees
and each committee meeting and are reimbursed for all out-of-pocket expenses
relating to attendance at meetings.
[Compensation table]
As of the date of this Statement of Additional Information the Trustees
and officers of the Trust as a group owned less than 1% of the outstanding
shares of the Trust.
INVESTMENT ADVISER. The Trust retains FGIC Advisors, Inc. (the
"Adviser") as investment adviser for each Fund.
The Advisory Contract provides that the Adviser will manage the
portfolio of each Fund and will furnish to each Fund investment guidance and
policy direction in connection therewith.
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The Adviser has agreed to provide to the Trust, among other things,
information relating to money market portfolio composition, credit conditions
and average maturity of the portfolio of each Fund. Pursuant to the Advisory
Contract, the Adviser also furnishes to the Trust's Board of Trustees
periodic reports on the investment performance of the Funds.
The Adviser has also agreed in the Advisory Contract to provide
administrative assistance in connection with the operation of each Fund.
Administrative services provided by the Adviser include, among other things,
(i) data processing, clerical and bookkeeping services required in connection
with maintaining the financial accounts and records for the Funds, (ii)
compiling statistical and research data required for the preparation of
reports and statements which are periodically distributed to the Funds'
officers and Trustees, (iii) handling general shareholder relations with Fund
investors, such as advice as to the status of their accounts, the current
yield and dividends declared to date and assistance with other questions
related to their accounts, and (iv) compiling information required in
connection with the Funds' filings with the Securities and Exchange
Commission.
SPONSOR AND DISTRIBUTOR. Shares of the Funds are offered on a
continuous basis through ALPS Mutual Funds Services, Inc., the Distributor,
pursuant to the Distribution Contract. The Distributor is not obligated to
sell any specific amount of shares.
ADMINISTRATOR. Pursuant to the Administrative Services Contract, ALPS
Mutual Funds Services: (i) provides administrative services reasonably
necessary for the operation of the Funds, (other than those services which
are provided by the Adviser pursuant to the Advisory Contract) (ii) provides
the Funds with office space and office facilities reasonably necessary for
the operation of the Funds; and (iii) employs or associates with itself such
persons as it believes appropriate to assist it in performing its obligations
under the Administrative Services Contract.
As compensation for its administrative services under the Administrative
Services Agreement, ALPS Mutual Funds Services, Inc., is entitled to receive
a fee computed daily and payable monthly, at the annual rate of 0.18 percent
of average daily net assets up to $500 million, 0.15 percent on the next 500
million and 0.12 percent on assets in excess of $1 billion subject to a
minimum monthly fee of $62,500 for the Treasury Fund and $7,500 for the
Government Fund.
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For the fiscal year ended April 30, 1996 and for the period from May 25,
1994 (commencement of operations) to April 30, 1995, the Treasury Fund paid
$____________ and $687,761, respectively, in administration fees under the
Administration Services Agreement. For the fiscal year ended April 30, 1996
and for the period from June 7, 1994 (commencement of operations) to April
30, 1995, the Government Fund paid $_____________ and $68,092, respectively,
to ALPS Mutual Funds Services, in administration fees under the
Administrative Services Agreement.
FEES AND EXPENSES
As compensation for advisory, management and administrative services,
the Adviser and the Administrator are paid a monthly fee at the following
annual rates:
TREASURY FUND:
PORTION OF AVERAGE DAILY VALUE
OF NET ASSETS OF THE FUND ADVISORY ADMINISTRATIVE TOTAL
Not exceeding $500 million......... 0.35% 0.18% 0.53%
In excess of $500 million but
not exceeding $1 billion......... 0.35% 0.15% 0.50%
In excess of $1 billion............ 0.35% 0.12% 0.47%
GOVERNMENT FUND:
PORTION OF AVERAGE DAILY VALUE
OF NET ASSETS OF THE FUND ADVISORY ADMINISTRATIVE TOTAL
Not exceeding $500 million........ 0.45% 0.18% 0.63%
In excess of $500 million but
not exceeding $1 billion........ 0.45% 0.15% 0.60%
In excess of $1 billion........... 0.45% 0.12% 0.57%
[The Adviser has stated that it will voluntarily waive a portion of the
advisory fee otherwise payable and/or reimburse Trust expenses to the extent
necessary to maintain a total expense ratio of not more than 0.50% of average
net assets with respect to the Treasury Fund and 0.60% of average net assets
with respect to the Government Fund. The Adviser reserves the right to
terminate the fee waiver at any time. The Adviser earned $_____________ and
$264,224 in advisory fees for the Treasury Fund (all of which was voluntarily
waived) for the fiscal year ended April 30, 1996 and for the period May 25,
1994 (commencement of operations) to April 30, 1995, respectively. The Adviser
earned $______________ and $215,432 in advisory fees from the Government
Fund, (of which $_____________ and $109,039 was voluntarily waived) for the
fiscal year ended April 30, 1996
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and for the period June 7, 1994 (commencement of operations) to April 30,
1995, respectively.
Except for the expenses paid by the Adviser under the Advisory Contract
and the Administrator under the Administrative Services Contract, each Fund
bears all costs of its operations. Expenses attributable to the Funds are
charged against the assets of each Fund, respectively.
The Advisory Contract, Distribution Contract and Administrative Services
Contract will continue in effect with respect to each Fund from year to year
provided such continuance is approved annually (i) by the holders of a
majority of the outstanding voting securities of a Fund or by the Trust's
Trustees; and (ii) by a majority of the Trustees who are not parties to such
contracts or "interested persons" (as defined under the 1940 Act) of any such
party. Each contract may be terminated with respect to a Fund at any time,
without payment of any penalty, by a vote of a majority of the outstanding
voting securities of the Fund (as defined in the Investment Company Act of
1940) or by a vote of a majority of the Trustees. The Advisory Contract,
Administrative Services Contract and the Distribution Contract shall
terminate automatically in the event of their assignment (as defined in the
1940 Act).
The Board of Trustees of the Trust approved the continuance of each of
the Fund's Advisory Contract, the Distribution Contract and the
Administrative Services Agreement at a meeting of the Board of Trustees on
April 26, 1996.
The Trust incurs administration expenses based on the terms of the
Administrative Services Agreement. In the absence of certain fee waivers and
reimbursements, administration fees borne by the Funds might not be in
proportion to relative Fund assets.
CALCULATION OF YIELDS AND
PERFORMANCE INFORMATION
Each Fund may, from time to time, include its yield and effective yield
in advertisements or reports to shareholders or prospective investors.
Current yield (or "SEC Seven Day Yield") for each Fund will be based on the
change in the value of a hypothetical investment (exclusive of capital
changes) over a particular 7-day period, less a pro-rata share of a Fund's
expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base
period return"). The base period return is then annualized by multiplying by
365/7, with the resulting yield
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figure carried to at least the nearest hundredth of one percent. "Effective
yield" for the Funds assumes that all dividends received during an annual
period have been reinvested. Calculation of "effective yield" begins with
the same "base period return" used in the calculation of yield, which is then
annualized to reflect weekly compounding pursuant to the following formula:
Effective Yield - [(Base Period Return) + 1) 365/7] - 1.
As of April 30, 1996, the Seven Day Effective Yield and the SEC Seven
Day Yield for the Treasury Fund was % and %, respectively. As of
, 1996, the Seven Day Effective Yield and the SEC Seven Day
Yield for the Government Fund was % and %.
From time to time, in marketing pieces and other Fund literature, the
Funds' total performance may be compared to the performance of broad groups
of comparable funds or unmanaged indices of comparable securities.
Evaluations of Fund performance made by independent sources may also be used
in advertisements concerning the Funds. Sources for Fund performance
information may include, but are not limited to, the following:
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
BUSINESS WEEK, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing
abroad.
CHANGING TIMES, THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
DONOGHUE'S MONEY FUND REPORT, a weekly publication of the Donoghue
Organization, Inc., of Holliston, Massachusetts, reporting on the
performance of the nation's money market funds, summarizing money market
fund activity, and including certain averages as performance benchmarks,
specifically "Donoghue's Money Fund Average," and "Donoghue's Government
Money Fund Average."
FINANCIAL TIMES, Europe's business newspaper, which features from time to
time articles on international or country-specific funds.
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FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
FORTUNE, a national business publication that periodically rates the
performance of a variety of mutual funds.
GLOBAL INVESTOR, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a
weekly publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific
funds and the mutual fund industry as a whole.
NEW YORK TIMES, a nationally distributed newspaper which regularly covers
financial news.
PERSONAL INVESTOR, a monthly investment advisory publication that includes
a "Mutual Funds Outlook" section reporting on mutual fund performance
measures, yields, indices and portfolio holdings.
SYLVIA PORTER'S PERSONAL FINANCE, a monthly magazine focusing on personal
money management that periodically rates and ranks mutual funds by
performance.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' backgrounds, management policies, salient
features, management results, income and dividend records, and price
ranges.
DETERMINATION OF NET ASSET VALUE
The Funds' net asset value per share is determined by dividing the total
current market value of the assets of a Fund, less liabilities, by the total
number of shares outstanding at the time of determination. All expenses,
including the advisory and administrative fees, are accrued daily and taken
into account for the purpose of determining the net asset value.
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As indicated under "Determination of Net Asset Value" in the Funds'
Prospectuses, the Funds use the amortized cost method to determine the value
of their portfolio securities pursuant to Rule 2a-7 under the Investment
Company Act of 1940. The amortized cost method involves valuing a security
at its cost and amortizing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest rates on the
market value of the security. While this method provides certainty in
valuation, it may result in periods during which the value, as determined by
amortized cost, is higher or lower than the price which the Fund would
receive if the security were sold. During these periods the yield to a
shareholder may differ somewhat from that which could be obtained from a
similar fund which utilizes a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the amortized
cost method resulted in a lower value of the Fund's portfolio on a particular
day, a prospective investor in the Fund would be able to obtain a somewhat
higher yield than would result from an investment in a fund utilizing solely
market values, and existing Fund shareholders would receive correspondingly
less income. The converse would apply during periods of rising interest
rates.
Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, the Funds must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities of thirteen months or less and invest only in securities
determined by the Trust's Board of Trustees to be "eligible securities" as
defined by Rule 2a-7 and to present minimal credit risks. Pursuant to Rule
2a-7, the Board is required to establish procedures designed to stabilize, to
the extent reasonably possible, the price per share of the Funds, as computed
for the purpose of sales and redemptions, at $1.00. Such procedures include
review of the Funds' portfolio holdings by the Board of Trustees, at such
intervals as it may deem appropriate, to determine whether the net asset
value of the Fund calculated by using available market quotations deviates
from $1.00 per share based on amortized cost. The extent of any deviation
will be examined by the Board of Trustees. If such deviation exceeds 1/2 of
1%, the Board will promptly consider what action, if any, will be initiated.
In the event the Board determines that a deviation exists which may result in
material dilution or other unfair results to investors or existing
shareholders, the Board will take such corrective action as it regards as
necessary and appropriate, including the sale of portfolio instruments prior
to maturity to realize capital gains or losses or to shorten average
portfolio maturity, withholding dividends or establishing a net asset value
per share
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by using available market quotations.
Each Fund will compute its net asset value once daily as of 5:00 p.m.
(New York City time), on each day the New York Stock Exchange is open for
business which excludes New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to policy
established by the Trustees, the Adviser is primarily responsible for
portfolio decisions and the placing of portfolio transactions. In placing
orders, it is the policy of the Fund to obtain the best results taking into
account the dealer's general execution and operational facilities, the type
of transaction involved and other factors such as the dealer's risk in
positioning the securities involved. While the Adviser generally seeks
reasonably competitive spreads or commissions, the Funds will not necessarily
be paying the lowest spread or commission available.
Purchases and sales of securities will often be principal transactions
in the case of debt securities traded otherwise than on an exchange. Debt
securities normally will be purchased or sold from or to issuers directly or
to dealers serving as market makers for the securities at a net price.
Generally, money market securities are traded on a net basis and do not
involve brokerage commissions. Under the 1940 Act, persons affiliated with
the Adviser, the Funds or the Distributor are prohibited from dealing with
the Funds as a principal in the purchase and sale of securities except in
accordance with regulations adopted by the Securities and Exchange
Commission. Under the 1940 Act, persons affiliated with the Adviser, the
Funds or the Distributor may act as a broker for the Funds. In order for
such persons to effect any portfolio transactions for the Funds, the
commissions, fees or other remuneration received by such persons must be
reasonable and fair compared to the commissions, fees or other remunerations
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on an exchange during a comparable
period of time. This standard would allow the affiliate to receive no more
than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arms-length transaction. The Trustees
of the Trust will regularly review the commissions
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paid by the Funds to affiliated brokers.
The Adviser may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Adviser. By
allocating transactions in this manner, the Adviser is able to supplement its
research and analysis with the views and information of securities firms.
PORTFOLIO TURNOVER
The portfolio turnover rate measures the frequency with which a Fund's
portfolio of securities is traded. The purchase and sale of portfolio
securities may involve dealer mark-ups, underwriting commissions or other
transaction costs. Generally, the higher the portfolio turnover rate, the
higher the transaction costs to the Fund, which will generally increase the
Fund's total operating expenses. In order to qualify as a regulated
investment company, less than 30% of the Fund's gross income must be derived
from gains on the sale or other disposition of stock, securities or certain
other investments held for less than 3 months. The Funds expect to satisfy
the 30% income test.
EXCHANGE PRIVILEGE
Shareholders who have held all or part of their shares in one of the
Funds for at least seven days may exchange those shares for shares of the
other Fund if such Fund is available for sale in their state and meets the
investment criteria of the investor.
Before effecting an exchange, shareholders should review the Prospectus
of the other Fund. Exercise of the exchange privilege is treated as a
redemption for income tax purposes and, depending on the circumstances, a
gain or loss may be recognized.
The exchange privilege may be modified or terminated upon sixty (60)
days' written notice to shareholders. Although initially there will be no
limit on the number of times a shareholder may exercise the exchange
privilege, the Funds reserve the right to impose such a limitation. Call or
write the Funds for further details.
19
<PAGE>
REDEMPTIONS
In the event that a Fund does not maintain a constant net asset value
per share, the proceeds of a redemption may be more or less than the amount
invested and, therefore, a redemption may result in a gain or loss for
Federal and state and local income tax purposes. Any loss realized on the
redemption of Fund shares held, or treated as held, for six months or less
will be treated as a long-term capital loss to the extent of any long-term
capital gain dividends received on the redeemed shares.
A shareholder's account with the Funds remains open for at least one
year following complete redemption and all costs during the period will be
borne by the Funds. This permits an investor to resume investments in the
Fund during the period in an amount of $25,000 or more.
To be in a position to eliminate excessive shareholder expense burdens,
the Funds reserve the right to adopt a policy pursuant to which a Fund may
redeem, upon not less than 30 days' notice, shares of the Fund in an account
which has a value below a designated amount. However, any shareholder
affected by the exercise of this right will be allowed to make additional
investments prior to the date fixed for redemption to avoid liquidation of
the account. Shareholder accounts which have a value below the designated
amount due to changes in the market value in portfolio securities will not be
redeemed.
The Funds may suspend the right of redemption during any period when (i)
trading on the New York Stock Exchange is restricted or that Exchange is
closed, other than customary weekend and holiday closings, (ii) the
Securities and Exchange Commission has by order permitted such suspension or
(iii) an emergency exists making disposal of portfolio securities or
determination of the value of the net assets of the Fund not reasonably
practicable.
Although it would not normally do so, the Trust has the right to pay the
redemption price in whole or in part in securities of a Fund's portfolio as
prescribed by the Trustees. When a shareholder sells portfolio securities
received in this fashion he would incur a brokerage charge. The Trust has,
however, elected to be governed by Rule 18f-1 under the 1940 Act, as amended.
Under that rule, the Trust must redeem its shares for cash except to the
extent that the redemption payments to any shareholder during any 90-day
period would exceed the lesser of $250,000 or 1% of a Fund's net asset value
at the beginning of such period.
20
<PAGE>
FEDERAL INCOME TAXES
Each Fund has elected to be treated as a regulated investment company and
qualified as such in 1996. The Funds intend to continue to so qualify by
complying with the provisions of the Internal Revenue Code (the "Code")
applicable to regulated investment companies so that the Funds will not be
liable for Federal income tax with respect to amounts distributed to
shareholders in accordance with the timing requirements of the Code.
In order to qualify as a regulated investment company for a taxable
year, each Fund must, among other things, (a) derive at least 90% of its
gross income from dividends, interest, payments with respect to loans of
stock or securities and gains from the sale or other disposition of stock or
securities or foreign currency gains related to investments in stock or
securities or other income (including gains from options, futures or forward
contracts) derived with respect to the business of investing in stock,
securities or currency; (b)derive less than 30% of its gross income from the
sale or other disposition of stock or securities or certain other investments
held less than three months (excluding some amounts included in income as a
result of certain hedging transactions); and (c) diversify its holdings so
that, at the end of each quarter of its taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash, cash items, U.S.
Government securities, securities of other regulated investment companies and
other securities limited, in the case of other securities for purposes of
this calculation, in respect of any one issuer, to an amount not greater than
5% of its assets or 10% of the voting securities of the issuer, and (ii) not
more than 25% of the value of its assets is invested in the securities of any
one issuer (other than U.S. Government securities or securities of other
regulated investment companies). As such, and by complying with the
applicable provisions of the Code, the Funds will not be subject to Federal
income tax on taxable income (including realized capital gains) which is
distributed to shareholders in accordance with the timing requirements of the
Code.
The amount of capital gains, if any, realized in any given year will
result from sales of securities made with a view to the maintenance of a
portfolio believed by Fund management to be most likely to attain a Fund's
investment objective. Such sales and any resulting gains or losses, may
therefore vary considerably from year to year. Since at the time of an
investor's purchase of shares, a portion of the per share net asset value by
which
21
<PAGE>
the purchase price is determined may be represented by realized or unrealized
appreciation in a Fund's portfolio or undistributed income of the Fund,
subsequent distributions (or portions thereof) on such shares may be taxable
to such investor even if the net asset value of his shares is, as a result of
the distributions, reduced below his cost for such shares and the
distributions (or portions thereof) represent a return of a portion of his
investment.
The Funds are required to report to the Internal Revenue Service (the
"IRS") all distributions of taxable dividends and of capital gains, as well
as the gross proceeds of share redemptions. The Funds may be required to
withhold Federal income tax at a rate of 31% ("backup withholding") from
taxable dividends (including capital gain dividends) and the proceeds of
redemptions of shares paid to non-corporate shareholders who have not
furnished the Fund with a correct taxpayer identification number and made
certain required certifications or who have been notified by the IRS that
they are subject to backup withholding. The Funds may also be required to
withhold Federal income tax at a rate of 31% if they are notified by the IRS
or a broker that the taxpayer identification number is incorrect or that
backup withholding applies because of underreporting of interest or dividend
income.
Distributions of taxable net investment income and net realized capital
gains will be taxable as described in the Prospectus whether made in shares
or in cash. In determining amounts of net realized capital gains to be
distributed, any capital loss carryovers from prior years will be applied
against capital gains. Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in
each share so received equal to the net asset value of a share of the Fund on
the reinvestment date. Fund distributions will also be included in
individual and corporate shareholders' income on which the alternative
minimum tax may be imposed.
Any loss realized upon the redemption of shares held (or treated as
held) for six months or less will be treated as a long-term capital loss to
the extent of any long-term capital gain dividend received on the redeemed
shares. Any loss realized upon the redemption of shares within six months
after receipt of an exempt-interest dividend will be disallowed. All or a
portion of a loss realized upon the redemption of shares may be disallowed to
the extent shares are purchased (including shares acquired by means of
reinvested dividends) within 30 days before or after such redemption.
Exchanges are treated as redemptions for Federal tax purposes.
22
<PAGE>
Different tax treatment is accorded to accounts maintained as IRAs,
including a penalty on early distributions. Shareholders should consult
their tax advisers for more information.
Each Fund will be separate for investment and accounting purposes and
will be treated as a separate taxable entity for Federal income tax purposes.
Each Fund is subject to a 4% nondeductible excise tax to the extent that
it fails to distribute to its shareholders during each calendar year an
amount equal to (a) at least 98% of its taxable ordinary investment income
(excluding long-term and short-term capital gain income) for the calendar
year; plus (b) at least 98% of its capital gain net income for the one year
period ending on October 31 of such calendar year; plus (c) any ordinary
investment income or capital gain net income from the preceding calendar year
which was neither distributed to shareholders nor taxed to the Fund during
such year. The Funds intend to distribute to shareholders each year an
amount sufficient to avoid the imposition of such excise tax.
SHARES OF BENEFICIAL INTEREST
The Trust consists of multiple separate portfolios or Funds. When
certain matters affect one Fund but not another, the shareholders would vote
as a Fund regarding such matters. Subject to the foregoing, on any matter
submitted to a vote of shareholders, all shares then entitled to vote will be
voted separately by the Fund unless otherwise required by the 1940 Act, in
which case all shares will be voted in the aggregate. For example, a change
in a Fund's fundamental investment policies would be voted upon only by
shareholders of the Fund. Additionally, approval of the Advisory Contract is
a matter to be determined separately by each Fund. Approval by the
shareholders of one Fund is effective as to that Fund whether or not
sufficient votes are received from the shareholders of the other Fund to
approve the proposal as to that Fund. As used in the Prospectuses and in
this Statement of Additional Information, the term "majority," when referring
to approvals to be obtained from shareholders of a Fund means the vote of the
lesser of (i) 67% of the shares of the Fund or class represented at a
23
<PAGE>
meeting if the holder of more than 50% of the outstanding shares of the Fund
or class are present in person or by proxy, or (ii) more than 50% of the
outstanding shares of the Fund. The term "majority", when referring to the
approvals to be obtained from shareholders of the Trust as a whole means the
vote of the lesser of (i) 67% of the Trust's shares represented at a meeting
if the holders of more than 50% of the Trust's outstanding shares are present
in person or proxy, or (ii) more than 50% of the Trust's outstanding shares.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held.
The Trust may dispense with annual meetings of shareholders in any year
in which it is not required to elect trustees under the 1940 Act. However,
the Trust undertakes to hold a special meeting of its shareholders if the
purpose of voting on the question of removal of a director or trustees is
requested in writing by the holders of at least 10% of the Trust's
outstanding voting securities, and to assist in communicating with other
shareholders as required by Section 16(c) of the 1940 Act.
Each share of a Fund represents an equal proportional interest in the
Fund with each other share and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of the Trustees. In the event of the
liquidation or dissolution of the Trust, shareholders of each Fund are
entitled to receive the assets attributable to such Fund that are available
for distribution, and a distribution of any general assets of the Trust not
attributable to a particular Fund that are available for distribution in such
manner and on such basis as the Trustees in their sole discretion may
determine.
Shareholders are not entitled to any preemptive rights. All shares,
when issued, will be fully paid and non-assessable by the Trust.
As of July ___, 1996, the following shareholders owned 5% or more of the
outstanding shares of the Funds as listed below:
FUND PERCENTAGE INTEREST
U.S. TREASURY MONEY MARKET FUND
City of Cranston _____
Attn: Douglas Stewart
869 Park Avenue
Cranston, IL 02905
City of Hartford _____
City Treasurers Office, Denise Nappier
550 Main Street
Hartford, CT 06103
City of Odessa _____
24
<PAGE>
Attn: Jim Cox
P.O. Box 4398
Odessa, TX 79760-4398
City of Bridgeport _____
Attn: Sharon D. Lemdon
45 Lyon Terrace
Bridgeport, CT 06604
Treasurer-County of Riverside _____
Attn: Kenneth Kirin
P.O. Box 12005
Riverside, CA 92502-2205
County of Winnebago _____
Douglas R. Aurand, Treasurer
P.O. Box 1216
Rockford, IL 61105-1216
U.S. GOVERNMENT MONEY MARKET FUND
City of Hartford _____
City Treasurer's Office
Denise Nappier
550 Main Street
Hartford, CT 06103
Health Care FAC-SAYR _____
c/o Mellon Bank, N.A.
Attn: Joe Robinson
Corporate Trust Group
Two Mellon Bank Center
Third Floor, Room 0325
Pittsburg, PA 15259
OTHER INFORMATION
The Trust's Registration Statement, including the Prospectuses, the
Statement of Additional Information and the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C. Statements contained
in the Prospectuses or the Statement of Additional Information as to the
contents of any contract or other document referred to herein or in the
Prospectuses are not necessarily complete, and, in each instance, reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference.
25
<PAGE>
CUSTODIAN AND SUB-CUSTODIAN
State Street Bank & Trust Company of Connecticut, N.A. acts as Custodian
for the Trust. The Custodian, among other things, maintains a custody
account or accounts in the name of the Funds; receives and delivers all
assets for the Funds upon purchase and upon sale or maturity; collects and
receives all income and other payments and distributions on account of the
assets of the Funds and pays all expenses of the Funds. For its services as
Custodian, State Street receives an asset-based fee and transaction charges.
State Street Bank and Trust Company serves as Sub-Custodian for the Trust.
The Administrative Services Agreement between ALPS Mutual Fund Services and
the Trust currently provides that the asset-based fee and transaction costs
of the Trust's Custodian and Sub-Custodian be paid by ALPS Mutual Fund
Services. The Sub-Custodian was paid $_____________ and $76,684, for the
year ended April 30, 1996 and period ended April 30, 1995, respectively for
custody services.
EXPERTS
Deloitte & Touche LLP has been selected as the independent accountants
for the Trust. Deloitte & Touche provide audit services, tax return
preparation and assistance and consultation in connection with review of
certain SEC filings. Deloitte & Touche's address is 555 17th Street, Suite
3600, Denver, Colorado 80202.
FINANCIAL STATEMENTS
The financial highlights included in this prospectus and the related
financial statements included elsewhere in the registration statement have
been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports appearing in the Statement of Additional Information, and are
included in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders,
FGIC Public Trust:
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of the U.S. Treasury Money Market Fund
and the Short-Term U.S. Government Income Fund of the FGIC Public Trust as of
April 30, 1995, the related statements of operations for the U.S. Treasury Money
Market Fund (May 25, 1994 (commencement of operations) to April 30, 1995) and
the Short-Term U.S. Government Income Fund (June 7, 1994 (commencement of
operations) to April 30, 1995) and the statements of changes in net assets and
financial highlights for the periods ended April 30, 1995. These financial
statements and financial highlights are the responsibility of the Trust's
Management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
at April 30, 1995, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the U.S. Treasury
Money Market Fund and the Short-Term U.S. Government Income Fund of the FGIC
Public Trust as of April 30, 1995, and the results of their operations, the
changes in their net assets and financial highlights for each of the periods
indicated in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
May 24, 1995
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995
ASSETS
Investments, at amortized cost (which approximates
market value) -see accompanying statement $ 109,066,301
Organization costs, net of accumulated amortization 287,014
Receivable from investment advisor 160,467
Other 33,227
- - -----------------------------------------------------------------------------
Total Assets 109,547,009
- - -----------------------------------------------------------------------------
LIABILITIES
Payables:
Dividends 396,797
Accrued expenses 94,911
- - -----------------------------------------------------------------------------
Total Liabilities 491,708
- - -----------------------------------------------------------------------------
NET ASSETS $ 109,055,301
- - -----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 109,097,794
Accumulated net realized loss (42,493)
- - -----------------------------------------------------------------------------
NET ASSETS $ 109,055,301
- - -----------------------------------------------------------------------------
Shares of beneficial interest outstanding 109,097,794
- - -----------------------------------------------------------------------------
Net asset value and redemption value per share $1.00
- - -----------------------------------------------------------------------------
See notes to financial statements.
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
- - ----------- ------------- ----------------
U.S. GOVERNMENT TREASURIES 4.51%
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,000,000 U.S. Treasury Bills
08/10/95 (Cost $4,915,132) $ 4,915,132
-----------------------------------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 95.50%
- - ---------------------------------------------------------------------------------------------------
4,300,000 Repurchase agreement with BA Securities Inc.,
5.93%, dated 04/28/95 and maturing 05/01/95,
collateralized by U.S. Treasury Notes, 7.50%
due 10/31/95 4,302,125 $ 4,381,027
4,300,000 Repurchase agreement with Barclay's BZW Inc.,
5.90%, dated 04/28/95 and maturing 05/01/95,
collateralized by U.S. Treasury Notes,
3.875% due 09/30/95, 7.375% due 11/15/97 4,302,114 4,387,022
10,000,000 Repurchase agreement with Barclay's BZW Inc.,
5.70%, dated 04/28/95 and maturing 05/01/95,
collateralized by U.S. Treasury Note, 4.375%
due 08/15/96 10,004,750 10,200,768
21,500,000 Repurchase agreement with Chase
Securities Inc., 5.93%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Bills due 06/08/95, 06/15/95 21,510,625 21,933,839
4,300,000 Repurchase agreement with Deutsche Bank,
5.875%, dated 04/28/95 and maturing
05/01/95, collateralized by U.S. Treasury
Notes, 5.50% due 02/28/99, 9.125% due
05/15/99, 8.875% due 05/15/00 4,302,105 4,386,690
4,300,000 Repurchase agreement with First Chicago
Capital Markets, 5.92%, dated 04/28/95
and maturing 05/01/95, collateralized by
U.S. Treasury Bond, 10.375% due 11/15/09 4,302,121 4,390,691
</TABLE>
(continued)
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995 (Continued)
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
- - ----------- ------------- ----------------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (continued)
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,300,000 Repurchase agreement with Fuji Securities
Inc., 5.93%, dated 04/28/95 and maturity
05/01/95, collateralized by U.S. Treasury
Notes, 5.50% due 09/30/97, 5.375% due
05/31/98, 4.75% due 10/31/98 $4,302,125 $ 4,386,975
4,300,000 Repurchase agreement with Lehman
Brothers Inc., 5.90%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.375% due 11/15/97 4,302,114 4,383,631
10,000,000 Repurchase agreement with Lehman
Brothers Inc., 5.75%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.375% due 11/15/97 10,004,792 10,195,224
19,600,168 Repurchase agreement with Morgan Stanley
Inc., 5.93%, dated 04/28/95 and maturing
05/01/95, collateralized by U.S. Treasury
Note, 7.25% due 11/30/96 19,609,854 19,999,926
4,300,000 Repurchase agreement with Nomura
Securities Inc., 5.875%, dated 04/28/95
and maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.25% due 02/15/98, U.S.
Treasury Bond, 12.00% due 06/15/10 4,302,105 4,386,995
4,300,000 Repurchase agreement with Smith Barney
Shearson, Inc., 5.86%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Bills, due 05/25/95 and 04/04/96,
U.S. Treasury Note, 6.00% due 11/30/97,
U.S. Treasury Bond, 14.25% due 02/15/02 4,302,100 4,386,594
</TABLE>
(continued)
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995 (Continued)
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
- - ----------- ------------- ----------------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (continued)
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$4,300,000 Repurchase agreement with State Street
Bank Corp., 5.90%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Note, 5.125% due 03/31/96 $4,302,114 $4,388,560
4,300,000 Repurchase agreement with UBS Securities,
Inc., 5.93%, dated 04/28/95 and maturing
05/01/95, collateralized by U.S. Treasury
Bonds, 10.625% due 08/15/15, 9.875% due
11/15/15, 9.25% due 02/15/16 4,302,125 4,387,361
-----------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $104,151,169) 104,151,169 106,195,303
-----------------------------------
TOTAL INVESTMENTS
(Cost $109,066,301) 100.01% $109,066,301
LIABILITIES IN EXCESS OF OTHER ASSETS (0.01%) (11,000)
-------------------------------
NET ASSETS 100.00% $109,055,301
-------------------------------
</TABLE>
*See note I to financial statements.
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
For the period from May 25, 1994 (commencement of operations) to April 30, 1995
INVESTMENT INCOME $ 4,728,306
- - -------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 3) 264,224
Administration services*(Note 3) 687,761
Legal 41,852
Audit 15,000
Amortization of organization costs 52,751
Insurance 29,180
Registration 68,888
- - -------------------------------------------------------------------------------
Total Expenses 1,159,656
- - -------------------------------------------------------------------------------
Expenses waived by investment advisor (264,224)
Expenses reimbursed by investment advisor (455,040)
- - -------------------------------------------------------------------------------
NET EXPENSES 440,392
- - -------------------------------------------------------------------------------
NET INVESTMENT INCOME 4,287,914
- - -------------------------------------------------------------------------------
REALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions (42,493)
- - -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,245,421
- - -------------------------------------------------------------------------------
* 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.
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
ENDED
APRIL 30, 1995 (1)
------------------
OPERATIONS
Net investment income $ 4,287,914
Net realized loss on investments (42,493)
- - -------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,245,421
Dividends to shareholders from net investment income (4,287,914)
- - -------------------------------------------------------------------------
Change in net assets from operations (42,493)
- - -------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Shares sold 733,139,524
Dividends reinvested 3,414,118
- - -------------------------------------------------------------------------
736,553,642
Shares redeemed (627,505,848)
- - -------------------------------------------------------------------------
Change in net assets derived from beneficial
interest transactions 109,047,794
- - -------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 109,005,301
NET ASSETS:
Beginning of period 50,000*
- - -------------------------------------------------------------------------
End of period $ 109,055,301
- - -------------------------------------------------------------------------
*Initial capitalization
(1) Operations commenced on May 25, 1994.
See notes to financial statements.
<PAGE>
U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
FOR THE PERIOD
ENDED
APRIL 30, 1995 (1)
Net asset value - beginning of period $1.00
- - -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04
- - -------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.04)
- - -------------------------------------------------------------------------
Net asset value - end of period $1.00
- - -------------------------------------------------------------------------
Total return 4.71%(2)
- - -------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $109,055
- - -------------------------------------------------------------------------
Ratio of expenses to average net assets 0.50%(2)
- - -------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.87%(2)
- - -------------------------------------------------------------------------
Ratio of expenses to average net assets without fee waivers 1.32%(2)
- - -------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 4.05%(2)
- - -------------------------------------------------------------------------
(1) Operations commenced on May 25, 1994.
(2) Annualized.
See notes to financial statements.
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995
ASSETS
Investments, at value (cost $42,029,889)
-see accompanying statement $42,065,834
Organization costs, net of accumulated amortization 14,678
Interest receivable 37,292
Other 11,828
- - -------------------------------------------------------------------------
Total Assets 42,129,632
- - -------------------------------------------------------------------------
LIABILITIES
Payables:
Dividends 198,003
Advisory fees 11,127
Accrued expenses 27,416
- - -------------------------------------------------------------------------
Total Liabilities 236,546
- - -------------------------------------------------------------------------
NET ASSETS $41,893,086
- - -------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $42,045,954
Accumulated net realized loss (188,813)
Net unrealized appreciation 35,945
- - -------------------------------------------------------------------------
NET ASSETS $41,893,086
- - -------------------------------------------------------------------------
Shares of beneficial interest outstanding 4,201,105
- - -------------------------------------------------------------------------
Net asset value and redemption value per share $9.97
- - -------------------------------------------------------------------------
See notes to financial statements.
<PAGE>
SHORT-TERM U S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT TREASURIES 13.95%
- - --------------------------------------------------------------------------------------
U.S. Treasury Bills,
$4,000,000 02/08/96 $3,815,416
U.S. Treasury Notes,
2,000,000 7.50%, 01/31/97 2,030,000
----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $5,809,471) 5,845,416
----------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 86.46%
- - --------------------------------------------------------------------------------------
1,800,000 Repurchase agreement with BA Securities
Inc., 5.93%, dated 04/28/95 and maturing
05/01/95, collateralized by U.S. Treasury
Note, 7.50% due 10/31/99 1,800,889 $1,835,152
1,800,000 Repurchase agreement with Barclay's
BZW Securities Inc., 5.90%, dated 04/28/95
and maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.375% due 11/15/97 1,800,885 1,836,551
9,000,000 Repurchase agreement with Chase
Securities Inc., 5.93%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Bills, due 06/01/95 and 06/08/95 9,004,448 9,184,197
1,800,000 Repurchase agreement with Deutsche
Bank Corp., 5.875%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Bill, due 04/04/96 1,800,881 1,836,220
1,800,000 Repurchase agreement with First Chicago
Capital Markets, 5.92%, dated 04/28/95
and maturing 05/01/95, collateralized by U.S.
Treasury Bonds, 12.375% due 05/15/04,
10.75% due 08/15/05, 10.375% due 11/15/09 1,800,888 1,841,305
(continued)
</TABLE>
<PAGE>
SHORT-TERM US. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995 (Continued)
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (CONTINUED)
- - --------------------------------------------------------------------------------------
$1,800,000 Repurchase agreement with Fuji Securities
Inc., 5.93%, dated 04/28/95 and maturing
05/01/95, collateralized by U.S. Treasury
Notes, 7.875% due 07/31/96, 6.75% due
06/30/99 $1,800,889 $1,836,230
1,800,000 Repurchase agreement with Lehman
Brothers Inc., 5.90%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.375% due 11/15/97 1,800,885 1,837,450
9,202,570 Repurchase agreement with Morgan
Stanley Inc., 5.93%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Note, 8.50% due 05/15/97 9,207,118 9,391,335
1,800,000 Repurchase agreement with Nomura
Securities Inc., 5.875%, dated 04/28/95
and maturing 05/01/95, collateralized by U.S.
Treasury Note, 7.25% due 02/15/98 1,800,881 1,836,600
1,800,000 Repurchase agreement with Smith Barney
Shearson, Inc., 5.86%, dated 04/28/95 and
maturing 05/01/95, collateralized by U.S.
Treasury Bills, due 10/19/95, U.S. Treasury
Notes, 4.125% due 05/31/95, 6.375% due
06/30/97 1,800,879 1,836,306
1,800,000 Repurchase agreement with State Street
Bank Corp., 5.90%, dated 04/28/95 and
maturing on 05/01/95, collateralized by U.S.
Treasury Notes, 5.125% due 03/31/96 1,800,885 1,841,006
(continued)
</TABLE>
<PAGE>
SHORT- TERM US. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1995 (CONTINUED)
<TABLE>
<CAPTION>
FACE AMOUNT MARKET VALUE* COLLATERAL VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (CONTINUED)
- - --------------------------------------------------------------------------------------
$1,800,000 Repurchase agreement with UBS
Securities Inc., 5.93%, dated 04/28/95 and
maturing on 05/01/95, collateralized by U.S.
Treasury Bonds, 10.625% due 08/15/15 $1,800,890 $1,840,519
-------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $36,220,418) 36,220,418 36,952,871
-------------------------------
TOTAL INVESTMENTS
(Cost $42,029,889) 100.41% $42,065,834
LIABILITIES IN EXCESS OF OTHER ASSETS (0.41%) (172,748)
-----------------------------
NET ASSETS 100.00% $41,893,086
-----------------------------
</TABLE>
*See note I to financial statements.
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
For the period from June 7, 1994 (commencement of operations) to April 30, 1995
INVESTMENT INCOME $3,064,302
- - -------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 3) 215,432
Administration services* (Note 3) 68,092
Legal 26,496
Audit 12,000
Amortization of organization costs 3,205
Insurance 4,193
Registration 20,039
- - -------------------------------------------------------------------------
Total Expenses 349,457
- - -------------------------------------------------------------------------
Expenses waived by investment advisor (109,039)
- - -------------------------------------------------------------------------
NET EXPENSES 240,418
- - -------------------------------------------------------------------------
NET INVESTMENT INCOME 2,823,884
- - -------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from investment transactions (188,813)
- - -------------------------------------------------------------------------
Unrealized appreciation on investments:
Beginning of period 0
End of Period 35,945
- - -------------------------------------------------------------------------
Net change in unrealized appreciation 35,945
- - -------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (152,868)
- - -------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $2,671,016
- - -------------------------------------------------------------------------
* 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.
<PAGE>
SHORT- TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Period
Ended
April 30,1995 (1)
----------------
OPERATIONS
Net investment income 2,823,884
Net realized loss on investments (188,813)
Net unrealized depreciation 35,945
- - ---------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,671,016
Dividends to shareholders from net investment income (2,823,884)
- - ---------------------------------------------------------------------------
Change in net assets from operations (152,868)
- - ---------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Shares sold 108,454,418
Dividends reinvested 2,503,280
- - ---------------------------------------------------------------------------
110,957,698
Shares redeemed (68,961,744)
- - ---------------------------------------------------------------------------
Change in net assets derived from beneficial
interest transactions 41,995,954
- - ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 41,843,086
NET ASSETS:
Beginning of period 50,000*
- - ---------------------------------------------------------------------------
End of period $41,893,086
- - ---------------------------------------------------------------------------
*Initial capitalization
(1) Operations commenced on June 7, 1994.
See notes to financial statements.
<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 Period
Ended
April 30, 1995 (1)
------------------
<S> <C>
Net asset value - beginning of Period $10.00
- - -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.44
Net realized and unrealized loss on investments (0.03)
- - -------------------------------------------------------------------------------------
Total income from investment operations 0.41
- - -------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.44)
- - -------------------------------------------------------------------------------------
Net asset value - end of period $9.97
- - -------------------------------------------------------------------------------------
Total return 4.73%(2)
- - -------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $41,893
- - -------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.45%
- - -------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 5.23%(2)
- - -------------------------------------------------------------------------------------
Ratio of expenses to average net assets without fee waivers .65%(2)
- - -------------------------------------------------------------------------------------
Ratio of net investment income to average net assets without fee waivers 5.03%(2)
- - -------------------------------------------------------------------------------------
Portfolio turnover rate (3) 827.35%(2)
- - -------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on June 7, 1994.
(2) Annualized.
(3) 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
period ended April 30, 1995 were $26,984,886 and $24,886,719, respectively.
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Funds 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: A third party 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 Fund's 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 Fund is 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SHARES OF BENEFICIAL INTEREST
On April 30, 1995, there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in shares of beneficial interest
were as follows:
U.S. Treasury Money Short-Term U.S. Government
Market Fund Income Fund
For the Period For the Period
Ended April 30, 1995 Ended April 30, 1995
Shares Sold 733,139,524 10,861,462
Shares Reinvested 3,414,118 251,089
Total 736,553,642 11,112,551
Shares Redeemed 627,505,848 6,916,446
Net Increase 109,047,794 4,196,105
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, 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.
Two shareholders of the U.S. Treasury Money Market Fund owned 18.3 percent and
12.9 percent of the outstanding shares at April 30, 1995. Three shareholders of
the Short-Term U.S. Government Income Fund owned 58.0 percent, 17.5 percent and
12.3 percent of the outstanding shares at April 30, 1995.
<PAGE>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) (1) Financial Statement included in Part A of
this Registration Statement: Financial
Highlights
(2) Financial Statements included in Part B of
this Registration Statement: Financial
Statements as of April 30, 1996
(b) EXHIBITS
* (1)(a) Trust Instrument.
**** (1)(b) Revised Trust Instrument.
* (2)(a) Bylaws of Registrant.
**** (2)(b) Revised Bylaws of Registrant.
(3) None.
(4) None.
*** (5)(a) Form of Investment Advisory Contract between
Registrant and FGIC Advisors, Inc. with
respect to the U.S. Treasury Money Market Fund
* (5)(b) Form of Administration Agreement between
Registrant and ALPS Mutual Funds Services, Inc.
*** (5)(c) Form of Investment Advisory Contract between
Registrant and FGIC Advisors, Inc. with respect
to the Enhanced U.S. Government Income Fund.
* (6) Form of Distribution Agreement between
Registrant and ALPS Mutual Funds Services, Inc.
(7) None.
* (8) Form of Custodian Contract between
Registrant and State Street Bank and Trust
Company.
-1-
<PAGE>
* (9)(a) Form of Transfer Agency and Service
Agreement between Registrant and ALPS Mutual
Funds Services, Inc.
* (9)(b) Form of Sub-Transfer Agency Agreement
between ALPS Mutual Funds Services, Inc. and
State Street Bank and Trust Company.
* (9)(c) Bookkeeping and Pricing Agreement between
Registrant and ALPS Mutual Funds Services, Inc.
(10) Consent of Baker & McKenzie, counsel to
Registrant.
(11) Consent of Independent Public Accountants.
(12) None.
***** (13) Subscription Agreement.
(14) None.
(15) None.
***** 16 Schedule of Computation of Performance
Calculation.
17 Financial Data Schedule
18 None
Other Exhibits
**** (a) Power of Attorney
- - ------------
* Filed with original Registration Statement on December 3,
1993.
** Filed with Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on January 25, 1994.
*** Filed with Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on February 16, 1994.
**** Filed with Pre-Effective Amendment No. 3 to Registrant's
Registration Statement on April 14, 1994.
***** To be filed by Amendment.
-2-
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
U.S. Treasury Money Market Fund __
Government Money Market Fund __
Item 27. INDEMNIFICATION.
As permitted by Section 17(h) and (i) of the Investment Company Act
of 1940 (the "1940 Act") and pursuant to Article X of the Registrant's Trust
Instrument (Exhibit 1 to the Registration Statement), Article IV of each
Investment Advisory Agreement and Section 1.10 of the Distribution Agreement
(Exhibit 6 to this Registration Statement), officers, trustees, employees and
agents of the Registrant will not be liable to the Registrant, any
shareholder, officer, trustee, employee, agent or other person for any action
or failure to act, except for bad faith, willful misfeasance, gross
negligence or reckless disregard of duties, and those individuals may be
indemnified against liabilities in connection with the Registrant, subject to
the same exceptions.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant understands that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The Registrant has purchased an insurance policy insuring its
officers and trustees against liabilities, and certain costs of defending
claims against such officers and trustees, to the extent such officers and
trustees are not found to have committed conduct constituting willful
misfeasance, bad faith, gross negligence or reckless disregard in the
performance of their duties. The insurance policy also insures the
Registrant against the cost of indemnification payments to officers under
certain circumstances.
Article IV of each Investment Advisory Contract (Exhibits 5(a) and
5(c) to this Registration Statement) and Section 1.10 of the Distribution
Contract (Exhibit 6 to this
-3-
<PAGE>
Registration Statement) limit the liability of FGIC Advisors, Inc. and ALPS
Mutual Funds Services, Inc., respectively, to liabilities arising from
willful misfeasance, bad faith or gross negligence in the performance of
their respective duties or from reckless disregard by them of their
respective obligations and duties under the agreements.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, By-Laws, Investment
Advisory Contract and Distribution Contract in a manner consistent with
Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretations of Section 17(h) and 17(i) of such Act
remain in effect and are consistently applied.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
FGIC Advisors, Inc., was incorporated in Delaware on November 10, 1993. It
is a wholly-owned subsidiary of FGIC Holdings, Inc., which, in turn, is a
wholly-owned subsidiary of General Electric Capital Corporation.
The directors of FGIC Advisors, Inc., since its incorporation, are:
RICHARD A. COLE
- FGIC Advisors, Inc.
115 Broadway, New York, N.Y. 10006
Position: Director (since 11/93).
- Financial Guaranty Insurance Company
115 Broadway, New York, N.Y. 10006
Position: Director (since 1/93), Managing Director and Chief Credit
Officer (since 9/91).
- FGIC Capital Market Services, Inc.
115 Broadway, New York, N.Y. 10006
Position: Director (since 10/93).
-4-
<PAGE>
ANN C. STERN
- FGIC Advisors, Inc.
115 Broadway, New York, N.Y. 10006
Position: Director (since 11/93), Chairman of the Board (since
12/93).
- Financial Guaranty Insurance Company
115 Broadway, New York, N.Y. 10006
Position: Director (since 5/89), President, CEO and Chairman of the
Board (since 10/93), President and CEO (1/92 to 10/93), Managing
Director, General Counsel and Secretary (6/91 to 1/92).
- FGIC Capital Market Services, Inc.
115 Broadway, New York, N.Y. 10006
Position: Director (since 7/93), Chairman of the Board (since 10/93).
- FGIC Securities Purchase, Inc.
115 Broadway, New York, N.Y. 10006
Position: Director (since 11/93), President (since 1/92).
The officers of FGIC Advisors, Inc., since its incorporation, are:
CHRISTOPHER JACOBS
- FGIC Advisors, Inc.
115 Broadway, New York, N.Y. 10006
Position: Treasurer (since 12/93),
- Financial Guaranty Insurance Company
115 Broadway, New York, N.Y. 10006
Position: Director (since 1/91), Treasurer (since 7/87), Chief
Financial Officer (since 4/91), Managing Director (since 4/92).
- FGIC Capital Market Services, Inc.
115 Broadway, New York, N.Y. 10006
Position: Treasurer (since 10/93).
- FGIC Securities Purchase, Inc.
115 Broadway, New York, N.Y. 10006
Position: Treasurer (since 9/91), Director (since 11/93).
JANET P. MOORE
- FGIC Advisors, Inc.
115 Broadway, New York, N.Y. 10006
Position: Secretary (since 12/93).
-5-
<PAGE>
- Financial Guaranty Insurance Company
115 Broadway, New York, N.Y. 10006
Position: Secretary (since 1/92), Assistant Vice President (since
1/90).
- FGIC Capital Market Services, Inc.
115 Broadway, New York, N.Y. 10006
Position: Secretary (since 10/93).
- FGIC Securities Purchase, Inc.
115 Broadway, New York, N.Y. 10006
Position: Secretary (since 1/92).
ANN C. STERN [See information listed in "Director" section above.]
Item 29. PRINCIPAL UNDERWRITER
(a) ALPS Mutual Funds Services, Inc. acts as Distributor/Underwriter
for various other unrelated registered investment companies.
(b) Officers and Directors
-6-
<PAGE>
Name and Principal Positions and Offices with Positions and Offices with
Business Address* Registrant Underwriter
- - --------------------------------------------------------------------------------
W. Robert Alexander President Chairman
Arthur J. L. Lucey None President and Secretary
Mark A. Pougnet None Vice President and Chief
Financial Officer
Ned Burke None Vice President
James V. Hyatt None General Counsel
- - --------------------------------------------------------------------------------
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
are maintained at the offices of ALPS Mutual Funds Services, Inc.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS.
(a) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the removal of a trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant undertakes to provide the support to shareholders
specified in Section 16(c) of the 1940 Act as though that
section applied to the Registrant.
(c) Registrant undertakes to sell shares of the Trust exclusively
to municipal investors which include municipalities, counties
and state agencies as well as other institutional investors,
including broker/dealers, investment advisers, investment
banks, insurance companies and other financial institutions.
- - ------------------------
* All addresses are 370 Seventeenth Street, Suite 2700, Denver,
Colorado 80202.
-7-
<PAGE>
(d) Registrant undertakes not to sell shares of the Trust to
retail customers which for purposes of this undertaking are all
investors other than those described in undertaking (d)
directly above. Registrant further undertakes to inform the
Securities and Exchange Commission in the event shares of the
Trust are sold to retail customers.
(e) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest
annual report upon request and without a charge.
-8-
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this
Post-Effective Amendment No. 4 of its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of New
York, and State of New York, on June 26, 1996.
FGIC PUBLIC TRUST (Registrant)
By:----------------------------------------
W. Robert Alexander
Trustee and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- - --------------------------- Trustee and June 26, 1996
W. Robert Alexander Principal Executive
Officer
- - --------------------------- Vice President and June 26, 1996
William Paston Treasurer (Principal
Financial Officer)
BEVERLY S. BUNCH* Trustee June 26, 1996
- - ---------------------------
Beverly S. Bunch
WILLIAM J. COCHRAN* Trustee June 26, 1996
- - ---------------------------
William J. Cochran
MAYNARD H. JACKSON* Trustee June 26, 1996
- - ---------------------------
Maynard H. Jackson
ANN C. STERN* Trustee and June 26, 1996
- - --------------------------- Chairman
Ann C. Stern
- - ---------------------------
W. Robert Alexander
Attorney-in-Fact
- - ------------------
* Pursuant to Power of Attorney filed with Pre-effective Amendment No. 3
dated April 14, 1994.
-9-
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - --------------------------------------------------------------------------
EXHIBITS
to
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
- - --------------------------------------------------------------------------
FGIC PUBLIC TRUST
-10-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document
10 Consent of Baker & McKenzie, counsel to Registrant.
11 Consent of Independent Public Accountants
-11-
<PAGE>
June 27, 1996
FGIC Public Trust
370 17th street, Suite 2700
Denver, CO 80202
Re: FGIC Public Trust
Registration No. 33-72424
Dear Sir or Madam:
It is our opinion that the securities being registered hereunder will,
when sold, be legally issued, fully paid and non-assessable, and we hereby
consent to the reference to our firm as Counsel in Post-Effective Amendment
No. 4 to Registration No. 33-72424.
Very truly yours,
BAKER & McKENZIE
<PAGE>
INDEPENDENT AUDITORS' CONSENT
FGIC Public Trust:
We hereby consent to the use of our report dated May 24, 1995 in
Post-Effective Amendment No. 4 to Registration Statement No. 33-72424 and to
the references to us under the captions "Financial Highlights" appearing in
the Prospectus and "Experts" and "Financial Statements" appearing in the
Statement of Additional Information which are included in such Registration
Statement.
DELOITTE & TOUCHE LLP
- - -------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
June 21, 1996
