<PAGE>
LETTER FROM THE CHAIRMAN
Dear Shareholder:
As always, thank you for your continued participation in the FGIC Public
Trust Funds.
The FGIC Public Trust Funds continue to secure their position as the
alternative investment option of choice for a growing number of
municipalities and governmental entities. Indeed, this pioneering investment
choice has been recognized by the industry as such an attractive concept that
it has been the inspiration for similar products created by several of our
competitors. Imitation is truly the sincerest form of flattery!
FGIC Public Trust remains committed to making the Funds as accessible as
possible to markets throughout the country. To that end, we have added the
capacity to make the Funds available in Florida and Middle Atlantic states in
anticipation of increased demand for the product in those areas.
Future refinements to and improvements of the product will permit
late-day trading until 5:00 P.M. EST. Currently, trades are accepted only
until 4:00 P.M. EST; this new schedule will allow you an extra hour to
conduct business. Additionally, there is no minimum check writing amounts
associated with the U.S. Treasury Money Market Fund.
We are committed to making the Funds as easy to use and as appealing to
our shareholders as possible. If you would like to call us at
1-800-298-FGIC(3442) or write us at 370 17th Street, Suite 2700, Denver,
Colorado 80202, we would welcome your input about how the Funds can work
better for you.
Sincerely,
/s/ ANN C. STERN
Ann C. Stern
Chairman
1
<PAGE>
MANAGER'S FUND UPDATE
U.S. TREASURY MONEY MARKET FUND
The U.S. Treasury Money Market Fund seeks current income and stability
of principal by investing in U.S. Treasury bills, notes and other direct
obligations of the U.S. Treasury and repurchase agreements collateralized
102% with direct Treasury obligations. However, the government guarantee
supporting the Fund's investments applies only to the payment of principal
and interest of the Fund's underlying portfolio securities. It does not
guarantee the value of the Fund's shares nor does it guarantee against
adverse price movements brought about by an increase in prevailing rates of
market interest. The Fund strives to maintain a stable net asset value of
$1.00 per share as well as stability of principal and current income although
there can be no assurance of this. As of April 30, 1996, the Fund's 7-day
compounded yield was 5.11% and the 7-day SEC yield was 4.98%.
CHART
2
<PAGE>
MANAGER'S FUND UPDATE
SHORT-TERM U.S. GOVERNMENT INCOME FUND
The Short-Term U.S. Government Income Fund is designed for the
conservative investor seeking current income and relative price stability.
The Fund invests exclusively in direct obligations of the U.S. Treasury and
repurchase agreements collateralized 102% with direct obligations of the U.S.
Treasury. However, the government guarantee supports only the payment of
principal and interest of the Fund's underlying portfolio securities. It does
not guarantee the value of the Fund's shares nor does it guarantee against
adverse price movements brought about by an increase in prevailing rates of
market interest. Unlike a money market fund, the value of the Short-Term U.S.
Government Income Fund fluctuates with changes in interest rates. The Fund's
30-day SEC yield as of April 30, 1996 was 4.74%.
CHART
3
<PAGE>
MANAGER'S FUND UPDATE
ECONOMIC UPDATE
During 1995, both the bond and stock markets produced remarkable rates
of return. As we entered 1996, the capital markets had a major challenge
facing them: maintain or improve upon the gains achieved the previous year.
FGIC Advisors does not share in the market optimism that flowed from 1995
into 1996. The driving forces behind the 1995 bull market, i.e believable
efforts to balance the federal budget, low inflation and continued weakness
in foreign markets, have proven to be more feeble than expected.
There are three primary reasons for this less-than-optimistic market
review. First, the bipartisan effort to balance the federal budget deficit
has continued to frustrate the markets as the political bickering persists.
At this writing, it remains doubtful that an agreement will be made anytime
in the near future. Should the politicians reach a compromise, the next
battle will be to preserve the integrity of the legislation.
Second, the upward movements in the broadly based commodity indices over
the past several months have threatened the stability of the inflation
picture. Valid concerns about the continued rise in food prices prevail as
market participants await the remaining effects of the extreme winter and
spring weather conditions that tormented much of the U.S. FGIC Advisors is
focusing its attention on the prices of energy. The price of gasoline had
risen just as the summer driving season begins and it appears that gas prices
may remain on the high-side, at least for the next few months.
Finally, the Manager is keeping attentive to the question of foreign
participation in the U.S. government securities markets. As foreign interest
rates rise and become more competitive with the rates in the U.S., we could
see a dissipation in the substantial amount of purchase of U.S. government
securities by foreign investors. Even if this level of purchases were to do
nothing more than slow down, the ramifications to the current structure of
U.S. interest rates could be serious.
In 1995, the FGIC Public Trust U.S. Treasury Money Market Fund continued
to offer competitive rates of return when compared with the IBC/Donoghue
Money Fund Average. The FGIC Public Trust Short-Term U.S. Government Income
Fund achieved a one-year annualized total return of 5.65% as of April 30,
1996, while sustaining weighted average maturities of less than one year.
FGIC Advisors' maintenance of very short average maturities provided
attractive returns and remained within the conservative parameters necessary
to uphold the Funds' AAA/Aaa ratings. Due to the volatility of the markets,
the Manager did not believe that extending maturities provided enough reward
based on the potential risks inherent in purchasing longer term securities.
Going forward, based on the reasons discussed above, the Manager remains
very cautious about the near to intermediate future of the U.S. capital
markets. The FGIC Public Trust Funds remain heavily weighted in overnight
securities because the yields in overnight securities are currently more
competitive than those of U.S. Treasury bills. This conservative and yet
rate-attractive strategy will stand until longer maturities represent a
greater opportunity.
4
<PAGE>
MANAGEMENT OF THE FUNDS
The property, affairs and business of the Fund are managed by the Board of
Trustees. The Trustees elect officers who are charged with responsibility
for the day-to-day operations of the Fund and the execution of policies
formulated by the Trustees. The Trustees and their affiliations are as
follows:
ANN C. STERN - Trustee and Chairman. Ms. Stern is Chairman and Chief
Executive Officer of FGIC. Ms. Stern was named CEO of FGIC in January 1992
and was elected to Chairman in October 1993. Prior to her appointment, Ms.
Stern was Managing Director and General Counsel of FGIC. Ms. Stern is also a
member of the Executive Committee and Structured Finance Underwriting
Committee. Prior to joining FGIC, Ms. Stern was an Associate and a Partner
at two New York City law firms specializing in municipal bonds. She is a
member of several organizations including the Board of Advisors of the
Association of Financial Guaranty Insurers, the American Bar Association, the
Arts and Culture Committee of the GE Foundation and a member of the Board of
Advisors of The Public's Capital, a quarterly journal on infrastructure.
Because of her affiliation with FGIC, Ms. Stern is considered an "interested"
Trustee of FGIC Public Trust.
W. ROBERT ALEXANDER - Trustee and President. Mr. Alexander is the Chief
Executive Officer of ALPS Mutual Funds Services, Inc. which provides
administration and distribution services for proprietary mutual fund
complexes. Prior to co-founding ALPS, Mr. Alexander was Vice Chairman of
First Interstate Bank of Denver, responsible for Trust, Private Banking,
Retail Banking, Cash Management Services and Marketing. Mr. Alexander is a
member of the Board of Trustees of the Colorado Trust, Colorado's largest
foundation, as well as a Trustee of the Hunter and Hughs Trusts. Because of
his affiliation with ALPS, Mr. Alexander is considered an "interested"
Trustee of FGIC Public Trust.
BEVERLY S. BUNCH - Trustee. Ms. Bunch is Assistant Professor at the LBJ
School of Public Affairs, University of Texas at Austin. Ms. Bunch teaches
graduate courses in public financial management, economics, and quantitative
methods. Ms. Bunch also conducts research in environmental finance and
municipal debt. Prior to her current position, Ms. Bunch was Assistant to
the Executive Director of the Texas Bond Review Board. In that capacity, Ms.
Bunch analyzed proposed state debt issues, briefed board representatives and
made recommendations to state budget officials on capital planning and
budgeting. Ms. Bunch has held several academic positions and has taught
courses in public finance and related subjects. Ms. Bunch also acted as
Budget Analyst for the City of San Antonio where she analyzed and monitored a
$64 million budget for four city departments.
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE
SHAREHOLDERS OF THE TRUST. IT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS ACCOMPANIED OR PRECEDED BY
EFFECTIVE PROSPECTUSES FOR EACH PORTFOLIO OF THE TRUST, WHICH
CONTAIN INFORMATION CONCERNING THE INVESTMENT POLICIES AND
EXPENSES OF THE FUNDS AS WELL AS OTHER PERTINENT INFORMATION.
5
<PAGE>
MANAGEMENT OF THE FUNDS (CONTINUED)
WILLIAM J. COCHRAN - Trustee. Mr. Cochran served as Director of Finance and
Chief Financial Officer of the City of Hartford, Connecticut from 1987 to
1993. As Director of Finance, Mr. Cochran had full Charter responsibility
for the fiscal affairs of a major urban government comprised of 6,000
employees, assets of over $1 billion and an overall operating budget of $500
million. During Mr. Cochran's tenure with Hartford, the city was awarded the
Certificate of Achievement for Excellence in Financial Reporting and the
Distinguished Budget Presentation Award by the Government Finance Officers
Association ("GFOA") for many years. Prior to his tenure as Director of
Finance and Chief Financial Officer, Mr. Cochran was the Executive Director
of the Hartford Development Commission from October, 1981. Mr. Cochran has
served on the Executive Board of the GFOA and served on its Debt and Fiscal
Policy Committee. Mr. Cochran is also a member of the Connecticut Government
Finance Officers Association and is a Founder and Trustee of the Hartford
Partnership for Scholarships.
MAYNARD H. JACKSON, JR. - Trustee. Mr. Jackson served three terms as the
mayor of Atlanta, completing his last term in January of 1994. During his
tenure as mayor, Rand McNally named Atlanta as the best major city in which
to live and work in the United States. Mr. Jackson recently returned to the
private sector as Chairman of the Board of Jackson Securities. Mr. Jackson
has also held positions on several civic related boards including Chairman of
the U.S. Local Government Energy Policy Advisory Committee, founding Chairman
of the Rebuild America Coalition and founding Chairman of the Atlanta
Economic Development Authority of Atlanta. Mr. Jackson was also a key
component of Atlanta's successful bid for the 1996 Summer Olympics. A member
of Phi Beta Kappa and a trustee of Morehouse College, Mr. Jackson is the
recipient of numerous honorary degrees, citations and awards for civic,
humanitarian, academic and business achievements.
Detailed information about the Trustees and their affiliations may be found
in the Statement of Additional Information under Management of the Fund.
FGIC PUBLIC TRUST OFFICERS AND TRUSTEES
Ann C. Stern, Jim McCullough
Trustee and Chairman Vice President
W. Robert Alexander, William Paston,
Trustee and President Vice President and Treasurer
Beverly S. Bunch, Steve Howard,
Trustee Secretary
William J. Cochran,
Trustee
Maynard H. Jackson, Jr.,
Trustee
6
<PAGE>
[LETTERHEAD]
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, 1996, the related statements of operations for the year then
ended and the statements of changes in net assets and financial highlights
for each of the periods indicated. 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, 1996, 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, 1996, 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, 1996
7
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
ASSETS
Investments, at amortized cost (which approximates market value)
- see accompanying statement $317,479,617
Organizational costs, net of accumulated amortization 209,229
Receivable from investment advisor 85,921
Other 32,042
- --------------------------------------------------------------------------------
Total Assets 317,806,809
- --------------------------------------------------------------------------------
LIABILITIES
Dividends payable 1,363,433
Accrued expenses 79,609
- --------------------------------------------------------------------------------
Total Liabilities 1,443,042
- --------------------------------------------------------------------------------
NET ASSETS $316,363,767
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $316,397,584
Accumulated net realized loss (33,817)
- --------------------------------------------------------------------------------
NET ASSETS $316,363,767
- --------------------------------------------------------------------------------
Shares of beneficial interest outstanding 316,397,584
- --------------------------------------------------------------------------------
Net asset value and redemption value per share $1.00
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
Face Value Market Value* Collateral Value
- ---------- -----------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S. GOVERNMENT
OBLIGATIONS 100.35%
- ------------------------------------------------------------------------------------------------
$13,800,000 Repurchase agreement with BA Securities Inc.,
5.31%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 4.75%
due 8/31/98 $13,802,036 $14,058,996
76,000,000 Repurchase agreement with Barclay's BZW
Securities Inc., 5.32%, dated 4/30/96 and
maturing 5/1/96, collateralized by U.S.
Treasury Notes, 8.00%, due 5/15/01, 4.25%
due 5/15/96, 6.875% due 3/31/00, 5.75%
due 9/30/97 76,011,231 77,520,844
13,800,000 Repurchase agreement with Chase Securities Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 7.25% due
11/30/96 13,802,032 14,077,879
13,800,000 Repurchase agreement with Deutsche Bank Corp.,
5.125%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Notes, 4.375%
due 11/15/96, 5.75% due 9/30/97 and U.S.
Treasury Bond, 10.375% due 11/15/12 13,801,965 14,076,994
13,800,000 Repurchase agreement with First Boston,
5.27%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bond, 9.125%
due 5/15/18 13,802,020 14,553,488
13,800,000 Repurchase agreement with First Chicago Capital
Markets, 5.30%, dated 4/30/96 and maturing
5/1/96, collateralized by U.S. Treasury Note,
6.625% due 3/31/97 13,802,032 14,076,053
</TABLE>
9
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
Face Value Market Value* Collateral Value
- ---------- -----------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S. GOVERNMENT
OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------
$13,800,000 Repurchase agreement with Goldman Sachs,
5.22%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 6.00%
due 8/31/97 $13,802,001 $14,076,199
13,800,000 Repurchase agreement with Lehman Brothers Inc.,
5.35%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bills, due 6/13/96,
6/20/96 13,802,051 14,076,027
13,800,000 Repurchase agreement with Merrill Lynch Inc.,
5.20%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 6.00% due
08/31/97 13,801,993 14,074,425
75,832,993 Repurchase agreement with Morgan Stanley Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 8.625% due
8/15/97 75,844,156 77,430,200
13,800,000 Repurchase agreement with Sanwa Securities Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bills, due 6/6/96,
7/5/96 13,802,032 14,076,660
13,800,000 Repurchase agreement with Smith Barney Shearson
Inc., 5.25%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 6.25% due
4/30/01 13,802,013 14,076,806
13,800,000 Repurchase agreement with State Street Bank Corp.,
5.28%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 7.50% due
5/15/02 13,802,023 14,027,121
</TABLE>
10
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
Face Value Market Value* Collateral Value
- ---------- -----------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S. GOVERNMENT
OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------
$13,800,000 Repurchase agreement with UBS Securities Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Notes, 6.875%
due 03/31/00, 5.50% due 4/15/00, 6.75% due
4/30/00, 8.875% due 5/15/00, 6.25% due
5/31/00 $13,802,032 $14,076,882
TOTAL REPURCHASE AGREEMENTS
(Cost $317,479,617) 317,479,617 324,278,574
----------------------------
TOTAL INVESTMENTS
(Cost $317,479,617) 100.35% 317,479,617
Liabilities in Excess of Other Assets (0.35%) (1,115,850)
----------------------
NET ASSETS 100.00% $316,363,767
----------------------
----------------------
</TABLE>
*See note 1 to financial statements.
11
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME $14,039,332
- --------------------------------------------------------------------------------
EXPENSES
Investment advisory fee (Note 3) 742,238
Administration Services* (Note 3) 750,000
Legal 70,663
Audit 18,232
Amortization of organization costs 77,785
Insurance 19,226
Registration 78,485
Other 3,295
- --------------------------------------------------------------------------------
Total Expenses 1,759,924
Expenses waived by investment advisor (742,238)
Expenses reimbursed by investment advisor (85,160)
Expenses waived by administrator (190,288)
- --------------------------------------------------------------------------------
Net Expenses 742,238
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 13,297,094
- --------------------------------------------------------------------------------
REALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 8,676
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,305,770
- --------------------------------------------------------------------------------
*Administration services include: fund accounting, daily pricing, licensing
and registration, shareholder services, transfer agency, fund ratings,
training and printing.
See notes to financial statements.
12
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
Year Ended Period Ended
April 30, 1996 April 30, 1995(1)
-------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $13,297,094 $ 4,287,914
Net realized gain (loss) on investments 8,676 (42,493)
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 13,305,770 4,245,421
Dividends to shareholders from net investment income (13,297,094) (4,287,914)
- --------------------------------------------------------------------------------
Change in net assets from operations 8,676 (42,493)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Shares sold 1,141,004,290 733,139,524
Dividends reinvested 9,807,519 3,414,118
- --------------------------------------------------------------------------------
1,150,811,809 736,553,642
Shares redeemed (943,512,019) (627,505,848)
- --------------------------------------------------------------------------------
Change in net assets derived from beneficial interest
transactions 207,299,790 109,047,794
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 207,308,466 109,005,301
NET ASSETS:
Beginning of period 109,055,301 50,000*
- --------------------------------------------------------------------------------
End of period $316,363,767 $109,055,301
- --------------------------------------------------------------------------------
</TABLE>
* Initial capitalization
(1) Operations commenced on May 25, 1994.
See notes to financial statements.
13
<PAGE>
U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL
INTEREST OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
For The For the
Year Ended Period Ended
April 30, 1996 April 30, 1995(1)
-------------------------------------
Net asset value - beginning of period $1.00 $1.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.04
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.05) (0.04)
- --------------------------------------------------------------------------------
Net asset value - end of period $1.00 $1.00
- --------------------------------------------------------------------------------
Total return 5.44% 4.71%(2)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $316,364 $109,055
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.30% 0.50%(2)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.36% 4.87%(2)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 0.71% 1.32%(2)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets without fee waivers 4.95% 4.05%(2)
- --------------------------------------------------------------------------------
(1) Operations commenced on May 25, 1994.
(2) Annualized
See notes to financial statements.
14
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
ASSETS
Investments, at value (cost $31,125,531)
- see accompanying statement $31,165,989
Cash 65,000
Organizational costs, net of accumulated amortization 10,668
Other 42,607
- --------------------------------------------------------------------------------
Total Assets 31,284,264
- --------------------------------------------------------------------------------
LIABILITIES
Dividends payable 128,693
Advisory fees payable 50,348
Accrued expenses 23,075
- --------------------------------------------------------------------------------
Total Liabilities 202,116
- --------------------------------------------------------------------------------
NET ASSETS $31,082,148
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $31,228,360
Accumulated net realized loss (186,670)
Net unrealized appreciation 40,458
- --------------------------------------------------------------------------------
NET ASSETS $31,082,148
- --------------------------------------------------------------------------------
Shares of beneficial interest outstanding 3,117,058
- --------------------------------------------------------------------------------
Net asset value and redemption value per share $9.97
- --------------------------------------------------------------------------------
See notes to financial statements.
15
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Face Value Market Value*
- ---------- -------------
U.S. GOVERNMENT TREASURIES 13.01%
- ------------------------------------------------------------------------------------------------
U.S. Treasury Notes
$2,000,000 7.50%, 1/31/97 $2,028,122
2,000,000 6.50%, 4/30/97 2,015,624
------------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $4,003,288) 4,043,746
------------
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 87.26% Collateral Value
- ------------------------------------------------------------------------------------------------
$1,200,000 Repurchase agreement with BA Securities
Inc., 5.31%, dated 04/30/96 and maturing
5/1/96, collateralized by U.S. Treasury
Note, 4.75% due 8/31/98 1,200,177 $1,223,373
6,600,000 Repurchase agreement with Barclay's BZW
Securities Inc., 5.32%, dated 4/30/96 and
maturing 5/1/96, collateralized by U.S.
Treasury Note, 6.375% due 8/15/02 6,600,975 6,732,932
1,200,000 Repurchase agreement with Chase Securities
Inc., 5.30%, dated 4/30/96 and maturing
5/1/96, collateralized by U.S. Treasury Note,
7.25% due 11/30/96 1,200,177 1,227,329
1,200,000 Repurchase agreement with Deutsche Bank Corp.,
5.125%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bond, 8.00%
due 8/15/96 1,200,171 1,224,480
1,200,000 Repurchase agreement with First Boston,
5.27% dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bond, 12.00%
due 5/15/05 1,200,176 1,277,515
</TABLE>
16
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
Face Value Market Value* Collateral Value
- ---------- -----------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------
$1,200,000 Repurchase agreement with First Chicago
Capital Markets, 5.30%, dated 4/30/96 and
maturing 5/1/96, collateralized by U.S.
Treasury Note, 6.625% due 3/31/97 $1,200,177 $1,227,533
1,200,000 Repurchase agreement with Goldman Sachs
5.22%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Bond, 12.75%
due 11/15/10 1,200,174 1,224,674
1,200,000 Repurchase agreement with Lehman Brothers
Inc., 5.35%, dated 4/30/96 and maturing
5/1/96, collateralized by U.S. Treasury Bill,
due 6/20/96 1,200,178 1,226,182
1,200,000 Repurchase agreement with Merrill Lynch Inc.,
5.20%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 6.00% due
08/31/97 1,200,173 1,228,479
6,118,260 Repurchase agreement with Morgan Stanley Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 4.75% due
2/15/97 6,119,161 6,247,504
1,200,000 Repurchase agreement with Sanwa Securities
Inc., 5.30%, dated 4/30/96 and maturing
5/1/96, collateralized by U.S. Treasury Bill,
due 7/5/96 1,200,177 1,224,693
1,200,000 Repurchase agreement with Smith Barney
Shearson Inc., 5.25%, dated 4/30/96 and
maturing 05/1/96, collateralized by U.S.
Treasury Note, 5.75% due 10/31/00 1,200,175 1,224,808
</TABLE>
17
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
APRIL 30, 1996 (CONTINUED)
<TABLE>
<CAPTION>
Face Value Market Value* Collateral Value
- ---------- -----------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------
$1,200,000 Repurchase agreement with State Street Bank
Corp., 5.28%, dated 4/30/96 and maturing
5/1/96, collateralized by U.S. Treasury Note,
7.50% due 5/15/02 $1,200,176 $1,224,461
1,200,000 Repurchase agreement with UBS Securities Inc.,
5.30%, dated 4/30/96 and maturing 5/1/96,
collateralized by U.S. Treasury Note, 6.875%
due 03/31/00 1,200,176 1,225,634
-----------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $27,122,243) 27,122,243 27,739,597
-----------------------------------
TOTAL INVESTMENTS
(Cost $31,125,531) 100.27% 31,165,989
Liabilities in Excess of Other Assets (0.27%) (83,841)
-----------------------------------
NET ASSETS 100.00% $31,082,148
-----------------------------------
-----------------------------------
</TABLE>
*See note 1 to financial statements.
18
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1996
INVESTMENT INCOME $2,032,562
- --------------------------------------------------------------------------------
EXPENSES
Investment advisory fee (Note 3) 136,073
Administration services* (Note 3) 76,135
Legal 19,339
Audit 16,879
Amortization of organization costs 4,010
Insurance 9,743
Registration 25,181
Miscellaneous 2,475
- --------------------------------------------------------------------------------
Total Expenses 289,835
- --------------------------------------------------------------------------------
Expenses waived by investment advisor (85,725)
- --------------------------------------------------------------------------------
NET EXPENSES 204,110
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,828,452
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 2,142
- --------------------------------------------------------------------------------
Unrealized appreciation on investments:
Beginning of period 35,945
End of period 40,458
- --------------------------------------------------------------------------------
Net change in unrealized appreciation 4,513
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 6,655
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,835,107
- --------------------------------------------------------------------------------
* Administration services include: fund accounting, daily pricing, custody,
licensing and registration, shareholder servicing, transfer agency, fund
ratings, training and printing.
See notes to financial statements.
19
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
Year Ended Period Ended
April 30, 1996 April 30, 1995(1)
-------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $1,828,452 $2,823,884
Net realized gain (loss) on investments 2,142 (188,813)
Net unrealized appreciation 4,513 35,945
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,835,107 2,671,016
Dividends to shareholders from net investment income (1,828,452) (2,823,884)
- --------------------------------------------------------------------------------
Change in net assets from operations 6,655 (152,868)
- --------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Shares sold 23,564,658 108,454,418
Dividends reinvested 1,457,918 2,503,280
- --------------------------------------------------------------------------------
25,022,576 110,957,698
Shares redeemed (35,840,169) (68,961,744)
- --------------------------------------------------------------------------------
Change in net assets derived from beneficial interest
transactions (10,817,593) 41,995,954
- --------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET
ASSETS (10,810,938) 41,843,086
NET ASSETS:
Beginning of period 41,893,086 50,000*
- --------------------------------------------------------------------------------
End of period $31,082,148 $41,893,086
- --------------------------------------------------------------------------------
* Initial capitalization
(1) Operations commenced on June 7, 1994.
</TABLE>
See notes to financial statements.
20
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
For The For the
Year Ended Period Ended
April 30, 1996 April 30, 1995(2)
-------------------------------------
Net asset value - beginning of period $9.97 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55 0.44
Net realized and unrealized gain (loss)
on investments 0.00 (0.03)
- --------------------------------------------------------------------------------
Total income from investment operations 0.55 0.41
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.55) (0.44)
- --------------------------------------------------------------------------------
Net asset value - end of period $9.97 $9.97
- --------------------------------------------------------------------------------
Total return 5.65% 4.73%(3)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $31,082 $41,893
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.60% 0.45%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.38% 5.23%(3)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 0.85% 0.65%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets without fee waivers 5.12% 5.03%(3)
- --------------------------------------------------------------------------------
Portfolio turnover rate (1) 0.00% 827.35%(3)
- --------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities (excluding
securities with maturity date of one year or less at the time of acquisition)
for the period and dividing it by the monthly average of the market value of
such securities during the period. Purchases and sales of investment
securities (excluding short-term securities) for the year ended April 30,
1996 were $11,996,249 and $0, respectively.
(2) Operations commenced on June 7, 1994.
(3) Annualized.
See notes to financial statements.
21
<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 Fund's securities
are valued on the basis of amortized cost which approximates market value.
Securities of the Short-Term U.S. Government Income Fund are valued at
4:00 p.m. (EST) on each trading day. The Fund's investments are valued at
the last sales price of the day or where market quotations are not readily
available, a fair market value is determined in good faith by or under the
direction of the Board of Trustees. Short-term securities are valued at
amortized cost which approximates market value.
REPURCHASE AGREEMENTS: The Funds' custodian takes possession of the
collateral pledged for investments in repurchase agreements. The underlying
collateral is valued daily on a mark-to-market basis to ensure that value,
including accrued interest, is at least 102% of the repurchase price. In the
event of default on the obligation to repurchase, the Funds have the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default by or
bankruptcy of the other party to the agreement, realization and/or retention
of the collateral may be subject to legal proceedings.
FEDERAL INCOME TAXES: It is the Funds' policy to continue to comply
with provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
shareholders. Therefore, no Federal Income Tax provisions are required.
ORGANIZATION COSTS: The Funds have deferred certain organization costs.
Such costs are being amortized over a 60 month period from the commencement
of operations. In the event that all, or part of FGIC's initial investment
in shares of the Funds are withdrawn during the amortization period, the
redemption proceeds will be reduced by the proportionate amount of the
unamortized organization costs represented by the ratio that the number of
shares redeemed bears to the number of initial shares outstanding at the time
of each redemption.
OTHER: Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Dividends from net investment
income are declared daily and paid monthly. Distributions of accumulated 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
On April 30, 1996, there was an unlimited number of no par value shares
of beneficial interest authorized. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
U.S. Treasury Money Market Fund Short-Term U.S. Government Income Fund
----------------------------------------------------------------------------------------
For the Year Ended For the Period Ended For the Year Ended For the Period Ended
April 30, 1996 April 30, 1995 (1) April 30, 1996 April 30, 1995 (1)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares Sold 1,141,004,290 733,139,524 2,361,064 10,861,462
- ---------------------------------------------------------------------------------------------------------------
Shares Reinvested 9,807,519 3,414,118 146,094 251,089
- ---------------------------------------------------------------------------------------------------------------
Total 1,150,811,809 736,553,642 2,507,158 11,112,551
- ---------------------------------------------------------------------------------------------------------------
Shares Redeemed 943,512,019 627,505,848 3,591,204 6,916,446
- ---------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 207,299,790 109,047,794 (1,084,046) 4,196,105
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations for the U.S. Treasury Money Market Fund and Short-Term U.S.
Government Income Fund commenced on May 25, 1994 and June 7, 1994,
respectively.
3. INVESTMENT ADVISORY FEES, ADMINISTRATION FEES AND OTHER RELATED PARTY
TRANSACTIONS
The Trust has entered into Investment Advisory Agreements with
FGICAdvisors, Inc. (FGIC). Pursuant to these advisory agreements with the
Trust, the Investment Advisor is entitled to an advisory fee, computed daily
and payable monthly. FGICreceives an annual fee of .35 percent and .45
percent of the average net assets of the U.S. Treasury Money Market Fund and
Short-Term U.S. Government Income Fund, respectively. In addition, for the
year ended April 30, 1996 , 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. ALPSMutual Funds Services, Inc. (ALPS) serves as the
Fund's administrator. ALPS is entitled to receive a fee from the Funds for
its administrative services, computed daily and payable monthly, at the
annual rate of .18 percent of average daily net assets up to $500 million,
.15 percent on the next $500 million and .12 percent on assets in excess of
$1 billion subject to a minimum monthly fee of $62,500 for the U.S. Treasury
Money Market Fund and $7,500 for the Short-Term U.S. Government Income Fund.
In addition, for the year ended April 30, 1996, ALPS waived a portion of its
administration fee on the U.S. Treasury Money Market Fund.
Three shareholders of the Short-Term U.S. Government Income Fund owned
50.2 percent, 23.2 percent and 22.4 percent of the outstanding shares at
April 30, 1996.
4. SUBSEQUENT EVENT
At their meeting held on April 26, 1996, the Board of Trustees of FGIC Public
Trust (the "Board") proposed that shareholders approve an amendment to a
fundamental investment restriction of the Short-Term U.S. Government Income
Fund (the "Fund") to allow for the purchase of United States Government
agency and instrumentality obligations as well as repurchase agreements
collateralized to 102% by direct obligations of the United States Government
agencies and instrumentalities. The Board also proposed that the Fund change
from a non-money market fund to a money market fund. It is also contemplated
that the Fund will change its name to reflect the changes discussed above.
These proposals will be voted upon at a Special Meeting of the Fund which
will be held on Thursday, June 27, 1996.
23
