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As Filed with the Securities and Exchange Commission on August 28, 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. 5 /x/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
AMENDMENT NO. 8
(CHECK APPROPRIATE BOX OR BOXES) /x/
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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):
X immediately upon filing pursuant to paragraph (b)
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on (date) pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a) of Rule 485
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Registrant registered an indefinite number of shares pursuant to regulation
24f-2 under the Investment Company Act of 1940 on June 28, 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
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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
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Item 1. Cover Page. . . . . . . . . . Cover Page
Item 2. Synopsis. . . . . . . . . . . Expense Summary
<PAGE>
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
<PAGE>
U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
Part B Statement of Additional Information
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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
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Item 22. Calculation of Performance
Data. . . . . . . . . . . . Calculation of Yields and
Performance Information
Item 23. Financial Statements. . . . . Financial Statements
<PAGE>
FGIC PUBLIC TRUST August 28, 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 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 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.
1
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TABLE OF CONTENTS
PAGE
----
EXPENSE SUMMARY....................................... 3
FINANCIAL HIGHLIGHTS.................................. 4
FUND OPERATIONS....................................... 6
SUITABILITY........................................... 10
MANAGEMENT OF THE FUND................................ 11
HOW TO INVEST IN THE FUND............................. 14
HOW TO REDEEM SHARES.................................. 16
SHAREHOLDER SERVICES.................................. 18
TAXES................................................. 18
OTHER INFORMATION..................................... 19
2
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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, adjusted 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 "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)
(Net of Reimbursements) 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
assume 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%, 0.44% and 0.59%, 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, redemption at the end of each time period and the reinvestment of
all dividends and distributions, you would pay the following expenses on a
$2,000,000 investment in the Fund.
1 Year $ 4,100
3 Years $12,899
5 Years $22,563
10 Years $51,079
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 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 Fund as the Short-Term U.S. Government Income Fund when it
was not a money market fund and had different investment policies and
expenses, and a fluctuating net asset value not maintained at $1.00 per
share. The Fund was changed to a money market fund on July 10, 1996 following
a special meeting of the Fund's shareholders on June 27, 1996. 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.
4
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FINANCIAL HIGHLIGHTS---------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
(Formerly the Short-Term U.S. Government Income Fund)
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
For the For the
Year Ended Period Ended
April 30, April 30,
1996 1995(1)
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Net asset value - beginning of period 9.97 $10.00
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INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55 0.44
Net realized and unrealized loss on
investments 0.00 (0.03)
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Total income from investment operations 0.55 0.41
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DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.55) (0.44)
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Net asset value - end of period $9.97 $9.97
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Total Return 5.65% 4.73%(2)
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $31,082 $41,893
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Ratio of expenses to average net assets 0.60% 0.45%(2)
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Ratio of net investment income to average
net assets 5.38% 5.23%(2)
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Ratio of expenses to average net assets
without fee waivers 0.85% 0.65%(2)
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Ratio of net investment income to
average net assets without fee waivers 5.12% 5.03%(2)
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Portfolio turnover rate (3) 0.00% 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 $11,996,249 and $0, respectively.
5
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FUND OPERATIONS--------------------------------------------------------------
At a special meeting held on June 27, 1996, the shareholders of the Fund
approved changing the investment objective and investment policies of the
Fund consistent with their approval to operate the Fund as a money market
fund.
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.
The 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 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
6
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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. To an even greater extent
than other interest-bearing securities, the prices of such securities may be
extremely sensitive to, and 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. Lower than estimated prepayments from an
increase in interest rates might alter the expected average life of such
securities and increase volatility. 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 that the Fund will receive when
these amounts are reinvested.
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 will only
enter into repurchase agreements with maturities in excess of seven days in
cases where a liquidity feature, such as a put option, permits the Fund to
liquidate or terminate the repurchase agreement within seven 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 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.
The Fund may, in certain cases, calculate the maturity of a security
with a floating or variable rate or a demand feature in the manner specified
in
7
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Rule 2a-7 under the Investment Company Act, with the effect that the maturity
is deemed to be shorter than its final date.
The Fund intends to purchase U.S. Treasury securities at auction from
the Federal Reserve. 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. Currently, the Fund does not intend to lend portfolio
securities.
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
the Fund's assets at the time of borrowing. The Fund may not purchase
securities while its borrowings are outstanding.
4) With respect to more than 10% of Fund assets, enter into repurchase
agreements providing for settlement more than seven days after
8
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notice without a liquidity feature such as a put option, permitting the Fund
to liquidate or terminate the repurchase agreement within seven days.
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 for fully collateralized
repurchase agreements that, because of term limitations, are deemed to be
illiquid.
8) Hold securities with remaining maturities exceeding thirteen months.
9) 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 and the New
York Stock Exchange are open for business and as of 12:00 noon Eastern Time
on each day the Public Securities Association ("PSA") recommends an early
close (each such day referred to as a "Half Day"). Currently, either 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 PSA currently recommends an early close on the
business day before each day that either the New York Federal Reserve or the
New York Stock Exchange observes a holiday, except for Good Friday.
Additionally, the PSA recommends an early close on the business day following
Independence Day and Thanksgiving 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 of 1940, as amended, 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 .30 of
1% (.30 of a cent) the Board is notified immediately. If there is a
deviation of .50 of 1% (.50 of a cent) the Board will promptly consider what
action, if any, will be initiated. In the event the Board
9
<PAGE>
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.
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 Trust's Board of Trustees to be "eligible securities" and that present
minimal credit risks. The Board of Trustees or its delegate 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.
10
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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
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
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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 - 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 the city of 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"). 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
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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, 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 voluntarily agreed 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
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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
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.
Investors shall pay for their purchase of Fund shares by using the Federal
Reserve Wire System. 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
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Purchases by telephone can be made after an account has been 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 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 are 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.
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 $200,000
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 $200,000 minimum.
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.
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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. A redemption request will not be deemed to be properly
received until the Fund receives all required documents in proper form.
When 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
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<PAGE>
(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 will be wired directly to your account at a
commercial bank within the United States. 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 but will not materially change or terminate it without
giving shareholders 60 days' written notice.
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
within seven days after the Fund receives your order and 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.
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).
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<PAGE>
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 before investing. Each Fund has its own
minimum balance requirements which must be adhered to.
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.
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 has qualified and 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
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<PAGE>
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
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.
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<PAGE>
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 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.
20
<PAGE>
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.
22
<PAGE>
FGIC PUBLIC TRUST August 28, 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. TREASURY MONEY MARKET FUND
This Prospectus describes the U.S. Treasury 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 U.S. Treasury bills, notes and other direct obligations of the
U.S. Treasury and repurchase agreements collateralized to 102% by these
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.
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.
1
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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....................................18
TAXES...................................................18
OTHER INFORMATION.......................................19
2
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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 period ended April 30, 1996, adjusted 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 "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)
(Net of Reimbursement) 0.30%
Total Fund Operating Expenses
(Net of Fee Waivers) 0.30%
(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
assume a portion of the Fund expenses, to the extent necessary for the Fund
to maintain a total expense ratio of not more than 0.30% 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 0.35%, 0.36% and 0.71%, 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 $750,000 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
return, redemption at the end of each time period and the reinvestment of all
dividends and distributions, you would pay the following expenses on a
$100,000 investment in the Fund:
1 YEAR $308
3 YEARS $967
5 YEARS $1,689
10 YEARS $3,813
OTHER INFORMATION
The Expense Summary and Example are intended to help you understand the
expenses you would bear either directly (as with the Shareholder Transaction
Expenses) or indirectly (as with the 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 for the fiscal period ended April 30, 1996, 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. 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. TREASURY MONEY MARKET 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)
-------------- -----------------
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.
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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 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 invests
exclusively in direct obligations of the U.S. Treasury, such as Treasury bills
and notes and repurchase agreements with respect to such obligations. The Board
of Trustees shall make a determination that all portfolio securities purchased
by the Fund present minimal credit risk.
Securities issued by the U.S. Treasury have historically involved little
risk of default. However, due to fluctuations in interest rates, the market
value of such securities may vary during the period a shareholder owns shares of
the Fund. The Fund will seek to maintain a stable Net Asset Value at $1.00 per
share. There is no assurance that the Fund will meet its investment objective.
Neither the United States, nor any agency or instrumentality thereof, has
guaranteed, sponsored or approved the Fund or its shares.
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 will only
enter into repurchase agreements with maturities in excess of seven days in
cases where a liquidity feature, such as a put option, permits the Fund to
liquidate or terminate the repurchase agreement within seven 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 will
collateralize the repurchase agreement with U.S. Treasury obligations and other
direct obligations of the U.S. Government. Default by or bankruptcy of the
seller may, however, expose the Fund to possible loss because of adverse
6
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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.
The Fund may, in certain cases, calculate the maturity of a security with a
floating or variable rate or a demand feature in the manner specified in Rule
2a-7 under the Investment Company Act, with the effect that the maturity is
deemed to be shorter than its final date.
The Fund intends to purchase U.S. Treasury securities at auction from the
Federal Reserve.
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. Currently, the Fund does not
intend to lend portfolio securities.
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. Treasury,
some of which may be subject to repurchase agreements, and repurchase agreements
collateralized to 102% by direct U.S. Treasury obligations.
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
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<PAGE>
amounts not in excess of the dollar amounts borrowed or 10% of the value of
the Fund's assets at the time of borrowing. The Fund may not purchase
securities while its borrowings are outstanding.
4) With respect to more than 10% of Fund assets, enter into repurchase
agreements providing for settlement more than seven days after notice without a
liquidity feature such as a put option, permitting the Fund to liquidate or
terminate the repurchase agreement within seven days.
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 for fully collateralized
repurchase agreements that, because of term limitations, are deemed to be
illiquid.
8) Hold securities with remaining maturities exceeding thirteen months.
9) 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 and the New York Stock
Exchange are open for business and as of 12:00 noon Eastern Time on any day the
Public Securities Association ("PSA") recommends an early close (each such day
referred to as a "Half Day"). Currently, either the New York Federal Reserve or
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. An early close
is curretnly recommended by the PSA on the business day before each that either
the New York Federal Reserve or the New York Stock Exchange observes a holiday,
except for Good Friday. Additionally, the PSA recommends an early close on the
business day following Independence Day and Thanksgiving 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 of 1940, as amended, 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
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<PAGE>
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 .30 of 1% (.30 of a cent) the Board is notified immediately. If
there is a deviation of .50 of 1% (.50 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.
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
Trust's Board of Trustees to be "eligible securities" and that present minimal
credit risks. The Board of Trustees or its delegate 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 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.
9
<PAGE>
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
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 U.S.
Treasury obligations 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 U.S. Treasury debt instruments. 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 Sections 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 unions, and 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
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<PAGE>
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.
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 the city of 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"). In 1993,
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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, 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 officers 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 0.35%
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 voluntarily agreed to
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<PAGE>
waive its advisory fee to the extent necessary to insure that the total
expense ratio of the Fund does not exceed 0.30% 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 administrative services computed
daily and payable monthly, at the annual rate of the greater of $750,000 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
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<PAGE>
must be payable in U.S. dollars to the Fund 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 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, Federal Funds will
generally be available to the Fund two Business Days after the Fund receives
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 Eastern
Time 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 are 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.
MINIMUM INVESTMENT AND ACCOUNT BALANCES
The minimum initial investment in the Fund is $100,000 and additional
investments may be made in any amount. The minimum
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<PAGE>
purchase requirements do not apply to reinvested dividends. If an account
balance falls below $25,000 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 $25,000 minimum.
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, check, 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 that day. Otherwise,
the Fund will pay for your redeemed shares on 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"
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must appear with the signature. A redemption request will not be deemed to be
properly received until the Fund receives all required documents in proper
form.
When 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 but will not materially change or terminate it without giving
shareholders 60 days' written notice.
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.
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CHECK REDEMPTION
You may request on your account application or by written request to the
Fund that the Fund provide redemption checks drawn on your account. In order to
establish the checkwriting option, you must manually sign a signature card that
includes all authorized individuals. Checks will be sent only to the registered
owner(s) of the account and only to the address of record. Checks may be made
payable to the order of any person. When a check is presented to the Transfer
Agent for payment, the Transfer Agent, as your agent, will cause the Fund to
redeem a sufficient number of your Fund shares to cover the amount of the check.
Shares earn dividends through the day the redemption is processed. There is no
charge to you for the use of the checks; however, the Transfer Agent will impose
a charge for stopping payment of a check upon your request, or if the Transfer
Agent cannot honor a check due to insufficient funds or other valid reasons. A
request to reverse a stop payment order must be received in writing.
Checks may not be written to redeem shares purchased by check until the
date that good funds are credited to the Fund's custodian by its correspondent
bank. If the amount of the check is greater than the value of the shares in your
account, the check will be returned marked "insufficient Funds". Checks written
on amounts subject to the hold described above will be returned marked
"uncollected". If your check does not clear, you will be responsible for any
loss the Fund, Custodian or Transfer Agent may incur.
A check may not be used to close an account. Checkwriting is not available
to holders of shares in certificate form or if you are subject to Internal
Revenue Service backup withholding. It is also inadvisable for you to write a
check for an amount close to the total value of your account. The Trust reserves
the right to terminate or alter the checkwriting service at any time.
GENERAL REDEMPTION INFORMATION
Except for the presence of certain exceptional circumstances as 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 supporting
documents in proper form (except as provided by the rules of the Securities and
Exchange Commission). Where payment is to be made by wire via the Federal
Reserve Wire System, the Fund will wire redemption proceeds on the same day
after receiving your redemption order, provided it is made 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 were purchased 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 $25,000 if the shareholder does not increase the
amount of the account to at least $25,000 upon 30 days' notice.
Please direct questions concerning the proper form for redemption requests
to the Fund at (800) 298-FGIC (3442).
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SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
You may sell your Fund shares and buy shares of the U.S. Government Money
Market Fund, another investment 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. Because
exchanges may have tax consequences, you should consult your tax adviser for
further information. The U.S. Government 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. Government Money Market Fund. Each Fund has its own
minimum balance requirements which must be adhered to.
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.
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 has qualified and intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as
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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 a 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
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
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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.
Shareholders of 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 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 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
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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 Fund's 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.
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FGIC PUBLIC TRUST
U.S. Treasury Money Market Fund
U.S. Government Money Market Fund
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
August 28, 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 and repurchase agreements fully collateralized by such
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.
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 August 28, 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, additional
copies of which may be obtained without charge from the Trust.
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Table of Contents
Page No.
--------
Investment Policies .................................... 3
Investment Restrictions ................................ 4
Management ............................................. 5
Calculation of Yields and Performance Information ...... 9
Determination of Net Asset Value ....................... 10
Portfolio Transactions ................................. 10
Exchange Privilege ..................................... 11
Redemptions ............................................ 11
Federal Income Taxes ................................... 12
Shares of Beneficial Interest .......................... 13
Other Information ...................................... 15
Custodian and Sub-Custodian ............................ 15
Experts ................................................ 15
Financial Statements ................................... 15
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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 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. To an even greater extent than other
interest-bearing securities, the prices of such securities may be extremely
sensitive to, and 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.
Lower than estimated prepayments from an increase in interest rates might alter
the expected average life of such securities and increase volatility. 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 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.
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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' 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, or a liquidation feature permitting termination within a
period 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 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.
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<PAGE>
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 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 without a liquidation feature 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 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.
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* 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 "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 the city of 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 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.
JAMES MCCULLOUGH, 50, - Vice President. 115 Broadway, New York, New York 1006.
Portfolio Manager, FGIC Public Trust. Prior to joining FGIC, Mr. McCullough was
responsible for the active management of the Resolution Trust Corporation's
investment portfolio.
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.
6
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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 and
a fee in the amount of $500 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.
- - - --------------------------------------------------------------------------------
Pension Or Aggregate
Retirement Estimated Compensation
Aggregate Benefits Annual From the Trust
Compensation Accrued As Benefits and Fund
From the Part of Fund Upon Complex Paid
Trust Expenses Retirement to Trustees
- - - --------------------------------------------------------------------------------
Beverly S. Bunch,
Trustee $7,000 $0 $0 $7,000
- - - --------------------------------------------------------------------------------
William J. Cochran,
Trustee $7,000 $0 $0 $7,000
- - - --------------------------------------------------------------------------------
Maynard H. Jackson,
Trustee $5,500 $0 $0 $5,500
- - - --------------------------------------------------------------------------------
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. 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 of the Trust 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 Administrator earned
$750,000 and $687,761, respectively, in administration fees under the
Administration Services Agreement for the Treasury Fund (of which $190,288 and
$0, respectively, was voluntarily waived). For the fiscal year ended April 30,
1996 and for the period from June 7, 1994 (commencement of operations) to April
30, 1995, the Administrator earned, and was paid $76,135 and $68,092,
respectively, in administration fees under the Administration Services Agreement
for the Government Fund.
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 0.15% 0.18% 0.33%
In excess of $500 million but
not exceeding $1 billion 0.15% 0.15% 0.30%
In excess of $1 billion 0.15% 0.12% 0.27%
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 0.30% of average
net assets with respect to the Treasury Fund and 0.20% 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 $742,238 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 $136,073 and
$215,432 in advisory fees from the Government Fund, (of which $85,725 and
$109,039 was voluntarily waived) for the fiscal year ended April 30, 1996 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.
8
<PAGE>
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 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 5.11% and 4.98%, respectively. As of July
17,1996, the Seven Day Effective Yield and the SEC Seven Day Yield for the
Government Fund was 5.20% and 5.07%, respectively.
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.
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.
9
<PAGE>
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.
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 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.
10
<PAGE>
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 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.
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.
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.
11
<PAGE>
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.
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 of 1986 (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 securities loans 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 certain assets (namely
(i) stock or securities; (ii) options, futures, and forward contracts (other
than those on foreign currencies); (iii) foreign currencies (including options,
futures, and forward contracts on such securities) not directly related to the
Funds' principle business of investing in stock or securities (or options and
futures with respect to stock or securities)) held less than 3 months; 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 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 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.
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<PAGE>
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.
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
any capital gain or losses) for the calendar year; plus (b) at least 98% of the
excess of its capital gains over capital losses (adjusted for ordinary losses)
for the one year period ending on October 31 of such calendar year; plus (c) any
ordinary investment income or capital gain net income (adjusted for certain
ordinary losses) from the preceding calendar years 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 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.
13
<PAGE>
As of August 13, 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 Bridgeport 7%
Attn: Sharon D. Lemdon
45 Lyons Terrace
Bridgeport, CT 06604
City of Hartford 6%
City Treasurers Office, Denise Nappier
550 Main Street
Hartford, CT 06103
City of Rock Island 6%
1504 Third Avenue
Rock Island, IL 61201-8684
Treasurer-County of Riverside 5%
Attn: Kenneth Kirin
P.O. Box 12005
Riverside, CA 92502-2205
U.S. GOVERNMENT MONEY MARKET FUND
City of Hartford 30%
City Treasurer's Office
Denise Nappier
550 Main Street
Hartford, CT 06103
FGIC Holdings 25%
115 Broadway
New York, NY 10006
Health Care FAC-SAYR 14%
c/o Mellon Bank, N.A.
Attn: Joe Robinson
Corporate Trust Group
Two Mellon Bank Center
Third Floor, Room 0325
Pittsburgh, PA 15259
City of Cape Coral 14%
P.O. Box 150027
Cape Coral, FL 33915-0027
Treasurer - County of Riverside 10%
P.O. Box 12005
Riverside, CA 92592-2205
14
<PAGE>
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.
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 $83,234 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 provides audit services, tax return preparation
and assistance and consultation in connection with review of certain SEC
filings. Deloitte & Touche's address is 555 Seventeenth 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.
15
<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, 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.
/s/ DELOITTE & TOUCHE LLP
- - - ----------------------------------
DELOITTE & TOUCHE LLP
DENVER, COLORADO
MAY 24, 1996
16
<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.
17
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
April 30, 1996
<TABLE>
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>
18
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
April 30, 1996 (Continued)
<TABLE>
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>
19
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF INVESTMENTS
April 30, 1996 (Continued)
<TABLE>
Face Value Market Value* Collateral Value
- - - ---------- -------------------------------
<S> <C> <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.
20
<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.
21
<PAGE>
U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
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.
22
<PAGE>
U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial
interest outstanding throughout the period indicated:
<TABLE>
For the For The
Year Ended Period Ended
April 30, 1996 April 30, 1995 (1)
------------------------------------
<S> <C> <C>
Net asset value - beginning of period $ 1.00 $ 1.00
- - - -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 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)
- - - -------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on May 25, 1994.
(2) Annualized
See notes to financial statements.
23
<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.
24
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
April 30, 1996
<TABLE>
Face Value Market Value*
- - - ---------- -------------
<S> <C> <C> <C>
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>
25
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
April 30, 1996 (CONTINUED)
<TABLE>
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>
26
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF INVESTMENTS
April 30, 1996 (CONTINUED)
<TABLE>
Face Value Market Value* Collateral Value
- - - ---------- --------------------------------
<S> <C> <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.
27
<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.
28
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
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
- - - ---------------------------------------------------------------------------------------
</TABLE>
* Initial capitalization
(1) Operations commenced on June 7, 1994.
See notes to financial statements.
29
<PAGE>
SHORT-TERM U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the period indicated:
<TABLE>
For the For The
Year Ended Period Ended
April 30, 1996 April 30, 1995 (2)
------------------------------------
<S> <C> <C>
Net asset value - beginning of period $ 9.97 $ 10.00
- - - ---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.55 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)
- - - ---------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities
(excluding securities with maturity date of one year or less at the time
of acquisition) for the period and dividing it by the monthly average of
the market value of such securities during the period. Purchases and
sales of investment securities (excluding short-term securities) for the
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.
30
<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.
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>
- - - --------------------------------------------------------------------------------------------------------
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.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
32
<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 for the
year ended April 30, 1996.
(2) Financial Statements included in Part B of this
Registration Statement: Statement of Assets and
Liabilities, Statement of Investments, Statement of
Operations, Statement of Changes in Net Assets,
Financial Highlights and Notes to Financial Statements
as of and for the year ended 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 U.S.
Government Money Market Fund.
* (6) Form of Distribution Agreement between Registrant and
ALPS Mutual Funds Services, Inc.
<PAGE>
(7) None.
* (8) Form of Custodian Contract between Registrant and State
Street Bank and Trust Company.
* (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.
***** 27 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.
***** Filed herewith.
****** To be filed by Amendment.
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
Item 26. NUMBER OF HOLDERS OF SECURITIES.
As of July 31, 1996
U.S. Treasury Money Market Fund 123
U.S. Government Money Market Fund 6
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.
<PAGE>
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 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., 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).
<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., 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).
<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
<PAGE>
Name and Principal Positions and Offices with Positions and Offices with
Business Address* Registrant Underwriter
- - - ------------------ -------------------------- --------------------------
W. Robert Alexander Trustee Chairman and Chief
Executive Officer
Arthur J. L. Lucey None President and Secretary
Mark A. Pougnet Assistant Treasurer and Chief Financial Officer
Assistant Secretary
William N. Paston Vice President and Treasurer Vice President
James V. Hyatt None General Counsel
John W. Hannon, Jr. None Director
Rick A. Pederson None Director
Asa W. Smith None Director
W. Gordon
Hobgood, Jr. None Director
Steve J. Bettcher None Director
Mary Anstine None Director
Chris Woessner None Director
All addresses are 370 Seventeenth Street, Suite 2700, Denver, Colorado
80202.
(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.
<PAGE>
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.
(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.
<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. 5 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 August 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 August 26, 1996
W. Robert Alexander Principal Executive
Officer
- - - -------------------------- Vice President and August 26, 1996
William Paston Treasurer (Principal
Financial Officer)
BEVERLY S. BUNCH* Trustee August 26, 1996
- - - -------------------------
Beverly S. Bunch
WILLIAM J. COCHRAN* Trustee August 26, 1996
- - - -------------------------
William J. Cochran
MAYNARD H. JACKSON* Trustee August 26, 1996
- - - -------------------------
Maynard H. Jackson
ANN C. STERN* Trustee and August 26, 1996
- - - -------------------------
Ann C. Stern Chairman
- - - -------------------------------------------------
W. Robert Alexander
Attorney-in-Fact
- - - ------------------
* Pursuant to Power of Attorney filed with Pre-effective Amendment No. 3
dated April 14, 1994.
<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
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document
5 ( c ) Form of Investment Advisory Contract between Registrant and FGIC
Advisors, Inc. with respect to the U.S. Government Money Market
Fund.
10 Consent of Baker & McKenzie, counsel to Registrant.
11 Consent of Independent Public Accountants
13 Subscription Agreement
16 Schedule of Computation of Performance Calculation
a) U.S. Treasury Money Market Fund
b) U.S. Government Money Market Fund
27 Financial Data Schedule
a) U.S. Treasury Money Market Fund
b) U.S. Government Money Market Fund
<PAGE>
EXHIBIT 5(c)
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 19 , by and between FGIC PUBLIC
TRUST, a Delaware business trust (the "Trust"), and FGIC ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S T H:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the investment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, the Trustees of the Trust (the "Trustees") are authorized to
establish separate series relating to separate portfolios of securities, each of
which may offer separate classes of shares; and
WHEREAS, the Trustees have established and designated the U.S. GOVERNMENT
MONEY MARKET FUND (the "Fund") as a series of the Trust; and
WHEREAS, the Adviser is engaged principally in rendering management and
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Adviser to render management and
investment advisory services to the Trust and the Fund in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Adviser is willing to provide management and investment
advisory services to the Trust and the Fund on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE ADVISER
<PAGE>
The Trust hereby employs the Adviser to act as an investment adviser of the
Fund and to furnish or arrange for affiliates to furnish the investment advisory
services and administrative services described below, subject to policies of,
review by and overall control of the Trustees, for the period and on the terms
and conditions set forth in this Agreement. The Adviser hereby accepts such
employment and agrees during such period, at its own expense, to render, or
arrange for the rendering of, such services and to assume the obligations herein
set forth for the compensation provided for herein. The Adviser and its
affiliates shall for all purposes herein be deemed to be independent contractors
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Trust or the Fund in any way or otherwise be deemed
agents of the Trust or the Fund.
(a) ADMINISTRATIVE SERVICES. The Adviser shall provide (or arrange for
its affiliates to provide) administrative assistance in connection with the
operation of the Trust and the Fund. Administrative services provided by the
Adviser include, but are not limited to, (i) compiling statistical and research
data required for the preparation of reports and statements which are
periodically distributed to the Trust's officers and Trustees, and (ii) such
other services as the Adviser, subject to review by the Trustees, from time to
time shall determine to be necessary or useful to perform its obligations under
this Agreement. The Adviser also shall provide to the Trust and the Fund
information relating to portfolio composition, credit conditions and average
maturity of the portfolio of the Fund. The Adviser shall furnish periodic
reports on the investment performance of the Fund to the Trustees of the Trust.
The Adviser generally shall monitor the Trust's and the Fund's compliance with
investment policies and restrictions as set forth in the currently effective
prospectus and statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended (the "Prospectus" and the
"Statement of Additional Information", respectively). The Adviser shall make
reports to the Trustees of the
<PAGE>
performance of its obligations hereunder and furnish advice and recommendations
with respect to such other aspects of the business and affairs of the Trust and
the Fund as it shall determine to be desirable.
(b) Investment Advisory Services. The Adviser shall manage the portfolio
of the Fund and will furnish the Fund with investment guidance and policy
direction in connection therewith. The Adviser shall provide the Trust and the
Fund with such investment research, advice and supervision as the latter may
from time to time consider necessary for the proper supervision of the assets of
the Fund, shall furnish continuously an investment program for the Fund and
shall determine from time to time which securities shall be purchased, sold or
exchanged and what portion of the assets of the Fund shall be held in the
various money market securities or cash, subject always to the restrictions of
the Declaration of Trust and the By-Laws of the Trust, as amended from time to
time, the provisions of the Investment Company Act and the statements relating
to the Fund's investment objective, investment policies and investment
restrictions as the same are set forth in the Prospectus and the Statement of
Additional Information. The Adviser also shall make decisions for the Trust as
to the manner in which voting rights, rights to consent to corporate action and
any other rights pertaining to the Fund's portfolio securities shall be
exercised. Should the Trustee at any time, however, make any definite
determination as to investment policy and notify the Adviser thereof in writing,
the Adviser shall be bound by such determination for the period, if any,
specified in such notice or until similarly notified that such determination has
been revoked. The Adviser shall take, on behalf of the Fund, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Fund's account with brokers or dealers selected by
it, and to this end the Adviser is authorized as the agent for the Trust to give
instructions to the custodian for the Fund as to deliveries of securities and
<PAGE>
payments of cash for the Account of the fund. In connection with the selection
of such brokers or dealers and the placing of such orders with respect to assets
of the Fund, the Adviser is directed at all time to seek to obtain execution and
price within the policy guidelines determined by the Trustees as set forth in
the Prospectus and the Statement of Additional Information. Subject to this
requirement and the provisions or the Investment Company Act, the Securities
Exchange Act of 1934, as amended, and other applicable provisions of law, the
Adviser may select brokers or dealers with which it or the Trust is affiliated.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Adviser. The Adviser assumes and shall pay for maintaining the
staff and personnel necessary to perform its obligations under this Agreement
and shall pay all compensation of officers of the Trust who are affiliated
persons of the Adviser and all Trustees of the Trust who are affiliated persons
of the Adviser.
(b) The Trust. The Trust assumes and shall pay or cause to be paid by
such other entity or persons including ALPS Mutual Funds Services, Inc. (the
"Administrator") pursuant to the Administrative Services Contract with the
Trust, all other expenses of the Trust and Fund, including, without limitation:
redemption expenses, expenses of portfolio transactions, expenses of registering
shares under federal and state securities laws, pricing costs (including the
daily calculation of net asset value), expenses of printing shareholder reports,
prospectuses and statements of additional information, Securities and Exchange
Commission fees, interest, taxes, fees and actual out-of-pocket expenses of
Trustees who are not affiliated persons of the Adviser and Administrator, fees
for legal and auditing services, litigation expenses, costs of printing proxies
and other expenses related to shareholder meetings,
<PAGE>
and other expenses properly payable by the Trust and the Fund. It also is
understood that the Trust will reimburse the Adviser for its costs in providing
any accounting services to the Trust and the Fund. The Fund's distributor will
pay certain of the expenses of the Fund incurred in connection with the
continuous offering of Fund shares.
ARTICLE III
COMPENSATION OF THE ADVISER
(a) Investment Advisory Fee. For the services rendered, the facilities
furnished and the expenses assumed by the Adviser, the Trust shall pay to the
Adviser at the end of each calendar month a fee based upon the average daily
value of the net assets of the Fund, as determined and computed in accordance
with the description of the determination of net asset value contained in the
Prospectus and the Statement of Additional Information, at the annual rate of
0.15 of 1.0% (.15%) of the average daily net assets of the Fund, commencing on
the day following effectiveness hereof. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for the part of the month that this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fee as set
forth above. Subject to the provisions of subsection (b) hereof, payment of the
Adviser's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by subsection (b)
hereof. During any period when the determination of net asset value is
suspended by the Trustees, the net asset value as of the last business day prior
to such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
(b) EXPENSE LIMITATIONS. In the event that the operating expenses of the
Fund, including amounts payable to the Adviser pursuant to subsection (a)
hereof, for any fiscal year ending on a date on which this Agreement is in
<PAGE>
effect exceed the expense limitations applicable to the Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Adviser shall reduce its
management fee by the extent of such excess and, if required pursuant to any
such laws or regulations, will reimburse the Fund in the amount of such excess;
provided, however, to the extent permitted by law, there shall be excluded from
such expenses the amount of any interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto) paid
or payable by the Trust with respect to the Fund. Whenever the expenses of the
Fund exceed a pro rata portion of the applicable annual expense limitations, the
estimated amount of reimbursement under such limitations shall be applicable as
an offset against the monthly payment of the management fee due to the Adviser.
Should two or more such expenses limitations be applicable as of the end of the
last business day of the month, that expense limitation which results in the
largest reduction in the Adviser's fee shall be applicable.
<PAGE>
ARTICLE IV
LIMITATION OF LIABILITY OF THE ADVISER
The Adviser shall not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
management of the Trust and the Fund, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Article IV,
the term "Adviser" shall include any affiliates of the Adviser performing
services of the Trust or the Fund contemplated hereby and directors, officers
and employees of the Adviser and such affiliates.
ARTICLE V
ACTIVITIES OF THE ADVISER
The services of the Adviser to the Trust and the Fund are not be deemed to
be exclusive, and the Adviser and any person controlled by or under common
control with the Adviser (for purposes of Article V referred to as "affiliates")
are free to render services to others. It is understood that Trustees,
officers, employees and shareholders of the Trust and the Fund are or may become
interested in the Adviser and it affiliates, as directors, officers, employees
and shareholders or otherwise, and that directors, officers, employees and
shareholders of the Adviser and its affiliates are or may become similarly
interested in the Trust and the Fund, and that the Adviser may become interested
in the Trust and the Fund as a shareholder or otherwise.
<PAGE>
ARTICLE VI
DURATION AND TERMINATION OF THIS CONTRACT
This Agreement shall become effective as of the date first above written
and shall remain in force until , 19 and thereafter, but only for
so long as such continuance is specifically approved at least annually by (i)
the Trustees, or by the vote of a majority of the outstanding voting securities
of the Fund, and (ii) by the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, on 60 days' written notice to the
other party. This Agreement shall terminate automatically in the event of its
assignment.
ARTICLE VII
AMENDMENT OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of (i) a majority of the outstanding voting
securities of the Fund, and (ii) a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
<PAGE>
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under the
Investment Company Act.
ARTICLE IV
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York and the applicable provisions of the Investment
Company Act. To the extent that the applicable laws of the State of New York,
or any of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FGIC PUBLIC TRUST
By
---------------------------------
Name:
Title:
FGIC ADVISORS, INC.
By
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10
<PAGE>
August 28, 1996
FGIC Public Trust
370 Seventeenth Street, Suite 2700
Denver, CO 80202
RE: FGIC PUBLIC TRUST
REGISTRATION NO. 33-72424
FILE NO. 811-8194
Dear Sir or Madam:
We hereby consent to the reference to our firm as Counsel in Post-
Effective Amendment No. 8 to Registration 33-72424.
Very truly yours,
Baker & McKenzie
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 5 to Registration
Statement No. 33-72424 of our report dated May 24, 1996, appearing in the April
30, 1996 Annual Report of FGIC Public Trust 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
Denver, Colorado
August 27, 1996
<PAGE>
PURCHASE AGREEMENT
------------------
FGIC Public Trust, a Delaware business trust (the "Company"), and FGIC
Securities Purchase, Inc. ("FSP"), hereby agree as follows:
1. The Company hereby offers FSP and FSP hereby purchases the
following shares, par value $ 001 par share, of each portfolio ("Fund") of the
Trust: (a) 50,000 shares at $1.00 per share representing, shares in the U.S.
Treasury Money Market Fund; and (b) 5,000 shares at $10.00 per share
representing shares in the Short-Term IJ.S- Government Income Fund, FSP hereby
acknowledges receipt of a purchase confirmation reflecting the purchase of the
Shares, and the Company hereby acknowledges receipt from the FSP of funds in the
amount of $100,000 in full payment for the shares.
2. FSP represents and warrants to the Trust that the Shares are
being acquired
for investment purposes and not with a view to the distribution thereof.
3. FSP agrees that if it or any direct or indirect transferee of the
Shares redeems the Shares prior to the fifth anniversary of the date the Company
begins its investment activities, FSP will pay to the Company an amount equal to
the number resulting from multiplying each Fund's total unamortized
organizational expenses by a fraction, the numerator of which is equal to the
number of Shares redeemed by FSP or such transferee and the denominator of which
is equal to the number of shares of each Fund outstanding as of the date of such
redemption, as long as the administrative position of the staff of the
Securities and Exchange Commission requires such reimbursement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day of _________________________, 1994.
Attest: FGIC PUBLIC TRUST
By:
Name:
Title:
Attest: FGIC SECURITIES PURCHASE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT 16
<PAGE>
U.S. TREASURY MONEY MARKET FUND
SEC Seven Day Yield as of April 30, 1996
(Base Period Return) X (365/7)
(.000955) X (365/7) = 4.98%
Seven Day Effective Yield as of April 30, 1996
(Base Period Return + 1)365/7) - 1
(.000955 + 1)365/7) - 1 = 5.11%
<PAGE>
U.S. GOVERNMENT MONEY MARKET FUND
SEC Seven Day Yield as of July 17, 1996
(Base Period Return) X (365/7)
(.000972) X (365/7) = 5.07%
Seven Day Effective Yield as of July 17, 1996
(Base Period Return + 1)365/7) - 1
(.000972 + 1)365/7) - 1 = 5.20%
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<PAGE>
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<PAGE>
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