IOWA PUBLIC AGENCY INVESTMENT TRUST
ANNUAL FINANCIAL REPORT
JUNE 30, 1996
SPONSORED BY THE
IOWA ASSOCIATION OF MUNICIPAL UTILITIES
IOWA STATE ASSOCIATION OF COUNTIES
IOWA LEAGUE OF CITIES
<PAGE>
STATEMENT OF SPONSORING ASSOCIATIONS
IPAIT CONTINUES TO EXPLORE WAYS TO BETTER SERVE ITS MEMBERS' CASH MANAGEMENT
NEEDS IN THE FUTURE.
The Iowa Public Agency Investment Trust (IPAIT) enjoyed its most successful year
of operation to date during fiscal year 1995-96. Total funds invested in all
program investment services were higher for each respective day throughout the
year than for any previous year in the program's existence.
IPAIT was initially created in 1987 as a cash management program for use by
members of the Iowa League of Cities, the Iowa State Association of Counties,
and the Iowa Association of Municipal Utilities. Since inception, our three
sponsoring associations and the IPAIT Board of Trustees have remained
consistently focused upon providing participants with only the safest of
investment alternatives.
During the fiscal year, prevailing short-term interest rates generally declined.
The Federal Reserve Board lowered the federal funds discount rate three times
for a total of 0.75 percent throughout the period as the national economy
exhibited signs of slowing and most inflation indicators remained moderate.
While IPAIT rates of return similarly declined, the program continued to
consistently provide yields superior to those available from other investment
alternatives.
Since inception, the Diversified and Direct Government Obligation Funds have
provided participants with a total of over $76,000,000 in investment income. No
program or institution in the history of our state has helped more cities,
counties, municipal utilities, and other eligible participants to invest their
surplus operating funds and to earn better rates of interest without incident
than the Iowa Public Agency Investment Trust.
IPAIT continues to explore ways to better serve its members' cash management
needs in the future. Participants can continue to rely on the high standards set
in the past, forming the foundation for all future program operations.
<PAGE>
MESSAGE FROM THE CHAIR
IN ITS NINTH YEAR OF OPERATION, IPAIT'S INVESTMENT POLICIES AND PRACTICES REMAIN
CLEARLY FOCUSED UPON PROTECTING INVESTED FUNDS.
The Iowa Public Agency Investment Trust (IPAIT) is pleased to present this
annual report of Trust operations for the period ended June 30, 1996.
Use of the program's cash management services expanded dramatically throughout
the period, setting a number of new investment records for total funds invested.
Total funds invested in all program investment services were higher for each
respective day throughout the year than for any previous year in the program's
existence, with total funds invested reaching an all-time high of $345,527,213
on April 8, 1996.
In its ninth year of operation, IPAIT's investment policies and practices remain
clearly focused upon protecting invested funds. The combined investment strength
of the program's 325 participants working together enables the participants to
provide themselves with investment returns not available to individual Iowa
public bodies.
Other highlights from fiscal year 1995-96 include:
o Average daily investments in the Diversified and Direct Government
Obligation Portfolios of $240,336,825, up 19.78 percent from $200,646,799
in the previous fiscal year,
o Placement of a total of 54 Fixed Term Automated investments, representing
a total of $46,781,075 in invested assets,
o Placement of 102 certificates of deposit into Iowa financial
institutions, representing over $96,425,000.
The Board of Trustees welcomes your comments and suggestions regarding the
operation of the IPAIT program. We thank you for your continued participation
and support. On behalf of the Board, we want to help IPAIT to grow to meet your
cash management needs into the next century.
Respectfully,
Ken Alberts, Chair
Board of Trustees
BOARD OF TRUSTEES
<PAGE>
BOARD OF TRUSTEES
The Board of Trustees for the Iowa Public Agency Investment Trust supervises all
operations of the investment program. The Board meets quarterly to review all
aspects of IPAIT operation and receives extensive performance information
relative to the program's operation each month.
As the first cash management program for cities, counties, and municipal
utilities to be registered with the Securities and Exchange Commission (SEC),
IPAIT offers participants a unique investment opportunity with a distinctly Iowa
presence.
Diversity of experience and attention to detail provided by each member of the
Board assures that each individual participant's funds are effectively and
safely invested. The Board is made up of three representative members from each
of the three sponsoring associations; the Iowa League of Cities, the Iowa State
Association of Counties, and the Iowa Association of Municipal Utilities.
<PAGE>
NOTES FROM YOUR SERVICE PROVIDERS
During the fiscal year 1995-96, short-term interest rates declined. The Federal
Reserve lowered the federal funds rate three times during the fiscal year in
0.25 percent increments, as the economy began to slow and inflation remained
moderate.
The rate on the IPAIT Diversified Fund also declined during the fiscal
year, but still provided a competitive rate to other short-term investment
alternatives. The portfolio consistently provided a rate 0.25 percent greater
than the Donoghue Index of national money market funds. The Diversified Fund was
postured to maintain a slightly longer average maturity than the Donoghue Index,
as we anticipated the decline in short-term interest rates. This enabled the
Diversified Fund to outperform the Index.
Recently, fears of inflation have surfaced due to the strong growth in
employment over the past few months. The link between wages and inflation has
been correlated in the past, as businesses have tended to pass through higher
wage costs into final product prices. The ability to raise final product prices
in the current environment is questionable, however, due to price conscious
consumers. Company managements comment that they have little flexibility to
raise prices.
The Federal Reserve is watching inflation closely and may raise short-term
interest rates. In our view, however, any rate increase should be modest, since
inflation remains mild and is not poised to accelerate significantly. Most
measures of inflation are below a 3 percent annual rate.
The IPAIT program emphasizes three elements: safety, liquidity, and
competitive rates, in that order. Although rate is important, the safety and
security of participant moneys is our first priority. The second priority is to
assure daily liquidity. Only after the first two elements are satisfied, do we
examine the rates of different investments. As always, we appreciate your
support and look forward to serving you in the 1996-97 fiscal year.
- --------------------------------------------------------------------------------
Helpful, knowledgeable cash management program representatives are an integral
part of the IPAIT program and are always available to assist with any
investment-related need. Anita Tracy heads up a team of dedicated IPAIT program
administrators that can be reached on the toll-free line at your convenience.
Current investment rates for all IPAIT alternatives, questions about account
activity, or any other inquiry are always courteously and efficiently addressed.
- --------------------------------------------------------------------------------
Investors Management Group (IMG) provides program development services to the
IPAIT cash management program and to each IPAIT participant.
Paul Kruse, IMG's Investment Services Marketing Manager, personally calls
on representatives of IPAIT members and potential program participants
throughout the state. During the course of a year, Paul will travel over 30,000
miles around Iowa, meeting with hundreds of treasurers, finance officers, clerks
and managers. Paul's stop at any given location may involve anything from a
formal presentation to the representative body to one-on-one assistance with
cash management needs or questions.
In addition to attending association sponsored conventions held throughout
the state, Paul contributes material to the IOWA INVESTOR, including the popular
KRUSE'N DOWN THE HIGHWAY series.
<PAGE>
MEMBER PROFILE
MUNICIPALITIES: Ackley, Agency, Albert City, Algona, Alton, Altoona, Ames,
Anamosa, Ankeny, Anthon, Atlantic, Bettendorf, Bloomfield, Bondurant, Boone,
Bussey, Callender, Camanche, Carlisle, Carson, Carter Lake, Cedar Falls, Cedar
Rapids, Centerville, Charles City, Cherokee, Clarinda, Clinton, Clive, Colfax,
Colo, Coralville, Corydon, Council Bluffs, Creston, Davenport, Dayton, Denison,
Denver, Des Moines, Dike, Dubuque, Eagle Grove, Earlham, Early, Eldridge, Elk
Run Heights, Ellsworth, Epworth, Fairbank, Fairfield, Fort Dodge, Fort Madison,
Grand Mound, Greenfield, Grimes, Grinnell, Grundy Center, Harlan, Hawarden,
Hazleton, Hiawatha, Humboldt, Huxley, Indianola, Iowa City, Jefferson, Johnston,
Keokuk, Keystone, La Porte City, Lake Mills, Lamont, Lehigh, Letts, Lisbon,
Lohrville, Lovilia, Mallard, Manning, Maquoketa, Marble Rock, Marion,
Martensdale, Mason City, Maynard, Melcher-Dallas, Middletown, Mitchellville,
Montezuma, Morning Sun, Moulton, Mount Pleasant, Murray, Nevada, New Hampton,
New London, New Virginia, Newton, Nora Springs, Oelwein, Orange City, Orange
City Hospital, Orient, Orleans, Oskaloosa, Ossian, Ottumwa, Parnell, Pella,
Perry, Pleasant Hill, Pleasantville, Polk City, Prairie City, Prescott, Preston,
Readlyn, Red Oak, Ringsted, Riverdale, Rockwell City, Sac City, Shelby,
Shenandoah, Sioux City, Slater, Spencer, Spirit Lake, Spragueville, Springbrook,
St. Charles, Storm Lake, Sumner, Tipton, Traer, Van Meter, Villisca, Vinton,
Washington, Waverly, Waverly Hospital, Webster City, Wesley, West Des Moines,
Windsor Heights, IMWCA
UTILITIES: Algona, Alton, Ames, Anamosa, Anthon, Aplington, Bloomfield, Cedar
Falls, Colfax, Coon Rapids, Coralville, Corydon, Creston, Denison, Denver, Des
Moines, Dike, Eagle Grove, Epworth, Fairbank, Fort Madison, Fredericksburg,
Graettinger, Harlan, Hawarden, Huxley, Knoxville, Lake Mills, La Porte City,
Laurens, Le Claire, Lenox, Lohrville, Mallard, Manilla, Manilla Gas Dep.,
Manning, Maquoketa, Martensdale, Melcher-Dallas, Middletown, Montezuma,
Montezuma Light and Power, Murray, New Hampton, New London, Newton, Orange City,
Orient, Pella, Prairie City, Preston, Readlyn, Sac City, Sanborn, Shelby,
Slater, Spencer, St. Charles, Story City, Traer, Urbandale, Villisca, Vinton,
Wahpeton, Warren County Lakewood Water District, Waverly, Iowa Assn. of
Municipal Util. Insurance Trust, North IA Mun. Elec. Coop. Assoc., Resale Power
Group of Iowa, Missouri Basin Municipal Elec. Coop. Assoc., Xenia Rural Water
COUNTIES: Adair, Appanoose, Audubon, Audubon County Memorial Hospital, Black
Hawk, Boone, Buchanan, Buena Vista, Butler, Calhoun, Carroll, Cass, Cedar, Cerro
Gordo, Chickasaw, Clay, Clinton, Crawford, Crawford County Hospital, Dallas,
Davis, Decatur, Des Moines, Dickinson, Dubuque, Emmet, Floyd, Franklin, Fremont,
Greene, Greene Medical, Grundy, Hamilton, Hancock, Hardin, Harrison, Henry,
Howard, Iowa, Jackson, Jasper, Jefferson, Jefferson County Hospital, Johnson,
Jones, Kossuth, Louisa, Lucas, Lyon, Madison, Marion, Mills, Mitchell, Monona,
Monroe, O'Brien, Osceola, Page, Plymouth, Polk, Poweshiek, Ringgold, Sac, Scott,
Sioux, Story, Tama, Union, Van Buren Hospital, Wapello, Warren, Washington,
Washington Hospital, Wayne, Webster, Winneshiek, Worth, Wright
28E ENTITIES: Buena Vista County Solid Waste Commission, Des Moines Area
Metropolitan Planning Organization, Des Moines Metropolitan Transit Authority,
Eighth Judicial Dist. Dept. of Correc. Srvcs., Fifth Judicial Dist. Dept. of
Correc. Srvcs., Heart of Iowa Regional Transit Authority, IMWCA, Johnson
Township Barnum Comm. Fire Dept., Mid-Iowa Development Association Council of
Governments, Mid-Iowa Regional Housing Authority, Montezuma Fire Dept., Central
Iowa Juvenile Detention Comm., North Central Iowa Regional Solid Waste Agency,
North Iowa Area Council of Governments, Northwest Iowa Area Solid Waste Agency,
Plymouth County Solid Waste Agency, Second Judicial Dist. Dept. of Correc.
Srvcs., Seventh Judicial Dist. Dept. of Correc. Srvcs., South Iowa Area Crime
Commission, South Iowa Area Detention Service Agency, Southwest Iowa Planning
Council, Third Judicial Dist. Dept. of Correc. Srvcs., Urbandale Sanitary Sewer
District, Webster County Solid Waste Commission
- --------------------------------------------------------------------------------
IPAIT MEMBERS ARE FOUND IN EVERY COUNTY IN THE STATE. LARGER PARTICIPANTS
APPRECIATE THE EASE OF INVESTING WITH THE PROGRAM, ITS CONVENIENT AND RELIABLE
METHODS OF MONEY MOVEMENT AND IPAIT'S ABILITY TO ACCOMMODATE ANY INVESTMENT
AMOUNT, REGARDLESS OF SIZE. SMALLER MEMBERS APPRECIATE THE FACT THAT EVERY
DOLLAR INVESTED EARNS THE SAME RATE OF INTEREST, REGARDLESS OF INVESTED BALANCE,
AND THE COMPREHENSIVE, PROPRIETARY IPAIT ACCOUNT REPORTS THAT CLEARLY ILLUSTRATE
ALL TRANSACTION HISTORY.
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<PAGE>
PROGRAM SERVICES AND FEATURES
IPAIT was the first local government investment program for cities, counties,
and municipal utilities in the country to be registered with the Securities and
Exchange Commission (SEC).
ooooo
IPAIT is sponsored by the Iowa League of Cities, the Iowa State Association of
Counties and the Iowa Association of Municipal Utilities. The executive director
of each association meets monthly with the IPAIT service providers to assure
that all elements of program operation are functioning smoothly.
ooooo
IPAIT's proprietary reporting system provides participants with daily
confirmations and monthly account summaries that are easy to understand by any
interested party.
ooooo
IPAIT provides toll-free phone access to experienced personnel that are able to
immediately provide reliable, needed information regarding a specific
participant's account or the securities markets in general.
ooooo
IPAIT provides two investment portfolios, the Diversified Fund and the Direct
Government Obligation (DGO) Fund, tailored to meet specific needs of investors.
Each portfolio provides complete daily liquidity and rates that typically exceed
those available with term investments requiring an investor to sacrifice
liquidity.
ooooo
IPAIT is governed by a Board of Trustees representative of the participants in
the program. No one can anticipate the unique needs of investors of Iowa public
funds better than those responsible for the investment of Iowa public funds.
ooooo
IPAIT invests as many dollars as possible back into Iowa financial institution
issued certificates of deposit. Since inception, association-sponsored cash
management programs have invested over $650,000,000 on behalf of members back
into Iowa institutions.
ooooo
IPAIT provides program support and development services to participants
including program representatives that regularly call upon participants to
assure that their needs are met and that their suggestions are considered.
ooooo
Through its Fixed Term Automated (FTA) program, IPAIT can provide individual
investment assistance offering a participant the highest yielding, legally
authorized investment available in the marketplace at any given time including
the Flexible Withdrawal Certificate of Deposit (Flex-CD). The Flex-CD is often
used as an investment vehicle for bond proceeds issued in anticipation of a
capital improvement project. The fixed rate of interest, flexible withdrawal
opportunities, and extended maturity date are perfectly suited to most building
program investment needs.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- 10.35%
$ 7,500,000 Federal Agricultural Mtge. Corp.-Disc. Note 5.32% 07/09/96 $ 7,491,500
1,295,000 Federal Natl. Mortgage Assoc.-Disc. Note 4.97% 07/30/96 1,289,993
2,500,000 Federal Natl. Mortgage Assoc.-Disc. Note 5.34% 08/29/96 2,478,981
5,000,000 World Bank-Disc. Note 5.38% 09/04/96 4,952,875
3,750,000 Federal Agricultural Mtge. Corp.-Disc. Note 5.28% 09/27/96 3,703,708
-------------
TOTAL (cost-- $19,917,057) $ 19,917,057
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COUPON SECURITIES -- 51.55%
$ 2,000,000 Student Loan Mortgage Assn., Variable Rate 5.09% 07/01/96 $ 2,000,000
2,000,000 Student Loan Mortgage Assn., Variable Rate 5.35% 07/01/96 2,000,000
10,000,000 Student Loan Mortgage Assn., Variable Rate 5.38% 07/01/96 10,000,000
2,500,000 Federal Farm Credit Bank, 5.60% 5.86% 07/01/96 2,500,000
2,395,000 Federal Home Loan Bank, 4.41% 5.06% 07/08/96 2,394,694
2,500,000 Federal Home Loan Bank, 5.10% 5.68% 07/08/96 2,499,722
1,000,000 Federal Natl. Mortgage Assoc., 8.00% 5.77% 07/10/96 1,000,524
2,000,000 Federal Natl. Mortgage Assoc., 8.00% 5.77% 07/10/96 2,001,050
2,000,000 U.S. Treasury Note, 7.875% 5.74% 07/15/96 2,001,562
2,000,000 U.S. Treasury Note, 7.875% 5.63% 07/15/96 2,001,644
1,500,000 Federal Home Loan Bank, 5.00% 5.83% 07/16/96 1,499,506
1,000,000 Federal Home Loan Mortgage Corp., 5.51% 5.40% 07/19/96 1,000,000
2,000,000 Federal Home Loan Bank, 8.00% 5.58% 07/25/96 2,003,060
1,500,000 Federal Home Loan Bank, 4.44% 5.06% 07/29/96 1,499,268
1,150,000 Housing & Urban Development, 8.75% 5.41% 08/01/96 1,153,157
1,500,000 Federal Farm Credit Bank, 5.75% 5.71% 08/01/96 1,500,025
2,300,000 Federal Farm Credit Bank, 5.10% 5.16% 08/01/96 2,299,878
2,500,000 Federal Home Loan Bank, 6.125% 5.37% 08/05/96 2,501,647
2,000,000 Federal Natl. Mortgage Assoc., 8.15% 5.83% 08/12/96 2,005,083
1,000,000 Federal Natl. Mortgage Assoc., 5.91% 5.08% 08/19/96 1,001,078
1,000,000 Federal Farm Credit Bank, 9.00% 5.77% 08/26/96 1,004,741
1,000,000 Federal Home Loan Mortgage Corp., 5.68% 5.74% 09/11/96 999,868
505,000 Federal Home Loan Bank, 8.25% 5.74% 09/25/96 507,848
960,000 Federal Farm Credit Bank, 4.20% 5.57% 10/21/96 956,056
1,000,000 Student Loan Mortgage Assn., Variable Rate 5.60% 10/22/96 1,000,487
1,000,000 Federal Home Loan Bank, 6.70% 5.41% 10/25/96 1,003,962
1,000,000 Private Export Funding, 7.125% 5.60% 10/31/96 1,004,766
1,000,000 Private Export Funding, 7.125% 5.55% 10/31/96 1,005,011
1,000,000 Federal Natl. Mortgage Assoc., 5.47% 5.63% 11/14/96 999,352
2,500,000 U.S. Treasury Note, 7.25% 5.12% 11/15/96 2,519,142
1,400,000 Federal Home Loan Bank, 4.81% 5.57% 11/18/96 1,395,961
80,000 Federal Home Loan Bank, 8.30% 5.59% 12/02/96 80,877
1,100,000 Federal Home Loan Bank, 8.30% 5.59% 12/02/96 1,112,053
1,000,000 Student Loan Mortgage Assn., 7.56% 5.59% 12/09/96 1,008,327
2,000,000 Tennesee Valley Authority, 4.60% 5.36% 12/15/96 1,993,186
1,000,000 Federal Natl. Mortgage Assoc., 8.20% 5.55% 12/23/96 1,012,147
750,000 Federal Home Loan Mortgage Corp., 7.73% 5.72% 01/06/97 757,508
1,000,000 Federal Home Loan Bank, 4.75% 5.54% 01/13/97 995,830
2,000,000 Federal Natl. Mortgage Assoc., 7.86% 5.56% 01/17/97 2,024,038
2,500,000 U.S. Treasury Note, 7.50% 5.56% 01/31/97 2,526,981
500,000 Federal Farm Credit Bank, 4.55% 5.67% 02/03/97 496,776
500,000 Federal Home Loan Mortgage Corp., 4.78% 5.82% 02/10/97 496,901
1,500,000 Federal Natl. Mortgage Assoc., 4.78% 5.60% 02/14/97 1,492,574
2,500,000 U.S. Treasury Note, 6.875% 5.46% 02/28/97 2,522,344
2,500,000 U.S. Treasury Note, 6.875% 5.43% 02/28/97 2,522,847
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996 (CONTINUED)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
$ 2,500,000 U.S. Treasury Note, 6.875% 5.46% 02/28/97 $ 2,522,339
1,000,000 Federal Natl. Mortgage Assoc., 4.97% 5.51% 03/10/97 996,379
2,500,000 Federal Natl. Mortgage Assoc., 5.05% 5.54% 03/14/97 2,491,570
2,000,000 Federal Natl. Mortgage Assoc., 5.05% 5.52% 03/14/97 1,993,526
1,000,000 Federal Natl. Mortgage Assoc., 5.05% 5.59% 03/14/97 996,343
1,000,000 Federal Natl. Mortgage Assoc., 5.05% 5.54% 03/14/97 996,638
1,000,000 Federal Natl. Mortgage Assoc., 5.05% 5.52% 03/14/97 996,818
2,500,000 U.S. Treasury Note, 6.50% 5.73% 04/30/97 2,515,204
900,000 Federal Home Loan Bank, 6.23% 5.75% 05/15/97 903,517
5,000,000 Federal Natl. Mortgage Assoc., Variable Rate 5.38% 05/19/97 5,013,833
1,000,000 Federal Natl. Mortgage Assoc., 5.71% 5.86% 05/20/97 998,630
2,500,000 Federal Farm Credit Bank, 5.84% 6.02% 06/18/97 2,495,733
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TOTAL (cost-- $99,222,011) $ 99,222,011
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CERTIFICATES OF DEPOSIT -- 13.02%
$ 1,000,000 Community First State Bank, Decorah 5.50% 07/10/96 $ 1,000,000
1,000,000 Valley State Bank, Rock Valley 5.40% 07/22/96 1,000,000
1,500,000 Mercantile Bank, Mt. Pleasant 5.50% 07/23/96 1,500,000
1,000,000 Union State Bank, Monona 5.40% 07/29/96 1,000,000
350,000 Producers Savings Bank, Green Mountain 6.10% 07/31/96 350,000
500,000 Heritage Bank, Holstein 6.15% 08/16/96 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 5.75% 08/19/96 250,000
500,000 Citizens Bank, Sac City 6.15% 08/21/96 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 6.10% 08/21/96 250,000
1,000,000 Valley State Bank, Rock Valley 5.45% 08/27/96 1,000,000
500,000 First State Bank, Nora Springs 6.05% 08/30/96 500,000
5,000,000 Norwest Bank, Clive 5.40% 09/17/96 5,000,000
1,000,000 St. Ansgar State Bank, St. Ansgar 6.15% 09/19/96 1,000,000
1,000,000 Nevada National Bank, Nevada 5.60% 10/11/96 1,000,000
250,000 Citizens Bank, Sac City 5.60% 10/11/96 250,000
250,000 Citizens Bank, Sac City 6.00% 10/11/96 250,000
400,000 Exchange Bank, Collins 5.60% 10/15/96 400,000
300,000 Miles Savings Bank, Miles 6.00% 10/18/96 300,000
500,000 First State Bank, Conrad 5.65% 11/22/96 500,000
300,000 First State Bank, Ida Grove 5.80% 12/06/96 300,000
1,000,000 Peoples Savings Bank, Elma 5.75% 12/20/96 1,000,000
500,000 Nevada National Bank, Nevada 5.50% 01/24/97 500,000
5,000,000 Firstar Bank, Des Moines 5.25% 02/21/97 5,000,000
500,000 Union State Bank, Winterset 5.25% 02/21/97 500,000
200,000 Northwestern State Bank, Orange City 5.35% 02/28/97 200,000
1,000,000 St. Ansgar State Bank, St. Ansgar 5.65% 03/25/97 1,000,000
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TOTAL (cost-- $25,050,000) $ 25,050,000
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REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 24.27%
$ 23,275,000 Smith Barney, Repo 5.38% 07/01/96 $ 23,275,000
23,430,000 JP Morgan, Repo 5.40% 07/01/96 23,430,000
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TOTAL (cost-- $46,705,000) $ 46,705,000
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<PAGE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996 (CONTINUED)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
TOTAL INVESTMENTS-- 99.19% (cost-- $190,894,068) $ 190,894,068
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 0.81%
(Includes $54,944 payable to IMG and $836,196 dividends payable to unitholders) $ 1,557,514
-------------
NET ASSETS -- 100%
Applicable to 192,451,582 outstanding units $ 192,451,582
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($192,451,582 divided by =============
192,451,582 units outstanding)
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996
(SHOWING PERCENTAGE OF NET ASSETS)
COUPON SECURITIES -- 33.09%
$ 1,000,000 U.S. Treasury Note, 7.875% 5.65% 06/30/96 $ 1,000,000
1,000,000 U.S. Treasury Note, 7.875% 5.72% 07/15/96 1,000,788
1,000,000 U.S. Treasury Note, 7.875% 5.67% 07/15/96 1,000,808
1,000,000 U.S. Treasury Note, 7.875% 5.56% 07/31/96 1,001,826
1,500,000 U.S. Treasury Note, 4.375% 5.21% 08/15/96 1,498,476
1,000,000 U.S. Treasury Note, 4.375% 5.18% 11/15/96 997,032
1,000,000 U.S. Treasury Note, 7.25% 5.11% 11/30/96 1,008,557
1,000,000 U.S. Treasury Note, 7.25% 5.00% 11/30/96 1,009,034
1,500,000 U.S. Treasury Note, 7.25% 4.95% 11/30/96 1,513,873
1,500,000 U.S. Treasury Note, 7.50% 5.43% 12/31/96 1,514,890
1,000,000 U.S. Treasury Note, 6.75% 5.42% 02/28/97 1,008,446
1,000,000 U.S. Treasury Note, 6.75% 5.42% 02/28/97 1,008,457
1,500,000 U.S. Treasury Note, 6.875% 5.73% 02/28/97 1,510,798
1,000,000 U.S. Treasury Note, 6.625% 5.70% 03/31/97 1,006,525
1,500,000 U.S. Treasury Note, 6.625% 5.59% 03/31/97 1,511,078
1,000,000 U.S. Treasury Note, 6.625% 5.72% 03/31/97 1,006,470
2,000,000 U.S. Treasury Note, 6.50% 5.87% 04/30/97 2,009,882
1,000,000 U.S. Treasury Note, 6.50% 5.73% 04/30/97 1,006,081
-------------
TOTAL (cost-- $21,613,021) $ 21,613,021
-------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 66.61%
$ 43,506,000 JP Morgan, Repo 5.30% 07/01/96 $ 43,506,000
-------------
TOTAL (cost-- $43,506,000) $ 43,506,000
-------------
TOTAL INVESTMENTS-- 99.70% (cost-- $65,119,021) $ 65,119,021
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 0.30%
(Includes $15,144 payable to IMG and $218,277
dividends payable to unitholders) $ 198,864
-------------
NET ASSETS -- 100%
Applicable to 65,317,885 outstanding units $ 65,317,885
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($65,317,885 divided by =============
65,317,885 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
Direct Government
Diversified Portfolio Obligation Portfolio
INVESTMENT INCOME:
Interest $10,907,564 $ 2,708,945
----------- -----------
EXPENSES:
Investment advisory, administrative,
and program support fees 617,335 158,955
Custody and bank trust services fees 238,913 60,210
Distribution fees 192,827 48,168
Other fees and expenses 48,207 12,042
----------- -----------
Total Expenses 1,097,282 279,375
----------- -----------
NET INVESTMENT INCOME $ 9,810,282 $ 2,429,570
=========== ===========
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
<TABLE>
<CAPTION>
Direct Government
Diversified Portfolio Obligation Portfolio
1996 1995 1996 1995
_________________________________________________________________________
<S> <C> <C> <C> <C>
From Investment Activities:
Net investment income distributed
to unitholders $ 9,810,282 $ 8,321,294 $ 2,429,570 $ 1,229,044
============= ============== ============ =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 791,179,123 $ 639,646,816 $ 33,201,098 $ 56,205,390
Units issued in reinvestment
of dividends from net investment income 9,810,282 8,321,294 2,429,570 1,229,044
Units redeemed (792,907,257) (627,747,904) (26,391,156) (32,508,505)
------------- -------------- ------------- -------------
Net increase in net assets derived from
unit transactions 8,082,148 20,220,206 9,239,512 24,925,929
Net assets at beginning of year 184,369,434 164,149,228 56,078,373 31,152,444
------------- -------------- ------------ -------------
Net assets at end of year $ 192,451,582 $ 184,369,434 $ 65,317,885 $ 56,078,373
============= ============== ============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1996 1995 1994 1993 1992 1991 1990 1989 1988*
__________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IOWA PUBLIC AGENCY INVESTMENT TRUST
DIVERSIFIED PORTFOLIO
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .051 .049 .029 .030 .047 .066 .077 .081 .069
Dividends Distributed (.051) (.049) (.029) (.030) (.047) (.066) (.077) (.081) (.069)
--------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 5.11% 4.86% 2.88% 2.98% 4.67% 6.68% 7.73% 8.09% 6.90%
Ratio of Expenses to
Average Net Assets 0.57% 0.57% 0.57% 0.57% 0.62% 0.66% 0.67% 0.65% 0.24%
Ratio of Net Income to
Average Net Assets 5.11% 4.86% 2.88% 2.98% 4.67% 6.68% 7.73% 8.09% 6.90%
Net Assets, End
of Period (000 Omitted) $192,452 $184,369 $164,149 $175,721 $182,899 $198,367 $129,980 $102,289 $ 69,324
</TABLE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1996 1995 1994 1993 1992 1991 1990 1989**
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IOWA PUBLIC AGENCY INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION PORTFOLIO
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .050 .048 .028 .028 .041 .066 .078 .083
Dividends Distributed (.050) (.048) (.028) (.028) (.041) (.066) (.078) (.083)
---------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 5.03% 4.82% 2.77% 2.76% 4.06% 6.64% 7.77% 8.32%
Ratio of Expenses to
Average Net Assets 0.58% 0.58% 0.58% 0.58% 0.61% 0.66% 0.65% 0.66%
Ratio of Net Income to
Average Net Assets 5.03% 4.82% 2.77% 2.76% 4.06% 6.64% 7.77% 8.32%
Net Assets,
End of Period (000 Omitted) $ 65,318 $ 56,078 $ 31,152 $ 19,026 $ 16,475 $ 7,441 $ 15,467 $ 800
</TABLE>
*From Commencement of Operations (November 13, 1987).
**From Commencement of Operations (September 1, 1988).
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Iowa Public Agency Investment Trust (IPAIT) is a common law trust
established under Iowa law pursuant to Chapter 28E and Sections 331.555
and 384.21, Iowa Code (1987), as amended, which authorized Iowa public
agencies to jointly invest moneys pursuant to a joint investment
agreement. IPAIT is registered under the Investment Company Act of 1940.
IPAIT was established by the adoption of a Joint Powers Agreement and
Declaration of Trust as of October 1, 1987, and commenced operations on
November 13, 1987. The Joint Powers Agreement and Declaration of Trust
was amended September 1, 1988, and again on May 1, 1993. As amended,
IPAIT is authorized to operate and now operates three investment
programs: 1) the Diversified Portfolio, 2) the Direct Government
Obligation Portfolio, and 3) the Fixed Term Automated (FTA) Investment
Program. These financial statements include activities of the Diversified
and DG0 Portfolios. The objective of the portfolios is to maintain a high
degree of liquidity and safety of principal through investment in
short-term securities as permitted for Iowa public agencies under Iowa
law. The objective of the FTA Investment Program is to provide individual
public agency ownership of investments in legally permissible individual
securities which offer fixed rates of return and fixed maturities.
Norwest Bank Iowa, N.A., serves as the Custodian and Bank Trust Services
Provider, and Investors Management Group serves as the Investment Advisor
and Administrator.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
INVESTMENTS IN SECURITIES
The Diversified and Direct Government Obligation Portfolios consist of
cash and short-term investments valued at amortized cost pursuant to Rule
2a-7 under the Investment Company Act of 1940. This involves valuing a
portfolio security at its original cost on the date of purchase, and
thereafter amortizing any premium or discount on a straight-line basis to
maturity. The amount of premium or discount amortized to income under the
straight-line method does not differ materially from the amount which
would be amortized to income under the interest method. Procedures are
followed to maintain a constant net asset value of $1.00 per unit for
each portfolio.
Security transactions are accounted for on the trade date. Interest
income, including the accretion of discount and amortization of premium,
is recorded on the accrual basis.
Under Governmental Accounting Standards as to custodial credit risk,
IPAIT's investments in securities are classified as category one.
Category one is the most secure investment category description.
Certificates of deposit amounts in excess of the $100,000 federal deposit
insurance are collateralized as required by Iowa law, including the
security provided by the State of Iowa's sinking fund for public
deposits.
In connection with transactions in repurchase agreements, it is IPAIT's
policy that its Custodian take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest at all times. If the
seller defaults, and the value of the collateral declines, realization of
the collateral by IPAIT may be delayed or limited. At June 30, 1996, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with market values of
$47,678,255 and $44,376,000 for the Diversified Portfolio and the Direct
Government Obligation Portfolio, respectively.
UNIT ISSUES, REDEMPTIONS AND DISTRIBUTIONS
IPAIT determines the net asset value of each portfolio daily. Units are
issued and redeemed daily at the daily net asset value. Dividends from
net investment income for each portfolio is declared daily and
distributed monthly.
INCOME TAXES
IPAIT is exempt from federal and state income tax.
FEES AND EXPENSES
Under separate agreements with IPAIT, Investors Management Group (IMG),
the Investment Advisor, Administrator and Program Support Provider, and
Norwest Bank, Iowa, N.A. (Norwest), the Custodian and Bank Trust Services
Provider, are paid an annual fee for operating the investment programs.
For each of the portfolios, IMG receives .230 percent of the average
daily net asset value up to $150 million, .185 percent from $150 to $300
million, and .140 percent exceeding $300 million for investment advisor
and administrative fees. In addition, IMG receives .10 percent of the
average daily net asset value up to $250 million for program support
fees. For the year ended June 30, 1996 the Diversified Portfolio and the
Direct Government Obligation Portfolio paid $617,335 and $158,955,
respectively to IMG for services provided. For each of the portfolios,
Norwest receives .050 percent of $150 million, .045 percent from $150 to
$300 million, and .040 percent exceeding $300 million for custodial
services. Norwest also receives .075 percent of the average daily net
asset value for bank trust services. For the year ended June 30, 1996,
the Diversified Portfolio and the Direct Government Obligation Portfolio
paid $238,913 and $60,210, respectively to Norwest for services provided.
Under a distribution plan the public agency associations collectively
receive an annual fee of .10 percent of the daily net asset value of the
portfolios. For the year ended June 30, 1996, the Diversified Portfolio
and the Direct Government Obligation Portfolio paid $106,032 and $39,017
respectively to the Iowa League of Cities, $21,675 and $9,151,
respectively to the Iowa Association of Municipal Utilities. For the year
ended June 30, 1996, the Diversified Portfolio paid $65,120 to the Iowa
State Association of Counties. IPAIT is responsible for other expenses
incurred directly by IPAIT. All fees are computed daily and paid monthly.
(2) SECURITIES TRANSACTIONS
Purchases of portfolio securities for the Diversified Portfolio and
Direct Government Obligation Portfolio aggregated $15,800,401,570 and
$6,508,426,930 respectively for the year ended June 30, 1996. Proceeds
from maturities of securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $15,766,278,609 and
$6,498,766,938 respectively for the year ended June 30, 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Unitholders
Iowa Public Agency Investment Trust:
We have audited the accompanying statements of net assets of the Diversified
Portfolio and the Direct Government Obligation Portfolio of the Iowa Public
Agency Investment Trust (the Trust Portfolios) as of June 30, 1996, and the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the nine-year period ended
June 30, 1996 for the Diversifed Portfolio and the eight-year period ended June
30, 1996 for the Direct Government Obligation Portfolio. These financial
statements and the financial highlights are the responsibility of the Trust
Portfolios' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Diversified Portfolio and
the Direct Government Obligation Portfolio of the Iowa Public Agency Investment
Trust as of June 30, 1996, and the results of their operations for the year then
ended and the changes in their net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years presented,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
July 26, 1996
<PAGE>
INVESTMENT ADVISOR AND ADMINISTRATOR
INVESTORS MANAGEMENT GROUP
2203 GRAND AVENUE
DES MOINES, IA 50312-5338
* * * * *
CUSTODIAN AND BANK TRUST
SERVICES PROVIDER
Norwest Bank Iowa, N.A.
666 Walnut Street, P.O. Box 837
Des Moines, IA 50304
* * * * *
LEGAL COUNSEL
AHLERS, COONEY, DORWEILER, HAYNE, SMITH & ALLBEE, P.C.
ATTORNEYS AT LAW
100 Court Avenue, Suite 600
Des Moines, IA 50309
* * * * *
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
2500 Ruan Center
Des Moines, IA 50309
* * * * *
IOWA PUBLIC AGENCY INVESTMENT TRUST
c/o Norwest Bank Iowa, N.A.
666 Walnut Street, P.O. Box 837
Des Moines, IA 50304
(800) 872-0140 or (515) 245-3245
