IOWA PUBLIC AGENCY INVESTMENT TRUST DIVERSIFIED FUND
IOWA PUBLIC AGENCY INVESTMENT TRUST DIRECT GOVERNMENT OBLIGATION FUND
FOR THE FISCAL YEAR ENDED
JUNE 30, 1998
PREPARED BY THE
IOWA PUBLIC AGENCY INVESTMENT TRUST
BOARD OF TRUSTEES
<PAGE>
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter from the Chair.................................................. 3
Management Report...................................................... 6
Board of Trustees...................................................... 7
Service Providers...................................................... 8
Organizational Chart................................................... 10
Certificate of Achievement............................................. 11
FINANCIAL SECTION
Diversified Portfolio:
Independent Auditor's Report........................................... 12
Financial Statements................................................... 13
Financial Highlights................................................... 16
Notes to Financial Statements.......................................... 17
Direct Government Obligation Portfolio:
Independent Auditor's Report........................................... 19
Financial Statements................................................... 20
Financial Highlights................................................... 22
Notes to Financial Statements.......................................... 23
INVESTMENT SECTION
Fund Facts Summary..................................................... 25
Diversified Fund Facts............................................. 25
Direct Government Obligation Fund Facts............................ 25
Diversified Fund and Direct Government Obligation Fund................. 26
Introduction....................................................... 26
Risk Profile....................................................... 28
Performance Summary................................................ 29
Past Fiscal Year Economic Summary.................................. 29
Economic Outlook for Fiscal Year 1999.............................. 30
IPAIT Investment Policy................................................ 31
STATISTICAL SECTION
Growth in Fund Units - Diversified Fund and DGO Fund................... 38
Monthly Comparative Yields - Diversified Fund and DGO Fund............. 39
Annual Comparative Yields - Diversified Fund and DGO Fund.............. 40
Annual Net Investment Income - Diversified Fund and DGO Fund........... 40
Glossary of Investment Terms........................................... 41
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK.
<PAGE>
INTRODUCTORY SECTION
<PAGE>
IOWA PUBLIC AGENCY
INVESTMENT TRUST
DIVERSIFIED FUND
IOWA PUBLIC AGENCY
INVESTMENT TRUST
DIRECT GOVERNMENT
OBLIGATION FUND
666 WALNUT, P.O. BOX 837
DES MOINES, IA 50304-0837
August 31, 1998
Dear Fellow IPAIT Participants:
The Iowa Pubic Agency Investment Trust (IPAIT) is pleased to submit to you this
Diversified Fund Comprehensive Annual Financial Report and the Direct Government
Obligation (DGO) Fund Comprehensive Annual Financial Report, both for the fiscal
year ended June 30, 1998. This, IPAIT's eleventh year of serving participant
needs, has been another excellent year of operation for the IPAIT Diversified
and DGO Funds.
IPAIT was created pursuant to Iowa Code Chapter 28E in 1987 to enable eligible
Iowa public agencies to safely and effectively invest their available operating
and reserve funds. Both the Diversified and DGO portfolios have followed
established money market mutual fund investment parameters designed to maintain
a $1 per unit net asset value since inception and were registered with the
Securities and Exchange Commission (SEC) in accordance with 17 C.F.R. Section
270.2a-7 in May 1993. The Diversified Fund and the DGO Fund were among the first
local government investment pools in the country to do so and have been formally
regulated by the SEC since that time.
Both Funds continue to be focused upon their investment objectives as stated in
the IPAIT Investment Policy reproduced in the Investment Section elsewhere in
this report. These goals, in order of priority are safety of invested principal,
followed by maintenance of adequate liquidity, followed by evaluation of
available yield. Within these objectives, each Fund strives to provide
participants with the best available rates of return for legally authorized
investments.
Financial and operating highlights from this past year include:
o Receipt of a Certificate of Achievement for Excellence on Financial
Reporting by the Government Finance Officers Association.
o Average combined daily investments in the Diversified and DGO
portfolios of $236,121,435.
o Placement of 129 portfolio certificates of deposit in Iowa
financial institutions, by the Diversified Fund representing over
$143,850,000.
o An authorized membership total of 343 public bodies for each Fund,
representing 155 municipalities, 83 counties, 72 municipal
utilities and 33 other eligible public agencies.
Use of the program's cash management services continued to serve a record number
of participants. Total funds invested in the program's investment alternatives
reached a combined high for the fiscal year of $386,387,623 on June 30, 1998.
<PAGE>
This report was prepared in its entirety by the Iowa Public Agency Investment
Trust and its various service providers. We take full responsibility for the
accuracy of the data and the completeness and fairness of the financial
statements, supporting schedules, investment performance statistics and
comparisons and various statistical tables found throughout the report.
COMPREHENSIVE ANNUAL FINANCIAL REPORT FORMAT AND CONTENTS
The report is presented in four sections as follows:
INTRODUCTION--contains the Table of Contents, Letter of Transmittal, Management
Report, IPAIT Organizational Chart and a listing of the IPAIT Board of Trustees
and service providers.
FINANCIAL--contains the Diversified Fund and DGO Fund financial statements and
the report of independent auditors, KPMG Peat Marwick LLP.
INVESTMENT--contains a comprehensive discussion of each Fund's investment
performance and operations including the following:
o Fund Facts--a summary of IPAIT's Diversified Fund and DGO Fund
investment strategy, individual fund performance comparison to
other registered money market fund performance benchmarks
including the IBC Financial Data Money Fund Index, and an Economic
Environment Overview for the past fiscal year;
o Complete Portfolio Characteristics--portfolio composition and
summaries for each Fund to include portfolio ownership analysis,
weighted-average maturity illustrations and comparisons, maturity
analysis, portfolio distribution by security type, historical
portfolio asset growth; and
o The IPAIT Diversified Fund and DGO Fund Investment Policy.
STATISTICAL--includes trend data for the past five years for various program
operating components, including total net asset value for each Fund by type of
participant, monthly and annual yield highlights and comparisons, Summary of
Operations, and a glossary of investment terms.
The Government Finance Officers Association of the United States and Canada
(GFOA) awarded a Certificate of Achievement for Excellence in Financial
Reporting to the Iowa Public Agency Investment Trust for its comprehensive
annual financial report (CAFR) for the fiscal year ended June 30, 1997. The
Certificate of Achievement is a prestigious national award recognizing
conformance with the highest standards for preparation of a state and local
government financial reports.
In order to be awarded a Certificate of Achievement, a government unit must
publish an easily readable and efficiently organized comprehensive annual
financial report, whose contents conform to program standards. The CAFR must
satisfy both generally accepted accounting principles and applicable legal
requirements.
A Certificate of Achievement is valid for a period of one year only. We believe
our current report continues to conform to the Certificate of Achievement
program requirements, and we are submitting it to the GFOA.
<PAGE>
On behalf of IPAIT's Board of Trustees, sponsoring associations and service
providers, we thank you for your continued support of the Iowa Public Agency
Investment Trust and encourage you to contact us with comments and suggestions
regarding the operation of the program.
As we begin fiscal year 1998-99, we collectively pledge to continue working
together to safely increase interest income for every participant and to provide
helpful, convenient cash management related information.
Respectfully,
Robert Hagey
Chair, Board of Trustees
IOWA PUBLIC AGENCY INVESTMENT TRUST
<PAGE>
MANAGEMENT REPORT
TO IPAIT PARTICIPANTS:
While IPAIT's Diversified Fund and DGO Fund financial statements and the related
financial data contained in these Annual Reports have been prepared in
conformity with generally accepted accounting principles and such financial
statements have been audited by the Independent Auditor, KPMG Peat Marwick LLP,
the ultimate accuracy and validity of this information is the responsibility of
the management of the Iowa Public Agency Investment Trust Board of Trustees. To
carry out this responsibility, the Board of Trustees maintains financial
policies, procedures, accounting systems and internal controls which the Board
believes provide reasonable, but not absolute, assurance that accurate financial
records are maintained and investment assets are safeguarded.
In addition, the three ex-officio trustees meet with the program's service
providers and legal counsel to review all aspects of IPAIT performance each
month. The Board of Trustees meets quarterly to similarly review program
performance and compliance. Every three years, IPAIT is subjected to an
extensive review of all services and costs of operation by the IPAIT Board of
Trustees. This year's Comprehensive Annual Financial Report (CAFR) will be
submitted to the Government Finance Officers Association for consideration for a
Certificate of Achievement for Excellence in Financial Reporting following
receipt of a Certificate of Achievement for the fiscal year 1996-1997 CAFR.
In the Board's opinion, IPAIT's internal control structure is adequate to ensure
that the financial information in this report presents fairly the IPAIT
Diversified Fund and DGO Fund operations and financial condition.
Sincerely,
Robert Haug
Secretary, Board of Trustees
IOWA PUBLIC AGENCY INVESTMENT TRUST
<PAGE>
BOARD OF TRUSTEES
CHAIR
MR. ROBERT HAGEY,
TREASURER
Sioux County Courthouse
210 Central Avenue, SW
P.O. Box 70
Orange City, IA 51041
(712) 737-3505
Fax: (712) 737-2537
VICE CHAIR
MR. TOM HANAFAN, MAYOR
City Hall
209 Pearl Street
Council Bluffs, IA 51503
(712) 328-4601
Fax: (712) 328-2137
SECOND
VICE CHAIR
MR. KEN ALBERTS,
DIRECTOR PLANNING & DEVELOPMENT
Cedar Falls Utilities
612 East 12th Street
P.O. Box 769
Cedar Falls, IA 50613-0769
(319) 266-1761
Fax: (319) 266-8158
MR. ROBERT RASMUSSEN,
MAYOR
City Hall
118 South Main
Fairfield, IA 52556
(515) 472-6193
Fax: (515) 472-0698
MR. JODY SMITH,
FINANCE OFFICER
City of West Des Moines
P.O. Box 65320
West Des Moines, IA
50265-0320
(515) 222-3600
Fax: (515) 222-3640
MR. JIM AHRENHOLTZ,
OFFICE MANAGER
Denison Municipal Utility
16th & 5th Avenue South
P.O. Box 518
Denison, IA 51442
(712) 263-4154
Fax: (712) 263-8767
MR. NORMAN KEHRBERG,
TREASURER
Plymouth County Courthouse
215 4th Avenue SE
LeMars, IA 51031
(712) 546-7078
Fax: (712) 546-8796
MR. FLOYD MAGNUSSON,
SUPERVISOR
Webster County
Courthouse
703 Central Avenue
Ft. Dodge, IA 50501
(515) 573-7175
Fax: (515) 573-8228
MR. PAUL OLDHAM,
OFFICE MANAGER
Algona Municipal Utilities
104 West Call
P.O. Box 10
Algona, IA 50511
(515) 295-3584
Fax: (515) 295-3364
In addition to the IPAIT Board of Trustees above, the Executive Directors of the
Iowa League of Cities, Iowa State Association of Counties and the Iowa
Association of Municipal Utilities serve as Ex-Officio Members of the IPAIT
Board.
Shown above, from left to right, are Robert Haug, Executive Director, Iowa
Association of Municipal Utilities and IPAIT Secretary to the Board; William
Peterson, Executive Director, Iowa State Association of Counties and IPAIT
Assistant Secretary to the Board; and Thomas Bredeweg, Executive Director Iowa
League of Cities and IPAIT Treasurer to the Board.
<PAGE>
SERVICE PROVIDERS
SPONSORING ASSOCIATIONS
IOWA ASSOCIATION OF MUNICIPAL UTILITIES
6900 NE 14th St., Ste. 27
Ankeny, IA 50021-8997
Robert Haug, Executive Director
515-289-1999
Iowa League of Cities
317 Sixth Avenue
Suite 1400
Des Moines, IA 50309
Thomas G. Bredeweg, Executive Director
515-244-7282
IOWA STATE ASSOCIATION OF COUNTIES
701 East Court Avenue
Des Moines, IA 50309
William R. Peterson, Executive Director
515-244-7181
<PAGE>
SERVICE PROVIDERS (CONTINUED)
INVESTMENT
ADVISOR-ADMINISTRATOR
Investors Management Group
2203 Grand Avenue
Des Moines, IA 50312
MARK MCCLURG 515-245-9534
KATHRYN BEYER 515-245-9523
PAUL KRUSE 515-245-9532
CUSTODIAN AND BANK
TRUST SERVICES PROVIDER
Norwest Bank Iowa, N.A.
666 Walnut Street, P.O. Box 837
Des Moines, IA 50304
BRUCE KIELHORN 515-245-3200
JEAN LETH 515-245-3234
LEGAL COUNSEL
Ahlers, Cooney, Dorweiler, Haynie, Smith & Allbee, P.C.
100 Court Avenue, Suite 600
Des Moines, IA 50309
EDGAR BITTLE 515-246-0312
ELIZABETH GROB 515-246-0305
INDEPENDENT AUDITOR
KPMG Peat Marwick LLP
2500 Ruan Center
Des Moines, IA 50309
<PAGE>
ORGANIZATIONAL CHART
IOWA PUBLIC AGENCY INVESTMENT TRUST (IPAIT)
DIVERSIFIED FUND AND
DIRECT GOVERNMENT OBLIGATION FUND
ADMINISTRATION FLOW CHART
________________________________ ____________________________________
| IPAIT BOARD OF TRUSTEES | | SPONSORING ASSOCIATIONS |
| | | |
| Robert Hagey, Chair | | |
| Tom Hanafan, Vice Chair | | Iowa League of Cities |
| Ken Alberts, Second Vice Chair |-----| Tom Bredeweg |
| Robert Rasmussen, Board Member | | Iowa State Association of Counties |
| Jody Smith, Board Member | | William Peterson |
| Jim Ahrenholtz, Board Member | | Iowa Association of |
| Norman Kehrberg, Board Member | | Municipal Utilities |
| Floyd Magnusson, Board Member | | Bob Haug |
| Paul Oldham, Board Member | | |
|________________________________| |____________________________________|
|
|
______________|_________________________________________________________
| | | | | | |
| _______|_________ | ________|__________ | ______________|____________ |
| | IPAIT CUSTODIAN ||| IPAIT BANK ||| IPAIT INVESTMENT ADVISOR ||
| | ||| TRUST SERVICES ||| ||
| |Norwest Bank Iowa||| Norwest Bank Iowa ||| Investors Management Group||
| | Jean Leth ||| Bruce Kiehorn ||| Kathryn Beyer, CFA ||
| |_________________|||___________________|||___________________________||
_|_________________ | _______|____________________ |
| LEGAL COUNSEL | | | IPAIT AUDITOR | |
| Ahlers, Cooney, | | | | |
| Dorweiler, Haynie, | | | KPMG Peat Marwick LLP | |
|Smith & Allbee, P.C.| | |CERTIFIED PUBLIC ACCOUNTANTS| |
| ATTORNEYS AT LAW | | | | |
| Edgar Bittle | | | | |
|____________________| | |____________________________| |
| |
______________|_______________ ____________________________|_
| IPAIT ADMINISTRATION | | IPAIT PROGRAM |
| | | DEVELOPMENT |
| Investors Management Group | | Investors Management Group |
| Mark McClurg | | Paul Kruse |
|______________________________| |______________________________|
<PAGE>
_______________________________________________________________
| |
| CERTIFICATE OF |
| ACHIEVEMENT |
| FOR EXCELLENCE |
| IN FINANCIAL |
| REPORTING |
| |
| PRESENTED TO |
| |
| IOWA PUBLIC AGENCY |
| INVESTMENT TRUST |
| |
| FOR ITS COMPREHENSIVE ANNUAL |
| FINANCIAL REPORT |
| FOR THE FISCAL YEAR ENDED |
| JUNE 30, 1997 |
| A CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL |
| REPORTING IS PRESENTED BY THE GOVERNMENT FINANCE OFFICERS |
| ASSOCIATION OF THE UNITED STATES AND CANADA TO |
| GOVERNMENT UNITS AND PUBLIC EMPLOYEE RETIREMENT |
| SYSTEMS WHOSE COMPREHENSIVE ANNUAL FINANCIAL |
| REPORTS (CAFRS) ACHIEVE THE HIGHEST |
| STANDARDS IN GOVERNMENT ACCOUNTING |
| AND FINANCIAL REPORTING. |
| |
| |
| |
| |
| GOVERNMENT FINANCE DOUGLAS R. ELLSWORTH |
| OFFICERS ASSOCIATION PRESIDENT |
| OF THE UNITED STATES |
| AND CANADA |
| CORPORATION SEAL JEFFREY L. ESSER |
| CHICAGO EXECUTIVE DIRECTOR |
|_______________________________________________________________|
<PAGE>
FINANCIAL SECTION
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Unitholders
Iowa Public Agency Investment Trust:
We have audited the accompanying statement of net assets of the Diversified
Portfolio of the Iowa Public Agency Investment Trust (the Portfolio) as of June
30, 1998, and the related statement 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
ten-year period ended June 30, 1998. These financial statements and the
financial highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audit.
We conducted our audits 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 audits provide 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 of
the Iowa Public Agency Investment Trust as of June 30, 1998, and the results of
its operations for the year then ended and the changes in its 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 24, 1998
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1998
(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 -- 7.87%
$ 4,000,000 Fed. National Mtge. Assoc.-Disc. Note 5.58% 07/21/98 $ 3,987,978
5,000,000 Fed. Home Loan Mtge. Corp.-Disc. Note 5.56% 07/31/98 4,977,291
5,000,000 Fed. National Mtge. Assoc.-Disc. Note 5.58% 08/24/98 4,959,125
-------------
TOTAL (cost-- $13,924,394) $ 13,924,394
-------------
COUPON SECURITIES -- 37.19%
$ 5,000,000 Federal National Mtge. Assoc., 5.19% 5.58% 07/20/98 $ 4,998,803
4,000,000 Federal Home Loan Bank, 5.635% 5.58% 07/21/98 3,999,810
1,250,000 Federal Farm Credit Bank, 5.375% 5.60% 08/03/98 1,249,696
2,215,000 Federal National Mtge. Assoc., 9.40% 5.61% 08/10/98 2,223,827
3,500,000 Student Loan Marketing Assoc., Variable Rate, 5.32%* 5.58% 08/20/98 3,498,788
5,000,000 Federal National Mtge. Assoc., 5.55% 5.67% 09/08/98 4,998,184
4,500,000 Federal National Mtge. Assoc., 5.71% 5.65% 09/09/98 4,500,505
6,500,000 Federal National Mtge. Assoc., 5.71% 5.63% 09/09/98 6,500,452
5,000,000 Federal Home Loan Bank, Variable Rate, 5.59%* 5.72% 10/23/98 4,999,497
1,000,000 Federal Home Loan Bank, Variable Rate, 4.80%* 5.68% 10/27/98 997,405
4,000,000 Federal Farm Credit Bank, Variable Rate, 5.57%* 5.65% 11/03/98 4,000,551
3,000,000 Student Loan Marketing Assoc., Variable Rate, 5.62%* 5.75% 11/05/98 3,000,066
3,380,000 Federal Home Loan Mtge. Corp., 5.70% 5.15% 02/02/99 3,380,964
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.34%* 5.57% 02/08/99 4,994,695
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.33%* 5.62% 02/22/99 4,994,340
7,500,000 Student Loan Marketing Assoc., Variable Rate, 5.66%* 5.58% 04/16/99 7,497,090
-------------
TOTAL (cost-- $65,834,673) $ 65,834,673
-------------
CERTIFICATES OF DEPOSIT-- 26.01%
$ 250,000 Citizens Bank, Sac City 5.90% 07/06/98 $ 250,000
500,000 American Bank, LeMars 5.90% 07/09/98 500,000
150,000 Community Bank, Preston 5.90% 07/20/98 150,000
1,000,000 Union State Bank, Monona 5.90% 07/20/98 1,000,000
500,000 Mid-Iowa Savings Bank, Newton 5.75% 07/20/98 500,000
500,000 American Bank, LeMars 5.90% 07/22/98 500,000
1,000,000 First State Bank, Conrad 5.65% 07/22/98 1,000,000
500,000 American Bank, Sioux Center 5.77% 07/24/98 500,000
400,000 DeWitt Bank & Trust, DeWitt 6.10% 07/29/98 400,000
250,000 Farmers State Bank, Hawarden 5.75% 07/29/98 250,000
2,000,000 Community First State Bank, Decorah 5.70% 08/04/98 2,000,000
400,000 DeWitt Bank & Trust, DeWitt 6.11% 08/05/98 400,000
500,000 Peoples State Bank, Elkader 5.75% 08/10/98 500,000
400,000 DeWitt Bank & Trust, DeWitt 6.13% 08/12/98 400,000
2,500,000 Norwest Bank, Pleasant Hill 5.80% 08/17/98 2,500,000
500,000 Citizens Bank, Sac City 6.10% 08/21/98 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 6.05% 08/21/98 250,000
2,000,000 Heritage Bank, Holstein 5.80% 08/24/98 2,000,000
500,000 American Bank, Sioux Center 5.75% 08/24/98 500,000
200,000 Northwestern State Bank, Orange City 5.80% 08/26/98 200,000
500,000 First State Bank, Nora Springs 6.10% 08/28/98 500,000
2,500,000 Bankers Trust, Des Moines 5.75% 09/08/98 2,500,000
500,000 American Bank, Sioux Center 5.77% 09/09/98 500,000
250,000 Ackley State Bank, Ackley 6.05% 09/10/98 250,000
300,000 State Savings Bank, Baxter 6.05% 09/10/98 300,000
1,000,000 St. Ansgar State Bank, St. Ansgar 6.10% 09/11/98 1,000,000
500,000 Maquoketa State Bank, Maquoketa 6.21% 09/11/98 500,000
*Denotes floating rate investment with interest rate as of June 30, 1998.
<PAGE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1998 (CONTINUED)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- -------------------------------------------------------------------------------------------------------------------------
$ 200,000 Treynor State Bank, Treynor 6.25% 09/11/98 $ 200,000
500,000 DeWitt Bank & Trust, DeWitt 6.05% 09/11/98 500,000
1,500,000 Mercantile Bank, Mt. Pleasant 5.80% 09/11/98 1,500,000
1,000,000 St. Ansgar State Bank, St. Ansgar 5.80% 09/14/98 1,000,000
250,000 First Bank & Trust, Rock Rapids 6.10% 09/16/98 250,000
500,000 First American State Bank, Ames 6.00% 09/18/98 500,000
1,000,000 St. Ansgar State Bank, St. Ansgar 5.80% 09/21/98 1,000,000
2,500,000 Bankers Trust, Des Moines 5.75% 09/21/98 2,500,000
400,000 Exchange Bank, Collins 5.80% 10/13/98 400,000
300,000 Community Bank, Miles 6.10% 10/19/98 300,000
150,000 Community Bank, Preston 5.80% 10/19/98 150,000
2,500,000 Norwest Bank, Clive 6.10% 11/12/98 2,500,000
500,000 Peoples State Bank, Elkader 5.80% 11/16/98 500,000
300,000 First State Bank, Ida Grove 5.80% 11/30/98 300,000
1,000,000 Peoples State Bank, Elma 5.80% 12/21/98 1,000,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 5.87% 02/18/99 250,000
500,000 Union State Bank, Winterset 6.00% 02/26/99 500,000
500,000 First Bank & Trust, Rock Rapids 5.90% 03/04/99 500,000
250,000 Ackley State Bank, Ackley 6.00% 03/09/99 250,000
5,000,000 Magna Bank, Waterloo 6.05% 03/19/99 5,000,000
1,000,000 American Bank, LeMars 6.00% 04/14/99 1,000,000
400,000 Exchange Bank, Collins 6.00% 04/15/99 400,000
200,000 Maxwell State Bank, Maxwell 6.00% 04/22/99 200,000
500,000 American Bank, LeMars 6.00% 04/30/99 500,000
5,000,000 Magna Bank, Waterloo 5.99% 06/16/99 5,000,000
-------------
TOTAL (cost-- $46,050,000) $ 46,050,000
-------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 28.37%
$ 25,107,000 Merrill Lynch, Repurchase Agreement 5.70% 07/01/98 $ 25,107,000
25,107,000 J P Morgan, Repurchase Agreement 5.60% 07/01/98 25,107,000
-------------
TOTAL (cost-- $50,214,000) $ 50,214,000
-------------
TOTAL INVESTMENTS-- 99.44% (cost-- $176,023,067) $ 176,023,067
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- .56%
(Includes $47,649 payable to IMG and $747,780
dividends payable to unitholders) $ 995,647
-------------
NET ASSETS -- 100%
Applicable to 177,018,714 outstanding units $ 177,018,714
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($177,018,714 =============
divided by 177,018,714 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF OPERATIONS -- DIVERSIFIED PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1998 1997 1996 1995 1994
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME: $ 10,298,218 $11,734,493 $10,907,564 $9,290,842 $5,967,498
EXPENSES:
Investment advisory, administrative,
and program support fees 585,147 675,479 617,335 548,112 558,545
Custody and bank trust services fees 225,456 264,103 238,913 210,185 214,341
Distribution fees 181,630 213,836 192,827 169,001 172,396
Other fees and expenses 45,407 53,457 48,207 42,250 43,098
------------ ----------- ----------- ---------- ----------
TOTAL EXPENSES 1,037,640 1,206,875 1,097,282 969,548 988,380
------------ ----------- ----------- ---------- ----------
NET INVESTMENT INCOME $ 9,260,578 $10,527,618 $ 9,810,282 $8,321,294 $4,979,118
============ =========== =========== ========== ==========
</TABLE>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS -- DIVERSIFIED PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1998 1997
-----------------------------
From Investment Activities:
Net investment income distributed
to unitholders $ 9,260,578 $ 10,527,618
============= =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 735,507,788 $ 690,467,870
Units issued in reinvestment
of dividends from net investment income 9,260,578 10,527,618
Units redeemed (766,798,742) (694,397,980)
------------- -------------
Net increase in net assets derived from
unit transactions (22,030,376) 6,597,508
Net assets at beginning of year 199,049,090 192,451,582
------------- -------------
Net assets at end of year $ 177,018,714 $ 199,049,090
============= =============
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST
DIVERSIFIED PORTFOLIO
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .051 .049 .051 .049 .029 .030 .047 .066 .077 .081
Dividends Distributed (.051) (.049) (.051) (.049) (.029) (.030) (.047) (.066) (.077) (.081)
--------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
===================================================================================================
Total Return 5.10% 4.92% 5.11% 4.86% 2.88% 2.98% 4.67% 6.68% 7.73% 8.09%
Ratio of Expenses to
Average Net Assets 0.57% 0.56% 0.57% 0.57% 0.57% 0.57% 0.62% 0.66% 0.67% 0.65%
Ratio of Net Income to
Average Net Assets 5.10% 4.92% 5.11% 4.86% 2.88% 2.98% 4.67% 6.68% 7.73% 8.09%
Net Assets,
End of Period (000 Omitted) $177,019 $199,049 $192,452 $184,369 $164,149 $175,721 $182,899 $198,367 $129,980 $102,289
</TABLE>
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 authorizes 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 investment programs, one
of which is the Diversified Portfolio. These financial statements include
activities of the Diversified Portfolio. The objective of the portfolio
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. 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 net investment income
during the period. Actual results could differ from those estimates.
In reporting financial activity, IPAIT applies applicable Governmental
Accounting Standards Board (GASB) pronouncements, as well as all
Financial Accounting Standards Board and predecessor statements and
interpretations not in conflict with GASB pronouncements.
IPAIT is exposed to various risks in connection with operation of the
Diversified Portfolio and adheres to policies which mitigate market risk
in the portfolio and maintains insurance coverage for fidelity and errors
and omissions exposures. IPAIT has had no claims or settlements under its
insurance coverage since its organization in 1987.
INVESTMENTS IN SECURITIES
The Diversified Portfolio consists 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 the portfolio.
IPAIT is authorized by investment policy and statute to invest public
funds in obligations of the U.S. government, its agencies and
instrumentalities; certificates of deposit and other evidences of deposit
at federally insured Iowa depository institutions approved and secured
pursuant to Chapter 12 of the Code of Iowa; and repurchase agreements,
provided that the underlying collateral consists of obligations of the
U.S. government, its agencies and instrumentalities and that IPAIT's
custodian takes delivery of the collateral either directly or through an
authorized custodian.
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.
<PAGE>
Under Governmental Accounting Standards as to custodial credit risk,
IPAIT's investments in securities are classified as category one.
Category one consists of insured or registered securities or securities
held by IPAIT or its agent in IPAIT's name and is the most secure
investment category description.
Certificates of deposit amounts in excess of the $100,000 federal deposit
insurance are collateralized with securities or letters of credit held by
IPAIT's custodian in IPAIT's name, or by the Iowa multiple financial
institution collateral pool in accordance with Chapter 12C of the Code of
Iowa, which provides for additional assessments against depositories to
ensure there will be no loss of public funds.
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, 1998, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with a market value of
$51,835,610 for the Diversified Portfolio.
UNIT ISSUES, REDEMPTIONS AND DISTRIBUTIONS
IPAIT determines the net asset value of the portfolio daily. Units are
issued and redeemed daily at the daily net asset value. Dividends from
net investment income for each portfolio are 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.
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,
1998 the Diversified Portfolio paid $585,147 to IMG for services
provided. 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, 1998, the Diversified Portfolio paid $225,456 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, 1998, the
Diversified Portfolio paid $91,635 to the Iowa League of Cities, $23,472
to the Iowa Association of Municipal Utilities, and $66,523 to the Iowa
State Association of Counties. IPAIT is responsible for operating
expenses incurred directly by IPAIT. All fees are computed daily and paid
monthly.
(2) SECURITIES TRANSACTIONS
Purchases of portfolio securities for the Diversified Portfolio
aggregated $14,382,650,170 for the year ended June 30, 1998. Proceeds
from maturities of securities for the Diversified Portfolio aggregated
$14,406,774,580 for the year ended June 30, 1998.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Trustees and Unitholders
Iowa Public Agency Investment Trust:
We have audited the accompanying statement of net assets of the Direct
Government Obligation Portfolio of the Iowa Public Agency Investment Trust (the
Portfolio) as of June 30, 1998, and the related statement 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 ten-year period ended June 30, 1998. These financial
statements and the financial highlights are the responsibility of the Trust
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audits 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 audits provide 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 Direct Government
Obligation Portfolio of the Iowa Public Agency Investment Trust as of June 30,
1998, and the results of its operations for the year then ended and the changes
in its 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 24, 1998
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1998
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COUPON SECURITIES --4.83%
$ 2,000,000 U.S. Treasury Note, 5.625% 5.50% 11/30/98 $ 2,000,924
2,000,000 U.S. Treasury Note, 5.875% 5.55% 02/28/99 2,003,997
-------------
TOTAL (cost-- $4,004,921) $ 4,004,921
-------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 95.53%
$ 79,158,000 SBC Warburg, Repurchase Agreement 5.55% 07/01/98 $ 79,158,000
TOTAL (cost-- $79,158,000) -------------
TOTAL INVESTMENTS-- 100.36% (cost-- $83,162,921) $ 83,162,921
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- (.36%)
(Includes $21,325 payable to IMG and $322,040
dividends payable to unitholders) ($297,888)
-------------
NET ASSETS -- 100%
Applicable to 82,865,033 outstanding units $ 82,865,033
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($82,865,033 =============
divided by 82,865,033 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF OPERATIONS -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1998 1997 1996 1995 1994
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME: $ 3,039,348 $ 3,033,698 $ 2,708,945 $ 1,376,422 $ 912,855
EXPENSES:
Investment advisory, administrative,
and program support fees 179,822 184,323 158,955 83,853 88,908
Custody and bank trust services fees 68,114 69,984 60,210 31,762 33,676
Distribution fees 54,491 55,987 48,168 25,410 26,942
Other fees and expenses 13,624 13,998 12,042 6,353 6,735
----------- ----------- ----------- ----------- ----------
Total Expenses 316,051 324,292 279,375 147,378 156,261
----------- ----------- ----------- ----------- ----------
NET INVESTMENT INCOME $ 2,723,297 $ 2,709,406 $ 2,429,570 $ 1,229,044 $ 756,594
=========== =========== =========== =========== ==========
</TABLE>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1998 1997
------------------------------
From Investment Activities:
Net investment income distributed
to unitholders $ 2,723,297 $ 2,709,406
============ =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 53,493,135 $ 20,560,746
Units issued in reinvestment
of dividends from net investment income 2,723,297 2,709,406
Units redeemed (32,177,079) (29,762,357)
------------ -------------
Net increase in net assets derived from
unit transactions 24,039,353 (6,492,205)
Net assets at beginning of year 58,825,680 65,317,885
------------ -------------
Net assets at end of year $ 82,865,033 $ 58,825,680
============ =============
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION PORTFOLIO
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .050 .048 .050 .048 .028 .028 .041 .066 .078 .083
Dividends Distributed (.050) (.048) (.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 $ 1.000 $ 1.000
Total Return 4.98% 4.84% 5.03% 4.82% 2.77% 2.76% 4.06% 6.64% 7.77% 8.32%
Ratio of Expenses to
Average Net Assets 0.60% 0.58% 0.58% 0.58% 0.58% 0.58% 0.61% 0.66% 0.65% 0.66%
Ratio of Net Income to
Average Net Assets 4.98% 4.84% 5.03% 4.82% 2.77% 2.76% 4.06% 6.64% 7.77% 8.32%
Net Assets,
End of Period (000 Omitted) $82,865 $58,826 $65,318 $56,078 $31,152 $19,026 $16,475 $ 7,441 $15,467 $ 800
*From Commencement of Operations (September 1, 1988).
</TABLE>
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 authorizes 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 investment programs, one
of which is the Direct Government Obligation Portfolio. These financial
statements include activities of the Direct Government Obligation
Portfolio. The objective of the portfolio 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. 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 net investment income
during the period. Actual results could differ from those estimates.
In reporting financial activity, IPAIT applies applicable Governmental
Accounting Standards Board (GASB) pronouncements, as well as all
Financial Accounting Standards Board and predecessor statements and
interpretations not in conflict with GASB pronouncements.
IPAIT is exposed to various risks in connection with operation of the
Direct Government Obligation Portfolio and adheres to policies which
mitigate market risk in the portfolio and maintains insurance coverage
for fidelity and errors and omissions exposures. IPAIT has had no claims
or settlements under its insurance coverage since its organization in
1987.
INVESTMENTS IN SECURITIES
The Direct Government Obligation Portfolio consists 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 the
portfolio.
IPAIT is authorized by investment policy and statute to invest public
funds in obligations of the U.S. government; and repurchase agreements,
provided that the underlying collateral consists of obligations of the
U.S. government and that IPAIT's custodian takes delivery of the
collateral either directly or through an authorized custodian.
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.
<PAGE>
Under Governmental Accounting Standards as to custodial credit risk,
IPAIT's investments in securities are classified as category one.
Category one consists of insured or registered securities or securities
held by IPAIT or its agent in IPAIT's name and is the most secure
investment category description.
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, 1998, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with a market value of
$81,532,740 for the Direct Government Obligation Portfolio.
UNIT ISSUES, REDEMPTIONS AND DISTRIBUTIONS
IPAIT determines the net asset value of the portfolio daily. Units are
issued and redeemed daily at the daily net asset value. Dividends from
net investment income for each portfolio are 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.
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,
1998, the Direct Government Obligation Portfolio paid $179,822 to IMG for
services provided. 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, 1998, the Direct Government Obligation Portfolio paid $68,114 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,
1998, the Direct Government Obligation Portfolio paid $49,896 to the Iowa
League of Cities and $4,595 to the Iowa Association of Municipal
Utilities. 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 Direct Government Obligation
Portfolio aggregated $12,769,219,547 for the year ended June 30, 1998.
Proceeds from maturities of securities for the Direct Government
Obligation Portfolio aggregated $12,744,866,000 for the year ended June
30, 1998.
<PAGE>
INVESTMENT SECTION
<PAGE>
FUND FACTS SUMMARY
DIVERSIFIED FUND FACTS
AS OF JUNE 30, 1998
INVESTMENT STRATEGY/GOALS: To provide a safe, liquid, effective investment
alternative for the operating and reserve funds for Iowa's municipalities,
counties, municipal utilities and other eligible public agencies by jointly
investing participant funds in a professionally managed portfolio of
short-term, high-quality, legally authorized marketable securities.
DATE OF INCEPTION: November 13, 1987
TOTAL NET ASSETS: $176 million
BENCHMARKS: IBC U.S. Government & Agencies Money Fund Report Index, Iowa Code
Chapter 74A 32-89 day Public Funds Rates, and Iowa Code Chapter 74A 90-179
day Public Funds Rates.
PERFORMANCE OBJECTIVE: To provide the highest level of current income from
investment in a portfolio of U.S. government and agency securities and other
authorized securities collateralized by U.S. government and agency securities
as is consistent with, in order of priority, preservation of principal and
provision of necessary liquidity.
INVESTMENT ADVISOR:
Investors Management Group
MANAGEMENT FEES:
Fifteen basis points (0.15%)
TOTAL EXPENSE RATIO:
Fifty-six basis points (0.56%)
DIRECT GOVERNMENT OBLIGATION (DGO) FUND FACTS
AS OF JUNE 30, 1998
INVESTMENT STRATEGY/GOALS: To provide a safe, liquid, effective investment
alternative for the bond proceeds, operating and reserve funds for Iowa's
municipalities, counties, municipal utilities and other eligible public
agencies that are limited to investment in only direct obligations of the
U.S. government by jointly investing participant funds into a professionally
managed portfolio of short-term, eligible marketable securities.
DATE OF INCEPTION: September 1, 1988
TOTAL NET ASSETS: $83 million
BENCHMARKS: IBC U.S. Treasury & Repo Money Fund Report Index, Iowa Code Chapter
74A 32-89 day Public Funds Rates, and Iowa Code Chapter 74A 90-179 day Public
Funds Rates.
PERFORMANCE OBJECTIVE: To provide the highest level of income from investment
in a portfolio of U.S. government securities as is consistent with, in order
of priority, preservation of principal and provision of necessary liquidity.
INVESTMENT ADVISOR: Investors Management Group
MANAGEMENT FEES: Fifteen basis points (0.15%)
TOTAL EXPENSE RATIO: Fifty-eight basis points (0.58%)
<PAGE>
DIVERSIFIED FUND AND
DIRECT GOVERNMENT OBLIGATION FUND
INVESTMENT RESULTS REVIEW
FISCAL YEAR ENDED JUNE 30, 1998
INTRODUCTION
The Diversified Fund and the Direct Government Obligation (DGO) Fund are each
short-term investment pools of high-quality money market instruments. Each pool
has been registered, since May of 1993, with the Securities and Exchange
Commission (SEC) under the federal Investment Company Act of 1940 and each is
operated in accordance with 17 C.F.R. Section 270.2a-7 (Rule 2a-7). Each pool
complied voluntarily with all Rule 2a-7 money market fund operating guidelines
from inception until formal registration in 1993.
The Diversified Fund is made up of a professionally managed portfolio of U.S.
government and federal agency securities and collateralized certificates of
deposit of Iowa financial institutions and perfected repurchase agreements, each
collateralized by U.S. government and federal agency securities. The Diversified
Fund is typically used for the investment of all public funds subject to the
Iowa public funds statutory provisions invested by a participant unless other
participant-specific investment restrictions exist.
(GRAPHICS OMITTED These charts present Ownership Analysis as of June 30, 1998
for IPAIT Diversified Fund and IPAIT DGO Fund.)
The DGO Fund is identical in every respect to the Diversified Fund except that
it is invested exclusively in direct U.S. government obligations and repurchase
agreements collateralized by direct U.S. government obligations. The DGO Fund is
typically used to invest those public funds of a participant that are subject to
more stringent investment restrictions than those provided by Iowa public funds
statutes, for example bond proceeds whose investment alternatives may be limited
to the types of securities found in the DGO Fund.
The investment objective of both the Diversified Fund and the DGO Fund is to
provide as high a level of current income as is consistent with preservation of
invested principal and provision of adequate liquidity to meet participants'
daily cash flow needs. As a general policy, all purchased securities will be
held until they mature. However, in an effort to increase yields, IPAIT may sell
securities and realize capital gains when there are perceived disparities
(GRAPHICS OMITTED These charts present Historical Portfolio Cash Flow for IPAIT
Diversified Fund and IPAIT DGO Fund from 1993 to 1998.)
<PAGE>
between maturities for various categories of authorized investments. Summaries
of all securities trades for each Fund are regularly provided monthly to the
IPAIT Board of Trustees for review.
Both portfolios have been managed by Investors Management Group, IPAIT's Des
Moines, Iowa based investment advisor, since inception. Aggregate cash flows for
each Fund are monitored daily and compared to respective Fund cash flow patterns
of previous periods. Fund cash flow patterns throughout the fiscal period, as
compared to previous years, have traditionally been generally repetitive. Ten
years of operating history create a very helpful tool to gauge necessary pool
liquidity needs.
Both the Diversified Fund and the DGO Fund follow a fundamental strategy of
investing when interest rates rise and fund cash flows provide liquidity for
purchases. In addition, the Diversified Fund actively monitors rates offered by
Iowa financial institutions for public funds certificates of deposit which are
collateralized according to Iowa statutory requirements. Institutions
experiencing strong loan demand typically offer rates that are at or above those
available for marketable securities, presenting a helpful portfolio investment
alternative.
To assure adequate liquidity for anticipated and unanticipated participant
withdrawals, IPAIT continually monitors the weighted-average maturity (WAM) of
both the Diversified Fund and the DGO Fund. Each Fund's WAM is similarly
compared to the IBC Financial Data average for all registered money market
funds. Presented in the previous column is the WAM for each Fund as compared to
the IBC Financial Data average for all similar registered money market funds for
the fiscal period.
(GRAPHICS OMITTED These charts present Weighted Average Maturiy Comparison IPAIT
Diversified Fund vs. IBC US Gov. & Agency Index July 1997 - June 1998 and
Weighted Average Maturity Comparison IPAIT DGO vs. IBC US Treasury & Repo Index
July 1997 - June 1998.)
Each Fund accrues interest income daily and pays accrued income monthly to
participant accounts. Interest is paid on the first business day of the month
following accrual. Daily income amounts are calculated by the amortized cost
method. Under this method, a security is initially valued at cost on the date of
purchase and, thereafter, any premium or discount is amortized on a
straight-line basis to maturity.
The IPAIT Administrator-Advisor values each Fund's portfolio weekly at current
market value, based upon actual market quotations. Each Fund's current market
valuation is compared to that Fund's current amortized cost basis. In accordance
with the established operating parameters of Rule 2a-7 and IPAIT's internal
(GRAPHICS OMITTED These charts present Amortized Cost vs. Market Value Per Share
for IPAIT Diversified Fund and IPAIT DGO Fund July 1, 1995 - June 30, 1998.)
<PAGE>
controls and procedures, any deviation in net asset value based upon available
market quotations from each Fund's $1.00 amortized cost per unit is carefully
monitored. Deviations may never exceed 0.5 percent and historically have never
exceeded 0.1 percent. Illustrated on the previous page are the amortized cost
versus market value per unit comparisons for the past three fiscal years for
each Fund.
The Diversified Fund's investment performance is regularly compared to three
established benchmarks, the IBC Financial Data average rate for all registered
Rule 2a-7 money market funds investing in U.S. government and federal agency
securities, the Iowa Code Chapter 74A rate for 32-89, and 90-179 day
certificates of deposit issued by Iowa financial institutions for public funds
in the state. The DGO Fund is similarly compared to the IBC Financial Data
average rate for all Rule 2a-7 money market funds that invest in only direct
obligations of the U. S. government as well as the Iowa Code Chapter 74A rates
for 32-89 and 90-179 day certificates of deposit.
(GRAPHICS OMITTED These charts present IPAIT Diversified Fund vs. Iowa Chap.
74A(90-179 & 32-89 Day) & IBC US Gov. & Agency Fund Index July 1997 - June 1998
and IPAIT DGO Fund vs. Iowa Chap. 74A (90-179 & 32-89 Dat) & IBC US Treasury &
Repo Fund Index July 1997 - June 1998.)
The Iowa Code Chapter 74A rates are distributed monthly by the state Treasurer's
office for various investment periods and are intended to be the minimum rates
at which Iowa financial institutions can accept public funds for timed deposits.
While a public body must commit funds for minimum periods of time to access the
Chapter 74A rates, IPAIT's Diversified Fund and DGO Fund typically offer rates
at or above the Chapter 74A benchmarks with complete daily liquidity.
RISK PROFILE
Both the Diversified Fund and the DGO Fund are low in risk profile. Both Funds
limit portfolio investments to:
1. No single portfolio investment may exceed 365 days to maturity and
2. The weighted average maturity (WAM) may never exceed 90 days.
In addition to the above investment maturity restrictions common to both Funds,
the Diversified Fund limits itself to U.S. government and federal agency
securities and perfected repurchase agreements collateralized by U.S. government
and federal agency securities and Iowa financial institution certificates of
deposit similarly collateralized. The DGO Fund further limits itself to only
direct obligations of the U. S. government and perfected repurchase agreements
collateralized by direct obligations of the U.S. government. This combination of
(GRAPHICS OMITTED These charts present Maturity Analysis as of June 30, 1998 for
IPAIT Diversified Fund and IPAIT DGO Fund.)
<PAGE>
short average maturities and extremely high-quality credit instruments provides
eligible Iowa public funds investors with a safe, effective investment
alternative.
As noted previously, both the Diversified Fund and the DGO Fund carefully limit
themselves to high credit-quality securities. In addition, IPAIT monitors a
broad array of economic indicators as well as activities of the Federal Reserve
Board to be able to position each Fund's WAM to take advantage of projected
interest rate environments. The relatively flat yield curve throughout the
fiscal period resulted in stable WAM's for both the Diversified Fund and the DGO
Fund. As the Diversified Fund identified Iowa financial institution certificates
of deposit that offered attractive investment opportunities, funds were invested
in term securities that tended to keep the Diversified Fund WAM comparable to
the industry index. A lack of similar investment opportunities for the DGO Fund
resulted in a substantially shorter WAM for the period.
It is important to note that portfolio liquidity needs for the program must
control evaluation of alternative portfolio management opportunities at all
times. If historical cash flow analysis indicates that participants will need to
withdraw funds in the aggregate, material extension of either Fund's portfolio
is not a viable alternative.
(GRAPHICS OMITTED These charts present Distribution by Security Type as of June
30, 1998 for IPAIT Diversified Fund and IPAIT DGO Fund.)
PERFORMANCE SUMMARY
For the one-year period ended June 30, 1998, the Diversified Fund and DGO Fund
reported a ratio of net income to average net assets of 5.10 percent and 4.98
percent respectively, net of all operating expenses. This figure exceeded the
IBC Indices for each Fund, which returned 4.90 percent and 4.85 percent
respectively for the fiscal period.
Although both the Diversified Fund and the DGO Fund are liquidity pools, their
performance over time has consistently exceeded the IBC Index as illustrated
below.
(GRAPHICS OMITTED These charts present IPAIT Diversified Fund vs. IBC US Gov. &
Agency Index Annual Total Return 1989 - 1998 and IPAIT DGO Fund vs. IBC US
Treasury & Repo Index Annual Total Return 1989 - 1998.)
PAST FISCAL YEAR ECONOMIC SUMMARY
Fiscal year 1998 began with a remarkably stable and productive national economy.
Prices in the U.S. rose at a historically low 1.7 percent rate for the period
from July 1, 1997 through June 30, 1998. Output growth approached four percent
for the period, sustaining a strong economic advance. This positive environment
fueled continued consumer optimism, with the consumer contributing over
two-thirds of consumption spending to the economic equation. Continued favorable
<PAGE>
longer term interest rates similarly contributed to a strong housing sector
performance.
Two possible clouds troubled the economic horizon for much of the fiscal year
period. A tight domestic labor market has created the possibility that wage
increases will materially outpace price increases in goods and services. Wage
increases in certain industries showed signs of accelerating. If these trends
continue, additional income provided to an optimistic consumer will likely lead
to inflationary spending. To date, the concern over wage level possibilities has
not produced material signs of emerging inflation, but the possibility exists
and is on the mind of fixed income investors.
The second influence emanates from Asia and the turmoil in that region. A number
of the economic powers in Southeast Asia began to experience significant
difficulties beginning in the fourth quarter of 1997. Widespread currency
devaluations and economic instability created concern over the viability of
those markets to supply products to and to purchase goods from trading partners.
To date, the Asian turmoil has strengthened domestic fixed income markets as
overseas investors rushed to invest in the strong U.S. markets. Long-term
Treasury yields fell to their lowest recorded levels during the fiscal period.
Concern over the domestic labor markets and a vibrant national economy prompted
the Federal Reserve Board to leave overnight rates unchanged throughout the
entire fiscal year period, producing a very flat yield curve at year-end.
ECONOMIC OUTLOOK FOR FISCAL YEAR 1999
We begin fiscal year 1999 with many of the same observations that attended our
entry into fiscal year 1998. Again, consumer fundamentals continue to show
significant strength. Employment is very strong, with unemployment levels
pushing ever lower. Such a strong employment environment can easily lead to
inflationary pressure as confident consumers spend increased wages. The
tremendous growth in domestic equity markets has also created a significant
increase in personal wealth. While much of the increase has been realized in
tax-deferred accounts, more and more Americans are investing taxable assets in
equities. As capital gains taxes have decreased and taxable wealth has grown,
many are presented with another source of possible spending support that, if
exercised, could contribute to inflationary spending.
The uncertainty surrounding Southeast Asia acts as a counterbalance to domestic
fears of overheating. The full extent of potential disruption that might impact
American markets is still developing as we enter fiscal year 1999. This
uncertainty could be significant, but is certainly challenging to measure at
this point.
These relative strengths and weaknesses have served to offset each other over
the past several quarters as the Federal Reserve Board has struggled to set
appropriate economic policy. We would anticipate that these factors will
continue to push Fed policy to a neutral posture until one or the other
predominates.
As always, management of the DGO Fund and the Diversified Fund will continue to
focus on the program's three fundamental investment objectives: 1) safety of
invested principal, 2) maintenance of necessary liquidity, and 3) competitive
rates, in that order of priority.
<PAGE>
IPAIT INVESTMENT POLICY
SECTION 1--SCOPE OF INVESTMENT POLICY
The Investment Policy of the Iowa Public Agency Investment Trust (IPAIT) shall
apply to all funds invested on behalf of participants accounted for in the IPAIT
financial statements. Each investment made pursuant to this Investment Policy
must be authorized by applicable law and this written Investment Policy.
This Investment Policy is intended to comply with Iowa Code chapters 28E, 12B
and 12C.
Upon passage and upon future amendment, if any, copies of this Investment Policy
shall be delivered to all of the following:
1. The IPAIT Board of Trustees.
2. All IPAIT depository institutions or fiduciaries.
3. The auditor engaged to audit any fund of IPAIT.
SECTION 2--FUNDAMENTAL INVESTMENT RESTRICTIONS
A. Unless otherwise specified below, none of the portfolios will:
1. Invest more than 5 percent of the value of their total assets in
the securities of any one federally insured Iowa depository institution (other
than securities of the U.S. government or its agencies or instrumentalities).
2. Invest 25 percent or more of the value of their total assets in the
securities of issuers conducting their principal business activities in any one
industry, including financial institutions. This restriction does not apply to
securities of the U.S. government or its agencies and instrumentalities and
repurchase agreements relating thereto.
3. Issue any senior securities (as defined in the Investment Company
Act of 1940, as amended).
4. Mortgage, pledge or hypothecate their assets.
5. Make short sales of securities or maintain a short position.
6. Purchase any securities on margin.
7. Write, purchase or sell puts, calls or combinations thereof.
8. Purchase or sell real estate or real estate mortgage loans.
9. Invest in restricted securities or invest more than 10 percent of
the Portfolio's net assets in repurchase agreements with a maturity of more than
seven days, and other liquid assets, such as securities with no readily
available market quotation.
<PAGE>
10. Underwrite the securities of other issuers.
11. Invest in any securities in contravention of the provisions of
Rule 2a-7 of the Investment Company Act of 1940 as it presently exists or as it
may hereafter be amended.
B. Prohibited Investments
Assets of IPAIT shall not be invested in the following:
1. Reverse repurchase agreements.
2. Futures and options contracts.
3. Any security with a remaining maturity of more than 365 days from
the date of purchase not withstanding the provisions of Rule 2a-7 or any other
provisions of state or federal law relating to the operation of the Trust.
C. Prohibited Investment Practices
The following investment practices are prohibited:
1. Trading of securities for speculation or the realization of
short-term trading gains.
2. Investing pursuant to a contract providing for the compensation of
an agent or fiduciary based upon the performance of the invested assets.
3. If a fiduciary or other third party with custody of public
investment transaction records
of IPAIT fails to produce requested records when requested by IPAIT or its
agents within a reasonable time, IPAIT shall make no new investment with or
through the fiduciary or third party and shall not renew maturing investments
with or through the fiduciary or third party.
D. Management Policies and Procedures
Following are the fundamental management policies and procedures for IPAIT.
All investments shall be maintained in separate IPAIT custodial accounts,
segregated by Portfolio on behalf of IPAIT Participants.
1. Each purchase or sale of a security must be handled on a delivery
versus payment (DVP) basis. Funds for the purchase of an investment shall not be
released to the seller until the security is delivered to the IPAIT Custodian.
Conversely, a sold security shall not be released to the buyer until funds for
the purchase price of the security have been received by the IPAIT Custodian.
2. "Free delivery" transactions are prohibited. The Custodian shall
never release assets from the IPAIT custodial accounts until the funds for the
investment are delivered.
3. Any material deviation (greater than 0.5 percent) from the
amortized cost of investments shall be promptly reported by the Advisor to the
Board of Trustees. If such deviation exceeds 0.5 percent, the Advisor will
<PAGE>
consider what action, if any, should be initiated to reason ably eliminate or
reduce material dilution or other unfair results to Participants. Such action
may include redemption of Trust Units in kind, selling portfolio securities
prior to maturity, withholding distributions or utilizing a net asset value per
Trust Unit based upon available market quotations.
4. The frequent trading of securities, including day trading for the
purpose of realizing short-term gains, the purchase and sale of futures and
options to buy or sell authorized investments, reverse repurchase agreements,
and other similar speculative transactions are expressly prohibited.
5. IPAIT may not make any investment other than Permitted Investments
authorized by the provisions of the law applicable to the investment of funds by
the Participants, as such laws may be amended from time to time.
6. IPAIT may not purchase any Permitted Investment if the effect of
such purchase by IPAIT would be to make the average-dollar-weighted maturity of
a portfolio greater than 90 days.
7. IPAIT may not borrow money or incur indebtedness whether or not the
proceeds thereof are intended to be used to purchase Permitted Investments.
8. IPAIT may not make loans, provided that IPAIT may make Permitted
Investments.
9. IPAIT may not purchase securities or shares of investment companies
or any entities similar to IPAIT.
The restrictions set forth above are fundamental to the operation and activities
of IPAIT and may not be changed without the affirmative approval, in writing, of
a majority of the Participants entitled to vote, except that such restrictions
may be changed by the Trustees so as to make them more restrictive when
necessary to conform the investment program and activities of IPAIT to the laws
of the State of Iowa and the United States of America as they may from time to
time be amended.
The above investment restrictions shall not be changed without the vote of a
majority of the Participants in a Portfolio. "Majority" means the lesser of (a)
67 percent of the Trust's or a Portfolio's outstanding Trust Units voting at a
meeting of the Participants at which more than 50 percent of the outstanding
Trust Units are represented in person or by proxy or (b) a majority of the
Trust's or a Portfolio's outstanding Trust Units.
Provided, however, the Trust may invest Portfolio assets pursuant to the maximum
extent possible by Iowa law governing investments by public agencies and Rule
2a-7 and any change in the restrictions of the Iowa law governing investments by
public agencies and Rule 2a-7 shall be deemed to be adopted by the Trust, and
such change shall not require the approval of the Participants.
Any investment restrictions or limitations referred to above which involve a
maximum percentage of securities or assets shall not be considered to be
violated unless an excess over the percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
<PAGE>
SECTION 3--DELEGATION OF AUTHORITY
The responsibility for conducting IPAIT investment transactions resides with the
IPAIT Board of Trustees. Certain responsibilities have been delegated to the
Administrator-Advisor, the Custodian and the Bank Trust Services provider (the
"Service Providers") pursuant to the Administrator-Advisor Agreement, the
Custodian Agreement and the Bank Trust Services Agreement with amendments as may
be adopted from time to time and the current Information Statement (the
"Documents").
Each Service Provider shall individually notify the IPAIT Board of Trustees in
writing within 30 days of receipt of all communications from the auditor of any
Service Provider or any regulatory authority of the existence of a material
weakness in internal control structure of the Service Provider or regulatory
orders or sanctions regarding the type of services being provided to IPAIT by
the Service Provider.
The records of investment transactions made by or on behalf of IPAIT are public
records and are the property of IPAIT whether in the custody of IPAIT or in the
custody of a fiduciary or other third party.
SECTION 4--OBJECTIVES OF INVESTMENT POLICY
The primary objectives, in order of priority, of all investment activities
involving the financial assets of IPAIT shall be the following:
1. SAFETY: Safety and preservation of principal in the overall portfolio
is the foremost investment objective.
2. LIQUIDITY: Maintaining the necessary liquidity to match expected
liabilities is the second investment objective.
3. RETURN: Obtaining a reasonable return is the third investment objective.
SECTION 5--PRUDENCE
The Board of Trustees, when providing for the investment of deposit of public
funds in the IPAIT program, shall exercise the care, skill, prudence and
diligence under the circumstances then prevailing that a person acting in a like
capacity and familiar with such matters would use to attain the Section 4
investment objectives.
SECTION 6--INSTRUMENTS ELIGIBLE FOR INVESTMENT
Assets of IPAIT may be invested in the following, all as more fully described in
the IPAIT Information Statement:
o Obligations of the U.S. government, its agencies and instrumentalities.
<PAGE>
o Certificates of deposit and other evidences of deposit at federally insured
Iowa depository institutions approved and secured pursuant to Chapter 12C.
o Repurchase agreements, provided that the underlying collateral consists of
obligations of the U.S. government, its agencies and instrumentalities and that
the Custodian takes delivery of the collateral either directly or through an
authorized custodian.
All instruments eligible for investment are further qualified by all other
provisions of this Investment Policy, including Section 8, Diversification and
Investment Maturity Limitations.
SECTION 7--DIVERSIFICATION AND INVESTMENT MATURITY LIMITATIONS
It is the policy of IPAIT to diversify portfolio investments in the Diversified
Portfolio and the Direct Government Obligation (DGO) Portfolio. As described in
the Information Statement, portfolio investments in the Diversified Portfolio
and the Direct Government Obligation Portfolio are limited to the following:
1. No individual investment may exceed 365 days in length.
2. The maximum average maturity of all portfolio investments may not exceed
90 days.
Pursuant to IPAIT policies as disclosed in the Documents, Participants may also
individually invest in Fixed Term Program investments.
SECTION 8--SAFEKEEPING AND CUSTODY
All invested assets of Participants in the Portfolios shall be held in
accordance with the Custodian Agreement.
All invested assets eligible for physical delivery shall be secured by having
them held at a third-party custodian. All purchased investments shall be held
pursuant to a written third-party custodial agreement requiring delivery versus
payment. No assets may be delivered out of the IPAIT account without full
payment (no "free deliveries" shall be permitted).
SECTION 9--REPORTING
The Service Providers shall submit all reports required in the Documents.
SECTION 10--INVESTMENT POLICY REVIEW AND AMENDMENT
This Investment Policy shall be reviewed annually or more frequently as
appropriate. Notice of amendments to the Investment Policy shall be promptly
given to all parties noted in Section 1.
<PAGE>
SECTION 11--EFFECTIVE DATE
This Investment Policy shall be effective as of May, 1993:
Passed and approved this 20th day of April, 1993.
IOWA PUBLIC AGENCY INVESTMENT TRUST
by ___________/s/ Ken Alberts__________________
Chairman
Attest:
_________/s/ Robert Haug____________________
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK.
<PAGE>
STATISTICAL SECTION
<PAGE>
GROWTH IN FUND UNITS
<TABLE>
<CAPTION>
GROWTH OF PARTICIPANT ASSETS UNDER MANAGEMENT
DIVERSIFIED FUND AND
DIRECT GOVERNMENT OBLIGATION (DGO) FUND
IPAIT ANNUAL IPAIT ANNUAL
DATE DIV. FUND * GROWTH DGO FUND ** GROWTH
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
06/98 $ 177,018,714 -11.07% $ 82,865,033 40.87%
03/98 $ 191,859,267 -20.16% $ 47,073,726 -5.27%
12/97 $ 161,914,498 -24.50% $ 52,182,763 -5.28%
09/97 $ 187,412,776 -9.27% $ 57,501,838 -2.32%
06/97 $ 199,049,090 3.43% $ 58,825,680 -9.94%
03/97 $ 240,303,292 6.54% $ 49,692,437 18.91%
12/96 $ 214,444,033 14.52% $ 55,091,929 21.40%
09/96 $ 206,557,219 12.61% $ 58,868,709 15.62%
06/96 $ 192,451,582 4.38% $ 65,317,885 16.48%
03/96 $ 225,543,440 14.49% $ 41,790,609 40.80%
12/95 $ 187,247,248 14.28% $ 45,378,898 61.99%
09/95 $ 183,419,433 8.79% $ 50,916,159 133.73%
06/95 $ 184,369,434 12.32% $ 56,078,373 80.01%
03/95 $ 196,998,830 7.33% $ 29,680,324 -24.24%
12/94 $ 163,844,838 -9.69% $ 28,012,748 -37.19%
09/94 $ 168,603,118 -0.03% $ 21,784,470 62.28%
06/94 $ 164,149,228 -6.59% $ 31,152,444 63.73%
03/94 $ 183,548,823 -14.30% $ 39,174,341 74.69%
12/93 $ 181,419,538 -1.02% $ 44,600,604 246.79%
09/93 $ 168,662,012 -15.21% $ 13,424,063 -8.52%
06/93 $ 175,721,378 -3.92% $ 19,026,307 15.48%
03/93 $ 214,180,229 4.68% $ 22,425,329 33.97%
12/92 $ 183,291,073 -4.35% $ 12,860,893 -29.31%
09/92 $ 198,907,983 -0.94% $ 14,675,037 67.15%
06/92 $ 182,899,353 -7.80% $ 16,475,476 121.42%
03/92 $ 204,603,904 -6.03% $ 16,739,378 105.45%
12/91 $ 191,625,582 8.01% $ 18,192,600 63.77%
09/91 $ 200,793,815 59.98% $ 8,779,691 -73.91%
06/91 $ 198,367,235 52.61% $ 7,440,794 -51.89%
03/91 $ 217,741,157 81.16% $ 8,147,861 -77.33%
12/90 $ 177,410,450 30.38% $ 11,108,759 -46.40%
09/90 $ 125,513,147 -1.24% $ 33,654,449 6.66%
</TABLE>
*IPAIT Div. Fund inception date 11/13/87
**IPAIT DGO Fund inception date 9/1/88
<PAGE>
MONTHLY COMPARATIVE YIELDS
DIVERSIFIED FUND
CODE CODE
DIV. FUND IBC U.S. TREASURY CHAPTER 74A CHAPTER 74A
DATE RATE (1) & AGENCY INDEX (2) 32-89 DAY (3) 90-179 DAY (3)
- --------------------------------------------------------------------------------
06/98 5.05 4.89 4.90 5.20
05/98 5.05 4.87 4.70 5.00
04/98 5.10 4.89 4.90 5.00
03/98 5.10 4.88 4.90 5.00
02/98 5.09 4.91 4.80 4.90
01/98 5.15 4.96 4.60 5.00
12/97 5.17 4.96 4.80 5.00
11/97 5.13 4.91 4.90 5.00
10/97 5.11 4.87 4.80 5.10
09/97 5.09 4.88 4.70 5.10
08/97 5.08 4.88 4.80 5.13
07/97 5.06 4.87 4.70 5.10
1) Actual earnings less expenses
2) IBC U.S. Government & Agencies Monthly Money Fund Report
3) Iowa Code Chapter 74A minimum public funds deposit rates
DIRECT GOVERNMENT OBLIGATION FUND
CODE CODE
DGO FUND IBC U.S. TREASURY CHAPTER 74A CHAPTER 74A
DATE RATE (1) & REPO INDEX (2) 32-89 DAY (3) 90-179 DAY (3)
- --------------------------------------------------------------------------------
06/98 4.99 4.84 4.90 5.20
05/98 4.95 4.81 4.70 5.00
04/98 4.95 4.84 4.90 5.00
03/98 4.99 4.86 4.90 5.00
02/98 4.99 4.84 4.80 4.90
01/98 5.02 4.88 4.60 5.00
12/97 5.08 4.90 4.80 5.00
11/97 5.05 4.88 4.90 5.00
10/97 4.99 4.83 4.80 5.10
09/97 4.98 4.83 4.70 5.10
08/97 5.02 4.87 4.80 5.13
07/97 4.97 4.81 4.70 5.10
1) Actual earnings less expenses
2) IBC U.S. Treasury and Repo Monthly Money Fund Report
3) Iowa Code Chapter 74A minimum public funds deposit rates
<PAGE>
ANNUAL COMPARATIVE YIELDS
IBC U.S. GOV. IBC U.S. TREASURY
DATE DIV. FUND (1) & AGENCY INDEX (2) DGO FUND (1) & REPO INDEX (3)
- -------------------------------------------------------------------------------
1998 5.10 4.90 4.98 4.85
1997 4.92 4.72 4.84 4.68
1996 5.11 4.88 5.03 4.89
1995 4.86 4.72 4.82 4.65
1994 2.88 2.74 2.77 2.70
1) Actual earnings less expenses
2) IBC U.S. Government and Agencies Money Fund Report
3) IBC U.S. Treasury and Repo Money Fund Report
ANNUAL NET INVESTMENT INCOME
DATE DIVERSIFIED FUND (1) DGO FUND (1)
---------------------------------------------------------------
1998 $ 9,260,578 $ 2,723,297
1997 10,527,618 2,709,406
1996 9,810,282 2,429,570
1995 8,321,294 1,229,044
1994 4,979,118 756,594
(1) Investment income less expenses
<PAGE>
GLOSSARY OF INVESTMENT TERMS
ACCRUED INTEREST - interest accumulated on all securities in a portfolio since
the most recent payment date for each security.
ADMINISTRATOR - entity that carries out IPAIT policies and provides participant
recordkeeping services.
AMORTIZED COST - method of accounting that gradually reduces a security's
discount or premium on a straight-line basis.
ASSETS - items in financial statement with current market value owned by IPAIT.
CERTIFICATE OF DEPOSIT - debt instrument issued by a financial institution with
an interest rate set by competitive forces in the marketplace.
COLLATERAL - U.S. government or agency securities pledged to IPAIT until
investment is repaid. For instance, the security for a collateralized
certificate of deposit issued by an Iowa financial institution.
COMPOUND RATE - interest calculation based upon investment of principal plus
reinvestment of interest earned from previous period(s). IPAIT portfolio
interest is compounded or reinvested monthly.
CUSTODIAN - bank that maintains custody of all IPAIT assets.
DISCOUNT - the dollar amount by which the par value of a bond exceeds its market
price.
DIVERSIFIED - spreading of risk by investing assets in several different
categories of investment and assorted maturities within those categories.
IBC - monthly and quarterly publications of IBC Financial Data, Inc.
illustrating money fund expense and performance data.
INVESTMENT ADVISOR - Securities and Exchange Commission registered firm that
provides investment advice to IPAIT.
IOWA CODE CHAPTER 74A RATES - Minimum rates at which Iowa financial institutions
may accept deposits of public funds for various periods.
LIABILITIES - claims on the assets of IPAIT.
MARKET VALUE - the current price or value of a security.
NET INVESTMENT INCOME - income from IPAIT investments distributed to
participants after payment of program operating expenses.
NOMINAL RATE - simple interest calculation based only upon the principal amount
invested without reinvestment of earned interest.
PAR VALUE - value of IPAIT investments at maturity.
<PAGE>
PORTFOLIO - all investments owned by IPAIT.
PREMIUM - the dollar amount by which the market price of a bond exceeds its par
value.
REDEMPTIONS - withdrawal of funds by participants from IPAIT.
REPURCHASE AGREEMENT - agreement between IPAIT and a seller of U.S. government
securities, whereby the seller agrees to repurchase the securities at an agreed
upon price at a stated time. The transaction is collateralized by U.S.
government or U.S. agency securities with a market value of at least 102% of the
value of the repurchase agreement.
STRAIGHT-LINE - conservative accounting procedure to reduce a security's premium
or discount in equal daily increments over its remaining period to maturity.
U.S. GOVERNMENT AGENCIES - securities issued by U.S. government sponsored
corporations such as the Federal Home Loan Bank and Federal National Mortgage
Association.
U.S. GOVERNMENT SECURITIES - direct obligations of the U.S. government, such as
Treasury bills, notes and bonds.
YIELD CURVE - graph plotting yields of securities of similar quality on vertical
axis and maturities ranging from shortest to longest on horizontal axis.
