IOWA PUBLIC AGENCY INVESTMENT TRUST
DIVERSIFIED FUND
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
IOWA PUBLIC AGENCY INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION FUND
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED
JUNE 30, 1999
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
Required Supplementary Information..................................... 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, 1999
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, 1999. This, IPAIT's twelfth 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 $271,958,772, up from $236,121,435 last fiscal year.
o Placement of 100 portfolio certificates of deposit in Iowa
financial institutions by the Diversified Fund representing over
$78,150,000.
o An authorized membership total of 360 public bodies for each Fund,
representing 166 municipalities, 85 counties, 73 municipal
utilities and 36 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 $514,462,964 on April 9, 1999,
surpassing the previous combined high by $128,075,341.
<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 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, 1998. 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.
<PAGE>
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.
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 199-00, 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 highlights contained in these Comprehensive Annual Financial Reports
(CAFR) have been prepared in conformity with generally accepted accounting
principles and have been audited by IPAIT's Independent Auditor, KPMG 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 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 second Certificate of Achievement for
the fiscal year 1997-1998 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
MR. DON KERKER,
DIRECTOR OF FINANCE
Muscatine Power and Water
3205 Cedare Street
Muscatine, IA 52761
(319) 262-3303
Fax: (319) 262-3315
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.
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
Thomas Bredeweg
Executive Director
Iowa League of Cities
and IPAIT Treasurer to
the Board.
<PAGE>
SERVICE PROVIDERS
SPONSORING ASSOCIATIONS
IOWA ASSOCIATION OF MUNICIPAL UTILITIES
1735 NE 70th Ave.
Ankeny, IA 50021-9353
Robert Haug, Executive Director
515-244-7282
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 |
| Don Kerker, Board Member |-----| 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 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, 1998 |
| 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, 1999, and the related statement of operations for each of the years in the
five-year period 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 five-year period then ended. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audits 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, 1999, and the results of
its operations for each of the years in the five-year period 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 LLP
Des Moines, Iowa
July 23, 1999
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1999
(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 -- 9.25%
$ 5,000,000 Fed. Home Loan Mtge. Corp.-Disc. Note 4.88% 07/09/99 $ 4,994,756
2,500,000 Fed. Home Loan Mtge. Corp.-Disc. Note 4.95% 07/09/99 2,497,333
5,000,000 Fed. Home Loan Mtge. Corp.-Disc. Note 4.85% 08/04/99 4,977,947
5,000,000 Fed. Home Loan Mtge. Corp.-Disc. Note 4.87% 08/10/99 4,973,945
TOTAL (cost-- $17,443,981) -------------
$ 17,443,981
COUPON SECURITIES -- 47.51% -------------
$ 5,000,000 Federal National Mtge. Assoc., 6.45% 5.07% 07/01/99 $ 5,000,000
1,000,000 Federal National Mtge. Assoc., 6.07% 5.04% 07/01/99 1,000,000
1,350,000 Federal Home Loan Bank, Variable Rate, 4.44%* 4.98% 07/15/99 1,349,710
4,000,000 Federal National Mtge. Assoc., 5.90% 4.85% 07/19/99 4,002,012
4,500,000 Federal Home Loan Mtge. Corp., 7.125% 4.98% 07/21/99 4,505,052
10,000,000 Federal National Mtge. Assoc., Variable Rate, 5.29%* 4.88% 07/30/99 10,000,773
2,500,000 Federal Home Loan Mtge. Corp., 5.544% 4.88% 08/13/99 2,501,871
4,970,000 Federal Home Loan Mtge. Corp., 5.544% 4.94% 08/13/99 4,973,257
1,140,000 Federal National Mtge. Assoc., Variable Rate, 4.68%* 5.02% 08/17/99 1,139,502
3,450,000 Federal Home Loan Mtge. Corp., 6.13% 4.89% 08/19/99 3,455,396
10,000,000 Student Loan Marketing Assoc., Variable Rate, 5.24%* 4.91% 09/16/99 9,997,024
1,000,000 Federal National Mtge. Assoc., 5.81% 4.95% 10/01/99 1,002,099
4,000,000 Tennessee Valley Authority, 8.375% 5.07% 10/01/99 4,031,798
1,100,000 Federal National Mtge. Assoc., 5.73% 4.91% 10/14/99 1,102,496
2,000,000 Federal National Mtge. Assoc., 5.73% 5.08% 10/14/99 2,003,581
5,000,000 Federal National Mtge. Assoc., 5.73% 4.98% 10/14/99 5,010,528
1,500,000 Federal Home Loan Bank, 5.03% 4.96% 10/29/99 1,500,000
2,500,000 Federal National Mtge. Assoc., 5.91% 5.23% 02/25/00 2,510,461
5,000,000 Federal Home Loan Bank, Variable Rate, 5.34%* 4.95% 03/24/00 5,000,000
5,000,000 Federal Home Loan Bank, Variable Rate, 5.35%* 4.83% 04/12/00 4,998,437
5,000,000 Federal Home Loan Bank, Variable Rate, 5.35%* 5.21% 04/12/00 5,001,430
1,000,000 Federal Home Loan Bank, 5.50% 5.55% 04/14/00 999,542
7,500,000 Federal Home Loan Mtge. Corp., Variable Rate, 5.39%* 4.86% 04/14/00 7,497,049
1,000,000 Federal Home Loan Bank, 5.625% 5.63% 06/02/00 999,923
-------------
TOTAL (cost-- $89,581,941) $ 89,581,941
-------------
CERTIFICATES OF DEPOSIT-- 12.22%
$ 250,000 Citizens Bank, Sac City 6.00% 07/06/99 $ 250,000
2,500,000 First National Bank, Ames 4.90% 07/19/99 2,500,000
1,000,000 First State Bank, Conrad 4.95% 07/19/99 1,000,000
500,000 First Federal Bank, Sioux City 5.05% 07/20/99 500,000
500,000 American Bank, LeMars 5.00% 07/21/99 500,000
1,000,000 Community First State Bank, Decorah 5.00% 07/26/99 1,000,000
500,000 Farmers State Bank, Hawarden 5.10% 08/13/99 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 6.00% 08/23/99 250,000
500,000 First State Bank, Nora Springs 5.05% 08/23/99 500,000
500,000 Frontier Bank, Rock Rapids 5.10% 08/31/99 500,000
*Denotes floating rate investment with interest rate as of June 30, 1999.
See accompanying notes to financial statements.
<PAGE>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1999 (Continued)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
300,000 State Savings Bank, Baxter 6.00% 09/10/99 300,000
500,000 First American State Bank, Ames 5.80% 09/20/99 500,000
400,000 Exchange Bank, Collins 5.40% 10/13/99 400,000
300,000 Community Bank, Miles 5.15% 10/13/99 300,000
150,000 Community Bank, Preston 5.15% 10/13/99 150,000
2,000,000 First State Bank, Conrad 5.30% 10/14/99 2,000,000
1,000,000 Union State Bank, Winterset 5.40% 10/22/99 1,000,000
1,000,000 DeWitt Bank & Trust, DeWitt 5.29% 10/22/99 1,000,000
250,000 Hardin County Savings Bank, Eldora 5.00% 10/22/99 250,000
250,000 State Savings Bank, Baxter 5.35% 10/25/99 250,000
300,000 First State Bank, Ida Grove 5.13% 11/30/99 300,000
1,000,000 St. Ansgar State Bank, St. Ansgar 5.13% 12/10/99 1,000,000
1,000,000 Peoples State Bank, Elma 5.40% 12/20/99 1,000,000
250,000 Citizens Bank, Sac City 5.40% 12/20/99 250,000
500,000 Union State Bank, Monona 5.38% 12/27/99 500,000
500,000 Maquoketa State Bank, Maquoketa 5.10% 01/11/00 500,000
500,000 Citizens Bank, Sac City 5.10% 02/17/00 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 5.20% 02/18/00 250,000
1,000,000 DeWitt Bank & Trust, DeWitt 5.20% 02/25/00 1,000,000
500,000 Union State Bank, Winterset 5.20% 02/28/00 500,000
500,000 Hartford-Carlisle Savings Bank, Carlisle 5.75% 03/16/00 500,000
500,000 Hartford-Carlisle Savings Bank, Carlisle 5.50% 03/16/00 500,000
1,000,000 St. Ansgar State Bank, St. Ansgar 5.38% 04/11/00 1,000,000
500,000 American Bank, LeMars 5.38% 04/13/00 500,000
400,000 Exchange Bank, Collins 5.38% 04/14/00 400,000
200,000 Maxwell State Bank, Maxwell 5.25% 04/21/00 200,000
500,000 American Bank, LeMars 5.25% 05/01/00 500,000
-------------
TOTAL (cost-- $23,050,000) $ 23,050,000
-------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 30.39%
$ 28,648,000 Merrill Lynch, Repurchase Agreement 5.00% 07/01/99 $ 28,648,000
28,649,000 Warburg, Repurchase Agreement 4.80% 07/01/99 28,649,000
-------------
TOTAL (cost-- $57,297,000) $ 57,297,000
-------------
TOTAL INVESTMENTS-- 99.37% (cost-- $187,372,922) $ 187,372,922
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- .63%
(Includes $50,129 payable to IMG and $685,069
dividends payable to unitholders) $ 1,185,914
-------------
NET ASSETS -- 100%
Applicable to 188,558,836 outstanding units $ 188,558,836
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($188,558,836 =============
divided by 188,558,836 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,
1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME: $ 10,089,384 $10,298,218 $11,734,493 $10,907,564 $9,290,842
EXPENSES:
Investment advisory, administrative,
and program support fees 626,204 585,147 675,479 617,335 548,112
Custody and bank trust services fees 242,699 225,456 264,103 238,913 210,185
Distribution fees 196,000 181,630 213,836 192,827 169,001
Other fees and expenses 49,000 45,407 53,457 48,207 42,250
------------ ----------- ----------- ---------- ----------
TOTAL EXPENSES 1,113,903 1,037,640 1,206,875 1,097,282 969,548
------------ ----------- ----------- ---------- ----------
NET INVESTMENT INCOME $ 8,975,481 9,260,578 $10,527,618 $9,810,282 $8,321,294
============ =========== =========== ========== ==========
</TABLE>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS -- DIVERSIFIED PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1999 1998
-----------------------------
From Investment Activities:
Net investment income distributed
to unitholders $ 8,975,481 9,260,578
============= =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 912,337,019 $ 735,507,788
Units issued in reinvestment
of dividends from net investment income 8,975,481 9,260,578
Units redeemed (909,772,378) (766,798,742)
------------- -------------
Net increase in net assets derived from
unit transactions 11,540,122 (22,030,376)
Net assets at beginning of year 188,558,836 199,049,090
------------- -------------
Net assets at end of year $ 188,558,836 $177,018,714
============= =============
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, 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income 0.046 0.051 0.049 0.051 0.049
Dividends Distributed (0.046) (0.051) (0.049) (0.051) (0.049)
-------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
==================================================================================
Total Return 4.61% 5.10% 4.92% 5.11% 4.86%
Ratio of Expenses to
Average Net Assets 0.57% 0.57% 0.56% 0.57% 0.57%
Ratio of Net Income to
Average Net Assets 4.61% 5.10% 4.92% 5.11% 4.86%
Net Assets,
End of Period (000 Omitted) $188,559 $177,019 $199,049 $192,452 $184,369
</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, Administrator, and Program Support Provider.
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.
Security transactions are acccounted for on the trade date. Interest
income, including the accretion of discount and amortization of premium,
is recorded on the accrual basis.
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.
<PAGE>
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, 1999, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with a market value of
$58,454,982 for the Diversified Portfolio.
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.
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.
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 .100 percent of the average daily net asset value
up to $250 million and .125 percent exceeding $250 miilion for program
support fees. For the year ended June 30, 1999 the Diversified Portfolio
paid $626,204 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, 1999, the Diversified Portfolio paid $242,699
to Norwest for services provided. Under a distribution plan the public
agency associations collectively receive an annual fee of .100 percent of
the daily net asset value of the portfolios. For the year ended June 30,
1999, the Diversified Portfolio paid $106,760 to the Iowa League of
Cities, $63,840 to the Iowa State Association of Counties, and $25,400 to
the Iowa Association of Municipal Utilities. 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 $13,178,382,722 for the year ended June 30, 1999. Proceeds
from maturities of securities for the Diversified Portfolio aggregated
$13,167,044,054 for the year ended June 30, 1999.
<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, 1999, and the related statement of operations for each
of the years in the five-year period 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 five-year period then ended.
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 audits.
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,
1999, and the results of its operations for each of the years in the five-year
period 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 LLP
Des Moines, Iowa
July 23, 1999
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1999
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COUPON SECURITIES --2.86%
$ 2,500,000 U.S. Treasury Notes, 6.375% 4.72% 07/15/99 $ 2,501,538
-------------
TOTAL (cost-- $2,501,538) $ 2,501,538
-------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. Securities) -- 97.41%
$ 85,335,000 SBC Warburg, Repurchase Agreement 4.80% 07/01/99 $ 85,335,000
TOTAL (cost-- $85,335,000) -------------
TOTAL INVESTMENTS-- 100.27% (cost-- $87,836,538) $ 87,836,538
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- (.27%)
(Includes $22,851 payable to IMG and $284,970
dividends payable to unitholders) ($240,157)
-------------
NET ASSETS -- 100%
Applicable to 87,596,381 outstanding units $ 87,596,381
=============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($87,596,381 =============
divided by 87,596,381 units outstanding)
</TABLE>
<TABLE>
<CAPTION>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF OPERATIONS -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME: $3,815,354 $ 3,039,348 $ 3,033,698 $ 2,708,945 $ 1,376,422
EXPENSES:
Investment advisory, administrative,
and program support fees 250,664 179,822 184,323 158,955 83,853
Custody and bank trust services fees 94,949 68,114 69,984 60,210 31,762
Distribution fees 75,959 54,491 55,987 48,168 25,410
Other fees and expenses 18,990 13,624 13,998 12,042 6,353
----------- ----------- ----------- ----------- ----------
Total Expenses 440,562 316,051 324,292 279,375 147,378
----------- ----------- ----------- ----------- ----------
NET INVESTMENT INCOME $ 3,374,792 $ 2,723,297 $ 2,709,406 $ 2,429,570 $ 1,229,044
=========== =========== =========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
IOWA PUBLIC AGENCY INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
FOR THE YEARS ENDED JUNE 30,
1999 1998
------------------------------
From Investment Activities:
Net investment income distributed
to unitholders $ 3,374,792 $ 2,723,297
============ =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 38,064,288 $ 53,493,135
Units issued in reinvestment
of dividends from net investment income 3,374,792 2,723,297
Units redeemed (36,707,732) (32,177,079)
------------ -------------
Net increase in net assets derived from
unit transactions 4,731,348 24,039,353
Net assets at beginning of year 82,865,033 58,825,680
------------ -------------
Net assets at end of year $ 87,596,381 $ 82,865,033
============ =============
<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, 1999 1998 1997 1996 1995
- - ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income 0.44 0.050 0.048 0.050 0.048
Dividends Distributed (0.44) (0.050) (0.048) (0.050) (0.048)
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.43% 4.98% 4.84% 5.03% 4.82%
Ratio of Expenses to
Average Net Assets 0.58% 0.60% 0.58% 0.58% 0.58%
Ratio of Net Income to
Average Net Assets 4.43% 4.98% 4.84% 5.03% 4.82%
Net Assets,
End of Period (000 Omitted) $87,596 $82,865 $58,826 $65,318 $56,078
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REQUIRED SUPPLEMENTARY INFORMATION
Year 2000 Issues (Unaudited)
The Diversified and Direct Governemnt Obligation Funds of the Iowa Public Agency
Investment Trust (IPAIT) have addressed year 2000 issues relating to computer
and other electronic equipment. The year 2000 problem is the result of
operational design shortcomings in computer systems and other electronic
systems. As these systems execute instructions stored in memory, they may make
calculation or logical comparisons utilizing information about dates. The way
dates are represented in some systems could adversely affect the execution of
these instructions, resulting in system malfunctions.
The four stages necessary to implement year 2000 compliant systems are:
Awareness Stage - Esatblishing a budget and project plan for dealing with the
year 2000 issue. Assessment Stage - Identifying all systems and individual
components for which the year 2000 compiance work is needed. Remediation Stage -
Making changes to systems and equipment. Validations/Testing Stage - Validating
and testing the changes made during the remediation stage.
As of June 30, 1999, IPAIT had completed all four stages by obtaiing disclosure
statements from Investors Management Group (the Investment Advisor,
Administrator and Program Support Provider) and Norwest Bank Iowa, N.A. (the
Custodian and Bank Services Provider). The disclosure statements covered year
2000 compiance for systems used to process and record participant activity. In
addition, contingency plans for maintaining accurate records and processing
transactions in the event of systems failure were reviewed to assure Investors
Management Group and Norwest Bank Iowa, N.A. had addressed such issues. As of
June 30, 1999, IPAIT has not incurred and does not expect to incur further
expenses related to the year 2000 issue.
Because of the unprecendented nature of the year 2000 issue, its effects and the
success of related remediation efforts will not be fully determinable until the
year 2000 and thereafter. No assurance can be made that IPAIT will be year 2000
ready or that parties with whom IPAIT does business will be year 2000 ready.
<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, Administrator, and Program Support Provider.
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.
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.
IPAIT is authorized by investment policy and statute to invest public
funds in obligations of the U.S. government; and repurchase agreements,
<PAGE>
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.
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, 1999, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with a market value of
$87,042,064.
Certificates of deposit amounts in excess of teh $100,000 federal deposit
insurance are collateralized with securities or letters of credit held by
IPAIT's cusotdian 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.
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.
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,
1999, the Direct Government Obligation Portfolio paid $250,664 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, 1999, the Direct Government Obligation Portfolio paid $94,949 to
Norwest for services provided. Under a distribution plan the public
agency associations collectively receive an annual fee of .100 percent of
the daily net asset value of the portfolios. For the year ended June 30,
1999, the Direct Government Obligation Portfolio paid $69,212 to the Iowa
League of Cities and $6,747 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 $18,121,001,367 for the year ended June 30, 1999.
Proceeds from maturities of securities for the Direct Government
Obligation Portfolio aggregated $18,116,298,000 for the year ended June
30, 1999.
<PAGE>
INVESTMENT SECTION
<PAGE>
FUND FACTS SUMMARY
DIVERSIFIED FUND FACTS
AS OF JUNE 30, 1999
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: $189 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 (0.57%)
DIRECT GOVERNMENT OBLIGATION (DGO) FUND FACTS
AS OF JUNE 30, 1999
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: $88 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, 1999
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
(GRAPHICS OMITTED These charts present Ownership Analysis as of June 30, 1999
for IPAIT Diversified Fund and IPAIT DGO Fund.)
by a participant unless other participant-specific investment restrictions
exist.
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
(GRAPHICS OMITTED These charts present Historical Portfolio Cash Flow for IPAIT
Diversified Fund and IPAIT DGO Fund from 1994 to 1999.)
<PAGE>
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 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. Twelve
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.
(GRAPHICS OMITTED These charts present Weighted Average Maturiy Comparison IPAIT
Diversified Fund vs. IBC US Gov. & Agency Index July 1998 - June 1999 and
Weighted Average Maturity Comparison IPAIT DGO vs. IBC US Treasury & Repo Index
July 1998 - June 1999.)
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.
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
controls and procedures, any deviation in net asset
(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>
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 1998 - June 1999
and IPAIT DGO Fund vs. Iowa Chap. 74A (90-179 & 32-89 Dat) & IBC US Treasury &
Repo Fund Index July 1998 - June 1999.)
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, perfected repurchase agreements collateralized by U.S. government
and federal agency securities
(GRAPHICS OMITTED These charts present Maturity Analysis as of June 30, 1999 for
IPAIT Diversified Fund and IPAIT DGO Fund.)
<PAGE>
and Iowa financial institution certificates of deposit. 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 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, 1999 for IPAIT Diversified Fund and IPAIT DGO Fund.)
PERFORMANCE SUMMARY
For the one-year period ended June 30, 1999, the Diversified Fund and DGO Fund
reported a ratio of net income to average net assets of 4.61 percent and 4.43
percent respectively, net of all operating expenses. These figures exceeded the
IBC Indices for each Fund, which returned 4.47 percent and 4.35 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 1990 - 1999 and IPAIT DGO Fund vs. IBC US
Treasury & Repo Index Annual Total Return 1990 - 1999.)
Also illustrated below are the historical returns for both the Diversified Fund
and the DGO Fund for the most recent one, three and five year periods.
(GRAPHICS OMITTED These charts present IPAIT Diversified Fund vs. IBC US Gov. &
Agency Index Annualized Total Returns for 1, 3, and 5 years and IPAIT DGO Fund
vs. IBC US Treasury & Repo Index Annualized Total Returns for 1, 3, and 5
years.)
<PAGE>
Past Fiscal Year Economic Summary
The domestic U.S. economy was strong as fiscal year 1999 began. Consumer
spending was robust as plentiful jobs and wages rising at nearly twice the rate
of inflation buoyed consumer confidence. Readily available financing boosted the
construction sector. Due to the strength of the domestic economy, the Federal
Reserve had a bias toward raising short-term interest rates.
The environment quickly changed as the financial turmoil in Southeast Asia moved
to Russia and Latin America. Commodity prices plunged. The U.S. dollar soared.
Long-term U.S. Treasury bond yields fell to the lowest levels since the 1960s as
investors fled to a safe haven. The Federal Reserve lowered the federal funds
rate in three quick steps to calm the financial markets and inject liquidity.
Central banks around the world followed suit.
The action taken by the Federal Reserve and other central banks worked.
Stability returned to the financial markets. Stock markets rebounded and the
flight to safety dissipated. Lower interest rates further stimulated the
domestic U.S. economy. Overseas economies gradually recovered as well.
As the global financial markets regained their footing, the focus returned to
the domestic economy. The Federal Reserve began to take back the liquidity
injection by raising short-term interest rates 1/4 percent on June 30, 1999.
Although inflationary pressures still appeared mild, the Fed was concerned that
a too easy monetary policy would eventually stoke inflation.
Economic Outlook for Fiscal Year 2000
The domestic economy shows few signs of slowing with consumer spending at a
vigorous level and the manufacturing sector gaining strength. The red-hot pace
of consumer spending is beginning to give corporations more pricing power.
The solid pace of demand for goods and services is keeping the demand for
workers high and wages rising faster than inflation. The increased rate of
productivity has kept unit labor costs low, but productivity advances will have
to accelerate to sustain this trend.
Commodity prices are bottoming due to improving demand from overseas and
production cuts. Most notable is the price of oil which has risen 50 percent
over the last six months. Industrial metal prices are also beginning to
increase.
The deflationary effect of falling import prices is fading. The dumping of
imports is past its peak. The value of the trade-weighted dollar is also off of
its highs. While the dollar is supported by a wide interest rate differential
between U.S. and foreign bonds, this differential is necessary to attract
foreign capital to finance the U.S. current account deficit.
After a period of low credit growth, the demand for credit has turned up
significantly. Although the federal government is borrowing less, consumer and
business credit is accelerating. Private borrowing has risen above 9 percent,
the highest level in over a decade.
It is not surprising that the Fed has begun to raise short-term interest rates.
The Fed's signal that it is acting preemptively to keep inflation low is
positive for the economy in the long run.
Given the current environment, the average maturities of the Diversified Fund
and the DGO Fund are relatively short. The agency market provides some
opportunities to achieve yields higher than overnight investments, but there is
little incentive to extend maturities in the Treasury market.
As always, management of the DGO Fund and the Diversified Fund will focus on
IPAIT's three fundamental investment objectives: 1) safety of invested
principal, 2) maintenance of necessary liquidity, and 3) competitive rates, in
that order.
<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
<PAGE>
percent, the Advisor will consider what action, if any, should be
initiated to reasonably 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
<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>
06/99 $ 188,558,836 6.52% $ 87,596,381 5.71%
03/99 $ 238,242,744 24.18% $ 69,752,928 48.18%
12/98 $ 192,712,021 19.02% $ 72,730,352 39.38%
09/98 $ 191,295,081 2.07% $ 77,758,459 35.23%
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)
- --------------------------------------------------------------------------------
06/99 4.38 4.20 4.40 4.70
05/99 4.37 4.18 4.30 4.50
04/99 4.36 4.20 4.40 4.60
03/99 4.38 4.24 4.30 4.60
02/99 4.43 4.26 4.40 4.60
01/99 4.47 4.35 4.40 4.60
12/98 4.49 4.41 4.40 4.60
11/98 4.59 4.48 4.50 4.70
10/98 4.66 4.62 4.60 4.90
09/98 5.02 4.86 4.40 5.00
08/98 5.06 4.89 4.80 5.00
07/98 5.07 4.89 4.80 5.20
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)
- --------------------------------------------------------------------------------
06/99 4.12 4.06 4.40 4.70
05/99 4.17 4.11 4.30 4.50
04/99 4.22 4.14 4.40 4.60
03/99 4.23 4.16 4.30 4.60
02/99 4.16 4.11 4.40 4.60
01/99 4.18 4.16 4.40 4.60
12/98 4.26 4.22 4.40 4.60
11/98 4.40 4.33 4.50 4.70
10/98 4.47 4.42 4.60 4.90
09/98 4.96 4.83 4.40 5.00
08/98 5.00 4.86 4.80 5.00
07/98 4.99 4.85 4.80 5.20
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)
- --------------------------------------------------------------------------------
1999 4.61 4.47 4.43 4.35
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
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)
---------------------------------------------------------------
1999 $ 8,975,841 $ 3,374,792
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
(1) Actual earnings 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.
<PAGE>
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.
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.
<PAGE>
<PAGE>
