IOWA PUBLIC AGENCY INVESTMENT TRUST, N-30D, 2000-10-26

IOWA PUBLIC AGENCY INVESTMENT TRUST
N-30D, 2000-10-26

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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, 2000 www.ipait.org
<PAGE>

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, 2000 www.ipait.org

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.................................30
Economic Outlook for Fiscal Year 2001.............................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

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<PAGE>

Introductory Section

<PAGE>

August 31, 2000

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, 2000. This, IPAIT's thirteenth year of serving participant
needs, has been another excellent year of operation for the IPAIT Diversified
and DGO Funds.

INVESTMENT POLICIES AND STRATEGIES

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.

IPAIT's Investment Policy is reproduced elsewhere in this CAFR. The program's
Investment Policy guides all investment decisions and operating frameworks.

INVESTMENT SAFEGUARDS

Both Funds continue to be focused upon their investment objectives as stated in
the IPAIT Investment Policy found 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. All security settlements
within either portfolio are settled on a delivery-versus-payment (DVP) basis.
DVP settlements greatly reduce the possibility of inappropriate transmission of
funds or securities.

RELIABILITY OF INVESTMENT SECTION

All commentary and displays in the Investment Section were prepared by IPAIT's
service providers, Investors Management Group (IMG), acting as the program's
Investment Adviser and Administrative Services Provider and Wells Fargo Bank
Iowa, N.A. (Wells Fargo), the program's Custodian and Bank Trust Services
provider. Each of these entities has provided their respective services to the
IPAIT program since the program's inception in 1987. All services provided by
IPAIT to participants are subject to rigorous and regular verification between
these two institutional providers. All data presented represents the combined
work product of IMG and Wells Fargo.

SCHEDULE OF OPERATIONS

For FY 99/00 and 98/99, total interest earned, total operating expenses and net
investment income for the IPAIT Diversified Fund and the Direct Government
Obligation Fund were as follows:

Interest Earned Expenses Net Investment Income
--------------------------------------------------------------------------------

Diversified Fund
FY 99/00 $12,205,834 $1,204,371 $11,001,463
FY 98/99 10,089,384 1,113,903 8,975,481

Direct Government
Obligation Fund
FY 99/00 $ 3,577,873 $ 378,211 $ 3,199,662
FY 98/99 3,815,354 440,562 3,374,792

There were no significant changes in operation from one fiscal period to the
next. Each program operates pursuant to Service Provider agreements for all
aspects of program operation. Every agreement specifies the fees to be charged
for each component of IPAIT services and was in place for both fiscal periods.

Financial and operating highlights from this past year include:

o Receipt of a third consecutive Certificate of Achievement for
Excellence in Financial Reporting by the Government Finance Officers
Association (GFOA).

o Average combined daily investments in the Diversified and DGO
portfolios of $277,400,998, up from $271,958,772 last fiscal year.

o Placement of 139 portfolio certificates of deposit in Iowa financial
institutions, by the Diversified Fund representing over $114,150,000.

o An authorized membership total of 378 public bodies for each Fund, an
increase of eighteen over the previous period representing 174
municipalities, 87 counties, 80 municipal utilities and 37 other
eligible public agencies.

Use of the program's cash management services continued to serve a record number
of participants throughout the period. Total funds invested in the program's
investment alternatives reached a combined high for the fiscal year of
$488,704,627 on October 14, 1999.

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.
<PAGE>

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 third consecutive 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,
1999. The Certificate of Achievement is a prestigious national award recognizing
conformance with the highest standards for preparation of 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 (CAFR), 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.

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 2000/01, IPAIT will introduce a new standard for ease
and efficiency of participant interaction with IPASonline, IPAIT's proprietary
Internet-based Participant Accounting System. We collectively pledge to continue
working together to provide a safe source of 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 Comprehensive Annual Financial Reports 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. In addition, IPAIT is regularly subjected to a
comprehensive 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 (GFOA) for
consideration for a Certificate of Achievement for Excellence in Financial
Reporting following receipt of a third consecutive Certificate of Achievement
for the fiscal year 1998-1999 CAFR.

In the Board's opinion, IPAIT's internal controls are adequate to ensure that
the financial information in this report presents fairly the IPAIT Diversified
Fund and the IPAIT Direct Government Obligation (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

Ms. Arlys Hannam
City Clerk
1512 7th Street
Coralville, IA 52241
(319) 351-1266
Fax: (319) 351-5915

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. 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 Avenue
Ankeny, IA 50021-9353
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 (CONT.)

Investment Adviser-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
Wells Fargo and Company
666 Walnut, P.O. Box 837
Des Moines, IA 50304

Bruce Kielhorn 515-245-3200
Anita Tracy 515-245-3413

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 LLP
2500 Ruan Center
Des Moines, IA 50309

<PAGE>

ORGANIZATION 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 Iowa League of Cities
Tom Hanafan, Vice Chair Tom Bredeweg
Don Kerker, Board Member Iowa State Association of Counties
Arlys Hannam, Board Member William Peterson
Jody Smith, Board Member Iowa Association of
Jim Ahrenholtz, Board Member Municipal Utilities
Floyd Magnusson, Board Member Bob Haug
Paul Oldham, Board Member
(one vacancy)

<TABLE>
<CAPTION>
IPAIT Custodian IPAIT Bank Trust Services IPAIT Investment Adviser
<S> <C> <C> <C>
Wells Fargo Bank Iowa, N.A. Wells Fargo Bank Iowa, N.A. Investors Management Group
Anita Tracy Bruce Kielhorn Kathryn Beyer, CFA

Legal Counsel IPAIT Auditor IPAIT Administrator IPAIT Program Development
Ahlers, Cooney, KPMG LLP Investors Management Group Investors Management Group
Dorweiler, Haynie, CERTIFIED PUBLIC ACCOUNTANTS Mark McClurg Paul Kruse
Smith & Allbee, P.C.
ATTORNEYS AT LAW
Edgar Bittle
</TABLE>

<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, 2000, and the related statements of operations for each of the years in the
five-year period then ended, statements of changes in net assets for each of the
years in the two-year period then ended, and 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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 accounting principles generally accepted in the United States of
America.

KPMG LLP

Des Moines, Iowa
July 21, 2000

<PAGE>

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. The accompanying 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.
Wells Fargo Bank Iowa, N.A., serves as the Custodian and Bank Trust Services
Provider, and Investors Management Group serves as the Investment Adviser,
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 accounted for on the trade date. Interest income,
including the accretion of discount and amortization of premium, is recorded on
the accrual basis.

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.

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, 2000, the securities purchased under overnight
agreements to resell were collateralized by government and government agency
securities with a market value of $35,504,988.

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 state sinking fund 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 each 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 Adviser, Administrator and Program Support Provider, and Wells Fargo
Bank Iowa, N.A. (Wells Fargo), 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 Adviser 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 million for program support fees. For the year ended June 30,
2000 the Diversified Portfolio paid $675,117 to IMG for services provided. Wells
Fargo receives .050 percent of the average daily net asset value up to $150
million, .045 percent from $150 to $300 million, and .040 percent exceeding $300
million for custodial services. Wells Fargo also receives .075 percent of the
average daily net asset value for bank trust services. For the year ended June
30, 2000, the Diversified Portfolio paid $263,064 to Wells Fargo 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, 2000, the Diversified Portfolio paid
$113,217 to the Iowa League of Cities, $69,522 to the Iowa State Association of
Counties, and $30,213 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
$17,505,271,438 for the year ended June 30, 2000. Proceeds from maturities of
securities for the Diversified Portfolio aggregated $17,466,890,480 for the year
ended June 30, 2000.

<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, 2000, and the related statements of operations for
each of the years in the five-year period then ended, statements of changes in
net assets for each of the years in the two-year period then ended, and
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.

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,
2000, 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 accounting principles generally accepted in the
United States of America.

KPMG LLP

Des Moines, Iowa
July 21, 2000

<PAGE>

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. The accompanying 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. Wells Fargo Bank Iowa, N.A., serves as the
Custodian and Bank Trust Services Provider, and Investors Management Group
serves as the Investment Adviser, Administrator, and Program Support Provider.

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, 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.

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, 2000, the securities purchased under overnight
agreements to resell were collateralized by government agency securities with a
market value of $38,715,435.

UNIT ISSUES, REDEMPTIONS AND DISTRIBUTIONS

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 Adviser, Administrator and Program Support Provider, and Wells Fargo
Bank Iowa, N.A. (Wells Fargo), 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 adviser 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 million for program support fees. For the year ended June 30,
2000 the Direct Government Obligation Portfolio paid $215,189 to IMG for
services provided. Wells Fargo receives .050 percent of the average daily net
asset value up to $150 million, .045 percent from $150 to $300 million, and .040
percent exceeding $300 million for custodial services. Wells Fargo also receives
.075 percent of the average daily net asset value for bank trust services. For
the year ended June 30, 2000, the Direct Government Obligation Portfolio paid
$81,511 to Wells Fargo 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, 2000,
the Direct Government Obligation Portfolio paid $58,969 to the Iowa League of
Cities and $6,240 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 Direct Government Obligation Portfolio
aggregated $14,613,823,866 for the year ended June 30, 2000. Proceeds from
maturities of securities for the Direct Government Obligation Portfolio
aggregated $14,656,175,000 for the year ended June 30, 2000.

<PAGE>

INVESTMENT SECTION

<PAGE>

FUND FACTS SUMMARY

DIVERSIFIED FUND FACTS
AS OF JUNE 30, 2000

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: $216 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,
certificates of deposit in Iowa financial institutions 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 ADVISER:
Investors Management
Group

MANAGEMENT FEES:
Fifteen basis
points (0.15%)

TOTAL EXPENSE RATIO:
Fifty-seven basis
points (0.57%)

DIRECT GOVERNMENT OBLIGATION (DGO) FUND FACTS
AS OF JUNE 30, 2000

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: $45 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 ADVISER: Investors Management Group

MANAGEMENT FEES: Fifteen basis points (0.15%)

TOTAL EXPENSE RATIO: Fifty-eight basis points (0.58%)

DIVERSIFIED FUND AND
DIRECT GOVERNMENT OBLIGATION FUND

INVESTMENT RESULTS REVIEW
Fiscal Year Ended June 30, 2000

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 Investment Company Act of 1940. 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, certificates of deposit issued by Iowa
financial institutions and perfected repurchase agreements, the latter
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.

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
between maturities for various categories of authorized investments. Summaries
of all security trades for each Fund are regularly provided monthly to the IPAIT
Board of Trustees for review.
<PAGE>

Both portfolios have been managed by Investors Management Group, IPAIT's Des
Moines, Iowa based investment adviser, 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.
Thirteen 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.
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.

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-Adviser 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 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.
<PAGE>
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.

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
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 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. Anticipation of a rising yield curve throughout the
fiscal period brought about by the Federal Reserve Board's series of overnight
rate increases resulted in a gradually declining WAM for the Diversified Fund.
The DGO Fund experienced a moderately increasing WAM as rising rates brought
about a positive yield curve that had not existed prior to the overnight rate
increases.

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
<PAGE>

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.

PERFORMANCE SUMMARY

For the one-year period ended June 30, 2000, the Diversified Fund and DGO Fund
reported a ratio of net income to average net assets of 5.13 percent and 4.98
percent respectively, net of all operating expenses. These figures exceeded the
IBC Indices for each Fund, which returned 4.98 percent and 4.78 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.

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.
<PAGE>

PAST FISCAL YEAR ECONOMIC SUMMARY

U.S. consumers ended the decade of the 1990s with a bang. Retailers had their
best holiday sales of the decade. The robust pace of consumer spending was not
surprising given that the unemployment rate was at the lowest level since the
1960s. In addition, readily available and low cost financing propelled the
housing sector to record levels.

The U.S. economy was not the only global region celebrating the new millennium.
Economic reports from Canada, Europe, Latin America, and the Pacific Rim region
all began to show stronger growth. Central bankers, concerned that synchronized
global growth could spur inflation, began raising short-term interest rates.

The Federal Reserve was the first central bank to take pre-emptive action. With
growth in the U.S. already at historically high levels, the Fed was concerned
that a benevolent monetary policy would eventually stoke inflation. Against this
backdrop, the Fed began to reclaim liquidity injected into the financial markets
in the midst of the 1998 global financial turmoil, beginning with an initial
rate hike of .25 percent on June 29, 1999.

Over the course of the year, the Federal Funds rate was increased by a total of
1.75 percent, evidencing the Fed's increasing concern that low unemployment
rates and rising raw material costs combined with the high demand for goods and
services could generate higher inflation.

ECONOMIC OUTLOOK FOR FISCAL YEAR 2001

While the Fed has raised the federal funds rate substantially over the last
year, long-term borrowing rates have not risen significantly. In the housing
sector, thirty-year fixed rate mortgages are only .50 percent higher than a year
ago. Corporations are paying only slightly higher rates for long-term
borrowings. While the Fed controls short-term interest rates and banks often
move their prime-lending rate in lock-step with the Fed, the bond market
determines long-term borrowing rates. The bond market is slowing the Fed's
efforts to cool the economy.

The global economy is clearly accelerating. Business and consumer confidence in
Europe is at the highest levels since mid-1990. Industrial production in Japan
has risen for sixth straight months and business optimism continues to increase
throughout Southeast Asia.

In 1998 and 1999, weaker overseas economies helped keep domestic inflationary
pressures at bay with the availability of imports helping to satisfy consumer
demands for goods without stretching U.S. manufacturing capacity constraints.
The flight of capital into the U.S. provided support to the U.S. dollar and
reduced the prices of these imports.

As overseas economies strengthen, this moderating influence weakens. As U.S.
exports increase, employment in the manufacturing sector rises at a time when
qualified workers are already scarce. The improvement in overseas economies
could result in capital flowing back into those countries, weakening the dollar
and boosting import inflation, already higher than a year ago.

The popular perception is that only the price of energy related products is
rising and core inflation is all that matters. A sustained increase in energy
prices does matter. Wage demands have been restrained by the steady decline in
inflation during the 1990s. As consumers pay more at the pump and their utility
bills rise, workers will demand larger wage increases. Corporations will try to
push through rising energy and labor costs to protect their profit margins. The
strong level of demand for goods and services both here and abroad provides
corporations with more pricing power.

Beyond oil, inflation is accelerating as well. The number of accelerating
components of core CPI continues to increase. While the absolute level of core
inflation is still low, it is accelerating at the fastest pace since the 1980s,
the last time both commodity prices and employment costs rose in tandem.

We don't expect inflation to run rampant. The secular forces of global
competition, deregulation, and advances in technology have dampened the cyclical
forces that normally push inflation significantly higher in the latter stages of
an economic expansion. The cyclical forces, however, are gaining momentum and
will not subside unless restrained.

Both short-term and long-term rates must rise sufficiently to slow demand enough
to relieve inflationary pressures. The Fed is likely to continue raising
short-term rates until economic growth slows and inflationary pressures abate.

Given the current environment, the average maturities of the Diversified Fund
and the DGO Fund are relatively short. This posture will enable the Funds to
quickly respond to anticipated higher interest rates.

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.

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
Adviser to the Board of Trustees. If such deviation exceeds 0.5
percent, the Adviser 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.

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-Adviser, the Custodian and the Bank Trust Services provider (the
"Service Providers") pursuant to the Administrator-Adviser 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.

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 7, 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.

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>

GROWTH OF PARTICIPANT ASSETS UNDER MANAGEMENT
DIVERSIFIED FUND AND
DIRECT GOVERNMENT OBLIGATION (DGO) FUND
<CAPTION>

IPAIT Annual IPAIT Annual
Date Div. Fund * Growth DGO Fund ** Growth
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
06/00 $ 216,459,830 14.80% $ 45,366,390 -48.21%
03/00 $ 247,826,392 4.02% $ 54,500,390 -21.87%
12/99 $ 213,110,138 10.58% $ 61,810,064 -15.01%
09/99 $ 210,543,469 10.06% $ 73,381,984 -5.63%
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%

*IPAIT Div. Fund inception date 11/13/87
**IPAIT DGO Fund inception date 9/1/88
</TABLE>

<PAGE>

<TABLE>

MONTHLY COMPARATIVE YIELDS

DIVERSIFIED FUND

<CAPTION>
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)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
06/00 5.81 5.79 5.80 6.00
05/00 5.66 5.53 5.80 6.20
04/00 5.49 5.37 5.60 5.80
03/00 5.42 5.22 5.40 5.70
02/00 5.30 5.13 5.30 5.60
01/00 5.11 4.98 5.20 5.60
12/99 5.04 4.89 5.20 5.40
11/99 4.99 4.81 5.10 5.30
10/99 4.84 4.64 5.00 5.10
09/99 4.74 4.58 4.80 5.00
08/99 4.66 4.44 4.60 4.90
07/99 4.49 4.34 4.50 4.80

(1) Investment income less expenses
(2) IBC U.S. Government & Agencies Monthly Money Fund Report
(3) Iowa Code Chapter 74A minimum public fund 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)
-------------------------------------------------------------------------------------------------------------------

06/00 5.80 5.66 5.80 6.00
05/00 5.48 5.29 5.80 6.20
04/00 5.41 5.18 5.60 5.80
03/00 5.26 5.04 5.40 5.70
02/00 5.16 4.93 5.30 5.60
01/00 4.83 4.72 5.20 5.60
12/99 4.73 4.52 5.20 5.40
11/99 4.89 4.60 5.10 5.30
10/99 4.64 4.44 5.00 5.10
09/99 4.67 4.45 4.80 5.00
08/99 4.49 4.31 4.60 4.90
07/99 4.41 4.25 4.50 4.80

(1) Investment income less expenses
(2) IBC U.S. Government & Agencies Monthly Money Fund Report
(3) Iowa Code Chapter 74A minimum public fund deposit rates

Annual Comparative Yields

IBC U.S. Gov. IBC U.S. Treasury
Date Div. Fund (1) & Agency Index (2) DGO Fund (1) & Repo Index (3)
-------------------------------------------------------------------------------------------------------------------

2000 5.13 4.98 4.98 4.78
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

(1) Investment income less expenses
(2) IBC U.S. Government & Agencies Money Fund Report
(3) IBC U.S. Treasury and Repo Money Fund Report
</TABLE>
<TABLE>

Annual Net Investment Income
<CAPTION>

Date Diversified Fund (1) DGO Fund (1)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2000 $ 11,001,463 $ 3,199,662
1999 8,975,481 3,374,792
1998 9,260,578 2,723,297
1997 10,527,618 2,709,406
1996 9,810,282 2,429,570

(1) Investment income less expenses

</TABLE>
<PAGE>
GLOSSARY OF INVESTMENTTERMS

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 ADVISER - 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.

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>
IOWA PUBLIC AGENCY INVESTMENT TRUST
666 Walnut, P.O. Box 837
Des Moines, IA 50304-0837
(800) 872-4024 or (515) 245-3245
www.ipait.org

<PAGE>

--------------------------------------------------------------------------------

IOWA PUBLIC AGENCY
INVESTMENT TRUST
(IPAIT)

A comprehensive cash management
service for Iowa Cities, Counties
and City Utilities

INFORMATION STATEMENT
October 1, 2000

This booklet provides detailed information about the Iowa Public Agency
Investment Trust.

Please read it carefully and retain it for future reference.

Sponsored by the
Iowa Association of Municipal Utilities
Iowa State Association of Counties
Iowa League of Cities

<PAGE>

CONTENTS

Section Page

--------------------------------------------------------------------------------

The Iowa Public Agency Investment Trust (IPAIT)...............................3
Cash Management Alternatives
Diversified Portfolio.........................................................3
Direct Government Obligation Portfolio........................................3
Authorized Investments
Maximum Current Income........................................................4
Risk and Management of Risk
Management Policies and Procedures............................................4
Maturity of IPAIT Investments.................................................5
Maintenance of Liquidity......................................................5
Investing in IPAIT Portfolio Units
Portfolio Investments.........................................................5
Investments by Bank Funds Transfer............................................5
Income Distributions..........................................................6
Redeeming IPAIT Portfolio Units
Portfolio Withdrawals.........................................................6
Valuing IPAIT Portfolio Trust Units
Portfolio Transactions........................................................6
Calculating Yield.............................................................7
Expenses of IPAIT.............................................................7
Trustees and Officers.........................................................7
The Administrator-Adviser.....................................................8
The Custodian.................................................................8
Bank Trust Services...........................................................9
Administrative and Distribution Related Services..............................9
Taxes.........................................................................9
Reports to Participants.......................................................9
Declaration of Trust
Description of Trust Units....................................................9
Participant Liability.........................................................9
Termination of the Declaration of Trust.......................................9
Amendment of the Declaration of Trust.........................................9
Withdrawal...................................................................10
Definitions..................................................................10
Independent Auditors.........................................................10
Document Copies..............................................................10
Instructions and Application Form............................................11
Instructions for Making Placements...........................................18
Instructions for Making Redemptions..........................................18

No person or entity has been authorized to give any information or to make any
representations other than those contained in this Information Statement, and,
if given or made, such information or representations must not be relied upon as
having been authorized by IPAIT, its Trustees, the Administrator-Adviser, the
Custodian, or any agent of IPAIT or the Trustees.

<PAGE>

IOWA PUBLIC AGENCY
INVESTMENT TRUST (IPAIT)

The Iowa Public Agency Investment Trust ("IPAIT") is a professionally managed
common law trust organized and operated as a diversified open-end management
investment company created with the objective of providing Iowa cities,
counties, city utilities, and other eligible participants (the "Participants")
with a convenient method for investing their funds in a manner that will
maximize current income consistent with safety of principal and the required
degree of liquidity for operating funds.

IPAIT has been established under Iowa law pursuant to Iowa Code Chapter 28E and
Sections 331.555 and 384.21, which authorize Iowa cities, counties, city
utilities, and other eligible participants to jointly invest moneys pursuant to
a joint investment agreement. IPAIT was established by adoption of a Joint
Powers Agreement and Declaration of Trust establishing the Iowa Public Agency
Investment Trust as of October 1, 1987 and amended as of August 1, 1988, and May
1, 1993 (the "Declaration"). Iowa Code permits judicial districts and rural
water districts to participate in a joint investment agreement, and such
entities are authorized to participate in IPAIT upon the approval of the Board
of Trustees. A city, city utility, or county which is, respectively, a member of
the Iowa League of Cities, the Iowa Association of Municipal Utilities, or the
Iowa State Association of Counties (the "Sponsoring Associations") or other
eligible participants can become a Participant in IPAIT by submitting an
application and a certified copy of the form of authorizing resolution contained
therein to Iowa Public Agency Investment Trust, P.O. Box 837, Des Moines, Iowa,
50304-0837. (See "Instructions and Application Form").

In the opinion of legal counsel, the interests of beneficial ownership in IPAIT
("Trust Units") are exempt from registration under the Securities Act of 1933
and the Iowa Uniform Securities Act. IPAIT is, however, registered as an
investment company under the Investment Company Act of 1940 ("1940 Act")
pursuant to the requirements of Iowa Code ss. 12B.10.

This Information Statement provides detailed information about IPAIT and its
investment and operating policies. Please read it carefully and retain it for
future reference. Additional information, a copy of the Declaration of Trust,
and further assistance regarding becoming a Participant in IPAIT may be obtained
by calling the IPAIT toll free number, (800) 872-4024, or by contacting Iowa
Public Agency Investment Trust, P.O. Box 837, Des Moines, Iowa 50304-0837. This
Information Statement is qualified in its entirety by reference to the text of
the Declaration of Trust.

CASH MANAGEMENT
ALTERNATIVES

IPAIT issues two separate series of Trust Units in which Participants may
invest, referred to as the Diversified Portfolio and the Direct Government
Obligation Portfolio (a "Portfolio" or the "Portfolios").

There are no minimum or maximum investments or limitations on redemptions for
either Portfolio. Participants may invest any funds in their custody in either
Portfolio. The Portfolios are operated according to investment and accounting
standards which conform to the requirements of Rule 2a-7 under the 1940 Act for
"money market" funds. Only funds of Participants may be invested in IPAIT.

DIVERSIFIED PORTFOLIO - The Diversified Portfolio is a professionally managed
portfolio of U.S. government and federal agency securities, collateralized
certificates of deposit of Iowa financial institutions and collateralized
perfected repurchase agreements as more fully described below. All such
securities have final maturities of no greater than 365 days and the Portfolio
maintains a maximum average dollar weighted maturity of 90 days or less.

DIRECT GOVERNMENT OBLIGATION PORTFOLIO - The Direct Government Obligation
Portfolio is identical in every respect to the Diversified Portfolio except that
it is invested exclusively in direct U.S. government obligations and repurchase
agreements collateralized by direct U.S. government obligations as more fully
described below. All such securities have final maturities no greater than 365
days from the date of purchase and the Portfolio maintains a maximum average
dollar weighted maturity of 90 days or less. Thus, Participants, which may be
required or wish to confine their short-term investments to these types of
instruments, may do so by investing in Direct Government Obligation Units.

AUTHORIZED INVESTMENTS

The objective of IPAIT, in offering the Diversified and Direct Government
Obligation Portfolios, is to provide Participants with daily liquidity and the
highest possible investment yield consistent with safety of principal and the
maintenance of liquidity.

Subject to the specific investment restrictions of the Portfolios described
herein, assets of IPAIT will only be invested in securities specifically
permitted for Participants under Iowa law, as it now or in the future may exist,
including the following types of securities and instruments ("Permitted
Investments").

(1) Securities issued or guaranteed as to payment of principal and interest by
the U.S. Government. These include, for example, Treasury bills, bonds and
notes which are direct obligations of the U.S. Government ("U.S. Government
Securities").

(2) Obligations issued or guaranteed as to payment of principal and interest by
agencies or instrumentalities of the U.S. Government ("Federal Agency
Securities"). Such agencies and instrumentalities include, for example,
Federal Intermediate Credit Banks, Federal Home Loan Banks, the Federal
National Mortgage Association, and the Farmers Home Administration. Such
securities will include those supported by the full faith and credit of the
United States Treasury or the right of the agency or instrumentality to
borrow from the Treasury, as well as those supported only by the credit of
the issuing agency or instrumentality.

(3) Collateralized perfected repurchase agreements secured by securities in the
immediately foregoing categories. A repurchase agreement involves the sale
of such securities to IPAIT with the concurrent agreement of the seller to
repurchase them at a specified time and price to yield an agreed upon rate
of interest.
<PAGE>

The securities collateralizing the agreement are held in custody and are
regularly verified by the IPAIT Custodian for the benefit of IPAIT and are
maintained daily in an amount equal to at least 102 percent of the value of
principal and accrued interest of the repurchase agreement.

(4) Collateralized certificates of deposit ("CDs") in Iowa financial
institutions. Each collateralized CD that IPAIT places with an Iowa
institution on behalf of the Participants in IPAIT is insured by the FDIC
for the first $100,000 of value. All amounts in excess of $100,000 in an
Iowa institution are protected by the State of Iowa's sinking Fund for
public deposits. IPAIT's Investment Adviser also regularly monitors the
creditworthiness of Iowa financial institutions approved by the IPAIT Board
as IPAIT public funds depositories. Before funds may be deposited by IPAIT
into an Iowa financial institution CD, that depository must be deemed to
present minimal credit risk of default base upon the credit analysis. Each
depository with outstanding IPAIT CD's is reviewed quarterly to evaluate
continuing creditworthiness.

Every Permitted Investment shall be purchased on a delivery versus payment
("DVP") basis. No other settlement procedure is allowed.

MAXIMUM CURRENT INCOME - Because of the participation of many Iowa
municipalities, counties, city utilities and other Iowa governmental entities in
IPAIT and the large pool of funds resulting therefrom, IPAIT can purchase
securities in larger denominations, thereby improving yields and reducing
transaction costs. IPAIT's size and experience will also permit the selection of
securities maturing at various times which can enhance average portfolio yields.
These strategies, implemented by a full-time professional portfolio manager,
will maximize the current returns earned by IPAIT.

Generally, the yields on direct and guaranteed U.S. government obligations are
less than those on Federal Agency securities and other Permitted Investments.
Thus, the returns earned by Participants that elect to invest in the Direct
Government Obligation Portfolio may also be lower.

RISK AND
MANAGEMENT OF RISK

While investments by IPAIT will be confined to the highest quality securities
and instruments with varying maturities, the complete elimination of risk is not
possible. It is possible that large redemptions of Trust Units in the Portfolios
could necessitate the sale of some Portfolio investments prior to maturity at
current market prices. If market values have declined, a reduction in Unit value
could result at the time of redemption.

MANAGEMENT POLICIES AND PROCEDURES

Following are the fundamental management policies and procedures for IPAIT. All
investments are maintained in separate IPAIT custodial accounts at Wells Fargo
Bank Iowa, N.A., segregated by Portfolio on behalf of IPAIT Participants.

1. IPAIT investment procedures require that each purchase or sale of a
security be handled on a 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. IPAIT investment procedures prohibit "free delivery" transactions. The
Custodian shall never release assets from the IPAIT custodial accounts
until the funds for the investment are delivered. Prohibiting "free
delivery" settlements precludes movement of IPAIT program investments or
funds to a third party anywhere.

3. Any material deviation (greater than 0.5 percent) from the amortized cost
of investments shall be promptly reported by the Adviser to the Board of
Trustees. If such deviation exceeds 0.5 percent, the Adviser 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 or derivative 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 for the Diversified or
Direct Government Obligation Portfolios which has a maturity date more than
365 days from the date of purchase, unless subject to a perfected
repurchase agreement, which such maturity shall be determined in accordance
with Rule 2a-7 under the 1940 Act as it presently exists or as it may be
amended in the future.

7. 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
either the Diversified or Direct Obligation Portfolio greater than ninety
(90) days; provided, however, that in making such determination, the
maturity of a Permitted Investment shall be determined as set forth under 6
above.

8. IPAIT may not borrow money or incur indebtedness whether or not the
proceeds thereof are intended to be used to purchase Permitted Investments;

9. IPAIT may not make loans, provided that IPAIT may make Permitted
Investments;

10. IPAIT may not purchase securities or shares of investment companies or any
entities similar to IPAIT.

Iowa and the United States of America as they may from time to time be amended.

IPAIT may invest in Certificates of Deposit issued by Iowa financial
institutions. The Trust's investment adviser provides a financial assessment of
each nonrated IPAIT depository to the IPAIT Board of Trustees comparing that
Depository's financial ratios to those of other Iowa and regional financial
institutions whose securities are rated in the highest rating category for
short-term debt obligations. Pursuant to this credit analysis, each IPAIT
depository's Certificates of Deposit are deemed to be First Tier securities
pursuant to Rule 2a-7 under the Investment Company Act of 1940 and to present
minimal credit risk of default based upon the credit analysis. The IPAIT Board
of Trustees has directed IPAIT's investment adviser to monitor the credit
quality of all IPAIT depositories on an ongoing basis and to advise the Board of
any deterioration of credit quality of any IPAIT depository relative to rated
institutions. The State of Iowa maintains a Sinking Fund for public deposits to
protect against the potential loss of funds by a public body with funds on
deposit in an Iowa financial institution. The State of Iowa also has assessment
procedures authorized to assess all Iowa depositories holding public funds for
any losses experienced by an Iowa public body in excess of the State Sinking
Fund in the event of an Iowa depository failure. There is no assurance that the
State of Iowa's Sinking Fund for public deposits will be sufficient in case of
bank failure.

In addition to the fundamental restrictions and procedures set forth above, as a
condition of providing services to IPAIT, IPAIT presently requires that the
IPAIT Custodian, Bank Trust Services Provider, Administrator, and Investment
Adviser maintain fidelity and errors and omissions insurance coverage for
IPAIT's benefit for all services provided to IPAIT.

MATURITY OF IPAIT INVESTMENTS

Each of the Portfolios strictly adheres to Iowa law and Rule 2a-7 under the 1940
Act for money market mutual funds, developed to minimize risk that the value of
investments in a portfolio might vary. IPAIT's investment policy as set forth
herein presently limits portfolio investments to the following:

1. The remaining maturity of any individual investment may not exceed more
than 365 days from the date of purchase, which such maturity shall be
determined in accordance with Rule 2a-7 under the 1940 Act as it
presently exists or as it may be amended in the future.

2. The maximum dollar weighted average maturity of all IPAIT investments
may not exceed 90 days;

3. Investments are monitored daily by its Iowa based investment adviser to
assure that the value of each IPAIT investment does not materially
deviate in value from its amortized cost.

MAINTENANCE OF LIQUIDITY

IPAIT's investments in the Diversified and Direct Government Obligation
Portfolios will generally be confined to securities maturing at various times
within 365 days from the date of purchase as previously described. Because of
their relatively short maturities, high quality, and minimal price fluctuations,
ready markets will exist for liquidating all securities in which IPAIT will
invest.

As a general policy, the Portfolios will hold investments 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 investments. Summaries of all securities trades are
regularly provided to the Board of Trustees by the Administrator-Adviser for
review.

INVESTING IN
IPAIT PORTFOLIO UNITS

PORTFOLIO INVESTMENTS - To become a Participant in IPAIT, the public body must
adopt the Form A resolution included in the Instructions and Application Form
attached hereto, or otherwise provided by IPAIT. The resolution authorizes the
public body to become a Participant, adopts the Declaration, and designates
officials of the public body authorized to execute transactions with IPAIT.
Following adoption of the resolution, the public body must complete and forward
to the IPAIT Administrator-Adviser, the investment trust application Form B
along with the Form A and Form A Certificate. (See "Instructions and Application
Form".)
<PAGE>

Investments may be made in the Diversified or Direct Government Obligation
Portfolio at the net asset value per Unit next determined after an investment
order has been received. The net asset value of Portfolio Units is determined
once daily at the close of the New York Stock Exchange (currently 3:00 p.m., Des
Moines time).

INVESTMENTS BY BANK FUNDS TRANSFER - A Participant may authorize Wells Fargo
Bank Iowa as IPAIT Trust Services Provider to cause moneys to be transferred, by
means of the Iowa Automated Clearinghouse System ("ACH"), from the Participant's
local bank to IPAIT. The Participant may also have its local bank wire federal
funds directly to Wells Fargo Bank, the IPAIT Custodian, all as indicated
herein.

A Participant has the ability to invest in a Portfolio by the following methods:

(1) An authorized official may telephone IPAIT at (800) 872-4024 and furnish
the public body's name, name of person calling, the IPAIT account number
and the amount being invested. A request for the IPAIT investment to be
transferred by ACH, which will be effective the next business day, must be
made by 3:00 p.m.

(2) To make an investment by wire transfer, to be effective the same business
day, an authorized official must notify an IPAIT representative by 10:00
a.m., furnishing the information described above. The Participant must also
instruct its local financial institution to wire funds to the IPAIT
Custodian with the following instructions:

Wells Fargo Bank Iowa, N.A., Des Moines
ABA #073000228
Credit #405200
Iowa Public Agency Investment Trust
(Further credit to Participant Name and IPAIT account number)

(3) A Participant may invest in IPAIT Portfolio Units by mailing a check or
other bank draft to the IPAIT Custodian, Wells Fargo Bank Iowa, N.A., Iowa
Public Agency Investment Trust, P.O. Box 837, Des Moines, Iowa 50304-0837.
Until the check has been converted into federal funds, the investment order
will not be accepted, and no income will be earned on the investment until
that time.

INCOME DISTRIBUTIONS - Net income for each Portfolio of IPAIT is declared each
business day for Participants of record immediately before 3:00 p.m. Central
Standard time. Income distributions are accrued to Participants' accounts daily
and reinvested in additional Trust Units monthly for compounded interest. Total
distributions for each month are credited to Participants' accounts the first
business day of the following month. Distributions are automatically reinvested
in Portfolio Trust Units unless cash payment has been requested. Cash payments,
if requested, will be made monthly. If a Participant redeems the entire amount
in its account during the month, income distributions accrued to the account
from the beginning of the month through the date of redemption are paid into the
account the FIRST business day of the following month.

REDEEMING
IPAIT PORTFOLIO UNITS

PORTFOLIO WITHDRAWALS - IPAIT Portfolio Trust Units may be redeemed on any day
on which the New York Stock Exchange is open for trading, on which the
Administrator-Adviser computes the net asset value of the IPAIT Portfolios, and
which is not a federal holiday or a holiday officially observed by commercial
banks in Iowa. IPAIT Portfolio Trust Units will be redeemed at the net asset
value next determined after a withdrawal request in good order is received by
the Bank.

Proceeds from the redemption of IPAIT Portfolio Trust Units will be transmitted
to the Participant's local financial institution by means of the ACH system or
by the federal reserve wire system. No charge will be made for the ACH transfer
of the Participant's funds; however, local financial institutions may reserve
the right to charge for an incoming wire transfer. Proceeds can also be paid by
check to the registered Participant and mailed to the Participant's address of
record.

Proceeds from the redemption of IPAIT Portfolio Trust Units, which have been
paid for by check, may not be transmitted to the Participant's financial
institution by wire for up to a maximum of seven days after the Bank has been
informed that the Participant's check has cleared, but in no event for more than
15 days after the Units have been issued and outstanding.
A Participant has the ability to redeem Trust Units from either Portfolio by the
following methods:

(1) An Authorized Official may redeem Trust Units by telephoning (800)
872-4024 and furnishing the public body's name, name of person calling,
the IPAIT account number and the amount to be withdrawn, and the account
number to which the funds are to be transferred. A request for the IPAIT
withdrawal to be transferred by the Automated Clearing House System
(ACH), which will be transferred the next business day, must be made by
3:00 p.m.

(2) To redeem Trust Units by wire transfer to be effective the same day, an
IPAIT representative must be notified by 10:00 a.m. by a Participant's
Authorized Official. The Participant must instruct the IPAIT
representative to wire funds to its local financial institution. The
Participant must provide the wiring instructions including the local
financial institution name, location, account number, and name and
telephone number of a contact person at that financial institution.

(3) A Participant may redeem all or a portion of its Trust Units by
instructing the Bank Trust Services Provider by letter mailed to the
following address: Iowa Public Agency Investment Trust, P.O. Box 837, Des
Moines, Iowa, 50304-0837. This redemption request must be in good order,
indicating the dollar amount or number of Trust Units to be redeemed, the
method of redemption (i.e., ACH, check or wire) and signed by an
Authorized Official of the public body.
<PAGE>

VALUING
IPAIT PORTFOLIO TRUST UNITS

The net asset value of IPAIT Portfolio Trust Units is determined once each day,
as of the close of the New York Stock Exchange (currently 3:00 p.m. Des Moines
time). Except for federal holidays, such other holidays that are officially
observed by commercial banks in Iowa, and days on which no investments in or
redemption of IPAIT Portfolio Trust Units occur, the Administrator-Adviser will
compute the Portfolios' net asset value on each day the New York Stock Exchange
is open for trading or when there is a sufficient volume of trading which might
materially affect the net asset value of Portfolio securities. The net asset
value of each Trust Unit is computed by adding the value of all securities and
other assets (including income receivable), subtracting liabilities (including
accrued expenses) attributable to each Portfolio and dividing by the number of
Trust Units of each Portfolio outstanding.

The IPAIT Administrator-Adviser will compute the net asset value of Trust Units
for the Portfolios by using the amortized cost method for valuing securities.
Under the amortized cost method, a security is initially valued at cost on the
date of purchase and, thereafter, any discount or premium is amortized on a
straight line basis to maturity, regardless of fluctuating interest rates or the
market value of the security. However, the Administrator-Adviser will establish
procedures to stabilize the net asset value of Trust Units at $l.00 per Trust
Unit. These procedures include a review by the Administrator-Adviser as to the
extent of the deviation of net asset value based upon available market
quotations from the Portfolio's $l.00 amortized cost per Trust Unit. If such
deviation exceeds 0.5 percent, the Administrator-Advier 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.

If, and only if, the Trustees, with the advice of the Administrator-Adviser,
shall determine that the amortized cost method of determining the net asset
value of IPAIT Portfolio Units no longer represents a fair method of valuation,
the Trustees may either permit such net asset value to fluctuate or may reflect
the fair value thereof in the number of Trust Units allocated to each
Participant.

PORTFOLIO TRANSACTIONS - Subject to policies set by the Trustees, the
Administrator-Adviser is authorized to determine, consistent with the IPAIT
investment objectives and policies, which securities will be purchased, sold and
held by IPAIT. Most securities will be purchased on a principal basis directly
from the issuer, from banks, underwriters, or market makers and, thus, will not
involve payment of a brokerage commission. Such purchases may include a
discount, concession or mark-up retained by an underwriter or dealer. The
Administrator-Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of securities and is directed to use its best
efforts to obtain the best available price and most favorable execution on
brokerage transactions. Some of the transactions may be directed to brokers or
dealers who furnish special research and statistical information or services
rendered in the execution of orders.

CALCULATING YIELD - The yield on Trust Units (a 7-calendar-day historical yield)
is calculated by first dividing the average daily net income per Trust Unit for
that 7-day period by the average daily net asset value per Unit for the same
period. This return is then annualized by multiplying the result times 365. The
yield for the 7-day period ended June 30, 2000, for IPAIT and IPAIT DGO was
5.81% and 5.84%, respectively.

EXPENSES OF IPAIT - The Administrator-Adviser is paid an annual fee based upon
average daily net assets for each Portfolio of 0.23 percent for assets up to
$150,000,000, 0.185 percent for assets greater than $150,000,000 and less than
$300,000,000 and 0.14 percent for assets greater than $300,000,000. In addition,
the Administrator-Adviser is paid a program support provider fee of 0.10 percent
for program assets less than $250,000,000 and 0.125 percent for program assets
greater than $250,000,000. This fee, which is paid pursuant to the provisions of
a Rule 12b-1 Plan adopted by the Trustees, is used by the Administrator-Adviser
to pay for various expenses in marketing IPAIT. All fees payable to the
Administrator-Adviser are accrued daily and paid monthly.

The Custodian is paid an annual fee based upon average daily net assets for each
Portfolio of 0.05 percent for assets up to $150,000,000, 0.045 percent for
assets greater than $150,000,000 and less than $300,000,00 and 0.04 percent for
assets greater than $300,000,000. Custodial fees are accrued daily and paid
monthly.

The Bank is paid an annual fee based upon average daily net assets of .075
percent for Bank Trust Services. All Bank Trust Service fees are accrued daily
and paid monthly.

IPAIT also pays the operating expenses incurred directly by IPAIT and its
Trustees in connection with the discharge of their duties. These expenses
include initial and ongoing legal and accounting fees, auditing fees,
out-of-pocket expenses of Trustees and the cost of printing, mailing and other
services performed independently by IPAIT. Payment of all operating expenses are
accrued daily and are estimated at the annual rate of 0.025 percent of average
daily net assets.

Also pursuant to the Trust's Rule 12b-1 Plan, there is an administrative
services fee computed at the annual rate of 0.10 percent of the average daily
net assets of the Portfolios. The administrative services fee is payable to the
Sponsoring Associations based upon Participants attributable to each Sponsoring
Association pro rata share of the IPAIT average daily net assets. This fee is
paid for administrative services provided by the Sponsoring Associations to
IPAIT, including clerical and administrative services in connection with
meetings of the Board of Trustees, evaluation of performance of service
providers, review of compliance with investment policies, providing the Board of
Trustees various reports thereon, maintaining Trust records and providing
marketing services.

Expenses directly attributable to a Portfolio are accrued against the respective
Portfolio. Expenses not attributable to a particular Portfolio ("general
expenses") are allocated to the Portfolios pro rata based upon the relative net
asset value of the Portfolios.
<PAGE>

For the fiscal year ending June 30, 2000, total expenses of the Portfolios
amounted to 0.57 percent and 0.58 percent, respectively, of the Diversified and
Direct Government Obligation Portfolios' average daily net assets.

These fees and operating expenses are subject to adjustment and renegotiation as
determined by the Board of Trustees and the terms of the contracts with the
service providers.

TRUSTEES AND OFFICERS

The Board of Trustees has full and complete control over the business and assets
of IPAIT, subject to the rights of IPAIT Participants as provided in the
Declaration of Trust.

There are nine voting members of the Board of Trustees. In addition, the
Executive Directors of the Iowa Association of Municipal Utilities, the Iowa
League of Cities, and the Iowa State Association of Counties serve as ex officio
nonvoting members of the Board of Trustees and, pursuant to the Bylaws, may from
time to time serve as secretary and treasurer for the Board. The names,
affiliations and positions of the Board members are set forth below:

NAME AFFILIATION POSITION
Robert Hagey Treasurer, Chair and
Sioux County Trustee
Tom Hanafan Mayor, Council Bluffs Vice Chair
and Trustee
Don Kerker Muscatine Utilities Trustee
Jim Ahrenholtz Office Manager, Trustee
Denison Municipal Utility
Floyd Magnusson Supervisor, Trustee
Webster County
Diane Kiefer Treasurer, Trustee
Wapello County
Paul Oldham Office Manager, Trustee
Algona Municipal Utility
Jody Smith Director of Adminis- Trustee
trative Services,
West Des Moines
Robert Haug Executive Director, Ex Officio
Iowa Association of Trustee
Municipal Utilities Secretary
Thomas Bredeweg Executive Director, Ex Officio
Iowa League of Trustee
Cities Treasurer
William Peterson Executive Director, Ex Officio
Iowa State Association Trustee,
of Counties Asst. Secretary

Ex Officio Trustees have no voting power in connection with any actions that the
Trustees may take on behalf of IPAIT. The Trustees have legal title to the
assets of IPAIT for the benefit of the Participants. In their capacity as
Trustees, the Trustees function on behalf of the Participants, as the agents and
fiduciaries of the Participants, to implement and administer the Declaration, as
an agreement among the Participants. The Chairman, Vice Chairman, Second Vice
Chairman, Secretary, Assistant Secretary, and Treasurer serve on an Executive
Committee. The Executive Committee may exercise all of the authority of the
Board of Trustees except that the Executive Committee cannot create a new
Portfolio or a series of units or change investment policies.

The Iowa State Association of Counties, the Iowa League of Cities and the Iowa
Association of Municipal Utilities have each appointed three Trustees to 3-year
staggered terms.

If, at any time after election to the Board of Trustees, a Trustee is associated
with a city utility, county or city which ceases to be a Participant, such
Trustee must resign.

No Trustee (whether voting or nonvoting) of IPAIT will receive any compensation
from IPAIT, the Administrator, Adviser or Custodian for his or her services.
IPAIT will reimburse the Trustees for their reasonable expenses incurred on
behalf of IPAIT.

IPAIT refers to the Trustees in their capacity collectively as Trustees and not
individually or personally. All persons dealing with IPAIT must look solely to
IPAIT assets for the enforcement of claims against IPAIT. The Trustees, officers
and Participants do not assume any liability for obligations entered into on
behalf of IPAIT.

The Joint Powers Agreement and Declaration of Trust shall not create any right,
title, privilege or entitlement in any person, corporation or other legal entity
except a Participant and a Person that has a direct and written contract with
IPAIT. The terms and conditions of the Declaration of Trust are not intended to
and shall not be construed to create any cause of action, legal or equitable, in
any Person against the Participants, Trustees, officers, employees, Sponsoring
Associations or agents of IPAIT, except as is provided by specific language in
the Declaration or by specific language in written agreements or contracts
entered into by the Trustees in implementing IPAIT. It is not intended and the
terms of the Declaration shall not be construed so that any breach thereof by
Participants, Trustees, officers, employees or agents of IPAIT creates an action
at common law, tort, contract or otherwise.

A Trustee is not personally liable for a claim based upon an act or omission of
the Trustee performed in the discharge of the Trustee's duties, except for acts
or omissions which involve intentional misconduct or knowing violation of the
law or for a transaction from which the Trustee derives an improper personal
benefit.

The Trustees are responsible for the management of IPAIT, the conduct of its
affairs, and the management and distribution of IPAIT assets. However, the
Trustees are not required personally to conduct all of the affairs of IPAIT.
Consistent with their responsibility, the Trustees have appointed an
Administrator-Adviser, Bank Trust Services Provider and Custodian and have
assigned to them such duties as the Trustees have deemed appropriate with regard
to the investment, administration, record keeping and custody of moneys and
investments of IPAIT.

THE ADMINISTRATOR-ADVISER

Investors Management Group (IMG), 2203 Grand Avenue, Des Moines, Iowa
50312-5338, an investment adviser registered under the

Investment Company Act of 1940, serves as the IPAIT Administrator-Adviser,
pursuant to an Administrator-Adviser Agreement. IMG, a wholly-owned subsidiary
of AMCORE Financial Inc., was organized in 1982. Since then, the firm's
principal business has been providing continuous investment management to
pension and profit-sharing plans, insurance companies, public agencies, banks,
endowments and charitable institutions, individuals and others. As of June 30,
2000, IMG had approximately $4.2 billion in equity, fixed income and money
market assets under management. The Trust has been managed by Kathryn D. Beyer,
CFA, Managing Director since 1993. Ms. Beyer is a fixed income strategist and is
a member of IMG's Investment Policy Committee. Her experience includes serving
as a securities analyst and director of mortgage-backed securities for Central
Life Assurance Company. She received her Master of Business Administration from
Drake University and her Bachelor of Science degree in agricultural engineering
from Iowa State University. The Administrator-Adviser furnishes IPAIT with
advice with respect to IPAIT operations and the investment of its assets subject
to and in conformity with the Declaration of Trust and the policies adopted by
the Board of Trustees; provides daily account services to Participants;
determines and allocates income of IPAIT; provides all participant transaction
confirmations and monthly account summaries; provides administrative personnel,
equipment and office space to IPAIT; determines the net asset value of IPAIT on
a daily basis; and performs all related administrative services for IPAIT. The
IPAIT agreement with the Administrator-Adviser is approved annually, is not
assignable, and is cancelable on 60 days notice by either party without penalty.
It will remain in effect until December 31, 2000, and thereafter as approved by
the Trustees. For the fiscal year ended June 30, 2000, fees paid by IPAIT and
IPAIT DGO to IMG for investment advisory services amounted to $459,948 and
$149,407, respectively, or approximately 0.13 percent and 0.15 percent,
respectively, of the Fund's average net assets.

THE CUSTODIAN

Wells Fargo Bank Iowa, N.A., 666 Walnut, P.O. Box 837, Des Moines, Iowa
50304-0837, acts as Custodian for IPAIT pursuant to a Custodian Agreement. The
Custodian will hold in a separate account all investment instruments and moneys,
including cash received for each Portfolio. Subject to the terms and conditions
of the Custodian Agreement, the Custodian may register or transfer assets of
IPAIT into the Custodian's name or the name of a nominee or nominees provided
that the books and records of the Custodian at all times show that such accounts
are a part of IPAIT. All IPAIT security transactions are handled on the basis of
delivery versus payment of the custodian or its nominee or nominees. IPAIT's
agreement with the Custodian is approved annually, is not assignable, and is
cancelable on 60 days notice by either party without penalty. It will remain in
effect until December 31, 2000, and thereafter as approved by the Trustees.

BANK TRUST SERVICES

Wells Fargo Bank Iowa, N.A., 666 Walnut Street, P.O. Box 837, Des Moines, Iowa
50304-0837 (the Bank), provides all Bank Trust Services for IPAIT pursuant to a
Bank Trust Services Agreement. Bank Trust Services provided shall include
facilitating and processing all movement of monies between IPAIT and the
Participant's accounts at the Participant's local financial institutions, verify
that each transaction is initiated by an authorized representative of the
Participant and, utilizing banking and trust procedures, follow procedures that
assure that all IPAIT or Participant funds be moved only within a "closed
system" between the Participant's preauthorized local account and the
Participant's IPAIT account and assure that all monies received from or on
behalf of Participants are fully collected and available. The IPAIT Trust
Services Agreement with the Bank is approved annually, is not assignable, and is
cancelable on 60 days notice by either party without penalty. It will remain in
effect until December 31, 2000, and thereafter as approved by the Trustees.

ADMINISTRATIVE AND DISTRIBUTION
RELATED SERVICES

The Trust has adopted a Rule 12b-1 Plan ("Plan") which permits the Trust to pay
certain distribution related expenses. Under the Plan, the Trust pays the
Sponsoring Associations a fee at the annual rate of .10 percent of average
annual net assets for providing to the Trust various administrative services,
including clerical and administrative services in connection with meetings of
the Board of Trustees, evaluation of performance of service providers, review of
compliance with investment policies, providing the Board of Trustees various
reports thereon, providing marketing assistance and maintaining Trust records.
The Sponsoring Associations were instrumental in the establishment of the Trust
which was and is intended to assist Iowa public agencies in cash management
thereby lessening the burdens of government. The Executive Directors of the
Sponsoring Associations serve as officers and members of the Executive Committee
of IPAIT. The Plan is approved annually by the Trustees only after careful
consideration of whether there is a reasonable likelihood that the Plan will
benefit the Trust and the Participants.

TAXES

Counsel for IPAIT is of the opinion that IPAIT is not subject to Federal or Iowa
income tax and that distributions received by Participants are not taxable to
them.

REPORTS TO PARTICIPANTS

Participants receive an "advice of activity" confirming all transactions
processed. Participants will receive a monthly statement summarizing all
activity on each account opened with IPAIT. This statement will include a list
of all investments currently held by IPAIT for the Participant. In addition,
Participants will be provided monthly performance information illustrating
historical investment performance and yield. IPAIT will issue unaudited
semi-annual reports which will include a list of securities owned by IPAIT and
complete financial statements. It will also issue an annual report containing a
financial report audited by the IPAIT independent auditors, KPMG Peat Marwick
LLP.

DECLARATION OF TRUST

IPAIT was established as of October 1, 1987, as a common law trust under the
laws of the State of Iowa by the adoption and execution of a Joint Powers
Agreement and Declaration of Trust by the Maquoketa
<PAGE>

Municipal Electric Utility, Buchanan County, and the City of Fairfield.
Additional Iowa cities, counties, city utilities and the other eligible
participants (including 28E organizations) may become Participants in the manner
described in this Information Statement. The Joint Powers Agreement and
Declaration of Trust was amended on August 1, 1988 and May 1, 1993, and restated
as of May 1, 1993.

Each potential Participant is given a copy of the Declaration before it becomes
a Participant. The summary of the Declaration given herein is qualified in its
entirety by reference to the full text of the Declaration.

DESCRIPTION OF TRUST UNITS - The Declaration authorizes an unlimited number of
full and fractional Trust Units which may be issued in series. All Trust Units
of each series participate equally in the allocation of distributions and have
equal liquidation and other rights pertaining to that series. The Trust Units
have no conversion, exchange or preemptive rights.

For all matters requiring a vote of Participants, each Participant is entitled
to one vote with respect to each matter. It is not necessary for a Participant
to hold any minimum number of Units to be entitled to vote. Participants are not
entitled to cumulative voting.

No Trust Units may be transferred to any transferee other than IPAIT itself at
the time of redemption.

PARTICIPANT LIABILITY - The Declaration provides that Participants will not be
subject to any liability whatsoever in tort, contract or otherwise to any other
person or persons in connection with IPAIT property or the affairs of IPAIT. Any
Participant made a party to any suit or proceedings to assert or enforce any
such liability shall not on account thereof be held to any personal liability.

TERMINATION OF THE DECLARATION OF TRUST - IPAIT may be terminated by the
affirmative vote of a majority of Participants entitled to vote at any meeting
of Participants or by an instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by not less than a majority of the
Participants entitled to vote.

AMENDMENT OF THE DECLARATION OF TRUST. The Declaration may be amended at any
meeting of Participants or by an instrument or instruments in writing, by the
affirmative vote or signed approval of a majority of the Participants. The
Trustees, from time to time, by a two-thirds vote of the Trustees and after 15
days prior written notice to the Participants, may amend the Declaration without
the vote or consent of the Participants, to the extent they deem necessary to
conform the Declaration to the requirements of applicable laws or regulations,
or any interpretation thereof by a court or other governmental agency; but the
Trustees shall not be liable for failing to do so.

WITHDRAWAL - A Participant may withdraw from IPAIT at any time by notifying the
Trustees as specified in the Declaration.

DEFINITIONS - Unless otherwise expressly defined herein, words that are
capitalized in this Information Statement have the meaning defined in the Joint
Powers Agreement and Declaration of Trust.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP, 2500 Ruan Center, Des Moines, Iowa 50309, serves as the
IPAIT independent auditors.

DOCUMENT COPIES

Copies of the Joint Powers Agreement and Declaration of Trust, the
Administrator-Adviser Agreement, the Bank Trust Services Agreement, and the
Custodian Agreement can be obtained from the Iowa Public Agency Investment
Trust, P.O. Box 837, Des Moines, Iowa 50304-0837.

<PAGE>
INSTRUCTIONS AND APPLICATION FORM

HOW TO OPEN ACCOUNTS WITH IOWA PUBLIC AGENCY INVESTMENT TRUST (IPAIT)

Any city, county, or city utility which is, respectively, a member of the Iowa
League of Cities, the Iowa State Association of Counties or the Iowa Association
of Municipal Utilities and other eligible participants including 28E
organizations may join IPAIT as a "Participant" and take full advantage of its
investment programs.

A CITY, COUNTY OR CITY UTILITY (OR 28E ORGANIZATION) THAT WISHES TO OPEN AN
ACCOUNT WITH IPAIT AND BECOME A PARTICIPANT SHOULD COMPLETE FORMS A AND B.

FORM A (Model Resolution)

The City Council, County Board of Supervisors, or Utility Board of Trustees (or
governing body of other eligible participants including 28E organizations) must
adopt a resolution in the form as provided by the model resolution. The adopted
resolution must be certified using the certificate provided. The resolution
authorizes the city, county, municipal utility or other eligible participant to
become a Participant of IPAIT and adopts the Joint Powers Agreement and
Declaration of Trust. It also designates the officials of the Participant
authorized to effect transactions with IPAIT. Form A must be completed with the
Participant, the names and titles of Authorized Officials, the signatures of the
presiding officer and clerk/secretary and a certification signed and notarized
by the clerk/secretary. Form A and the certificate are to be sent with Form B to
the IPAIT Administrator-Adviser at the address given herein. The Participant
must include a copy of the Resolution along with a copy of the Joint Powers
Agreement and Declaration of Trust in the minutes of the meeting at which the
Resolution is approved.

FORM B (Application Form)

This form must be completed by an Authorized Official. Form B provides all
applicable information about the Participant and the local depository bank.
After an application is received by the IPAIT Administrator-Adviser an account
and an account number will be assigned. Once the account is open, the
Participant may make its initial investment, according to the "Instructions for
Investment and Withdrawals," given at the back of this publication. Supplemental
Form B should be used for opening additional accounts.

For more information regarding the opening of an account or the use of automated
clearinghouse transfer (ACH), please call the IPAIT toll-free number
(800)872-4024 or 245-3245 in Des Moines.

NOTE: All completed forms should be mailed to IPAIT at the following address:

Iowa Public Agency Investment Trust
P.O. Box 837
Des Moines, Iowa 50304-083

<PAGE>

--------------------------------------------------------------------------------

IOWA PUBLIC AGENCY INVESTMENT TRUST (IPAIT)
RESOLUTION

FORM A Date___________________________

A RESOLUTION AUTHORIZING THE APPROVAL OF AND PARTICIPATION IN A JOINT POWERS
AGREEMENT AND DECLARATION OF TRUST FOR THE IOWA PUBLIC AGENCY INVESTMENT TRUST,
AUTHORIZING INVESTMENTS THROUGH THE FIXED TERM AUTOMATED INVESTMENT PROGRAM OF
IPAIT AND AUTHORIZING IPAIT TO DESIGNATE AND NAME DEPOSITORIES.

WHEREAS, Iowa Code section 28E.1 permits political subdivisions to make
efficient use of their powers by enabling them to provide joint services with
other Public Agencies and to cooperate in other ways of mutual advantage, and to
exercise and enjoy jointly any powers, privileges or authority exercised or
capable of being exercised by one Public Agency of this state or private
agencies for the joint or cooperative action; and

WHEREAS, Iowa Code sections 331.555 and 384.21 empowers Cities, City
Utilities, and Counties to invest their moneys pursuant to a joint investment
agreement; and

WHEREAS, the City of Fairfield, the Maquoketa Municipal Utility, and
Buchanan County are political subdivisions organized and existing under and by
virtue of the laws and Constitution of the State of Iowa and have approved the
Joint Powers Agreement and Declaration of Trust and thereby they have
established the Iowa Public Agency Investment Trust as of October 1, 1987, and
amended as of May 1, 1993; and

WHEREAS, this Governing Body desires to adopt and enter into the Joint
Powers Agreement and Declaration of Trust, and it is in the best interest of
this Governing Body to participate in the Iowa Public Agency Investment Trust
for the purpose of joint investment of moneys with other cities, city utilities
and counties to enhance investment earnings to each; and

WHEREAS, this Governing Body deems it to be advisable for this Public
Agency to make use, from time to time, of the Fixed Term Automated Investment
Program available to Participants of IPAIT;

NOW, THEREFORE, BE IT RESOLVED:

Section 1. The Joint Powers Agreement and Declaration of Trust is approved
and adopted. This Public Agency joins with the other public agencies in
accordance with the Joint Powers Agreement and Declaration of Trust, as amended,
(the "Declaration of Trust") which is incorporated herein by reference with the
same effect as if it had been set out in this resolution by becoming a
Participant of IPAIT. The Joint Powers Agreement and Declaration of Trust is
filed in the minutes of the meeting at which this Resolution is adopted. The
authorized officials of this Public Agency are directed and authorized to take
such actions and execute documents as may be deemed necessary and appropriate to
effect the entry of this Public Agency into the Declaration of Trust and
adoption thereof by this Public Agency and to carry out the intent and purpose
of this Resolution.

Section 2. This Public Agency is authorized to invest its available moneys
from time to time and to withdraw such moneys from time to time in accordance
with the provisions of the Declaration of Trust and the Fixed Term Automated
Investment Program of IPAIT.

Payment for any investments made within the Fixed Term Automated Investment
Program is authorized from the Public Agency's specified IPAIT Account. Interest
and principal payments must be credited to the Public Agency's designated Trust
Account. The Custodian will hold investments in the name of IPAIT for the
account of the Public Agency.

The following officers and officials of this Public Agency and their respective
successors in office each are designated as "Authorized Officials" with full
power and authority to effectuate the investment and withdrawal of moneys with
this Public Agency from time to time in accordance with the Joint Powers
Agreement and Declaration of Trust.

================================================================================
<PAGE>

________________________________ _____________________________
Printed Name Title

IPAIT must be advised of any changes in Authorized Officials in accordance with
procedures established by IPAIT.

Section 3. The Trustees of IPAIT are designated as having official custody
of this Public Agency's moneys which are invested in accordance with the Joint
Powers Agreement and Declaration of Trust and any moneys invested in accordance
with the Trust's Fixed Term Automated Investment Program.

Section 4. IPAIT is authorized to designate and name depositories and to
file form CPE-31019, to execute documents, and to take actions as may be
necessary to purchase and make payment, sell, secure, or take payment of
principal and interest. Certificates of deposit must be purchased only from
financial institutions designated by IPAIT which are approved depositories as
prescribed by Iowa Code chapter 573.

Section 5. Authorization is given for members and officials of this Public
Agency to serve as Trustees of IPAIT from time to time if selected as such
pursuant to the provisions of the Declaration of Trust.

Section 6. Unless otherwise expressly defined, words that are capitalized
in the Resolution have meanings defined in the Joint Powers Agreement and
Declaration of Trust.

Passed and approved this ___________________ day of
______________________________,_________.

_________________________________ ________________________________
Name of Public Agency Signature of Presiding Officer

ATTEST:

_____________________________________________________________________________
Clerk/Secretary

NOTE: Please mail one original copy of this form and the certification and a
completed application Form B to the following address:

IOWA PUBLIC AGENCY INVESTMENT TRUST
P.O. Box 837
Des Moines, Iowa 50304-0837

This form may be photocopied.

<PAGE>

IOWA PUBLIC AGENCY INVESTMENT TRUST

FORM A CERTIFICATE

STATE OF IOWA )
)SS:
COUNTY OF )

I, the undersigned of _______________________________________________,
(Name of Public Agency)
State of Iowa, do certify that attached is a complete copy of the portion of the
records of the Governing Body of the named Public Agency, and the same is a
complete copy of the action taken by the Governing Body of the Public Agency
with respect to this matter at the meeting held on this date; these proceedings
remain in full force and effect and have not been amended or rescinded in any
way; that this meeting and all action was publicly held in accordance with
notice of public meeting and tentative agenda, a copy of which was timely served
on each member of the Governing Body of the Public Agency and posted on a
bulletin board or other prominent place easily accessible to the public clearly
designated for that purpose, at the principal office of the Governing Body and
in accordance with the provisions of Iowa Code chapter 21, with at least 24
hours advance notice to the public and media as required by law and with members
of the public present in attendance.

I further certify that the individuals named therein were on this date
lawfully possessed of their respective offices as indicated, that no vacancy
existed except as may be stated in proceedings, and that no controversy or
litigation is pending, prayed or threatened involving the incorporation,
organization, existence or boundaries of the Public Agency or the right of the
individuals named herein as officers to their respective positions.

WITNESS my hand hereto affixed this day of
------------------------------
---------------------------------------------, ----.

By _________________________________________________________
(Clerk/Secretary for Public Agency)

Subscribed and sworn to before me on this day of
-----------------------------

, .
------------------------------------- ----

_______________________________________________
(Notary Public)

<PAGE>

IOWA PUBLIC AGENCY INVESTMENT TRUST
APPLICATION FORM

FORM B

--------------------------------------------------------------------------------
I. BASIC INFORMATION

Name of Public Agency:_________________________________________________________

(Check one) City City Utility County 28E Organization Other:

(Check all appropriate box(es) Member of: ILC IAMU ISAC

Federal Identification Number___________________________________________________

Contact Person and Title________________________________________________________

Address_________________________________________________________________________

Telephone Number ( )
---------------------------------------- --------------------

--------------------------------------------------------------------------------

IF INITIAL INVESTMENT IS ENCLOSED, PLEASE INDICATE AMOUNT $
--------------------
(Payable to Wells Fargo Bank Iowa, N.A.)
--------------------------------------------------------------------------------
II. NEW ACCOUNT INFORMATION

Authorization is hereby given to Investors Management Group, as IPAIT
Administrator-Adviser, to open the following Iowa Public Agency Investment Trust
Account(s).

Name to appear on IPAIT Account (e.g. General Fund, etc.)*
----------------------
Name and Address of Local Depository for funds transfer
-------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Local Depository Account Number
-------------------------------------------------
checking savings
(For your protection, only one depository account may be accessed per IPAIT
account)

Depository's ABA Routing Number
-----------------------------------------------
(This number can be obtained from bottom of blank check or by calling your
depository)
--------------------------------------------------------------------------------
III. DEPOSIT/WITHDRAWAL INFORMATION AND AUTHORIZATION

Authorization is given to Investors Management Group, as the IPAIT
Administrator-Adviser, to honor any request believed to be authentic for
investment to or withdrawal from IPAIT. Moneys will be transferred only upon
telephone, written or personal notice from an Authorized Official of the Public
Agency. Upon notification, the Administrator-Adviser will initiate debit and
credit entries to the local depository account(s) indicated and the local
depository(ies) are authorized to debit and credit the same to such account(s).
Transfer must be made by Automated Clearinghouse Transfer (ACH), if available,
unless otherwise directed by the Public Agency. There is no direct charge for
ACH transfers.
--------------------------------------------------------------------------------
IV. INFORMATION STATEMENT AND DECLARATION OF TRUST

It is hereby certified that the Public Agency has received a copy of the
Information Statement of IPAIT and a copy of the Joint Powers Agreement and
Declaration of Trust and agrees to be bound by the terms of such documents.
<PAGE>
--------------------------------------------------------------------------------
V. EFFECTIVENESS OF APPLICATION FORM

The information, certifications and authorizations set forth on this application
shall remain in full force and effect until the IPAIT Administrator receives
written notification of a change.

--------------------------------------------------------------------------------
VI. AUTHORIZED SIGNATURES

The following are Authorized Officials (as designated in Resolution - Form A) of
this Public Agency to effectuate the investment and withdrawal of moneys of this
Public Agency from time to time in accordance with the Joint Powers Agreement
and Declaration of Trust.

Name of Public Agency
-----------------------------------------------------------
_________________________________________ ___________________________________
Print or Type Name of Authorized Official Title

_________________________________________ ___________________________________
Signature (Authorized Official) Date

Print or Type Name of Authorized Official Title

_________________________________________ ___________________________________
Signature (Authorized Official) Date

Print or Type Name of Authorized Official Title

_________________________________________ ___________________________________
Signature (Authorized Official) Date

--------------------------------------------------------------------------------
VII. APPLICATION SIGNATURE

Application is hereby made this day of
-----------------

, .
------------------------------------ -----
Name: ________________________ Title:_______________________________________

Signature_______________________________________________________________________

This application form must be signed by an official authorized by Resolution to
Transact business with IPAIT. (See Resolution Form A for Authorized Officials)

Mail this form along with FORM A to:

IOWA PUBLIC AGENCY INVESTMENT TRUST
P.O. Box 837
Des Moines, Iowa 50304-0837

This form may be photocopied

*For Additional Ipait Accounts, Use Space Provided On Supplemental Form B.

<PAGE>

ADDITIONAL IPAIT ACCOUNTS

COMPLETE THE FOLLOWING INFORMATION FOR EACH ADDITIONAL IPAIT ACCOUNT TO BE
OPENED

SUPPLEMENTAL FORM B

--------------------------------------------------------------------------------

Name of Public Agency __________________________________________________________

Name to appear on IPAIT Account (e.g. General Fund, etc.)_______________________

Name and Address of Local Depository for funds transfer_________________________
________________________________________________________________________________
________________________________________________________________________________

Local Depository Account Number___________________ checking |_| savings |_|
(For your protection, only one depository account may be accessed per IPAIT
account)

Depository's ABA Routing Number_______________________________________________

(This number can be obtained from bottom of blank check or by calling
depository)

--------------------------------------------------------------------------------

Name of Public Agency __________________________________________________________

Name to appear on IPAIT Account (e.g. General Fund, etc.)_______________________

Local Depository Account Number________________ checking |_| savings |_|
(For your protection, only one depository account may be accessed per IPAIT
account)

Depository's ABA Routing Number_______________________________________________
(This number can be obtained from bottom of blank check or by calling
depository)
--------------------------------------------------------------------------------

Name of Public Agency___________________________________________________________

Name to appear on IPAIT Account (e.g. General Fund, etc.)_______________________

Local Depository Account Number________________ checking |_| savings |_|
(For your protection, only one depository account may be accessed per IPAIT
account)

Depository's ABA Routing Number_______________________________________________
(This number can be obtained from bottom of blank check or by calling
depository)

_____________________________________________
Signature of Authorized Official

<PAGE>

INSTRUCTIONS FOR
MAKING PLACEMENTS

A. To make a Placement by Automated Clearinghouse TRANSFER (ACH) DEBIT:
(Interest always begins the following business day)

l. Call 1-800-872-4024 prior to 3:00 p.m. and an IPAIT representative will
answer - "Iowa Public Agency Trust."

2. Say: "This is (city, city utility, county) of _____ (name) _____,
IPAIT Participant No. _____, with an ACH Placement, in the amount of
$_____. My local financial institution is _____, and the local
checking/savings account number is _____."

3. The IPAIT representative will repeat the information given and
acknowledge that the placement is accepted.

NOTE: Notice must be received prior to 3:00 p.m. to begin earning interest the
next business day.

B. TO MAKE A PLACEMENT BY WIRING MONEYS: (Interest begins same day)

l. Call 1-800-872-4024 prior to 10:00 a.m. and an IPAIT representative
will answer - "Iowa Public Agency Trust."

2. Say: "This is (city, city utility, county) of _____ (name) _____,
IPAIT Participant No _____, with a wire investment in the amount of
_____. This will be coming from _____(Financial Institution name
and account number) _____."

3. The IPAIT representative will repeat the information given and
acknowledge the placement.

4. Instruct your local Financial Institution to wire the moneys to: Wells
Fargo Bank Iowa, N.A., Des Moines, ABA #073000228, credit #0000405200,
Trust Clearing Account, further credit to IPAIT and (Public Agency
name and IPAIT account number).

NOTE: To be credited the same day, THE PARTICIPANT MUST CALL BEFORE 10:00
a.m. and THE LOCAL FINANCIAL INSTITUTION MUST DEPOSIT MONEYS WITH the
federal reserve wire system no later than 10:00 a.m.

C. TO MAKE A PLACEMENT BY CHECK OR BANK DRAFT: (Interest begins usually one
business day following receipt)

1. Mail or deliver checks endorsed for deposit or made payable to Wells
Fargo Bank Iowa, N.A. along with placement instructions, giving name
of the Public Agency, IPAIT Participant number, and placement amount.
Mail or deliver to:

IOWA PUBLIC AGENCY INVESTMENT TRUST
c/o Wells Fargo Bank Iowa, N.A.
666 Walnut, P.O. Box 837
Des Moines, Iowa 50304-0837

INSTRUCTIONS FOR
MAKING REDEMPTIONS

A. To make a REDEMPTION by Automated Clearinghouse TRANSFER (ACH) CREDIT:
(Moneys transferred next business day after request)

l. Call 1-800-872-4024 prior to 3:00 p.m. and an IPAIT representative will
answer - "Iowa Public Agency Trust."

2. Say: "This is (city, city utility, county) of _____ (name) _____,
IPAIT Participant No. _____,with an ACH redemption request, in the
amount of $_____. My local financial institution is _____, and the
local checking/savings account number is _____."

3. The IPAIT representative will repeat the information given and
acknowledge the redemption.

NOTE: Notice must be received prior to 3:00 p.m. for moneys to be on deposit
in your local FINANCIAL INSTITUTION the next business day.

B. TO MAKE REDEMPTIONS BY WIRING MONEYS: (Moneys transferred same day)

1. Call 1-800-872-4024 prior to 10:00 a.m. and an IPAIT representative
will answer - "Iowa Public Agency Trust."

2. Say: "This is (city, city utility, county) of _____ (name) _____,
IPAIT Participant No. _____, with a wire redemption request, in the
amount of $_____."

3. Provide instructions for wiring, including local financial institution,
location, account number, and name and telephone number of a contact
person at that financial institution.

4. The IPAIT representative will repeat the information given and
acknowledge the redemption.

NOTE: Notice must be received prior to 10:00 a.m. for transfers to be made
the same day.

C. To receive a check by mail: (This option is available but not recommended
since the IPAIT Account is debited the same day check is written)

Call 1-800-872-4024 and an IPAIT representative will assist you.