IOWA SCHOOLS JOINT
INVESTMENT TRUST
ANNUAL FINANCIAL REPORT
JUNE 30, 1996
SPONSORED BY THE
IOWA ASSOCIATION OF SCHOOL BOARDS
<PAGE>
STATEMENT OF SPONSORING ASSOCIATION
The Iowa Schools Joint Investment Trust (ISJIT) enjoyed its most successful year
of operation to date during fiscal year 1995-96. Total funds invested in the
program's investment alternatives set new records throughout the second, third
and fourth quarters of the fiscal year.
ISJIT was initially created in 1986 as a cash management program for use by
members of the Iowa Association of School Boards. Since inception, IASB, as the
sponsor of the ISJIT program, and the ISJIT Board of Trustees have remained
consistently focused upon providing participants with only the safest of
investment alternatives.
During the fiscal year, prevailing short-term interest rates generally declined.
The Federal Reserve Board lowered the federal funds discount rate three times
for a total of 0.75 percent throughout the period as the national economy
exhibited signs of slowing and most inflation indicators remained moderate.
While ISJIT rates of return similarly declined somewhat, the program continued
to provide yields superior to those available from other investment
alternatives.
Since its inception, the Diversified and Direct Government Obligation Funds have
provided participants with a total of over $70,000,000 in investment income. No
program or institution in the history of our state has helped more school
corporations to invest their surplus operating funds and to earn better rates of
interest without incident than the Iowa Schools Joint Investment Trust.
ISJIT continues to explore ways to better serve its members' cash management
needs in the future. Participants can continue to rely on the high standards set
in the past, forming the foundation for all future program operations.
I have personally enjoyed the opportunity to participate in the success of the
ISJIT program throughout its ten years of operation. Although I will be retiring
as Executive Director on July 1, 1996, I am confident that the program will
continue to safely and efficiently address the investment needs of IASB members.
T. E. DAVIDSON
EXECUTIVE DIRECTOR
IOWA ASSOCIATION OF SCHOOL BOARDS
- --------------------------------------------------------------------------------
ISJIT CONTINUES TO EXPLORE WAYS TO BETTER SERVE ITS MEMBERS' CASH MANAGEMENT
NEEDS IN THE FUTURE.
- --------------------------------------------------------------------------------
<PAGE>
MESSAGE FROM THE CHAIR
The Iowa Schools Joint Investment Trust (ISJIT) is pleased to present this
annual report of Trust operations for the period ended June 30, 1996.
Use of the program's cash management services expanded dramatically throughout
the period, setting a number of new investment records for total funds invested.
Total funds invested in all program investment services were higher for each
respective day than for any previous year in the program's existence, from
December 19, 1995 through June 30, 1996, with total funds invested reaching an
all-time high of $369,677,783 on May 17, 1996.
In its tenth year of operation, ISJIT's investment policies and practices remain
clearly focused upon protecting invested funds. The combined investment strength
of the program's 318 participants working together enables the participants to
provide themselves with investment returns not available to individual Iowa
school districts.
Other highlights from fiscal year 1995-96 include:
o Average daily investments in the Diversified and Direct Government
Obligation Funds of $183,137,054, up 13.35 percent from $161,588,774 in the
previous fiscal year,
o Placement of a total of 83 Fixed Term Automated (FTA) investments,
representing a total of $102,506,345 in invested assets,
o Regular receipt of $40,000,000 in State of Iowa Foundation Aid payments to
school districts via Electronic Funds Transfer (EFT) directly into
participant ISJIT accounts and
o Placement of 96 certificates of deposit into Iowa financial institutions,
representing over $71,750,000.
The Board of Trustees welcomes your comments and suggestions regarding the
operation of the ISJIT program. We thank you for your continued participation
and support. On behalf of the Board, we want to help ISJIT to grow to meet your
cash management needs into the next century.
Respectfully,
CAROLYN JONS, CHAIR
BOARD OF TRUSTEES
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IN ITS TENTH YEAR OF OPERATION, ISJIT'S INVESTMENT POLICIES AND PRACTICES REMAIN
CLEARLY FOCUSED UPON PROTECTING INVESTED FUNDS.
- --------------------------------------------------------------------------------
<PAGE>
BOARD OF TRUSTEES
The Board of Trustees for the Iowa Schools Joint Investment Trust supervises all
operations of the investment program. The Board meets quarterly to review ISJIT
operations and receives extensive performance information relative to the
program's operation each month.
Diversity of experience and attention to detail provided by each member of the
Board assures that each participant's funds are effectively and safely invested.
The Board is made up of six members from across the state. Each has extensive
personal experience in addressing the needs of Iowa school corporations. The
diversified Board of Trustees includes four school board members, a school
business official and a school superintendent.
The ISJIT Board of Trustees covers the state from corner to corner.
BOARD OF TRUSTEES
Carolyn Jons Don Williams Gary D. Bengtson Dean Borg
CHAIR VICE CHAIR TREASURER MOUNT VERNON
AMES VILLISCA Bus. Manager--CARROLL
Gerald Cowell Richard L. VandeKieft
CRESTON CEDAR FALLS
OFFICERS
T.E. Davidson Boyd Boehlje Bob Huckleberry
SECRETARY ASST. TREASURER ASST. SECRETARY
IASB PELLA IASB
<PAGE>
NOTES FROM YOUR SERVICE PROVIDERS
During the fiscal year 1995-96, short-term interest rates declined. The Federal
Reserve lowered the federal funds rate three times during the fiscal year in
0.25 percent increments, as the economy began to slow and inflation remained
moderate.
The rate on the ISJIT Diversified Fund also declined during the fiscal
year, but still provided a competitive rate to other short-term investment
alternatives. The portfolio consistently provided a rate 0.22 percent greater
than the Donoghue Index of national money market funds. The Diversified Fund was
postured to maintain a slightly longer average maturity than the Donoghue Index,
as we anticipated the decline in short-term interest rates. This enabled the
Diversified Fund to outperform the Index.
Recently, fears of inflation have surfaced due to the strong growth in
employment over the past few months. The link between wages and inflation has
been correlated in the past, as businesses have tended to pass through higher
wage costs into final product prices. The ability to raise final product prices
in the current environment is questionable, however, due to price conscious
consumers. Company managements comment that they have little flexibility to
raise prices.
The Federal Reserve is watching inflation closely and may raise short-term
interest rates. In our view, however, any rate increase should be modest, since
inflation remains mild and is not poised to accelerate significantly. Most
measures of inflation are below a 3 percent annual rate.
The ISJIT program emphasizes three elements: safety, liquidity, and
competitive rates, in that order. Although rate is important, the safety and
security of participant moneys is our first priority. The second priority is to
assure daily liquidity. Only after the first two elements are satisfied, do we
examine the rates of different investments. As always, we appreciate your
support and look forward to serving you in the 1996-97 fiscal year.
- --------------------------------------------------------------------------------
Helpful, knowledgeable cash management program representatives are an integral
part of the ISJIT program and are always available to assist with any
investment-related need. Tina Gordinier heads up a team of dedicated ISJIT
program administrators that can be reached on the toll-free line at your
convenience. Current investment rates for all ISJIT alternatives, questions
about account activity or any other inquiry are courteously and efficiently
addressed.
- --------------------------------------------------------------------------------
Investors Management Group (IMG) provides program development services to the
ISJIT cash management program and to each ISJIT program participant.
Paul Kruse, IMG's Investment Services Marketing Manager, and Max Miller,
ISJIT Ambassador, personally call on representatives of community school
districts and community colleges throughout the state. During the course of a
year, Paul and Max will travel thousands of miles around Iowa, meeting with
hundreds of superintendents, business managers and school board secretaries.
Their stops at any given location may involve anything from a formal
presentation to the Board, to one-on-one assistance with cash management needs
or questions.
In addition to attending regional meetings and statewide conventions
throughout the year, Paul contributes material to the EDUCATED INVESTOR,
including the popular KRUSE'N DOWN THE HIGHWAY series.
<PAGE>
MEMBER PROFILE
Ackley-Geneva, Adair-Casey, Akron-Westfield, Albert City-Truesdale, Albia,
Alden, Algona, Allison-Bristow, Amana, Ames, Anamosa, Andrew, Anita, Ankeny,
Anthon-Oto, Aplington, Ar-We-Va, Atlantic, Audubon, Ballard, Battle Creek-Ida
Grove, Baxter, Bedford, Belmond-Klemme, Bennett, Bettendorf, Bondurant-Farrar,
Boone, Boyden-Hull, Britt, Buffalo Center-Rake-Lakota, Burlington, C and M, Cal,
Calamus-Wheatland, Camanche, Cardinal, Carlisle, Carroll, Cedar Falls, Cedar
Rapids, Center Point-Urbana, Centerville, Central City, Central Decatur, Central
Lee, Central Lyon, Chariton, Charter Oak-Ute, Cherokee, Clarence-Lowden,
Clarinda, Clarke (Osceola), Clarksville, Clear Creek-Amana, Clinton, College,
Collins-Maxwell, Corning, Council Bluffs, Creston, Dallas Center-Grimes,
Danville, Davenport, Davis County, Decorah, Deep River-Millersburg, Delwood,
Denison, Denver, Des Moines, Dexfield, Diagonal, Dike, Dubuque, Dunkerton,
Earlham, East Buchanan, East Central, East Marshall, East Union, Eastern
Allamakee, Eastwood, Eddyville-Blakesburg, English Valleys, Essex, Estherville,
Exira, Forest City, Fort Dodge, Fort Madison, Fredericksburg, Fremont,
Galva-Holstein, Garnavillo, George, Gilbert, Gilmore City-Bradgate, Glenwood,
Glidden-Ralston, Graettinger, Grand Valley, Greenfield, Grinnell-Newburg,
Griswold, Grundy Center, H-L-V, Hancock-Avoca, Harlan, Hartley-Melvin-Sanborn,
Highland, Hinton, Howard-Winneshiek, Humboldt, Independence, Indianola,
Interstate 35, Iowa City, Iowa Valley, Janesville, Jefferson-Scranton, Johnston,
Keokuk, Keota, Knoxville, Lake Mills, Lamoni, Laurens-Marathon, Lawton-Bronson,
LeMars, Lenox, Lewis Central, Lincoln Central (Gruver), Linn-Mar, Lisbon, Little
Rock, Logan-Magnolia, Lone Tree, Louisa-Muscatine, Lu Verne, Madrid, Malvern,
Manning, Manson Northwest Webster, Maple Valley, Maquoketa,
Marcus-Meridian-Cleghor, Marion, Marshalltown, Mason City, Mediapolis,
Melcher-Dallas, Meservey-Thornton, Mid-Prairie, Midland, Missouri Valley,
MOC-Floyd Valley, Montezuma, Monticello, Moravia, Mormon Trail, Morning Sun,
Moulton-Udell, Mount Ayr, Mount Pleasant, Mount Vernon, Murray, Muscatine,
Nevada, New Hampton, New Hartford, New London, New Market, Newton, Nishna
Valley, Nora Springs Rock Falls, North Fayette, North Mahaska, North Polk, North
Scott, North Winneshiek, Northeast (Goose Lake), Northeast Hamilton, Norwalk,
Norway, Odebolt-Arthur, Okoboji, Olin, Orient-Macksburg, Osage, Ottumwa, Oxford
Junction, Panorama, Parkersburg, PCM, Pekin, Pella, Perry, Plainfield,
Pleasantville, Pocahontas, Prairie Valley, Prescott, Preston, Riverside, Rock
Valley, Rockwell City-Lytton, Rockwell Swaledale, Roland-Story,
Rudd-Rockford-MR, Sac, Saydel, Sergeant Bluff-Luton, Seymour, Shelby, Sheldon,
Sidney, Sigourney, Sioux Central, Sioux City, South Hamilton, South Page, South
Winneshiek, Southeast Polk, Southeast Warren, Southeast Webster, Southern Cal,
Spencer, Spirit Lake, Springville, Stanton, Starmont, Storm Lake, Terril,
Tipton, Tri-Center, Tri-County, Turkey Valley, Underwood, Union, United, Valley
(Elgin), Van Buren, Van Meter, Ventura, Villisca, Vinton-Shellsburg, Waco, Wall
Lake, Wapello, Walnut, Wapsie Valley, Washington, Waterloo, Waukee, Wayne,
Webster City, West Bend-Mallard, West Burlington, West Central, West Des Moines,
West Hancock, West Harrison, West Liberty, West Lyon, West Marshall, West
Monona, Western Dubuque, Westwood, Whiting, Williamsburg, Willow, Wilton,
Winfield-Mt. Union, Winterset, Woodbury Central, Woodward Granger, AEA
1--Keystone, AEA 2--Northern Trails, AEA 4, AEA 5--Arrowhead, AEA 6, AEA 7, AEA
9--Mississippi Valley, AEA 10--Grant Wood, AEA 11--Heartland, AEA 12--Western
Hills, AEA 13--Loess Hills, AEA 14--Green Valley, AEA 15--Southern Prairie, AEA
16--Great River, Des Moines Area Community College, Hawkeye Technical Institute,
Indian Hills Community College, Iowa Central Community College, Iowa Lakes
Community College, Iowa Western Community College, Iowa Valley Community
College, Kirkwood Community College, North Iowa Area Community College,
Northeast Iowa Community College, Northwest Iowa Technical Institute,
Southeastern Community College, Western Iowa Technical Institute, IMPACC, ISCAP,
Metro Interagency Insurance Program (MIIP), Mid-Iowa Computer, Southeast Iowa
Schools Health Care Plan
<PAGE>
PROGRAM SERVICES AND FEATURES
ISJIT was the first public school investment program in the country to be
registered with the Securities and Exchange Commission (SEC).
ooooo
ISJIT is sponsored by the Iowa Association of School Boards (IASB). IASB's
Executive Director meets monthly with the service providers of the ISJIT program
to assure that all elements of program operation are functioning smoothly.
ooooo
ISJIT's proprietary reporting system provides participants with daily
confirmations and monthly account summaries that are easy to understand.
ooooo
ISJIT provides toll-free phone access to experienced ISJIT personnel that are
able to immediately provide school officials with reliable information regarding
a participant's account or investment alternatives.
ooooo
ISJIT provides two investment portfolios, the Diversified Fund and the Direct
Government Obligation (DGO) Fund, tailored to meet specific investor needs. Each
portfolio provides complete daily liquidity and rates that typically exceed
those available with fixed-term investments which require an investor to
sacrifice liquidity.
ooooo
Under guidelines approved by the ISJIT Board of Trustees, ISJIT invests
available funds into financial institution certificates of deposit. Since its
inception, association-sponsored cash management programs have invested over
$650,000,000 back into Iowa financial institutions.
ooooo
ISJIT provides program support and development services to participants
including an ISJIT representative that regularly calls on participants to assure
that their needs are met and that their suggestions are considered.
ooooo
Through its Fixed Term Automated (FTA) program, ISJIT can provide individual
investment assistance offering a participant the highest yielding, legally
authorized investment available in the marketplace at any given time, including
the Flexible Withdrawal Certificate of Deposit (Flex-CD). The Flex-CD has become
the investment of choice for Iowa school corporations issuing bond proceeds in
anticipation of a school building program. The fixed rate of interest, flexible
withdrawal options, and extended maturity date provided by the Flex-CD are
perfectly suited to building program investment needs.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- 16.46%
$ 2,500,000 Federal Agricultural Mtge. Corp.-Disc. Note 5.32% 07/09/96 $ 2,497,167
2,500,000 Federal Natl. Mtge. Assoc.-Disc. Note 5.00% 07/25/96 2,491,967
1,975,000 Federal Natl. Mtge. Assoc.-Disc. Note 5.35% 07/30/96 1,966,711
2,445,000 Federal Home Loan Mortgage Corp.- Disc. Note 5.36% 08/19/96 2,427,661
3,025,000 Federal Natl. Mtge. Assoc.-Disc. Note 5.36% 08/22/96 3,002,235
905,000 Federal Natl. Mtge. Assoc.-Disc. Note 5.37% 08/28/96 897,389
5,000,000 Federal Natl. Mtge. Assoc.-Disc. Note 5.00% 08/29/96 4,956,979
1,351,000 Federal Home Loan Mortgage Corp.- Disc. Note 5.40% 09/03/96 1,338,391
5,000,000 World Bank-Disc. Note 5.38% 09/04/96 4,952,875
3,750,000 Fed. Agricultural Mtge. Corp.-Disc. Note 5.42% 09/27/96 3,703,708
------------
TOTAL (cost-- $28,235,083) $ 28,235,083
------------
COUPON SECURITIES -- 62.53%
$ 3,000,000 Federal Natl. Mtge. Assoc., 6.00% 5.37% 07/01/96 $ 3,000,000
10,000,000 Student Loan Mortgage Assn., 3.51% 5.38% 07/01/96 10,000,000
1,000,000 Federal Natl. Mtge. Assoc., Variable Rate 5.27% 07/05/96 999,985
2,500,000 Federal Home Loan Bank, Variable Rate 5.09% 07/08/96 2,500,362
1,000,000 Federal Home Loan Bank, 6.14% 5.39% 07/08/96 1,000,126
2,320,000 Federal Natl. Mtge. Assoc., 8.00% 5.40% 07/10/96 2,321,389
3,300,000 Federal Natl. Mtge. Assoc., 8.00% 5.33% 07/10/96 3,302,046
920,000 Federal Natl. Mtge. Assoc., 8.00% 5.20% 07/10/96 920,617
1,000,000 Federal Natl. Mtge. Assoc., 8.00% 5.60% 07/10/96 1,000,569
1,000,000 Federal Natl. Mtge. Assoc., 8.00% 5.06% 07/10/96 1,000,703
1,500,000 Federal Home Loan Bank, 5.00% 5.83% 07/16/96 1,499,506
1,000,000 Federal Home Loan Bank, 7.81% 4.99% 07/17/96 1,001,202
2,360,000 Federal Home Loan Bank, 8.00% 5.35% 07/25/96 2,363,920
7,700,000 Federal Farm Credit Bank, Variable Rate 5.57% 07/29/96 7,695,921
5,000,000 Federal Farm Credit Bank, Variable Rate 5.40% 07/29/96 4,997,404
1,275,000 Housing & Urban Development, 7.71% 5.50% 08/01/96 1,277,259
2,000,000 Federal Farm Credit Bank, 5.75% 5.67% 08/01/96 2,000,100
1,000,000 Federal Farm Credit Bank, 5.75% 5.71% 08/01/96 1,000,017
1,000,000 Federal Home Loan Bank, 6.125% 5.48% 08/05/96 1,000,512
2,500,000 Federal Home Loan Bank, 6.125% 5.37% 08/05/96 2,501,647
1,600,000 Federal Home Loan Bank, 6.125% 5.40% 08/05/96 1,601,014
1,000,000 Federal Home Loan Mortgage Corp., 5.00% 5.45% 08/05/96 999,503
2,000,000 Federal Natl. Mtge. Assoc., 8.15% 5.36% 08/12/96 2,006,085
1,520,000 Federal Home Loan Bank, 7.70% 5.47% 08/26/96 1,524,989
1,000,000 Student Loan Mortgage Assn., Variable Rate 5.38% 08/28/96 999,856
1,300,000 Federal Farm Credit Bank, 5.875% 5.56% 09/03/96 1,300,634
2,500,000 Federal Natl. Mtge. Assoc., 5.76% 5.55% 09/03/96 2,500,825
1,390,000 Federal Natl. Mtge. Assoc., 5.64% 5.49% 09/09/96 1,390,233
1,320,000 Tennessee Valley Authority, 4.19% 5.48% 09/09/96 1,316,845
500,000 Federal Home Loan Bank, 4.17% 5.70% 09/09/96 498,587
1,790,000 Federal Natl. Mtge. Assoc., 8.625% 5.07% 09/10/96 1,802,017
450,000 Federal Natl. Mtge. Assoc., 8.625% 5.30% 09/10/96 452,796
1,000,000 Federal Home Loan Bank, 4.50% 5.78% 09/23/96 997,162
1,000,000 Federal Home Loan Mortgage Corp., 8.125% 5.55% 09/30/96 1,006,139
1,000,000 Federal Farm Credit Bank, 4.19% 5.55% 10/04/96 996,410
500,000 Federal Farm Credit Bank, 4.20% 5.60% 10/21/96 497,917
500,000 Federal Home Loan Bank, 7.92% 5.74% 10/21/96 503,188
1,000,000 Federal Farm Credit Bank, 4.13% 5.56% 10/28/96 995,362
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996 (CONTINUED)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
$ 1,750,000 Federal Home Loan Bank, 9.15% 5.58% 10/30/96 $ 1,769,852
1,000,000 Student Loan Mortgage Assn., 7.56% 5.49% 12/09/96 1,008,755
1,000,000 Tennessee Valley Authority, 4.60% 5.36% 12/15/96 996,593
1,000,000 Federal Home Loan Mortgage Corp., 7.88% 5.65% 12/20/96 1,010,189
1,000,000 Federal Natl. Mtge. Assoc., 8.20% 5.54% 12/23/96 1,012,203
1,000,000 Federal Farm Credit Bank, 5.84% 5.45% 12/23/96 1,001,771
1,100,000 Federal Home Loan Mortgage Corp., 7.73% 5.51% 01/06/97 1,112,024
915,000 Federal Natl. Mtge. Assoc., 7.60% 5.75% 01/10/97 923,587
1,020,000 Federal Home Loan Mortgage Corp., 7.91% 5.52% 01/13/97 1,032,495
2,000,000 U.S. Treasury Notes, 6.75% 5.62% 02/28/97 2,014,211
2,500,000 U.S. Treasury Notes, 6.875% 5.56% 02/28/97 2,520,751
5,000,000 U.S. Treasury Notes, 6.875% 5.55% 02/28/97 5,041,940
500,000 Federal Home Loan Bank, 6.94% 5.65% 03/14/97 504,286
2,000,000 Federal Home Loan Bank, 6.955% 5.67% 03/17/97 2,017,267
2,500,000 Federal Home Loan Bank, 5.40% 5.84% 03/20/97 2,492,116
2,500,000 U.S. Treasury Notes, 6.625% 5.57% 03/31/97 2,518,747
2,500,000 U.S. Treasury Notes, 6.875% 5.60% 03/31/97 2,522,807
1,000,000 Federal Home Loan Bank, 6.52% 5.80% 04/24/97 1,005,494
2,000,000 U.S. Treasury Notes, 6.50% 5.73% 04/30/97 2,012,163
2,000,000 Federal Natl. Mtge. Assoc., 5.765% 6.03% 06/20/97 1,995,059
------------
TOTAL (cost-- $107,285,157) $107,285,157
------------
CERTIFICATES OF DEPOSIT -- 12.96%
$ 1,000,000 Valley State Bank, Rock Valley 5.30% 07/05/96 $ 1,000,000
400,000 Exchange Bank, Collins 5.70% 07/15/96 400,000
250,000 Citizens Bank, Sac City 6.05% 07/16/96 250,000
1,500,000 Nevada National Bank, Nevada 5.50% 07/24/96 1,500,000
675,000 Mercantile Bank, Mt. Pleasant 5.50% 07/25/96 675,000
500,000 Peoples State Bank, Elkader 5.40% 07/26/96 500,000
1,000,000 Nevada National Bank, Nevada 5.50% 07/26/96 1,000,000
1,000,000 Mercantile Bank, Pella 5.25% 07/31/96 1,000,000
300,000 Miles Savings Bank, Miles 6.10% 08/09/96 300,000
500,000 Heritage Bank, Holstein 6.15% 08/16/96 500,000
250,000 Ft. Madison Bank & Tr, Ft. Madison 5.75% 08/20/96 250,000
250,000 Ft. Madison Bank & Tr, Ft. Madison 6.10% 08/21/96 250,000
300,000 Valley State Bank, Rock Valley 5.45% 08/27/96 300,000
5,000,000 Norwest Bank, Clive 5.40% 09/17/96 5,000,000
500,000 Peoples State Bank, Elkader 5.55% 09/25/96 500,000
200,000 Shelby Co. State Bank, Harlan 6.00% 10/13/96 200,000
500,000 Peoples Bank & Trust, Rock Valley 5.50% 10/28/96 500,000
1,000,000 Nevada National Bank, Nevada 6.00% 10/30/96 1,000,000
1,000,000 Mercantile Bank, Cedar Rapids 6.00% 11/07/96 1,000,000
250,000 Libertyville Savings Bank, Libertyville 6.00% 11/21/96 250,000
300,000 First State Bank, Ida Grove 5.80% 12/06/96 300,000
300,000 Miles Savings Bank, Miles 5.85% 12/13/96 300,000
500,000 Peoples Savings Bank, Elma 5.75% 12/20/96 500,000
500,000 Peoples Savings Bank, Elma 5.75% 12/27/96 500,000
250,000 Citizens Bank, Sac City 5.75% 01/10/97 250,000
2,500,000 Firstar Bank, Des Moines 5.25% 02/21/97 2,500,000
500,000 Union State Bank, Winterset 5.25% 02/21/97 500,000
1,000,000 Firstar Bank, Des Moines 5.50% 03/06/97 1,000,000
------------
TOTAL (cost-- $22,225,000) $ 22,225,000
------------
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996 (CONTINUED)
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
___________________________________________________________________________________________________________________________
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 7.01%
$ 5,952,000 Smith Barney, Repo 5.38% 07/01/96 $ 5,952,000
6,079,000 J P Morgan, Repo 5.40% 07/01/96 6,079,000
------------
TOTAL (cost-- $12,031,000) $ 12,031,000
------------
TOTAL INVESTMENTS-- 98.96% (cost-- $169,776,240) $169,776,240
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 1.04%
(Includes $39,704 payable to IMG and $781,314 dividends payable to unitholders) $ 1,778,024
------------
NET ASSETS -- 100%
Applicable to 171,554,264 outstanding units $171,554,264
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($171,554,264 divided by ============
171,554,264 units outstanding)
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1996
(SHOWING PERCENTAGE OF NET ASSETS)
COUPON SECURITIES -- 44.38%
$ 500,000 U.S. Treasury Note, 8.00% 5.24% 10/15/96 $ 503,850
1,500,000 U.S. Treasury Note, 7.25% 5.14% 11/15/96 1,511,359
1,500,000 U.S. Treasury Note, 7.25% 5.00% 11/30/96 1,513,786
1,000,000 U.S. Treasury Note, 7.25% 5.12% 11/30/96 1,008,980
1,000,000 U.S. Treasury Note, 7.25% 5.12% 11/30/96 1,008,506
1,500,000 U.S. Treasury Note, 7.50% 5.43% 12/31/96 1,514,890
1,000,000 U.S. Treasury Note, 6.75% 5.42% 02/28/97 1,008,457
1,000,000 U.S. Treasury Note, 6.625% 5.59% 03/31/97 1,007,385
1,000,000 U.S. Treasury Note, 6.50% 5.74% 04/30/97 1,006,082
------------
TOTAL (cost-- $10,083,295) $ 10,083,295
------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 55.36%
$ 12,579,000 J P Morgan, Repo 5.30% 07/01/96 $ 12,579,000
------------
TOTAL (cost-- $12,579,000) $ 12,579,000
------------
TOTAL INVESTMENTS-- 99.74% (cost-- $22,662,295) $ 22,662,295
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 0.26%
(Includes $3,347 payable to IMG and $103,729 dividends payable to unitholders) $ 59,512
------------
NET ASSETS -- 100%
Applicable to 22,721,807 outstanding units $ 22,721,807
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($22,721,807 divided by ============
22,721,807 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
DIRECT GOVERNMENT
DIVERSIFIED PORTFOLIO OBLIGATION PORTFOLIO
_______________________________________________
INVESTMENT INCOME:
Interest $ 8,488,165 $ 1,865,869
----------- -----------
EXPENSES:
Investment advisory and
program support fees 372,408 50,100
Custody and administrative fees 335,878 108,554
Distribution fees 150,368 33,407
Other fees and expenses 37,250 7,864
----------- -----------
Total Expenses 895,904 199,925
----------- -----------
NET INVESTMENT INCOME $ 7,592,261 $ 1,665,944
=========== ===========
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30,
DIRECT GOVERNMENT
DIVERSIFIED PORTFOLIO OBLIGATION PORTFOLIO
1996 1995 1996 1995
_________________________________ __________________________________
<S> <C> <C> <C> <C>
From Investment Activities:
Net investment income distributed
to unitholders $ 7,592,261 $ 6,553,798 $ 1,665,944 $ 1,451,916
============ ============ ============ ============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $942,167,923 $888,465,918 $ 24,350,659 $ 34,728,656
Units issued in reinvestment
of dividends from net investment income 7,592,261 6,553,798 1,665,944 1,451,916
Units redeemed (942,325,202) (853,063,370) (33,776,717) (34,007,350)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets
derived from unit transactions 7,434,982 41,956,346 (7,760,114) 2,173,222
Net assets at beginning of year 164,119,282 122,162,936 30,481,921 28,308,699
------------ ------------ ------------ ------------
Net assets at end of year $171,554,264 $164,119,282 $ 22,721,807 $ 30,481,921
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987*
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIVERSIFIED PORTFOLIO
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .051 .049 .029 .029 .047 .067 .077 .080 .063 .055
Dividends Distributed (.051) (.049) (.029) (.029) (.047) (.067) (.077) (.080) (.063) (.055)
-----------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.67% 7.99% 6.34% 5.47%
Ratio of Expenses to
Average Net Assets 0.60% 0.59% 0.58% 0.58% 0.60% 0.66% 0.67% 0.67% 0.66% 0.23%
Ratio of Net Income to
Average Net Assets 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.69% 7.99% 6.34% 5.47%
Net Assets, End
of Period (000 Omitted) $171,554 $164,119 $122,163 $ 99,608 $ 78,716 $ 89,047 $ 91,742 $ 62,796 $ 75,092 $44,881
</TABLE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1996 1995 1994 1993 1992 1991 1990 1989**
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION PORTFOLIO
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .050 .048 .028 .028 .044 .063 .077 .085
Dividends Distributed (.050) (.048) (.028) (.028) (.044) (.063) (.077) (.085)
-----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 5.01% 4.81% 2.77% 2.82% 4.43% 6.36% 7.74% 8.51%
Ratio of Expenses to
Average Net Assets 0.60% 0.59% 0.58% 0.58% 0.60% 0.65% 0.65% 0.66%
Ratio of Net Income to
Average Net Assets 5.01% 4.81% 2.77% 2.82% 4.43% 6.36% 7.74% 8.51%
Net Assets,
End of Period (000 Omitted)$ 22,722 $ 30,482 $ 28,309 $ 25,672 $ 24,462 $ 23,927 $ 24,461 $ 15,781
</TABLE>
*From Commencement of Operations (December 16, 1986).
**From Commencement of Operations (September 22, 1988).
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Iowa Schools Joint Investment Trust (ISJIT) is a common law trust
established under Iowa law pursuant to Chapter 28E and Section 279.29, Iowa
Code (1985), as amended, which authorizes Iowa schools to jointly invest
moneys pursuant to a joint investment agreement. ISJIT is registered under
the Investment Company Act of 1940. ISJIT was established by the adoption
of a Joint Powers Agreement and Declaration of Trust as of October 1, 1986,
and commenced operations on December 16, 1986. The Joint Powers Agreement
and Declaration of Trust was amended September 22, 1988, and again on May
1, 1993. As amended, ISJIT is authorized and now operates three investment
programs: 1) the Diversified Portfolio, 2) the Direct Government Obligation
Portfolio, and 3) the Fixed Term Automated (FTA) Investment Program. These
financial statements include activities of the Diversivied and DGO
Portfolios. The objective of the portfolios is to maintain a high degree of
liquidity and safety of principal through investment in short-term
securities as permitted for Iowa schools under Iowa law. The objective of
the FTA Investment Program is to provide individual public agency ownership
of investments in legally permissible individual securities which offer
fixed rates of return and fixed maturities. Norwest Bank Iowa, N.A. serves
as ISJIT's Administrator and Custodian, and Investors Management Group
serves as the Investment Advisor.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
INVESTMENTS IN SECURITIES
The Diversified and Direct Government Obligation Portfolios consist of cash
and short-term investments valued at amortized cost pursuant to Rule 2a-7
under the Investment Company Act of 1940. This involves valuing a portfolio
security at its original cost on the date of purchase, and thereafter
amortizing any premium or discount on a straight-line basis to maturity.
The amount of premium or discount amortized to income under the
straight-line method does not differ materially from the amount which would
be amortized to income under the interest method. Procedures are followed
to maintain a constant net asset value of $1.00 per unit for each
portfolio.
Security transactions are accounted for on the trade date. Interest income,
including the accretion of discount and amortization of premium, is
recorded on the accrual basis.
Under Governmental Accounting Standards as to custodial credit risk,
ISJIT's investments in securities are classified as category one. Category
one is the most secure investment category description.
Certificates of deposit amounts in excess of the $100,000 federal deposit
insurance are collateralized as required by Iowa law, including the
security provided by the State of Iowa's sinking fund for public deposits.
In connection with transactions in repurchase agreements, it is ISJIT'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 ISJIT may be delayed or limited. At June 30, 1996, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with market values of
$12,280,166 and $12,830,828 for the Diversified Portfolio and the Direct
Government Obligation Portfolio, respectively.
UNIT ISSUES, REDEMPTIONS, AND DISTRIBUTIONS
ISJIT determines the net asset value of each portfolio account daily. Units
are issued and redeemed daily at the daily net asset value. Dividends from
net investment income for each portfolio is declared daily and distributed
monthly.
INCOME TAXES
ISJIT is exempt from federal and state income tax.
FEES AND EXPENSES
Under separate agreements with ISJIT, Investors Management Group (IMG), the
Investment Advisor and Program Support Provider, and Norwest Bank, Iowa,
N.A. (Norwest), the Custodian and Administrator are paid an annual fee for
operating the investment programs. For each of the portfolios, IMG receives
.150 percent of the average daily net asset value up to $150 million and
.125 percent exceeding $150 million for investment advisor fees. In
addition, IMG receives .10 percent of the average daily net asset value of
the Diversified Portfolio for program support fees. For the year ended June
30, 1996, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $372,408 and $50,100, respectively to IMG for services
provided. For each of the portfolios, Norwest receives .050 percent of the
average daily net asset value up to $150 million, .045 percent from $150 to
$200 million, and .040 percent exceeding $200 million for custodial
services. For the Diversified Portfolio, Norwest receives .175 percent of
the average daily net asset value up to $150 million, .165 percent from
$150 to $200 million, and .150 percent exceeding $200 million for
administrative services; for the Direct Government Obligation Portfolio,
Norwest receives .275 percent of the average daily net asset value up to
$150 million, .265 percent from $150 to $200 million, and .250 percent
exceeding $200 million for administrative services. For the year ended June
30, 1996, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $335,878 and $108,554, respectively to Norwest for services
provided. Under a distribution plan, the sponsoring association receives an
annual fee of .10 percent of the daily net asset value of the portfolios.
For the year ended June 30, 1996, the Diversified Portfolio and the Direct
Government Obligation Portfolio paid $150,368 and $33,407 respectively to
the Iowa Association of School Boards. ISJIT is responsible for operating
expenses incurred directly by ISJIT. All fees are computed daily and paid
monthly.
(2) SECURITIES TRANSACTIONS
Purchases of portfolio securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $12,187,968,141 and
$4,466,705,773 respectively for the year ended June 30, 1996. Proceeds from
maturities of securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $12,156,687,006 and
$4,474,390,301 respectively for the year ended June 30, 1996.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Unitholders
Iowa Schools Joint Investment Trust:
We have audited the accompanying statements of net assets of the Diversified
Portfolio and the Direct Government Obligation Portfolio of the Iowa Schools
Joint Investment Trust (the Trust Portfolios) as of June 30, 1996, and the
related statements of operations for the year then ended and the statements of
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the ten-year period ended
June 30, 1996 for the Diversified Portfolio and the eight-year period ended June
30, 1996 for the Direct Government Obligation Portfolio. These financial
statements and the financial highlights are the responsibility of the Trust
Portfolios' management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements 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 were confirmed to us by the Custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Diversified Portfolio and
the Direct Government Obligation Portfolio of the Iowa Schools Joint Investment
Trust as of June 30, 1996, and the results of their operations for the year then
ended and the changes in their net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years presented,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Des Moines, Iowa
July 26, 1996
<PAGE>
INVESTMENT ADVISOR:
Investors Management Group
2203 Grand Avenue
Des Moines, IA 50312-5338
CUSTODIAN AND ADMINISTRATOR:
Norwest Bank Iowa, N.A.
666 Walnut, P.O. Box 837
Des Moines, IA 50304
LEGAL COUNSEL:
Ahlers, Cooney, Dorweiler, Haynie, Smith
& Allbee, P.C.
100 Court Avenue, Suite 600
Des Moines, IA 50309
INDEPENDENT AUDITORS:
KPMG Peat Marwick LLP
2500 Ruan Center
Des Moines, IA 50309
IOWA SCHOOLS JOINT INVESTMENT TRUST
c/o Norwest Bank Iowa, N.A.
666 Walnut, P.O. Box 837
Des Moines, Iowa 50304
Toll Free (800) 872-0140 or (515) 245-3245
