IOWA SCHOOLS JOINT INVESTMENT TRUST
ANNUAL FINANCIAL REPORT
JUNE 30, 1997
SPONSORED BY THE IOWA ASSOCIATION OF SCHOOL BOARDS
<PAGE>
CONTENTS
STATEMENT OF SPONSORING ASSOCIATION 1
MESSAGE FROM THE CHAIR 2
BOARD OF TRUSTEES 3
NOTES FROM YOUR SERVICE PROVIDERS 4
MEMBER PROFILE 5
PROGRAM SERVICES AND FEATURES 6
FINANCIAL STATEMENTS 7
STATEMENT OF SPONSORING ASSOCIATION
The Iowa Schools Joint Investment Trust (ISJIT) once again set new records
throughout fiscal year 1996-97 as the cash management program enjoyed its most
successful year of operation to date. Total funds invested in the program's
investment alternatives reached an all-time high of $294,641,134 on May 19,
1997.
ISJIT was organized in 1986 to enable school districts, area education agencies
and community colleges from across the state to join together to safely increase
interest income. Under the sponsorship guidance of the Iowa Association of
School Boards, ISJIT has become a national success story, providing millions of
dollars in additional investment income to the program's 325 participants.
During this past fiscal year, prevailing interest rates were generally
unchanged, increasing slightly in March following a 0.25 percent increase in the
federal funds rate by the Federal Reserve Board as the national economy
exhibited signs of stronger than anticipated growth. ISJIT Diversified and
Direct Government Obligation (DGO) rates of return similarly increased, ending
the fiscal year well in excess of five percent.
Since inception, the Diversified and DGO funds have provided participants with a
total of over $80,000,000 in investment income. No program or institution in the
history of our state has helped more school corporations to invest surplus
operating funds and to earn better rates of interest than the Iowa Schools Joint
Investment Trust.
ISJIT continues a proud IASB tradition of providing diversified assistance
to our Association's members. As ISJIT enters its second decade of operation, I
am confident that ISJIT will continue to set the national standard for
responsible, effective cash management assistance.
RON RICE
EXECUTIVE DIRECTOR
IOWA ASSOCIATION OF SCHOOL BOARDS
________________________________________________________________________________
AS ISJIT ENTERS ITS SECOND DECADE OF OPERATION, I AM CONFIDENT THAT ISJIT WILL
CONTINUE TO SET THE NATIONAL STANDARD FOR RESPONSIBLE, EFFECTIVE CASH MANAGEMENT
ASSISTANCE.
________________________________________________________________________________
<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, 1997. ISJIT
enjoyed another excellent year of operation, with use of a number of the
program's investment services setting new investment records.
Use of the program's Fixed Term Automated (FTA) services expanded dramatically,
in particular participants' use of the popular Flexible Withdrawal Certificate
of Deposit (Flex-CD) to invest bond proceeds in anticipation of building
projects. Total funds for all investment alternatives reached an all-time high
of $430,165,621 in May 1997.
As ISJIT enters its second decade of operation, it continues to focus upon
providing participants with innovative investment alternatives tailored to the
unique needs of its participants.
Other highlights from the fiscal year include:
o average daily investments in the Diversified and Direct Government
Obligation Funds of $181,902,635,
o placement of a total of 92 FTA investments representing a total of
$136,468,531 in invested assets,
o regular receipt of over $45,000,000 in State of Iowa Foundation Aid
payments via Electronic Funds Transfer (EFT) directly into ISJIT
participant accounts and
o placement of 63 portfolio certificates of deposit into Iowa financial
institutions, representing over $55,825,000.
On behalf of the Board of Trustees, I personally thank each participant for
their support of the ISJIT program. We pledge to continue to work on behalf of
our fellow school corporations across the state to develop safe, innovative cash
management services available to any interested participant. If you have any
suggestions or observations, please feel free to contact myself or any other
Board member.
Respectfully,
CAROLYN JONS, CHAIR
BOARD OF TRUSTEES
________________________________________________________________________________
TOTAL FUNDS FOR ALL INVESTMENT ALTERNATIVES REACHED AN ALL-TIME HIGH OF
$430,165,621 IN MAY 1997.
________________________________________________________________________________
<PAGE>
BOARD OF TRUSTEES
The Board of Trustees for the Iowa Schools Joint Investment Trust is made up of
six members from across the state. Each member of the ISJIT Board is involved
with operating a school corporation as a school board member, school business
official or school superintendent and each brings extensive personal experience
to the ISJIT program.
The Board receives extensive performance information relative to the program's
operation each month and meets quarterly to review all aspects of program
operation.
The diversity of experience and attention to detail by the ISJIT Board assures
that the program's helpful and reliable operating history will continue into the
future.
BOARD OF TRUSTEES
RICHARD L. VANDEKIEFT, CEDAR FALLS
DEAN BORG, MOUNT VERNON
PICTURED FROM LEFT TO RIGHT: GARY D. BENGTSON, CARROLL; DON WILLIAMS, VILLISCA;
CAROLYN JONS, AMES; GERALD COWELL, CRESTON.
<PAGE>
NOTES FROM YOUR SERVICE PROVIDERS
During the fiscal year 1996-97, short-term interest rates rose. The Federal
Reserve raised the federal funds rate by 0.25 percent on March 25, 1997. Strong
economic growth, particularly consumer spending, accompanied by a declining
unemployment rate and increasing wage pressures caused the Federal Reserve to
make this preemptive move to thwart inflation.
The rate on the ISJIT Diversified Fund also increased during the fiscal year,
crossing the five percent threshold in April. The portfolio consistently
provided a rate nearly 0.20 percent greater than the Donoghue Index of national
money market funds. The Diversified Fund was postured to maintain a shorter
average maturity than the Donoghue Index, as we anticipated the increase in
short-term interest rates. This enabled the Diversified Fund to outperform the
Index.
Economic growth slowed this spring, but may pick up again this summer. Consumer
fundamentals are sound. The unemployment rate is less than five percent and
incomes are rising faster than inflation. Consumers are more confident than they
have been in two decades. This sets the stage for a possible rebound in consumer
spending. Increases in demand for goods and services inevitably lead to
bottlenecks as demand exceeds supply, triggering higher inflation. If consumer
spending increases over the next few months, the Federal Reserve may increase
short-term interest rates further. ISJIT is well positioned to take advantage of
rising short-term interest rates with an average maturity of less than 40 days
as we end the fiscal year.
The ISJIT program emphasizes three elements: safety, liquidity, and competitive
rates in that order. As always, we appreciate your support and look forward to
serving you in the 1997-98 fiscal year.
KATHRYN D. BEYER, CFA
MANAGING DIRECTOR
INVESTORS MANAGEMENT GROUP
_____________________________________________________________________
No cash management program can serve participant needs without knowledgeable
representatives. Anita Tracy heads up a team of dedicated program administrators
that are always available to assist with any ISJIT program related investment
need. Current investment rates, questions about account activity, setting up new
accounts or any other inquiry is always courteously and efficiently addressed.
ANITA TRACY
ISJIT ADMINISTRATOR
NORWEST BANK IOWA, N.A.
_____________________________________________________________________
Investors Management Group (IMG) provides program development services to the
ISJIT program and each participant.
Paul Kruse, IMG's Investment Services Marketing Manager, personally calls on
representatives of community school districts, area education agencies and
community colleges throughout the state each year to explain the benefits of
participating in ISJIT. An individual stop may vary from an informal one-on-one
conversation to a formal presentation to a governing Board.
In addition to attending regional meetings and statewide conventions throughout
the year, Paul contributes material to the Educational Investor, including the
popular Kruse'n Down the Highway series.
PAUL L. KRUSE
INVESTMENT SERVICES MARKETING MANAGER
INVESTORS MANAGEMENT GROUP
<PAGE>
MEMBER PROFILE
Ackley-Geneva, Adair-Casey, Akron-Westfield, Albert City-Truesdale, Albia,
Alden, Algona, Allison-Bristow, 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, Burlington, C and M, Cal, Calamus-Wheatland, Camanche,
Cardinal, Carlisle, Carroll, Cedar Falls, Cedar Rapids, Center Point-Urbana,
Centerville, Central Decatur, Central Lyon, Chariton, Clarence-Lowden, Clarinda,
Clarke (Osceola), Clarksville, Clear Creek-Amana, Clearfield, 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, Dows, Dubuque, Dunkerton,
Earlham, East Buchanan, East Central, East Marshall, East Union, Eastern
Allamakee, Eastwood, Eddyville-Blakesburg, English Valleys, Essex, Estherville,
Exira, Firstar - AREA 9-Missippi Bend, Forest City, Fort Dodge, Fort Madison,
Fredericksburg, Fremont, Galva-Holstein, Garnavillo, George, Gilbert, Gilmore
City-Bradgate, Glenwood, Glidden-Ralston, Graettinger, Grand Valley, Grand,
Greenfield, Grinnell-Newburg, Griswold, Grundy Center, H-L-V, Harlan,
Hartley-Melvin-Sanborn, Highland, Hinton, Howard-Winneshiek, Independence,
Indian Hills, Indian Hills - Dev. Corp., Indian Hills - Foundation, Indianola,
Interstate 35, Iowa City, Iowa Falls, Iowa Valley, Janesville,
Jefferson-Scranton, Johnston, Keokuk, Keota, Knoxville, Lake Mills, Lamoni,
Laurens-Marathon, Lawton-Bronson, LeMars, Lenox, Lewis Central, Lincoln Central
(Gruver), Lineville - Clio, Linn-Mar, Little Rock, Logan-Magnolia, Lone Tree,
Louisa-Muscatine, Lu Verne, Madrid, Manning, Manson Northwest Webster, Maple
Valley, Maquoketa, Marcus-Meridian-Cleghor, Marion, Marshalltown, Mason City,
Mediapolis, Melcher-Dallas, Meservey-Thornton, Mid-Prairie, 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 London, New Market, Newton, Nishna Valley, Nora Springs
Rock Falls, North Fayette, North Central, North Mahaska, North Polk, North
Scott, North Winneshiek, Northeast (Goose Lake), Northeast Hamilton, Northern
Trails Trust, 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,
River Valley, 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, Southeastern,
South Hamilton, South Page, South Winneshiek, Southeast Polk, Southeast Warren,
Southeast Webster, Southern Cal, Spencer, Spirit Lake, Springville, St. Ansgar,
Stanton, Starmont, Storm Lake, Sumner, Terril, Tipton, Tri-Center, Tri-County,
Turkey Valley, Underwood, Union, United, Urbandale, Valley (Elgin), Van Buren,
Van Meter, Ventura, Villisca, Vinton-Shellsburg, Waco, Wall Lake, Wapello,
Walnut, Wapello, Wapsie Valley, Washington, Waterloo, Waukee, Wayne, Webster
City, 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's operation is sponsored by the Iowa Association of School Boards. IASB's
management team meets monthly with the program's service providers to monitor
all elements of program operation.
ooooo
ISJIT provides two daily liquid investment alternatives, the Diversified Fund
and the Direct Government Obligation (DGO) Fund. Each alternative is tailored to
meet specific participant investment needs. Each offers rates that typically
exceed those available for other liquid account structures and fixed-term
investments that limit liquidity.
ooooo
ISJIT provides toll-free phone
accessibility to experienced ISJIT representatives that can assist with any
investment related inquiry or request.
ooooo
ISJIT's unique proprietary reporting system provides participants with easy to
understand daily confirmations and monthly account summaries, even providing for
a transaction note to be dictated onto the statement by the participant.
ooooo
ISJIT invests available funds into
Iowa financial institutions offering competitive rates of interest
whenever possible. To date, IASB sponsored cash management programs have
invested over $850,000,000 back into Iowa financial institutions on behalf of
program participants.
ooooo
ISJIT was the first public school investment program in the country to be
registered with and regulated by the Securities and Exchange Commission (SEC).
ooooo
ISJIT's Flexible Withdrawal Certificate of Deposit or Flex-CD offers the perfect
investment opportunity for bond proceeds. Each Flex-CD is tailored to the
specific needs of the project, offering:
o payment of an excellent fixed rate of interest;
o no penalty, monthly liquidity for project needs; and
o an extended maturity to accommodate unanticipated project delays.
CAMANCHE COMMUNITY SCHOOL DISTRICT
CAMANCHE, IOWA
"ISJIT'S FLEX-CD SATISFIED ALL OF OUR DISTRICT'S BOND PROCEEDS INVESTMENT NEEDS.
ISJIT'S PEOPLE HANDLES ALL OF THE DETAILS, PROVIDING CAMANCHE CSD WITH AN
EXCELLENT RATE OF INTEREST TAILORED TO OUR SPECIFIC PROJECT. OUR FLEX-CD IS NOT
ONLY EXTREMELY EASY TO WORK WITH, BUT WILL ALSO PROVIDE THOUSANDS OF DOLLARS IN
ADDITIONAL PROJECT FUNDS."
DAN BOLTE,
BUSINESS MANAGER CAMANCHE CSD
<PAGE>
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COUPON SECURITIES-- 49.42%
$ 6,155,000 Federal Farm Credit Bank, 5.93% 5.65% 07/01/97 $ 6,155,000
5,000,000 Fed. Nat'l Mtge. Assoc., Variable Rate 5.39% 07/16/97 4,999,894
1,000,000 Federal Home Loan Bank, 5.85% 5.42% 07/18/97 1,000,187
1,700,000 Federal Home Loan Bank, Variable Rate 5.86% 07/30/97 1,698,716
3,840,000 Federal National Mtge. Assoc., 5.62% 5.72% 08/12/97 3,839,184
2,500,000 Federal National Mtge. Assoc., 5.35% 5.34% 08/14/97 2,500,000
1,000,000 Federal National Mtge. Assoc., 5.35% 5.79% 08/14/97 999,389
1,000,000 Federal Home Loan Mortgage Corp., 5.57% 5.56% 08/20/97 1,000,000
5,000,000 Fed. Nat'l Mtge. Assoc., Variable Rate 5.35% 08/22/97 4,999,739
5,000,000 Federal Home Loan Bank, 9.20% 5.36% 08/25/97 5,028,412
1,000,000 Federal Home Loan Bank, 6.65% 5.71% 08/28/97 1,001,201
5,000,000 Federal Home Loan Bank, 6.53% 5.73% 09/02/97 5,005,906
1,000,000 Federal National Mtge. Assoc., 5.64% 5.64% 09/03/97 999,789
2,500,000 Fed. Farm Credit Bank, Variable Rate 5.34% 10/01/97 2,499,868
2,500,000 Federal Home Loan Bank, Variable Rate 5.34% 10/02/97 2,499,504
3,000,000 Federal Home Loan Bank, 5.40% 5.67% 11/26/97 2,996,734
5,000,000 Fed. Nat'l Mtge. Assoc., Variable Rate 5.47% 12/03/97 4,998,553
4,000,000 Fed. Farm Credit Bank, Variable Rate 5.40% 12/17/97 3,998,225
5,000,000 Student Loan Marketing Assn., Variable Rate 5.30% 01/21/98 5,002,942
1,500,000 Fed. Nat'l Mtge. Assoc., Variable Rate 5.89% 02/17/98 1,500,973
2,000,000 Federal Home Loan Bank, 5.14% 6.10% 02/20/98 1,988,096
1,278,000 Student Loan Marketing Assn., 5.54% 5.94% 02/25/98 1,274,666
3,000,000 Student Loan Marketing Assn., 7.00% 6.03% 03/03/98 3,018,541
1,000,000 Federal National Mtge. Assoc., 5.71% 5.88% 03/18/98 998,860
1,000,000 Federal National Mtge. Assoc., 5.25% 6.10% 03/25/98 994,004
1,000,000 Federal National Mtge. Assoc., 5.25% 6.09% 03/25/98 994,057
5,000,000 Fed. Nat'l Mtge. Assoc., Variable Rate 5.84% 04/15/98 4,998,447
1,500,000 Fed. Home Loan Mtge Corp., Variable Rate 5.90% 06/30/98 1,504,228
18,000,000 Federal Home Loan Bank, 6.25% 5.53% 07/02/98 18,000,281
------------
TOTAL (cost-- $96,495,396) $ 96,495,396
------------
CERTIFICATES OF DEPOSIT-- 13.97%
$ 250,000 Citizens Bank, Sac City 5.60% 07/07/97 $ 250,000
500,000 Union State Bank, Monona 5.60% 07/09/97 500,000
400,000 Exchange Bank, Collins 5.65% 07/14/97 400,000
500,000 Peoples State Bank, Elkader 5.65% 07/16/97 500,000
500,000 Peoples Bank & Trust, Rock Valley 5.60% 07/28/97 500,000
500,000 American State Bank, Sioux Center 5.65% 07/28/97 500,000
5,000,000 Norwest Bank, Clive 5.60% 07/29/97 5,000,000
300,000 Miles Savings Bank, Miles 6.00% 08/08/97 300,000
2,500,000 Bankers Trust, Des Moines 5.75% 08/11/97 2,500,000
250,000 Ft. Madison Bank & Tr, Ft. Madison 6.05% 08/21/97 250,000
500,000 American State Bank, Sioux Center 5.70% 08/26/97 500,000
500,000 Farmers State Bank, Hawarden 5.80% 09/02/97 500,000
1,000,000 Mercantile Bank of Eastern Iowa, Cedar Rapids 5.80% 09/08/97 1,000,000
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO, CONTINUED
STATEMENT OF NET ASSETS -- JUNE 30, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT
$ 500,000 Great River Bank & Trust, LeClaire 5.80% 09/11/97 500,000
500,000 Peoples State Bank, Elkader 5.75% 09/22/97 500,000
2,500,000 Bankers Trust, Des Moines 5.95% 10/06/97 2,500,000
500,000 Citizens Bank, Sac City 5.95% 10/14/97 500,000
1,000,000 United Bank of Iowa, Ida Grove 5.95% 10/20/97 1,000,000
500,000 St. Ansgar State Bank, St Ansgar 5.95% 10/20/97 500,000
500,000 Union State Bank, Monona 5.80% 10/21/97 500,000
2,000,000 First State Bank, Conrad 5.95% 10/29/97 2,000,000
2,000,000 First State Bank, Conrad 5.95% 11/14/97 2,000,000
500,000 Premier Bank, Rock Valley 5.95% 11/18/97 500,000
675,000 Mercantile Bank of Eastern Iowa, Mt. Pleasant 5.80% 11/21/97 675,000
300,000 First State Bank, Ida Grove 5.95% 12/01/97 300,000
300,000 First State Bank, Ida Grove 5.95% 12/01/97 300,000
300,000 Miles Savings Bank, Miles 5.80% 12/12/97 300,000
500,000 Peoples Savings Bank, Elma 5.95% 12/22/97 500,000
500,000 Peoples Savings Bank, Elma 5.95% 12/22/97 500,000
250,000 Citizens Bank, Sac City 5.90% 01/05/98 250,000
250,000 Ft. Madison Bank & Tr, Ft. Madison 6.10% 02/18/98 250,000
500,000 Union State Bank, Winterset 5.95% 02/20/98 500,000
500,000 Peoples Bank & Trust, Rock Valley 6.05% 03/20/98 500,000
------------
TOTAL (cost-- $27,275,000) $ 27,275,000
------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 36.01%
$ 35,151,000 Merrill Lynch, Repurchase Agreement 6.00% 07/01/97 $ 35,151,000
35,151,000 Smith Barney, Repurchase Agreement 6.03% 07/01/97 35,151,000
------------
TOTAL (cost-- $70,302,000) $ 70,302,000
------------
TOTAL INVESTMENTS -- 99.40% (cost -- $194,072,396) $194,072,396
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- .60%
(Includes $43,236 payable to IMG and $892,887
dividends payable to unitholders) $ 1,179,045
------------
NET ASSETS -- 100%
Applicable to 195,251,441 outstanding units $195,251,441
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($195,251,441 ============
divided by 195,251,441 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1997
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COUPON SECURITIES-- 20.06%
$ 1,000,000 U. S. Treasury Note, 8.50% 5.38% 07/15/97 $ 1,001,163
1,000,000 U. S. Treasury Note, 8.50% 5.38% 07/15/97 1,001,165
1,000,000 U. S. Treasury Note, 5.88% 5.37% 07/31/97 1,000,396
1,000,000 U. S. Treasury Note, 5.88% 5.39% 07/31/97 1,000,377
1,000,000 U. S. Treasury Note, 7.25% 5.75% 02/15/98 1,009,049
1,000,000 U. S. Treasury Note, 6.13% 6.02% 03/31/98 1,000,775
------------
TOTAL (cost-- $6,012,925) $ 6,012,925
------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 79.86%
$ 23,942,000 Smith Barney, Repurchase Agreement 5.96% 07/01/97 $ 23,942,000
------------
TOTAL (cost-- $23,942,000) $ 23,942,000
------------
TOTAL INVESTMENTS-- 99.92% (cost-- $29,954,925) $ 29,954,925
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES-- .08%
(Includes $4,056 payable to IMG and $132,410
dividends payable to unitholders) $ 25,056
------------
NET ASSETS-- 100%
Applicable to 29,979,981 outstanding units $ 29,979,981
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($29,979,981 ============
divided by 29,979,981 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
DIRECT GOVERNMENT
DIVERSIFIED PORTFOLIO OBLIGATION PORTFOLIO
----------------------------------------------
INVESTMENT INCOME:
Interest $ 8,554,499 $ 1,369,083
----------- -----------
EXPENSES:
Investment advisory and
program support fees 384,299 38,004
Custody and administrative fees 347,619 83,057
Distribution fees 156,176 25,556
Other fees and expenses 46,853 7,667
----------- -----------
TOTAL EXPENSES 934,947 154,284
----------- -----------
NET INVESTMENT INCOME $ 7,619,552 $ 1,214,799
=========== ===========
<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
1997 1996 1997 1996
-------------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
From Investment Activities:
Net investment income distributed
to unitholders $ 7,619,552 $ 7,592,261 $ 1,214,799 $ 1,665,944
================ ============== ============= =============
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $ 1,102,123,360 $ 942,167,923 $ 42,010,980 $ 24,350,659
Units issued in reinvestment
of dividends from net investment income 7,619,552 7,592,261 1,214,799 1,665,944
Units redeemed (1,086,045,735) (942,325,202) (35,967,605) (33,776,717)
---------------- -------------- ------------- -------------
Net increase/(decrease) in net assets
derived from unit transactions 23,697,177 7,434,982 7,258,174 (7,760,114)
Net assets at beginning of year 171,554,264 164,119,282 22,721,807 30,481,921
---------------- -------------- ------------- -------------
Net assets at end of year $ 195,251,441 $ 171,554,264 $ 29,979,981 $ 22,721,807
================ ============== ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- - ------------------------------------------------------------------------------------------------------------------------------------
<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 .049 .051 .049 .029 .029 .047 .067 .077 .080 .063
Dividends Distributed (.049) (.051) (.049) (.029) (.029) (.047) (.067) (.077) (.080) (.063)
------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======================================================================================================
Total Return 4.87% 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.67% 7.99% 6.34%
Ratio of Expenses to
Average Net Assets 0.60% 0.60% 0.59% 0.58% 0.58% 0.60% 0.66% 0.67% 0.67% 0.66%
Ratio of Net Income to
Average Net Assets 4.87% 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.69% 7.99% 6.34%
Net Assets,
End of Period (000 Omitted) $195,251 $171,554 $164,119 $122,163 $99,608 $78,716 $89,047 $91,742 $62,796 $75,092
</TABLE>
<TABLE>
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1997 1996 1995 1994 1993 1992 1991 1990 1989*
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 $ 1.000
-------------------------------------------------------------------------------------------------
Net Investment Income .048 .050 .048 .028 .028 .044 .063 .077 .085
Dividends Distributed (.048) (.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 $ 1.000
=================================================================================================
Total Return 4.77% 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% 0.60% 0.59% 0.58% 0.58% 0.60% 0.65% 0.65% 0.66%
Ratio of Net Income to
Average Net Assets 4.77% 5.01% 4.81% 2.77% 2.82% 4.43% 6.36% 7.74% 8.51%
Net Assets
End of Period (000 Omitted) $ 29,980 $ 22,722 $ 30,482 $ 28,309 $ 25,672 $ 24,462 $ 23,927 $ 24,461 $ 15,781
</TABLE>
*From Commencement of Operations (September 22, 1988).
See accompanying notes to financial statements.
<PAGE>
(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 Diversified 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 direct
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, 1997, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with market values of
$72,369,556 and $24,435,450 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, 1997, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $384,299 and $38,004, 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, 1997, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $347,619 and $83,057, 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, 1997, the Diversified Portfolio and the Direct
Government Obligation Portfolio paid $156,176 and $25,556 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 $13,521,629,848 and
$4,228,413,891 respectively for the year ended June 30, 1997. Proceeds from
maturities of securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $13,496,899,451 and
$4,220,988,000 respectively for the year ended June 30, 1997.
<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, 1997, 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, 1997 for the Diversified Portfolio and the nine-year period ended June
30, 1997 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 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 and
the Direct Government Obligation Portfolio of the Iowa Schools Joint Investment
Trust as of June 30, 1997, 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
August 1, 1997
<PAGE>
INVESTMENT ADVISOR
INVESTORS MANAGEMENT GROUP
2203 GRAND AVENUE
DES MOINES, IA 50312-5338
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CUSTODIAN AND ADMINISTRATOR
Norwest Bank Iowa, N.A.
666 Walnut, P.O. Box 837
Des Moines, IA 50304
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LEGAL COUNSEL
AHLERS, COONEY, DORWEILER, HAYNIE, SMITH & ALLBEE, P.C.
ATTORNEYS AT LAW
100 Court Avenue, Suite 600
Des Moines, IA 50309
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INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
2500 Ruan Center
Des Moines, IA 50309
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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
