IOWA SCHOOLS JOINT INVESTMENT TRUST
ANNUAL FINANCIAL REPORT
JUNE 30, 1998
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 in fiscal year 1997-98 since the cash management program's
introduction in 1986. Total funds collectively invested in the program's various
investment services reached an all-time high of $474,343,181 on May 19, 1998,
surpassing the previous all-time high by $44,177,560.
ISJIT was one of the first cash management programs in the country when created
for schools in 1986. In the past eleven years of continuous operation, ISJIT has
assisted more than 325 authorized participants to safely increase their interest
income, providing millions of additional dollars to increase the quality of
educational services available to students across the state.
Under the sponsorship guidance of the Iowa Association of School Boards, ISJIT
has become a model for providing safe, efficient cash management practices and
responsiveness to the unique needs of school corporations across the state.
During this past fiscal year, prevailing short-term interest rates were
basically unchanged for the period as the Federal Reserve Board declined to
increase or decrease the federal funds rate. Although the national economy
continued to grow and expand, other factors tended to neutralize concerns that
the level of economic growth might bring about an increase in inflation.
ISJIT's Diversified and Direct Government Obligation (DGO) rates of return
reflected the overall stability of the fixed income markets in FY 97-98
providing investing participants with rates clustered around five percent
throughout the year.
Since inception, the Diversified and DGO funds have provided participants with
over $90,000,000 in investment income. No program or institution in history has
helped more Iowa school corporations to earn more interest income than the Iowa
Schools Joint Investment Trust.
The Iowa Association of School Boards has a proud tradition of assisting our
members to combine efforts to enable themselves to better take advantage of
opportunities. ISJIT has set the standard in the state and in the country for
responsible, effective cash management assistance, exemplifying IASB's service
role to its members.
RONALD M. RICE
Ronald M. Rice
Executive Director
Iowa Association of School Boards
_______________________________________
| |
| CONTENTS |
| |
- - -------------------------------------- | ------------------------------------- |
ISJIT HAS SET THE STANDARD IN THE | Statement of Sponsoring Association 1 |
STATE AND IN THE COUNTRY FOR | |
RESPONSIBLE, EFFECTIVE CASH MANAGEMENT | Message From The Chair 2 |
ASSISTANCE, EXEMPLIFYING IASB'S | |
SERVICE ROLE TO ITS MEMBERS. | Board of Trustees 3 |
- - -------------------------------------- | |
| Notes From Your Service Providers 4 |
| |
| Member Profile 5 |
| |
| Program Services and Features 6 |
| |
| Financial Statements 7 |
|_______________________________________|
<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, 1998. ISJIT
enjoyed its most successful year of operation to date, with the program's
investment services setting new records for invested funds throughout the
period.
Total funds for all investment alternatives reached an all-time high of
$474,343,181 in May 1998. Use of every investment service offered by ISJIT
increased over previous fiscal periods.
o Use of the program's Fixed Term Automated (FTA) services expanded
dramatically as member districts took advantage of the program's popular
Flexible Withdrawal Certificate of Deposit (Flex-CD) to invest bond
proceeds in anticipation of building projects. During the year, 91
participants from across the state invested $123,787,725 in ISJIT FTA
investments.
o Average daily investments in the Diversified and Direct Government
Obligation (DGO) funds were $204,353,692, up 12% from FY 96-97 averages.
o Regular receipt of over $50,000,000 in State of Iowa Foundation Aid
payments via Electronic Funds Transfer directly into participant ISJIT
accounts.
o Placement of 100 portfolio certificates of deposit into Iowa financial
institutions representing over $113,950,000.
On behalf of each member of the ISJIT Board of Trustees and all other
professional parties that work together to bring you the ISJIT services, I would
like to personally thank each participating school corporation for their support
of the ISJIT program. It is the goal of the Board to provide you with the best
cash management program in the country. Your suggestions and observations are
always appreciated and have helped ISJIT to continue to improve its services and
your participation. Please feel free to contact myself or any other Board member
at your convenience.
Respectfully,
DON WILLIAMS
Don Williams, Chair
Board of Trustees
------------------------------------------------
TOTAL FUNDS FOR ALL INVESTMENT ALTERNATIVES
REACHED AN ALL-TIME HIGH OF $474,343,181 IN MAY
1998. USE OF EVERY INVESTMENT SERVICE OFFERED BY
ISJIT INCREASED OVER PREVIOUS FISCAL PERIODS.
------------------------------------------------
<PAGE>
BOARD OF TRUSTEES
PICTURED CLOCKWISE FROM LEFT TO RIGHT: GARY D. BENGTSON, CARROLL; CAROLYN JONS,
AMES; RICHARD L. VANDEKIEFT, CEDAR FALLS; DEAN BORG, MOUNT VERNON; BARBARA
GROHE, IOWA CITY; DON WILLIAMS, VILLISCA.
The Iowa Schools Joint Investment Trust Board of Trustees meets quarterly to
review the program's operation and to consider program operating enhancements
that might be of assistance to ISJIT participants. Each of the six members
represents the interests of their own school corporation as well as over 325
other ISJIT program members. Each board member has served as a school board
member or school business official in their home district for many years prior
to their ISJIT service.
Together, the ISJIT Board provides an extensive network of experience and
knowledge of members' cash management needs to the program's ongoing operation.
The diversity of experience and attention to detail by each member of the Board
assures that the program's history of helpful cash management assistance will
continue to be available to ISJIT members well into the future.
<PAGE>
NOTES FROM YOUR SERVICE PROVIDERS
KATHRYN D. BEREY, CFA
MANAGING DIRECTOR
INVESTORS MANAGEMENT GROUP
During the fiscal year 1997-98 short-term interest rates were remarkably stable.
Domestic economic growth was strong, led by consumer spending and construction
activity. This strong domestic growth was tempered by the financial turmoil in
Asia. The Asian turmoil has caused exports to decline and resulted in an
extremely competitive global pricing environment. Due to these offsetting
forces, the Federal Reserve has not changed interest rates. The Federal Reserve,
however, does maintain a bias toward raising short-term interest rates. The low
unemployment rate is pushing up wages and could lead to upward inflationary
pressures.
The rate on the ISJIT Diversified Fund was also extremely stable during the
year, ranging from 5.00 to 5.15 percent. The Fund consistently provided a rate
more than 0.20 percent above the IBC Index of national money market funds.
The average maturity of the Fund was 51 days at the end of the fiscal year. Most
investments mature within 90 days. Longer maturity investments provide little
yield advantage and the Federal Reserve is biased toward raising short-term
interest rates.
The IPAIT program continues to emphasize three elements: safety, liquidity, and
competitive rates, in that order. We look forward to serving you in the 1998-99
fiscal year.
PAUL L. KRUSE
INVESTMENT SERVICES
MARKETING MANAGER
INVESTORS MANAGEMENT GROUP
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.
ANITA TRACY
ISJIT ADMINISTRATOR
NORWEST BANK IOWA, N.A.
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.
<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, BCLUW, Bedford, Belmond-Klemme, Bennett, Bettendorf,
Bondurant-Farrar, Boone, Boyden-Hull, Burlington, C & M, CAL, Calamus-Wheatland,
Camanche, Cardinal, Carlisle, Carroll, Cedar Falls, Cedar Rapids, Center
Point-Urbana, Centerville, Central Decatur, Central Lyon, Chariton, Charles
City, Clarence-Lowden, Clarinda, Clarke (Osceola), Clarksville, Clear
Creek-Amana, Clear Lake, Clearfield, Clinton, Colfax Mingo, College,
Collins-Maxwell, Columbus, Corning, Council Bluffs, Creston, Dallas
Center-Grimes, Danville, Davenport, Davis County, Decorah, Deep
River-Millersburg, Delwood, Denison, Denver, Des Moines, Dexfield, Diagonal,
Dike New Hartford, Dows, Dubuque, Dunkerton, Earlham, East Buchanan, East
Central, East Marshall, East Union, Eastern Allamakee, Eddyville-Blakesburg,
English Valleys, Essex, Estherville, Exira, Firstar - AREA 9--Missippi Bend,
Forest City, Fort Dodge, Fort Madison, Fredericksburg, Fremont, Galva-Holstein,
Garnavillo, Garner-Hayfield, George, Gilbert, Gilmore City-Bradgate, Glenwood,
Glidden-Ralston, Graettinger, Grand, Grand Valley, Greenfield, Grinnell-Newburg,
Griswold, Grundy Center, H-L-V, Harlan, Hartley-Melvin-Sanborn, Highland,
Hinton, Howard-Winneshiek, Hudson, Independence, Indian Hills, Indian Hills -
Dev. Corp., Indian Hills - Foundation, Indianola, Interstate 35, Iowa City, Iowa
Falls, Iowa Lakes, Iowa Valley, Iowa Western, 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-Cleghon, Marion Independent, Marshalltown,
Mason City, Mediapolis, Melcher-Dallas, Meservey-Thornton, Mid Iowa,
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 Central, North Fayette, North
Mahaska, North Polk, North Scott, North Winneshiek, Northeast (Goose Lake),
Northeast Hamilton, Northern Trails Trust, Norwalk, Odebolt-Arthur, Ogden,
Okoboji, Olin, Orient-Macksburg, Osage, Ottumwa, Panorama, Parkersburg, PCM,
Pekin, Pella, Perry, Pleasant Valley, 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, Sheffield-Chapin, Sheldon, Sidney, Sigourney, Sioux Central, Sioux
City, South Hamilton, South Page, South Winneshiek, Southeast Polk, Southeast
Warren, Southeast Webster, Southeastern, Southern Cal, Spencer, Spirit Lake,
Springville, St. Ansgar, Stanton, Starmont, Storm Lake, Stratford, 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, 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, Wilton,
Winfield-Mt. Union, Winterset, Woden-Crystal Lake, 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.
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.
ISJIT provides toll-free phone accessibility to experienced ISJIT
representatives that can assist with any investment related inquiry or request.
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.
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 $950,000,000 back into Iowa financial
institutions on behalf of program participants.
ISJIT was the first public school investment program in the country to be
registered with and regulated by the Securities and Exchange Commission (SEC).
- - --------------------------------------------------------------------------------
"ISJIT'S FLEX-CD SATISFIED ALL OF OUR DISTRICT'S BOND PROCEEDS INVESTMENT NEEDS.
ISJIT'S PEOPLE HANDLED ALL OF THE DETAILS, PROVIDING CLINTON 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."
MARK KLETT,
CLINTON CSD
- - --------------------------------------------------------------------------------
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.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO, CONTINUED
STATEMENT OF NET ASSETS -- JUNE 30, 1998
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- 12.58%
$ 4,855,000 Fed. Home Loan Mtge. Corp-Disc. Note 5.57% 07/30/98 $ 4,833,646
3,735,000 Fed. Home Loan Mtge. Corp-Disc. Note 5.57% 07/31/98 3,718,006
2,500,000 Fed. Home Loan Mtge. Corp-Disc. Note 5.55% 08/07/98 2,486,074
5,000,000 Fed. Home Loan Mtge. Corp-Disc. Note 5.58% 08/24/98 4,959,200
5,000,000 Fed. Home Loan Mtge. Corp-Disc. Note 5.57% 08/26/98 4,957,844
5,000,000 Fed. National Mtge. Assoc.-Disc. Note 5.59% 08/27/98 4,957,171
------------
TOTAL (cost-- $25,911,941) $ 25,911,941
------------
COUPON SECURITIES-- 50.94%
$ 1,205,000 Federal Farm Credit Bank, 5.46% 5.67% 07/01/98 $ 1,205,000
5,236,000 Federal Farm Credit Bank, 5.65% 5.50% 07/01/98 5,236,000
2,000,000 Federal Home Loan Bank, 5.72% 5.60% 07/07/98 2,000,021
1,000,000 Federal Home Loan Bank, 5.72% 5.52% 07/07/98 1,000,013
1,000,000 Federal National Mtge. Assoc., 6.13% 5.64% 07/09/98 1,000,078
1,000,000 Federal National Mtge. Assoc., 7.00% 5.58% 07/13/98 1,000,420
500,000 Fed. Home Loan Bank, Variable Rate, 3.00%* 5.75% 07/15/98 499,476
1,500,000 Federal National Mtge. Assoc., 5.35% 5.63% 07/16/98 1,499,766
8,000,000 Federal National Mtge. Assoc., 5.19% 5.58% 07/20/98 7,998,086
7,500,000 Federal National Mtge. Assoc., 5.10% 5.50% 07/22/98 7,497,775
500,000 Fed. Home Loan Mtge Corp., 6.05% 5.51% 07/28/98 500,189
3,000,000 Federal Farm Credit Bank, 5.42% 5.61% 08/04/98 2,999,203
5,000,000 Federal National Mtge. Assoc., 9.40% 5.61% 08/10/98 5,019,926
1,000,000 Federal National Mtge. Assoc., 9.40% 5.67% 08/10/98 1,003,861
2,500,000 Federal National Mtge. Assoc., 5.35% 5.63% 08/12/98 2,498,975
1,000,000 Federal Home Loan Bank, 5.52% 5.67% 08/17/98 999,784
2,000,000 Federal National Mtge. Assoc., 5.30% 5.66% 08/25/98 1,998,931
7,600,000 Student Loan Marketing Assoc., 5.50% 5.68% 09/03/98 7,594,751
5,000,000 Federal National Mtge. Assoc., 5.55% 5.67% 09/08/98 4,998,184
4,500,000 Federal National Mtge. Assoc., 5.71% 5.65% 09/09/98 4,500,505
6,500,000 Federal National Mtge. Assoc., 5.71% 5.63% 09/09/98 6,500,452
500,000 Federal National Mtge. Assoc., 4.70% 5.72% 09/10/98 499,027
500,000 Fed. Home Loan Mtge Corp., 4.77% 5.56% 09/14/98 499,199
500,000 Federal National Mtge. Assoc., 4.90% 5.55% 09/16/98 499,326
4,000,000 Federal Home Loan Bank, Variable Rate, 5.59%* 5.72% 10/23/98 3,999,597
5,000,000 Fed. Home Loan Mtge Corp., 13.00% 5.73% 11/04/98 5,117,978
3,000,000 Student Loan Marketing Assoc., Variable Rate, 5.62%* 5.75% 11/05/98 3,000,066
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.32%* 5.55% 11/10/98 4,996,593
3,000,000 Federal National Mtge. Assoc., 5.75% 5.77% 12/10/98 2,999,687
2,000,000 Federal National Mtge. Assoc., 5.75% 5.74% 12/10/98 2,000,000
4,750,000 Student Loan Marketing Assoc., Variable Rate, 5.34%* 5.71% 01/13/99 4,742,435
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.34%* 5.57% 02/08/99 4,994,695
4,000,000 Student Loan Marketing Assoc., Variable Rate, 5.33%* 5.57% 02/22/99 3,995,444
------------
TOTAL (cost-- $104,895,443) $104,895,443
------------
CERTIFICATES OF DEPOSIT-- 18.39%
$ 250,000 Citizens Bank, Sac City 5.90% 07/06/98 $ 250,000
250,000 Citizens Bank, Sac City 5.75% 07/06/98 250,000
3,000,000 Community First State Bank, Decorah 5.65% 07/16/98 3,000,000
500,000 Peoples Bank & Trust, Rock Valley 5.90% 07/27/98 500,000
750,000 Farmers State Bank, Hawarden 5.75% 07/29/98 750,000
2,000,000 Community First State Bank, Decorah 5.65% 08/07/98 2,000,000
300,000 Community Bank, Miles 6.30% 08/10/98 300,000
2,500,000 Norwest Bank, Pleasant Hill 5.80% 08/17/98 2,500,000
*Denotes floating investment with interest rate as of June 30, 1998
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO, CONTINUED
STATEMENT OF NET ASSETS -- JUNE 30, 1998
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT
$ 250,000 Ft. Madison Bank & Trust, Ft. Madison 6.05% 08/21/98 $ 250,000
500,000 American Bank, LeMars 5.85% 08/21/98 500,000
500,000 American Bank, LeMars 5.75% 09/03/98 500,000
500,000 DeWitt Bank & Trust, DeWitt 6.05% 09/04/98 500,000
500,000 Union State Bank, Monona 5.80% 09/04/98 500,000
2,000,000 St. Ansgar State Bank, St. Ansgar 5.80% 09/08/98 2,000,000
500,000 Peoples Bank & Trust, Rock Valley 5.75% 09/16/98 500,000
250,000 First Bank & Trust, Rock Rapids 6.10% 09/16/98 250,000
500,000 First American Bank, Ames 6.00% 09/18/98 500,000
5,000,000 Magna Bank, Waterloo 5.85% 09/21/98 5,000,000
500,000 American State Bank, Sioux Center 5.75% 09/21/98 500,000
2,500,000 Bankers Trust, Des Moines 5.75% 09/21/98 2,500,000
500,000 Citizens Bank, Sac City 5.80% 10/13/98 500,000
500,000 American State Bank, Sioux Center 5.80% 11/09/98 500,000
500,000 Peoples State Bank, Elkader 5.80% 11/09/98 500,000
2,500,000 Norwest Bank, Clive 6.10% 11/12/98 2,500,000
500,000 Premier Bank, Rock Valley 5.80% 11/16/98 500,000
675,000 Mercantile Bank, Mt. Pleasant 5.80% 11/16/98 675,000
500,000 Union State Bank, Monona 5.75% 11/16/98 500,000
600,000 First State Bank, Ida Grove 5.80% 11/30/98 600,000
300,000 Community Bank, Miles 6.10% 12/11/98 300,000
500,000 Peoples State Bank, Elkader 5.80% 12/21/98 500,000
1,000,000 Peoples Savings Bank, Elma 5.80% 12/21/98 1,000,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 5.87% 02/18/99 250,000
500,000 Union State Bank, Winterset 6.00% 02/22/99 500,000
500,000 St. Ansgar State Bank, St. Ansgar 6.00% 04/20/99 500,000
500,000 American State Bank, Sioux Center 6.00% 04/23/99 500,000
5,000,000 Magna Bank, Waterloo 5.99% 06/16/99 5,000,000
------------
TOTAL (cost-- $37,875,000) $ 37,875,000
------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 17.27%
$17,776,000 Merrill Lynch, Repurchase Agreement 5.70% 07/01/98 $ 17,776,000
17,775,000 J P Morgan, Repurchase Agreement 5.60% 07/01/98 17,775,000
------------
TOTAL (cost-- $35,551,000) $ 35,551,000
------------
TOTAL INVESTMENTS-- 99.18% (cost-- $204,233,384) $204,233,384
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- .82%
(Includes $47,643 payable to IMG and $994,127
dividends payable to unitholders) $ 1,693,768
------------
NET ASSETS -- 100%
Applicable to 205,927,152 outstanding units $205,927,152
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($205,927,152 ============
divided by 205,927,152 units outstanding)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1998
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COUPON SECURITIES-- 3.71%
$ 1,000,000 U. S. Treasury Note, 5.625% 5.50% 11/30/98 $ 1,000,462
------------
TOTAL (cost-- $1,000,462) $ 1,000,462
------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities)-- 96.74%
$26,052,000 Warbug Dillon Reed LLC 5.55% 07/01/98 $ 26,052,000
------------
TOTAL (cost-- $26,052,000) $ 26,052,000
------------
TOTAL INVESTMENTS -- 100.45% (cost -- $27,052,462) $ 27,052,462
EXCESS OF OTHER LIABILITIES OVER TOTAL ASSETS-- (.45%)
(Includes $3,511 payable to IMG and $117,208
dividends payable to unitholders) ($ 121,641)
------------
NET ASSETS-- 100%
Applicable to 26,930,821 outstanding units $ 26,930,821
============
NET ASSET VALUE: $ 1.00
Offering and redemption price per unit ($26,930,821 ============
divided by 26,930,821 units outstanding)
See accompanying notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
DIRECT GOVERNMENT
DIVERSIFIED PORTFOLIO OBLIGATION PORTFOLIO
------------------------------------------------
INVESTMENT INCOME:
Interest $10,038,182 $ 1,678,604
----------- -----------
EXPENSES:
Investment advisory and
program support fees 435,450 45,088
Custody and administrative fees 392,359 97,691
Distribution fees 177,654 30,059
Other fees and expenses 53,296 9,017
----------- -----------
Total Expenses 1,058,759 181,855
----------- -----------
NET INVESTMENT INCOME $ 8,979,423 $ 1,496,749
=========== ===========
<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
1998 1997 1998 1997
------------------------------------- -----------------------------------
<S> <C> <C> <C> <C>
From Investment Activities:
Net investment income distributed
to unitholders $ 8,979,423 $ 7,619,552 $ 1,496,749 $ 1,214,799
From Unit Transactions:
(at constant net asset value of $1 per unit)
Units sold $1,161,628,825 $1,102,123,360 $ 29,707,895 $ 42,010,980
Units issued in reinvestment
of dividends from net investment income 8,979,423 7,619,552 1,496,749 1,214,799
Units redeemed (1,159,932,537) (1,086,045,735) (34,253,804) (35,967,605)
Net increase/(decrease) in net assets
derived from unit transactions 10,675,711 23,697,177 (3,049,160) 7,258,174
Net assets at beginning of year 195,251,441 171,554,264 29,979,981 22,721,807
Net assets at end of year $ 205,927,152 $ 195,251,441 $ 26,930,821 $ 29,979,981
</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, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- - ------------------------------------------------------------------------------------------------------------------------------------
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIVERSIFIED PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .051 .049 .051 .049 .029 .029 .047 .067 .077 .080
Dividends Distributed (.051) (.049) (.051) (.049) (.029) (.029) (.047) (.067) (.077) (.080)
-------------------------------------------------------------------------------------------------------
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 5.06% 4.87% 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.67% 7.99%
Ratio of Expenses to
Average Net Assets 0.60% 0.60% 0.60% 0.59% 0.58% 0.58% 0.60% 0.66% 0.67% 0.67%
Ratio of Net Income to
Average Net Assets 5.06% 4.87% 5.09% 4.86% 2.90% 2.88% 4.67% 6.75% 7.69% 7.99%
Net Assets,
End of Period (000 Omitted) $205,927 $195,251 $171,554 $164,119 $122,163 $99,608 $78,716 $89,047 $91,742 $62,796
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- - ------------------------------------------------------------------------------------------------------------------------------------
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income .050 .048 .050 .048 .028 .028 .044 .063 .077 .085
Dividends Distributed (.050) (.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 $ 1.000
Total Return 4.98% 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 0.61% 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 4.98% 4.77% 5.01% 4.81% 2.77% 2.82% 4.43% 6.36% 7.74% 8.51%
End of Period (000 Omitted) $ 26,931 $ 29,980 $ 22,722 $ 30,482 $ 28,309 $25,672 $24,462 $23,927 $24,461 $15,781
See accompanying notes to financial statements.
</TABLE>
<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 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 net investment income
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, 1998, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with market values of
$36,515,365 and $26,573,625 for the Diversified Portfolio and the Direct
Government Obligation Portfolio, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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, 1998, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $435,450 and $45,088, 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, 1998, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $392,359 and $97,691, 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, 1998, the Diversified Portfolio and the Direct
Government Obligation Portfolio paid $177,654 and $30,059 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 $15,183,110,527 and
$7,057,646,742 respectively for the year ended June 30, 1998. Proceeds from
maturities of securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $15,172,909,247 and
$7,060,536,000 respectively for the year ended June 30, 1998.
<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, 1998, 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, 1998. 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, 1998, 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 24, 1998
<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.
100 Court Avenue, Suite 600
Des Moines, IA 50309
ooooo
INDEPENDENT AUDITOR
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
