IOWA SCHOOLS JOINT INVESTMENT TRUST
ANNUAL FINANCIAL REPORT
JUNE 30, 1999
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 1998-99 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 $499,098,170 on May 19, 1999,
surpassing the previous all-time high by $24,754,989.
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 declined
somewhat as the Federal Reserve Board decreased the federal funds rate three
times during the period to avert a possible slowing of the domestic economy.
Although several other economies around the globe tended to slow during the
third and fourth quarters of 1998, our national economy continued to grow and
expand.
ISJIT's Diversified and Direct Government Obligation (DGO) rates of return
reflected the overall stability of the fixed income markets in FY 98-99
providing investing participants with rates between four and one half and five
percent throughout the year.
Since inception, the Diversified and DGO funds have provided participants with
over $100,000,000 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 |
| |
- - - ---------------------------------- | ------------------------------------- |
NOPROGRAM OR INSTITUTION IN | Statement of Sponsoring Association 1 |
HISTORY HAS HELPED MORE IOWA | |
SCHOOL CORPORATIONS TO EARN MORE | Message From The Chair 2 |
INTEREST INCOME THATN THE IOWA | |
SCHOOLS JOINT INVESTMENT TRUST. | 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, 1999. 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
$499,098,170 in May of 1999. 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, 108
participants from across the state invested $121,095,804 in ISJIT FTA
investments.
o Average daily investments in the Diversified and Direct Government
Obligation (DGO) funds were $225,784,061, up 10.5% from FY 97-98 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 88 portfolio certificates of deposit into Iowa financial
institutions representing over $81,855,000.
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 most
responsive cash management program in the country.
Your suggestions and observations are always appreciated and have helped ISJIT
to continually improve its services. Please feel free to contact myself or any
other Board member at your convenience if you have ideas about improving your
cash managment progoram.
Respectfully,
DON WILLIAMS
Don Williams, Chair
Board of Trustees
------------------------------------------------
TOTAL FUNDS FOR ALL INVESTMENT ALTERNATIVES
REACHED AN ALL-TIME HIGH OF $499,098,170 IN MAY
1999. USE OF EVERY INVESTMENT SERVICE OFFERED BY
ISJIT INCREASED OVER PREVIOUS FISCAL PERIODS.
------------------------------------------------
<PAGE>
BOARD OF TRUSTEES
PICTURED CLOCKWISE FROM LEFT TO RIGHT: GARY BENGTSON, CARROLL; JAN TURNER,
OKOBOJI; 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 each quarter 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 1998-99, short-term interest rates declined somewhat as
the Federal Reserve decreased short term interest rates three times in late 1998
for a total decrease of .75 percent. Although domestic economic growth was
strong, there was a concern that weakness in several other prominent economies
around the globe might cause a widespread liquidity shortage. As we progressed
through the fiscal period, a number of the troubled economies began to show
signs of strengthening, even as the domestic economy continued to grow. As a
result, as we enter FY 99-00 the Federal Reserve has a bias toward raising
short-term interest rates.
The rate on the ISJIT Diversified Fund declined somewhat during the year,
beginning the year at roughly five percent and declining to roughly four and one
half percent as a result of the interest rate cuts. The Fund consistently
provided a rate more than 0.20 percent above the IBC Index of comparable
national money market funds.
The average maturity of the Fund was 45 days at the end of the fiscal year. Most
investments mature within 90 days. Longer maturity investments provide
relatively little yield advantage with the Federal Reserve bias towards raising
short-term interest rates.
The ISJIT program continues to emphasize safety, liquidity, and competitive
rates, in that order, as fundamental investment objectives. We look forward to
serving you in the 1999-00 fiscal year.
PAUL L. KRUSE
INVESTMENT SERVICES
MANAGING DIRECTOR
INVESTORS MANAGEMENT GROUP
Investors Management Group (IMG) provides program development services to the
ISJIT program and each eligible participant and prospect.
Paul Kruse, IMG's Investment Services Marketing Manager, personally calls on
representatives of community school districts, area education agencies,
community colleges and other eligible ISJIT participants throughout the state
each year to explain the benefits of ISJIT participation. An individual stop can
range from 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 welcome and always courteously and efficiently
addressed.
MEMBERSHIP 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, Bridgewater-Fontanelle, 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, Cherokee, 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,
GMG, 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, Lineville - Clio, Linn-Mar, Little Rock, Logan-Magnolia, Lone
Tree, Louisa-Muscatine, Lu Verne, Madrid, Manning, Manson Northwest Webster,
Maple Valley, Maquoketa, Maquoketa Valley, 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, North Cedar, North Central, North
Fayette, North Iowa, North Linn, 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,
Sibley-Ocheydean, 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,
Treynor, Tri-Center, Tri-County, Turkey Valley, Twin Cedars, 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, West Sioux, 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, Marshalltown 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
PROGRAM SERVICE FEATURES
ISJIT'S operation is sponsored by the Iowa Association of School Boards. IASB's
management team meets regularly 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 with limited liquidity.
ISJIT provides toll-free phone access 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 $1,000,000,000 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).
"Representatives of the Iowa Schools Joint Investment Trust walked us through
the financial planning for construction of a new middle school in Cherokee.
After the voters approved the bond issue, ISJIT cooperated with our local
financial institutions to come up with the best rate possible for investment of
our bond proceeds."
MartinLode, Superintendent
Cherokee CSD
ISJIT's Flexible Withdrawal Certificate of Deposit or Flex-CD offers the perfect
investment capability 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 any unanticipated project delays.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIVERSIFIED PORTFOLIO, CONTINUED
STATEMENT OF NET ASSETS -- JUNE 30, 1999
(SHOWING PERCENTAGE OF NET ASSETS)
YIELD AT
PAR TIME OF AMORTIZED
VALUE DESCRIPTION PURCHASE DUE DATE COST
- - - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DISCOUNTED GOVERNMENT SECURITIES -- 21.64%
$4,254,000 Student Loan Marketing Assoc.-Disc. Note 4.87% 07/02/99 $ 4,253,435
5,000,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.86% 07/08/99 4,995,450
5,000,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.88% 07/09/99 4,994,756
2,500,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.95% 07/09/99 2,497,333
4,971,000 Student Loan Marketing Assoc.-Disc. Note 4.96% 07/09/99 4,965,620
5,000,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.83% 07/28/99 4,982,338
5,000,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.84% 08/09/99 4,974,488
5,000,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.87% 08/10/99 4,973,944
3,133,000 Federal National Mtge. Assoc.-Disc. Note 4.93% 08/13/99 3,115,000
4,600,000 Federal National Mtge. Assoc.-Disc. Note 4.88% 08/20/99 4,570,100
7,500,000 Fed. Home Loan Mtge Corp.-Disc. Note 4.86% 08/31/99 7,440,144
--------------------
TOTAL (cost -- $51,762,608) $51,762,608
--------------------
COUPON SECURITIES -- 38.94%
$3,213,000 Federal National Mtge. Assoc., 6.45% 5.07% 07/01/99 $ 3,213,000
2,000,000 Federal National Mtge. Assoc., 6.07% 4.83% 07/01/99 2,000,000
5,000,000 Federal National Mtge. Assoc., 5.48% 5.00% 07/09/99 5,000,408
1,000,000 Federal National Mtge. Assoc., 5.91% 5.04% 07/15/99 1,000,324
5,000,000 Federal Home Loan Bank, 5.54% 4.88% 07/15/99 5,001,125
4,000,000 Federal National Mtge. Assoc., 5.90% 4.85% 07/19/99 4,002,012
10,000,000 Student Loan Marketing Assoc., Variable Rate, 5.11%* 4.87% 08/02/99 9,999,343
5,000,000 Fed. Home Loan Mtge Corp., 5.544% 4.94% 08/13/99 5,003,277
5,000,000 Federal Home Loan Bank, 5.545% 5.13% 08/18/99 5,002,063
2,000,000 Federal National Mtge. Assoc., 6.00% 4.98% 08/19/99 2,002,593
8,000,000 Fed. Home Loan Mtge Corp., 6.13% 4.89% 08/19/99 8,012,511
1,000,000 Federal Farm Credit Bank, 5.50% 4.88% 09/01/99 1,000,997
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.24%* 4.98% 09/16/99 4,998,512
2,500,000 Federal National Mtge. Assoc., 5.08% 4.84% 09/24/99 2,501,289
1,000,000 Federal Home Loan Bank, 6.035% 4.96% 09/27/99 1,002,471
1,000,000 Federal National Mtge. Assoc., 5.81% 4.99% 10/01/99 1,001,969
1,000,000 Federal National Mtge. Assoc., 6.07% 4.83% 10/18/99 1,003,565
2,000,000 Student Loan Marketing Assoc., Variable Rate, 5.29%* 5.00% 10/21/99 2,000,000
1,138,000 Federal National Mtge. Assoc., 8.35% 4.84% 11/10/99 1,151,951
5,000,000 Student Loan Marketing Assoc., Variable Rate, 5.54%* 5.09% 01/20/00 4,999,891
1,500,000 Federal National Mtge. Assoc., 5.43% 5.10% 01/27/00 1,502,708
3,000,000 Federal National Mtge. Assoc., 5.04% 5.32% 02/23/00 2,994,482
3,000,000 Federal Home Loan Bank, 4.995% 5.25% 02/24/00 2,994,952
5,000,000 Federal Home Loan Bank, Variable Rate, 5.34%* 4.95% 03/24/00 5,000,000
2,500,000 Federal National Mtge. Assoc., 5.60% 5.39% 03/27/00 2,503,630
2,500,000 Fed. Home Loan Mtge Corp., Variable Rate, 5.39%* 4.86% 04/14/00 2,499,016
750,000 Federal National Mtge. Assoc., 5.00% 5.52% 04/21/00 746,898
2,000,000 Federal National Mtge. Assoc., 5.00% 5.50% 04/21/00 1,992,032
3,000,000 Federal Home Loan Bank, 5.625% 5.50% 06/02/00 3,003,256
------------------
TOTAL (cost -- $93,134,275) $93,134,275
------------------
*Denotes floating invesment with interest rate as of June 30, 1999.
</TABLE>
See accomoanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CERTIFICATES OF DEPOSIT -- 11.90%
<S> <C> <C> <C> <C>
$ 250,000 Citizens Bank, Sac City 5.13% 07/06/99 $250,000
2,500,000 First National Bank, Ames 4.90% 07/19/99 2,500,000
1,500,000 Peoples State Bank, Elkader 4.95% 07/19/99 1,500,000
2,000,000 First State Bank, Conrad 5.10% 07/26/99 2,000,000
1,000,000 Peoples State Bank, Elkader 5.00% 08/02/99 1,000,000
500,000 Community First National Bank, Decorah 5.10% 08/06/99 500,000
250,000 Ft. Madison Bank & Tr, Ft. Madison 6.00% 08/23/99 250,000
500,000 DeWitt Bank & Trust, DeWitt 5.10% 08/23/99 500,000
500,000 American Bank, LeMars 5.05% 08/25/99 500,000
2,000,000 First State Bank, Conrad 5.10% 08/27/99 2,000,000
750,000 DeWitt Bank & Trust, DeWitt 5.10% 08/30/99 750,000
750,000 DeWitt Bank & Trust, DeWitt 5.10% 09/07/99 750,000
500,000 First American Bank, Ames 5.80% 09/20/99 500,000
500,000 American State Bank, Sioux Center 5.25% 09/21/99 500,000
500,000 Citizens Bank, Sac City 5.15% 10/08/99 500,000
500,000 DeWitt Bank & Trust, DeWitt 5.35% 10/13/99 500,000
500,000 St. Ansgar State Bank, St. Ansgar 5.15% 10/18/99 500,000
250,000 First State Bank, Huxley 5.15% 10/18/99 250,000
100,000 Ackley State Bank, Ackley 5.20% 10/18/99 100,000
500,000 American State Bank, Sioux Center 5.15% 10/20/99 500,000
1,000,000 DeWitt Bank & Trust, DeWitt 5.29% 10/22/99 1,000,000
1,000,000 Union State Bank, Winterset 5.40% 10/22/99 1,000,000
250,000 Hardin County Savings Bank, Eldora 5.00% 10/22/99 250,000
250,000 State Savings Bank, Baxter 5.35% 10/25/99 250,000
500,000 American Bank, LeMars 5.10% 11/05/99 500,000
600,000 First State Bank, Ida Grove 5.13% 11/30/99 600,000
1,000,000 Union State Bank, Monona 5.25% 12/07/99 1,000,000
500,000 Peoples Bank & Trust, Rock Valley 5.00% 12/15/99 500,000
1,000,000 Peoples Savings Bank, Elma 5.40% 12/20/99 1,000,000
1,000,000 First American Bank, Ames 5.20% 01/28/00 1,000,000
500,000 Premier Bank, Rock Valley 5.25% 01/28/00 500,000
250,000 Ft. Madison Bank & Trust, Ft. Madison 5.20% 02/18/00 250,000
500,000 Union State Bank, Winterset 5.20% 02/22/00 500,000
500,000 American Bank, LeMars 5.15% 02/22/00 500,000
2,000,000 St. Ansgar State Bank, St. Ansgar 5.38% 03/07/00 2,000,000
1,000,000 Hartford-Carlisle Savings Bank, Carlisle 5.50% 03/16/00 1,000,000
500,000 Peoples Bank & Trust, Rock Valley 5.38% 03/23/00 500,000
250,000 Citizens Bank, Sac City 5.38% 04/04/00 250,000
--------------
TOTAL (cost -- $28,450,000) $28,450,000
--------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 26.97%
$32,258,000 Merrill Lynch, Repurchase Agreement 5.00% 07/01/99 $32,258,000
32,257,000 Warburg, Repurchase Agreement 4.80% 07/01/99 32,257,000
---------------
TOTAL (cost -- $64,515,000) $64,515,000
---------------
TOTAL INVESTMENTS -- 99.45% (cost -- $237,861,883) $237,861,883
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- .55%
(Includes $53,338 payable to IMG and $964,126
dividends payable to unitholders) $1,327,370
--------------
NET ASSETS -- 100%
Applicable to 239,189,253 outstanding units $239,189,253
==============
NET ASSET VALUE: $1.00
==============
Offering and redemption price per unit ($239,189,253
divided by 239,189,253 units outstanding)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST -- DIRECT GOVERNMENT OBLIGATION PORTFOLIO
STATEMENT OF NET ASSETS -- JUNE 30, 1999
(SHOWING PERCENTAGE OF NET ASSETS)
- -----------------------------------------------------------------------------------------------------------------------------------
Yield at
Time of Amortized
Par Value Description Purchase Due Date Cost
COUPON SECURITIES -- 6.25%
<S> <C> <C> <C> <C>
$2,000,000 U. S. Treasury Note, 6.375% 4.72% 07/15/99 $2,001,230
--------------------
TOTAL (cost -- $2,001,230) $2,001,230
--------------------
REPURCHASE AGREEMENTS (collateralized by U.S. Govt. securities) -- 91.97%
$29,460,000 Warburg, Repurchase Agreement 4.80% 07/01/99 $29,460,000
--------------------
TOTAL (cost -- $29,460,000) $29,460,000
--------------------
TOTAL INVESTMENTS -- 98.22% (cost -- $31,461,230) $31,461,230
EXCESS OF OTHER ASSETS OVER TOTAL LIABILITIES -- 1.78%
(Includes $3,963 payable to IMG and $105,753
dividends payable to unitholders) $ 569,302
--------------------
NET ASSETS -- 100%
Applicable to 32,030,532 outstanding units $32,030,532
====================
NET ASSET VALUE: $1.00
====================
Offering and redemption price per unit ($32,030,532
divided by 32,030,532 units outstanding)
</TABLE>
<PAGE>
FINANCIAL STATEMENTS
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Direct Government
Diversified Portfolio Obligation Portfolio
<S> <C> <C>
----------------------- ------------------------
INVESTMENT INCOME:
Interest $9,770,961 $1,641,227
----------------------- ------------------------
EXPENSES:
Investment advisory and
program support fees 469,446 49,491
Custody and administrative fees 422,745 107,230
Distribution fees 192,790 32,994
Other fees and expenses 57,837 9,898
----------------------- ------------------------
Total Expenses 1,142,818 199,613
----------------------- ------------------------
NET INVESTMENT INCOME $8,628,143 $1,441,614
======================= ========================
</TABLE>
<TABLE>
<CAPTION>
IOWA SCHOOLS JOINT INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Direct Government
Diversified Portfolio Obligation Portfolio
1999 1998 1999 1998
----------------------- ------------------- ------------------------ -------------------
From Investment Activities:
Net investment income
distributed to unitholders $8,628,143 $8,979,423 $1,441,614 $1,496,749
======================= =================== ======================== ===================
From Unit Transactions:
(at constant net asset value
of $1 per unit)
Units sold $1,189,865,150 $1,161,628,825 $44,154,864 $29,707,895
Units issued in reinvestment
of dividends from net
investment income 8,628,143 8,979,423 1,441,614 1,496,749
Units redeemed (1,165,231,192) (1,159,932,537) (40,496,767) (34,253,804)
--------------------- ------------------- ------------------------ -------------------
Net increase (decrease) in net assets
derived from unit transactions 33,262,101 10,675,711 5,099,711 (3,049,160)
Net assets at beginning of period 205,927,152 195,251,441 26,930,821 29,979,981
---------------------- ------------------- ------------------------ -------------------
Net assets at end of period $239,189,253 $205,927,152 $32,030,532 $26,930,821
====================== =================== ======================== ===================
</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, 1999 1998 1997 1996 1995
- - -
- -------------------------------------------------------------------------------------
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIVERSIFIED PORTFOLIO
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.00 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income 0.045 0.051 0.049 0.051 0.049
Dividends Distributed (0.045) (0.051) (0.049) (0.051) (0.049)
--------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.54% 5.06% 4.87% 5.09% 4.86%
Ratio of Expenses to
Average Net Assets 0.59% 0.60% 0.60% 0.60% 0.59%
Ratio of Net Income to
Average Net Assets 4.54% 5.06% 4.87% 5.09% 4.86%
Net Assets,
End of Period (000 Omitted) $239,189 $205,927 $195,251 $171,554 $164,119
<CAPTION>
SELECTED DATA FOR A UNIT OF EACH
PORTFOLIO OUTSTANDING THROUGH
EACH PERIOD ENDED JUNE 30, 1999 1998 1997 1996 1995
- - -
- -------------------------------------------------------------------------------------
IOWA SCHOOLS JOINT INVESTMENT TRUST
DIRECT GOVERNMENT OBLIGATION PORTFOLIO
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net Investment Income 0.044 0.050 0.048 0.050 0.048
Dividends Distributed (0.044) (0.050) (0.048) (0.050) (0.048)
--------------------------------------------------------
Net Asset Value,
End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total Return 4.39% 4.98% 4.77% 5.01% 4.81%
Ratio of Expenses to
Average Net Assets 0.60% 0.61% 0.60% 0.60% 0.59%
Ratio of Net Income to
Average Net Assets 4.39% 4.98% 4.77% 5.01% 4.81%
Net Assets,
End of Period (000 Omitted) $ 32,031 $ 26,931 $ 29,980 $ 22,722 $ 30,482
See accompanying notes to financial statements.
</TABLE>
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 and Program Support Provider.
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of net investment income
during the period. Actual results could differ from those estimates.
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.
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, 1999, the
securities purchased under overnight agreements to resell were
collateralized by government agency securities with market values of
$65,819,476 and $30,050,051 for the Diversified Portfolio and the Direct
Government Obligation Portfolio, respectively.
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.
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 .100 percent of the average daily net asset value of
the Diversified Portfolio for program support fees. For the year ended June
30, 1999, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $469,446 and $49,491, 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONT.
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, 1999, the Diversified Portfolio and the Direct Government Obligation
Portfolio paid $422,745 and $107,230, respectively to Norwest for services
provided. Under a distribution plan, the sponsoring association receives an
annual fee of .100 percent of the daily net asset value of the portfolios.
For the year ended June 30, 1999, the Diversified Portfolio and the Direct
Government Obligation Portfolio paid $192,790 and $32,994 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 $14,442,323,406 and
$7,818,435,094 respectively for the year ended June 30, 1999. Proceeds from
maturities of securities for the Diversified Portfolio and Direct
Government Obligation Portfolio aggregated $14,408,937,772 and
$7,814,006,000 respectively for the year ended June 30, 1999.
<PAGE>
REQUIRED SUPPLEMENTARY INFORMATION
Year 2000 Issues (Unaudited)
Iowa Schools Joint Investment Trust (ISJIT) has addressed year 2000 issues
relating to computer systems and other electronic equipment. The year 2000
problem is the result of operational design shortcomings in computer systems and
other electronic systems. As these systems execute instructions stored in
memory, they may make calculation or logical comparisons utilizing information
about dates. The way dates are represented in some systems could adversely
affect the execution of these instructions, resulting in system malfunctions.
The four stages necessary to implement year 2000 compliant systems are:
oAwareness Stage - Establishing a budget and project plan for dealing with the
year 2000 issue.
oAssessment Stage - Idenitfying all systems and individual components for
which the year 2000 compliance work is needed.
oRemediation Stage - Making changes to systems and equipment.
oValidations/Testing Stage - Validating and testing the changes made during the
remediation stage.
As of June 30, 1999, ISJIT had completed all four stages by obtaining disclosure
statements from Investors Management Group (the Investment Advisor and Program
Support Provider) and Norwest Bank Iowa, N.A. (the Custodian and Administrator).
The disclosure statements covered year 2000 compliance for systems used to
process and record participant activity. In addition, contingency plans for
maintaining accurate records and processing transactions in the event of systems
failure were reviewed to assure Investors Management Group and Norwest Bank
Iowa, N.A. had addressed such issues. As of June 30, 1999, ISJIT has not
incurred and does not expect to incur further expenses related to the year 2000
issue.
Because of the unprecedented nature of the year 2000 issue, its effects and the
success of related remediation efforts will not be fully determinable until the
year 2000 and thereafter. No assurance can be made that ISJIT will be year 2000
ready or that parties with whom ISJIT does business will be year 2000 ready.
<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, 1999, 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 five-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 audits.
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, 1999, 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 LLP
Des Moines, Iowa
July 23, 1999
<PAGE>
INVESTMENT ADVISOR
INVESTORS MANAGEMENT GROUP
2203 GRAND AVENUE
DES MOINES, IA 50312-5338
ooooo
CUSTODIAN AND ADMINISTRATOR
Norwest Bank Iowa, N.A.
666 Walnut, P.O. Box 837
Des Moines, IA 50304
ooooo
LEGAL COUNSEL
BRICK, GENTRY, BOWERS, SWARTZ, STOLTZE, SCHULING & LEVIS, P.C.
550 39th Street, Suite 200
Des Moines, IA 50312
ooooo
INDEPENDENT AUDITOR
KPMG PEAT MARWICK LLP
2500 Ruan Center
Des Moines, IA 50309
ooooo
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
