IAI Investment Funds I, Inc.
File No. 2-59115
SUPPLEMENT DATED JUNE 20, 2000
TO THE PROSPECTUS DATED APRIL 1, 2000
OF
IAI BOND FUND
(A PORTFOLIO OF IAI INVESTMENT FUNDS I, INC.)
PROPOSED COMBINATION WITH FEDERATED BOND FUND
(A PORTFOLIO OF FEDERATED INVESTMENT SERIES FUNDS, INC.)
On June 12, 2000, the Board of Directors of IAI Investment Funds I, Inc.
approved a transaction (the "Reorganization") in which IAI Bond Fund (the
"Fund") will be combined into Federated Bond Fund (the "Federated Fund"), a
portfolio of Federated Investment Series Funds, Inc. which is advised by a
subsidiary of Federated Investors, Inc. ("Federated") and which has investment
objectives and policies substantially similar to those of the Fund. The
Reorganization was proposed in conjunction with the sale by Investment Advisers,
Inc. ("IAI"), the investment adviser to the Fund, of its mutual fund advisory
business to Federated. On June 16, 2000 IAI and Federated reached a definitive
agreement covering such a sale.
In the Reorganization, Fund shareholders will receive, in exchange for their
Fund shares, Class A shares of the Federated Fund which have an equivalent net
asset value at the closing date. The Reorganization is expected to be tax-free
to Fund shareholders. In addition, Fund shareholders will not bear any of the
expenses of the Reorganization. After the Reorganization, Fund shareholders will
be permitted to purchase additional shares of the Federated Fund and of other
funds advised by subsidiaries of Federated without paying any front-end sales
loads.
The Reorganization will take place only if Fund shareholders approve it. The
Fund's Board of Directors has called a special meeting of Fund shareholders to
be held on September 8, 2000, at which shareholders will vote on the
Reorganization. Proxy materials for the special meeting will be mailed to
shareholders in July. These proxy materials will contain more complete
information concerning the Reorganization, and you should review them carefully
before casting your vote on the Reorganization. YOU DO NOT NEED TO TAKE ANY
ACTION REGARDING THE REORGANIZATION BEFORE YOU RECEIVE THESE PROXY MATERIALS. If
shareholders approve the Reorganization, the Reorganization is expected to be
completed shortly thereafter, assuming that other customary closing conditions
are satisfied.
Federated is one of the largest mutual fund companies in the United States,
managing over $125 billion in approximately 175 mutual funds and separate
accounts as of March 31, 2000. Federated, a publicly held company, was founded
in 1955 and is headquartered in Pittsburgh, Pennsylvania.
