<PAGE>
June 30, 1996
Dear Shareholder:
IAA TRUST GROWTH FUND, INC.
The net asset value of the Fund on June 30, 1996 was $18.88.
(WITHOUT SALES CHARGES)
<TABLE>
<S> <C> <C>
1 YEAR 5 YEARS 10 YEARS
- --------- --------- -----------
21.51% 11.83% 10.65%
</TABLE>
(CURRENT MAXIMUM SALES CHARGES DEDUCTED)
<TABLE>
<S> <C> <C> <C>
17.88% 11.14% 10.31%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested and the maximum sales charge was applied on initial investments.
The first half of calendar 1996 saw stocks continuing to advance despite
rising interest rates. For the six month period ended June 30, 1996, the S&P 500
had a total return of 10.07% and 25.80% for the 12 month period. The IAA Growth
Fund had total returns of 10.54% and 21.51%, respectively. According to Lipper,
the average growth fund posted returns of 10.08% and 22.20% over the same
periods.
The rise in interest rates that began in mid-February continued during the
second quarter as the level of the 30-year Treasury Notes rose from about 6.2%
in March to over 7% at the end of June. These same bonds yielded about 5.2% at
the end of 1995. Stronger than expected employment gains and retail sales have
caused many market pundits to assume the economy is much more robust than they
had originally thought. The strong economy could bring about an upsurge in
inflation which, in turn, could force the Federal Reserve to raise interest
rates. As recently as last week, the Federal Open Market Committee of the
Federal Reserve decided to leave interest rates unchanged because they felt that
the economy was not overheating. On July 5, 1996 employment reports showed much
stronger growth than anyone had anticipated. Bond prices declined sharply,
reflecting investor concern that the Fed had missed its chance to raise interest
rates.
The prospect that rates will be raised soon has forced investors to lessen
their hopes for expanded price earnings ratios. If interest rates stay at
current levels or go higher, a correction of around 15% would not be
unreasonable.
Cash has been pouring into mutual funds at more than double the pace of last
year with investors looking for returns similar to those reaped in 1995. The
level of new issues, also known as 'initial public offerings' or 'IPOs,' has
also increased to new records. IPOs are absorbing vast amounts of cash that
might otherwise be used to purchase existing stocks. Many are low-quality
companies with no earnings and poor prospects of such anytime soon. Investors
are still buying them in hope of a quick gain.
We started this year with about 15% cash in the portfolio. The cash was
worked down during the past six months by increasing sector weightings in
Health, Basic Industry, and Consumer Staples. We also had sharp advances in
several of our holdings and took partial profits to reposition ourselves in
issues that we felt had better appreciation potential. At the end of the period,
our cash holdings were almost 15% again. We are comfortable holding some cash
reserves in view of what we foresee in the near future.
IAA TRUST ASSET ALLOCATION FUND, INC.
The annualized total returns for the Fund for the period ended June 30, 1996,
were as follows:
(WITHOUT SALES CHARGES)
<TABLE>
<S> <C> <C>
1 YEAR 5 YEARS 10 YEARS
- --------- --------- -----------
14.74% 10.49% 8.90%
</TABLE>
(CURRENT MAXIMUM SALES CHARGES DEDUCTED)
<TABLE>
<S> <C> <C>
11.30% 9.83% 8.57%
</TABLE>
During the past year, the U.S. economy has been consistent only in confounding
most forecasters. During the second half of calendar year 1995, the economy
showed unexpected weakness. This was followed by unexpected strength in the
first half of 1996. The bond market was turbulent in reaction to the economic
surprises. The stock market, however, showed remarkable strength in the face of
economic uncertainty and bond market instability.
The stock market's strength was largely due to record money flows into
mutual funds. Strong profits also supported the market's rise. Interest rates,
whose decline has acted as a tailwind in propelling the stock market higher in
the second half of 1995, (as well as since the bull market began in 1982)
reversed direction in 1996 and began acting as a drag on stock market momentum.
The stock market is facing a precarious situation. The market's rise has
been based on falling interest rates, rising corporate profits and record mutual
fund money flows. Interest rates have stopped falling and corporate profit
growth has slowed (particularly in the technology area). This has left the
market supported solely by rising mutual fund money flows. Recent data indicate
that this final pillar of support for the bull market may be breaking down as
mutual fund flows (although still strong) declined significantly in June.
The recent rise in interest rates has made bonds a more attractive
investment. Inflation remains moderate despite the strength in the U.S. economy.
Should inflation begin to accelerate, we believe that the Federal Reserve would
likely tighten monetary policy. We have increased the Fund's allocation on bonds
to 41% from 35% a year ago. The Fund's equity weighting has remained relatively
stable at 53% (vs. 52% a year ago) and cash has declined to 6% from 13%. Based
on our increasing concern regarding stock prices, we will look to decrease the
Fund's equity weighting while redeploying the assets in bonds and cash.
Over the past year, your Fund returned 14.74%. This slightly lagged the
Lipper Balanced Fund Index return of 15.52% due to a more conservative equity
weighting as well as a higher than average bond duration during the first
quarter of 1996. We expect the Fund's more conservative stock allocation and
extended bond duration to bolster returns in the coming year.
<PAGE>
IAA TRUST TAX EXEMPT BOND FUND, INC.
The annualized total returns for the Fund for the period ended June 30, 1996,
were as follows:
(WITHOUT SALES CHARGES)
<TABLE>
<S> <C> <C>
1 YEAR 5 YEARS 10 YEARS
- --------- --------- -----------
5.30% 5.95% 6.70%
</TABLE>
(CURRENT MAXIMUM SALES CHARGES DEDUCTED)
<TABLE>
<S> <C> <C>
2.12% 5.31% 6.37%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested and the maximum sales charge was applied on initial investments.
Although the Fund's income is exempt from Federal income tax, it may be subject
to state income taxation.
The general interest rate decline of 1995 reversed itself in 1996, due to
increasing signs of economic growth. This reversal moved the Bond Buyer 20 Index
from a yield of 5.97% this time last year, to a low of 5.33% mid-year, back to
5.97% as of June 27, 1996. The good news for some investors is that municipal
bonds have outperformed the treasury market over the past year. Several factors
influenced this performance. They include a diminishing supply picture coupled
with a resurgence of retail and institutional interest in higher-yielding
tax-exempts. Additionally, fears of major tax reform which plagued the market
for much of 1995 have abated.
Our decision to maintain the portfolio's duration at approximately the same
level it was this time last year benefited the Fund versus other funds as
interest rates declined in 1995. However, as interest rates rose during 1996,
the duration position did not help the Fund performance as reflected in the
Fund's total return for the year of 5.30%. In comparison, the Lehman Brothers
Municipal Bond Index had a total return of 6.64%. The Lehman Index has a higher
return because it contains an unmanaged list of long-term investment-grade
tax-exempt bonds. The Index does not take into account brokerage commissions or
other costs, may include bonds different from those in the Fund, and may pose
different risks than the Fund.
Going forward, a key determinant of the direction interest rates will take
over the course of the year will be the Federal Reserve's stance on controlling
inflation. Near-term economic indicators, including the Employment Cost Index,
second quarter GDP, and the next National Association of Purchasing Managers
survey will be key factors influencing the Fed's next moves. Municipal bonds
will continue to be influenced by the political debate on tax-reform as we move
closer to national elections. With this in mind, we will continue our strategy
of investing in high-quality bonds, while seeking the best possible return.
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
On January 31, the Federal Reserve's policy-making board lowered short-term
interest rates by 25 basis points. Markets remained quiet until the March 8 news
that February's employment was unexpectedly high. The Federal Reserve has since
left rates alone. However, a surprising June report stated that twice as many
jobs were added as economists expected. That report has left investors wondering
when the Federal Reserve will raise rates.
Fixed income investors have anticipated the effects of inflation by
demanding higher rates to compensate for the value that inflation might erode.
These higher rates can slow the economy, since higher borrowing costs tend to
discourage spending. Recently, this slowing effect was named, 'opportunistic
disinflation.' The theory suggests that when inflation is low, but above the
Federal Reserve's target, its policy should be to wait for a recession to help
cool the economy. Taken to this extreme, the theory seems to ignore the lagged
effects of monetary policy. Low unemployment and low inventory levels are a
troubling combination in an era when re-engineered companies have little room to
cut costs and the freedom to raise prices. We do not expect sustained inflation
since Federal Reserve Chairman Alan Greenspan is still an inflation hawk and
understands the lagged effect of his policies. We will shorten the average
maturity of the Fund to take advantage of the higher rates that will prevail if
the Federal Reserve takes action.
The average maturity of the Fund increased from 35 days on December 29,
1995, to 45 days on June 30, 1996. During the same period, the seven-day average
yield decreased from 4.93% to 4.49%. The decrease in yield is largely due to the
decreased supply of higher-quality, short-term instruments. This is the result
of corporations trying to lock in lower borrowing costs by issuing longer term
debt. As longer term rates have risen, this trend has begun to reverse.
Sincerely,
[A photograph of Ronald R. Warfield
appears here in the printed version]
/s/ Ronald R. Warfield
Ronald R. Warfield
President
<PAGE>
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS
IAA TRUST GROWTH FUND, INC.
PORTFOLIO CHANGES For the Year Ended June 30, 1996
MAJOR PURCHASES MAJOR SALES
Department 56, Inc. (1) Sun Microsystems, Inc.
SmithKline Beecham PLC, ADR (1) Cisco Systems (2)
Vishay Intertechnology, Inc. (1) Acclaim Entertainment, Inc. (2)
Phillips Electronics, N.V. (1) Pep Boys (2)
Wellman, Inc. (1) Toys-R-Us, Inc. (2)
Procter & Gamble Co. (1) Intel Corp.
Microsoft Corp. (1) Rubbermaid, Inc. (2)
International Business Machines Corp. (1) VeriFone, Inc. (2)
Ivax Corp. (1) Minnesota Mining & Mfg. (2)
(1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS June 30, 1996
PERCENT
VALUE OF FUND
---------- -----------
General Electric Co................................... $ 2,768,000 3.27%
Motorola, Inc. ....................................... 2,515,000 2.97
Intel Corp............................................ 2,350,000 2.77
Green Tree Financial Corp............................. 2,250,000 2.65
MBNA Corp. ........................................... 2,137,500 2.52
Travelers, Inc........................................ 2,053,125 2.42
Hewlett-Packard Co.................................... 1,992,500 2.35
GTE Corp.............................................. 1,969,000 2.32
Royal Dutch Petroleum Co., ADR........................ 1,968,000 2.32
DPL, Inc.............................................. 1,828,125 2.15
----------- -----
$21,831,250 25.74%
----------- -----
----------- -----
IAA TRUST ASSET ALLOCATION FUND, INC.
PORTFOLIO CHANGES For the Year Ended June 30, 1996
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
Tennessee Valley Authority, 5.980%, 04/01/36 (1) United State Treasury Notes (2)
Federal Home Loan Mortgage Corp., 6.500%, 06/15/06 (1) 4.750%, 2/15/97
Chemical Master Credit Card Trust, 5.980%, 09/15/08 (1) Sun Microsystems. Inc. (2)
Federal National Mortgage Assn. Notes, 7.060%, 11/02/05 (1) Chesapeake & Potomac Telephone
United States Treasury Notes, 6.875%, 05/15/06 (1) Wolverine World Wide (2)
Xerox Corp. (2)
Caterpiller, Inc. (2)
(1) New Holdings (2) Deletions
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS June 30, 1996
<S> <C> <C>
PERCENT
VALUE OF FUND
---------- -----------
Tennessee Valley Authority, 5.980%, 04/01/36............................ $ 498,125 4.94%
International American Devel. Bank, 8.875%, 06/01/09.................... 229,750 2.28
Bell of Pennsylvania, Putable Debentures, 8.350%, 12/15/30.............. 229,250 2.27
United States Treasury Notes, 7.250%, 05/15/04.......................... 207,364 2.06
United States Treasury Notes, 5.875%, 03/31/99.......................... 198,158 1.96
Federal Home Loan Mortgage Corp., 6.500%, 06/15/06...................... 197,500 1.96
Discover Credit Card Trust, 6.750%, 02/16/02............................ 196,250 1.95
Federal National Mortgage Association, 7.060%, 11/02/05................. 193,000 1.91
Chemical Master Credit Card Trust, 5.980%, 09/15/08..................... 185,065 1.84
Procter & Gamble Co..................................................... 181,250 1.80
---------- -----
$2,315,712 22.97%
---------- -----
---------- -----
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS
IAA TRUST TAX EXEMPT BOND FUND, INC.
PORTFOLIO CHANGES For the Year Ended June 30, 1996
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Texas A & M University Revenues Fin. System (1) Kaukauna Wisconsin Electric (2)
5.375%, 05/15/14 7.250%, 12/15/08
Denver, Colorado City & County (1) DuPage Water Commission, Illinois (2)
5.000%, 10/01/10 5.750%, 03/01/11
Fresno, California Massachusetts Bay Transit Authority (2)
Unified School District (1) 5.875%, 03/01/15
5.875%, 08/01/15 Pleasant Co. W.V. Pollution Control (2)
7.000%, 08/01/08
(1) New Holdings (2) Deletions
</TABLE>
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS June 30, 1996
<S> <C> <C>
PERCENT
VALUE OF FUND
---------- ----------
Wisconsin State Clean Water Revenue, 5.300%, 06/01/12................... $ 661,500 3.73%
Peru, Indiana Community School, 6.750%, 01/01/09........................ 580,938 3.28
Texas A & M University Revenues Fin. System, 5.375%, 05/15/14........... 573,000 3.23
Pennsylvania State Higher Education Revenue, 5.600%, 09/01/10........... 571,406 3.22
Cape Girardeau, Missouri Waterworks System, 7.450%, 03/01/05............ 568,125 3.20
State of Rhode Island Ref. General Obligation, 7.000%, 06/15/05......... 565,000 3.18
Louisville & Jefferson County, Met. Sewer Dist. Rev., 5.250%, 05/15/10.. 554,875 3.13
Connecticut State Unlimited Tax General Obligation, 5.400%, 03/15/08.... 548,625 3.09
Maricopa County School Dist. Arizona Unlimited, 6.400%, 07/01/06........ 541,875 3.05
Chicago, Illinois Water Revenue, 6.500%, 11/01/15....................... 533,125 3.01
---------- -----
$5,698,469 32.12%
---------- -----
---------- -----
</TABLE>
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
<TABLE>
<CAPTION>
TEN LARGEST HOLDINGS June 30, 1996
PERCENT
VALUE OF FUND
---------- -----------
<S> <C> <C>
Hewlett-Packard Corp., 5.36%, 08/29/96.................................. $ 1,497,727 4.45%
Schering Corp., 5.36%, 08/27/96......................................... 1,488,261 4.42
Norwest Corp., 5.32%, 08/01/96.......................................... 1,400,000 4.16
Province of Quebec, 5.32%, 09/16/96..................................... 1,384,070 4.11
CIT Group Holdings Inc., 5.35%, 07/25/96................................ 1,220,000 3.62
Assoc. Corp. of North America, 5.35%, 08/07/96.......................... 1,200,000 3.57
Philip Morris Cos., Inc., 5.30%, 07/22/96............................... 1,186,321 3.53
USAA Capital Corp., 5.37%, 08/23/96..................................... 1,041,699 3.09
Household Finance Corp., 5.36%, 08/22/96................................ 1,000,000 2.97
Federal National Mortgage Assn., 5.09%, 10/30/96........................ 982,892 2.92
----------- -----
$12,400,970 36.84%
----------- -----
----------- -----
</TABLE>
PORTFOLIO CHARACTERISTICS June 30, 1996
30 DAY AVERAGE YIELD: 4.40%
7 DAY AVERAGE YIELD: 4.49%
AVERAGE DAYS TO MATURITY: 45.01
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC.
<TABLE>
<S> <C> <C>
SHARES VALUE
--------- ---------
COMMON STOCKS -- 85.51%
BASIC INDUSTRY -- 6.20%
Engelhard Corp. ................ 50,000 $1,150,000
IMC Global, Inc. ............... 10,000 376,250
Newmont Mining Corp. ........... 20,000 987,500
Nucor Corp. .................... 24,000 1,215,000
Wellman, Inc. .................. 29,000 677,875
Weyerhaeuser Co. ............... 20,000 850,000
---------
5,256,625
---------
CAPITAL GOODS -- 7.76%
Deere & Co. .................... 20,400 816,000
General Electric Co. ........... 32,000 2,768,000
Hardinge, Inc. ................. 30,000 952,500
Philips Electronics N.V. ....... 15,000 489,375
York International, Inc. ....... 30,000 1,552,500
---------
6,578,375
---------
CONSUMER CYCLICAL -- 6.17%
Department 56, Inc.*............ 25,000 565,625
Ford Motor Co. ................. 30,000 971,250
Gentex Corp. ................... 35,700 696,150
Gymboree Corp. ................. 25,000 762,500
Titan Wheel International, Inc.. 35,000 560,000
Harley-Davidson, Inc. .......... 10,000 411,250
Wal-Mart Stores, Inc. .......... 50,000 1,268,750
---------
5,235,525
---------
CONSUMER SERVICES -- 1.82%
American Greetings Corp. ....... 10,000 273,750
First Data Corp. ............... 16,000 1,274,000
---------
1,547,750
---------
CONSUMER STAPLES -- 7.96%
American Stores Co. ............ 40,000 1,650,000
Archer-Daniels-Midland Co. ..... 73,500 1,405,688
PepsiCo, Inc. .................. 50,000 1,768,750
Procter & Gamble Co. ........... 10,000 906,250
Unilever N.V. .................. 7,000 1,015,875
---------
6,746,563
---------
ENERGY -- 9.28%
Chevron Corp. .................. 25,000 1,475,000
Exxon Corp. .................... 20,000 1,737,500
Phillips Petroleum Co. ......... 40,000 1,675,000
Royal Dutch Petroleum Co.,
ADR............................. 12,800 1,968,000
Unocal Corp. ................... 30,000 1,012,500
---------
7,868,000
---------
SHARES VALUE
--------- ---------
FINANCE -- 11.28%
American International Group,
Inc. ......................... 15,000 $1,479,375
Federal National Mortgage
Assoc. ....................... 49,000 1,641,500
Green Tree Financial Corp. ..... 72,000 2,250,000
MBNA Corp. ..................... 75,000 2,137,500
Travelers, Inc. ................ 45,000 2,053,125
---------
9,561,500
---------
HEALTH -- 11.41%
Columbia/HCA Healthcare Corp. .. 6,000 320,250
Elan Corp., PLC*................ 24,000 1,371,000
Ivax Corp. ..................... 30,000 476,250
Johnson & Johnson............... 36,000 1,782,000
Merck & Co. .................... 25,000 1,615,625
Mylan Laboratories, Inc. ....... 80,000 1,380,000
SmithKline Beecham PLC, ADR..... 25,000 1,359,375
U.S. Healthcare, Inc. .......... 25,000 1,375,000
---------
9,679,500
---------
TECHNOLOGY -- 13.09%
Hewlett-Packard Co. ............ 20,000 1,992,500
Intel Corp. .................... 32,000 2,350,000
International Business Machines
Corp. ........................ 8,000 792,000
Microsoft Corp.*................ 10,000 1,201,250
Motorola, Inc. ................. 40,000 2,515,000
Sun Microsystems, Inc.*......... 14,000 824,250
Vishay Intertechnology, Inc. ... 47,000 1,110,375
Xilinx, Inc.*................... 10,000 317,500
----------
11,102,875
----------
TRANSPORTATION -- 2.34%
Burlington Northern Corp. ...... 10,000 808,750
Federal Express Corp. .......... 6,000 492,000
Illinois Central Corp. ......... 24,000 681,000
---------
1,981,750
---------
UTILITIES -- 8.20%
A T & T Corp. .................. 28,000 1,736,000
DPL, Inc. ...................... 75,000 1,828,125
GTE Corp. ...................... 44,000 1,969,000
NICOR, Inc. .................... 50,000 1,418,750
---------
6,951,875
---------
TOTAL COMMON STOCKS
(cost $46,614,589) ............ 72,510,338
----------
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ---------
<S> <C> <C>
COMMERCIAL PAPER -- 12.23%
Beneficial Corp.
5.29%, 07/01/96 ............... $1,042,000 $1,042,000
General Electric Capital Corp.
5.32%, 07/03/96 ............... 488,000 488,000
General Electric Capital Corp.
5.32%, 07/09/96 ............... 173,000 173,000
Commercial Credit Co.
5.35%, 07/18/96 ............... 352,000 352,000
Ford Motor Credit Co.
5.37%, 07/23/96 ............... 500,000 500,000
Ford Motor Credit Co.
5.39%, 07/25/96 ............... 1,200,000 1,200,000
American Express Credit Corp.
5.37%, 08/01/96 ............... 2,910,000 2,910,000
AVCO Financial Services, Inc.
5.40%, 08/01/96 ............... 1,160,000 1,160,000
Norwest Corp.
5.37%, 08/05/96 ............... 444,000 444,000
Schering Corp.
5.36%, 08/27/96 ............... 299,000 296,462
Hewlett-Packard Corp.
5.36%, 08/29/96 ............... $ 189,000 $ 187,340
PRINCIPAL
AMOUNT VALUE
--------- ---------
Coca-Cola Co.
5.34%, 09/03/96 ............... 1,267,000 1,254,972
Toyota Motor Credit Co.
5.38%, 10/01/96 ............... 370,000 364,913
----------
TOTAL COMMERCIAL PAPER
(cost $10,372,687) ............ 10,372,687
----------
SHARES
---------
OTHER SHORT-TERM INVESTMENTS -- 2.18%
MONEY MARKET FUND
(cost $1,849,941)
Federated Prime Obligation
Fund .......................... 1,849,941 1,849,941
----------
TOTAL INVESTMENTS -- 99.92%
(cost $58,837,217) ............ 84,732,966
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.08% ... 67,477
-----------
NET ASSETS -- 100.00% .......... $84,800,443
-----------
-----------
* Non-income producing security
</TABLE>
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
--------- ---------
<S> <C> <C>
COMMON STOCKS -- 52.71%
BASIC INDUSTRY -- 2.57%
Learonal, Inc. ................. 3,000 $ 75,000
Mead Corp. ..................... 1,200 62,250
Potash Corp. of Saskatchewan.... 1,000 66,250
Wellman, Inc. .................. 2,400 56,100
---------
259,600
---------
CAPITAL GOODS -- 3.34%
Case Corp. ..................... 1,000 48,000
Fluor Corp. .................... 700 45,763
General Electric Co. ........... 900 77,850
Illinois Tool Works, Inc. ...... 1,500 101,438
Philips Electronics N.V. ....... 1,950 63,619
---------
336,670
---------
CONSUMER CYCLICAL -- 4.61%
Chrysler Corp. ................. 1,000 62,000
Department 56, Inc.*............ 3,000 67,875
Fleetwood Enterprises, Inc. .... 2,400 74,400
Harley-Davidson, Inc. .......... 1,600 65,800
Magna International, Inc., Cl.
A............................. 1,500 69,000
Planet Hollywood Int'l, Inc.,
Cl. A*........................ 1,000 27,000
Titan Wheel International, Inc.. 3,000 48,000
Wal-Mart Stores, Inc. .......... 2,000 50,750
---------
464,825
---------
CONSUMER SERVICES -- 0.72%
Tribune Co. .................... 1,000 72,625
---------
CONSUMER STAPLES -- 6.05%
Albertson's, Inc. .............. 2,900 119,987
Coca-Cola Co. .................. 2,400 117,300
Gillette Co. ................... 2,000 124,750
Procter & Gamble Co. ........... 2,000 181,250
Walgreen Co. ................... 2,000 67,000
---------
610,287
---------
ENERGY -- 5.82%
Atlantic Richfield Co. ......... 700 82,950
Exxon Corp. .................... 2,000 173,750
Repsol S.A., ADR................ 2,100 72,975
Schlumberger, Ltd. ............. 600 50,550
Williams Cos., Inc. ............ 2,800 138,600
YPF Sociedad Anonima, ADS....... 3,000 67,500
---------
586,325
---------
FINANCE -- 6.96%
Bank of New York................ 1,500 76,875
BankAmerica Corp. .............. 1,000 75,750
Citicorp........................ 1,950 161,119
Meditrust, Inc. ................ 2,700 90,113
National Golf Properties, Inc... 2,500 60,625
Norwest Corp. .................. 3,400 118,575
Travelers, Inc. ................ 2,599 118,579
---------
701,636
---------
HEALTH -- 7.69%
Bristol-Myers Squibb Co. ....... 1,000 90,000
Columbia/HCA Healthcare Corp. .. 2,700 144,112
SHARES VALUE
--------- ---------
Elan Corp., PLC*................ 1,600 $ 91,400
ESC Medical Systems, Ltd.*...... 450 12,713
Healthdyne, Inc.*............... 5,000 65,000
Integrated Health Services, Inc. 2,700 64,125
Johnson & Johnson............... 2,400 118,800
Mylan Laboratories, Inc. ....... 3,000 51,750
US Healthcare, Inc. ............ 2,500 137,500
---------
775,400
---------
TECHNOLOGY -- 9.50%
AirTouch Communications,
Inc.*........................... 1,500 42,375
Intel Corp. .................... 800 58,750
Kemet Corp.*.................... 4,000 80,000
Lam Research Corp.*............. 2,000 52,000
Lucent Technologies, Inc.*...... 1,000 37,875
Microsoft Corp.*................ 500 60,062
Motorola, Inc. ................. 2,000 125,750
Oracle Corp. ................... 4,125 162,680
Raytheon Co. ................... 2,200 113,575
Sun Microsystems, Inc. ......... 800 47,100
Tektronix, Inc. ................ 2,500 111,875
Ultratech Stepper, Inc.*........ 3,500 65,625
---------
957,667
---------
TRANSPORTATION -- 1.55%
Federal Express Corp.*.......... 1,900 155,800
---------
UTILITIES -- 3.90%
AT & T Corp. ................... 1,200 74,400
BellSouth Corp. ................ 1,500 63,562
CILCORP, Inc. .................. 1,200 51,300
Florida Progress Corp. ......... 1,200 41,700
Pacific Telesis Group, Inc. .... 1,500 50,625
Texas Utilities, Inc. .......... 1,000 42,750
Wisconsin Energy Corp. ......... 2,400 69,300
---------
393,637
---------
TOTAL COMMON STOCKS
(cost $3,731,901) ............. 5,314,472
---------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ---------
<S> <C> <C>
BONDS AND NOTES -- 41.03%
AUTO -- 1.11%
General Motors Acceptance Corp.
8.875%, 06/01/10............... $ 100,000 111,750
---------
BANKING -- 3.31%
International American
Development Bank
9.500%, 10/15/97............... 100,000 104,125
International American
Development Bank
8.875%, 06/01/09............... 200,000 229,750
---------
333,875
---------
BEVERAGES -- 0.98%
Coca-Cola Co.
6.625%, 10/01/02............... 100,000 99,125
---------
CHEMICALS -- 0.99%
DuPont (E.I.) DeNemours & Co.
6.750%, 10/15/02............... 100,000 99,875
---------
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ---------
<S> <C> <C>
BONDS AND NOTES (CONTINUED)
FINANCE COMPANIES -- 4.39%
Chemical Master Credit Card
Trust
5.980%, 09/15/08............... $ 200,000 $ 185,065
Discover Credit Card Trust
6.750%, 02/16/02............... 200,000 196,250
Thrift Financial Corp.
8.550%, 05/20/18............... 58,961 61,056
---------
442,371
---------
TELEPHONE UTILITY -- 4.99%
Bell of Pennsylvania
Putable Debentures
8.350%, 12/15/30............... 200,000 229,250
Chesapeake & Potomac Telephone Co.
of Virginia Debentures
8.375%, 10/01/29............... 100,000 113,375
New Jersey Bell Telephone Co.
7.850%, 11/15/29............... 150,000 160,687
---------
503,312
---------
U.S. GOVERNMENT AGENCIES -- 14.41%
Federal Farm Credit Bank
5.800%, 12/18/00............... 100,000 96,016
Federal Home Loan Bank
6.830%, 06/07/01............... 100,000 98,500
Federal Home Loan Bank
8.000%, 09/20/04............... 100,000 102,500
Federal Home Loan Mortgage Corp.
10.750%, 07/01/00.............. 4,815 4,815
Federal Home Loan Mortgage Corp.
8.750%, 04/01/01............... 42,057 42,899
Federal Home Loan Mortgage Corp.
10.150%, 04/15/06.............. 28,788 29,975
Federal Home Loan Mortgage Corp.
6.500%, 06/15/06............... 200,000 197,500
Federal National Mortgage
Association
7.060%, 11/02/05............... 200,000 193,000
Government National Mortgage
Association Pool #60721
9.750%, 04/15/98............... 3,525 3,768
Government National Mortgage
Association Pool #30111
9.000%, 05/15/09............... 18,586 19,469
Government National Mortgage
Association Pool #23653
9.500%, 06/15/09............... 14,101 15,080
PRINCIPAL
AMOUNT VALUE
--------- ---------
Government National Mortgage
Association Pool #32147
9.500%, 08/15/09............... $ 13,916 $ 14,881
Government National Mortgage
Association Pool #161621
9.000%, 07/15/16............... 130,261 136,448
Tennessee Valley Authority
5.980%, 04/01/36............... 500,000 498,125
---------
1,452,976
---------
U.S. GOVERNMENT OBLIGATIONS -- 10.85%
United States Treasury Notes
5.875%, 03/31/99............... 200,000 198,158
United States Treasury Notes
6.750%, 06/30/99............... 100,000 101,238
United States Treasury Notes
6.875%, 07/31/99............... 100,000 101,553
United States Treasury Notes
6.375%, 08/15/02............... 100,000 99,218
United States Treasury Notes
7.250%, 05/15/04............... 200,000 207,364
United States Treasury Notes
7.250%, 08/15/04............... 100,000 103,644
United States Treasury Notes
6.875%, 05/15/06............... 150,000 151,641
United States Treasury Bonds
11.625%, 11/15/04.............. 100,000 131,304
---------
1,094,120
---------
TOTAL BONDS AND NOTES
(cost $4,019,327) ............ 4,137,404
---------
</TABLE>
<TABLE>
<S> <C> <C>
SHARES VALUE
--------- ---------
SHORT-TERM INVESTMENTS -- 5.84%
MONEY MARKET FUNDS
(cost $588,589)
Dreyfus Money Market Fund....... 153,589 153,589
Federated Prime Obligation
Fund........................... 453,000 435,000
-----------
588,589
-----------
TOTAL INVESTMENTS -- 99.58%
(cost $8,339,817) ............. 10,040,465
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.42% ... 42,481
-----------
NET ASSETS -- 100.00% .......... $10,082,946
-----------
-----------
* Non-income producing security
</TABLE>
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ---------
<S> <C> <C>
MUNICIPAL BONDS
(TAX EXEMPT) -- 95.89%
ARIZONA -- 5.93%
Bullhead City Arizona Parkway Revenue
6.100%, 01/01/07 ............. $ 250,000 $ 250,938
Maricopa County School District #93
Arizona Unlimited Tax General Obligation
6.400%, 07/01/06 ............. 500,000 541,875
Salt River Project Arizona Agriculture
Improvement & Power District Electric
System Revenue
5.625%, 01/01/06 ............. 250,000 258,438
---------
1,051,251
---------
CALIFORNIA -- 8.56%
California State Public Works Board
Lease Revenue
5.200%, 12/01/09 ............. 500,000 473,125
City of Fresno California
Sewer System Revenue
6.250%, 09/01/14 ............. 250,000 266,562
Fresno, California
Unified School District,
General Obligation
5.875%, 08/01/15 ............. 275,000 273,969
Los Angeles California
Wastewater
System Revenue
6.000%, 11/01/14 ............. 500,000 505,000
---------
1,518,656
---------
COLORADO -- 2.64%
Denver, Colorado City & County
General Obligation
5.000%, 10/01/10 ............. 500,000 467,500
---------
CONNECTICUT -- 3.09%
Connecticut State Unlimited Tax
General Obligation
5.400%, 03/15/08 ............. 550,000 548,625
---------
FLORIDA -- 2.91%
Port St. Lucie, Florida
Utility System Revenue
5.900%, 09/01/09 ............. 500,000 516,250
---------
ILLINOIS -- 16.28%
Chicago, Illinois O'Hare
International Airport Revenue
5.000%, 01/01/16 ............. 500,000 443,125
Chicago, Illinois Water Revenue
6.500%, 11/01/15 ............. 500,000 533,125
Illinois State Sales Tax Revenue
5.400%, 06/15/13 ............. 550,000 517,000
Illinois State Toll Highway
Authority Revenue, Series A
6.300%, 01/01/12 ............. 275,000 291,156
Northwest Suburban Municipal
Joint Action Water Agency
Illinois Contract Revenue
6.450%, 05/01/07 ............. 400,000 431,500
PRINCIPAL
AMOUNT VALUE
--------- ---------
Northwest Water Commission
Illinois, Cook & Lake Revenue
5.000%, 05/01/13 ............. $ 500,000 $ 455,625
Sangamon County Illinois Tax
General Obligation
6.500%, 03/01/08 ............. 200,000 217,750
---------
2,889,281
---------
INDIANA -- 3.27%
Peru, Indiana Community School
Corp. Revenue
6.750%, 01/01/09 ............. 550,000 580,938
---------
KENTUCKY -- 3.13%
Louisville & Jefferson County
Metropolitan Sewer District
Revenue, Series A
5.250%, 05/15/10 ............. 575,000 554,875
---------
MASSACHUSETTS -- 2.91%
Massachusetts State Water
Resource Authority Revenue
6.000%, 11/01/08 ............. 500,000 515,625
---------
MISSISSIPPI -- 1.46%
Mississippi State Unlimited
General Obligation, Series B
5.900%, 11/15/11 ............. 250,000 259,062
---------
MISSOURI -- 3.20%
Cape Girardeau, Missouri Waterworks
System Revenue
7.450%, 03/01/05 ............. 500,000 568,125
---------
NEBRASKA -- 1.70%
Grand Island, Nebraska Sewer
Project Revenue
5.850%, 04/01/08 ............. 200,000 205,000
Nebraska Public Power District Revenue
5.400%, 01/01/10 ............. 100,000 97,250
---------
302,250
---------
NEVADA -- 5.04%
Clark County, Nevada School District
General Obligation
5.250%, 06/01/07 ............. 500,000 493,750
Henderson, Nevada Water and
Sewer Unlimited Tax General
Obligation 5.375%,
06/01/07 ..................... 400,000 400,500
---------
894,250
---------
NEW YORK -- 2.61%
New York State Dormitory Authority
Revenue
5.500%, 07/01/12 ............. 500,000 463,125
---------
NORTH CAROLINA -- 1.53%
North Carolina East Municipal Power
Agency System Revenue
7.000%, 01/01/08 ............. 250,000 270,625
---------
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC. (CONTINUED)
<TABLE>
<S> <C> <C>
PRINCIPAL
AMOUNT VALUE
--------- ---------
MUNICIPAL BONDS (CONTINUED)
OHIO -- 2.78%
Montgomery County, Ohio
Sewer System Revenue
5.600%, 09/01/11 ............. $ 500,000 $ 493,125
---------
PENNSYLVANIA -- 6.04%
Pennsylvania Intergovernmental
Corp.
Authority, Special Tax Revenue
5.450%, 06/15/08 ............. 500,000 499,375
Pennsylvania State Higher
Education
Revenue Bonds, Series A
5.600%, 09/01/10 ............. 575,000 571,406
---------
1,070,781
---------
RHODE ISLAND -- 3.18%
State of Rhode Island Refunding
General Obligation
7.000%, 06/15/05 ............. 500,000 565,000
---------
TEXAS -- 10.26%
Austin, Texas Limited Tax
General Obligation
7.250%, 09/01/03 ............. 350,000 395,937
Bexar County, Texas
Detention Facilities Limited
Tax
General Obligation
5.750%, 06/15/10 ............. 500,000 500,625
Garland, Texas Limited Tax
General Obligation
5.800%, 08/15/12 ............. 350,000 351,750
Texas A&M University Revenues
Financing System
5.375%, 05/15/14 ............. 600,000 573,000
---------
1,821,312
---------
PRINCIPAL
AMOUNT VALUE
--------- ---------
WASHINGTON -- 4.08%
Public Utility District #1 of
Chelan County, Washington
Revenue
5.250%, 06/01/13 ............. $ 500,000 $ 448,125
Washington Public Power Supply
System, Nuclear Project #1,
Refunding Revenue, 1990-C
7.625%, 07/01/01 ............. 250,000 275,937
---------
724,062
---------
WISCONSIN -- 5.29%
Brookfield, Wisconsin Unlimited Tax
Corp. General Obligation
6.900%, 03/15/03 ............. 250,000 277,500
Wisconsin State Clean Water
Revenue Bond
5.300%, 06/01/12 ............. 700,000 661,500
---------
939,000
---------
TOTAL MUNICIPAL BONDS
(cost $17,099,793) ........... 17,013,718
----------
</TABLE>
<TABLE>
<S> <C> <C>
SHARES VALUE
--------- ---------
TAX EXEMPT
MONEY MARKET FUNDS -- 2.75%
(cost $488,961)
Nuveen Tax Exempt .............. 488,961 488,961
---------
TOTAL INVESTMENTS -- 98.64%
(cost $17,588,754) ............ 17,502,679
----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 1.36% ... 241,040
---------
NET ASSETS -- 100% ............. $17,743,719
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS June 30, 1996
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
<TABLE>
<S> <C> <C>
PRINCIPAL
AMOUNT VALUE
--------- ---------
COMMERCIAL PAPER -- 92.37%
AUTO & TRUCK -- 11.70%
Daimler-Benz NA Corp.
5.38%, 09/24/96................ $ 870,000 $ 858,949
Daimler-Benz NA Corp.
5.43%, 10/15/96................ 700,000 688,808
Ford Motor Credit Co.
5.34%, 07/08/96................ 900,000 900,000
Ford Motor Credit Co.
5.36%, 07/16/96................ 550,000 550,000
Ford Motor Credit Co.
5.37%, 07/23/96................ 250,000 250,000
Toyota Motor Credit Co.
5.38%, 10/01/96................ 700,000 690,376
---------
3,938,133
---------
BEVERAGES -- 2.80%
Coca-Cola Co.
5.34%, 09/03/96................ 953,000 943,953
---------
COMMERCIAL BANKING -- 5.05%
Norwest Corp.
5.34%, 07/01/96................ 300,000 300,000
Norwest Corp.
5.32%, 08/01/96................ 1,400,000 1,400,000
---------
1,700,000
---------
COMMERCIAL FINANCE -- 3.63%
CIT Group Holdings, Inc.
5.35%, 07/25/96................ 1,220,000 1,220,000
---------
COMMERCIAL SERVICES -- 4.74%
PHH Corp.
5.27%, 07/17/96................ 849,000 847,011
PHH Corp.
5.27%, 07/19/96................ 751,000 749,021
---------
1,596,032
---------
CONSUMER FINANCE -- 35.70%
American Express Credit Corp.
5.30%, 07/09/96................ 483,000 483,000
American Express Credit Corp.
5.36%, 07/24/96................ 400,000 400,000
American Express Credit Corp.
5.37%, 08/01/96................ 750,000 750,000
American General Finance Corp.
5.36%, 07/18/96................ 860,000 860,000
American General Finance Corp.
5.38%, 07/23/96................ 740,000 740,000
Associates Corp. of N. America
5.35%, 08/07/96................ 1,200,000 1,200,000
AVCO Financial Services, Inc.
5.41%, 07/29/96................ 900,000 900,000
AVCO Financial Services, Inc.
5.36%, 07/31/96................ 700,000 700,000
Beneficial Corp.
5.29%, 07/01/96................ 423,000 423,000
Beneficial Corp.
5.30%, 07/02/96................ 600,000 600,000
Beneficial Corp.
5.50%, 10/17/96................ 637,000 637,000
Commercial Credit Co.
5.32%, 07/10/96................ 844,000 844,000
Household Finance Corp.
5.36%, 07/30/96................ 600,000 600,000
Household Finance Corp.
5.36%, 08/22/96................ 1,000,000 1,000,000
PRINCIPAL
AMOUNT VALUE
--------- ---------
International Lease Finance
Corp.
5.40%, 09/12/96................ $ 450,000 $ 445,072
Prudential Funding Corp.
5.31%, 07/03/96................ 840,000 840,000
Prudential Funding Corp.
5.42%, 08/05/96................ 596,000 596,000
----------
12,018,072
----------
ELECTRONICS -- 4.67%
General Electric Capital Corp.
5.32%, 07/09/96................ 671,000 671,000
General Electric Capital Corp.
5.46%, 10/03/96................ 900,000 900,000
---------
1,571,000
---------
FARM MACHINERY & EQUIPMENT -- 2.80%
John Deere Capital Corp.
5.33%, 07/11/96................ 943,000 943,000
---------
FOOD PRODUCTS -- 3.52%
Philip Morris Cos., Inc.
5.30%, 07/22/96................ 1,190,000 1,186,321
---------
FOREIGN GOVERNMENTS -- 4.11%
Province of Quebec
5.32%, 09/16/96................ 1,400,000 1,384,070
---------
INSURANCE/MULTI-LINE -- 4.78%
USAA Capital Corp.
5.38%, 08/06/96................ 570,000 566,933
USAA Capital Corp.
5.37%, 08/23/96................ 1,050,000 1,041,699
---------
1,608,632
---------
OFFICE EQUIPMENT -- 4.45%
Hewlett-Packard Corp.
5.36%, 08/29/96................ 1,511,000 1,497,727
---------
PHARMACEUTICALS -- 4.42%
Schering Corp.
5.36%, 08/27/96................ 1,501,000 1,488,261
---------
TOTAL COMMERCIAL PAPER
(cost $31,095,201) ............ 31,095,201
----------
BONDS & NOTES -- 4.40%
U.S. GOVERNMENT AGENCIES
(cost $1,482,892)
Federal National Mortgage
Association
5.09%, 10/30/96................ 1,000,000 982,892
Student Loan Marketing
Association
6.07%, 07/03/97................ 500,000 500,000
---------
1,482,892
---------
SHARES VALUE
--------- ---------
OTHER SHORT-TERM INVESTMENTS -- 4.45%
MONEY MARKET FUND
(cost $1,498,623)
Federated Prime Obligation
Fund .......................... 1,498,623 1,498,623
-----------
TOTAL INVESTMENTS -- 101.22%
(cost $34,076,716) ............ 34,076,716
-----------
LIABILITIES NET OF CASH
AND OTHER ASSETS -- (1.22%) ... (412,526)
-----------
NET ASSETS -- 100.00% .......... $33,664,190
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE
FIXED INCOME
IAA TRUST IAA TRUST SERIES FUND,
IAA TRUST ASSET TAX EXEMPT INC.
GROWTH FUND, ALLOCATION FUND, BOND FUND, MONEY MARKET
INC. INC. INC. SERIES
-------------- ---------------- ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities at value (cost $58,837,217,
$8,339,817, $17,588,754, and $34,076,716,
respectively)........................................ $84,732,966 $10,040,465 $17,502,679 $34,076,716
Cash................................................... -- 3,375 -- --
Receivable for capital stock sold...................... 54,434 -- -- --
Dividends and interest receivable...................... 130,814 55,738 256,360 109,743
Other assets........................................... 5,464 745 1,453 2,826
----------- ----------- ----------- -----------
Total assets......................................... 84,922,678 10,100,323 17,760,492 34,189,285
----------- ----------- ----------- -----------
LIABILITIES:
Payable for securities purchased....................... -- -- -- 500,000
Payable for capital stock redeemed..................... 58,134 7,000 -- --
Distributions payable.................................. 2,124 -- -- --
Accrued expenses and other liabilities................. 61,977 10,377 16,773 25,095
----------- ----------- ----------- -----------
Total liabilities.................................... 122,235 17,377 16,773 525,095
----------- ----------- ----------- -----------
NET ASSETS:
Applicable to 4,492,226, 753,062, 2,110,571 and
33,664,227 shares outstanding, respectively.......... $84,800,443 $10,082,946 $17,743,719 $33,664,190
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSETS CONSIST OF:
Capital paid-in........................................ $54,289,748 $ 7,929,729 $17,815,294 $33,664,129
Undistributed (Distributions in excess of) net
investment income.................................... 461,403 (325) (1,726) 61
Accumulated net realized gain on investments........... 4,153,543 452,894 16,226 --
Net unrealized appreciation (depreciation) of
investments.......................................... 25,895,749 1,700,648 (86,075) --
----------- ----------- ----------- -----------
$84,800,443 $10,082,946 $17,743,719 $33,664,190
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE.......... $ 18.88 $ 13.39 $ 8.41 $ 1.00
----- ----- --- ---
----- ----- --- ---
OFFERING PRICE PER SHARE (NET ASSET VALUE DIVIDED BY
.97,
EXCEPT MONEY MARKET SERIES)............................ $ 19.46 $ 13.80 $ 8.67 $ 1.00
----- ----- --- ---
----- ----- --- ---
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS for the Year Ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE
FIXED INCOME
IAA TRUST IAA TRUST SERIES FUND,
IAA TRUST ASSET TAX EXEMPT INC.
GROWTH ALLOCATION BOND FUND, MONEY MARKET
FUND, INC. FUND, INC. INC. SERIES
-------------- ---------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 1,156,931 $ 101,615 $ -- $ --
Interest............................................... 712,345 341,984 1,009,044 2,270,886
----------- ---------- ---------- ----------
Total investment income.............................. 1,869,276 443,599 1,009,044 2,270,886
----------- ---------- ---------- ----------
EXPENSES:
Investment advisory fees (Note E)...................... 580,601 78,490 93,863 201,429
Distribution expenses (Note E)......................... 8,912 8,538 15,380 --
Legal fees............................................. 5,224 4,022 3,887 5,000
Transfer agent fees (Note E)........................... 67,980 7,695 14,263 39,872
Auditing fees.......................................... 32,357 3,915 7,976 16,491
Printing............................................... 9,780 805 1,741 3,993
Directors' fees........................................ 4,967 1,178 1,239 1,397
Administration fees (Note E)........................... 79,358 10,737 19,820 42,050
Accounting fees (Note E)............................... 48,794 28,996 35,352 37,196
Insurance.............................................. 17,778 2,445 4,744 9,532
Registration fees...................................... 2,300 2,272 2,333 2,277
Miscellaneous.......................................... 5,749 1,094 1,810 3,929
----------- ---------- ---------- ----------
Total expenses....................................... 863,800 150,187 202,408 363,166
----------- ---------- ---------- ----------
NET INVESTMENT INCOME................................... 1,005,476 293,412 806,636 1,907,720
----------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS -- Note (D):
Net realized gain on investments....................... 7,560,208 736,443 27,534 --
Net change in unrealized appreciation on investments... 6,380,518 385,622 141,343 --
----------- ---------- ---------- ----------
Net realized and unrealized gain on investments........ 13,940,726 1,122,065 168,877 --
----------- ---------- ---------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS.................. $14,946,202 $1,415,477 $ 975,513 $1,907,720
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST ASSET
IAA TRUST ALLOCATION FUND,
GROWTH FUND, INC. INC.
--------------------- -----------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/96 6/30/95 6/30/96 6/30/95
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................................... $1,005,476 $ 893,251 $ 293,412 $ 284,971
Net realized gain (loss) on investments................................. 7,560,208 4,148,412 736,443 (37,078)
Net change in unrealized appreciation of investments.................... 6,380,518 10,210,477 385,622 1,113,816
Increase in net assets from operations.................................. 14,946,202 15,252,140 1,415,477 1,361,709
---------- ----------- ---------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income....................................................... (1,047,434) (671,272) (293,737) (219,893)
Realized gains on investments........................................... (6,467,667) (5,659,861) (250,319) (145,553)
Distribution in excess of realized gains on investments................. -- -- -- (49,654)
Return of capital....................................................... -- -- -- (6,398)
---------- ----------- ---------- -----------
(7,515,101) (6,331,133) (544,056) (421,498)
---------- ----------- ---------- -----------
CAPITAL STOCK TRANSACTIONS -- (NET) Note (C)............................. 6,792,238 2,208,346 (328,304) (52,911)
---------- ----------- ---------- -----------
Total increase in net assets............................................ 14,223,339 11,129,353 543,117 887,300
NET ASSETS:
Beginning of year....................................................... 70,577,104 59,447,751 9,539,829 8,652,529
---------- ----------- ---------- -----------
End of year............................................................. $84,800,443 $70,577,104 $10,082,946 $9,539,829
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
IAA TRUST TAXABLE FIXED INCOME
TAX EXEMPT BOND SERIES FUND, INC.
FUND, INC. MONEY MARKET SERIES
-------------------- ----------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/96 6/30/95 6/30/96 6/30/95
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................................... $ 806,636 $ 895,922 $1,907,720 $1,714,406
Net realized gain on investments........................................ 27,534 35,903 -- --
Net change in unrealized appreciation of investments.................... 141,343 411,011 -- --
----------- ----------- ----------- -----------
Increase in net assets from operations.................................. 975,513 1,342,836 1,907,720 1,714,406
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income....................................................... (808,361) (894,338) (1,907,605) (1,714,510)
Realized gains on investments........................................... (46,251) (69,768) -- --
----------- ----------- ----------- -----------
(854,612) (964,106) (1,907,605) (1,714,510)
----------- ----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS -- (NET) Note (C)............................. (1,209,728) (640,781) (2,751,388) (2,283,706)
----------- ----------- ----------- -----------
Total decrease in net assets............................................ (1,088,827) (262,051) (2,751,273) (2,283,810)
NET ASSETS:
Beginning of year....................................................... 18,832,546 19,094,597 36,415,463 38,699,273
----------- ----------- ----------- -----------
End of year............................................................. $17,743,719 $18,832,546 $33,664,190 $36,415,463
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS June 30, 1996
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: IAA Trust Growth Fund, Inc. ('Growth
Fund'), IAA Trust Asset Allocation Fund, Inc. ('Asset Allocation Fund'), IAA
Trust Tax Exempt Bond Fund, Inc. ('Tax Exempt Bond Fund') and IAA Trust Taxable
Fixed Income Series Fund, Inc. ('Taxable Fixed Income Series Fund'), formerly
known as IAA Trust Money Market Fund, Inc., (collectively, 'the Funds') are
separately incorporated and registered companies under the Investment Company
Act of 1940 (the 'Act'), as amended, as diversified, open-ended management
companies.
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 at the date of the
financial statement and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by each Fund in the preparation of its financial statements.
(1) SECURITY VALUATION: For the Growth Fund, the Asset Allocation Fund and
the Tax Exempt Bond Fund, securities traded on national exchanges and
over-the-counter securities listed in the NASDAQ National Market System are
valued at the last reported sales price at the close of the New York Stock
Exchange. Securities for which there have been no sales on such day are
valued at the last reported bid price on such exchange. Over-the-counter
securities not listed on the NASDAQ National Market System are valued at the
mean of the current bid and asked prices. Fixed-income securities except
short-term securities may be valued on the basis of prices provided by a
pricing service when such prices are believed by the Advisor to reflect the
fair market value of such securities. Short-term investments, those with a
remaining maturity of 60 days or less, are valued at amortized cost, which
approximates market value. For the Money Market Series of Taxable Fixed
Income Series Fund, all securities are valued at amortized cost, which
approximates market value. Under the amortized cost method, discounts and
premiums are accreted and amortized ratably to maturity and are included in
interest income.
(2) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
Securities transactions are accounted for on the date securities are
purchased or sold. Securities gains and losses are determined on the
identified cost basis.
(3) FEDERAL INCOME TAXES: The Funds have elected to be treated as 'regulated
investment companies' under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income annually.
Accordingly, no provisions for Federal income taxes have been made in the
accompanying financial statements.
(4) DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to shareholders
are recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles.
NOTE (B) DIVIDENDS FROM NET INVESTMENT INCOME AND DISTRIBUTIONS OF CAPITAL
GAINS: In the Growth Fund, net investment income from investment transactions
are distributed to shareholders twice a year. The Asset Allocation Fund and the
Tax Exempt Bond Fund distribute net investment income to shareholders monthly.
The Money Market Series of Taxable Fixed Income Series Fund declares dividends
daily from its net investment income, which are payable monthly. Dividends are
automatically reinvested in additional Fund shares, at the then current net
asset value, for those shareholders that have elected the reinvestment option.
Net realized gains from investment transactions, if any, of all Funds are
generally distributed once a year. For the Growth Fund and the Asset Allocation
Fund, distributions, if any, are made at the end of the fiscal year and calendar
year.
NOTE (C) CAPITAL STOCK: At June 30, 1996, 10,000,000 shares of capital stock
were authorized for each of the Growth Fund, Asset Allocation Fund, and Tax
Exempt Bond Fund. The shares of capital stock authorized for the Money Market
Series of Taxable Fixed Income Series Fund were 250,000,000. The par value for
each share of the Growth Fund, Asset Allocation Fund, and Tax Exempt Bond Fund
is $1.00 per share. The par value for each share of the Money Market Series is
$0.10 per share.
Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND ASSET ALLOCATION FUND
------------------------------------------ ------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
-------------------- -------------------- -------------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- -------- --------- -------- ---------- -------- ---------
Shares sold............................. 367,621 $6,620,827 82,369 $1,266,232 174,733 $2,278,506 70,254 $ 788,460
Shares issued through reinvestment of
dividends.............................. 416,875 7,132,281 424,176 6,030,680 27,062 350,628 23,407 261,811
------- ---------- ------ ---------- ------- ---------- ------ ---------
784,496 13,753,108 506,545 7,296,912 201,795 2,629,134 93,661 1,050,271
------- ---------- ------ ---------- ------- ---------- ------ ---------
Shares redeemed......................... (388,989) (6,960,870) (331,902) (5,088,566) (224,935) (2,957,438) (98,290) (1,103,182)
------- ---------- ------ ---------- ------- ---------- ------ ---------
Net increase (decrease)................. 395,507 $6,792,238 174,643 $2,208,346 (23,140) $(328,304) (4,629) $ (52,911)
------- ---------- ------ ---------- ------- ---------- ------ ---------
------- ---------- ------ ---------- ------- ---------- ------ ---------
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS June 30, 1996
(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAXABLE FIXED INCOME SERIES FUND
--------------------------------------------------
TAX EXEMPT BOND FUND MONEY MARKET SERIES
--------------------------------------------- --------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
--------------------- -------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................... 63,839 $ 550,009 66,402 $ 546,984 51,403,909 $51,403,909 54,472,453 $54,472,453
Shares issued through
reinvestment of dividends.... 64,497 549,480 76,197 620,434 1,795,132 1,795,132 1,587,538 1,587,538
-------- ----------- ------- --------- ---------- ----------- ---------- -----------
128,336 1,099,489 142,599 1,167,418 53,199,041 53,199,041 56,059,991 56,059,991
-------- ----------- ------- --------- ---------- ----------- ---------- -----------
Shares redeemed............... (271,157) (2,309,217) (221,928) (1,808,199) (55,950,429) (55,950,429) (58,343,697) (58,343,697)
-------- ----------- ------- --------- ---------- ----------- ---------- -----------
Net (decrease)................ (142,821) $(1,209,728) (79,329) $(640,781) (2,751,388) $(2,751,388) (2,283,706) $(2,283,706)
-------- ----------- ------- --------- ---------- ----------- ---------- -----------
</TABLE>
NOTE (D) INVESTMENT TRANSACTIONS: Purchases and sales of investment securities,
other than U.S. Government obligations and short term notes for the year ended
June 30, 1996 were:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth Fund.............................................................................. $ 21,795,215 $ 21,382,303
Asset Allocation Fund.................................................................... $ 2,060,455 $ 2,322,849
Tax Exempt Bond Fund..................................................................... $ 2,676,288 $ 4,038,703
</TABLE>
For the year ended June 30, 1996, the aggregate cost of purchases and proceeds
from sales of U.S. Government Securities for the Asset Allocation Fund was
$1,154,178 and $686,172, respectively.
For both Federal income tax and financial statement purposes, the identified
cost of investments at June 30,1996 was $58,837,217 for the Growth Fund,
$8,339,817 for the Asset Allocation Fund, $17,588,754 for the Tax Exempt Bond
Fund and $34,076,716 for the Money Market Series of Taxable Fixed Income Series
Fund.
The gross unrealized appreciation/depreciation for book and tax purposes at June
30,1996 consisted of the following:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Growth Fund.............................................................................. $ 26,545,611 $ 649,862
Asset Allocation Fund.................................................................... $ 1,833,552 $ 132,904
Tax Exempt Bond Fund..................................................................... $ 220,339 $ 306,414
</TABLE>
NOTE (E) ADVISORY, ADMINISTRATION AND DISTRIBUTION SERVICES AGREEMENTS: Under
its Advisory Agreements with the Funds, IAA Trust Company (the 'Advisor')
provides investment advisory services for the Funds. The Funds pay the Advisor
at the following annual percentage rates of the average daily net assets of each
Fund: Growth Fund 0.75%; Asset Allocation Fund 0.75%; Tax Exempt Bond Fund
0.50%; and Money Market Series of Taxable Fixed Income Series Fund 0.50%. These
fees are accrued daily and paid to the Advisor monthly. IAA Trust Company serves
as the Funds' Custodian, without compensation.
Under its agreements with the Funds, Fund/Plan Services, Inc., the Funds'
Administrator, provides certain administrative services for which the Funds pay
an annual fee at the following annual percentage rates of the combined average
net assets of the Funds: 0.15% of the first $50,000,000; 0.07% on the next
$50,000,000; and 0.05% of the balance. Fund/Plan Services, Inc., also serves as
the Funds' Accounting and Transfer Agent.
Fund/Plan Broker Services, Inc. serves as the Funds' Distributor. Pursuant to
Rule 12b-1 adopted by the Securities and Exchange Commission under the Act, the
Growth Fund, the Asset Allocation Fund, and the Tax Exempt Bond Fund have each
adopted a Plan of Distribution (the 'Plans'), effective April 1, 1993. The Plans
permit the participating Funds to pay certain expenses associated with the
distribution of their shares. The maximum amount payable under the Plans, on an
annual basis, is 0.25% of each Fund's average daily net assets. For the year
ended June 30, 1996, for the Growth Fund, the Asset Allocation Fund and the Tax
Exempt Fund, the actual percentage of average daily net assets was 0.011%,
0.081% and 0.082%, respectively.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
IAA TRUST
GROWTH FUND, INC.
YEARS ENDED JUNE 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................................... $ 17.23 $ 15.16 $ 17.55 $ 17.23 $ 17.35
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................................. 0.23 0.22 0.27 0.25 0.35
Net gains or losses on securities (both realized and unrealized)...... 3.23 3.45 (0.63) 1.67 0.40
--------- --------- --------- --------- ---------
Total from investment operations.................................... 3.46 3.67 (0.36) 1.92 0.75
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income.................................. (0.25) (0.17) (0.22) (0.29) (0.38)
Distributions from capital gains...................................... (1.56) (1.43) (1.81) (1.31) (0.49)
--------- --------- --------- --------- ---------
Total distributions................................................. (1.81) (1.60) (2.03) (1.60) (0.87)
--------- --------- --------- --------- ---------
Net asset value, end of year........................................... $ 18.88 $ 17.23 $ 15.16 $ 17.55 $ 17.23
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN+.......................................................... 21.51% 26.68% (2.42%) 11.71% 4.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).................................. $ 84,800 $ 70,577 $ 59,448 $ 70,785 $ 76,147
Ratio of expenses to average net assets*.............................. 1.12% 1.14% 1.24% 1.18% 0.85%
Ratio of net investment income to average net assets*................. 1.30% 1.41% 1.03% 1.36% 1.91%
Portfolio turnover.................................................... 32.95% 31.84% 49.12% 55.36% 45.50%
Average Commission Rate Paid**........................................ $ 0.0645 N/A N/A N/A N/A
</TABLE>
* Average net assets have been computed based on the aggregate value of the
fund's daily net assets.
+ Total return calculation does not reflect sales load.
** Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. The disclosure is required by the SEC beginning in 1996.
<TABLE>
<CAPTION>
IAA TRUST
ASSET ALLOCATION FUND, INC.
YEARS ENDED JUNE 30,
------------------------------------------
1996 1995 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year............................................... $ 12.29 $ 11.08 $ 11.60 $ 11.20
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................... 0.37 0.36 0.34 0.57
Net gains or losses on securities (both realized and unrealized)................ 1.41 1.38 (0.25) 0.47
--------- --------- --------- ---------
Total from investment operations.............................................. 1.78 1.74 0.09 1.04
--------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income............................................ (0.37) (0.34) (0.34) (0.57)
Distributions from capital gains................................................ (0.31) (0.18) (0.27) (0.07)
Distributions from return of capital............................................ (0.00) (0.01) (0.00) (0.00)
--------- --------- --------- ---------
Total distributions........................................................... (0.68) (0.53) (0.61) (0.64)
--------- --------- --------- ---------
Net asset value, end of year..................................................... $ 13.39 $ 12.29 $ 11.08 $ 11.60
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN+.................................................................... 14.74% 16.29% 0.71% 9.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............................................ $ 10,083 $ 9,540 $ 8,653 $ 6,663
Ratio of expenses to average net assets*........................................ 1.44% 1.46% 1.78% 1.71%
Ratio of net investment income to average net assets*........................... 2.81% 3.18% 2.98% 4.97%
Portfolio turnover.............................................................. 33.77% 21.03% 17.39% 36.70%
Average Commission Rate Paid**.................................................. $ 0.0861 N/A N/A N/A
<CAPTION>
1992
---------
Net asset value, beginning of year............................................... $ 10.74
---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................................... 0.68
Net gains or losses on securities (both realized and unrealized)................ 0.55
---------
Total from investment operations.............................................. 1.23
---------
LESS DISTRIBUTIONS
Dividends from net investment income............................................ (0.68)
Distributions from capital gains................................................ (0.09)
Distributions from return of capital............................................ (0.00)
---------
Total distributions........................................................... (0.77)
---------
Net asset value, end of year..................................................... $ 11.20
---------
---------
TOTAL RETURN+.................................................................... 11.84%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............................................ $ 6,233
Ratio of expenses to average net assets*........................................ 1.51%
Ratio of net investment income to average net assets*........................... 6.20%
Portfolio turnover.............................................................. 14.10%
Average Commission Rate Paid**.................................................. N/A
<CAPTION>
</TABLE>
* Average net assets have been computed based on the aggregate value of the
fund's daily net assets.
+ Total return calculation does not reflect sales load.
** Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. The disclosure is required by the SEC beginning in 1996.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
IAA TRUST
TAX EXEMPT BOND FUND, INC.
YEARS ENDED JUNE 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........................................ $ 8.36 $ 8.19 $ 9.11 $ 8.78 $ 8.44
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................................................... 0.37 0.39 0.39 0.46 0.49
Net gains or losses on securities (both realized and unrealized)......... 0.07 0.20 (0.54) 0.33 0.34
--------- --------- --------- --------- ---------
Total from investment operations....................................... 0.44 0.59 (0.15) 0.79 0.83
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income..................................... (0.37) (0.39) (0.39) (0.46) (0.49)
Distributions from capital gains......................................... (0.02) (0.03) (0.38) 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions.................................................... (0.39) (0.42) (0.77) (0.46) (0.49)
--------- --------- --------- --------- ---------
Net asset value, end of year.............................................. $ 8.41 $ 8.36 $ 8.19 $ 9.11 $ 8.78
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN+............................................................. 5.30% 7.51% (1.86%) 9.19% 10.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)..................................... $ 17,744 $ 18,833 $ 19,095 $ 20,026 $ 17,872
Ratio of expenses to average net assets*................................. 1.08% 1.06% 1.15% 1.03% 0.95%
Ratio of net investment income to average net assets*.................... 4.30% 4.79% 4.47% 5.11% 5.65%
Portfolio turnover....................................................... 14.75% 24.89% 41.94% 39.60% 20.30%
</TABLE>
* Average net assets have been computed based on the aggregate value of the
fund's daily net assets.
+ Total return calculation does not reflect sales load.
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME
SERIES FUND, INC.
MONEY MARKET SERIES
YEARS ENDED JUNE 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year....................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................................... 0.05 0.05 0.03 0.02 0.03
--------- --------- --------- --------- ---------
Total from investment operations...................................... 0.05 0.05 0.03 0.02 0.03
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income.................................... (0.05) (0.05) (0.03) (0.02) (0.03)
--------- --------- --------- --------- ---------
Total distributions................................................... (0.05) (0.05) (0.03) (0.02) (0.03)
--------- --------- --------- --------- ---------
Net asset value, end of year............................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN............................................................. 4.82% 4.85% 2.86% 2.41% 3.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).................................... $ 33,664 $ 36,415 $ 38,699 $ 33,302 $ 10,191
Ratio of expenses to average net assets*+............................... 0.90% 0.73% 0.56% 0.58% 1.32%
Ratio of net investment income to average net assets*................... 4.74% 4.80% 2.83% 2.67% 3.60%
</TABLE>
* Average net assets have been computed based on the aggregate value of the
fund's daily net assets.
+ After voluntary waiver of advisory fees. Before voluntary waiver of advisory
fees, the ratio of expenses to average net assets was .97%, 1.06% and 1.02%
for the years ended June 30, 1995, June 30, 1994 and June 30, 1993,
respectively.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Boards of Directors
IAA Trust Mutual Funds
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments of the IAA Trust Mutual Funds (the
'Funds') (comprising, respectively, the IAA Trust Growth Fund, Inc., the IAA
Trust Asset Allocation Fund, Inc., the IAA Trust Tax Exempt Bond Fund, Inc. and
the IAA Trust Taxable Fixed Income Series Fund, Inc. -- Money Market Series
(formerly known as IAA Trust Money Market Fund, Inc.)) as of June 30, 1996, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and 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 and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation and physical inspection of
securities held by the custodian as of June 30, 1996. 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 and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Funds comprising the IAA Trust Mutual Funds as of June
30, 1996, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for each of the periods presented in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA
August 14, 1996
<PAGE>
IAA Trust Mutual Funds
IAA Trust Growth Fund, Inc.
IAA Trust Asset Allocation Fund, Inc.
IAA Trust Tax Exempt Bond Fund, Inc.
IAA Trust Taxable Fixed Income Series Fund, Inc.
Money Market Series
Board of Directors
Ronald R. Warfield
Herbert G. Allen
Nancy J. Erickson
Paul S. Ives
William E. Klein, Sr.
Ailene Miller
Joseph W. Sommer
Officers
Ronald R. Warfield, President
Wayne A. Brown, Vice-President
Gary E. Mede, Vice-President
Richard M. Miller, Vice-President
Rollie D. Moore, Vice-President
Paul M. Harmon, Secretary
Robert W. Weldon, Treasurer
Richard F. Day, Controller
Investment Advisor
IAA Trust Company
Bloomington, Illinois
Distributor
Fund/Plan Broker Services, Inc.
Conshohocken, Pennsylvania
Transfer Agent
Fund/Plan Services, Inc.
Conshohocken, Pennsylvania
Custodian
IAA Trust Company
Bloomington, Illinois
Independent Accountants
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
General Counsel
Jerome P. Weiss
Sonnenschein, Nath & Rosenthal
Washington, D.C.
This Report has been prepared for the general information of
shareholders of the Funds and is not authorized for distribution to
prospective investors unless preceded or accompanied by an
effective Prospectus which contains details concerning the sales
charge and other pertinent information.
F30-113-06 (8/96)
Annual Report
June 30, 1996
IAA
Trust
Company Mutual Funds
IAA Trust Growth Fund, Inc.
IAA Trust Asset Allocation Fund, Inc.
IAA Trust Tax Exempt Bond Fund, Inc.
IAA Trust Taxable Fixed Income Series Fund, Inc.
Money Market Series
