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<PAGE> PAGE 2
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<PAGE> PAGE 6
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<PAGE> PAGE 8
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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SIGNATURE MARTIN FAWZY
TITLE COMPLIANCE ADM.
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[SERIES]
[NUMBER] 2
[NAME] IAA TRUST SHORT-TERM GOVERNMENT BOND SERIES
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JUN-30-1997
[PERIOD-START] JAN-02-1997
[PERIOD-END] JUN-30-1997
[INVESTMENTS-AT-COST] 13813055
[INVESTMENTS-AT-VALUE] 13824623
[RECEIVABLES] 12579698
[ASSETS-OTHER] 9120
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 26413441
[PAYABLE-FOR-SECURITIES] 2032459
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 95963
[TOTAL-LIABILITIES] 2128422
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 24264126
[SHARES-COMMON-STOCK] 2426194
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 9325
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11568
[NET-ASSETS] 24285019
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 79028
[OTHER-INCOME] 0
[EXPENSES-NET] 10664
[NET-INVESTMENT-INCOME] 68364
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 11568
[NET-CHANGE-FROM-OPS] 79932
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 59039
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2427250
[NUMBER-OF-SHARES-REDEEMED] 4974
[SHARES-REINVESTED] 3918
[NET-CHANGE-IN-ASSETS] 24285019
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 6982
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 54148
[AVERAGE-NET-ASSETS] 5057289
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] .20
[PER-SHARE-GAIN-APPREC] .01
[PER-SHARE-DIVIDEND] .20
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.01
[EXPENSE-RATIO] .76
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
FILE NUMBER 811-2840
FORM N-SAR ATTACHMENT FOR QUESTION 77.B.
AUDITOR'S INTERNAL CONTROL LETTER
REPORT OF INDEPENDENT ACCOUNTANTS
To the Boards of Directors of
IAA Trust Company Mutual Funds
In planning and performing our audit of the financial
statements of IAA Trust Company Mutual Funds (the "Fund")
(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. which includes the IAA Trust Money Market Series
(formerly known as the IAA Trust Money Market Fund Inc.), the
IAA Trust Short-Term Government Bond Series and the IAA Trust
Long-Term Bond Series) for the year ended June 30, 1997, we
considered its internal control structure, including procedures
for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of
Form N-SAR, not to provide assurance on the internal control
structure.
The management of the Fund is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance
with management's authorization and recorded properly to permit
preparation of financial statements in conformity with
generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and may not be
detected. Also, projection of any evaluation of the structure
to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control
structure that might be material weaknesses under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the
design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk
that errors or irregularities in amounts that would be material
in relation to the financial statements being audited may occur
and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However,
we noted no matters involving the internal control structure,
including procedures for safeguarding securities, that we
consider to be material weaknesses as defined above as of June
30, 1997.
This report is intended solely for the information and use of
management of the Fund and the Securities and Exchange
Commission.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
August 12, 1997
