January 27, 1997
Dear Shareholder:
IAA TRUST GROWTH FUND, INC.
The net asset value of the Fund on December 31, 1996 was $19.33.
RETURNS:
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
22.01% 11.74% 12.43%
These returns assume all dividends and capital gains distributions were
reinvested.
The year 1996 turned out to be one of the best investment environments of
the last ten years as stocks, for the second consecutive year, turned in an
outstanding performance. The S&P 500 returned 23.0% for the calendar year versus
22.0% for the Growth Fund. The average growth fund posted a return of 19.2%
during the same period.
The "goldilocks" scenario of slow growth, low inflation, and declining
interest rates continued to buoy investors' spirits. With the exception of a
minor correction in July, the gains seen in the S&P 500 were steady in each
quarter. Investors seem convinced that stocks are the only place to be mainly
because rates of returns on other financial assets, such as CDs and bonds, are
currently low relative to the last 15 years. For the past 9 years, every dip in
stock prices has proven to be a "buying opportunity." So far, the dip during the
month of July was no exception.
Even though stocks should outperform other financial assets over long
periods of time, they have underperformed for extended periods as long as 5
years. This was the case during the period 1974-1982. Granted, many negative
factors, such as the Arab oil embargo, the end of the Bretton Woods monetary
system with its fixed currency exchange rates, and the end of the war in Vietnam
emerged on the scene simultaneously. However, in 1972 none of the above events
were foreseen by investors. Investors at that time seemed more concerned about
the return on their money rather than the return of their money.
The Growth Fund was overweighted in Technology during 1996 and this served
us well. Intel was up 130%, Microsoft was up 94%, and Adaptec was up 84%.
Financial stocks also performed well and we carried a market weighting in this
sector. Health Care stocks also performed well with Merck, Smithkline, and Elan
all doing better than the market.
Basic Industry and Consumer Cyclical stocks did not do very well relative to
the markets during the year. Although we feel that certain segments of these
sectors will perform well, we continue to underweight these areas.
Stock sectors that we continue to favor include Technology, Health, and
Financials. Our strategy is to wait for an overall market correction as well as
to take advantage of individual stock declines. We started the year with a cash
position of about 13%. During the July decline this position was reduced to
about 10%. It has been increased to about 13% again during the last few months
as some of the stocks we owned achieved our target prices and were sold. Our
cash is still high relative to other mutual funds, which will allow us to take
advantage of declines.
<PAGE>
IAA TRUST ASSET ALLOCATION FUND, INC.
The net asset value of the Fund on December 31, 1996 was $13.29.
RETURNS:
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
12.96% 10.16% 9.31%
These returns assume all dividends and capital gains distributions were
reinvested.
1996 was a good year for the Asset Allocation Fund as strong stock
performance compensated for a weak bond market. The Fund had a 13% annual
return. Performance was enhanced by superior security selection but hurt by
owning too few common stocks. We continue to believe that the level of risk in
the stock market is high, therefore we still hold a lower proportion of Fund
assets in stocks than many other asset allocation funds.
STOCKS
Common stock prices, as measured by the S&P 500 Stock Index, rose to record
levels in 1996, up 22.9%. This comes on the heels of a stellar return in 1995.
Stocks continued to be propelled by record flows of cash into mutual funds and
strong corporate profits. The two year return of 69.1% on the S&P 500 Stock
Index has only been surpassed a handful of times. Therefore, we caution
shareholders that investment returns over the next several years will likely be
below the previous two.
Our equities strategy for 1997 will continue to be "Growth at a Reasonable
Price." This means we look to invest in companies with superior growth
potential, when such potential is not yet fully reflected in the stock price.
Two themes we will continue to concentrate on are "The Graying of America"
and "Feed the World." The Graying of America refers to the aging of the
population, which is causing an increase in the ratio of older to younger
Americans and a large absolute increase in the elderly population. This
demographic change will have profound effects on the US economy as well as those
of Asia and Europe which are experiencing a similar but more pronounced
"graying." Companies in health care, recreation and finance have the potential
to benefit.
The "Feed the World" theme recognizes the growing importance of agriculture.
Many countries with large populations, such as China, India and Brazil, are
experiencing rising prosperity as a result of moves toward capitalism. When a
country's wealth increases, its population's diet quickly improves and beef,
poultry and grain consumption increase. This poses an excellent opportunity for
producers of farm equipment, fertilizer, seed and other companies serving the
agricultural industry.
BONDS
What might have been an extremely disappointing year for bonds was made
tolerable when bond prices rallied over the past four months. Bond prices fell
early in the year as inflation concerns heightened following surprising strength
in the economy and rising grain and oil prices. However, bond prices rose
sharply in September through early December thanks to moderate, controlled
inflation and evidence of a slowing economy. Bonds returned some of those gains
in December as the economy seemed to pick up strength. Overall, it was a
moderately disappointing year for bond investors as intermediate term US
Treasury notes returned less than 3%.
We enter 1997 with a neutral view of the bond market. The market is torn
between those who believe that rising wage inflation will result from tightness
in the labor market and those who believe that the economy is slowing and wage
inflation will not be a factor.
ALLOCATION
During the past year the Fund's stock investments increased from 49% to 53%
of the portfolio as a result of both rising stock prices and new purchases. Bond
investments increased from 37% to 39%, while cash and cash equivalents decreased
from 14% to 8%. We intend to increase the bond position on market weakness while
keeping the Fund's stock weighting stable.
<PAGE>
IAA TRUST TAX EXEMPT BOND FUND, INC.
The annualized total returns for the Fund for the period ended December 31,
1996 are as follows:
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
2.96% 5.62% 6.27%
These returns assume all dividends and capital gains distributions were
reinvested. Although the Fund's income is exempt from federal income tax, it may
be subject to state income taxation.
Municipal interest rates ended 1996 only slightly higher than they were at
the beginning of the year. The Bond Buyer 20 Index, at a yield of 5.44% this
time last year, rose to a high of 6.12% mid-year, then back to 5.66% as of
year-end 1996. The good news for some investors is that municipal bonds
outperformed the Treasury market over the past year. Several factors influenced
this performance. First, with the threat of flat tax reform out of the picture,
municipal yields returned to a more typical relationship to Treasury yields.
Secondly, insurance companies were strong long municipal bond buyers. Finally,
new issue municipal bond supply, although higher in the first five months of the
year, declined to 1995's levels for the remainder.
Our decision to maintain the portfolio's duration at approximately the same
level it was this time last year did not help the Fund's performance the first
half of the year as interest rates rose. However, as interest rates declined for
the remainder of the year, our duration position benefited Fund performance. The
Fund's total return for the year was 2.96%. In comparison, the Lehman Brothers
Municipal Bond Index had a total return of 4.43%. The Lehman Index has a higher
return because it 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.
The outlook for the municipal bond market in 1997 is favorable, reflecting
expectations that inflation will remain low and the economy will grow at a
modest pace. Municipal bonds, no longer threatened by the political debate on
tax reform, should outperform the US Treasury market again this year. 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
In recent decades, the longest the Federal Reserve has gone without changing
interest rates has been the 17 months between September 4, 1992, and February 4,
1994. The Federal Reserve's last move was January 31, 1996, when it cut
short-term rates by one-quarter of one percent. Without compelling evidence that
the economy will change from its current path of seemingly sustainable growth
and low inflation, Federal Reserve inaction could reach an historic duration.
Unemployment hovers at what many believe to be inflation-provoking levels,
and consumers continue to be burdened by debt. However, consumer confidence is
high. At 70 months and going, the current US economic expansion is quite old
compared to the peacetime average of 43 months. In a December speech, Federal
Reserve Chairman Alan Greenspan warned that, "we should not underestimate ...
the complexities of the interactions of asset markets and the economy." Perhaps
the financial market's frailty was demonstrated when, in the same speech, Mr.
Greenspan alarmed stock and bond markets worldwide by alluding to their
"irrational exuberance."
With the current complexities of trying to forecast interest rate movements,
the Fund will maintain a moderate duration and focus on the quality of issuers.
The average maturity of the Fund decreased from 45 days on June 30, 1996, to 38
days on December 31, 1996, in order to take advantage of higher short-term
yields. During the same period, the 7-day average yield increased from 4.49% to
4.52%.
Sincerely,
[PHOTO]
[Signature]
Ronald R. Warfield
President
<PAGE>
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1996
MAJOR PURCHASES MAJOR SALES
Sun Microsystems, Inc. Mylan Laboratories, Inc. (2)
Talbots, Inc. (1) U.S. Healthcare, Inc. (2)
Integrated Health Services, Inc. (1) MBNA Corp.
Adaptec, Inc. (1) Ford Motor Co. (2)
VeriFone, Inc. (1) Gymboree Corp. (2)
Petroleum Securities Australia, Ltd. (1) Wellman, Inc. (2)
Gentex Corp. Department 56, Inc. (2)
Columbia/HCA Healthcare Corp. Hewlett-Packard Co.
(1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS December 31, 1996
PERCENT
VALUE OF FUND
----------- ----------
Intel Corp.......................................... $ 3,666,250 3.94%
General Electric Co................................. 3,164,000 3.40
Travelers, Inc...................................... 2,722,500 2.93
Green Tree Financial Corp........................... 2,317,500 2.49
Sun Microsystems, Inc............................... 2,311,875 2.49
Royal Dutch Petroleum Co., ADR...................... 2,185,600 2.35
Motorola, Inc....................................... 2,148,125 2.31
GTE Corp............................................ 2,002,000 2.15
Elan Corp., PLC..................................... 1,995,000 2.15
Merck & Co.......................................... 1,981,250 2.13
----------- -----
$24,494,100 26.34%
=========== =====
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1996
MAJOR PURCHASES MAJOR SALES
BellSouth Capital Funding Corp., 6.040%, Motorola, Inc. (2)
11/15/26 (1) Int'l. American Development Bank
United States Treasury Notes, 6.500%, 8.875%, 06/01/09
05/15/05 (1) Travelers, Inc.
Wendy's International, Inc. (1) U.S. Healthcare, Inc. (2)
Warnaco Group, Inc., Cl. A (1) Illinois Tool Works, Inc.
OccuSystems, Inc. (1) Learonal, Inc. (2)
DePuy, Inc. (1) Lucent Technologies, Inc. (2)
Integrated Health Services, Inc.
(1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS December 31, 1996
PERCENT
VALUE OF FUND
--------- -----------
Tennessee Valley Authority, 5.980%,
04/01/36............................................. $ 506,875 4.55%
Bell of Pennsylvania, Putable Debentures,
8.350%, 12/15/30..................................... 233,750 2.10
Procter & Gamble Co.................................... 215,000 1.93
United States Treasury Notes, 7.250%,
05/15/04............................................. 210,562 1.89
Citicorp............................................... 200,850 1.80
United States Treasury Notes,
5.875%, 03/31/99..................................... 199,874 1.79
Discover Credit Card Trust,
6.750%, 02/16/02..................................... 199,063 1.78
BellSouth Capital Funding Corp.,
6.040%, 11/15/26..................................... 198,250 1.78
Federal Home Loan Mortgage Corp.,
6.500%, 06/15/06..................................... 197,500 1.77
Exxon Corp............................................. 196,000 1.76
---------- -----
$2,357,724 21.15%
========== =====
- --------------------------------------------------------------------------------
<PAGE>
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1996
MAJOR PURCHASES MAJOR SALES
Shelby County, Tennessee, Los Angeles, California Wastewater
General Obligation, Series B (1) System Revenue (2)
5.875%, 06/01/18 6.000%, 11/01/14
Saint Paul, Minnesota Independent Public Utility District #1 of
School District #625, General Chelan County, Washington Revenue(2)
Obligation, Series C (1) 5.250%, 06/01/13
5.250%, 02/01/13
(1) New Holdings (2) Deletions
TEN LARGEST HOLDINGS December 31, 1996
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
--------- -----------
<S> <C> <C>
Wisconsin State Clean Water Revenue, 5.300%, 06/01/12.................... $ 679,000 3.79%
Peru, Indiana Community School, 6.750%, 01/01/09......................... 587,812 3.28
Texas A&M University Revenues Fin. System, 5.375%, 05/15/14.............. 587,250 3.28
Pennsylvania State Higher Education Revenue, 5.600%, 09/01/10............ 584,344 3.26
State of Rhode Island Ref. General Obligation, 7.000%, 06/15/05.......... 575,000 3.21
Louisville & Jefferson County, Met. Sewer Dist. Rev., 5.250%, 05/15/10... 567,094 3.17
Cape Girardeau, Missouri Waterworks System, 7.450%, 03/01/05............. 565,625 3.16
Connecticut State Unlimited Tax General Obligation, 5.400%, 03/15/08..... 562,375 3.14
Chicago, Illinois Water Revenue, 6.500%, 11/01/15........................ 554,375 3.10
Maricopa County School Dist. Arizona Unlimited, 6.400%, 07/01/06......... 550,000 3.07
---------- -----
$5,812,875 32.46%
========== =====
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
TEN LARGEST HOLDINGS December 31, 1996
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
---------- -----------
<S> <C> <C>
Ameritech Corp., 5.33%, 02/13/97....................... $ 2,006,146 4.83%
PHH Corp., 5.32%, 01/24/97............................. 1,714,154 4.12
Philip Morris Cos., Inc., 6.45%, 01/02/97.............. 1,599,713 3.85
Daimler-Benz NA Corp., 5.33%, 03/20/97................. 1,334,410 3.21
Schering Corp., 5.31%, 02/11/97........................ 1,292,138 3.11
U.S. Central Credit Union, 5.32%, 01/27/97............. 1,276,078 3.07
IBM Credit Corp., 5.36%, 03/27/97...................... 1,240,000 2.98
Province of Quebec, 5.43%, 01/06/97.................... 1,149,133 2.76
John Deere Capital Corp., 5.35%, 01/29/97.............. 1,144,000 2.75
Norwest Corp., 5.29%, 01/09/97......................... 1,028,789 2.47
----------- -----
$13,784,561 33.15%
=========== =====
PORTFOLIO CHARACTERISTICS December 31, 1996
30 DAY AVERAGE YIELD: 4.49%
7 DAY AVERAGE YIELD: 4.52%
AVERAGE DAYS TO MATURITY: 38.26
- --------------------------------------------------------------------------------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC.
SHARES VALUE
--------- ---------
COMMON STOCKS -- 86.85%
BASIC INDUSTRY -- 5.81%
Engelhard Corp. ................ 60,000 $1,147,500
IMC Global, Inc. ............... 25,000 978,125
Newmont Mining Corp. ........... 20,000 895,000
Nucor Corp. .................... 30,000 1,530,000
Weyerhaeuser Co. ............... 18,000 852,750
----------
5,403,375
----------
CAPITAL GOODS -- 7.83%
Channell Commercial Corp.* ..... 50,000 618,750
Deere & Co. .................... 20,400 828,750
General Electric Co. ........... 32,000 3,164,000
Hardinge, Inc. ................. 37,000 985,125
York International, Inc. ....... 30,000 1,676,250
----------
7,272,875
----------
CONSUMER CYCLICAL -- 5.26%
Gentex Corp. ................... 65,000 1,308,125
Talbots, Inc. .................. 40,000 1,145,000
Titan Wheel International,
Inc. ......................... 55,000 701,250
Wal-Mart Stores, Inc. .......... 50,000 1,143,750
Warnaco Group, Inc., Cl. A ..... 20,000 592,500
----------
4,890,625
----------
CONSUMER SERVICES -- 1.56%
American Greetings Corp. ....... 10,000 283,750
First Data Corp. ............... 32,000 1,168,000
----------
1,451,750
----------
CONSUMER STAPLES -- 7.46%
American Stores Co. ............ 40,000 1,635,000
Archer-Daniels-Midland Co. ..... 50,000 1,100,000
PepsiCo, Inc. .................. 50,000 1,462,500
Procter & Gamble Co. ........... 14,000 1,505,000
Unilever N.V. .................. 7,000 1,226,750
----------
6,929,250
----------
ENERGY -- 10.16%
Chevron Corp. .................. 25,000 1,625,000
Exxon Corp. .................... 20,000 1,960,000
Petroleum Securities Australia
Ltd., ADR*.................... 30,000 682,500
Phillips Petroleum Co. ......... 40,000 1,770,000
Royal Dutch Petroleum Co.,
ADR .......................... 12,800 2,185,600
Unocal Corp. ................... 30,000 1,218,750
----------
9,441,850
----------
SHARES VALUE
--------- ----------
FINANCE -- 11.14%
American International Group,
Inc. ......................... 15,000 $1,623,750
Federal National Mortgage
Assoc. ....................... 49,000 1,825,250
Green Tree Financial Corp. ..... 60,000 2,317,500
MBNA Corp. ..................... 45,000 1,867,500
Travelers, Inc. ................ 60,000 2,722,500
----------
10,356,500
----------
HEALTH -- 10.04%
Columbia/HCA Healthcare
Corp. ........................ 25,000 1,018,750
Elan Corp., PLC* ............... 60,000 1,995,000
Integrated Health Services,
Inc. ......................... 34,500 840,938
Johnson & Johnson .............. 36,000 1,791,000
Merck & Co. .................... 25,000 1,981,250
SmithKline Beecham PLC, ADR .... 25,000 1,700,000
----------
9,326,938
----------
TECHNOLOGY -- 17.08%
Adaptec, Inc.* ................. 36,000 1,440,000
Hewlett-Packard Co. ............ 35,000 1,758,750
Intel Corp. .................... 28,000 3,666,250
International Business Machines
Corp. ........................ 8,000 1,208,000
Microsoft Corp.* ............... 20,000 1,652,500
Motorola, Inc. ................. 35,000 2,148,125
Sun Microsystems, Inc.* ........ 90,000 2,311,875
VeriFone, Inc.* ................ 20,000 590,000
Vishay Intertechnology, Inc. ... 47,000 1,098,625
----------
15,874,125
----------
TRANSPORTATION -- 2.33%
Burlington Northern Corp. ...... 10,000 863,750
Federal Express Corp. .......... 12,000 534,000
Illinois Central Corp. ......... 24,000 768,000
----------
2,165,750
----------
UTILITIES -- 8.18%
AT & T Corp. ................... 35,000 1,522,500
DPL, Inc. ...................... 75,000 1,837,500
GTE Corp. ...................... 44,000 2,002,000
NICOR, Inc. .................... 50,000 1,787,500
Wisconsin Energy Corp. ......... 17,000 456,875
----------
7,606,375
----------
TOTAL COMMON STOCKS
(cost $49,818,999) ........... 80,719,413
----------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC. (CONTINUED)
PRINCIPAL
AMOUNT VALUE
---------- ----------
COMMERCIAL PAPER -- 12.91%
Toyota Motor Credit Co.
6.45%, 01/02/97 ............... $2,177,000 $2,176,610
Province of Quebec
5.43%, 01/06/97 ............... 1,300,000 1,299,019
Associates Corp. of N. America
5.35%, 01/08/97 ............... 1,000,000 1,000,000
Commercial Credit Co.
5.47%, 01/08/97 ............... 153,000 153,000
AVCO Financial Services, Inc.
5.40%, 01/15/97 ............... 820,000 820,000
General Electric Capital Corp.
5.46%, 01/16/97 ............... 1,000,000 1,000,000
Beneficial Corp.
5.33%, 01/17/97 ............... 786,000 786,000
CIT Group Holdings, Inc.
5.39%, 01/22/97 ............... 1,096,000 1,096,000
John Deere Capital Corp.
5.38%, 01/27/97 ............... 539,000 539,000
Beneficial Corp.
5.52%, 01/30/97 ............... 93,000 93,000
PRINCIPAL
AMOUNT VALUE
---------- ----------
Household Finance Corp.
5.40%, 02/06/97 ............... $ 62,000 $ 62,000
Prudential Funding Corp.
5.45%, 02/11/97 ............... 1,200,000 1,200,000
Ameritech Corp.
5.33%, 02/13/97 ............... 735,000 730,321
Toyota Motor Credit Co.
5.27%, 02/18/97 ............... 444,000 440,880
American General Finance Corp.
5.37%, 03/04/97 ............... 600,000 600,000
-----------
TOTAL COMMERCIAL PAPER
(cost $11,995,830) ............ 11,995,830
-----------
TOTAL INVESTMENTS -- 99.76%
(cost $61,814,829) ............ 92,715,243
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.24% ... 223,287
-----------
NET ASSETS -- 100.00% .......... $92,938,530
===========
* Non-income producing security
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC.
SHARES VALUE
--------- ---------
COMMON STOCKS -- 53.12%
BASIC INDUSTRY -- 1.74%
IMC Global, Inc. ............... 1,000 $ 39,125
Mead Corp. ..................... 1,200 69,750
Potash Corp. of Saskatchewan ... 1,000 85,000
---------
193,875
---------
CAPITAL GOODS -- 4.00%
AGCO Corp. ..................... 2,000 57,250
Case Corp. ..................... 1,800 98,100
Fluor Corp. .................... 700 43,925
General Electric Co. ........... 900 88,987
Illinois Tool Works, Inc. ...... 500 39,938
Philips Electronics N.V. ....... 1,950 78,000
York International Corp. ....... 700 39,113
---------
445,313
---------
CONSUMER CYCLICAL -- 4.74%
Chrysler Corp. ................. 2,000 66,000
Department 56, Inc.* ........... 3,000 74,250
Fleetwood Enterprises, Inc. .... 2,400 66,000
Harley-Davidson, Inc. .......... 500 23,500
Magna International, Inc., Cl.
A ............................ 1,500 83,625
Planet Hollywood International,
Inc., Cl. A* ................. 1,000 19,750
Titan Wheel International,
Inc. ......................... 3,000 38,250
Wal-Mart Stores, Inc. .......... 3,000 68,625
Warnaco Group, Inc., Cl. A ..... 3,000 88,875
---------
528,875
---------
CONSUMER SERVICES -- 2.12%
First Data Corp. ............... 1,500 54,750
Tribune Co. .................... 1,000 78,875
Wendy's International, Inc. .... 5,000 102,500
---------
236,125
---------
CONSUMER STAPLES -- 6.10%
Albertson's, Inc. .............. 2,900 103,312
Coca-Cola Co. .................. 2,400 126,300
Gillette Co. ................... 2,000 155,500
Procter & Gamble Co. ........... 2,000 215,000
Walgreen Co. ................... 2,000 80,000
---------
680,112
---------
ENERGY -- 5.94%
Atlantic Richfield Co. ......... 700 92,750
Exxon Corp. .................... 2,000 196,000
Repsol S.A., ADR ............... 2,100 80,063
Schlumberger, Ltd. ............. 600 59,925
Williams Cos., Inc. ............ 4,200 157,500
YPF Sociedad Anonima, ADS ...... 3,000 75,750
---------
661,988
---------
FINANCE -- 6.89%
Bank of New York ............... 3,000 101,250
BankAmerica Corp. .............. 1,000 99,750
SHARES VALUE
--------- ---------
Citicorp ....................... 1,950 $ 200,850
Echelon International Corp.,
Inc.* ........................ 80 1,250
Meditrust, Inc. ................ 2,700 108,000
National Golf Properties,
Inc. ......................... 2,500 79,063
Norwest Corp. .................. 3,400 147,900
Travelers , Inc. ............... 665 30,174
---------
768,237
---------
HEALTH -- 7.75%
Aetna, Inc. .................... 561 44,880
Bristol-Myers Squibb Co. ....... 1,000 108,750
Columbia/HCA Healthcare
Corp. ........................ 4,050 165,038
DePuy, Inc.* ................... 3,500 70,875
Elan Corp., PLC* ............... 4,500 149,625
ESC Medical Systems, Ltd.* ..... 450 11,475
Integrated Health Services,
Inc. ......................... 5,200 126,750
Johnson & Johnson .............. 2,400 119,400
OccuSystems, Inc.* ............. 2,500 67,500
---------
864,293
---------
TECHNOLOGY -- 9.06%
AirTouch Communications,
Inc.* ........................ 1,500 37,875
Bell & Howell Co.* ............. 2,000 47,500
Hewlett-Packard Co. ............ 900 45,225
Intel Corp. .................... 800 104,750
Kemet Corp.* ................... 4,000 93,000
Lam Research Corp.* ............ 2,000 56,250
Microsoft Corp.* ............... 1,000 82,625
Oracle Corp. ................... 3,125 130,469
Raytheon Co. ................... 2,200 105,875
Sun Microsystems, Inc. ......... 2,000 51,375
Tektronix, Inc. ................ 2,500 128,125
Ultratech Stepper, Inc.* ....... 3,500 83,125
VeriFone, Inc.* ................ 1,500 44,250
---------
1,010,444
---------
TRANSPORTATION -- 1.52%
Federal Express Corp.* ......... 3,800 169,100
---------
UTILITIES -- 3.26%
AT & T Corp. ................... 1,200 52,200
BellSouth Corp. ................ 1,500 60,562
CILCORP, Inc. .................. 1,200 43,950
Florida Progress Corp. ......... 1,200 38,700
Pacific Telesis Group, Inc. .... 1,500 55,125
Texas Utilities, Inc. .......... 1,000 40,750
Wisconsin Energy Corp. ......... 2,700 72,562
---------
363,849
---------
TOTAL COMMON STOCKS
(cost $3,964,106).............. 5,922,211
---------
PREFERRED STOCKS -- 0.13%
(cost $12,213)
Aetna, Inc. Convertible
Preferred 6.25% ............... 187 14,843
---------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC. (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- ---------
BONDS AND NOTES -- 38.39%
AUTO -- 1.04%
General Motors Acceptance Corp.
8.875%, 06/01/10 .............. $ 100,000 $ 115,875
---------
BANKING -- 1.98%
International American
Development Bank
9.500%, 10/15/97 .............. 100,000 102,750
International American
Development Bank
8.875%, 06/01/09 .............. 100,000 118,625
---------
221,375
---------
BEVERAGES -- 0.90%
Coca-Cola Co.
6.625%, 10/01/02 .............. 100,000 100,375
---------
CHEMICALS -- 0.91%
DuPont (E.I.) DeNemours & Co.
6.750%, 10/15/02 .............. 100,000 101,250
---------
FINANCE COMPANIES -- 3.49%
Chemical Master Credit Card
Trust
5.980%, 09/15/08 .............. 200,000 189,973
Discover Card Credit Trust
6.750%, 02/16/02 .............. 200,000 199,063
---------
389,036
---------
TELEPHONE UTILITY -- 6.39%
Bell of Pennsylvania
Putable Debentures
8.350%, 12/15/30 .............. 200,000 233,750
BellSouth Capital Funding Corp.
6.040%, 11/15/26 .............. 200,000 198,250
Chesapeake & Potomac Telephone
Co. of Virginia Debentures
8.375%, 10/01/29 .............. 100,000 115,875
New Jersey Bell Telephone Co.
7.850%, 11/15/29 .............. 150,000 164,250
---------
712,125
---------
U.S. GOVERNMENT AGENCIES -- 12.85%
Federal Farm Credit Bank
5.800%, 12/18/00 .............. 100,000 97,281
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 ............. 3,513 3,513
Federal Home Loan Mortgage Corp.
8.750%, 04/01/01 .............. 34,954 35,653
PRINCIPAL
AMOUNT VALUE
--------- ---------
Federal Home Loan Mortgage Corp.
10.150%, 04/15/06 ............. $ 22,730 $ 23,668
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 .............. 2,062 2,209
Government National Mortgage
Association Pool #30111
9.000%, 05/15/09 .............. 18,207 19,185
Government National Mortgage
Association Pool #23653
9.500%, 06/15/09 .............. 12,483 13,493
Government National Mortgage
Association Pool #32147
9.500%, 08/15/09 .............. 12,939 13,987
Government National Mortgage
Association Pool #161621
9.000%, 07/15/16 .............. 118,589 124,963
Tennessee Valley Authority
5.980%, 04/01/36 .............. 500,000 506,875
---------
1,432,327
---------
U.S. GOVERNMENT OBLIGATIONS -- 10.83%
United States Treasury Notes
5.875%, 03/31/99 .............. 200,000 199,874
United States Treasury Notes
6.750%, 06/30/99 .............. 100,000 101,805
United States Treasury Notes
6.875%, 07/31/99 .............. 100,000 102,800
United States Treasury Notes
6.375%, 08/15/02 .............. 100,000 100,763
United States Treasury Notes
7.250%, 05/15/04 .............. 200,000 210,562
United States Treasury Notes
7.250%, 08/15/04 .............. 100,000 105,298
United States Treasury Notes
6.500%, 05/15/05 .............. 100,000 100,694
United States Treasury Notes
6.875%, 05/15/06 .............. 150,000 154,627
United States Treasury Bonds
11.625%, 11/15/04 ............. 100,000 132,040
---------
1,207,743
---------
TOTAL BONDS AND NOTES
(cost $4,122,574) ............. 4,280,106
---------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC. (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- ---------
COMMERCIAL PAPER -- 7.05%
Toyota Motor Credit Co.
6.45%, 01/02/97 ............... $ 418,000 $ 417,925
Beneficial Corp.
5.335%, 01/17/97 .............. 65,000 65,000
U.S. Central Credit Union
5.320%, 01/27/97 .............. 19,000 18,927
General Electric Capital Corp.
5.371%, 01/30/97 .............. 284,000 284,000
---------
TOTAL COMMERCIAL PAPER
(cost $785,852) ............... 785,852
---------
SHARES VALUE
-------- ----------
OTHER SHORT TERM
INVESTMENTS -- 0.86%
MONEY MARKET FUNDS
Dreyfus Money Market Fund ...... 78,399 $ 78,399
Federated Prime Obligation
Fund .......................... 17,000 17,000
-----------
TOTAL MONEY MARKET FUNDS
(cost $95,399) ................ 95,399
-----------
TOTAL INVESTMENTS -- 99.55%
(cost $8,980,144) ............. 11,098,411
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.45% ... 49,654
-----------
NET ASSETS -- 100% ............. $11,148,065
===========
* Non-income producing security
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC.
PRINCIPAL
AMOUNT VALUE
--------- ---------
MUNICIPAL BONDS
(TAX EXEMPT) -- 97.24%
ARIZONA -- 5.99%
Bullhead City, Arizona Parkway
Revenue
6.100%, 01/01/07 ............. $ 250,000 $ 256,875
Maricopa County School District
#93
Arizona Unlimited Tax General
Obligation
6.400%, 07/01/06 ............. 500,000 550,000
Salt River Project Arizona
Agriculture Improvement &
Power District Electric
System Revenue
5.625%, 01/01/06 ............. 250,000 265,313
---------
1,072,188
---------
CALIFORNIA -- 5.85%
California State Public Works
Board Lease Revenue
5.200%, 12/01/09 ............. 500,000 490,000
City of Fresno, California
Sewer System Revenue
6.250%, 09/01/14 ............. 250,000 276,562
Fresno, California
Unified School District,
General Obligation
5.875%, 08/01/15 ............. 275,000 280,156
---------
1,046,718
---------
COLORADO -- 2.67%
Denver, Colorado City & County
General Obligation
5.000%, 10/01/10 ............. 500,000 478,125
---------
CONNECTICUT -- 3.14%
Connecticut State Unlimited Tax
General Obligation
5.400%, 03/15/08 ............. 550,000 562,375
---------
FLORIDA -- 2.92%
Port St. Lucie, Florida
Utility System Revenue
5.900%, 09/01/09 ............. 500,000 523,125
---------
ILLINOIS -- 16.62%
Chicago, Illinois O'Hare
International Airport Revenue
5.000%, 01/01/16 ............. 500,000 458,125
Chicago, Illinois Water Revenue
6.000%, 11/01/15 ............. 500,000 554,375
Illinois State Sales Tax Revenue
5.400%, 06/15/13 ............. 550,000 529,375
Illinois State Toll Highway
Authority Revenue, Series A
6.300%, 01/01/12 ............. 275,000 297,688
Northwest Suburban Municipal
Joint Action Water Agency
Illinois Contract Revenue
6.450%, 05/01/07 ............. 400,000 445,500
Northwest Water Commission
Illinois, Cook & Lake Revenue
5.000%, 05/01/13 ............. 500,000 466,875
Sangamon County, Illinois Tax
General Obligation
6.500%, 03/01/08 ............. 200,000 223,750
---------
2,975,688
---------
PRINCIPAL
AMOUNT VALUE
--------- ---------
INDIANA -- 3.28%
Peru, Indiana Community School
Corp. Revenue
6.750%, 01/01/09 ............. $ 550,000 $ 587,812
---------
KENTUCKY -- 3.17%
Louisville & Jefferson County
Met. Sewer Dist. Rev., Series
A
5.250%, 05/15/10 ............. 575,000 567,094
---------
MASSACHUSETTS -- 2.93%
Massachusetts State Water
Resource Authority Revenue
6.000%, 11/01/08 ............. 500,000 525,000
---------
MINNESOTA -- 2.75%
Saint Paul, Minnesota
Independent School District
#625 General Obligation,
Series C
5.250%, 02/01/13 ............. 500,000 492,500
---------
MISSISSIPPI -- 1.49%
Mississippi State Unlimited
General Obligation, Series B
5.900%, 11/15/11 ............. 250,000 266,563
---------
MISSOURI -- 3.16%
Cape Girardeau, Missouri
Waterworks System Revenue
7.450%, 03/01/05 ............. 500,000 565,625
---------
NEBRASKA -- 1.72%
Grand Island, Nebraska Sewer
Project Revenue
5.850%, 04/01/08 ............. 200,000 208,750
Nebraska Public Power Dist.
Revenue
5.400%, 01/01/10 ............. 100,000 99,625
---------
308,375
---------
NEVADA -- 5.10%
Clark County, Nevada School
District General Obligation
5.250%, 06/01/07 ............. 500,000 505,000
Henderson, Nevada Water and
Sewer Unlimited Tax General
Obligation
5.375%, 06/01/07 ............. 400,000 408,500
---------
913,500
---------
NEW YORK -- 2.69%
New York State Dormitory
Authority Revenue
5.500%, 07/01/12 ............. 500,000 482,500
---------
NORTH CAROLINA -- 1.54%
North Carolina East Municipal
Power Agency System Revenue
7.000%, 01/01/08 ............. 250,000 275,938
---------
OHIO -- 2.82%
Montgomery County, Ohio
Sewer System Revenue
5.600%, 09/01/11 ............. 500,000 505,625
---------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC. (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- ---------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA -- 6.10%
Pennsylvania Intergovernmental
Corp. Authority, Special
Tax Revenue
5.450%, 06/15/08 ............. $ 500,000 $ 508,125
Pennsylvania State Higher
Education Revenue Bonds,
Series A
5.600%, 09/01/10 ............. 575,000 584,344
----------
1,092,469
----------
RHODE ISLAND -- 3.21%
State of Rhode Island Refunding
General Obligation
7.000%, 06/15/05 ............. 500,000 575,000
----------
TENNESSEE -- 2.84%
Shelby County, Tennessee
General Obligation, Series B
5.875%, 06/01/18 ............. 500,000 509,375
----------
TEXAS -- 10.35%
Austin, Texas Limited Tax
General Obligation
7.250%, 09/01/03 ............. 350,000 398,125
Bexar County, Texas
Detention Facilities Limited
Tax General Obligation
5.750%, 06/15/10 ............. 500,000 512,500
Garland, Texas Limited Tax
General Obligation
5.800%, 08/15/12 ............. 350,000 356,125
Texas A&M University Revenues
Financing System
5.375%, 05/15/14 ............. 600,000 587,250
----------
1,854,000
----------
PRINCIPAL
AMOUNT VALUE
--------- ----------
WASHINGTON -- 1.55%
Washington Public Power Supply
System, Nuclear Project #1,
Refunding Revenue, 1990-C
7.625%, 07/01/01 ............. $ 250,000 $ 277,812
-----------
WISCONSIN -- 5.35%
Brookfield, Wisconsin Unlimited
Tax Corp. General Obligation
6.900%, 03/15/03 ............. 250,000 279,375
Wisconsin State Clean Water
Revenue Bond
5.300%, 06/01/12 ............. 700,000 679,000
-----------
958,375
-----------
TOTAL MUNICIPAL BONDS
(cost $17,056,136) ........... 17,415,782
-----------
SHARES
---------
TAX EXEMPT
MONEY MARKET FUNDS -- 1.31%
(cost $234,221)
Nuveen Tax Exempt Fund ......... 234,221 234,221
-----------
TOTAL INVESTMENTS -- 98.55%
(cost $17,290,357) ............ 17,650,003
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 1.45% ... 260,529
-----------
NET ASSETS -- 100% ............. $17,910,532
===========
</TABLE>
See notes to financial statements.
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
IAA TRUST MONEY MARKET SERIES
PRINCIPAL
AMOUNT VALUE
---------- ----------
COMMERCIAL PAPER -- 98.60%
AUTO & TRUCK -- 13.35%
Daimler-Benz NA Corp.
5.30%, 02/14/97 .............. $ 500,000 $ 496,761
Daimler-Benz NA Corp.
5.33%, 03/20/97 .............. 1,350,000 1,334,410
Ford Motor Credit Co.
5.57%, 01/08/97 .............. 530,000 530,000
Ford Motor Credit Co.
5.36%, 01/16/97 .............. 750,000 750,000
Ford Motor Credit Co.
5.41%, 03/24/97 .............. 750,000 750,000
Toyota Motor Credit Co.
6.45%, 01/02/97 .............. 622,000 621,888
Toyota Motor Credit Co.
5.28%, 02/10/97 .............. 430,000 427,477
Toyota Motor Credit Co.
5.27%, 02/18/97 .............. 646,000 641,461
----------
5,551,997
----------
COMMERCIAL BANKING -- 5.54%
Norwest Corp.
5.29%, 01/09/97 .............. 1,030,000 1,028,789
U.S. Central Credit Union
5.32%, 01/27/97 .............. 1,281,000 1,276,078
----------
2,304,867
----------
COMMERCIAL FINANCE -- 2.43%
CIT Group Holdings, Inc.
5.38%, 02/12/97 .............. 1,010,000 1,010,000
----------
COMMERCIAL SERVICES -- 4.12%
PHH Corp.
5.32%, 01/24/97 .............. 1,720,000 1,714,154
----------
CONSUMER FINANCE -- 35.09%
American Express Credit Corp.
5.28%, 01/02/97 .............. 910,000 910,000
American Express Credit Corp.
5.40%, 01/30/97 .............. 350,000 350,000
American General Finance Corp.
5.37%, 01/29/97 .............. 705,000 705,000
American General Finance Corp.
5.36%, 02/03/97 .............. 600,000 600,000
American General Finance Corp.
5.37%, 03/04/97 .............. 400,000 400,000
Associates Corp. of N. America
5.35%, 01/08/97 .............. 500,000 500,000
Associates Corp. of N. America
5.39%, 01/22/97 .............. 729,000 729,000
Associates Corp. of N. America
5.45%, 02/19/97 .............. 593,000 593,000
AVCO Financial Services, Inc.
5.40%, 01/15/97 .............. 980,000 980,000
AVCO Financial Services, Inc.
5.30%, 02/12/97 .............. 655,000 650,950
Beneficial Corp.
5.33%, 01/17/97 .............. 499,000 499,000
Beneficial Corp.
5.52%, 01/30/97 .............. 825,000 825,000
Beneficial Corp.
5.40%, 04/09/97 .............. 700,000 700,000
Commercial Credit Co.
5.47%, 01/08/97 .............. 570,000 570,000
Household Finance Corp.
5.47%, 01/13/97 .............. 740,000 740,000
PRINCIPAL
AMOUNT VALUE
---------- ----------
Household Finance Corp.
5.43%, 01/23/97 .............. $ 400,000 $ 400,000
Household Finance Corp.
5.40%, 02/06/97 .............. 706,000 706,000
International Lease Finance
Corp.
5.30%, 01/23/97 .............. 548,000 546,225
International Lease Finance
Corp.
5.28%, 02/05/97 .............. 772,000 768,037
International Lease Finance
Corp.
5.30%, 03/06/97 .............. 450,000 445,760
Prudential Funding Corp.
5.30%, 01/07/97 .............. 600,000 600,000
Prudential Funding Corp.
5.46%, 02/24/97 .............. 650,000 650,000
Prudential Funding Corp.
5.37%, 04/15/97 .............. 721,000 721,000
-----------
14,588,972
-----------
ELECTRONICS -- 4.79%
General Electric Capital Corp.
5.39%, 01/21/97 .............. 800,000 800,000
General Electric Capital Corp.
5.41%, 03/17/97 .............. 900,000 900,000
General Electric Capital Corp.
5.42%, 05/08/97 .............. 290,000 290,000
----------
1,990,000
----------
FARM MACHINERY & EQUIPMENT --
4.81%
John Deere Capital Corp.
5.38%, 01/27/97 .............. 456,000 456,000
John Deere Capital Corp.
5.35%, 01/29/97 .............. 1,144,000 1,144,000
John Deere Capital Corp.
5.48%, 02/04/97 .............. 400,000 400,000
----------
2,000,000
----------
FOOD PRODUCTS -- 5.28%
Philip Morris Cos., Inc.
6.45%, 01/02/97 .............. 1,600,000 1,599,713
Philip Morris Cos., Inc.
5.32%, 02/03/97 .............. 600,000 597,074
----------
2,196,787
----------
FOREIGN GOVERNMENTS -- 2.76%
Province of Quebec
5.43%, 01/06/97 .............. 1,150,000 1,149,133
----------
INSURANCE/MULTI-LINE -- 8.31%
Transamerica Financial Corp.
5.31%, 01/28/97 .............. 953,000 949,205
Transamerica Financial Corp.
5.28%, 03/14/97 .............. 650,000 643,136
USAA Capital Corp.
5.34%, 01/13/97 .............. 1,030,000 1,028,167
USAA Capital Corp.
5.32%, 02/25/97 .............. 590,000 585,205
USAA Capital Corp.
5.32%, 02/27/97 .............. 250,000 247,894
----------
3,453,607
----------
OFFICE EQUIPMENT -- 4.19%
IBM Credit Corp.
5.33%, 01/16/97 .............. 520,000 502,000
IBM Credit Corp.
5.36%, 03/27/97 .............. 1,240,000 1,240,000
----------
1,742,000
----------
<PAGE>
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
IAA TRUST MONEY MARKET SERIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- -----------
COMMERCIAL PAPER (CONTINUED)
PHARMACEUTICALS -- 3.11%
Schering Corp.
5.31%, 02/11/97 .............. $1,300,000 $ 1,292,138
-----------
TELEPHONE/UTILITY -- 4.82%
Ameritech Corp.
5.33%, 02/13/97 .............. 2,019,000 2,006,146
-----------
TOTAL COMMERCIAL PAPER
(cost $40,999,801)............ 40,999,801
-----------
PRINCIPAL
AMOUNT VALUE
--------- -----------
BONDS & NOTES -- 1.20%
U.S. GOVERNMENT AGENCIES
(cost $500,000)
Student Loan Marketing
Association
6.07%, 07/03/97 .............. $ 500,000 $ 500,000
-----------
TOTAL INVESTMENTS -- 99.80%
(cost $41,499,801) ........... 41,499,801
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.20% .. 80,901
-----------
NET ASSETS -- 100% ............ $41,580,702
===========
See notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<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 $61,814,829,
$8,980,144, $17,290,357 and $41,499,801,
respectively)........................................ $92,715,243 $11,098,411 $17,650,003 $41,499,801
Cash................................................... 992 -- -- 88,766
Receivable for securities sold......................... 2,566,315 452,759 41,942 --
Receivable for capital stock sold...................... 43,723 10,300 -- --
Dividends and interest receivable...................... 201,253 65,344 274,905 150,476
Other assets........................................... 15,275 1,890 3,486 6,787
----------- ----------- ----------- -----------
Total assets......................................... 95,542,801 11,628,704 17,970,336 41,745,830
----------- ----------- ----------- -----------
LIABILITIES:
Payable for securities purchased....................... 2,419,320 417,850 -- --
Payable for capital stock redeemed..................... 42,845 9,027 -- --
Distributions payable.................................. 73,321 43,062 36,942 146,338
Accrued expenses and other liabilities................. 68,785 10,700 22,862 18,790
----------- ----------- ----------- -----------
Total liabilities.................................... 2,604,271 480,639 59,804 165,128
----------- ----------- ----------- -----------
NET ASSETS:
Applicable to 4,807,351, 838,532, 2,087,721 and
41,580,928 shares outstanding, respectively.......... $92,938,530 $11,148,065 $17,910,532 $41,580,702
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital paid-in........................................ $59,729,847 $ 9,031,438 $17,618,187 $41,580,830
Undistributed (Distributions in excess of) net
investment income.................................... (417) 4 793 --
Accumulated net realized gain (loss) on investments.... 2,308,686 (1,644) (68,094) (128)
Net unrealized appreciation of investments............. 30,900,414 2,118,267 359,646 --
----------- ----------- ----------- -----------
$92,938,530 $11,148,065 $17,910,532 $41,580,702
=========== =========== =========== ===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE.......... $19.33 $13.29 $8.58 $1.00
====== ====== ===== =====
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS for the Six Months Ended December 31, 1996 (unaudited)
- --------------------------------------------------------------------------------
<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>
INVESTMENT INCOME:
Dividends.............................................. $ 606,108 $ 47,446 $ -- $ --
Interest............................................... 334,224 171,903 482,911 953,632
---------- --------- --------- ---------
Total investment income.............................. 940,332 219,349 482,911 953,632
---------- --------- --------- ---------
EXPENSES:
Investment advisory fees (Note E)...................... 327,272 39,069 44,883 87,408
Distribution expenses (Note E)......................... 21,648 8,887 12,356 --
Legal fees............................................. 1,690 1,477 1,484 2,760
Transfer agent fees (Note E)........................... 35,328 4,236 7,481 20,601
Auditing fees.......................................... 21,698 2,513 3,769 8,659
Printing............................................... 5,704 571 940 2,176
Directors' fees........................................ 2,521 605 655 754
Administration fees (Note E)........................... 38,486 4,406 7,944 19,254
Accounting fees (Note E)............................... 26,163 14,563 17,481 17,539
Insurance.............................................. 10,611 1,382 2,628 5,157
Registration fees...................................... 2,145 1,159 1,211 1,260
Miscellaneous.......................................... 3,025 613 1,008 1,914
---------- --------- --------- ---------
Total expenses....................................... 496,291 79,481 101,840 167,482
---------- --------- --------- ---------
NET INVESTMENT INCOME................................... 444,041 139,868 381,071 786,150
---------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS --
Note (D):
Net realized gain (loss) on investments................ 3,290,201 215,772 (35,661) (128)
Net change in unrealized appreciation on investments... 5,004,665 417,619 445,721 --
---------- --------- --------- ---------
Net realized and unrealized gain (loss) on
investments.......................................... 8,294,866 633,391 410,060 (128)
---------- --------- --------- ---------
INCREASE IN NET ASSETS FROM OPERATIONS.................. $8,738,907 $ 773,259 $ 791,131 $ 786,022
========== ========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST IAA TRUST ASSET
GROWTH FUND, INC. ALLOCATION FUND, INC.
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/96 ENDED 12/31/96 ENDED
(UNAUDITED) 6/30/96 (UNAUDITED) 6/30/96
-------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .............................. $ 444,041 $ 1,005,476 $ 139,868 $ 293,412
Net realized gain on investments ................... 3,290,201 7,560,208 215,772 736,443
Net change in unrealized appreciation of investments 5,004,665 6,380,518 417,619 385,622
------------ ------------ ------------ ------------
Increase in net assets from operations ............. 8,738,907 14,946,202 773,259 1,415,477
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income .................................. (905,861) (1,047,434) (139,539) (293,737)
Realized gains on investments ...................... (5,135,058) (6,467,667) (670,310) (250,319)
------------ ------------ ------------ ------------
(6,040,919) (7,515,101) (809,849) (544,056)
------------ ------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS -- (NET) Note (C) ........ 5,440,099 6,792,238 1,101,709 (328,304)
------------ ------------ ------------ ------------
Total increase in net assets ....................... 8,138,087 14,223,339 1,065,119 543,117
NET ASSETS:
Beginning of period ................................ 84,800,443 70,577,104 10,082,946 9,539,829
------------ ------------ ------------ ------------
End of period ...................................... $ 92,938,530 $ 84,800,443 $11,148,065 $10,082,946
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
IAA TRUST TAXABLE FIXED INCOME
TAX EXEMPT BOND FUND, SERIES FUND, INC.
INC. MONEY MARKET SERIES
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/96 ENDED 12/31/96 ENDED
(UNAUDITED) 6/30/96 (UNAUDITED) 6/30/96
-------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ..................................... $ 381,071 $ 806,636 $ 786,150 $ 1,907,720
Net realized gain (loss) on investments ................... (35,661) 27,534 (128) --
Net change in unrealized appreciation of investments ...... 445,721 141,343 -- --
------------ ------------ ------------ ------------
Increase in net assets from operations .................... 791,131 975,513 786,022 1,907,720
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income ......................................... (378,552) (808,361) (786,211) (1,907,605)
Realized gains on investments ............................. (48,659) (46,251) -- --
------------ ------------ ------------ ------------
(427,211) (854,612) (786,211) (1,907,605)
------------ ------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS -- (NET) Note (C) ............... (197,107) (1,209,728) 7,916,701 (2,751,388)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets ................... 166,813 (1,088,827) 7,916,512 (2,751,273)
NET ASSETS:
Beginning of period ....................................... 17,743,719 18,832,546 33,664,190 36,415,463
------------ ------------ ------------ ------------
End of period ............................................. $ 17,910,532 $ 17,743,719 $ 41,580,702 $ 33,664,190
============ ============ ============ ============
</TABLE>
See notes to financial statements.
<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.
SIX MONTHS
ENDED YEARS ENDED JUNE 30,
12/31/96 ------------------------------------------
(UNAUDITED) 1996 1995 1994 1993
--------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................... $ 18.88 $ 17.23 $ 15.16 $ 17.55 $ 17.23
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.09 0.23 0.22 0.27 0.25
Net gains or losses on securities (both realized and
unrealized)............................................... 1.69 3.23 3.45 (0.63) 1.67
--------- --------- --------- --------- ---------
Total from investment operations.......................... 1.78 3.46 3.67 (0.36) 1.92
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.20) (0.25) (0.17) (0.22) (0.29)
Distributions from capital gains............................ (1.13) (1.56) (1.43) (1.81) (1.31)
--------- --------- --------- --------- ---------
Total distributions....................................... (1.33) (1.81) (1.60) (2.03) (1.60)
--------- --------- --------- --------- ---------
Net asset value, end of period............................... $ 19.33 $ 18.88 $ 17.23 $ 15.16 $ 17.55
========= ========= ========= ========= =========
TOTAL RETURN................................................. 20.64%** 21.51% 26.68% (2.42%) 11.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 92,939 $ 84,800 $ 70,577 $ 59,448 $ 70,785
Ratio of expenses to average net assets*.................... 1.14%** 1.12% 1.14% 1.24% 1.18%
Ratio of net investment income to average net assets*....... 1.02%** 1.30% 1.41% 1.03% 1.36%
Portfolio turnover.......................................... 27.30%** 32.95% 31.84% 49.12% 55.36%
Average Commission Rate Paid***............................. $ 0.0588 $ 0.0645 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
1992
---------
<S> <C>
Net asset value, beginning of period......................... $ 17.35
---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.35
Net gains or losses on securities (both realized and
unrealized)............................................... 0.40
---------
Total from investment operations.......................... 0.75
---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.38)
Distributions from capital gains............................ (0.49)
---------
Total distributions....................................... (0.87)
---------
Net asset value, end of period............................... $ 17.23
=========
TOTAL RETURN................................................. 4.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 76,147
Ratio of expenses to average net assets*.................... 0.85%
Ratio of net investment income to average net assets*....... 1.91%
Portfolio turnover.......................................... 45.50%
Average Commission Rate Paid***............................. N/A
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
ASSET ALLOCATION FUND, INC.
SIX MONTHS
ENDED YEARS ENDED JUNE 30,
12/31/96 ------------------------------------------
(UNAUDITED) 1996 1995 1994 1993
--------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................... $ 13.39 $ 12.29 $ 11.08 $ 11.60 $ 11.20
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.18 0.37 0.36 0.34 0.57
Net gains or losses on securities (both realized and
unrealized)............................................... 0.77 1.41 1.38 (0.25) 0.47
--------- --------- --------- --------- ---------
Total from investment operations.......................... 0.95 1.78 1.74 0.09 1.04
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.18) (0.37) (0.34) (0.34) (0.57)
Distributions from capital gains............................ (0.87) (0.31) (0.18) (0.27) (0.07)
Distributions from return of capital........................ (0.00) (0.00) (0.01) (0.00) (0.00)
--------- --------- --------- --------- ---------
Total distributions....................................... (1.05) (0.68) (0.53) (0.61) (0.64)
--------- --------- --------- --------- ---------
Net asset value, end of period............................... $ 13.29 $ 13.39 $ 12.29 $ 11.08 $ 11.60
========= ========= ========= ========= =========
TOTAL RETURN................................................. 15.14%** 14.74% 16.29% 0.71% 9.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 11,148 $ 10,083 $ 9,540 $ 8,653 $ 6,663
Ratio of expenses to average net assets*.................... 1.53%** 1.44% 1.46% 1.78% 1.71%
Ratio of net investment income to average net assets*....... 2.69%** 2.81% 3.18% 2.98% 4.97%
Portfolio turnover.......................................... 16.34%** 33.77% 21.03% 17.39% 36.70%
Average Commission Rate Paid***............................. $ 0.0767 $ 0.0861 N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
1992
---------
<S> <C>
Net asset value, beginning of period......................... $ 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 period............................... $ 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
</TABLE>
* Average net assets have been computed based on the aggregate value of the
Fund's daily net assets.
** Annualized.
*** 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.
SIX MONTHS
ENDED YEARS ENDED JUNE 30,
12/31/96 ------------------------------------------
(UNAUDITED) 1996 1995 1994 1993
--------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................... $ 8.41 $ 8.36 $ 8.19 $ 9.11 $ 8.78
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.18 0.37 0.39 0.39 0.46
Net gains or losses on securities (both realized and
unrealized)............................................... 0.19 0.07 0.20 (0.54) 0.33
--------- --------- --------- --------- ---------
Total from investment operations.......................... 0.37 0.44 0.59 (0.15) 0.79
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.18) (0.37) (0.39) (0.39) (0.46)
Distributions from capital gains............................ (0.02) (0.02) (0.03) (0.38) 0.00
--------- --------- --------- --------- ---------
Total distributions....................................... (0.20) (0.39) (0.42) (0.77) (0.46)
--------- --------- --------- --------- ---------
Net asset value, end of period.............................. $ 8.58 $ 8.41 $ 8.36 $ 8.19 $ 9.11
========= ========= ========= ========= =========
TOTAL RETURN................................................. 8.93%** 5.30% 7.51% (1.86%) 9.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 17,911 $ 17,744 $ 18,833 $ 19,095 $ 20,026
Ratio of expenses to average net assets*.................... 1.13%** 1.08% 1.06% 1.15% 1.03%
Ratio of net investment income to average net assets*....... 4.25%** 4.30% 4.79% 4.47% 5.11%
Portfolio turnover.......................................... 10.59%** 14.75% 24.89% 41.94% 39.60%
</TABLE>
<TABLE>
<CAPTION>
1992
---------
<S> <C>
Net asset value, beginning of period......................... $ 8.44
---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.49
Net gains or losses on securities (both realized and
unrealized)............................................... 0.34
---------
Total from investment operations.......................... 0.83
---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.49)
Distributions from capital gains............................ 0.00
---------
Total distributions....................................... (0.49)
---------
Net asset value, end of period.............................. $ 8.78
=========
TOTAL RETURN................................................. 10.05%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 17,872
Ratio of expenses to average net assets*.................... 0.95%
Ratio of net investment income to average net assets*....... 5.65%
Portfolio turnover.......................................... 20.30%
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
SIX MONTHS
ENDED YEARS ENDED JUNE 30,
12/31/96 ------------------------------------------
(UNAUDITED) 1996 1995 1994 1993
--------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.02 0.05 0.05 0.03 0.02
--------- --------- --------- --------- ---------
Total from investment operations.......................... 0.02 0.05 0.05 0.03 0.02
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.02) (0.05) (0.05) (0.03) (0.02)
--------- --------- --------- --------- ---------
Total distributions....................................... (0.02) (0.05) (0.05) (0.03) (0.02)
--------- --------- --------- --------- ---------
Net asset value, end of period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN................................................. 4.54%** 4.82% 4.85% 2.86% 2.41%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 41,581 $ 33,664 $ 36,415 $ 38,699 $ 33,302
Ratio of expenses to average net assets* +.................. 0.96%** 0.90% 0.73% 0.56% 0.58%
Ratio of net investment income to average net assets*....... 4.50%** 4.74% 4.80% 2.83% 2.67%
</TABLE>
<TABLE>
<CAPTION>
1992
---------
<S> <C>
Net asset value, beginning of period......................... $ 1.00
---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income....................................... 0.03
---------
Total from investment operations.......................... 0.03
---------
LESS DISTRIBUTIONS
Dividends from net investment income........................ (0.03)
---------
Total distributions....................................... (0.03)
---------
Net asset value, end of period............................... $ 1.00
=========
TOTAL RETURN................................................. 3.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........................ $ 10,191
Ratio of expenses to average net assets* +.................. 1.32%
Ratio of net investment income to average net assets*....... 3.60%
</TABLE>
* Average net assets have been computed based on the aggregate value of the
Fund's daily net assets.
** Annualized.
+ 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>
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1996
(unaudited)
- --------------------------------------------------------------------------------
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 statements 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 December 31, 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 100,000,000. 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>
<CAPTION>
GROWTH FUND ASSET ALLOCATION FUND
------------------------------------------- ------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996 DECEMBER 31, 1996 JUNE 30, 1996
--------------------- --------------------- -------------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.............................. 238,429 $ 4,458,008 367,621 $6,620,827 76,121 $ 998,050 174,733 $2,278,506
Shares issued through reinvestment of
dividends............................... 331,159 5,731,159 416,875 7,132,281 51,852 657,018 27,062 350,628
-------- ----------- -------- ---------- ------- ---------- -------- ----------
569,588 10,189,167 784,496 13,753,108 127,973 1,655,068 201,795 2,629,134
-------- ----------- -------- ---------- ------- ---------- -------- ----------
Shares redeemed.......................... (254,463) (4,749,068) (388,989) (6,960,870) (42,503) (553,359) (224,935)(2,957,438)
-------- ----------- -------- ---------- ------- ---------- -------- ----------
Net increase (decrease).................. 315,125 $ 5,440,099 395,507 $6,792,238 85,470 $1,101,709 (23,140) $ (328,304)
======== =========== ======== ========== ======= ========== ======== ==========
</TABLE>
<PAGE>
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1996
(unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAXABLE FIXED INCOME SERIES FUND
TAX EXEMPT BOND FUND MONEY MARKET SERIES
------------------------------------------ ----------------------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1996 JUNE 30, 1996 DECEMBER 31, 1996 JUNE 30, 1996
-------------------- --------------------- ------------------------ --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold..................... 247,405 $2,126,873 63,839 $ 550,009 27,213,237 $27,213,237 51,403,909 $ 51,403,909
Shares issued through
reinvestment of dividends...... 32,889 280,671 64,497 549,480 636,823 636,823 1,795,132 1,795,132
-------- ---------- -------- ----------- ----------- ----------- ----------- ------------
280,294 2,407,544 128,336 1,099,489 27,850,060 27,850,060 53,199,041 53,199,041
-------- ---------- -------- ----------- ----------- ----------- ----------- ------------
Shares redeemed................. (303,144) (2,604,651) (271,157) (2,309,217) (19,933,359) (19,933,359) (55,950,429) (55,950,429)
-------- ---------- -------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease)......... (22,850) $ (197,107) (142,821) $(1,209,728) 7,916,701 $ 7,916,701 (2,751,388) $(2,751,388)
======== ========== ======== =========== =========== =========== =========== ============
</TABLE>
NOTE (D) INVESTMENT TRANSACTIONS: Purchases and sales of investment securities,
other than U.S. Government obligations and short-term notes for the six months
ended December 31, 1996 were:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth Fund.............................................................................. $ 11,007,823 $ 11,092,039
Asset Allocation Fund.................................................................... $ 1,031,576 $ 916,865
Tax Exempt Bond Fund..................................................................... $ 994,850 $ 982,375
</TABLE>
For the six months ended December 31, 1996, the aggregate cost of purchases and
proceeds from sales of U.S. Government Securities for the Asset Allocation Fund
was $99,844 and $0, respectively.
For both Federal income tax and financial statement purposes, the identified
cost of investments at December 31, 1996 was $61,814,829 for the Growth Fund,
$8,980,144 for the Asset Allocation Fund, $17,290,357 for the Tax Exempt Bond
Fund and $41,499,801 for the Money Market Series of Taxable Fixed Income Series
Fund.
The gross unrealized appreciation/depreciation for book and tax purposes at
December 31, 1996 consisted of the following:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
------------ -----------
<S> <C> <C>
Growth Fund............................................................................... $ 31,284,982 $ 384,568
Asset Allocation Fund..................................................................... $ 2,221,010 $ 102,743
Tax Exempt Bond Fund...................................................................... $ 449,563 $ 89,917
</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, FPS 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; 0.10% on the next
$50,000,000; and 0.05% of the balance. FPS Services, Inc., also serves as the
Funds' Accounting and Transfer Agent.
FPS 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 six
months ended December 31, 1996, for the Growth Fund, the Asset Allocation Fund
and the Tax Exempt Fund, the actual percentage of average daily net assets was
0.025%, 0.086% and 0.069%, respectively.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
An Annual Meeting of Stockholders was held on September 30, 1996 for IAA Trust
Growth Fund, Inc.; IAA Trust Asset Allocation Fund, Inc.; IAA Trust Tax Exempt
Bond Fund, Inc.; and IAA Trust Taxable Fixed Income Series Fund, Inc. At the
meetings, stockholders were asked to consider and act upon (1) the election of
seven (7) Directors for the ensuing year; (2) the ratification or rejection of
the selection by the Board of Directors of the firm of Coopers & Lybrand, L.L.P.
as auditors and accountants for the fiscal year ending June 30, 1997.
The results of all matters voted on by stockholders of the Funds at the Annual
Meetings held on September 30, 1996, were as follows:
A. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
IAA TRUST
IAA TRUST ASSET ALLOCATION
GROWTH FUND, INC. FUND, INC.
---------------------- ----------------------
WITHHOLD WITHHOLD
FOR AUTHORITY FOR AUTHORITY
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Ronald R. Warfield......................................... 2,839,474 24,372 525,890 0
Herbert G. Allen........................................... 2,840,388 23,458 525,890 0
Nancy J. Erickson.......................................... 2,810,877 52,969 522,467 3,423
William E. Klein, Sr....................................... 2,812,653 51,193 522,467 3,423
Ailene Miller.............................................. 2,837,542 26,304 522,826 3,064
Rollie D. Moore............................................ 2,840,091 23,755 522,826 3,064
Charlot R. Cole............................................ 2,839,401 24,445 525,890 0
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST TAXABLE
FIXED
INCOME SERIES FUND,
IAA TRUST TAX INC.
EXEMPT BOND FUND, INC. MONEY MARKET SERIES
---------------------- ----------------------
WITHHOLD WITHHOLD
FOR AUTHORITY FOR AUTHORITY
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Ronald R. Warfield......................................... 1,385,735 36,236 20,644,395 184,337
Herbert G. Allen........................................... 1,385,697 36,274 20,641,619 187,113
Nancy J. Erickson.......................................... 1,385,735 36,236 20,589,207 239,525
William E. Klein, Sr....................................... 1,385,735 36,236 20,586,431 242,301
Ailene Miller.............................................. 1,385,697 36,274 20,641,619 187,113
Rollie D. Moore............................................ 1,381,128 40,843 20,644,395 184,337
Charlot R. Cole............................................ 1,384,560 37,411 20,761,033 67,699
</TABLE>
B. SELECTION OF AUDITORS
<TABLE>
<CAPTION>
IAA TRUST GROWTH FUND, INC. IAA TRUST ASSET ALLOCATION FUND, INC.
- ---------------------------------------------------- ----------------------------------------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
2,786,481 716 76,649 511,931 48 13,911
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST TAXABLE FIXED
INCOME SERIES FUND, INC.
IAA TRUST TAX EXEMPT BOND FUND, INC. MONEY MARKET SERIES
- ---------------------------------------------------- ----------------------------------------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
1,397,243 0 24,728 20,599,982 0 228,750
</TABLE>
<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
Charlot R. Cole
Nancy J. Erickson
William E. Klein, Sr.
Ailene Miller
Rollie D. Moore
OFFICERS
Ronald R. Warfield, President
Bruce Finks, 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
FPS Broker Services, Inc.
King of Prussia, Pennsylvania
TRANSFER AGENT
FPS Services, Inc.
King of Prussia, Pennsylvania
CUSTODIAN
IAA Trust Company
Bloomington, Illinois
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
GENERAL COUNSEL
Paul M. Harmon, Esq.
Office of the General Counsel
Bloomington, Illinois
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.
F30-113-07 (2/97) 1
================================================================================
Semi-Annual Report
December 31, 1996
[LOGO]
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
