<PAGE> 1
PRESIDENT'S LETTER
DEAR SHAREHOLDER:
Unbelievable! Incredible! Unprecedented! Insane! These are just a few of the
terms that have been used to describe the stock market in 1999. Since the end of
1994, stocks have advanced at a compound rate in excess of 26% per year.
Nineteen ninety-nine was a record 5th year in a row of total return on stocks,
as measured by the S&P 500 Index, exceeding 20%. These stock returns were
achieved in spite of the fact that the bond market suffered its worst year since
1994 and the second worst since 1973. The total return on 30-year Treasury bonds
was -14.78%.
Large capitalization stocks and technology-related stocks were the market
leaders over the past year. Internet-related issues, in particular, exhibited
incredible performance and many companies that issued stock for the first time
saw their prices double, triple, or more on the first day at public trading. All
major domestic stock markets ended the year at record levels. Economic growth is
strong, unemployment is low, consumer confidence is high, and inflation appears
to be under control. This backdrop has been excellent for stocks, and valuation
levels combined with price performance reflect this.
Even so, some caution signals are visible. Over half of the gain in the S&P
500 was accounted for by just eight Technology stocks. Also, 230 stocks of the
S&P 500 are below their price level of two years ago. Price performance of
small, non-technology-related stocks has been poor. The number of stocks
declining in price has exceeded the number rising in price since the middle of
1998. The market's valuation, using conventional, time-tested measures, is at
levels never before seen and has been driven to that level mainly by the
performance of the largest companies. Stocks are "priced for perfection" and
susceptible to disappointments in response to negative news from any source.
One such source may be in the direction of interest rates, which have moved
significantly higher over the last half of the year. Booming growth stoked
concern that the pace of inflation would pick up and prompted three Federal
Reserve interest rate increases since June. Although rising interest rates
usually coincide with a declining stock market, such was not the case in 1999 as
stock investors ignored the bad news from the bond markets.
The key question for 2000 is how far the Federal Reserve must push interest
rates to achieve a slowdown in business activity. If the Fed is forced to keep
upward pressure on interest rates during the year, the stock and bond markets
could suffer lower than expected performance.
IAA TRUST GROWTH FUND, INC.
INCEPTION DATE 4/21/66
The annualized total returns for the Fund for the period ending December 31,
1999 are as follows:
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- ------ ------- --------
<S> <C> <C>
21.55% 22.28% 13.83%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested in the Fund.
The 21.55% return of the IAA Trust Growth Fund compares favorably to the
21.0% return of the S&P 500 Index and ranks in the upper half of its peer group.
The major provider of mutual fund analysis, Lipper, Inc., introduced a new
classification system in the third quarter of 1999. The Growth Fund is now
compared with Multi-Cap Core funds. Such funds generally invest in large
capitalization stocks and have wide latitude with respect to companies in which
they invest. This new classification is consistent with the Fund's
growth-oriented strategy as combined with disciplined price and valuation
sensitivity.
The Growth Fund continues to seek out stocks that are reasonably priced in
relation to their growth prospects. This has become an increasingly difficult
task as the market in general, and technology stocks in particular, have reached
extended levels of valuation. There are increasing indicators suggesting that a
cautious approach to the market is warranted, but there is no concrete evidence
of an end to the current environment that has been so good for stock
performance. We will continue to take advantage of opportunities that arise for
the benefit of our shareholders.
<PAGE> 2
IAA TRUST ASSET ALLOCATION FUND, INC.
INCEPTION DATE 12/7/78
The annualized total returns for the Fund for the period ending December 31,1999
are as follows:
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- ------ ------- --------
<S> <C> <C>
13.40% 16.20% 11.45%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested in the Fund.
The IAA Trust Asset Allocation Fund closed 1999 with a return of 13.40%.
This compares favorably to the average flexible and balanced fund, which
returned 12.55% and 8.69%, respectively.
Our decision at the end of 1998 to increase the equity exposure in this
portfolio significantly enhanced our twelve-month return. Although our stocks
handily beat the S&P 500 Index, the main factor that kept us competitive with
our peers was the additional equity weighting. Even an additional 10% invested
in stocks during 1999 added incremental return of at least 2.5%. Keeping any
money out of the stock market hurt overall performance during this time period.
Bonds were very weak following the Federal Reserve's three boosts to
short-term interest rates. This caused a major drag on the portfolio's returns
throughout the year. U.S. Treasuries, which are considered "risk-free," were the
worst performers of all. Fortunately, we reduced our exposure to this area at
the end of 1998 and moved to corporate fixed income investments. This enabled us
to produce respectable bond returns compared to most bond funds and indices.
The asset allocation as of December 31, 1999, was 60% stock, 35% bonds, and
5% cash equivalents.
IAA TRUST COMPANY TAX EXEMPT BOND FUND, INC.
INCEPTION DATE 12/7/78
The annualized total returns for the Fund for the period ending December 31,
1999, are as follows:
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- ------ ------- --------
<S> <C> <C>
- -1.59% 6.27% 5.77%
</TABLE>
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 or the federal alternative minimum tax.
The strong economy combined with the Federal Reserve's efforts to raise
interest rates resulted in a devastating year for municipal bonds. Municipal
interest rates increased 93 to 99 basis points across the yield curve. As a
result, average total returns for general municipal bond funds were down more
than 4.0% in 1999.
Our decision to complete the transition of the Fund from a general,
long-term Fund to an intermediate Fund in February was a wise one. As interest
rates rose, those funds that held longer maturities performed poorly. The Fund's
one-year total return was -1.59%. This compares to the Lehman Brothers
Seven-Year Municipal Bond Index's* total return of -0.14%.
Municipal bonds continue to be attractive relative to U.S Treasuries and
with the continued economic expansion, most municipal credits strengthened in
1999. Consequently, the tax advantage received from the Fund, coupled with the
risk adverse portfolio, continues to make the Fund a prudent investment choice.
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES**
INCEPTION DATE 10/26/81
The impact of three Federal Reserve's rate increases and the demand for
liquidity in preparation of a possible Y2K crisis was not lost on the IAA Trust
Money Market Series, as it's 7-day average yield increased from 4.21% on June
30, 1999 to 5.31% on December 31, 1999. Reflective of rates over the longer
12-month periods, the 12-month total return changed little from 4.54% on June
30, 1999 to 4.52% on December 31, 1999 compared to the Lipper average of 4.49%
(5-year and 10-year total returns as of 12/31/99 were 4.78%
<PAGE> 3
and 4.50%, respectively). Now that the hype of Y2K is behind us and proven to be
little more than "noise", the Fed can focus on the high levels of employment and
aggregate demand in our economy. The need to soak up unused Y2K liquidity gives
further credence to a possibly higher Fed interest rate increase in the coming
months. Going forward, however, the Fed will be challenged to consider "New
Economy" theories that credit technological advances for enabling a higher
sustainable growth rate without igniting inflation.
SHORT-TERM GOVERNMENT BOND SERIES***
INCEPTION DATE 1/2/97
The annualized total returns for the period ending December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------- ---------------
<S> <C> <C>
2.52% 4.86%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested in the Fund.
Treasuries slumped this year and were the worst performing bond sector in
1999. As expected, short-term bonds outperformed longer-maturity instruments
during this bear market even though the yield on the two-year Treasury note
increased from 4.5% to 6.3%. An optimistic outlook for year 2000 can be found in
the statistic that, of the seven years since 1977 when bond prices declined,
they gained all but once the following year.
For the year, our 2.52% return compares to the Merrill Lynch Short
Government Bond Index return of 3.12%. We continue to overweight agencies and
agency mortgage securities as they continue to offer attractive yield spreads
versus Treasuries.
LONG-TERM BOND SERIES***
INCEPTION DATE 1/2/97
The annualized total returns for the Fund for the period ending December 31,
1999 are as follows:
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------- ---------------
<S> <C> <C>
-1.13% 5.48%
</TABLE>
These returns assume all dividends and capital gains distributions were
reinvested in the Fund.
In 1999, the bond market slowly and steadily declined without sustaining any
large rallies. Super-safe Treasuries were the worst performers; the total return
on the 30-year Treasuries was -14.78%. Our annual return of -1.13% compares
favorably to the return of the Lipper A-rated Corporate Bond Fund Index of
- -2.05%. Our shorter duration and higher sector weightings in corporate bonds and
asset-backed securities contributed to decent relative performance.
<PAGE> 4
If the Fed achieves a slowing of Gross Domestic Product growth to 3% or
less, bond yields would be expected to decline. The pattern of total returns for
2000 could be opposite of the 1999 experience. We will lengthen the duration of
the portfolio if rates continue to increase, anticipating a rally later this
year.
Sincerely,
[Ronald R. Warfield Photo]
/s/ Ronald R. Warfield
Ronald R. Warfield
President
- ---------------
* All indices mentioned are unmanaged indices not available for investment.
** Although a money market seeks to maintain a stable net asset value of $1.00
per share, there is no assurance it will be able to do so. An investment in
the Fund is neither insured nor guaranteed by the U.S. Government, it is
possible to lose money.
*** U.S. Treasury bonds unlike mutual funds are direct obligations of the U.S.
Government that offer a fixed rate of return.
Past performance is no guarantee of future results. Share prices will
fluctuate and when redeemed, shares may be worth more or less than their
original investment. Funds are distributed by Provident Distributors, Inc. 4400
Computer Drive, Westborough, MA 01581. Must be preceded or accompanied by a
prospectus. DFU 2/00
<PAGE> 5
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
Allstate Corp. (1) Sun Microsystems, Inc.
MCI Worldcom, Inc. (1) American Express Co.
Bank One Corp. (1) American Greetings Corp. (2)
Abbott Laboratories (1) Deere & Co. (2)
Masco Corp. (1) Analog Devices, Inc.
Washington Mutual, Inc. (1) Oracle Corp.
Newell Rubbermaid, Inc. Office Depot, Inc. (2)
Warnaco Group, Inc., Cl. A Kimberly Clark Corp.
Rite Aid Corp. GTE Corp.
W.W. Grainger, Inc. American International Group, Inc.
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
----------- -------
<S> <C> <C>
Microsoft Corp.............................................. $ 8,756,250 4.67%
General Electric Co......................................... 7,892,250 4.21
Sun Microsystems, Inc....................................... 6,380,850 3.40
Oracle Corp................................................. 6,051,375 3.23
Cisco Systems, Inc.......................................... 5,999,000 3.20
Analog Devices, Inc......................................... 5,952,000 3.17
Tellabs, Inc................................................ 4,493,125 2.39
Wal-Mart Stores, Inc........................................ 4,147,500 2.21
Intel Corp.................................................. 4,058,006 2.16
AT&T Corp................................................... 3,958,500 2.11
----------- -----
$57,688,856 30.75%
=========== =====
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
Federal National Mortgage Association, 6.375%, 06/15/09 U.S. Treasury Note, 3.625%, 04/15/28
(1) (2)
Federal Home Loan Mortgage Corp., 6.625%, 9/15/09 (1) Oracle Corp.
U.S. Treasury Bond, 5.250%, 11/15/28 (1) American Express Co.
MCI Worldcom, Inc. (1) MGIC Investment Corp.
Bank One Corp. (1) Sun Microsystems, Inc.
Unocal Corp. (1) American Greetings Corp. (2)
Allstate Corp. (1) Deere & Co. (2)
Sun Microsystems, Inc., 7.500%, 08/15/06 (1) Analog Devices, Inc.
Xerox Corp. (1) Ford Credit Auto Owner Trust, 5.650%,
Washington Mutual, Inc. (1) 10/15/01 (2)
U.S. Treasury Note, 5.875%, 02/15/00
(2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
---------- -------
<S> <C> <C>
Microsoft Corp.............................................. $ 700,500 2.94%
General Electric Co......................................... 619,000 2.60
Sun Microsystems, Inc....................................... 573,038 2.41
Cisco Systems, Inc.......................................... 535,625 2.25
Oracle Corp................................................. 504,281 2.12
Analog Devices, Inc......................................... 409,200 1.72
U.S. Treasury Notes, 5.250%, 11/15/28....................... 371,043 1.56
Gentex Corp................................................. 333,000 1.40
Tellabs, Inc................................................ 308,100 1.29
Elan Corp................................................... 295,000 1.24
---------- -----
$4,648,787 19.53%
========== =====
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 6
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC.
PORTFOLIO CHANGES For the Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
United Independent School District, Texas 6.700%, St Paul, Minnesota Independent School
06/15/08 (1) District #625 General Obligation,
Michigan State Hospital Financing Authority Revenue Series C, 5.250%, 02/01/13 (2)
Ascension Health Credit, Series A, 5.500%, 11/15/06 (1) Long Island, New York Power Authority,
Regional Transportation Authority Illinois Unlimited Tax 4.000%, 04/01/04 (2)
General Obligation, 5.750%, 06/01/11 (1) Pike Township, Indiana Revenue Bond,
5.700%, 02/01/01 (2)
New York State Highway & Bridge
Authority Revenue, Series B, 5.000%,
04/01/08 (2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
---------- -------
<S> <C> <C>
Illinois Health Facilities Authority Revenue, 6.800%,
10/01/24................................................... $ 841,928 5.15%
Massachusetts State Grant Anticipation Revenue Bond, 5.000%,
12/15/08................................................... 792,472 4.85
Wisconsin State Clean Water Revenue Bond, 5.300%,
06/01/12................................................... 713,832 4.37
University of Kentucky, University Building Revenue, 4.150%,
05/01/01................................................... 697,095 4.26
Texas A&M University Revenue Financing System, 5.375%,
05/15/14................................................... 583,002 3.57
Pennsylvania State Higher Education Revenue Bonds, 5.600%,
09/01/10................................................... 582,688 3.56
Peru, Indiana Community School Corp. Revenue, 6.750%,
01/01/09................................................... 582,615 3.56
Connecticut State Unlimited Tax General Obligation, 5.400%,
03/15/08................................................... 561,600 3.43
Indiana University Trustee Revenue Bonds, Student Fees,
5.700%, 08/01/10........................................... 559,273 3.42
Cape Girardeau, Missouri Waterworks System Revenue, 7.450%,
03/01/05................................................... 549,280 3.36
---------- -----
$6,463,785 39.53%
========== =====
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
----------- -------
<S> <C> <C>
Toyota Motor Credit Corp., 5.78%, 02/15/00.................. $ 2,049,088 3.13%
GTE Funding, Inc., 5.90%, 01/18/00.......................... 1,994,428 3.05
Coca-Cola Co., 6.05%, 02/18/00.............................. 1,983,867 3.03
Federal National Mortgage Association, 5.50%, 02/24/00...... 1,983,500 3.03
DaimlerChrysler Corp., 5.87%, 01/24/00...................... 1,942,687 2.97
Citicorp, 6.01%, 02/04/00................................... 1,900,000 2.90
Chevron Corp., 6.21%, 01/26/00.............................. 1,820,000 2.78
American Express Credit Corp., 5.51%, 01/03/00.............. 1,700,000 2.60
Proctor & Gamble Co., 5.86%, 01/12/00....................... 1,696,956 2.59
USAA Capital Corp., 6.25%, 02/02/00......................... 1,591,111 2.43
----------- -----
$18,661,637 28.51%
=========== =====
</TABLE>
PORTFOLIO CHARACTERISTICS December 31, 1999
CURRENT YIELD: 5.39%
30-DAY AVERAGE YIELD: 5.17%
7-DAY AVERAGE YIELD: 5.31%
AVERAGE DAYS TO MATURITY: 26.0
- --------------------------------------------------------------------------------
<PAGE> 7
IAA TRUST MUTUAL FUNDS -- PORTFOLIO HIGHLIGHTS (UNAUDITED)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
SHORT-TERM GOVERNMENT BOND SERIES
PORTFOLIO CHANGES For the Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
Private Export Funding, 6.450%, 09/30/04 (1) Federal National Mortgage Association,
Federal Home Loan Mortgage Corp., 6.250%, 07/15/04 (1) 5.080%, 09/24/99 (2)
Federal National Mortgage Association, 6.500%, 09/25/19 (1) Federal Home Loan Bank, 8.000%, 09/20/04 (2)
Ford Credit Auto Owner Trust, 6.080%, 09/16/02 (1) U.S. Treasury Notes, 5.875%, 11/15/99 (2)
Federal National Mortgage Association, 5.000%, 09/25/06 (1) Federal Home Loan Mortgage Corp., 6.350%,
3/15/11 (2)
Federal National Mortgage Association,
6.500%, 08/01/04 (2)
Banc One Auto Grantor Trust, 6.270%, 11/20/03
(2)
The Money Store Home Equity Trust, 7.800%,
10/15/21 (2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
----------- -------
<S> <C> <C>
U.S. Treasury Notes, 6.500%, 08/31/01....................... $ 3,012,240 10.18%
U.S. Treasury Notes, 6.250%, 02/28/02....................... 1,999,780 6.76
Federal National Mortgage Association, 6.500%, 08/01/04..... 1,622,953 5.48
U.S. Treasury Notes, 5.500%, 02/29/00....................... 999,656 3.38
Federal National Mortgage Association, 5.100%, 09/25/00..... 990,440 3.35
Federal Home Loan Bank, 6.140%, 12/17/01.................... 987,520 3.34
Federal Home Loan Bank, 5.500%, 08/13/01.................... 985,450 3.33
Federal National Mortgage Association, 6.500%, 09/25/19..... 985,250 3.33
Federal National Mortgage Association, 5.400%, 05/07/01..... 985,000 3.33
Private Export Funding, 6.450%, 09/30/04.................... 981,250 3.32
----------- -----
$13,549,539 45.80%
=========== =====
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
LONG-TERM BOND SERIES
PORTFOLIO CHANGES For the Six Months Ended December 31, 1999
<TABLE>
<CAPTION>
MAJOR PURCHASES MAJOR SALES
<S> <C>
Federal National Mortgage Association, 6.375%, 06/15/09 (1) Sherwin-Williams Co., 5.500%, 10/15/27 (2)
Northwest Airlines Corp., 7.935%, 04/01/19 (1) Mattel, Inc., 6.000%, 07/15/03 (2)
Idaho Power Corp., 7.200%, 12/01/09 (1) J.C. Penny Master Credit Card Trust, 8.950%,
Allstate Corp., 7.200%, 12/01/09 (1) 10/15/01 (2)
Federal National Mortgage Association, 7.604%, 12/25/19 (1) Federal Home Loan Mortgage Corp., 7.000%,
CSX Transportation, Inc., 6.500%, 04/15/04 (1) 03/01/12 (2)
Federal Farm Credit Bank, 6.690%, 09/08/10 (1) Federal Home Loan Mortgage Corp., 6.000%,
Merrill Lynch & Co., Inc., 7.370%, 06/15/08 (1) 03/15/09 (2)
Government National Mortgage Association,
6.500%, 04/15/26 (2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS December 31, 1999
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
----------- -------
<S> <C> <C>
Federal Home Loan Mortgage Corp., 7.000%, 03/01/12.......... $ 2,629,440 6.46%
Merck & Co., Inc., 5.760%, 05/03/37......................... 1,597,749 3.92
Government National Mortgage Association, 8.000%,
07/15/26................................................... 1,260,483 3.10
Government National Mortgage Association, 6.500%,
04/15/26................................................... 1,091,864 2.68
California Infrastructure PG & E, 6.420%, 09/25/08.......... 967,920 2.38
U.S. Treasury Notes, 5.250%, 11/15/28....................... 948,221 2.33
U.S. Treasury Notes, 6.000%, 02/15/26....................... 915,260 2.25
Xerox Corp., 5.545%, 07/22/37............................... 913,204 2.24
Federal Home Loan Mortgage Corp., 6.000%, 03/15/09.......... 758,145 1.86
Associates Corp. of North America, 5.960%, 05/15/37......... 750,118 1.84
----------- -----
$11,832,404 29.06%
=========== =====
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 8
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK -- 94.20%
BASIC INDUSTRY -- 0.95%
Monsanto Co. ......................... 50,000 $ 1,781,250
------------
CAPITAL GOODS -- 5.09%
Boeing Co. ........................... 40,050 1,664,578
General Electric Co. ................. 51,000 7,892,250
------------
9,556,828
------------
COMMUNICATION SERVICES -- 7.23%
AT&T Corp. ........................... 78,000 3,958,500
GTE Corp. ............................ 36,000 2,540,250
MCI Worldcom, Inc.* .................. 44,280 2,349,607
SBC Communications, Inc. ............. 46,500 2,266,875
U.S. West, Inc. ...................... 33,900 2,440,800
------------
13,556,032
------------
CONSUMER CYCLICAL -- 7.90%
Gentex Corp. ......................... 132,000 3,663,000
Intimate Brands, Inc. ................ 52,000 2,242,500
Masco Corp. .......................... 55,450 1,407,044
Reuters Group PLC, ADR ............... 23,000 1,858,688
Wal-Mart Stores, Inc. ................ 60,000 4,147,500
Warnaco Group, Inc., Cl. A ........... 122,225 1,504,895
------------
14,823,627
------------
CONSUMER STAPLES -- 10.43%
Coca-Cola Co. ........................ 20,000 1,165,000
Dean Foods Co. ....................... 50,000 1,987,500
Fox Entertainment Group, Inc.* ....... 65,000 1,620,937
Gillette Co. ......................... 56,620 2,332,036
Kimberly-Clark Corp. ................. 39,000 2,544,750
Newell Rubbermaid, Inc. .............. 72,300 2,096,700
PepsiCo, Inc. ........................ 39,000 1,374,750
Philip Morris Companies, Inc. ........ 50,000 1,159,375
Procter & Gamble Co. ................. 35,000 3,834,688
Unilever N.V. ........................ 26,785 1,458,108
------------
19,573,845
------------
ENERGY -- 7.52%
Chevron Corp. ........................ 22,800 1,975,050
Diamond Offshore Drilling, Inc. ...... 58,000 1,772,625
Exxon Mobil Corp. .................... 20,000 1,611,250
Halliburton Co. ...................... 41,000 1,650,250
Phillips Petroleum Co. ............... 28,000 1,316,000
Royal Dutch Petroleum Co., ADR ....... 45,000 2,719,688
Schlumberger, Ltd. ................... 30,000 1,687,500
Transocean Sedco Forex, Inc. ......... 5,808 195,657
Unocal Corp. ......................... 35,000 1,174,688
------------
14,102,708
------------
FINANCE -- 13.72%
Allstate Corp. ....................... 94,000 2,256,000
American Express Co. ................. 12,000 1,995,000
American International Group, Inc. ... 20,000 2,162,500
Associates First Capital Corp. ....... 70,000 1,920,625
Bank Of New York ..................... 61,000 2,440,000
Bank One Corp. ....................... 49,500 1,587,094
Citigroup, Inc. ...................... 60,000 3,333,750
Fannie Mae ........................... 45,000 2,809,687
MBNA Corp. ........................... 66,000 1,798,500
MGIC Investment Corp. ................ 36,000 2,166,750
Washington Mutual, Inc. .............. 43,500 1,131,000
Wells Fargo Co. ...................... 53,000 2,143,188
------------
25,744,094
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
HEALTH -- 9.94%
Abbott Laboratories .................. 43,150 $ 1,566,884
Becton, Dickinson & Co. .............. 45,000 1,203,750
Bristol-Myers Squibb Co. ............. 40,000 2,567,500
Elan Corp., PLC, ADR ................. 97,600 2,879,200
Johnson & Johnson .................... 30,000 2,793,750
Merck & Co., Inc. .................... 54,000 3,621,375
Pfizer, Inc. ......................... 64,425 2,089,786
Smithkline Beecham PLC, ADR .......... 30,000 1,933,125
------------
18,655,370
------------
TECHNOLOGY -- 27.35%
America Online, Inc.* ................ 17,000 1,282,437
Analog Devices, Inc. ................. 64,000 5,952,000
Cisco Systems, Inc.* ................. 56,000 5,999,000
W.W. Grainger, Inc. .................. 37,000 1,769,063
Hewlett-Packard Co. .................. 25,000 2,848,437
Intel Corp. .......................... 49,300 4,058,006
International Business Machines
Corp. ............................... 20,000 2,160,000
Microsoft Corp.* ..................... 75,000 8,756,250
Oracle Corp.* ........................ 54,000 6,051,375
Raytheon Co., Cl. B .................. 25,000 664,063
Sun Microsystems, Inc.* .............. 82,400 6,380,850
Tellabs, Inc.* ....................... 70,000 4,493,125
Xerox Corp. .......................... 40,000 907,500
------------
51,322,106
------------
TRANSPORTATION -- 1.45%
Burlington Northern Corp. ............ 45,000 1,091,250
FDX Corp.* ........................... 40,000 1,637,500
------------
2,728,750
------------
UTILITIES -- 2.62%
DPL, Inc. ............................ 125,000 2,164,062
NICOR, Inc. .......................... 49,150 1,597,375
Wisconsin Energy Corp. ............... 60,000 1,155,000
------------
4,916,437
------------
TOTAL COMMON STOCK
(cost $105,416,964) ................. 176,761,047
------------
</TABLE>
<PAGE> 9
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST GROWTH FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
COMMERCIAL PAPER -- 4.14%
Ford Motor Credit Corp. 5.80%,
01/04/00 ........................... $1,000,000 $ 1,000,000
General Motors Acceptance Corp. 5.87%,
02/08/00 ............................ 4,677,000 4,677,000
Prudential Funding 5.87%, 01/12/00 ... 2,100,000 2,100,000
------------
TOTAL COMMERCIAL PAPER
(cost $7,777,000) ................... 7,777,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------
<S> <C> <C>
OTHER SHORT TERM INVESTMENTS -- 1.58%
MONEY MARKET FUNDS
Dreyfus Cash Management Money Market
Fund ................................ 653,259 $ 653,259
Federated Prime Obligation Fund ...... 2,300,757 2,300,757
------------
TOTAL MONEY MARKET FUNDS
(cost $2,954,016) ................... 2,954,016
------------
TOTAL INVESTMENTS -- 99.92%
(cost $116,147,980) ................. 187,492,063
------------
CASH & OTHER ASSETS NET OF
LIABILITIES -- 0.08% ................ 145,187
------------
NET ASSETS -- 100.00% ................ $187,637,250
============
* non-income producing
</TABLE>
See notes to financial statements.
<PAGE> 10
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC.
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCK -- 59.88%
BASIC INDUSTRIES -- 0.60%
Monsanto Co. ........................ 4,000 $ 142,500
------------
CAPITAL GOODS -- 3.21%
Boeing Co. .......................... 3,500 145,469
General Electric Co. ................ 4,000 619,000
------------
764,469
------------
COMMUNICATION SERVICES -- 4.35%
AT&T Corp. .......................... 4,500 228,375
BellSouth Corp. ..................... 3,000 140,437
GTE Corp. ........................... 3,000 211,688
MCI Worldcom, Inc.* ................. 3,600 191,025
SBC Communications, Inc. ............ 3,194 155,708
U.S. West, Inc. ..................... 1,500 108,000
------------
1,035,233
------------
CONSUMER CYCLICAL -- 5.57%
Gentex Corp. ........................ 12,000 333,000
Intimate Brands, Inc. ............... 4,725 203,766
Masco Corp. ......................... 5,000 126,875
Reuters Group PLC, ADR .............. 1,500 121,219
Tribune Co. ......................... 4,000 220,250
Wal-Mart Stores, Inc. ............... 3,700 255,763
Warnaco Group, Inc., Cl. A .......... 5,300 65,256
------------
1,326,129
------------
CONSUMER STAPLES -- 6.26%
Albertson's, Inc. ................... 2,900 93,525
Dean Foods Co. ...................... 4,000 159,000
Fox Entertainment Group, Inc.* ...... 7,000 174,562
Gillette Co. ........................ 3,600 148,275
Kimberly-Clark Corp. ................ 4,000 261,000
Newell Rubbermaid, Inc. ............. 4,500 130,500
PepsiCo, Inc. ....................... 4,000 141,000
Philip Morris Companies, Inc. ....... 4,000 92,750
Procter & Gamble Co. ................ 2,650 290,341
------------
1,490,953
------------
ENERGY -- 4.82%
Atlantic Richfield Co. .............. 1,400 121,100
Diamond Offshore Drilling, Inc. ..... 4,000 122,250
Exxon Mobil Corp. ................... 3,000 241,687
Halliburton Co. ..................... 3,500 140,875
Phillips Petroleum Co. .............. 3,000 141,000
Royal Dutch Petroleum Co., ADR ...... 4,000 241,750
Unocal Corp. ........................ 4,100 137,606
------------
1,146,268
------------
FINANCE -- 8.50%
Allstate Corp. ...................... 5,200 124,800
American Express Co. ................ 800 133,000
American International Group,
Inc. ............................... 1,600 173,000
Associates First Capital Corp. ...... 5,000 137,187
Bank of America Corp. ............... 3,055 153,323
Bank of New York .................... 5,000 200,000
Bank One Corp. ...................... 4,000 128,250
Citigroup, Inc. ..................... 4,312 239,585
Fannie Mae .......................... 3,800 237,262
MGIC Investment Corp. ............... 2,300 138,431
Washington Mutual, Inc. ............. 4,800 124,800
Wells Fargo Co. ..................... 5,800 234,538
------------
2,024,176
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
HEALTH -- 6.20%
Becton, Dickinson & Co. ............. 4,600 $ 123,050
Bristol-Myers Squibb Co. ............ 4,000 256,750
Elan Corp., PLC, ADR ................ 10,000 295,000
Johnson & Johnson ................... 2,500 232,813
Merck & Co., Inc. ................... 4,000 268,250
Pfizer, Inc. ........................ 4,500 145,969
Smithkline Beecham PLC, ADR ......... 2,400 154,650
------------
1,476,482
------------
TECHNOLOGY -- 17.43%
America Online, Inc.* ............... 1,400 105,612
Analog Devices, Inc. ................ 4,400 409,200
Cisco Systems, Inc.* ................ 5,000 535,625
W.W. Granger, Inc. .................. 2,700 129,094
Hewlett Packard Co. ................. 1,800 205,088
Intel Corp. ......................... 3,500 288,094
International Business Machine
Corp. .............................. 2,400 259,200
Microsoft Corp.* .................... 6,000 700,500
Oracle Corp.* ....................... 4,500 504,281
Raytheon Co., Cl. B ................. 2,000 53,125
Sun Microsystems, Inc.* ............. 7,400 573,038
Tellabs, Inc.* ...................... 4,800 308,100
Xerox Corp. ......................... 3,500 79,406
------------
4,150,363
------------
TRANSPORTATION -- 1.02%
Burlington Northern Corp. ........... 4,600 111,550
FDX Corp.* .......................... 3,200 131,000
------------
242,550
------------
UTILITIES/TELEPHONE -- 1.92%
Florida Progress Corp. .............. 2,200 93,087
NICOR, Inc. ......................... 4,500 146,250
Williams Companies, Inc. ............ 4,000 122,250
Wisconsin Energy Corp. .............. 5,000 96,250
------------
457,837
------------
TOTAL COMMON STOCK
(cost $8,622,365) .................. 14,256,960
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
BONDS AND NOTES -- 34.60%
ASSET BACKED -- 4.30%
Amresco Residential Securities
Mortgage Loan Trust
6.925%, 06/25/25 ................... $ 100,000 98,569
Chemical Master Credit Card Trust
5.980%, 09/15/08 ................... 200,000 189,580
Discover Credit Card Trust
6.750%, 02/16/02 ................... 200,000 199,375
5.600%, 05/15/06 ................... 250,000 238,203
Green Tree Financial Corp.
6.870%, 01/15/29 ................... 100,000 96,674
The Money Store Home Equity Trust
8.140%, 10/15/27 ................... 200,000 200,988
------------
$ 1,023,389
------------
</TABLE>
<PAGE> 11
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
AUTO -- 1.02%
Ford Credit Auto Owner Trust
5.650%, 10/15/01 ................... $ 137,929 $ 136,664
General Motors Acceptance Corp.
8.875%, 06/01/10 ................... 100,000 107,375
------------
244,039
------------
BANKING -- 2.11%
ABN AMRO N.V. (Chicago) Global Bond
7.125%, 06/18/07 ................... 100,000 96,875
Citicorp
7.200%, 06/15/07 ................... 100,000 97,000
International American Development
Bank
8.875%, 06/01/09 ................... 100,000 110,125
NationsBank Corp.
5.750%, 03/15/01 ................... 200,000 197,750
------------
501,750
------------
CHEMICALS -- 0.42%
Dupont (E.I.) De Nemours & Co.
6.750%, 10/15/02 ................... 100,000 99,500
------------
FINANCE -- 1.61%
Household Finance Corp.
6.400%, 06/17/08 ................... 200,000 185,250
Merrill Lynch & Co., Inc.
6.020%, 05/11/01 ................... 200,000 197,750
------------
383,000
------------
FOOD & BEVERAGE -- 2.22%
Campbell Soup Co.
4.750%, 10/01/03 ................... 200,000 185,500
Coca-Cola Co.
6.625%, 10/01/02 ................... 100,000 99,250
Coca-Cola Enterprises
7.000%, 10/01/26 ................... 250,000 243,437
------------
528,187
------------
INDUSTRIAL -- 2.84%
Amoco Canada Petroleum Co.
7.950%, 10/01/22 ................... 100,000 97,125
Mattel, Inc.
6.000%, 07/15/03 ................... 200,000 189,000
Merck & Co., Inc.
5.760%, 05/03/37 ................... 200,000 199,719
Raytheon Co.
5.950%, 03/15/01 ................... 100,000 98,375
6.300%, 03/15/05 ................... 100,000 92,750
------------
676,969
------------
MUNICIPAL -- 1.04%
New York State Power Authority
Revenue
6.050%, 02/15/15 ................... 250,000 247,056
------------
OFFICE EQUIPMENT -- 0.85%
Xerox Corp.
5.545%, 07/22/37 ................... 200,000 202,934
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
RETAILING -- 2.44%
Dayton Hudson Corp.
5.895%, 06/15/37 ................... $ 200,000 $ 199,750
Sears Roebuck Acceptance Corp.
6.000%, 03/20/03 ................... 200,000 190,250
Sears Roebuck Credit Account Master
Trust
5.650%, 03/15/09 ................... 200,000 190,699
------------
580,699
------------
TECHNOLOGY -- 0.63%
Sun Microsystems, Inc.
7.500%, 08/15/06 ................... 150,000 150,563
------------
TELEPHONE UTILITY -- 2.79%
Bell Telephone Co. of PA Putable
Debentures
8.350%, 12/15/30 ................... 200,000 210,750
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 ................... 100,000 105,625
New Jersey Bell Telephone Co.
7.850%, 11/15/29 ................... 150,000 150,375
------------
665,000
------------
TRANSPORTATION -- 0.83%
Norfolk Southern Corp.
7.050%, 05/01/37 ................... 200,000 196,750
------------
U.S. GOVERNMENT AGENCIES -- 6.97%
Federal Home Loan Mortgage Corp.
10.750%, 07/01/00 .................. 620 648
8.750%, 04/01/01 ................... 5,278 5,382
10.150%, 04/15/06 .................. 2,547 2,550
6.500%, 06/15/06 ................... 164,541 164,327
6.000%, 12/15/08 ................... 200,000 191,427
6.625%, 09/15/09 ................... 200,000 194,250
6.400%, 09/25/28 ................... 250,000 235,146
Federal National Mortgage Association
6.375%, 06/15/09 ................... 250,000 238,652
6.000%, 02/18/21 ................... 300,000 288,503
6.247%, 03/17/21 ................... 300,000 280,396
Government National Mortgage
Association Pool #030111
9.000%, 05/15/09 ................... 12,439 13,026
Government National Mortgage
Association Pool #23653
9.500%, 06/15/09 ................... 5,999 6,392
Government National Mortgage
Association Pool #32147
9.500%, 08/15/09 ................... 1,439 1,534
Government National Mortgage
Association Pool #161621
9.000%, 07/15/16 ................... 36,730 38,463
------------
1,660,696
------------
</TABLE>
<PAGE> 12
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST ASSET ALLOCATION FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 4.53%
U.S. Treasury Bonds
11.625%, 11/15/04 .................. $ 100,000 $ 120,837
5.250%, 11/15/28 ................... 450,000 371,043
U.S. Treasury Notes
6.625%, 04/30/02 ................... 100,000 100,766
6.875%, 05/15/06 ................... 150,000 152,643
6.500%, 10/15/06 ................... 200,000 199,540
Tennessee Valley Authority
5.375%, 11/13/08 ................... 150,000 133,370
------------
1,078,199
------------
TOTAL BONDS AND NOTES
(cost $8,442,484) .................. 8,238,731
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
OTHER SHORT TERM INVESTMENTS -- 4.68%
MONEY MARKET FUNDS
Dreyfus Cash Management Money Market
Fund ............................... 323,785 $ 323,785
Federated Prime Obligation Fund ..... 791,996 791,996
------------
TOTAL MONEY MARKET FUNDS
(cost $1,115,781) .................. 1,115,781
------------
TOTAL INVESTMENTS -- 99.16%
(cost $18,180,631) ................. 23,611,472
------------
CASH & OTHER ASSETS NET OF
LIABILITIES -- 0.84% .............. 199,220
------------
NET ASSETS -- 100.00% ............... $ 23,810,692
============
* non-income producing
</TABLE>
See notes to financial statements.
<PAGE> 13
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAX-EXEMPT BOND FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
MUNICIPAL BONDS
(TAX EXEMPT ) -- 96.51%
ARIZONA -- 3.30%
Maricopa County, School District #93
Arizona Unlimited Tax General
Obligation
6.400%, 07/01/06.................... $ 500,000 $ 539,275
------------
CALIFORNIA -- 1.65%
City of Fresno, California Sewer
System Revenue
6.250%, 09/01/14.................... 250,000 269,865
------------
CONNECTICUT -- 3.43%
Connecticut State Unlimited Tax
General Obligation
5.400%, 03/15/08.................... 550,000 561,600
------------
ILLINOIS -- 15.51%
Illinois Health Facilities Authority
Revenue
6.800%, 10/01/24.................... 800,000 841,928
Illinois State Sales Tax Revenue
5.400%, 06/15/13.................... 550,000 538,516
Northwest Suburban Municipal Joint
Action Water Agency Illinois
Contract Revenue
6.450%, 05/01/07.................... 400,000 432,660
Northwest Water Commission Illinois,
Cook & Lake Revenue
5.000%, 05/01/13.................... 500,000 466,030
Regional Transportation Authority
Illinois Unlimited Tax General
Obligation
5.750%, 06/01/11.................... 250,000 257,265
------------
2,536,399
------------
INDIANA -- 6.98%
Indiana University Trustee Revenue
Bonds, Student Fees
5.700%, 08/01/10.................... 550,000 559,273
Peru, Indiana Community School Corp.
Revenue
6.750%, 01/01/09.................... 550,000 582,615
------------
1,141,888
------------
KENTUCKY -- 7.15%
Jefferson County, Kentucky School
District Financing Corp. School
Building Revenue, Series A
5.300%, 07/01/15.................... 500,000 472,270
University of Kentucky, University
Building Revenue, Third Series
4.150%, 05/01/01.................... 700,000 697,095
------------
1,169,365
------------
MASSACHUSETTS -- 8.01%
Massachusetts State Grant
Anticipation
Notes Revenue Bond
5.000%, 12/15/08.................... 800,000 792,472
Massachusetts State Water Resource
Authority Revenue
6.000%, 11/01/08.................... 500,000 517,505
------------
1,309,977
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
MICHIGAN -- 2.50%
Michigan State Hospital Financing
Authority Revenue Ascension Health
Credit, Series A
5.500%, 11/15/06.................... $ 400,000 $ 409,336
------------
MISSOURI -- 4.90%
Cape Girardeau, Missouri Waterworks
System Revenue
7.450%, 03/01/05.................... 500,000 549,280
Missouri State Environmental
Improvement
& Energy Resource Authority
Pollution Control Revenue
5.250%, 12/01/09.................... 250,000 251,687
------------
800,967
------------
NEVADA -- 5.57%
Clark County, Nevada School District
General Obligation
5.250%, 06/01/07.................... 500,000 504,125
Henderson, Nevada Water & Sewer
Unlimited Tax General Obligation
5.375%, 06/01/07.................... 400,000 405,640
------------
909,765
------------
NEW JERSEY -- 1.54%
Essex County, New Jersey Unlimited
General Obligation
5.000%, 08/01/07.................... 250,000 250,820
------------
NEW YORK -- 2.99%
New York State Dormitory Authority
Revenue
5.500%, 07/01/12.................... 500,000 488,745
------------
NORTH CAROLINA -- 1.62%
North Carolina Eastern Municipal
Power
Agency System Revenue
7.000%, 01/01/08.................... 250,000 265,050
------------
OHIO -- 3.08%
Montgomery County, Ohio Sewer System
Revenue
5.600%, 09/01/11.................... 500,000 504,140
------------
PENNSYLVANIA -- 6.69%
Pennsylvania Intergovernmental Corp.
Authority, Special Tax Revenue
5.450%, 06/15/08.................... 500,000 511,805
Pennsylvania State Higher Education
Revenue Bonds, Series A
5.600%, 09/01/10.................... 575,000 582,688
------------
1,094,493
------------
TENNESSEE -- 3.21%
Shelby County, Tennessee School
General Obligation, Series B
5.875%, 06/01/18.................... 500,000 525,025
------------
</TABLE>
<PAGE> 14
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAX EXEMPT BOND FUND, INC. (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
TEXAS -- 12.13%
Bexar County, Texas Detention
Facilities Limited Tax General
Obligation
5.750%, 06/15/10.................... $ 500,000 $ 518,735
Garland, Texas Limited Tax General
Obligation
5.800%,08/15/12..................... 350,000 365,347
Texas A & M University Revenue
Financing System
5.375%, 05/15/14.................... 600,000 583,002
United Independent School District,
Texas
6.700%, 08/15/08.................... 465,000 515,764
------------
1,982,848
------------
UTAH -- 1.88%
Utah State Board Regents Revenue
5.500%, 08/01/05.................... 300,000 306,849
------------
WISCONSIN -- 4.37%
Wisconsin State Clean Water Revenue
Bond
5.300%, 06/01/12.................... 700,000 713,832
------------
TOTAL MUNICIPAL BONDS
(cost $15,681,452).................. 15,780,239
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
TAX EXEMPT MONEY MARKET
FUNDS -- 2.27%
Nuveen Tax Exempt Money Fund............ 371,402 $ 371,402
-----------
TOTAL INVESTMENTS -- 98.78%
(cost $16,052,854)..................... 16,151,641
-----------
CASH & OTHER ASSETS NET OF
LIABILITIES -- 1.22%................... 199,126
-----------
NET ASSETS -- 100.00%................... $16,350,767
===========
</TABLE>
<PAGE> 15
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
COMMERCIAL PAPER -- 92.98%
AUTO & TRUCK -- 15.50%
DaimlerChrysler Corp.
5.87%, 01/24/00...................... $ 1,950,000 $ 1,942,687
Ford Motor Credit Co.
5.80%, 01/04/00...................... 300,000 300,000
5.89%, 01/04/00...................... 1,260,000 1,260,000
6.28%, 01/07/00...................... 120,000 119,874
6.37%, 01/14/00...................... 1,408,000 1,404,761
General Motors Acceptance Corp.
5.91%, 02/07/00...................... 1,430,000 1,430,000
5.87%, 02/08/00...................... 1,286,000 1,286,000
5.87%, 02/24/00...................... 350,000 346,918
Toyota Motor Credit Corp.
5.78%, 02/15/00...................... 2,064,000 2,049,088
-----------
10,139,328
-----------
COMMERCIAL FINANCE -- 9.32%
Prudential Funding Corp.
5.86%, 01/11/00...................... 1,000,000 1,000,000
6.13%, 01/19/00...................... 1,020,000 1,020,000
6.04%, 01/28/00...................... 1,000,000 1,000,000
Wells Fargo & Co.
5.94%, 02/10/00...................... 1,347,000 1,338,110
5.92%, 02/14/00...................... 842,000 835,908
6.06%, 02/14/00...................... 908,000 908,000
-----------
6,102,018
-----------
CONSUMER FINANCE -- 23.44%
American Express Credit Corp.
5.51%, 01/03/00...................... 1,700,000 1,700,000
6.37%, 01/05/00...................... 1,590,000 1,590,000
American General Finance Corp.
5.80%, 01/19/00...................... 1,454,000 1,454,000
6.04%, 02/03/00...................... 1,587,000 1,587,000
Associates Corp. of North America
5.99%, 01/14/00...................... 1,175,000 1,175,000
5.30%, 01/18/00...................... 700,000 700,000
5.78%, 02/02/00...................... 1,128,000 1,128,000
Citicorp
5.79%, 01/13/00...................... 1,091,000 1,091,000
6.01%, 02/04/00...................... 1,900,000 1,900,000
Household Finance Corp.
6.23%, 01/12/00...................... 900,000 900,000
5.84%, 01/26/00...................... 1,112,000 1,112,000
5.89%, 02/01/00...................... 1,000,000 1,000,000
-----------
15,337,000
-----------
ELECTRONICS -- 3.59%
General Electric Capital Corp.
6.13%, 01/25/00...................... 924,000 924,000
6.06%, 02/09/00...................... 1,166,000 1,166,000
General Electric Credit Corp.
6.40%, 01/27/00...................... 258,000 256,807
-----------
2,346,807
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
FARM MACHINERY & EQUIPMENT -- 4.60%
John Deere Capital Corp.
5.85%, 01/07/00...................... $ 900,000 $ 900,000
6.12%, 01/13/00...................... 1,100,000 1,100,000
John Deere Credit Corp.
5.89%, 01/25/00...................... 1,010,000 1,010,000
-----------
3,010,000
-----------
FOOD & BEVERAGE -- 7.74%
Coca-Cola Co.
6.05%, 02/18/00...................... 2,000,000 1,983,867
Proctor & Gamble Co.
5.86%, 01/12/00...................... 1,700,000 1,696,956
5.97%, 01/18/00...................... 290,000 289,182
6.02%, 02/11/00...................... 1,100,000 1,092,458
-----------
5,062,463
-----------
INSURANCE/MULTI-LINE -- 10.04%
Transamerica Financial Corp.
6.51%, 01/12/00...................... 801,000 799,407
6.00%, 01/21/00...................... 1,000,000 996,667
6.38%, 01/26/00...................... 800,000 796,456
5.73%, 03/21/00...................... 700,000 691,087
USAA Capital Corp.
5.85%, 01/31/00...................... 1,500,000 1,492,687
6.25%, 02/02/00...................... 1,600,000 1,591,111
5.76%, 02/18/00...................... 200,000 198,464
-----------
6,565,879
-----------
MEDICAL/PHARMACEUTICALS -- 2.29%
Abbott Laboratories 5.65%, 01/06/00... 1,500,000 1,498,823
-----------
PETROLEUM REFINING -- 9.34%
Chevron Corp.
6.21%, 01/26/00...................... 1,820,000 1,820,000
5.87%, 01/27/00...................... 1,302,000 1,302,000
Texaco, Inc.
5.97%, 01/10/00...................... 1,413,000 1,413,000
5.48%, 01/20/00...................... 1,577,000 1,577,000
-----------
6,112,000
-----------
TELEPHONE/UTILITY -- 7.12%
AT&T Corp.
5.77%, 02/22/00...................... 1,152,000 1,142,399
Bell Atlantic Corp.
5.82%, 01/11/00...................... 1,000,000 998,383
6.60%, 01/20/00...................... 276,000 275,039
BellSouth Corp.
6.20%, 02/15/00...................... 250,000 248,062
GTE Funding, Inc.
5.90%, 01/18/00...................... 2,000,000 1,994,428
-----------
4,658,311
-----------
TOTAL COMMERCIAL PAPER
(Cost $60,832,629)................... 60,832,629
-----------
</TABLE>
<PAGE> 16
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 3.03%
Federal National Mortgage Association
5.50%, 02/24/00...................... $ 2,000,000 $ 1,983,500
-----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(cost $1,983,500).................... 1,983,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 4.00%
MONEY MARKET FUNDS
Dreyfus Cash Management Money Market
Fund.................................. 1,281,110 $ 1,281,110
Federated Government Obligation Fund... 1,331,031 1,331,031
-----------
TOTAL MONEY MARKET FUNDS
(cost $2,612,141)..................... 2,612,141
-----------
TOTAL INVESTMENTS -- 100.01%
(cost $65,428,270).................... 65,428,270
-----------
LIABILITIES NET OF CASH & OTHER
ASSETS -- (0.01)%..................... (4,173)
-----------
NET ASSETS -- 100.00%.................. $65,424,097
===========
</TABLE>
See notes to financial statements.
<PAGE> 17
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
SHORT-TERM GOVERNMENT BOND SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
BOND AND NOTES -- 87.47%
U.S. GOVERNMENT AGENCIES -- 52.59%
Federal Farm Credit Bank
5.125%, 04/02/01.................... $ 500,000 $ 492,245
4.630%, 11/05/01.................... 1,000,000 967,410
Federal Home Loan Bank
5.500%, 08/13/01.................... 1,000,000 985,450
6.140%, 12/17/01.................... 1,000,000 987,520
5.945%, 04/01/02.................... 1,000,000 980,930
8.340%, 01/26/05.................... 500,000 500,585
Federal Home Loan Mortgage Corp.
6.250%, 07/15/04.................... 1,000,000 977,500
5.500%, 11/25/05.................... 981,118 933,759
6.350%, 03/15/11.................... 282,742 280,432
Federal National Mortgage Association
5.100%, 09/25/00.................... 1,000,000 990,440
5.400%, 05/07/01.................... 1,000,000 985,000
5.375%, 03/15/02.................... 500,000 488,450
6.500%, 08/01/04.................... 1,656,075 1,622,953
5.000%, 09/25/06.................... 500,000 490,340
6.170%, 05/25/14.................... 772,371 776,233
6.500%, 09/25/19.................... 1,000,000 985,250
6.500%, 07/25/23.................... 168,993 161,186
Private Export Funding
6.450%, 09/30/04.................... 1,000,000 981,250
Tennessee Valley Authority
5.280%, 09/14/01.................... 1,000,000 977,500
------------
15,564,433
------------
U.S. GOVERNMENT OBLIGATIONS -- 20.65%
U.S. Treasury Notes
5.500%, 02/29/00.................... 1,000,000 999,656
6.500%, 08/31/01.................... 3,000,000 3,012,240
6.250%, 02/28/02.................... 2,000,000 1,999,780
6.625%, 04/30/02.................... 100,000 100,766
------------
6,112,442
------------
ASSET BACKED -- 10.38%
Banc One Auto Grantor Trust
6.270%, 11/20/03.................... 348,359 348,223
Discover Credit Card Master Trust
5.600%, 05/15/06.................... 300,000 285,938
First USA Credit Card Master Trust
6.420%, 03/17/05.................... 250,000 246,613
Ford Credit Auto Owner Trust
5.650%, 10/15/01.................... 248,272 245,995
6.080%, 09/16/02.................... 500,000 490,250
J.P. Morgan Commercial Mortgage
Finance Corp.
6.952%, 09/15/29.................... 316,213 316,479
Morgan Stanley Capital Corp.
6.850%, 02/15/20.................... 921,203 914,114
The Money Store Home Equity Trust
7.800%, 10/15/21.................... 224,055 224,950
------------
3,072,562
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------
<S> <C> <C>
CORPORATE BONDS -- 3.85%
BellSouth Telecommunications, Inc.
6.000%, 06/15/02.................... $ 400,000 $ 391,500
Merck & Co., Inc.
5.760%, 05/03/37.................... 750,000 748,945
------------
1,140,445
------------
TOTAL BONDS AND NOTES
(cost $26,223,826).................. 25,889,882
------------
COMMERCIAL PAPER -- 6.76%
Ford Motor Credit Corp.
6.280%, 01/07/00.................... 180,000 179,812
6.370%, 01/14/00.................... 942,000 939,833
General Electric Capital Corp.
6.134%, 01/25/00.................... 117,000 117,000
Prudential Funding Corp.
5.914%, 01/10/00.................... 587,400 587,400
Toyota Motor Credit Corp.
5.780%, 02/15/00.................... 79,000 78,429
Transamerica Financial Corp.
6.510%, 01/12/00.................... 99,000 98,803
------------
TOTAL COMMERCIAL PAPER
(cost $2,001,277)................... 2,001,277
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
OTHER SHORT TERM
INVESTMENTS -- 4.53%
MONEY MARKET FUNDS
Dreyfus Cash Management Money Market
Fund................................... 225,876 225,876
Federated Government Obligation Fund.... 1,114,732 1,114,732
-----------
TOTAL MONEY MARKET FUNDS
(cost $1,340,608)...................... 1,340,608
-----------
TOTAL INVESTMENTS -- 98.76%
(cost $29,565,711)..................... 29,231,767
-----------
CASH AND OTHER ASSETS NET OF
LIABILITIES -- 1.24%................... 367,170
-----------
NET ASSETS -- 100.00%................... $29,598,937
===========
</TABLE>
<PAGE> 18
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
LONG TERM BOND SERIES
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------
<S> <C> <C>
BONDS AND NOTES -- 97.44%
U.S. GOVERNMENT AGENCIES -- 27.54%
Federal Farm Credit Bank
6.690%, 09/08/10....................... $ 500,000 $ 484,770
Federal Home Loan Mortgage Corp.
6.000%, 03/15/09....................... 773,483 758,145
6.625%, 09/15/09....................... 400,000 388,500
7.000%, 03/01/12....................... 2,656,858 2,629,440
6.500%, 02/15/21....................... 500,000 493,395
5.000%, 05/15/21....................... 625,000 571,387
6.400%, 09/25/28....................... 500,000 470,292
Federal National Mortgage Association
6.375%, 06/15/09....................... 750,000 715,958
7.604%, 12/25/19....................... 600,000 593,906
6.000%, 02/18/21....................... 300,000 288,489
6.247%, 03/17/21....................... 615,000 574,813
6.997%, 12/25/21....................... 400,000 387,000
6.500%, 09/25/22....................... 200,000 194,096
Government National Mortgage Association
6.500%, 04/15/26....................... 1,162,337 1,091,864
8.000%, 07/15/26....................... 1,247,237 1,260,483
Tennessee Valley Authority
5.375%, 11/13/08....................... 350,000 311,196
----------
11,213,734
----------
U.S. GOVERNMENT OBLIGATIONS -- 5.83%
U.S. Treasury Bonds
6.000%, 02/15/26....................... 1,000,000 915,260
5.500%, 08/15/28....................... 600,000 512,148
5.250%, 11/15/28....................... 1,150,000 948,221
----------
2,375,629
----------
CORPORATE BONDS -- 54.83%
ABN AMRO N.V. (Chicago) Global Bond
7.125%, 06/18/07....................... 300,000 290,625
A T & T Corp.
5.625%, 03/15/04....................... 400,000 379,577
Abbott Laboratories Corp.
5.400%, 09/15/08....................... 500,000 445,948
Allstate Corp.
7.200%, 12/01/09....................... 600,000 583,500
Ameritech Capital Funding
5.950%, 01/15/38....................... 700,000 662,375
Amoco Canada Petroleum Co.
7.950%, 10/01/22....................... 500,000 485,625
Asian Development Bank 5.593%,
07/16/18............................... 500,000 479,045
Associates Corp. of North America
6.375%, 10/15/02....................... 250,000 245,937
5.960%, 05/15/37....................... 750,000 750,118
Burlington Northern Santa Fe
6.530%, 07/15/37....................... 400,000 389,529
California Infrastructure PG & E
6.420%, 09/25/08....................... 1,000,000 967,920
Canadian National Railway Co.
6.450%, 07/15/36....................... 400,000 375,000
Central Illinois Public Service Co.
7.610%, 06/01/17....................... 300,000 288,375
Citicorp
7.200%, 06/15/07....................... 250,000 242,500
Coca-Cola Enterprises
7.000%, 10/01/26....................... 500,000 486,875
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Conagra, Inc.
6.700%, 08/01/27....................... $ 200,000 $ 190,750
CSX Corp.
6.420%, 06/15/10....................... 250,000 229,032
CSX Transportation, Inc.
6.500%, 04/15/04....................... 600,000 540,436
Dayton Hudson Corp.
5.895%, 06/15/37....................... 700,000 699,125
Delphi Auto Systems Corp.
6.125%, 05/01/04....................... 500,000 472,500
Federal Express Corp.
6.720%, 01/15/22....................... 399,001 368,174
Florida Power Corp.
6.000%, 07/01/03....................... 400,000 386,000
Ford Motor Credit Co.
5.125%, 10/15/01....................... 300,000 291,000
7.200%, 06/15/07....................... 600,000 591,000
General Electric Credit Co.
6.500%, 11/01/06....................... 300,000 289,125
GTE Corp.
6.360%, 04/15/06....................... 400,000 380,500
GTE South, Inc.
6.125%, 06/15/07....................... 200,000 185,750
Halliburton Co.
6.750%, 02/01/27....................... 250,000 247,188
Household Finance Corp.
6.400%, 06/17/08....................... 500,000 463,125
Idaho Power Corp.
7.200%, 12/01/09....................... 600,000 581,738
Ingersoll-Rand Co.
6.015%, 02/15/28....................... 499,886 494,715
J.P. Morgan & Co.
6.700%, 11/01/07....................... 250,000 238,358
Madison Gas and Electric Co.
6.020%, 09/15/08....................... 300,000 267,208
Merck & Co., Inc.
5.768%, 05/03/37....................... 1,600,000 1,597,749
Merrill Lynch & Co., Inc.
7.150%, 07/30/12....................... 350,000 342,125
Morgan Stanley Dean Witter Discover
6.375%, 08/01/02....................... 250,000 245,937
NationsBank Corp.
5.750%, 03/15/01....................... 300,000 296,625
Norfolk Southern Corp.
7.050%, 05/01/37....................... 350,000 344,312
Northwest Airlines Corp.
7.935%, 04/01/19....................... 700,000 693,456
Oklahoma Gas & Electric Co.
6.650%, 07/15/27....................... 250,000 238,750
Province of Ontario
5.500%, 10/01/08....................... 400,000 355,500
Procter & Gamble Co.
5.250%, 09/15/03....................... 500,000 473,750
Raytheon Co.
5.950%, 03/15/01....................... 200,000 196,750
6.300%, 03/15/05....................... 200,000 185,500
Salomon Smith Barney Holding
6.250%, 05/15/03....................... 250,000 242,500
Sears Roebuck Acceptance Corp.
6.000%, 03/20/03....................... 200,000 190,250
</TABLE>
<PAGE> 19
IAA TRUST MUTUAL FUNDS -- SCHEDULE OF INVESTMENTS December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
LONG TERM BOND SERIES (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Sun Microsystems, Inc.
7.500%, 08/15/06....................... $ 350,000 $ 351,313
Suntrust Capital II
7.900%, 06/15/27....................... 200,000 183,750
Transamerica Financial Corp.
6.125%, 11/01/01....................... 350,000 344,312
US West Capital Funding, Inc.
6.250%, 07/15/05....................... 300,000 282,750
Wachovia Corp.
6.605%, 10/01/25....................... 600,000 577,500
Wisconsin Bell Telephone Co.
6.350%, 12/01/26....................... 300,000 283,500
Xerox Corp.
5.545%, 07/22/37....................... 900,000 913,204
----------
22,328,206
----------
ASSET BACKED -- 8.79%
Discover Credit Card Master Trust
5.850%, 01/17/06....................... 500,000 482,413
First USA Credit Card Master Trust
6.420%, 03/17/05....................... 250,000 246,612
Goldman Sachs Mortgage Securities
Corp. -II
6.620%, 10/18/30....................... 300,000 284,474
Green Tree Financial Corp.
6.870%, 01/15/29....................... 200,000 193,348
J.C. Penney Master Credit Card Trust
8.950%, 10/15/01....................... 189,318 190,497
J.P. Morgan Commercial Mortgage Co.
Finance Corp.
7.088%, 09/15/29....................... 556,000 545,608
Merrill Lynch Mortgage Investors, Inc.
7.370%, 06/15/08....................... 398,099 400,089
Morgan Stanley Capital I
6.760%, 11/15/08....................... 392,708 384,398
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------
<S> <C> <C>
Sears Credit Account Master Trust
5.650%, 03/15/09....................... $ 350,000 $ 333,723
The Money Store Home Equity Trust
5.675%, 02/15/09....................... 170,269 164,379
8.140%, 10/15/27....................... 350,000 351,729
----------
3,577,270
----------
MUNICIPAL -- 0.45%
Wisconsin State Unlimited General
Obligation
6.550%, 11/01/05....................... 195,000 184,681
----------
TOTAL BONDS AND NOTES
(cost $41,123,395)..................... 39,679,520
----------
COMMERCIAL PAPER -- 0.24%
Transamerica Finance Corp.
6.510%, 01/12/00 (cost $99,801)........ 100,000 99,801
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-----------
<S> <C> <C>
OTHER SHORT TERM INVESTMENTS -- 1.17%
MONEY MARKET FUNDS
Dreyfus Cash Management Money Market
Fund................................ 146,444 146,444
Federated Prime Obligation Fund...... 331,484 331,484
------------
TOTAL MONEY MARKET FUNDS
(cost $477,928)..................... 477,928
------------
TOTAL INVESTMENTS -- 98.85%
(cost $41,701,124).................. 40,257,249
------------
CASH AND OTHER ASSETS NET OF
LIABILITIES -- 1.15%................ 466,801
------------
NET ASSETS -- 100.00%................ $ 40,724,050
============
</TABLE>
See notes to financial statements.
<PAGE> 20
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
IAA TRUST IAA TRUST ----------------------------------------
IAA TRUST ASSET TAX EXEMPT SHORT-TERM LONG-TERM
GROWTH ALLOCATION BOND MONEY MARKET GOVERNMENT BOND
FUND, INC. FUND, INC. FUND, INC. SERIES BOND SERIES SERIES
------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities:
At cost.................................. $116,147,980 $18,180,630 $16,052,854 $65,428,270 $29,565,711 $41,701,124
============ =========== =========== =========== =========== ===========
At value................................. $187,492,063 $23,611,472 $16,151,641 $65,428,270 $29,231,767 $40,257,249
Cash....................................... 325 -- -- -- -- 39
Receivable for securities sold............. 10,000 114,499 38,678 -- 11,724 6,453
Receivable for capital stock sold.......... 87,914 28,073 -- -- 20,097 21,322
Dividends receivable....................... 223,474 16,536 -- -- -- --
Interest receivable........................ 55,606 93,997 213,749 306,611 383,570 486,451
Due from Advisor (Note E).................. -- -- -- -- -- 6,223
Prepaid Expenses........................... 12,874 2,882 1,837 4,514 1,681 1,813
------------ ----------- ----------- ----------- ----------- -----------
Total assets............................. 187,882,256 23,867,459 16,405,905 65,739,395 29,648,839 40,779,550
------------ ----------- ----------- ----------- ----------- -----------
LIABILITIES:
Cash overdraft............................. -- 4,512 37,153 1,187 1,285 --
Payable for securities purchased........... -- 28,997 -- -- -- 18,000
Payable for capital stock redeemed......... 87,555 -- 904 -- 32,529 9,318
Distributions Payable...................... -- -- -- 279,322 -- --
Accrued expenses and other liabilities..... 157,451 23,258 17,081 34,789 16,088 28,182
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities........................ 245,006 56,767 55,138 315,298 49,902 55,500
------------ ----------- ----------- ----------- ----------- -----------
NET ASSETS.................................. $187,637,250 $23,810,692 $16,350,767 $65,424,097 $29,598,937 $40,724,050
============ =========== =========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital paid-in............................ $113,784,791 $18,037,329 $16,287,130 $65,424,265 $29,943,318 $42,204,102
Undistributed (Distributions in excess of)
net investment income.................... (344,284) 3,632 (235) -- (1,825) (1,111)
Accumulated net realized gain (loss) on
investments.............................. 2,852,660 338,889 (34,915) (168) (8,612) (35,065)
Net unrealized appreciation (depreciation)
of investments........................... 71,344,083 5,430,842 98,787 -- (333,944) (1,443,876)
============ =========== =========== =========== =========== ===========
$187,637,250 $23,810,692 $16,350,767 $65,424,097 $29,598,937 $40,724,050
============ =========== =========== =========== =========== ===========
Shares outstanding......................... 7,196,611 1,447,920 1,935,162 65,424,364 2,990,934 4,204,679
============ =========== =========== =========== =========== ===========
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE...................................... $26.07 $16.44 $8.45 $1.00 $9.90 $9.69
====== ====== ===== ===== ===== =====
</TABLE>
See notes to financial statements.
<PAGE> 21
STATEMENTS OF OPERATIONS for the Six Months Ended December 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
IAA TRUST -----------------------------------------
ASSET IAA TRUST
IAA TRUST ALLOCATION TAX EXEMPT SHORT-TERM LONG-TERM
GROWTH FUND, BOND MONEY MARKET GOVERNMENT BOND
FUND, INC. INC. FUND, INC. SERIES BOND SERIES SERIES
---------- ---------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $1,090,409 $ 86,396 $ -- $ -- $ -- $ --
Interest................................... 236,129 300,307 444,755 1,691,165 877,537 $1,303,344
---------- -------- --------- ---------- --------- ----------
Total investment income.................. 1,326,538 386,703 444,755 1,691,165 877,537 1,303,344
---------- -------- --------- ---------- --------- ----------
EXPENSES:
Investment advisory fees (Note E).......... 672,811 86,919 43,195 155,855 74,963 154,042
Distribution expenses (Note F)............. 224,270 28,973 21,598 -- 12,340 17,393
Transfer agent fees........................ 36,997 4,894 5,350 17,239 13,007 13,121
Audit fees................................. 19,090 2,291 2,040 5,749 3,264 4,564
Printing................................... 8,068 754 1,012 2,944 579 727
Custody fees............................... 27,429 3,284 4,164 4,772 3,943 4,692
Directors' fees............................ 2,723 708 754 350 276 304
Administration fees........................ 61,088 7,719 6,946 24,303 10,757 14,455
Accounting fees............................ 32,159 16,734 16,663 22,447 16,583 18,799
Insurance.................................. 7,220 1,118 930 2,561 1,140 1,163
Registration fees.......................... 3,711 2,131 2,769 2,353 1,193 1,383
Legal fees................................. 2,172 1,898 1,812 1,109 854 854
Miscellaneous.............................. 4,582 1,012 754 1,665 934 1,086
---------- -------- --------- ---------- --------- ----------
Total expenses........................... 1,102,320 158,435 107,987 241,347 139,833 232,583
---------- -------- --------- ---------- --------- ----------
Less: Advisory fees waived and reimbursed
(Note E)................................. -- -- -- -- (11,235) (53,074)
Less: Expenses waived (Note E)............. (27,429) (3,284) (4,164) (4,772) (3,943) (4,692)
---------- -------- --------- ---------- --------- ----------
Net expenses............................. 1,074,891 155,151 103,823 236,575 124,655 174,817
---------- -------- --------- ---------- --------- ----------
NET INVESTMENT INCOME....................... 251,647 231,552 340,932 1,454,590 752,882 1,128,527
---------- -------- --------- ---------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS -- NOTE (D):
Net realized gain (loss) on investments.... 7,956,002 653,101 (21,253) -- (10,611) (27,831)
Net change in unrealized appreciation
(depreciation) on investments............ 638,804 (20,845) (318,676) -- (267,632) (911,526)
---------- -------- --------- ---------- --------- ----------
Net realized and unrealized gain (loss) on
investments.............................. 8,594,806 632,256 (339,929) -- (278,243) (939,357)
---------- -------- --------- ---------- --------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS...... $8,846,453 $863,808 $ 1,003 $1,454,590 $ 474,639 $ 189,170
========== ======== ========= ========== ========= ==========
</TABLE>
See notes to financial statements.
<PAGE> 22
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST IAA TRUST ASSET
GROWTH FUND, INC. ALLOCATION FUND, INC.
------------------------------- ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
12/31/99 YEAR ENDED 12/31/99 YEAR ENDED
(UNAUDITED) 06/30/99 (UNAUDITED) 06/30/99
---------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................... $ 251,647 $ 929,103 $ 231,552 $ 491,886
Net realized gain on investments........................... 7,956,002 12,717,971 653,101 1,177,178
Net change in unrealized appreciation of investments....... 638,804 23,916,026 (20,845) 1,674,115
------------ ------------ ----------- -----------
Net increase in net assets from operations................. 8,846,453 37,563,100 863,808 3,343,179
------------ ------------ ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Note (B)
Investment income.......................................... (1,066,212) (1,018,527) (233,135) (494,039)
Realized gains on investments.............................. (15,233,891) (8,886,026) (1,539,187) (164,915)
------------ ------------ ----------- -----------
Total distributions........................................ (16,300,103) (9,904,553) (1,772,322) (658,954)
------------ ------------ ----------- -----------
CAPITAL STOCK TRANSACTIONS -- (NET) NOTE (C)................ 13,020,637 (5,902,832) 1,434,467 1,950,772
------------ ------------ ----------- -----------
Total increase in net assets............................... 5,566,987 21,755,715 525,953 4,634,997
NET ASSETS:
Beginning of period........................................ 182,070,263 160,314,548 23,284,739 18,649,742
------------ ------------ ----------- -----------
End of period.............................................. $187,637,250 $182,070,263 $23,810,692 $23,284,739
============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME
IAA TRUST SERIES FUND, INC.
TAX EXEMPT BOND FUND, INC. MONEY MARKET SERIES
------------------------------ ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
12/31/99 YEAR ENDED 12/31/99 YEAR ENDED
(UNAUDITED) 06/30/99 (UNAUDITED) 06/30/99
---------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................... $ 340,932 $ 687,381 $ 1,454,590 $ 2,721,949
Net realized gain (loss) on investments.................... (21,253) 310,798 -- --
Net change in unrealized appreciation of investments....... (318,676) (624,536) -- --
----------- ----------- ----------- -----------
Net increase in net assets from operations................. 1,003 373,643 1,454,590 2,721,949
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: NOTE (B)
Investment income.......................................... (341,814) (697,162) (1,454,590) (2,721,949)
Realized gains on investments.............................. (55,062) (273,899) -- --
----------- ----------- ----------- -----------
Total distributions........................................ (396,876) (971,061) (1,454,590) (2,721,949)
----------- ----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS -- (NET) NOTE (C)................ (760,801) 435,516 2,402,325 9,999,569
----------- ----------- ----------- -----------
Total increase (decrease) in net assets.................... (1,156,674) (161,902) 2,402,325 9,999,569
NET ASSETS:
Beginning of period........................................ 17,507,441 17,669,343 63,021,772 53,022,203
----------- ----------- ----------- -----------
End of period.............................................. $16,350,767 $17,507,441 $65,424,097 $63,021,772
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 23
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IAA TRUST IAA TRUST
TAXABLE FIXED INCOME TAXABLE FIXED INCOME
SERIES FUND, INC. SERIES FUND, INC.
SHORT-TERM GOVERNMENT BOND SERIES LONG-TERM BOND SERIES
--------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
12/31/99 YEAR ENDED 12/31/99 YEAR ENDED
(UNAUDITED) 06/30/99 (UNAUDITED) 06/30/99
----------------- ------------- ---------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................... $ 752,882 $ 1,437,974 $ 1,128,527 $ 2,080,890
Net realized gain (loss) on
investments........................... (10,611) 87,430 (27,831) 909,033
Net change in unrealized appreciation of
investments........................... (267,632) (310,809) (911,525) (1,718,979)
----------- ----------- ----------- -----------
Net increase in net assets from
operations............................ 474,639 1,214,595 189,171 1,270,944
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM: NOTE (B)
Investment income....................... (753,099) (1,460,510) (1,125,897) (2,116,730)
Realized gains on investments........... -- (89,405) (422,149) (937,981)
----------- ----------- ----------- -----------
Total distributions..................... (753,099) (1,549,915) (1,548,046) (3,054,711)
----------- ----------- ----------- -----------
CAPITAL STOCK TRANSACTIONS -- (NET) NOTE
(C)..................................... 139,779 1,763,522 1,348,712 3,717,509
----------- ----------- ----------- -----------
Total increase (decrease) in net
assets................................ (138,681) 1,428,202 (10,163) 1,933,742
NET ASSETS:
Beginning of period..................... 29,737,618 28,309,416 40,734,213 38,800,471
----------- ----------- ----------- -----------
End of period........................... $29,598,937 $29,737,618 $40,724,050 $40,734,213
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE> 24
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,
12/31/99 --------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 27.24 $ 23.04 $ 22.51 $ 18.88 $ 17.23 $ 15.16
-------- -------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................. 0.04 0.15 0.17 0.15 0.23 0.22
Net gains on securities (both realized and
unrealized)......................................... 1.20 5.50 2.19 4.81 3.23 3.45
-------- -------- -------- -------- ------- -------
Total from investment operations.................... 1.24 5.65 2.36 4.96 3.46 3.67
-------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income.................. (0.16) 0.15 (0.15) (0.20) (0.25) (0.17)
Distributions from capital gains...................... (2.25) (1.30) (1.68) (1.13) (1.56) (1.43)
-------- -------- -------- -------- ------- -------
Total distributions................................. (2.41) (1.45) (1.83) (1.33) (1.81) (1.60)
-------- -------- -------- -------- ------- -------
Net asset value, end of period.......................... $ 26.07 $ 27.24 $ 23.04 $ 22.51 $ 18.88 $ 17.23
======== ======== ======== ======== ======= =======
TOTAL RETURN............................................ 4.90% 26.10% 10.98% 28.54% 21.51% 26.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).................. $187,637 $182,070 $160,315 $140,786 $84,800 $70,577
Ratio of expenses to average net assets:
Before expense waiver............................... 1.23%** 1.08% 1.02% -- -- --
After expense waiver................................ 1.20%** 1.04% 1.00% 1.16% 1.12% 1.14%
Ratio of net investment income to average net assets:
Before expense waiver............................... 0.25%** 0.55% 0.73% -- -- --
After expense waiver................................ 0.28%** 0.59% 0.75% 0.84% 1.30% 1.41%
Portfolio turnover.................................... 11.42% 31.88% 33.06% 30.74% 32.95% 31.84%
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
ASSET ALLOCATION FUND, INC.
--------------------------------------------------------------------
SIX MONTHS ENDED YEARS ENDED JUNE 30,
12/31/99 -------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- -------- -------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 17.12 $ 15.20 $ 14.64 $ 13.39 $ 12.29 $11.08
-------- -------- -------- -------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................................. 0.17 0.37 0.39 0.35 0.37 0.36
Net gains on securities (both realized and
unrealized).......................................... 0.45 2.04 1.22 2.11 1.41 1.38
-------- -------- -------- -------- ------- ------
Total from investment operations..................... 0.62 2.41 1.61 2.46 1.78 1.74
-------- -------- -------- -------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income................... (0.17) (0.37) (0.39) (0.34) (0.37) (0.34)
Distributions from capital gains....................... (1.13) (0.12) (0.66) (0.87) (0.31) (0.18)
Distributions from return of capital................... -- -- -- -- -- (0.01)
-------- -------- -------- -------- ------- ------
Total distributions.................................. (1.30) (0.49) (1.05) (1.21) (0.68) (0.53)
-------- -------- -------- -------- ------- ------
Net asset value, end of period........................... $ 16.44 $ 17.12 $ 15.20 $ 14.64 $ 13.39 $12.29
======== ======== ======== ======== ======= ======
TOTAL RETURN............................................. 3.68% 16.22% 11.41% 19.95% 14.74% 16.29%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)................... $ 23,811 $ 23,285 $ 18,650 $ 14,272 $10,083 $9,540
Ratio of expenses to average net assets:
Before expense waiver................................ 1.36%** 1.22% 1.25% -- -- --
After expense waiver................................. 1.34%** 1.16% 1.21% 1.46% 1.44% 1.46%
Ratio of net investment income to average net assets:
Before expense waiver................................ 1.98%** 2.30% 2.57% -- -- --
After expense waiver................................. 2.00%** 2.36% 2.61% 2.57% 2.81% 3.18%
Portfolio turnover..................................... 10.74% 33.91% 20.07% 19.25% 33.77% 21.03%
</TABLE>
** Annualized
See notes to financial statements.
<PAGE> 25
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,
12/31/99 ---------------------------------------------------
UNAUDITED 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 8.65 $ 8.95 $ 8.70 $ 8.41 $ 8.36 $ 8.19
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................ 0.17 0.36 0.37 0.36 0.37 0.39
Net gains (losses) on securities (both realized
and unrealized)................................ (0.17) (0.16) 0.27 0.31 0.07 0.20
------- ------- ------- ------- ------- -------
Total from investment operations............... 0.00 0.20 0.64 0.67 0.44 0.59
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income............. (0.17) (0.36) (0.37) (0.36) (0.37) (0.39)
Distributions from capital gains................. (0.03) (0.14) (0.02) (0.02) (0.02) (0.03)
------- ------- ------- ------- ------- -------
Total distributions............................ (0.20) (0.50) (0.39) (0.38) (0.39) (0.42)
------- ------- ------- ------- ------- -------
Net asset value, end of period..................... $ 8.45 $ 8.65 $ 8.95 $ 8.70 $ 8.41 $ 8.36
======= ======= ======= ======= ======= =======
TOTAL RETURN....................................... 0.01% 2.14% 7.45% 8.15% 5.30% 7.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............. $16,351 $17,507 $17,669 $18,008 $17,744 $18,833
Ratio of expenses to average net assets:
Before expense waiver.......................... 1.25%** 1.07% 1.01% -- -- --
After expense waiver........................... 1.20%** 1.00% 0.97% 1.14% 1.08% 1.06%
Ratio of net investment income to average net
assets:
Before expense waiver.......................... 3.90%** 3.83% 4.13% -- -- --
After expense waiver........................... 3.95%** 3.90% 4.17% 4.23% 4.30% 4.79%
Portfolio turnover............................... 4.05% 39.85% 24.83% 11.35% 14.75% 24.89%
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
MONEY MARKET SERIES
-----------------------------------------------------------------------
SIX MONTHS ENDED YEARS ENDED JUNE 30,
12/31/99 ---------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 1.00 $ 1.00 $1.00... $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................ 0.02 0.04 0.05 0.05 0.05 0.05
------- ------- ------- ------- ------- -------
Total from investment operations............... 0.02 0.04 0.05 0.05 0.05 0.05
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income............. (0.02) (0.04) (0.05) (0.05) (0.05) (0.05)
------- ------- ------- ------- ------- -------
Total distributions............................ (0.02) (0.04) (0.05) (0.05) (0.05) (0.05)
------- ------- ------- ------- ------- -------
Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
TOTAL RETURN....................................... 2.37% 4.54% 4.94% 4.63% 4.82% 4.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............. $65,424 $63,022 $53,022 $60,674 $33,664 $36,415
Ratio of expenses to average net assets:
Before expense waiver.......................... 0.78%** 0.82% 0.83% -- -- 0.97%
After expense waiver........................... 0.76%** 0.77% 0.81% 0.94% 0.90% 0.73%
Ratio of net investment income to average net
assets:
Before expense waiver.......................... 4.65%** 4.39% 4.81% -- -- 4.56%
After expense waiver........................... 4.67%** 4.44% 4.83% 4.55% 4.74% 4.80%
</TABLE>
** Annualized
See notes to financial statements.
<PAGE> 26
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
SHORT-TERM GOVERNMENT BOND SERIES
------------------------------------------------------------
SIX MONTHS ENDED YEARS ENDED JUNE 30, FOR THE PERIOD
12/31/99 -------------------- 01/02/97*
(UNAUDITED) 1999 1998 THROUGH 06/30/97
---------------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 9.99 $ 10.11 $ 10.01 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................................... 0.25 0.51 0.54 0.20
Net gains (losses) on securities (both realized and
unrealized)............................................. (0.09) (0.09) 0.10 0.01
------- ------- ------- -------
Total from investment operations........................ 0.16 0.42 0.64 0.21
------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income...................... (0.25) (0.51) (0.54) (0.20)
Distributions from capital gains.......................... 0.00 (0.03) -- --
------- ------- ------- -------
Total distributions..................................... (0.25) (0.54) (0.54) (0.20)
------- ------- ------- -------
Net asset value, end of period.............................. $ 9.90 $ 9.99 $ 10.11 $ 10.01
======= ======= ======= =======
TOTAL RETURN................................................ 1.64% 4.27% 6.50% 2.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $29,599 $29,738 $28,309 $24,285
Ratio of expenses to average net assets:
Before expense waiver and reimbursement................. 0.93%** 0.90% 0.92% 3.88%**
After expense waiver and reimbursement.................. 0.83%** 0.83% 0.86% 0.76%**
Ratio of net investment income to average net assets:
Before expense waiver and reimbursement................. 4.95%** 4.93% 5.30% 1.78%**
After expense waiver and reimbursement.................. 5.05%** 5.00% 5.36% 4.90%**
Portfolio turnover........................................ 2.87% 29.24% 1.54% 0.00%
</TABLE>
<TABLE>
<CAPTION>
IAA TRUST
TAXABLE FIXED INCOME SERIES FUND, INC.
LONG-TERM BOND SERIES
------------------------------------------------------------
SIX MONTHS ENDED YEARS ENDED JUNE 30, FOR THE PERIOD
12/31/99 -------------------- 01/02/97*
(UNAUDITED) 1999 1998 THROUGH 06/30/97
---------------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.01 $ 10.48 $ 10.04 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................................... 0.27 0.56 0.56 0.20
Net gains (losses) on securities (both realized and
unrealized)............................................. (0.22) (0.21) 0.45 0.04
------- ------- ------- -------
Total from investment operations........................ 0.05 0.35 1.01 0.24
------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income...................... (0.27) (0.56) (0.56) (0.20)
Distributions from capital gains.......................... (0.10) (0.26) (0.01) --
------- ------- ------- -------
Total distributions..................................... (0.37) (0.82) (0.57) (0.20)
------- ------- ------- -------
Net asset value, end of period.............................. $ 9.69 $ 10.01 $ 10.48 $ 10.04
======= ======= ======= =======
TOTAL RETURN................................................ 0.56% 3.29% 10.24% 2.44%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $40,724 $40,734 $38,800 $32,932
Ratio of expenses to average net assets:
Before expense waiver and reimbursement................. 1.13%** 1.09% 1.12% 3.82%**
After expense waiver and reimbursement.................. 0.85%** 0.85% 0.89% 0.78%**
Ratio of net investment income to average net assets:
Before expense waiver and reimbursement................. 5.26%** 5.08% 5.24% 2.11%**
After expense waiver and reimbursement.................. 5.54%** 5.32% 5.47% 5.15%**
Portfolio turnover........................................ 25.08% 29.19% 25.11% 41.77%
</TABLE>
* Commencement of operations.
** Annualized
See notes to financial statements.
<PAGE> 27
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1999
(unaudited)
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: The IAA Trust Mutual Funds represent
four separate funds, with one Fund containing three separate Series (referred to
herein as "Funds" or "Series"). Each of the Funds and Series has distinct
investment objectives and policies. The four Funds are as follows: 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. The
Taxable Fixed Income Series Fund currently consists of the following three
separate investment Series: IAA Trust Money Market Series ("Money Market
Series"); IAA Trust Short-Term Government Bond Series ("Short-Term Government
Bond Series"); and IAA Trust Long-Term Bond Series ("Long-Term Bond Series").
The Short-Term Government Bond Series and the Long-Term Bond Series commenced
operations on January 2, 1997. 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, the
Tax Exempt Bond Fund, the Short-Term Government Bond Series and the
Long-Term Bond Series, 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, such as those
with a remaining maturity of 60 days or less, are valued at amortized cost,
which approximates market value. For the Money Market Series, 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 trade date basis. Gains or
losses on the sale of securities are determined by use of the specific
identification method for both financial reporting and income tax purposes.
(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 is
declared and distributed to shareholders twice a year. The Asset Allocation
Fund, the Tax Exempt Bond Fund, the Short-Term Government Bond Series and the
Long-Term Bond Series, declare and distribute net investment income to
shareholders monthly. The Money Market Series 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
twice a year.
<PAGE> 28
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1999
(unaudited) (continued)
- --------------------------------------------------------------------------------
NOTE (C) CAPITAL STOCK: At December 31, 1999, 10,000,000 shares of capital stock
were authorized for each of the Growth Fund, Asset Allocation Fund, and Tax
Exempt Bond Fund, each Fund having a par value of $1.00 per share. The
authorized capitalization of the Taxable Fixed Income Series Fund consists of
250,000,000 shares with the par value of $0.10 per share. 100,000,000 of this
Fund's shares are designated as Money Market Series, 50,000,000 of its shares
are designated as Short-Term Government Bond Series, and 25,000,000 of its
shares are designated as Long-Term Bond Series. The remaining 75,000,000 shares
are undesignated.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
GROWTH FUND ASSET ALLOCATION FUND
----------- ---------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1999 JUNE 30, 1999 DECEMBER 31, 1999
---------------------- ------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold........................ 260,199 $ 6,572,526 346,692 $ 8,272,611 97,884 $ 1,634,172
Shares issued through reinvestment
of dividends...................... 597,619 15,385,907 424,032 9,386,928 92,388 1,515,623
-------- ----------- ---------- ------------ ----------- ------------
857,818 21,958,433 770,724 17,659,539 190,272 3,149,795
-------- ----------- ---------- ------------ ----------- ------------
Shares Redeemed.................... (346,087) (8,937,796) (1,045,124) (23,562,371) (102,763) (1,715,328)
-------- ----------- ---------- ------------ ----------- ------------
Net increase (decrease)............ 511,731 $13,020,637 (274,400) $ (5,902,832) 87,509 $ 1,434,467
======== =========== ========== ============ =========== ============
<CAPTION>
ASSET ALLOCATION FUND
---------
YEAR ENDED
JUNE 30, 1999
--------------------------
SHARES AMOUNT
----------- ------------
<S> <C> <C>
Shares sold........................ 259,768 $ 3,920,616
Shares issued through reinvestment
of dividends...................... 36,834 576,698
----------- ------------
296,602 4,497,314
----------- ------------
Shares Redeemed.................... (163,521) (2,546,542)
----------- ------------
Net increase (decrease)............ 133,081 $ 1,950,772
=========== ============
</TABLE>
<TABLE>
<CAPTION>
TAX EXEMPT BOND FUND
--------------------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold........................ 21,705 $ 186,695 141,601 $ 1,303,303
Shares issued through reinvestment
of dividends...................... 31,541 269,358 73,436 656,860
-------- ----------- ---------- ------------
53,246 456,053 215,037 1,960,163
-------- ----------- ---------- ------------
Shares redeemed.................... (141,791) (1,216,854) (169,227) (1,524,647)
-------- ----------- ---------- ------------
Net increase (decrease)............ (88,545) $ (760,801) 45,810 $ 435,516
======== =========== ========== ============
<CAPTION>
TAXABLE FIXED INCOME SERIES FUND
--------------------------------
MONEY MARKET SERIES
-------------------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold........................ 29,908,030 $ 29,908,030 73,477,819 $ 73,477,819
Shares issued through reinvestment
of dividends...................... 1,190,495 1,190,495 2,685,481 2,685,481
----------- ------------ ----------- ------------
31,098,525 31,098,525 76,163,300 76,163,300
----------- ------------ ----------- ------------
Shares redeemed.................... (28,696,200) (28,696,200) (66,163,731) (66,163,731)
----------- ------------ ----------- ------------
Net increase (decrease)............ 2,402,325 $ 2,402,325 9,999,569 $ 9,999,569
=========== ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
TAXABLE FIXED INCOME SERIES FUND
--------------------------------
SHORT-TERM GOVERNMENT
---------------------
BOND SERIES
-----------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold........................ 219,758 $ 2,191,957 511,782 $ 5,186,589
Shares issued through reinvestment
of dividends...................... 66,871 665,035 139,753 1,413,533
-------- ----------- ---------- ------------
286,629 2,856,992 651,535 6,600,122
-------- ----------- ---------- ------------
Shares redeemed.................... (272,408) (2,717,213) (475,781) (4,836,600)
-------- ----------- ---------- ------------
Net increase....................... 14,221 $ 139,779 175,754 $ 1,763,522
======== =========== ========== ============
<CAPTION>
TAXABLE FIXED INCOME SERIES FUND
--------------------------------
LONG-TERM BOND SERIES
---------------------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold........................ 383,220 $ 3,818,188 794,968 $ 8,300,725
Shares issued through reinvestment
of dividends...................... 142,469 1,400,492 276,431 2,875,782
----------- ------------ ----------- ------------
525,689 5,218,680 1,071,399 11,176,507
----------- ------------ ----------- ------------
Shares redeemed.................... (389,198) (3,869,968) (705,688) (7,458,998)
----------- ------------ ----------- ------------
Net increase....................... 136,491 $ 1,348,712 365,711 $ 3,717,509
=========== ============ =========== ============
</TABLE>
<PAGE> 29
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1999
(unaudited) (continued)
- --------------------------------------------------------------------------------
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, 1999 were:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Growth Fund................................................. $19,210,930 $26,900,374
Asset Allocation Fund....................................... $ 1,749,635 $ 2,103,418
Tax Exempt Bond Fund........................................ $ 669,530 $ 1,430,835
Short-Term Govt. Bond Series................................ $ 1,499,183 $ --
Long-Term Bond Series....................................... $10,090,215 $ 6,981,225
</TABLE>
For the six months ended December 31, 1999, the aggregate cost of purchases and
proceeds from sales of U.S. Government Securities were:
<TABLE>
<S> <C> <C>
Asset Allocation Fund....................................... $ 619,562 $ 485,729
Short-Term Govt. Bond Series................................ $ 2,477,150 $ 750,000
Long-Term Bond Series....................................... $ 6,962,731 $ 2,616,406
</TABLE>
For both Federal income tax and financial statement purposes, the cost of
investments at December 31, 1999 was $116,147,980 for the Growth Fund,
$18,180,630 for the Asset Allocation Fund, $16,052,854 for the Tax Exempt Bond
Fund, $65,428,270 for the Money Market Series, $29,565,711 for the Short-Term
Government Bond Series, and $41,701,124 for the Long-Term Bond Series.
The gross unrealized appreciation/depreciation for book and tax purposes at
December 31, 1999 consisted of the following:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Growth Fund................................................. $80,137,943 $8,793,860
Asset Allocation Fund....................................... $ 6,292,171 $ 861,329
Tax Exempt Bond Fund........................................ $ 288,082 $ 189,295
Short-Term Government Bond Series........................... $ 17,612 $ 351,556
Long-Term Bond Series....................................... $ 28,119 $1,471,994
</TABLE>
NOTE (E) ADVISORY AND OTHER RELATED PARTY TRANSACTIONS: 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%; Money
Market Series 0.50%; Short-Term Government Bond Series 0.50%; and Long-Term Bond
Series 0.75%. These fees are accrued daily and paid to the Advisor monthly. IAA
Trust Company serves as the Funds' Custodian, without compensation after
voluntary waivers. Custody fees waived for Growth Fund, Asset Allocation Fund,
Tax Exempt Fund, Money Market Series, Short-Term Government Bond Series and
Long-Term Bond Series for the six months ended December 31, 1999 were: $27,429,
$3,284, $4,164, $4,772, $3,943 and $4,692, respectively.
For the period January 2, 1997(commencement of operations) through June 30,
1997, the Advisor voluntarily agreed to reduce its fees and reimburse the
Short-Term Government Bond Series and the Long-Term Bond Series to the extent
total annualized expenses exceeded 1.32% and 1.57% of the Funds average daily
net assets. Effective July 1, 1997, the Advisor agreed to continue to reduce its
fees and reimburse the Funds to the extent total annualized expenses exceed
0.98%. Effective November 1, 1997, the Advisor agreed to
<PAGE> 30
IAA TRUST MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS December 31, 1999
(unaudited) (continued)
- --------------------------------------------------------------------------------
continue to reduce its fees and reimburse the Funds to the extent total
annualized expenses exceed 0.85% of average daily net assets. Investment
advisory fees, for the six months ended December 31, 1999, are as follows:
<TABLE>
<CAPTION>
EXPENSES
WAIVED
AND
ADVISORY ADVISORY REIMBURSED
FEE FEE BY ADVISOR
-------- -------- ----------
<S> <C> <C> <C>
Short-Term Government Bond Series........................... 0.50% $ 74,963 $11,235
Long-Term Bond Series....................................... 0.75% $154,042 $53,074
</TABLE>
The legal counsel to the Fund also serves as in-house counsel to the Advisor and
as secretary to the Fund. Fees paid by the Growth Fund, Asset Allocation Fund,
Tax Exempt Bond Fund, Money Market Series, Short-Term Government Bond Series and
Long-Term Bond Series during the six months ended December 31, 1999 were $2,172,
$1,898, $1,812, $1,109, $854, and $854, respectively.
NOTE (F) DISTRIBUTION SERVICES AGREEMENTS: Provident Distributors, 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,
the Tax Exempt Bond Fund, the Short-Term Government Bond Series, and the
Long-Term Bond Series 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 annual
contractual fee under the Plans, is 0.25% of the average daily net assets of
each Fund or Series. For the six months ended December 31, 1999, the annualized
Rule 12b-1 Plan expenses incurred for the Growth Fund, the Asset Allocation
Fund, the Tax Exempt Bond Fund, the Short-Term Government Bond Series and the
Long-Term Bond Series were 0.25%, 0.25%, 0.25%, 0.08%, and 0.08% of average net
assets, respectively.
NOTE (G) SHAREHOLDER CONCENTRATION: On December 31, 1999, three shareholders
held approximately 60.4% of the shares outstanding of the Growth Fund, two
shareholders held approximately 87.2% of the shares outstanding of the Asset
Allocation Fund, one shareholder held approximately 12.2% of the shares
outstanding of the Tax Exempt Bond Fund, two shareholders held approximately
88.9% of the shares outstanding of the Money Market Series, four shareholders
held approximately 99.1% of the shares outstanding of the Short-Term Government
Bond Series, and three shareholders held approximately 99.7% of the shares
outstanding of the Long-Term Bond Series.
<PAGE> 31
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
Short-Term Government Bond Series
Long-Term Bond Series
BOARD OF DIRECTORS
Ronald R. Warfield
Herbert G. Allen
Charlot R. Cole
Nancy J. Erickson
Ailene Miller
Rollie D. Moore
Wendell L. Shauman
Robert L. Phelps
OFFICERS
Ronald R. Warfield, President
Bruce D. Finks, Vice President
Robert W. Rush, Jr., Vice President
Duane L. Miller, Vice President
Richard M. Miller, Vice President
Rollie D. Moore, Vice President
Philip T. Nelson, Vice President
Paul M. Harmon, Secretary
David A. Magers, Treasurer
Richard F. Day, Controller
INVESTMENT ADVISOR
IAA Trust Company
Bloomington, Illinois
DISTRIBUTOR
Provident Distributors, Inc.
King of Prussia, Pennsylvania
TRANSFER AGENT
PFPC Inc.
King of Prussia, Pennsylvania
CUSTODIAN
IAA Trust Company
Bloomington, Illinois
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
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.
F30-113-03(2/00)
SEMI-ANNUAL REPORT
[GRAPHIC]
IAA Trust
Mutual Funds
December 31, 1999
A PLACE TO GROW
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
Short-Term Government Bond Series
Long-Term Bond Series
