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[LETTERHEAD OF KPMG PEAT MARWICK LLP]
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
Life & Annuity Trust:
We have examined management's assertion that the Asset Allocation Fund, Equity
Value Fund, Growth Fund (formerly Growth and Income Fund), Money Market Fund,
Strategic Growth Fund, and U.S. Government Allocation Fund (constituting Life &
Annuity Trust) (collectively the "Funds") complied with the requirements of
subsections (b) and (c) of Rule 17f-2 under the Investment Company Act of 1940
as of September 30, 1998, included in the accompanying Management Statement
regarding Compliance with Certain Provisions of the Investment Company Act of
1940. Management is responsible for the Funds' compliance with those
provisions. Our responsibility is to express an opinion on management's
assertion about the Funds' compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Funds' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of September 30, 1998 and for the period from July 31, 1998 (the
date of our last examination) through September 30, 1998, with respect to
securities transactions:
* Confirmation of all securities with the custodians, Wells Fargo Bank, N.A.
and Barclays Global Investors, N.A.;
* Confirmation or examination of underlying documentation of all securities
purchased but not received;
* Reconciliation of all securities to the books and records of the Funds and
the custodians;
* Testing of a selected sample of security transactions to determine if they
were properly recorded.
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[LETTERHEAD OF KPMG PEAT MARWICK LLP]
We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Funds' compliance
with the specified requirements.
In our opinion, management's assertion that the Funds were in compliance with
the above mentioned provisions of Rule 17f-2 of the Investment Company Act of
1940 as of September 30, 1998 and for the period from July 31, 1998 (the date of
our last examination) through September 30, 1998, is fairly stated in all
material respects.
This report is intended solely for the information and use of management of Life
& Annuity Trust and the Securities and Exchange Commission and should not be
used for any other purpose.
/s/ KPMG Peat Marwick LLP
October 30, 1998
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION ------------------------------
Washington, D.C. 20549 OMB APPROVAL
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OMB Number: 3235-0360
Expires: June 30, 1997
FORM N-17f-2 Estimated average burden hours
per response 0.05
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Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
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1. INVESTMENT COMPANY ACT FILE NUMBER: DATE EXAMINATION COMPLETED:
8188 September 30, 1998
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2. STATE IDENTIFICATION NUMBER:
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AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. EXACT NAME OF INVESTMENT COMPANY AS SPECIFIED IN REGISTRATION STATEMENT:
LIFE AND ANNUITY TRUST
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ADDRESS OF PRINCIPAL EXECUTIVE OFFICE (NUMBER, STREET, CITY, STATE, ZIP CODE):
111 CENTER STREET, LITTLE ROCK, ARKANSAS 72201
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INSTRUCTIONS:
This Form must be completed by investment companies that have custody of
securities or similar investments.
INVESTMENT COMPANY:
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance with
Rule 17f-2 under the Act and applicable state law, examines securities and
similar investments in the custody of the investment company.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
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ACCOUNTANT:
3. Submit this Form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the
original and one copy with the Securities and Exchange Commission's
principal office in Washington D.C., one copy with the regional office for
the region in which the investment company's principal business operations
are conducted, and one copy with the appropriate state administrator(s), if
applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
