As Filed with the Securities and Exchange Commission on November
5, 1996
Registration Nos. 333-447
811-7505
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 1 X
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 1 X
(Check appropriate box or boxes)
_______________
INTRUST FUNDS Trust
(formerly, FS FUNDS Trust)
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800)______
George Martinez
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
Copy to:
Steven R. Howard, Esq.
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as
practicable after the effective date of the Registration
Statement.
Registration has elected, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, to register an indefinite number
of shares by this registration statement. In accordance with
Rule 24f-2, a registration fee in the amount of $500 has
previously been paid.
_____________
Registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
This Amendment includes the Signature Page of the Master
Fund for the International Mult-Manager Fund.
______________________________________________________
Total Pages:
Exhibit Index: <PAGE>
INTRUST FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
under the Securities Act of 1933
CASH RESERVE MONEY MARKET FUND
SHORT TERM HIGH QUALITY FUND
INTERMEDIATE BOND INCOME FUND
STOCK APPRECIATION FUND
INTERNATIONAL MULTI-MANAGER FUND
Part A Prospectus Caption
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses;
Fee Table
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of The Investment Policies
Registrant and Practices of
the Funds
Item 5. Management of the Fund Management of the
Funds
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Dividends, Distributions
Securities and Federal Income Tax;
Other Information
Item 7. Purchase of Securities Fund Valuation; Pricing
Being Offered and Share Purchase of
Fund Shares
Item 8. Redemption or Repurchase Redemption of Fund
Shares
Item 9. Legal Proceedings Not Applicable
KANSAS TAX EXEMPT BOND FUND
Part A Prospectus Caption
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Expenses; Fee
Table
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of The Investment Policies
Registrant and Practices of the
Funds
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion Not Applicable
of Fund Performance
Item 6. Capital Stock and Other Dividends, Distributions
Securities and Federal Income Tax;
Other Information
Item 7. Purchase of Securities Fund Share Valuation;
Being Offered Pricing and Purchase
of Fund Shares
Item 8. Redemption or Repurchase Redemption of Fund
Shares
Item 9. Legal Proceedings Not Applicable
<PAGE>
CASH RESERVE MONEY MARKET FUND
SHORT TERM HIGH QUALITY FUND
INTERMEDIATE BOND INCOME FUND
STOCK APPRECIATION FUND
INTERNATIONAL MULTI-MANAGER FUND
KANSAS TAX EXEMPT BOND FUND
Part B Statement of Additional
Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Not Applicable
History
Item 13. Investment Objective and Investment Policies;
Policies Investment Restrictions
Item 14. Management of the Management
Registrant
Item 15. Control Persons and Management
Principal Holders of Securities
Item 16. Investment Advisory and Management; Other
Other Services Information; Custodian;
Transfer Agent and
Dividend Disbursing
Agent; Experts
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Information;
Other Securities Capitalization; Voting
Rights
<PAGE>
Item 19. Purchase, Redemption and Pricing and Purchase of
Pricing of Securities Being Fund Shares (Part A);
Offered Redemption of Fund
Shares (Part A);
Determination of Net
Asset Value
Item 20. Tax Status Taxation
Item 21. Underwriters Management
Item 22. Calculation of Performance Yields and Performance
Data Information
Item 23. Financial Statements Not Applicable
<PAGE>
Part C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration
Statement.
<PAGE>
SUBJECT TO COMPLETION
INTRUST FUNDS TRUST
3435 Stelzer Road, Columbus, Ohio 43219
General and Account Information:
(800)
KANSAS TAX EXEMPT BOND FUND
INSTITUTIONAL SERVICE CLASS AND
INSTITUTIONAL PREMIUM CLASS PROSPECTUS
INTRUST BANK, N.A.--Investment Adviser
(" INTRUST" or the "Adviser")
BISYS FUND SERVICES--Administrator, Sponsor and Distributor
("BISYS")
This Prospectus describes the Kansas Tax Exempt Bond Fund
(the "Fund") managed by INTRUST. The Fund seeks to provide
current income exempt from Federal and Kansas taxation.
The Fund offers two classes of shares the Institutional
Service Class and Institutional Premium Class Shares. See "Other
Information -- Capitalization." The Fund is a separate
investment fund of INTRUST Funds Trust (the "Trust"), a Delaware
business trust and registered open-end, management investment
company.
A Statement of Additional Information (the "SAI"), dated
December ____,1996 containing additional and more detailed
information about the Fund has been filed with the Securities and
Exchange Commission ("SEC") and is hereby incorporated by
reference into this Prospectus. It is available without charge
and can be obtained by writing or calling the Fund at the address
and information number printed above.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, INTRUST, and are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency, and may involve investment
risks, including the possible loss of principal.
This Prospectus sets forth concisely the information a
prospective investor should know before investing in the Fund and
should be read and retained for information about the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Date of this Prospectus is December __, 1996
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers to
buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
<PAGE>
Table of Contents
Page
FUND EXPENSES 1
FEE TABLE 1
HIGHLIGHTS 3
THE INVESTMENT POLICIES AND
PRACTICES OF THE FUND 4
MANAGEMENT OF THE FUND 7
FUND SHARE VALUATION 10
PURCHASE OF FUND SHARES 10
MINIMUM PURCHASE REQUIREMENTS 11
EXCHANGE OF FUND SHARES 11
REDEMPTION OF FUND SHARES 12
DIVIDENDS, DISTRIBUTIONS AND FEDERAL
INCOME TAX 13
INVESTMENT RESTRICTIONS 15
RISKS OF INVESTING IN THE FUND 15
OTHER INFORMATION 16
APPENDIX A-1
<PAGE>
FUND EXPENSES
The following expense table lists the costs and expenses
that an investor in the Fund will incur either directly or
indirectly as a shareholder of the Fund. The information is
based upon estimated expenses during the first year of
operations.(1)
FEE TABLE
Shareholder Transaction Institutional Institutional
Expenses Service Class Premium Class
Maximum Sales Load Imposed
on Purchases (as a
percentage of offering price) None None
Maximum Sales Load Imposed
on Reinvested Dividends (as a
percentage of offering price) None None
Deferred Sales Load (as a
percentage of redemption
proceeds) None None
Redemption Fees(2) None None
Exchange Fees None None
Annual Fund Operating
Expenses (as a percentage of
average net assets)
Management Fees (after waivers
and reimbursements)(3) 0.00% 0.30%
12b-1 Fees (after waiver)(4) 0.00% 0.00%
Other Expenses (after waivers
and reimbursements)(3) 0.21% 0.95%(5)
Total Portfolio Operating
Expenses after waivers and
reimbursements)(3) 0.21% 1.25
_______________________
(1)Shares are offered only to certain institutional investors or
other investors who at the time of purchase have a balance of
$1,000 or more invested in any of the INTRUST Funds, are
purchasers through a trust, investment manager, or account
managed or administered by the Adviser, are employees or
ex-employees of INTRUST Financial Corporation or any of its
affiliates, employees of BISYS, or any other service provider, or
employees of any trust customer of INTRUST Financial Corporation
or any of its affiliates.
(2)Shareholders may be charged a wire redemption fee by their
bank for receiving a wire payment on their behalf.
(3)The adviser has committed to waive fees and/or reimburse
expenses to maintain Total Portfolio Operating Expenses for the
Institutional Service Class at 0.21% for the Fund's first year of
operation. Absent such waivers and reimbursements, Management
Fees would be 0.30%, Other Expenses would be 0.45% and Total
Portfolio Operating Expenses would be 0.75% for this class.
(4)The fee under the Fund's Distribution Plan and Agreement is
calculated on the basis of average net assets of the Fund at an
annual rate not to exceed 0.25%. The Fund will not incur any
distribution expenses during its first year of operation.
(5)Other Expenses of the Institutional Premium Class are higher
than Other Expenses for the Institutional Service Class because
of a shareholder servicing charge of up to 0.50% of average daily
net assets. The shareholder servicing charge is imposed for
recordkeeping, communication with and education of shareholders,
fiduciary services (excluding investment management) and asset
allocation services. Compensation to salespersons may vary
depending upon whether Institutional Service Class or
Institutional Premium Class shares are sold.
The purpose of this table is to assist a shareholder in
understanding the various costs and expenses that an investor in
the Fund will bear.
Example:*
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% gross annual return and (2) redemption at the end
of each time period:
Institutional Service Class Shares Institutional Premium
Class Shares
1 year $ 2 $ 13
3 years $ 7 $ 40
Without waivers and reimbursements
1 year $ 8 $ 13
3 years $ 24 $ 40
_________________________
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not
be considered a representation of past or future annual
return; actual return may be greater or less than the
assumed amount.
<PAGE>
HIGHLIGHTS
This Prospectus describes the Kansas Tax Exempt Bond Fund
(the "Fund") managed by INTRUST. The Fund has distinct
investment objectives and policies.
The Fund's Investment Objective
The investment objective of the Fund is to preserve
capital while producing current income for the investor that is
exempt from both federal and Kansas state income taxes. The Fund
invests primarily in municipal obligations with maturities
generally ranging 1 to 15 years. It is the intent of the Adviser
to maintain an effective average weighted maturity between 7 and
12 years. As a fundamental policy, at least 80% of the Fund's
net assets will be invested in tax-exempt securities. At least
65% of the Portfolio's total assets will be invested in municipal
obligations exempt from Kansas state income taxes.
As a matter of Fundamental Policy, notwithstanding any
limitation, the Fund is authorized to achieve its investment
objective by investing all of its investable assets in an
investment company having substantially the same investment
objective and policies as the Fund.
Risks of Investing in the Fund
The price per share of the Fund will fluctuate with changes
in value of the investments held by the Fund. The Kansas
Tax-Exempt Bond Fund may concentrate its investments in
securities of Kansas governmental issuers and may therefore
be affected by political, economic or regulatory factors that
may impair the ability of Kansas issuers to pay interest on or
to repay the principal of their debt obligations, for example,
financial difficulties of Kansas, its counties, municipalities and
school districts. See "Risks of Investing in the Fund" and "Kansas
Risk Factors" in the SAI. Additionally, there can be no assurance
that the Fund will achieve its investment objective or be
successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of securities.
Management of the Fund
INTRUST Bank, N.A. acts as investment adviser to the Fund.
For its services, INTRUST receives a fee from the Fund based
upon the Fund's average daily net assets. See "Fee Table" and
"Management of the Fund" in this Prospectus.
BISYS Funds Services acts as administrator and sponsor to
the Fund. For its services, BISYS receives a fee from the Fund
based on the Fund's average daily net assets. See "Management of
the Fund" in this Prospectus. BISYS distributes the Fund's
shares and may be reimbursed for certain of its distribu-
tion-related expenses.
Guide to Investing in the INTRUST Family of Funds
Purchase orders for the Fund received by your broker or
Service Organization in proper form prior to 4:15 p.m., Eastern
time, and transmitted to the Distributor prior to 5:00 p.m.
Eastern time will become effective that day.
Minimum Initial Investment $1,000
Minimum Subsequent Investment $ 50
The Fund is purchased at net asset value.
Shareholders may exchange shares between Funds in the Trust
by telephone or mail. Shareholders may not exchange shares by
facsimile.
Minimum initial exchange $ 500
(No minimum for subsequent exchanges)
Shareholders may redeem shares by telephone, mail or wire.
Shareholders may not redeem shares by facsimile.
The Fund reserves the right to involuntarily redeem
upon not less than 30 days notice all shares in a
Fund's account which have an aggregate value of $500 or
less.
All dividends and distributions will be automatically paid
in additional shares at net asset value of the applicable Fund
unless cash payment is requested.
Distributions for the Fund are paid monthly.
THE INVESTMENT POLICIES AND PRACTICES OF THE FUND
The Fund is a separate investment fund or portfolio,
commonly known as a mutual fund. The Fund is a portfolio of a
Delaware business trust, INTRUST Funds Trust, organized under the
laws of Delaware as an open-end, management investment company.
The Trust's Board of Trustees oversees the overall management of
the Fund and elects the officers of the Fund.
The Fund follows its own investment policies and practices,
including certain investment restrictions. The SAI contains
specific investment restrictions which govern the Fund's
investments. Those restrictions and the Fund's investment
objectives are fundamental policies, which means that they may
not be changed without a majority vote of shareholders of the
Fund. Except for the objectives and those restrictions
specifically identified as fundamental, all other investment
policies and practices described in this Prospectus and in the
SAI are not fundamental, so that the Board of Trustees of the
Trust may change them without shareholder approval.
As a matter of fundamental policy, notwithstanding any
limitation, the Fund is authorized to seek to achieve its
objective by investing all of its investable assets in an
investment company having substantially the same investment
objective as the Fund.
The Adviser selects investments and makes investment
decisions based on the investment objective and policies of the
Fund. The following is a description of investment practices of
the Fund and securities in which it invests.
Under normal conditions, the Portfolio will invest at
least 80% of its net assets in municipal obligations which
produce interest that is, in the opinion of bond counsel, exempt
from federal income tax (collectively "Municipal Obligations").
This investment policy is a fundamental policy of the Portfolio.
At least 65% of the Portfolio's total assets will be invested in
Municipal Obligations which are exempt from Kansas state income
taxes. The remainder of the Portfolio may be invested in
Municipal Obligations of other states. Under normal conditions,
the Portfolio will also invest at least 80% of its net assets in
securities the income from which is not subject to the
alternative minimum tax. Although it has no present intention of
doing so, the Portfolio may invest up to 20% of its assets in
taxable securities for defensive purposes or when sufficient tax
exempt securities considered appropriate by INTRUST, N.A., the
Portfolio's investment adviser (the "Adviser") are not available
for purchase.
The market value of the Portfolio's fixed income
investments will change in response to interest rate changes and
other factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values
of such securities generally decline. Changes by recognized
rating agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments. Changes in
the value of portfolio securities will not necessarily affect
cash income derived from these securities, but will affect the
Portfolio's net asset value.
The Portfolio will maintain a dollar-weighted average
portfolio maturity of 7 years to 12 years. However, when the
Adviser determines that the market conditions so warrant, the
Portfolio can maintain an average weighted maturity of less than
7 years.
The Portfolio may purchase the following types of
municipal obligations, but only if such securities, at the time
of purchase, either have the requisite rating, or, if not rated,
are of comparable quality as determined by the Adviser: (i)
municipal bonds rated A or better by Standard and Poor's
Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's"), and a maximum of 10% of the Portfolio's total assets
in municipal bonds rated BBB by S&P or Baa by Moody's; (ii)
municipal notes rated at least SP-2 by S&P or MIG-2 or V-MIG-2 by
Moody's; and (iii) tax-exempt commercial paper rated at least A-1
by S&P or Prime-1 by Moody's. Municipal notes rated SP-2 by S&P
have satisfactory capacity to pay principal and interest; notes
rated MIG-2 or VMIG-2 by Moody's are considered to be of high
quality. Bonds rated BBB by S&P have an adequate capacity to pay
interest and repay principal; bonds rated Baa by Moody's are
considered to be medium-grade obligations (i.e., neither highly
protected nor poorly secured) and have speculative
characteristics. Capacity for timely payment on commercial paper
with the S&P designation of A-2 is satisfactory and commercial
paper issuers rated Prime-2 by Moody's have a strong ability for
repayment of senior short-term debt obligations. See the
Appendix for a more complete description of securities
ratings.
U.S. Treasury Obligations. The Fund may invest in U.S.
Treasury obligations, which are backed by the full faith and
credit of the U.S. Government as to the timely payment of
principal and interest. U.S. Treasury obligations consist of
bills, notes, and bonds and separately traded interest and
principal component parts of such obligations known as STRIPS
which generally differ in their interest rates and maturities.
U.S. Treasury bills, which have maturities of up to one year,
notes, which have maturities ranging from one year to 10 years,
and bonds, which have maturities of 10 to 30 years, are direct
obligations of the United States Government.
Municipal Commercial Paper. Municipal commercial paper is a
debt obligation with a stated maturity of one year or less which
is issued to finance seasonal working capital needs or as
short-term financing in anticipation of longer-term debt.
Municipal Notes. Municipal notes are generally sold as
interim financing in anticipation of the collection of taxes, a
bond sale or receipt of other revenue. Municipal notes generally
have maturities at the time of issuance of one year or less.
Municipal Bonds. Municipal bonds generally have a maturity
at the time of issuance of more than one year. Municipal bonds
may be issued to raise money for various public purposes -- such
as constructing public facilities and making loans to public
institutions. There are generally two types of municipal bonds:
general obligation bonds and revenue bonds. General obligation
bonds are backed by the taxing power of the issuing municipality
and are considered the safest type of municipal bond. Revenue
bonds are backed by the revenues of a project or facility --
tolls from a toll road, for example. Certain types of municipal
bonds are issued to obtain funding for privately operated
facilities. Industrial development revenue bonds (which are
private activity bonds) are a specific type of revenue bond
backed by the credit and security of a private user, and
therefore investments in these bonds have more potential risk.
Municipal Leases. The Fund may invest in instruments, or
participations in instruments, issued in connection with lease
obligations or installment purchase contract obligations of
municipalities. Although municipal lease obligations do not
constitute general obligations of the issuing municipality, a
lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate funds for, and make the
payments due under the lease obligation. However, certain lease
obligations contain "non-appropriation" clauses, which provide
that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is
appropriated for such purpose in the relevant years. Municipal
lease obligations will be treated as liquid only if they satisfy
criteria set forth in guidelines established by the Board of
Trustees, and there can be no assurance that a market will exist
or continue to exist for any municipal lease obligation.
STRIPS and Zero Coupon Securities. The Fund may invest
in separately traded principal and interest components of
securities backed by the full faith and credit of the United
States Treasury. The principal and interests components of
United States Treasury bonds with remaining maturities of longer
than ten years are eligible to be traded independently under the
Separate Trading of Registered Interest and Principal of
Securities ("STRIPS") program. Under the STRIPS program, the
principal and interest components are separately issued by the
United States Treasury at the request of depository financial
institutions, which then trade the component parts separately.
The interest component of STRIPS may be more volatile than that
of United States Treasury bills with comparable maturities. The
Funds will not actively trade in STRIPS.
The Fund may invest in zero coupon securities. A zero
coupon security pays no interest to its holder during its life
and is sold at a discount to its face value at maturity. The
market prices of zero coupon securities generally are more
volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates
than non-zero coupon securities having similar maturities and
credit qualities.
Variable Rate Demand Obligations. Variable rate demand
obligations have a maturity in the five to twenty year range but
carry with them the right of the holder to put the securities to
a remarketing agent or other entity on short notice, typically
seven days or less. Generally, the remarketing agent will adjust
the interest rate every seven days (or at other intervals
corresponding to the notice period for the put), in order to
maintain the interest rate at the prevailing rate for securities
with a seven-day maturity. The remarketing agent is typically a
financial intermediary that has agreed to perform these services.
Variable rate master demand obligations permit the Fund to invest
fluctuating amounts at varying rates of interest pursuant to
direct arrangements between the Fund, as lender, and the
borrower. Because the obligations are direct lending
arrangements between the Fund and the borrower, they will not
generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any
time. The borrower also may prepay up to the full amount of the
obligation without penalty. While master demand obligations, as
such, are not typically rated by credit rating agencies, if not
so rated, the Fund may, under its minimum rating standards,
invest in them only if, in the opinion of the Adviser, they are
of an investment quality comparable to other debt obligations in
which the Fund may invest and are within the credit quality
policies, guidelines and procedures established by the Board of
Trustees. See the SAI for further details on variable rate
demand obligations and variable rate master demand obligations.
Other Mutual Funds. The Fund may invest in shares of other
open-end, management investment companies, subject to the
limitations of the Act and subject to such investments being
consistent with the overall objective and policies of the Fund,
provided that any such purchases will be limited to short-term
investments in shares of unaffiliated investment companies. The
purchase of securities of other mutual funds results in
duplication of expenses such that investors indirectly bear a
proportionate share of the expenses of such mutual funds
including operating costs, and investment advisory and
administrative fees.
"When Issued" and "Forward Commitment" Transactions. The
Fund may purchase securities on a when-issued and delayed-delivery
basis and may purchase or sell securities on a forward
commitment basis. When-issued or delayed-delivery transactions
arise when securities are purchased by the Fund with payment and
delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield to the Fund at
the time of entering into the transaction. A forward commitment
transaction is an agreement by the Fund to purchase or sell
securities at a specified future date. When the Fund engages in
these transactions, the Fund relies on the buyer or seller, as
the case may be, to consummate the sale. Failure to do so may
result in the Fund missing the opportunity to obtain a price or
yield considered to be advantageous. When-issued and
delayed-delivery transactions and forward commitment transactions
may be expected to occur a month or more before delivery is due.
However, no payment or delivery is made by the Fund until it
receives payment or delivery from the other party to the
transaction. A separate account of liquid assets equal to the
value of purchase commitments will be maintained until payment is
made. A separate account containing only liquid assets, such as
cash, U.S. Government Securities, or other liquid high grade debt
obligations equal to the value of purchase commitments will be
maintained with the Fund's custodian until payment is made. Such
transactions have the effect of leverage on the Fund and may
contribute to volatility of the Fund's net asset value. For
further information, see the SAI.
Loans of Portfolio Securities. To increase current income,
the Fund may lend its portfolio securities in an amount up to 33
1/3% of the Fund's total assets to brokers, dealers and financial
institutions, provided certain conditions are met, including the
condition that each loan is secured continuously by collateral
maintained on a daily mark-to-market basis in an amount at least
equal to the current market value of the securities loaned.
Repurchase Agreements. Although it has no present
intention of doing so, the Fund may enter into repurchase
agreements with U.S. banks and broker-dealers under which it
acquires securities and obtains a simultaneous commitment from
the seller to repurchase the securities at a specified time and
at an agreed upon yield. The agreements will be fully
collateralized and the value of the collateral, including accrued
interest, marked-to-market daily. The agreements may be
considered to be loans made by the purchaser, collateralized by
the underlying securities. If the seller should default on its
obligation to repurchase the securities, the Fund may experience
a loss of income from the loaned securities and a decrease in the
value of any collateral maintained, problems in exercising its
rights to the underlying securities and costs and time delays in
connection with the disposition of securities. The Fund may not
invest more than 10% of its net assets in repurchase agreements
maturing in more than seven business days and in securities for
which market quotations are not readily available. For more
information about repurchase agreements, see "Investment
Policies" in the SAI.
Taxable Securities. The taxable instruments in which the
Fund may invest consist of U.S. Treasury obligations; obligations
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities whether or not backed by the full faith and
credit of the U.S. Government; certificates of deposit, bankers
acceptances and time deposits of U.S. commercial banks or savings
and loan institutions (not including foreign branches of U.S.
banks or U.S. branches of foreign banks) which are members of the
Federal Reserve System, the Federal Deposit Insurance Corporation
or the Federal Savings and Loan Insurance Corporation and which
have total assets of $1 billion or more as shown on their last
published financial statements at the time of investment; and
repurchase agreements involving any of the foregoing
obligations.
Portfolio Turnover. The Fund generally will not engage in
the trading of securities for the purpose of realizing short-term
profits, but the Fund will adjust its portfolio as it deems
advisable in view of prevailing or anticipated market conditions
or fluctuations in interest rates to accomplish its respective
investment objective. For example, the Fund may sell portfolio
securities in anticipation of an adverse market movement. Other
than for tax purposes, frequency of portfolio turnover will not
be a limiting factor if the Fund considers it advantageous to
purchase or sell securities. The Fund does not anticipate that
the annual portfolio turnover rate will be in excess of 150%. A
high rate of portfolio turnover involves correspondingly greater
transaction expenses than a lower rate, which expenses must be
borne by the Fund and its shareholders. High portfolio turnover
rates may also make it more difficult for the Fund to satisfy the
requirement for qualification as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"),
that less than 30% of the Fund's gross income in any tax year be
derived from gains on the sale of securities held for less than
three months.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the
direction of the Board of Trustees. Information about the
Trustees, as well as the Trust's executive officers, may be found
in the SAI under the heading "Management--Trustees and Officers."
The Adviser: INTRUST Bank, N.A.
INTRUST Bank, N.A. in Wichita, formerly First National Bank
in Wichita ( the "Adviser"), serves as the Portfolio's investment
adviser under an Advisory Agreement with the Trust (the "Advisory
Agreement"). Under the Advisory Agreement, the Adviser invests
the assets of the Portfolio, and continuously reviews, supervises
and administers the Portfolio's investment program. The Adviser
discharges its responsibilities subject to the supervision of,
and policies set by, the Trustees of the Trust.
The Adviser is a majority-owned subsidiary of INTRUST
Financial Corporation (formerly First Bancorp of Kansas), a bank
holding company. The Adviser is a national banking association
which provides a full range of banking and trust services to
clients. As of September 30, 1996 total assets under management
were approximately [$1.17] billion. The principal place of
business address of the Adviser is 105 North Main Street, Box
One, Wichita, Kansas 67201.
Michael Colgan, Vice President and Trust Investment
Officer for the Adviser since 1985 is responsible for the
day-to-day management of the Fund. Mr. Colgan, has managed the
portfolio of the SEI Kansas Tax Free Income Portfolio since
December 1991.
The Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of 0.30% of the average daily
net assets of the Portfolio. The Adviser may waive its fee, in
its discretion, for competitive purposes. In addition, the
Adviser has voluntarily agreed to waive a portion of its fee and
reimburse the Fund if necessary to limit the total operating
expenses to not more than 0.21% of the average daily net assets
for Institutional Service Class shares for the Fund's first year
of operation.
Based upon the advice of counsel, INTRUST believes that
the performance of investment advisory services for the Fund will
not violate the Glass-Steagall Act or other applicable banking
laws or regulations. However, future statutory or regulatory
changes, as well as future judicial or administrative decisions
and interpretations of present and future statutes and
regulations, could prevent INTRUST from continuing to perform
such services for the Fund. If INTRUST were prohibited from
acting as investment adviser to the Fund, it is expected that the
Board of Trustees would recommend to shareholders approval of a
new investment advisory agreement with another qualified
investment adviser selected by the Board or that the Board would
recommend other appropriate action.
The Sponsor and Distributor
BISYS, the Sponsor and Distributor (the "Distributor"),
has its principal office at 3435 Stelzer Road, Columbus, Ohio
43219. The Distributor will receive orders for, sell, and
distribute shares of the Fund. BISYS also serves as
administrator and distributor of other mutual funds.
The Distributor may from time to time pay a bonus or other
incentive to dealers that employ registered representatives who
sell a minimum dollar amount of shares of the Fund. Such bonus
or other incentive may take the form of payment for travel
expenses, including lodging, incurred in connection with trips
taken by qualifying registered representatives and members of
their families to places within or without the United States, or
other bonuses, such as gift certificates or the cash equivalent
of such bonuses.
Administrative Services
The Fund has also entered into an Administrative Services
Contract with BISYS pursuant to which BISYS provides certain
management and administrative services necessary for the Fund's
operations, including: (i) general supervision of the operation
of the Fund, including coordination of the services performed by
the Fund's Adviser, transfer agent, custodian, independent
accountants and legal counsel, regulatory compliance, including
the compilation of information for documents such as reports to,
and filings with, the SEC and state securities commissions, and
preparation of proxy statements and shareholder reports for the
Fund; (ii) general supervision relative to the compilation of
data required for the preparation of periodic reports distributed
to the Fund's officers and Board of Trustees; and (iii)
furnishing office space and certain facilities required for
conducting the business of the Fund. For these services, BISYS
receives from the Fund a fee, payable monthly, at the annual rate
of 0.15% of the Fund's average daily net assets. Pursuant to a
Services Agreement between the Trust and the Administrator, BISYS
assists the Trust with certain transfer and dividend disbursing
agent functions and receives a fee of $15 per account per year
plus out-of-pocket expenses. Pursuant to a Fund Accounting
Agreement between the Trust and the Administrator, the
Administrator assists the Trust in calculating net asset values
and provides certain other accounting services for each Fund
described therein, for an annual fee of $30,000 per Fund plus
out-of-pocket expenses.
Service Organizations
Various banks, trust companies, broker-dealers (other
than BISYS) or other financial organizations (collectively,
"Service Organizations") also may provide administrative services
for the Fund, such as maintaining shareholder accounts and
records. The Fund may pay fees to Service Organizations (which
vary depending upon the services provided) in amounts up to an
annual rate of 0.05% of the daily net asset value of the Fund's
shares owned by shareholders with whom the Service Organization
has a servicing relationship. Institutional Premium Class shares
may pay additional fees in amounts up to an annual rate of 0.50%
of the daily net asset value of the Fund's shares owned by
shareholders with whom the Service Organization has a servicing
relationship for recordkeeping, communicating with and education
of shareholders, fiduciary services (excluding investment
management) and asset allocation services.
Some Service Organizations may impose additional or
different conditions on their clients, such as requiring their
clients to invest more than the Fund's minimum initial or
subsequent investments or charging a direct fee for servicing.
If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Fund. Each
Service Organization has agreed to transmit to its clients a
schedule of any such fees. Shareholders using Service
Organizations are urged to consult with them regarding any such
fees or conditions.
The Glass-Steagall Act and other applicable laws provide
that, among other things, banks may not engage in the business of
underwriting, selling or distributing securities. There is
currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either
Federal or state regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform
all or a part of its servicing activities. If a bank were
prohibited from so acting, its shareholder clients would be
permitted to remain shareholders of the Fund and alternative
means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences.
The Fund has adopted a Rule 12b-1 Distribution Plan and
Agreement (the "Plan") pursuant to which the Fund may reimburse
the Distributor on a monthly basis for costs and expenses of the
Distribution in connection with the distribution and marketing of
shares. These costs and expenses, which are subject to a maximum
limit of 0.25% per annum of the average daily net assets of the
Fund, include (i) advertising by radio, television, newspapers,
magazines, brochures, sales literature, direct mail or any other
form of advertising, (ii) expenses of employees or agents of the
Distributor, including salary, commissions, travel and related
expenses, (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of
shares, including promotional incentives and fees calculated with
reference to the average daily net asset value of shares held by
shareholders who have a brokerage or other service relationship
with the broker-dealer or other institution receiving such fees,
(iv) costs of printing prospectuses, statements of additional
information and other materials to be given or sent to
prospective investors, (v) such other similar services as the
Trustees determine to be reasonably calculated to result in the
sale of shares of the Fund, (vi) costs of shareholder servicing
which may be incurred by broker-dealers, banks or other financial
institutions, and (vii) other direct and indirect
distribution-related expenses, including the provision of services
with respect to maintaining the assets of the Fund. The Fund
will pay all costs and expenses in connection with the preparation,
printing and distribution of its Prospectus to current
shareholders and the operation of its Plan, including related
legal and accounting fees. The Fund will not be liable for
distribution expenditures made by the Distributor in any given
year in excess of the maximum amount payable under the Plan for
that Fund year.
Other Expenses
The Fund bears all costs of its operations other than
expenses specifically assumed by BISYS or INTRUST. The costs
borne by the Fund include legal and accounting expenses;
Trustees' fees and expenses; insurance premiums; custodian and
transfer agent fees and expenses; expenses incurred in acquiring
or disposing of the Fund's portfolio securities; expenses of
registering and qualifying the Fund's shares for sale with the
SEC and with various state securities commissions; expenses of
obtaining quotations on the Fund's portfolio securities and
pricing of the Fund's shares; expenses of maintaining the Fund's
legal existence and of shareholders' meetings; and expenses of
preparation and distribution to existing shareholders of reports,
proxies and prospectuses. The Fund bears its own expenses
associated with its establishment as a series of the Trust; these
expenses are amortized over a five-year period from the
commencement of the Fund's operations. See "Management" in the
SAI. Trust expenses directly attributable to the Fund are
charged to the Fund; other expenses are allocated proportionately
among all of the Funds in the Trust in relation to the net assets
of each Fund.
Portfolio Transactions
Pursuant to the Investment Advisory Contract, the Adviser
places orders for the purchase and sale of portfolio investments
for the Fund's accounts with brokers or dealers selected by it in
its discretion.
In effecting purchases and sales of portfolio securities for
the account of the Fund, the Adviser will seek the best available
price and most favorable execution of the Fund's orders. Trading
does, however, involve transaction costs. Purchases of
underwritten issues may be made, which will include an
underwriting fee paid to the underwriter. The Adviser may cause
the Fund to pay commissions higher than another broker-dealer
would have charged if the Adviser believes the commission paid is
reasonable in relation to the value of the brokerage and research
services received by the Adviser. Broker-dealers are selected on
the basis of a variety of factors such as reputation, capital
strength, size and difficulty of order, sale of Fund shares and
research provided to the Adviser.
FUND SHARE VALUATION
The net asset value per share of the Fund is calculated
at 4:15 p.m. (Eastern time), Monday through Friday, on each day
the New York Stock Exchange is open for trading (a "Business
Day"), which excludes the following business holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The net
asset value per share of each class of the Fund is computed by
dividing the value of the net assets of each class (i.e., the
value of the assets less the liabilities) by the total number of
the outstanding shares of each class. All expenses, including
fees paid to the Adviser, Administrator and Distributor, are
accrued daily and taken into account for the purpose of
determining the net asset value. Within each class, expenses are
allocated proportionally based on the net asset value of each
class, except class specific expenses which are allocated
directly to the separate class.
Securities listed on an exchange are valued on the basis of
the last sale prior to the time the valuation is made. If there
has been no sale since the immediately previous valuation, then
the current bid price is used. Quotations are taken for the
exchange where the security is primarily traded.
Over-the-counter securities are valued on the basis of the bid
price at the close of business on each business day. Securities
for which market quotations are not readily available are valued
at fair value as determined in good faith by or at the direction
of the Board of Trustees. Notwithstanding the above, bonds and
other fixed-income securities are valued by using market
quotations and may be valued on the basis of prices provided by a
pricing service approved by the Board of Trustees.
PURCHASE OF FUND SHARES
Orders for the purchase of shares will be executed at the
net asset value per share next determined after an order has been
received.
All funds received by the Fund are invested in full and
fractional shares of the Fund. Certificates for shares are not
issued. BISYS maintains records of each shareholder's holdings
of Fund shares, and each shareholder receives a statement of
transactions, holdings and dividends. The Fund reserves the
right to reject any purchase.
An investment may be made using any of the following methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing
shareholders through authorized brokers, investment advisers and
Service Organizations. To make an investment using this method,
simply complete a Purchase Application and contact your broker,
investment adviser or Service Organization with instructions as
to the amount you wish to invest. Your broker will then contact
the Distributor to place the order on your behalf on that day.
Orders received by your broker or Service Organization
for the Fund in proper order prior to the determination of net
asset value and transmitted to the Distributor prior to the close
of its Business Day (which is currently 5:00 p.m., Eastern time),
will become effective that day. Brokers who receive orders are
obligated to transmit them promptly. You should receive written
confirmation of your order within a few days of receipt of
instructions from your broker.
By Wire. Investments may be made directly through the
use of wire transfers of Federal funds. Contact your bank and
request it to wire Federal funds to the Fund. In most cases,
your bank will either be a member of the Federal Reserve Banking
System or have a relationship with a bank that is. Your bank
will normally charge you a fee for handling the transaction. To
purchase shares by a Federal funds wire, please first contact
BISYS Funds' Client Services at (800)[ ]. They
will establish a record of information for the wire to insure the
correct processing of funds. You can reach the Wire Desk at
(800)[ ].
Then, have your bank wire funds using the following
instructions:
[INSTRUCTIONS]
As long as you have read the Prospectus, you may establish a
new regular account through the Wire Desk; IRAs may not be opened
in this way. When new accounts are established by wire, the
distribution options will be set to reinvest and the social
security or tax identification number ("TIN") will not be
certified until a signed application is received. Completed
applications should be forwarded immediately to the Distributor.
With the Purchase Application, the shareholder can specify other
distribution options and add any special features offered by the
Fund. Should any dividend distributions or redemptions be paid
before the TIN is certified, they will be subject to 31% Federal
tax withholding.
Institutional Accounts. Bank trust departments and other
institutional accounts, not subject to sales charges, may place
orders directly with the Distributor by telephone at (800)
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Fund is $1,000
unless the investor is a purchaser who (i) at the time of
purchase, has a balance of $1,000 or more in any of the INTRUST
Funds, is a purchaser through a trust investment manager or
account manager or is administered by the Adviser, is an employee
or an ex-employee of INTRUST Financial Corporation or is an
employee of any of its affiliates, BISYS or any other service
provider, or is an employee of any trust customer of INTRUST
Financial Corporation or any of its affiliates. Any subsequent
investments must be at least $50. All initial investments should
be accompanied by a completed Purchase Application. A Purchase
Application accompanies this Prospectus. The Fund reserves the
right to reject purchase orders.
EXCHANGE OF FUND SHARES
The Fund offers two convenient ways to exchange shares in
one Fund for shares in another Fund in the Trust. Before
engaging in an exchange transaction, a shareholder should read
carefully the Prospectus describing the Fund into which the
exchange will occur, which is available without charge and can be
obtained by writing to BISYS Fund Services, 3435 Stelzer Road,
Columbus, Ohio 43219 or by calling (800)[ ]. A
shareholder may not exchange shares of one Fund for shares of
another Fund if both or either are not qualified for sale in the
state of the shareholder's residence. The minimum amount for an
initial exchange is $500. No minimum is required in subsequent
exchanges. The Trust may terminate or amend the terms of the
exchange privilege at any time.
A new account opened by exchange must be established with
the same name(s), address and social security number as the
existing account. All exchanges will be made based on the net
asset value next determined following receipt of the request by a
Fund in good order.
An exchange is taxable as a sale of a security on which a
gain or loss may be recognized. Shareholders should receive
written confirmation of the exchange within a few days of the
completion of the transaction. Shareholders will receive at
least 60 days' prior written notice of any modification or
termination of the exchange privilege.
Exchange by Mail. To exchange Fund shares by mail,
simply send a letter of instruction to BISYS. The letter of
instruction must include: (i) your account number; (ii) the Fund
from and the Fund into which you wish to exchange your
investment; (iii) the dollar or share amount you wish to
exchange; and (iv) the signatures of all registered owners or
authorized parties. All signatures must be guaranteed by an
eligible guarantor institution including a member of a national
securities exchange or by a commercial bank or trust company,
broker-dealers, credit unions and savings associations.
Exchange by Telephone. To exchange Fund shares by telephone
or if you have any questions simply call the Funds at (800)[
]. You should be prepared to give the telephone
representative the following information: (i) your account
number, social security number and account registration; (ii) the
name of the Fund from and the Fund into which you wish to
transfer your investment; and (iii) the dollar or share amount
you wish to exchange. The conversation may be recorded to
protect you and the Funds. Telephone exchanges are available
only if the shareholder so indicates by checking the "yes" box on
the Purchase Application. See "Redemption of Fund Shares--By
Telephone" for a discussion of telephone transactions generally.
Automatic Investment Program. An eligible shareholder may
also participate in the Automatic Investment Program, an
investment plan that automatically debits money from the
shareholder's bank account and invests it in one or more of the
Funds in the Trust through the use of electronic funds transfers
or automatic bank drafts. Shareholders may elect to make
subsequent investments by transfers of a minimum of $500 on
either the fifth or twentieth day of each month into their
established Fund account. Contact the Funds for more information
about the Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in
part, on any Business Day. Shares will be redeemed at the net
asset value next determined after a redemption request in good
order has been received by the Fund. See "Determination of Net
Asset Value." A redemption may be a taxable transaction on which
gain or loss may be recognized.
Redemption of shares purchased by check will be effected
immediately upon clearance of the purchase check, which may take
up to 15 days after those shares have been credited to the
shareholder's account. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the
period prior to the time the shares are redeemed, dividends on
the shares will continue to accrue and be payable and the
shareholder will be entitled to exercise all other beneficial
rights of ownership.
Once the shares are redeemed, the Fund will ordinarily
send the proceeds by check to the shareholder at the address of
record on the next Business Day. The Fund may, however, take up
to seven days to make payment. This will not be the customary
practice. Also, if the New York Stock Exchange is closed (or
when trading is restricted) for any reason other than the
customary weekend or holiday closing or if an emergency condition
as determined by the SEC merits such action, the Funds may
suspend redemptions or postpone payment dates.
Redemption Methods. To ensure acceptance of your
redemption request, it is important to follow the procedures
described below. Although the Fund has no present intention to
do so, the Fund reserves the right to refuse or to limit the
frequency of any telephone or wire redemptions. Of course, it
may be difficult to place orders by telephone during periods of
severe market or economic change, and a shareholder should
consider alternative methods of communications, such as couriers.
The Fund's services and their provisions may be modified or
terminated at any time by the Fund. If the Fund terminates any
particular service, they will do so only after giving written
notice to shareholders. Redemption by mail will always be
available to shareholders.
You may redeem your shares using any of the following
methods:
Through an Authorized Broker, Investment Adviser or
Service Organization. You may redeem your shares by contacting
your broker or investment adviser or Service Organization
representative and instructing him or her to redeem your shares.
He or she will then contact the Distributor and place a
redemption trade on your behalf. He or she may charge you a fee
for this service.
By Mail. You may redeem your shares by sending a letter
directly to the Distributor. To be accepted, a letter requesting
redemption must include: (i) the Fund name and account
registration from which you are redeeming shares; (ii) your
account number; (iii) the amount to be redeemed, (iv) the
signatures of all registered owners; and (v) a signature
guarantee by any eligible guarantor institution including a
member of a national securities exchange or a commercial bank or
trust company, broker-dealers, credit unions and savings
associations. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.
By Telephone. You may redeem your shares by calling the
Funds toll free at (800) 557-3768. You should be prepared to
give the telephone representative the following information: (i)
your account number, social security number and account
registration; (ii) the Fund name from which you are redeeming
shares; and (iii) the amount to be redeemed. The conversation
may be recorded to protect you and the Fund. Telephone
redemptions are available only if the shareholder so indicates by
checking the "yes" box on the Purchase Application or on the
Optional Services Form. The Fund employs reasonable procedures
to confirm that instructions communicated by telephone are
genuine. If the Fund fails to employ such reasonable procedures,
they may be liable for any loss, damage or expense arising out of
any telephone transactions purporting to be on a shareholder's
behalf. In order to assure the accuracy of instructions received
by telephone, the Fund requires some form of personal
identification prior to acting upon instructions received by
telephone, record telephone instructions and provide written
confirmation to investors of such transactions. Redemption
requests transmitted via facsimile will not be accepted.
By Wire. You may redeem your shares by contacting the Fund
by mail or telephone and instructing them to send a wire
transmission to your personal bank.
Your instructions should include: (i) your account number,
social security or tax identification number and account
registration; (ii) the Fund name from which you are redeeming
shares; and (iii) the amount to be redeemed. Wire redemptions
can be made only if the "yes" box has been checked on your
Purchase Application, and attach a copy of a void check of
account where proceeds are to be wired. Your bank may charge you
a fee for receiving a wire payment on your behalf.
Systematic Withdrawal Plan. An owner of $10,000 or more of
shares of the Fund may elect to have periodic redemptions from
his account to be paid on a monthly, quarterly, semiannual or
annual basis. The minimum periodic payment is $100. A
sufficient number of shares to make the scheduled redemption will
normally be redeemed on the date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions
for the purpose of making such payments may reduce or even
exhaust the account. A shareholder may request that these
payments be sent to a predesignated bank or other designated
party. Capital gains and dividend distributions paid to the
account will automatically be reinvested at net asset value on
the distribution payment date.
Redemption of Small Accounts. Due to the disproportionately
higher cost of servicing small accounts, the Fund reserves the
right to redeem, on not less than 30 days' notice, an account in
the Fund that has been reduced by a shareholder to $500 or less.
However, if during the 30-day notice period the shareholder
purchases sufficient shares to bring the value of the account
above $500, this restriction will not apply.
Redemption in Kind. All redemptions of shares of the Fund
shall be made in cash, except that the commitment to redeem
shares in cash extends only to redemption requests made by each
shareholder of the Fund during any 90-day period of up to the
less of $250,000 or 1% of the net asset value of the Fund at the
beginning of such period. This commitment is irrevocable without
the prior approval of the SEC and is a fundamental policy of the
Fund that may not be changed without shareholder approval. In
the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the
Fund make payment, in whole or in part, in securities or other
assets, in case of an emergency or any time a cash distribution
would impair the liquidity of the Fund to the detriment of the
existing shareholders. In this event, the securities would be
valued in the same manner as the securities of the Fund are
valued. If the recipient were to sell such securities, he or she
could receive less than the redemption value of the securities
and could incur certain transaction costs.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
The Fund intends to distribute to its shareholders
substantially all of their net tax-exempt interest income and
their investment company taxable income (which includes, among
other items, dividends and taxable interest in excess of expenses
and, if any, net short-term capital gains over net long-term
capital losses). The Funds will declare distributions of such
income daily and pay those dividends monthly. The Fund intends
to distribute, at least annually, substantially all net capital
gain (the excess of net long-term capital gains over net
short-term capital losses). In determining amounts of capital
gains to be distributed, any capital loss carryovers from prior
years will be applied against capital gains.
Distributions will be paid in additional Fund shares based
on the net asset value at the close of business on the payment
date of the distribution, unless the shareholder elects in
writing, not less than five full business days prior to the
record date, to receive such distributions in cash. Dividends
declared in, and attributable to, the preceding month will be
paid within five business days after the end of each month.
Shares purchased will begin earning dividends on the day after
the purchase order is executed, and shares redeemed will earn
dividends through the day the redemption is executed. Investors
who redeem all or a portion of Fund shares prior to a dividend
payment date will be entitled on the next dividend payment date
to all dividends declared but unpaid on those shares at the time
of their redemption.
The Fund intends to be treated as a regulated investment
company under the Internal Revenue Code of 1986 (the "Code"). As
such, the Fund generally will not pay Federal income tax on the
income and gains the Fund pays as dividends to its shareholders.
In order to avoid a 4% Federal excise tax, the Fund intends to
distribute each year all of its income and gains.
To the extent that the Fund's dividends distributed to
shareholders are derived from interest income exempt from Federal
income tax and are designated as exempt-interest dividends by the
Fund, they will be excludable from a shareholder's gross income
for regular Federal income tax purposes. The Fund will be
qualified to pay exempt-interest dividends if, at the close of
each quarter of its taxable year, at least 50% of the value of
its total assets consists of securities on which interest
payments are exempt from Federal income tax under section 103 of
the Internal Revenue Code of 1986, as amended (the "Code"). The
Fund will inform shareholders annually as to the portion of the
distribution paid which constitutes exempt-interest dividends.
The Fund is authorized to make investments which will give rise
to taxable rather that tax-exempt income. To the extent that the
Fund's dividends are derived from income from its taxable
investments and from gain recognized by it, they will be taxable
to shareholders in the manner described above.
Tax-exempt interest on private activity bonds and
exempt-interest dividends attributable to private activity bonds
generally are treated as tax preference items for purposes of the
Federal alternative minimum tax. The Fund may purchase private
activity bonds, such as industrial development bonds that may be
subject to the alternative minimum tax.
The entire amount of exempt-interest dividends received from
the Fund will be part of an adjustment in computing Federal
alternative minimum taxable income for purposes of the
Alternative Minimum Tax and the Environmental Tax under Code
Section 59A.
Up to 85% of an individual's social security benefits and
certain railroad retirement benefits may be subject to Federal
income tax. Along with other factors, total tax-exempt income,
including exempt-interest dividends, is used to calculate the
portion of such benefits that are taxed.
There could be retroactive revocation of the tax-exempt
status of certain municipal obligations after their issuance. It
is not possible to predict the precise impact of these
provisions, but they may affect the value of the securities in
the Fund's portfolio.
Shareholders should be aware that redeeming shares of the
Fund after tax-exempt interest income has been accrued by the
Fund but before that income has been declared as a dividend may
be disadvantageous. This is because the gain, if any, on the
redemption will be taxable, even though such gain may be
attributable in part to the accrued tax-exempt interest which, if
distributed to the shareholder as a dividend rather that as
redemption proceeds, might have qualified as an exempt interest
dividend. All or a portion of interest on indebtedness incurred
or continued (or deemed under tax rules to be incurred or
continued) by shareholders to purchase or carry shares of the
Fund may not be deductible for Federal income tax purposes.
The treatment for state, local and municipal tax purposes of
distributions of exempt-interest dividends and dividends derived
from interest on certain Federal obligations will vary according
to the laws of state and local taxing authorities.
Exempt-interest dividends and other dividends may be subject to
state and local taxation. Investors should consult with their
tax advisers as to the availability of any exemptions from such
taxes. Persons who may be "substantial users" (or "related
persons" of substantial users) of facilities financed by private
activity bonds may suffer adverse tax consequences from investing
in the Fund and, therefore, should consult their tax advisers
before purchasing the Fund's shares. In some instances, a state
or city may exempt from tax the portion of the distribution from
the Fund that represents interest received on obligations of that
state or its political subdivisions and on certain Federal
obligations. Under the laws of certain other states and cities,
the entire amount of any such distribution may be taxable.
The preceding discussion primarily relates to Federal income
taxes; the consequences under other tax laws may differ.
The following is a general, abbreviated summary of
certain of the provisions of the Kansas tax code presently in
effect as they directly govern the taxation of shareholders
subject to Kansas personal income tax. These provisions are
subject to change by legislative or administrative action, and
any such change may be retroactive.
Under Kansas law, interest on all obligations issued by the
State of Kansas or its political subdivisions after December 31,
1987 is excluded from Kansas adjusted gross income in determining
Kansas tax liability, and interest from obligations issued prior
to January 1, 1988, is exempt from Kansas income tax only if
there is statutory authority exempting the interest from the
particular obligations in question. For Kansas income tax
purposes, interest on the above-described obligations is exempt
for both the Portfolio and its shareholders who are Kansas
residents.
For additional information relating to taxation, see the
SAI.
INVESTMENT RESTRICTIONS
The Fund also operates under certain investment
restrictions. Certain of the Fund's investment restrictions are
set forth below. For a complete list of all the Fund's
investment restrictions, see the section in the Fund's SAI
entitled "Investment Restrictions." The following investment
restrictions are fundamental policies of the Fund, which can be
changed only when permitted by law and approved by a majority of
the Fund's outstanding voting securities. The non-fundamental
investment restrictions can be changed by approval of a majority
of the Board of Trustees. A "majority of the outstanding voting
securities" means the lesser of (i) 67% of the shares represented
at a meeting at which more than 50% of the outstanding shares are
represented in person or by proxy or (ii) more than 50% of the
outstanding shares. See "Other Information Voting."
(1) The Fund may not borrow money or pledge or mortgage
their assets, except that the Fund may enter into reverse
repurchase agreements or borrow from banks up to 10% of the
current value of its total net assets for temporary or emergency
purposes and those borrowings may be secured by the pledge of not
more than 15% of the current value of the Fund's total net assets
(but investments may not be purchased by the Fund while any such
borrowings exist).
(2) The Fund may not make loans, except that the Fund may
enter into repurchase agreements with respect to portfolio
securities and may purchase the types of debt instruments
described in this Prospectus.
(3) The Fund will not invest more than 25% of its total
assets in the securities of any one industry. For this purpose,
U.S. Government securities (and repurchase agreements related
thereto) and Kansas Municipal Obligations are not considered
securities of a single industry.
(4) With respect to 75% of its assets, the Fund may not
purchase securities of any issuer (except the securities issued
or guaranteed by the United States Government, its agencies or
instrumentalities) if, as a result, (1) more than 5% of the total
assets of the Fund would be invested in the securities of such
issuer or (2) the Fund would own more than 10% the Outstanding
Voting Securities of such issues.
If a percentage restriction on investment policies or the
investment or use of assets set forth in this Prospectus are
adhered to at the time a transaction is effected, later changes
in percentage resulting from changing values will not be
considered a violation.
As a matter of Fundamental Policy, notwithstanding any
limitation, the Fund is authorized to seek to achieve its
investment objective by investing all of its investible assets in
an investment company having substantially the same investment
objective and policies as the Fund.
RISKS OF INVESTING IN THE FUND
Certain Risk Considerations
The price per share of the Fund will fluctuate with changes
in value of the investments held by the Fund. For example, the
value of shares of the Fund will generally fluctuate inversely
with the movements in interest rates.
There is, of course, no assurance that the Fund will achieve
its investment objective or be successful in preventing or
minimizing the risk of loss that is inherent in investing in
particular types of investment products. In order to attempt to
minimize that risk, the Adviser monitors developments in the
economy, the securities markets, and with each particular issuer.
Because the Fund will concentrate its investment in Kansas
Municipal Obligations, it may be affected by political, economic
or regulatory factors that may impair the ability of Kansas
issuers to pay interest on or to repay the principal of their
debt obligations. Kansas Municipal Obligations may be subject to
greater price volatility than municipal obligations in general as
a result of the effect of supply and demand for these securities
which, in turn, could cause greater volatility in the value of
the shares of the Fund.
Kansas ranks as the 14th largest state in terms of size
with an area in excess of 82,000 square miles. As of 1994
population is estimated to be 2,554,047 which is up from a
population of 2,477,588 in 1990. This represents a percentage
increase of 3.1%. In comparison, the growth in population in the
U.S. was 4.7%.
Kansas' economy is based primarily on agriculture,
manufacturing, and services. Kansas projected a positive general
fund balance for its 1996 fiscal year (on estimated general fund
revenues of approximately $3.367 billion). Currently there are
no general obligation ratings for Kansas.
Obligations of issuers of Kansas Municipal Obligations
are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the
Federal Bank Reform Act of 1978. In addition, the obligations of
such issuers may become subject to the laws enacted in the future
by Congress or the Kansas legislatures or by referenda extending
the time for payment or principal and/or interest, or imposing
other constraints upon enforcement of such obligations or upon
municipalities to levy taxes. There is also the possibility
that, as a result of legislation, litigation involving the
taxation of municipal obligations or the rights of municipal
obligation holders, or other conditions, the power or ability of
any issuer to pay, when due, the principal of and interest on its
Kansas Municipal Obligations may be materially affected.
Additional considerations relating to the risks of investing in
Kansas Municipal Obligations are presented in the SAI.
OTHER INFORMATION
Capitalization
INTRUST Funds Trust was organized as a Delaware business
trust on January 26, 1996 and currently consists of six
separately managed portfolios, one of which is described in this
Prospectus. The Board of Trustees may establish additional
portfolios in the future. The capitalization of the Trust
consists solely of an unlimited number of shares of beneficial
interest with a par value of $0.001 each. When issued, shares of
the Fund are fully paid, non-assessable and freely
transferable.
The Funds are offered at net asset value only to certain
institutional investors, or other investors who at the time of
purchase have a balance of $1,000 or more invested in any of the
INTRUST Funds, are purchasers through a trust investment manager
or account manager or administered by the Adviser, are employees
or ex-employees of INTRUST Financial Corporation or any of its
affiliates, employees of BISYS or any other service provider, or
employees of any trust customer of INTRUST Financial Corporation
or any of its affiliates. Shares in the Institutional Premium
Class of shares may be subject to an additional shareholder
servicing charge of up to 0.50% of average net assets. Call
800-_______ or contact your sales representative, broker-dealer or
bank to obtain more information about the Fund's classes of
shares.
Under Delaware law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Trust. However, the Declaration of Trust disclaims liability
of the shareholders, Trustees or officers of the Trust for acts
or obligations of the Trust, which are binding only on the assets
and property of the Trust and requires that notice of the
disclaimer be given in each contract or obligation entered into
or executed by the Trust or the Trustees. The Declaration of
Trust provides for indemnification out of Trust property for all
loss and expense of any shareholder held personally liable for
the obligations of the Trust. The risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be
unable to meet its obligations and should be considered remote.
Voting
Shareholders have the right to vote in the election of
Trustees and on any and all matters on which, by law or under the
provisions of the Declaration of Trust, they may be entitled to
vote. The Trust is not required to hold regular annual meetings
of the Funds' shareholders and does not intend to do so. The
Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if
requested in writing to do so by the holders of not less than 10%
of the outstanding shares of the Trust and in connection with
such meeting to comply with the shareholders' communications
provisions of Section 16(c) of the Act. See "Other
Information--Voting Rights" in the SAI.
Shares entitle their holders to one vote per share (with
proportionate voting for fractional shares). As used in this
Prospectus, the phrase "vote of a majority of the outstanding
shares" of the Fund (or the Trust) means the vote of the lesser
of: (1) 67% of the shares of the Fund (or the Trust) present at a
meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy; or (2) more than 50% of the
outstanding shares of the Fund (or the Trust).
Performance Information
The Fund may, from time to time, include yield and total
return information in advertisements or reports to shareholders
or prospective investors. Shareholders of the Institutional
Premium Class of shares will experience a lower net return on
their investment than shareholders of the Institutional Service
Class of shares because of the additional shareholder servicing
charge to which Institutional Premium Class shareholders are
subject. The methods used to calculate the yield and total
return of the Fund are mandated by the SEC.
Quotations of "yield" will be based on the investment income
per share during a particular 30-day (or one month) period
(including dividends and interest), less expenses accrued during
the period ("net investment income"), and will be computed by
dividing net investment income by the maximum public offering
price per share on the last day of the period.
Quotations of yield and effective yield reflect only the
Fund's performance during the particular period on which the
calculations are based. Yield and effective yield for the Fund
will vary based on changes in market conditions, the level of
interest rates and the level of the Fund's expenses, and no
reported performance figure should be considered an indication of
performance which may be expected in the future.
Quotations of average annual total return for the Fund will
be expressed in terms of the average annual compounded rate of
return of a hypothetical investment in that Fund over periods of
1, 5 and 10 years (up to the life of that Fund), reflect the
deduction of a proportional share of Fund expenses (on an annual
basis), and assume that all dividends and distributions are
reinvested when paid.
The Fund may also advertise its "taxable equivalent yield."
Taxable equivalent yield is the yield that an investment, subject
to Federal and Kansas personal income taxes, would need to earn
in order to equal, on an after-tax basis, the yield on an
investment exempt from such taxes (normally calculated assuming
the maximum combined Federal and Kansas marginal tax rate). A
taxable equivalent yield quotation for the Fund will be higher
than the yield or the effective yield quotations for the Fund.
[The following table shows how to translate the yield of
an investment that is exempt from Federal and Kansas personal
income taxes into a taxable equivalent yield for the 1995 taxable
year. The last four columns of the table show approximately how
much a taxable investment would have to yield in order to
generate an after-tax (Federal and Kansas personal income taxes)
yield of 4%, 5%, 6% and 7%. For example, the table shows
__________________]
[Insert Tax Table]
The Kansas Fund is the successor to the Kansas Tax Free
Income Portfolio of the SEI Tax Exempt Trust (the "SEI Fund") a
registered investment company for which INTRUST was also the
investment adviser. Investors in the SEI Fund were invited to
invest in the Kansas Tax Exempt Bond Fund at its inception. Set
forth below are certain performance data for the SEI Fund. The
data shown below reflects total return for the periods shown,
reduced by the actual expense ratio for such SEI Fund. To the
extent expense waivers or reimbursements were in effect during
the periods indicated below, actual returns would have been lower
had such expense waivers or reimbursements not been in effect.
However, this performance data is not necessarily indicative of
the future performance of any of the INTRUST Funds. The SEI Fund
performance reflects fees and expenses that may be lower than
fees for the Kansas Tax Exempt Bond Fund after its first year of
operation. The performance shown would have been lower if such
higher fees and expenses were in effect.
<PAGE>
ANNUALIZED TOTAL RETURN FOR
THE PERIOD ENDED SEPTEMBER 30, 1996
Lehman 7 Yr. Government
Obligation Index
1 Year 4.64% 4.46%
3 Years 4.24% 4.64%
5 Years 6.56% 6.86%
Since Inception
(2/10/90) 6.68% Not Available
Account Services
All transactions in shares of the Fund will be reflected in
a statement for each shareholder. In those cases where a Service
Organization or its nominee is shareholder of record of shares
purchased for its customer, the Fund has been advised that the
statement may be transmitted to the customer at the discretion of
the Service Organization.
BISYS acts as the Fund's transfer agent. The Trust
compensates BISYS, the Trust's administrator, pursuant to a
Services Agreement, for providing personnel and facilities to
perform dividend disbursing and transfer agency-related services
for the Trust. See "Management of the Fund."
Shareholder Inquiries
All shareholder inquiries should be directed to BISYS
Fund Services. <PAGE>
APPENDIX
Description of Moody's bond ratings:
Excerpts from Moody's description of its four highest bond
ratings are listed as follows: Aaa judged to be the best
quality and they carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards. Together with
the Aaa group, they comprise what are generally known as high
grade bonds; A--possess many favorable investment attributes and
are to be considered as "upper medium grade obligations";
Baa--considered to be medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time.
Moody's also supplies numerical indicators 1, 2 and 3 to
rating categories. The modifier 1 indicates that the security is
in the higher end of its rating category; the modifier 2
indicates a mid-range ranking; and modifier 3 indicates a ranking
toward the lower end of the category.
Description of S&P's bond ratings:
Excerpts from S&P's description of its four highest bond
ratings are listed as follows: AAA-- highest grade obligations,
in which capacity to pay interest and repay principal is
extremely strong; AA--also qualify as high grade obligations,
having a very strong capacity to pay interest and repay
principal, and differs from AAA issues only in a small degree;
A--regarded as upper medium grade, having a strong capacity to pay
interest and repay principal, although they are somewhat more
susceptible to the adverse effects of changes in circumstances
and economic conditions than debt in higher rated categories;
BBB--regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher
rated categories.
S&P applies indicators "+, -," no character, and relative
standing within the major rating categories.
Description of Moody's ratings of notes and variable rate demand
instruments:
Moody's ratings for state and municipal short-term
obligations will be designated Moody's Investment Grade or MIG.
Such ratings recognize the differences between short-term credit
and long-term risk. Short-term ratings on issues with demand
features (variable rate demand obligations) are differentiated by
the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and
payments relying on external liquidity.
MIG 1/VMIG 1: This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2: This denotes high quality. Margins of protection
are ample although not as large as in the preceding group.
Description of Moody's tax-exempt commercial paper ratings:
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations which have
an original maturity not exceeding nine months. Moody's makes no
representation that such obligations are exempt from registration
under the Securities Act of 1933, nor does it represent that any
specific note is a valid obligation of a rated issuer or issued
in conformity with any applicable law. The following
designations, all judged to be investment grade, indicate the
relative repayment ability of rated issuers of securities in
which the Trust may invest.
Prime-1: Issuers rated Prime-1 (or supporting institutions)
have a superior ability for repayment of senior short-term
promissory obligations.
Prime-2: Issuers rated Prime-2 (or supporting institutions)
have a strong ability for repayment of senior short-term
promissory obligations.
Description of S&P's ratings for municipal bonds:
Investment grade
AAA: Debt rated "AAA" has the highest rating assigned by
S&P. Capacity to pay interest and repay principal is extremely
strong.
AA: Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the highest rated
issues only in a small degree.
A: Debt rated "A" has strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
Description of S&P's ratings for investment grade municipal notes
and short-term demand obligations:
SP-1: Issues carrying this designation have a very strong
or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2: Issues carrying this designation have a satisfactory
capacity to pay principal and interest.
Description of S&P's ratings for demand obligations and
tax-exempt commercial paper:
An S&P commercial paper rating is a current assessment of
the likelihood of timely repayment of debt having an original
maturity of no more than 365 days. The two rating categories for
securities in which the Trust may invest are as follows:
A-l: This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues
determined to possess extremely strong safety characteristics
will be denoted with a plus (+) designation.
A-2: Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
INTRUST FUNDS TRUST
Address for
Trust Clients of INTRUST Bank, N.A A FAMILY OF
MUTUAL FUNDS
INTRUST Bank, N.A. Kansas Tax Exempt Bond Fund
seeks to provide current
105 North Main Street income from Federal and
Box one Kansas taxation.
Wichita, Kansas, 67202
Investment Adviser
INTRUST Bank, N.A.
105 North Main Street
Box one
Wichita, Kansas, 67202
Administrator and Sponsor and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
INTRUST Bank, N.A.
105 North Main Street
Box one
Wichita, Kansas, 67202
Counsel
Baker & McKenzie
805 Third Avenue
New York, New York 10022
PROSPECTUS
Independent Accountants
DECEMBER __, 1996
Price Waterhouse LLP
1177 Avenue of Americas Investment Adviser
New York, New York 10036] INTRUST BANK, N.A.
<PAGE>
SUBJECT TO COMPLETION
INTRUST FUNDS TRUST
3435 Stelzer Road, Columbus, Ohio 43219
General and Account Information:
(800)
INSTITUTIONAL PREMIUM CLASS AND INSTITUTIONAL
SERVICE CLASS PROSPECTUS
INTRUST BANK, N.A--Investment Adviser
("INTRUST" or the "Adviser")
BISYS FUND SERVICES--Administrator, Sponsor and Distributor
("BISYS")
This Prospectus describes five funds, one money market fund
(the "Money Market Fund") and four non-money market funds (the "Non
Money Market Funds") (collectively, the "Funds"), all of which are
managed by INTRUST. The Funds and their investment objectives
are:
The Cash Reserve Money Market Fund seeks to provide
investors with current income, liquidity and the
maintenance of a stable net asset value of $1.00
per share by investing in high quality, short-term
obligations.
The Short Term High Quality Fund seeks to provide investors
with as high a level of current income as is consistent
with liquidity and safety of principal by investing
primarily in investment grade short/intermediate term
obligations.
The Intermediate Bond Income Fund seeks to provide
investors with as high a level of current income as is
consistent with managing for total return by investing in
fixed income securities.
The Stock Appreciation Fund seeks to provide investors with
long-term capital appreciation.
The International Multi-Manager Fund seeks to provide
investors with long-term capital appreciation by investing
all of its investable assets in the International Equity
Portfolio of the AMR Investment Services Trust, which
invests primarily in equity securities of issuers based
outside of the United States.
This Prospectus describes the two Classes of shares
of each Fund, the Institutional Service Class and the Institutional
Premium Class shares. See "Other Information--Capitalization".
The Funds are separate investment funds of INTRUST Funds Trust (the
"Trust"), a Delaware business trust and registered open-end,
diversified management investment company.
The Funds are separate investment funds of INTRUST
Funds Trust, a Delaware business trust and open-end diversified
management investment company.
The International Multi-Manager Fund, unlike other
mutual funds which directly acquire and manage their own portfolios
of securities, seeks to achieve its investment objective by
investing all of its investable assets in another mutual fund whose
investment objective and policies are substantially identical.
This two-tiered investment approach is commonly referred to as a
master feeder fund structure.
An investment in shares of the Trust is neither insured
nor guaranteed by the U.S. Government. There can be no assurance
that the Money Market Fund will be able to maintain a stable net
asset value of $1.00 per share.
Shares of the Trust are not deposits or obligations
of, or guaranteed or endorsed by, INTRUST, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other government agency, and may involve
investment risk, including the possible loss of principal.
This Prospectus sets forth concisely the information a
prospective investor should know before investing in any of the
Funds and should be read and retained for information about each
Fund.
A Statement of Additional Information (the "SAI"),
dated December __, 1996, containing additional and more detailed
information about the Funds has been filed with the Securities and
Exchange Commission ("SEC") and is hereby incorporated by reference
into this Prospectus. It is available without charge and can be
obtained by writing or calling the Funds at the address or
information number printed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is December __, 1996.
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such State.
<PAGE>
Table of Contents
Page
FUND EXPENSES 1
FEE TABLE 1
HIGHLIGHTS 5
THE INVESTMENT POLICIES AND PRACTICES
OF THE FUNDS 11
INVESTMENT RESTRICTIONS 22
RISKS OF INVESTING IN THE FUNDS 22
MANAGEMENT OF THE FUNDS 24
FUND SHARE VALUATION 32
PURCHASE OF FUND SHARES 33
MINIMUM PURCHASE REQUIREMENTS 34
INDIVIDUAL RETIREMENT ACCOUNTS 34
EXCHANGE OF FUND SHARES 35
REDEMPTION OF FUND SHARES 35
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX 37
OTHER INFORMATION 39
APPENDIX A-1
<PAGE>
FUND EXPENSES
The following expense table lists the costs and expenses
that an investor in the Institutional Service Class of shares will
incur either directly or indirectly as a shareholder of a Fund.
The information is based Aupon estimates. Shareholders in the
Institutional Premium Class of shares may be subject to an
additional shareholder servicing charge of up to 0.50% of average
daily net assets.
FEE TABLE
Cash Intermediate Short Term Inter-
Reserve Bond Stock High national
Money Income Appre- Quality Multi-
Market Fund ciation Fund Manager
Fund Fund Fund
Shareholder Transaction Expenses
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of
offering price) None None None None None
Deferred Sales Load (as a
percentage of redemption
proceeds) None None None None None
Redemption Fees(1) None None None None None
Exchange Fees None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (after waivers
and reimbursements)(2) 0.10% 0.19% 0.29% 0.87% 0.78%
12b-1 Fees
(after waivers) 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses 0.50% 0.56% 0.56% 0.53% 0.87%
Total Portfolio Operating Expenses
(after waivers and
reimbursements)(2) 0.60% 0.75% 0.85% 1.40% 1.65%(4)
The Purpose of the above table is to assist a shareholder in the
Institutional Service Class of shares in understanding the various
costs and expenses that an investor in the Funds will bear.
___________________________
(1)Shareholders may be charged a wire redemption fee by their bank
for receiving a wire payment on their behalf.
(2)Absent waivers and reimbursements, Management Fees and Total
Portfolio Operating Expenses would be 0.25% and 0.75% for the Cash
Reserve Money Market Fund; 0.40% and 0.96% for the Short Term High
Quality Fund; 0.40% and 0.96% for the Intermediate Bond Income
Fund; 1.00% and 1.53% for the Stock Appreciation
Fund; and 1.25% and 2.12% for the International Multi-Manager Fund,
respectively.
(3)The fee under each Fund's Distribution Plan and Agreement is
calculated on the basis of the average net assets of each Fund at
an annual rate not to exceed 0.25%. The Funds will not incur any
distribution expenses during their first year of operation.
(4)The International Multi-Manager Fund pays BISYS a 0.10%
administrative fee and has other expenses of 0.10% and the
Portfolio pays advisory and administrative fees, of which the
International Multi-Manager Fund bears its pro rata portion.
The Trust's Board of Trustees believes that the aggregate per share
expenses of the Fund and the Portfolio will be approximately equal
to the expenses the Fund would incur if its assets were invested
directly in foreign securities. Investment Advisory Fees are 0.43%
at the Portfolio level and 0.38% at the Fund level.
Example:(1)
You would pay the following expenses on a $1,000
investment, assuming (1) 5% gross annual return and (2) redemption
at the end of each time period:
Cash Intermediate Short Inter-
Reserve Bond Stock Term national
Money Income Appre- High Multi-
Market Fund ciation Quality Manager
Fund Fund Fund Fund
1 year $ 6 $ 8 $ 9 $ 14 $ 17
3 years $ 19 $ 24 $ 27 $ 44 $ 52
Without waivers and reimbursements:
1 year $ 8 $ 10 $ 10 $ 16 $ 22
3 years $ 24 $ 31 $ 31 $48 $ 66
___________________________
(1) This example should not be considered a representation of
future expenses which may be more or less than those shown. The
assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return; actual
return may be greater or less than the assumed amount.
The following expense table lists the costs and expenses
that an investor in the Institutional Premium Class of shares
will incur either directly or indirectly as a shareholder of a
Fund.
The information is based upon expenses during the first year of
operations. Shareholders in the Institutional Premium Class of
shares are subject to an additional shareholder servicing charge
of up to 0.50% of average daily net assets to which
International Service Class shareholders are not subject.
FEE TABLE
Cash Short Inter-
Reserve Intermediate Stock Term national
Money Bond Appre- High Multi-
Market Income ciation Quality Manager
Fund Fund Fund Fund Fund
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage
of offering price) None None None None None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of
offering price) None None None None None
Deferred Sales Load (as a percentage
of redemption
proceeds) None None None None None
Redemption Fees(1) None None None None None
Exchange Fees None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees (after waivers and
reimbursements)(2) 0.10% 0.19% 0.29% 0.87% 0.78%
12b-1 Fees
(after waivers)(3) 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses(4) 1.00% 1.06% 1.06% 1.03% 1.37%
Total Portfolio Operating Expenses
(after waivers and
reimbursements)(2) 1.10% 1.25% 1.35% 1.90% 2.15%
The purpose of this table is to assist a shareholder in the
International Premium Class of shares in understanding the various
costs and expenses that an investor in the Funds will bear.
_____________________
(1) Shareholders may be charged a wire redemption fee by
their bank for receiving a wire payment on their behalf.
(2) Absent waivers and reimbursements, Management Fees and Total
Portfolio Operating Expenses would be 0.25% and 1.25% for the
Cash Reserve Money Market Fund; 0.40% and 1.46% for the Short
Term High Quality Fund; 0.40% and 1.46% for the Intermediate
Bond Income Fund; 1.00% and 2.03% for the Stock Appreciation
Fund; and 1.25% and 2.62% for the International Multi-Manager
Fund, respectively.
(3) The fee under each Fund's Distribution Plan and Agreement is
calculated on the basis of the average net assets of each Fund
at an annual rate not to exceed 0.25%. The Funds will not
incur any distribution expenses during their first year of
operation.
(4) Other expenses include a shareholder servicing fee of 0.50%
for recordkeeping, communicating with and education of
shareholders, fiduciary services (excluding investment
management) and asset allocation services. Compensation to
salespersons may vary depending upon which class is sold.
(5) The International Multi-Manager Fund pays BISYS a 0.10%
administrative fee and has other expenses of 0.10% and the
Portfolio pays advisory and administrative fees, of which the
International Multi-Manager Fund bears its pro rata portion.
The Trust's Board of Trustees believes that the aggregate per
share expenses of the Fund and the Portfolio will be
approximately equal to the expenses the Fund would incur if
its assets were invested directly in foreign securities.
Investment Advisory Fees are 0.40% at the Portfolio level and
0.38% at the Fund level. <PAGE>
Example:*
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% gross annual return and (2) redemption at the end
of each time period:
Cash Intermediate
Reserve Short Term Bond Stock International
Money High Income Appre- Multi-Manager
Market Quality Fund ciation Fund
Fund Fund Fund
1 year $ 11 $ 13 $ 14 $ 19 $ 22
3 years $ 35 $ 40 $ 43 $ 60 $ 67
Without waivers and reimbursements:
1 year $ 13 $ 15 $ 15 $ 21 $ 27
3 years $ 40 $ 46 $ 46 $ 64 $ 81
________________________
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not
be considered a representation of past or future annual
return; actual return may be greater or less than the
assumed amount.<PAGE>
HIGHLIGHTS
Investment Objectives and Policies of the Funds
This Prospectus describes five funds, one money market fund
and four non-money market funds (individually a "Fund," and
collectively, the "Funds"), all of which are managed by INTRUST.
Each Fund has distinct investment objectives and policies.
As a matter of Fundamental Policy, notwithstanding any
limitation, each Fund is authorized to seek to achieve its
investment objectives by investing all of its investable assets
in an investment company having substantially the same investment
objective and policies as the Fund.
Money Market Fund:
Cash Reserve Money Market Fund. The investment objectives
of the Cash Reserve Money Market Fund are current income,
liquidity and the maintenance of a stable net asset value of
$1.00 per share by investing in high quality, U.S.
dollar-denominated short-term obligations which are determined by
the investment Adviser to present minimal credit risks.
The Cash Reserve Money Market Fund may invest in
obligations permitted to be purchased under Rule 2a-7 of the
Investment Company Act of 1940 (the "1940 Act") including, but
not limited to, (1) obligations of the U.S. Government or its
agencies or instrumentalities; (2) commercial paper, loan
participation interests, medium-term notes, asset-backed
securities and other promissory notes, including floating or
variable rate obligations; and (3) domestic, Yankee dollar and
Eurodollar certificates of deposit, time deposits, bankers'
acceptances, commercial paper, bearer deposit notes and other
promissory notes, including floating or variable rate obligations
issued by U.S. or foreign bank holding companies and their bank
subsidiaries, branches and agencies. The Cash Reserve Money
Market Fund will invest only in issuers or instruments that at
the time of purchase (1) have received the highest short-term
rating by at least two Nationally Recognized Statistical Rating
Organizations ("NRSROs") such as "A-1" by Standard & Poor's and
"P-1" by Moody's; (2) are single rated and have received the
highest short-term rating by a NRSRO; or (3) are unrated, but are
determined to be of comparable quality by the Adviser pursuant
to guidelines approved by the Board and subject to ratification
by the Board. The Cash Reserve Money Market Fund may also
purchase securities on a "when-issued" basis and purchase or sell
them on a "forward commitment" basis.
The Cash Reserve Money Market Fund will concentrate its
investments in obligations issued by the domestic banking
industry. Concentration in this context means the investment of
more than 25% of the Cash Reserve Money Market Fund's assets in
such industry. However, for temporary defensive purposes during
periods when the Adviser believes that maintaining this
concentration may be inconsistent with the best interest of
shareholders, the Cash Reserve Money Market Fund will not
maintain this concentration. The Cash Reserve Money Market
Fund's policy of concentration in the banking industry increases
the Fund's exposure to market conditions prevailing in that
industry.
The Cash Reserve Money Market Fund may also invest in
variable rate master demand obligations which are unsecured
demand notes that permit the indebtedness thereunder to vary, and
provide for periodic adjustments in the interest rate. Because
master demand obligations are direct lending arrangements between
the Cash Reserve Money Market Fund and the issuer, they are not
normally traded. There is no secondary market for the notes;
however, the period of time remaining until payment of principal
and accrued interest can be recovered under a variable rate
master demand obligation generally will not exceed seven days.
To the extent this period is exceeded, the obligation in question
would be considered illiquid. Issuers of variable rate master
demand obligations must satisfy the same criteria as set forth
for other promissory notes (e.g., commercial paper). The Cash
Reserve Money Market Fund will invest in variable rate master
demand obligations only when such obligations are determined by
the Adviser, pursuant to guidelines established by the Board of
Trustees, to be of comparable quality to rated issuers or
instruments eligible for investment by the Cash Reserve Money
Market Fund. In determining dollar-weighted average portfolio
maturity, a variable rate master demand obligation will be deemed
to have a maturity equal to the shorter of the period of time
remaining until the next readjustment of the interest rate or the
period of time remaining until the principal amount can be
recovered from the issuer on demand.
Amortized Cost Method of Valuation for the Money Market Fund
Portfolio investments of the Money Market Fund are valued
based on the amortized cost valuation technique pursuant to Rule
2a-7 under the 1940 Act. Obligations in which the Money Market
Fund invests generally have remaining maturities of 397 days or
less, although upon satisfying certain conditions of Rule 2a-7,
the Fund may, to the extent otherwise permissible, invest in
instruments subject to repurchase agreements and certain variable
and floating rate obligations that bear longer final maturities.
The dollar-weighted average portfolio maturity of the Money
Market Fund will not exceed 90 days. See the SAI for an
explanation of the amortized cost valuation method.
On behalf of the Fund, the Adviser has entered into a
subadvisory agreement with AMR Investment Services, Inc. ("AMR")
pursuant to which AMR will provide investment advisory services
to the Fund.
Non-Money Market Funds:
Short-Term High Quality Fund. The objective of the Short
Term High Quality Fund is to seek as high a level of current
income as is consistent with liquidity and safety of principal by
investing primarily in investment grade short/intermediate term
obligations.
The Fund invests in high quality fixed income securities
such as U.S. Government Securities, corporate bonds and asset
backed securities (including mortgage backed securities).
High quality Securities for purposes of the Fund are those
securities that are rated, at the time of purchase, within the
three highest long-term or two highest short-term rating
categories assigned by a nationally recognized statistical rating
organization ("NRSRO"), such as Moody's Investors Service, Inc.,
Standard & Poor's Corporation or Fitch Investors Services, Inc.,
or which are unrated and determined by the Adviser to be of
comparable quality.
The Fund invests in debt obligations with maturities (or
average life in the case of mortgage-backed and similar
securities) ranging from short-term (including overnight) to 12
years and seeks to maintain an average dollar-weighted portfolio
maturity of between 2 and 5 years.
On behalf of the Fund, the Adviser has entered into a
subadvisory agreement with Galliard Capital Management, Inc.
("Galliard") pursuant to which Galliard will provide investment
advisory services to the Fund.
Intermediate Bond Income Fund. The investment objective
of the Intermediate Bond Income Fund is to provide as high a
level of current income as is consistent with managing for total
return by investing at least 65% of its total assets in fixed
income securities. The Fund invests primarily in high quality
fixed income securities such as U.S. Government securities,
corporate bonds and asset-backed securities (including
mortgage-backed securities). A minimum of 65% of the Fund's total
assets will be invested in securities rated "A" or better by a
primary credit rating agency and the Fund will seek to maintain a
minimum average portfolio quality rating of "AA". All securities
will be rated "BBB" or better by a primary credit rating agency at
the time of purchase. Fixed income securities downgraded to below
BBB subsequent to purchase may be retained in the portfolio when
deemed by the Adviser to be in the best interest of Fund
shareholders. The Fund may also invest in convertible
securities, preferred stocks and debt of foreign governments or
corporations. Futures and/or options may be used to hedge the
portfolio against reinvestment and interest rate risk when deemed
necessary. For purposes of this Fund, a "bond" is defined as a
debt instrument with a fixed interest rate. The dollar-weighted
average maturity of the Intermediate Income Fund will generally
range between three and ten years.
On behalf of the Fund, the Adviser has entered into a
subsidiary agreement with Galliard pursuant to which Galliard
will provide investment advisory services to the Fund.
Stock Appreciation Fund. The Fund's investment objective is
long-term capital appreciation. The Fund seeks to achieve this
objective through investing at least 80% of its assets in equity
securities and at least 65% of its assets in equity securities
issued by companies with large market capitalizations that the
Adviser believes sell at reasonable prices relative to their
projected earnings. The Adviser's investment goal is to
participate in up markets while cushioning the portfolio during a
downturn. A company with a market capitalization (outstanding
shares multiplied by price per share) of over $5 billion is
considered to have large market capitalization, although the Fund
may also invest to a limited degree in companies that have a
market capitalization between $1 billion and $5 billion. The
equity securities in which the Fund may invest include common
stock, convertible securities, preferred stock, ADRs, and
warrants. The Fund will normally be invested as fully as
practicable (at least 80%) in equity securities and will normally
invest at least 65% of its assets in companies with large market
capitalizations. The Fund may also invest in high-quality debt
securities.
On behalf of the Fund, the Adviser has entered into a
subadvisory agreement with Ark Asset Management ("Ark") pursuant
to which Ark will provide investment advisory service to the
Fund.
The Fund will be managed in accordance with the
investment philosophy that the subadviser has employed for more
than ten years in managing large capitalization, value-oriented
accounts. As a value adviser, Ark seeks large capitalization
issues that sell at attractive prices relative to their projected
earnings. Ark believes this approach will permit the Fund to
participate in rising markets and help temper losses in declining
markets. In managing the Fund, Ark seeks to outperform the S&P
500 Index over a full market cycle with particular emphasis on
minimizing losses during declining markets.
The Fund's assets may be invested in U.S. Government
securities and in certain short-term, high-quality debt
instruments for the following purposes; (i) to meet anticipated
day-to-day operating expenses; (ii) pending the Portfolio
Manager's ability to invest cash inflows; (iii) to invest if Fund
assets are insufficient for effective investment in equities;
(iv) to permit the Fund to meet redemption requests; and (v) for
temporary defensive purposes. The Fund will normally invest in
short-term debt instruments that do not have a maturity of
greater than one year. The short-term instruments in which a
Fund may invest include: (i) short-term obligations of the U.S.
Government, foreign governments and their agencies,
instrumentalities, authorities or political subdivisions;
(ii) other high-quality short-term debt securities;
(iii) commercial paper, including master notes; (iv) bank
obligations, including certificates of deposit, time deposits and
bankers' acceptances; (v) money market funds; and (vi) repurchase
agreements.
International Multi-Manager Fund. The investment
objective of the International Multi-Manager Fund is to realize
long-term capital appreciation. This Fund seeks its investment
objective by investing all of its investable assets in the
International Equity Portfolio (the "Portfolio"), a series of the
AMR Investment Services Trust (the "AMR Trust"). The Fund has a
fundamental policy that allows it to invest all of its investable
assets in the Portfolio. All other fundamental investment
policies and the non-fundamental investment policies of the Fund
and the Portfolio are identical. Therefore, although the
following discusses the investment policies of the Portfolio and
the AMR Board of Trustees ("AMR Trust Board"), it applies equally
to the Fund and the Trust's Board of Trustees.
The Portfolio invests primarily in equity securities of
issuers based outside the United States. AMR Investment
Services, Inc. ("AMR" or the "Manager") provides investment
management services to the Portfolio. Hotchkis and Wiley
("Hotchkis"), Morgan Stanley Asset Management Inc. ("Morgan
Stanley") and Templeton Investment Counsel, Inc. ("Templeton")
currently serve as investment advisers to the Portfolio. Rowe
Price-Fleming International, Inc. ("Fleming") is also an
investment adviser of the Portfolio; however, none of the
Portfolio's assets have been allocated to Fleming at this time.
Hotchkis, Morgan Stanley, Templeton and Fleming are also referred
to herein as the "Portfolio Advisers."
Ordinarily the Portfolio will invest at least 65% of its
assets in common stocks and securities convertible into common
stocks of issuers in at least three different countries located
outside the United States. However, excluding collateral for
securities loaned, the Portfolio generally invests in excess of
80% of its assets in such securities. The remainder of the
Portfolio's assets will be invested in non-U.S. debt securities
which, at the time of purchase, are rated in one of the three
highest rating categories by any NRSRO or, if unrated, are deemed
to be of comparable quality by the Portfolio Advisers and traded
publicly on a world market, or in cash or cash equivalents,
including obligations that are permitted investments for the
Money Market Fund or in other investment companies. The value of
the Portfolio's debt investments will vary in response to
interest rate changes. However, when the Portfolio Advisers deem
that market conditions warrant, the Portfolio may, for temporary
defensive purposes, invest up to 100% of its assets in cash, cash
equivalents, other investment companies and investment grade
short-term obligations.
The Portfolio Advisers select securities based upon a
country's economic outlook, market valuation and potential
changes in currency exchange rates. When purchasing equity
securities, primary emphasis will be placed on undervalued
securities with above average growth expectations.
Overseas investing carries potential risks not associated
with domestic investments. Such risks include, but are not
limited to: (1) political and financial instability abroad,
including risk of nationalization or expropriation of assets and
the risk of war; (2) less liquidity and greater volatility of
foreign investments; (3) less public information regarding
foreign companies; (4) less government regulation and supervision
of foreign stock exchanges, brokers and listed companies; (5)
lack of uniform accounting, auditing and financial reporting
standards; (6) delays in transaction settlement in some foreign
markets; (7) possibility of an imposition of confiscatory foreign
taxes; (8) possible limitation on the removal of securities or
other assets of the Portfolio; (9) restrictions on foreign
investments and repatriation of capital; (10) currency
fluctuations; (11) cost and possible restrictions of currency
conversion; (12) withholding taxes on dividends in foreign
countries; and (13) possibly higher commissions, custodial fees
and management costs than in the U.S. market. These risks are
often greater for investments in emerging or developing
countries.
The Portfolio will limit its investment to those in
countries which have been recommended by AMR and which have been
approved by the AMR Trust Board. Countries may be added or
deleted with AMR Trust Board approval. In determining which
countries will be approved, the AMR Trust Board will evaluate the
risk factors set forth above and will particularly focus on the
ability to repatriate funds, the size and liquidity aspects of a
particular country's market and the investment climate for
foreign investors. The current countries in which the Portfolio
may invest are Australia. Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Malaysia, Mexico, Netherlands, New Zealand, Norway, Singapore,
South Korea, Spain, Sweden, Switzerland and the United
Kingdom.
The Portfolio may trade forward foreign currency
contracts ("forward contracts"), which are derivatives, to hedge
currency fluctuations of underlying stock or bond positions, or
in other circumstances permitted by the Commodity Futures Trading
Commission ("CFTC"). Forward contracts to sell foreign currency
may be used when the management of the Portfolio believes that
the currency of a particular foreign country may suffer a decline
against the U.S. dollar. Forward contracts are also entered into
to set the exchange rate for a future transaction. In this
manner, the Portfolio may protect itself against a possible loss
resulting from an adverse change in the relationship between the
U.S. dollar or other currency which is being used for the
security purchase and the foreign currency in which the security
is denominated during the period between the date on which the
security is purchased or sold and the date on which payment is
made or received. Forward contracts involve certain risks which
include, but are not limited to: (1) imperfect correlation
between the securities hedged and the contracts themselves; and
(2) possible decrease in the total return of the Portfolio.
Forward contracts are discussed in greater detail in the SAI.
The Portfolio also may trade currency futures ("futures"),
which are derivatives, for the same reasons as for entering into
forward contracts as set forth above. Futures are traded on U.S.
and foreign currency exchanges. The use of futures also entails
certain risks which include, but are not limited to: (1) less
liquidity due to daily limits on price fluctuation; (2) imperfect
correlation between the securities hedged and the contracts
themselves; (3) possible decrease in the total return of the
Portfolio due to hedging; (4) possible reduction in value for
both the contracts and the securities being hedged; and
(5) potential losses in excess of the amounts invested in the
futures contracts themselves. The Portfolio may not enter into
futures contracts if the purchase or sale of such contract would
cause the sum of the Portfolio's initial and any variation margin
deposits to exceed 5% of its total assets. Futures contracts,
which are derivatives, are discussed in greater detail in the
SAI.
Short-Term Trading for the Stock Funds
Under certain market conditions, the Stock Appreciation
Fund, and International Multi-Manager Fund may seek profits by
short-term trading. The length of time a Fund has held a
particular security is not generally a consideration in
investment decisions. A change in the number of securities owned
by a Fund is known as "portfolio turnover." To the extent
short-term trading strategies are used, a Fund's portfolio turnover
rate may be higher than that of other mutual funds. Portfolio
turnover generally involves some expense to a Fund, including
brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other
securities. Such transactions may result in realization of
taxable capital gains.
Risks of Investing in the Funds
The Money Market Fund attempts to maintain the net asset
value of its shares at a constant $1.00 per share, although there
can be no assurance that the Money Market Fund will always be
able to do so. The Money Market Fund may not achieve as high a
level of current income as other funds that do not limit their
investments to the high quality securities in which the Money
Market Fund invests.
The Cash Reserve Fund's policy of concentrating in the
banking industry increases the Fund's exposure to market
conditions prevailing in the industry. See "Risks of Investing
in the Funds" herein.
The price per share of the Non-Money Market Funds will
fluctuate with changes in value of the investments held by each
Fund. Additionally, there can be no assurance that a Fund will
achieve its investment objective or be successful in preventing
or minimizing the risk of loss that is inherent in investing in
particular types of securities. Such risks include the
sensitivity of the cash flows and yields of separately traded
interest and principal components of obligations to the rate of
principal payments (including prepayments). With respect to
mortgage-backed securities, risks include a similar sensitivity
to the rate of prepayments in that, although the value of
fixed-income securities generally increases during periods of
falling interest rates, as a result of prepayments and other
factors, this is not always the case with respect to
mortgage-backed securities. Asset-backed securities involve the
risk that such securities do not usually have the benefit of a
complete security interest in the related collateral. Positions
in options, futures and options on futures involve the risks that
such options and futures may fail as hedging techniques, that the
loss from investing in futures transactions is potentially
unlimited and that closing transactions may not be effected where
a secondary liquid market does not exist. Further, investment in
the securities of issuers in any foreign country involves special
risks and considerations not typically associated with investing
in U.S. issuers.
An investment in the International Multi-Manager Fund
involves certain risks, depending on the types of investments
made and the types of investment techniques employed. All
investments by the International Multi-Manager Fund entail some
risk. The International Multi-Manager Fund's policy of investing
directly or indirectly in foreign issuers entails certain risks
in addition to those normally associated with investments in
equity securities. See "Investment Policies and Practices of the
Funds."
By investing solely in the Portfolio, the International
Multi-Manager Fund may achieve certain efficiencies and economies
of scale. Nonetheless, this investment could also have potential
adverse effects on the Fund. Investors in the Fund should
consider these risks, as described under "Other Information
International Multi-Manager Fund Structure."
Management of the Funds
Advisory Services
INTRUST Bank, N.A. acts as investment adviser to all of the
Funds. For its services, INTRUST receives a fee from each Fund
based upon each Fund's average daily net assets. See "Fee
Table" in this Prospectus.
AMR serves as subadviser to the Cash Reserve Money Market
Fund. Galliard serves as subadviser to the Intermediate Bond
Income Fund and Short Term High Quality Fund. ARK serves as
subadviser to the Stock Appreciation Fund. AMR, Galliard and Ark
may also be referred to herein as "subadvisers." For their
services, the subadvisers receive a fee based on the respective
Fund's average daily net assets.
The International Multi-Manager Fund currently invests
all of its investable assets in the Portfolio. The International
Multi-Manager Fund may withdraw its investment from the
Portfolio, for which AMR serves as investment manager and
Hotchkis, Morgan Stanley, Templeton and Fleming all may act as
investment advisers, at any time if the Trust's Board determines
that it is in the best interests of the International Multi-Manager
Fund and its shareholders to do so. See "Other
Information International Multi-Manager Fund Structure."
Other Services
BISYS Fund Services ("BISYS") acts as administrator,
sponsor and distributor to the Funds and is sometimes referred to
herein as "Administrator" or "Distributor." For its services,
BISYS receives a fee from the Funds based on each Fund's average
daily net assets. See "Management of the Fund" in this
Prospectus. The Distributor distributes the Funds' shares and may
be reimbursed for certain of its distribution-related
expenses.
Guide to investing in the INTRUST Family of Funds
Purchase orders for the Money Market Fund received by 12:00
noon Eastern time will become effective that day. Purchase
orders for all other Funds received by your broker or Service
Organization in proper form prior to 4:15 p.m., Eastern time, and
transmitted to the Distributor prior to 5:00 p.m. Eastern time,
will become effective that day.
Minimum Initial Investment $1,000
Minimum Initial Investment for IRAs $ 250
Minimum Subsequent Investment $ 50
The Funds are purchased at net asset value.
Shareholders may exchange shares between Funds in the Trust
by telephone or mail. Exchanges may not be effected by
facsimile.
Minimum initial exchange $500
(no minimum for subsequent exchanges)
Shareholders may redeem shares by telephone, mail, wire, or
by writing a check (the Money Market Fund only). Shares may not
be redeemed by facsimile.
If a redemption request is received by 12:00 noon
Eastern time, proceeds for the Money Market Fund will
be transferred to a designated account that day.
Minimum check amount is $500.
The Funds reserve the right to redeem involuntarily
upon not less than 30 days' notice all shares in a
Fund's account which have an aggregate value of $500 or
less.
(Redemption by telephone, wire and check writing is not
available for IRAs and trust relationships of INTRUST.)
All dividends and distributions will be automatically paid
in additional shares at net asset value of the applicable Fund
unless cash payment is requested.
Distributions for the Stock Appreciation Fund and
International Multi-Manager Fund are paid at least once
annually and distributions for the other Funds are paid
monthly.
THE INVESTMENT POLICIES AND PRACTICES OF THE FUNDS
Each Fund is a separate investment fund or portfolio,
commonly known as a mutual fund. The Funds are portfolios of a
Delaware business trust, INTRUST Funds Trust, organized under the
laws of Delaware as an open-end, management investment company.
The Trust's Board of Trustees oversees the overall management of
the Funds and elects the officers of the Trust.
As a matter of Fundamental Policy, each Fund is
authorized to seek to achieve its investment objective by
investing all of its investable assets in an investment company
having substantially the same investment objective and policies
as the Fund.
The investment objective of the Cash Reserve Money Market
Fund is to provide investors with current income, liquidity
and the maintenance of a stable net asset value of $1.00 per
share by investing in high quality, short-term
obligations.
The investment objective of the Short-Term High Quality
Fund is to provide investors with as high a level of current
income as is consistent with liquidity and safety of
principal by investing primarily in investment grade
short/intermediate term obligations.
The investment objective of the Intermediate Bond Income
Fund is to provide investors with as high a level of current
income as is consistent with managing for total return by
investing in fixed income securities.
The investment objective of the Stock Appreciation Fund is
to provide investors with long-term capital
appreciation.
The investment objective of the International Multi-
Manager Fund is to provide investors long-term capital
appreciation.
Each Fund follows its own investment objectives and
policies, including certain investment restrictions. The SAI
contains specific investment restrictions which govern the Funds'
investments. Those restrictions and the Funds' investment
objectives are fundamental policies, which means that they may
not be changed without a majority vote of shareholders of the
affected Fund. Except for the objectives and those restrictions
specifically identified as fundamental, all other investment
policies and practices described in this Prospectus and in the
SAI are not fundamental and may change solely with Board of
Trustees approval.
The following is a description of investment practices
of the Funds and the securities in which they may invest:
U.S. Treasury Obligations (All Funds). The Funds may invest
in U.S. Treasury obligations, which are backed by the full faith
and credit of the United States Government as to the timely
payment of principal and interest. U.S. Treasury obligations
consist of bills, notes, and bonds and separately traded interest
and principal component parts of such obligations known as STRIPS
which generally differ in their interest rates and maturities.
U.S. Treasury bills, which have original maturities of up to one
year, notes, which have maturities ranging from one year to 10
years, and bonds, which have original maturities of 10 to 30
years, are direct obligations of the United States Government.
U.S. Government Securities (All Funds). U.S. Government
securities are obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. U.S. Government
securities include debt securities issued or guaranteed by U.S.
Government-sponsored enterprises and federal agencies and
instrumentalities. Some types of U.S. Government securities are
supported by the full faith and credit of the United States
Government or U.S. Treasury guarantees, such as mortgage-backed
certificates guaranteed by the Government National Mortgage
Association ("GNMA"). Other types of U.S. Government securities,
such as obligations of the Student Loan Marketing Association,
provide recourse only to the credit of the agency or
instrumentality issuing the obligation. In the case of
obligations not backed by the full faith and credit of the United
States Government, the investor must look to the agency issuing
or guaranteeing the obligation for ultimate repayment.
Commercial Paper (All Funds). Commercial paper includes
short-term unsecured promissory notes, variable rate demand notes
and variable rate master demand notes issued by both domestic and
foreign bank holding companies, corporations and financial
institutions and United States Government agencies and
instrumentalities. All commercial paper purchased by the Funds
is, at the time of investment, rated in one of the top two (top
three with respect to Short Term High Quality Fund) rating
categories of at least one NRSRO, or, if not rated is, in the
opinion of the Adviser, of an investment quality comparable to
rated commercial paper in which the Funds may invest, or, with
respect to the Cash Reserve Money Market Fund, (i) rated "P-1" by
Moody's Investors Service, Inc. ("Moody's") and "A-1" or better
by Standard & Poor's Corporation ("S&P") or in a comparable
rating category by any two NRSROs that have rated the commercial
paper or (ii) rated in a comparable category by only one such
organization if it is the only organization that has rated the
commercial paper (and provided the purchase is approved or
ratified by the Board of Trustees).
Corporate Debt Securities (All Funds). The Funds may
purchase corporate debt securities, subject to the rating and
quality requirements specified with respect to each Fund. The
Funds may invest in both rated commercial paper and rated
corporate debt obligations of foreign issuers that meet the same
quality criteria applicable to investments by the Funds in
commercial paper and corporate debt obligations of domestic
issuers. These investments, therefore, are not expected to
involve significant additional risks as compared to the risks of
investing in comparable domestic securities. Generally, all
foreign investments carry with them both opportunities and risks
not applicable to investments in securities of domestic issuers,
such as risks of foreign political and economic instability,
adverse movements in foreign exchange rates, the imposition or
tightening of exchange controls or other limitations on
repatriation of foreign capital, changes in foreign governmental
attitudes toward private investment (possibly leading to
nationalization, increased taxation or confiscation of foreign
assets) and added difficulties inherent in obtaining and
enforcing a judgment against a foreign issuer of securities
should it default.
Mortgage-Related Securities (All Funds). The Funds are
permitted to invest in mortgage-related securities subject to the
rating and quality requirements specified with respect to each
such Fund. Mortgage pass-through securities are securities
representing interests in "pools" of mortgages in which payments
of both interest and principal on the securities are made
monthly, in effect, "passing through" monthly payments made by
the individual borrowers on the mortgage loans which underlie the
securities (net of fees paid to the issuer or guarantor of the
securities). Early repayment of principal on mortgage pass-through
securities (arising from prepayments of principal due to
sale of the underlying property, refinancing, or foreclosure, net
of fees and costs which may be incurred) may expose a Fund to a
lower rate of return upon reinvestment of principal. Also, if a
security subject to prepayment has been purchased at a premium,
in the event of prepayment the value of the premium would be
lost. Like other fixed-income securities, when interest rates
rise, the value of mortgage-related securities generally will
decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not
increase as much as other fixed-income securities. In
recognition of this prepayment risk to investors, the Public
Securities Association (the "PSA") has standardized the method of
measuring the rate of mortgage loan principal prepayments. The
PSA formula, the Constant Prepayment Rate or other similar models
that are standard in the industry will be used by the Funds in
calculating maturity for purposes of investment in
mortgage-related securities. The inverse relation between interest
rates and value of fixed income securities will be more pronounced
with respect to investments by the Fund in mortgage-related
securities, the value of which may be more sensitive to interest
rate changes.
Payment of principal and interest on some mortgage
pass-through securities (but not the market value of the securities
themselves) may be guaranteed by the full faith and credit of the
U.S. Government (in the case of securities guaranteed by GNMA or
guaranteed by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by the Federal
National Mortgage Association ("FNMA") or the Federal Home Loan
Mortgage Corporation ("FHLMC"), which are supported only by the
discretionary authority of the U.S. Government to purchase the
agency's obligations). Mortgage pass-through securities created
by non-governmental issuers (such as commercial banks, savings
and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers) may be
supported in various forms of insurance or guarantees issued by
governmental entities.
Collateralized Mortgage Obligations ("CMOs") are hybrid
instruments with characteristics of both mortgage-backed bonds
and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases,
semi-annually. CMOs may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC or
FNMA. CMOs are structured in multiple classes, with each class
bearing a different stated maturity or interest rate. The
inverse relation between interest rates and value of fixed income
securities will be more pronounced with respect to investments by
the Fund in mortgage-related securities, the value of which may
be more sensitive to interest rate changes.
Asset-Backed Securities (Cash Reserve Money Market Fund,
Short Term High Quality Fund and Intermediate Bond Income Fund).
These Funds are permitted to invest in asset-backed securities,
subject to the rating and quality requirements specified with
respect to each such Fund. Through the use of trusts and special
purpose subsidiaries, various types of assets, primarily home
equity loans and automobile and credit card receivables, are
being securitized in pass-through structures similar to the
mortgage pass-through structures described above. Consistent
with the Funds' investment objectives, policies and quality
standards, a Fund may invest in these and other types of
asset-backed securities which may be developed in the future.
Asset-backed securities involve certain risks that are not
posed by mortgage-related securities, resulting mainly from the
fact that asset-backed securities do not usually contain the
benefit of a complete security interest in the related
collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a
number of state and Federal consumer credit laws, some of which
may reduce the ability to obtain full payment. In the case of
automobile receivables, due to various legal and economic
factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities. The risks
associated with asset-backed securities are often reduced by the
addition of credit enhancements such as a letter of credit from a
bank, excess collateral or a third-party guarantee.
Municipal Commercial Paper (Intermediate Bond Income
Fund). Municipal commercial paper is a debt obligation with a
stated maturity of one year or less which is issued to finance
seasonal working capital needs or as short-term financing in
anticipation of longer-term debt. Investments in municipal
commercial paper are limited to commercial paper which is rated
at the date of purchase: (i) "P-1" by Moody's and "A-1" or "A-1+"
by S&P, "P-2" (Prime-2) or better by Moody's and "A-2" or
better by S&P or (ii) in a comparable rating category by any two
of the NRSROs that have rated commercial paper or (iii) in a
comparable rating category by only one such organization if it is
the only organization that has rated the commercial paper or (iv)
if not rated, is, in the opinion of the Adviser, of comparable
investment quality and within the credit quality policies and
guidelines established by the Board of Trustees.
Issuers of municipal commercial paper rated "P-1" have a
"superior capacity for repayment of short-term promissory
obligations." The "A-1" rating for commercial paper under the
S&P classification indicates that the "degree of safety regarding
timely payment is either overwhelming or very strong."
Commercial paper with "overwhelming safety characteristics" will
be rated "A-1+." Commercial paper receiving a "P-2" rating has a
strong capacity for repayment of short-term promissory
obligations. Commercial paper rated "A-2" has the capacity for
timely payment although the relative degree of safety is not as
overwhelming as for issues designated "A-1." See the Appendix
for a more complete description of securities ratings.
Municipal Notes (Intermediate Bond Income Fund).
Municipal notes are generally sold as interim financing in
anticipation of the collection of taxes, a bond sale or receipt
of other revenue. Municipal notes generally have maturities at
the time of issuance of one year or less. Investments in
municipal notes are limited to notes which are rated at the date
of purchase: (i) MIG 1 or MIG 2 by Moody's and in a comparable
rating category by at least one other nationally recognized
statistical rating organization that has rated the notes, or (ii)
in a comparable rating category by only one such organization,
including Moody's, if it is the only organization that has rated
the notes, or (iii) if not rated, are, in the opinion of the
Adviser, of comparable investment quality and within the credit
quality policies and guidelines established by the Board of
Trustees.
Notes rated "MIG 1" are judged to be of the "best quality"
and carry the smallest amount of investment risk. Notes rated
"MIG 2" are judged to be of "high quality, with margins of
protection ample although not as large as in the preceding
group."
Municipal Bonds (Intermediate Bond Income Fund).
Municipal bonds generally have a maturity at the time of issuance
of more than one year. Municipal bonds may be issued to raise
money for various public purposes -- such as constructing public
facilities and making loans to public institutions. There are
generally two types of municipal bonds: general obligation bonds
and revenue bonds. General obligation bonds are backed by the
taxing power of the issuing municipality and are considered the
safest type of municipal bond. Revenue bonds are backed by the
revenues of a project or facility -- tolls from a toll road, for
example. Certain types of municipal bonds are issued to obtain
funding for privately operated facilities. Industrial
development revenue bonds (which are private activity bonds) are
a specific type of revenue bond backed by the credit and security
of a private user, and therefore investments in these bonds have
more potential risk. Investments in municipal bonds are limited
to bonds which are rated at the time of purchase "A" or better by
a NRSRO. Municipal bonds generally have a maturity at the time
of issuance of more than one year.
Common Stocks (Stock Appreciation Fund and International
Multi-Manager Fund). Common stock represents the residual
ownership interest in the issuer after all of its obligations and
preferred stocks are satisfied. Common stock fluctuates in price
in response to many factors, including historical and prospective
earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market
volatility.
Preferred Stocks (Intermediate Bond Income Fund, Stock
Appreciation Fund, and International Multi-Manager Fund).
Preferred stock has a preference over common stock in liquidation
and generally in dividends as well, but is subordinated to the
liabilities of the issuer in all respects. Preferred stock may
or may not be convertible into common stock. As a general rule,
the market value of preferred stock with a fixed dividend rate
and no conversion element varies inversely with interest rates
and perceived credit risk. Because preferred stock is junior to
debt securities and other obligations of the issuer,
deterioration in the credit quality of the issuer will cause
greater changes in the value of a preferred stock than in a more
senior debt security with similar stated yield
characteristics.
American Depository Receipts (Intermediate Bond Income
Fund, Stock Appreciation Fund, and International Multi-Manager
Fund). American Depository Receipts are U.S. dollar-denominated
receipts generally issued by domestic banks, which evidence the
deposit with the bank of the common stock of a foreign issuer and
which are publicly traded on exchanges or over-the-counter in the
United States.
These Funds may each invest in both sponsored and
unsponsored ADR programs. There are certain risks associated
with investments in unsponsored ADR programs. Because the non-U.S.
company does not actively participate in the creation of the
ADR program, the underlying agreement for service and payment
will be between the depository and the shareholder. The company
issuing the stock underlying the ADR pays nothing to establish
the unsponsored facility, as fees for ADR issuance and
cancellation are paid by brokers. Investors directly bear the
expenses associated with certificate transfer, custody and
dividend payment.
In an unsponsored ADR program, there also may be several
depositories with no defined legal obligations to the non-U.S.
company. The duplicate depositories may lead to marketplace
confusion because there would be no central source of information
to buyers, sellers and intermediaries. The efficiency of
centralization gained in a sponsored program can greatly reduce
the delays in delivery of dividends and annual reports. In
addition, with respect to all ADRs there is always the risk of
loss due to currency fluctuations.
Investments in ADRs involve certain risks not typically
involved in purely domestic investments, including future foreign
political and economic developments, and the possible imposition
of foreign governmental laws or restrictions applicable to such
investments. Securities of foreign issuers through ADRs are
subject to different economic, financial, political and social
factors. Individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment,
resources, self-sufficiency and balance of payments position.
With respect to certain countries, there is the possibility of
expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could
adversely affect the value of the particular ADR. There may be
less publicly available information about a foreign company than
about a U.S. company, and there may be less governmental
regulation and supervision of foreign stock exchanges, brokers
and listed companies. In addition, such companies may use
different accounting and financial standards (and certain
currencies may become available for transfer from a foreign
currency), resulting in a Fund's possible inability to convert
proceeds realized upon the sale of portfolio securities of the
affected foreign companies immediately into U.S. currency. The
International Multi-Manager Fund may also invest in European
Depository Receipts (EDRs), which are receipts issued in bearer
form by a European financial institution and traded in European
securities' markets. Investments in EDRs involve similar risks
as ADRs.
Investment in Foreign Securities (Short Term High Quality
Fund, Intermediate Bond Income Fund, Stock Appreciation Fund and
International Multi-Manager Fund). These Funds may each invest
in securities of foreign governmental and private issuers that
are generally denominated in and pay interest in U.S. dollars.
Investments in foreign securities involve certain considerations
that are not typically associated with investing in domestic
securities. There may be less publicly available information
about a foreign issuer than about a domestic issuer. Foreign
issuers also are not generally subject to uniform accounting,
auditing and financial reporting standards comparable to those
applicable to domestic issuers. In addition, with respect to
certain foreign countries, interest may be withheld at the source
under foreign income tax laws, and there is a possibility of
expropriation or confiscatory taxation, political or social
instability or diplomatic developments that could adversely
affect investments in securities of issuers located in those
countries.
Convertible and Exchangeable Securities (Short Term High
Quality Fund, Intermediate Bond Income Fund, Stock Appreciation
Fund, and International Multi-Manager Fund). These Funds are
permitted to invest in convertible and exchangeable securities,
subject to the rating and quality requirements specified with
respect to each such Fund. Convertible securities generally
offer fixed interest or dividend yields and may be converted
either at a stated price or stated rate for common or preferred
stock. Exchangeable securities may be exchanged on specified
terms for common or preferred stock. Although to a lesser extent
than with fixed income securities generally, the market value of
convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates
decline. In addition, because of the conversion or exchange
feature, the market value of convertible or exchangeable
securities tends to vary with fluctuations in the market value of
the underlying common or preferred stock. Debt securities that
are convertible into or exchangeable for preferred or common
stock are liabilities of the issuer but are generally
subordinated to senior debt of the issuer.
Domestic and Foreign Bank Obligations (All Funds). These
obligations include but are not restricted to certificates of
deposit, commercial paper, Yankee dollar certificates of deposit,
bankers' acceptances, Eurodollar certificates of deposit and time
deposits, promissory notes and medium-term deposit notes. The
Funds will not invest in any obligations of their affiliates, as
defined under the 1940 Act.
Each Fund limits its investment in United States bank
obligations to obligations of United States banks (including
foreign branches). Each Fund limits its investment in foreign
bank obligations to United States dollar-denominated obligations
of foreign banks (including United States branches of foreign
banks) which in the opinion of the Adviser, are of an investment
quality comparable to obligations of United States banks which
may be purchased by the Funds. There is no limitation on the
amount of the Funds' assets which may be invested in obligations
of foreign banks meeting the conditions set forth herein.
Fixed time deposits may be withdrawn on demand by the
investor, but may be subject to early withdrawal penalties which
vary depending upon market conditions and the remaining maturity
of the obligation. There are no contractual restrictions on the
right to transfer a beneficial interest in a fixed time deposit
to a third party, although there is no market for such deposits.
Investments in fixed time deposits subject to withdrawal
penalties maturing in more than seven days may not exceed 15% of
the value of the total assets of the Non-Money Market Funds and
10% of the value of the total assets of the Money Market
Fund.
Obligations of foreign banks involve somewhat different
investment risks than those affecting obligations of United
States banks, including the possibilities that their liquidity
could be impaired because of future political and economic
developments, that the obligations may be less marketable than
comparable obligations of United States banks, that a foreign
jurisdiction might impose withholding taxes on interest income
payable on those obligations, that foreign deposits may be seized
or nationalized, that foreign governmental restrictions such as
exchange controls may be adopted which might adversely affect the
payment of principal and interest on those obligations and that
the selection of those obligations may be more difficult because
there may be less publicly available information concerning
foreign banks, or that the accounting, auditing and financial
reporting standards, practices and requirements applicable to
foreign banks may differ from those applicable to United States
banks. Foreign banks are not subject to examination by any
United States Government agency or instrumentality.
Investments in Eurodollar and Yankee dollar obligations
involve additional risks. Most notably, there generally is less
publicly available information about foreign companies; there may
be less governmental regulation and supervision; they may use
different accounting and financial standards; and the adoption of
foreign governmental restrictions may adversely affect the
payment of principal and interest on foreign investments. In
addition, not all foreign branches of United States banks are
supervised or examined by regulatory authorities as are United
States banks, and such branches may not be subject to reserve
requirements.
STRIPS and Zero Coupon Securities (All Funds except
International Multi-Manager Fund) . Each Fund may invest in
separately traded principal and interest components of securities
backed by the full faith and credit of the United States
Treasury. The principal and interests components of United
States Treasury bonds with remaining maturities of longer than
ten years are eligible to be traded independently under the
Separate Trading of Registered Interest and Principal of
Securities ("STRIPS") program. Under the STRIPS program, the
principal and interest components are separately issued by the
United States Treasury at the request of depository financial
institutions, which then trade the component parts separately.
The interest component of STRIPS may be more volatile than that
of United States Treasury bills with comparable maturities. In
accordance with Rule 2a-7, the Money Market Fund's investments in
STRIPS are limited to those with maturity components not
exceeding thirteen months. The Funds will not actively trade in
STRIPS.
The Funds may invest in zero coupon securities. A zero
coupon security pays no interest to its holder during its life
and is sold at a discount to its face value at maturity. The
market prices of zero coupon securities generally are more
volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates
than non-zero coupon securities having similar maturities and
credit qualities.
Variable rate demand obligations (All Funds). Variable
rate demand obligations have a maturity of 397 days or less with
respect to the Money Market Fund or five to twenty years with
respect to the Non-Money Market Funds, but carry with them the
right of the holder to put the securities to a remarketing agent
or other entity on short notice, typically seven days or less.
Generally, the remarketing agent will adjust the interest rate
every seven days (or at other intervals corresponding to the
notice period for the put), in order to maintain the interest
rate at the prevailing rate for securities with a seven-day
maturity. The remarketing agent is typically a financial
intermediary that has agreed to perform these services. Variable
rate master demand obligations permit a Fund to invest
fluctuating amounts at varying rates of interest pursuant to
direct arrangements between the Funds, as lender, and the
borrower. Because the obligations are direct lending
arrangements between the Funds and the borrower, they will not
generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any
time. The borrower also may prepay up to the full amount of the
obligation without penalty. While master demand obligations, as
such, are not typically rated by credit rating agencies, if not
so rated, a Fund may, under its minimum rating standards, invest
in them only if, in the opinion of the Adviser, they are of an
investment quality comparable to other debt obligations in which
the Funds may invest and are within the credit quality policies,
guidelines and procedures established by the Board of Trustees.
See the SAI for further details on variable rate demand
obligations and variable rate master demand obligations.
Other Mutual Funds (All Funds). Each Fund may invest in
shares of other open-end, management investment companies,
subject to the limitations of the 1940 Act and subject to such
investments being consistent with the overall objective and
policies of the Fund making such investment, provided that any
such purchases will be limited to short-term investments in
shares of unaffiliated investment companies. The purchase of
securities of other mutual funds results in duplication of
expenses such that investors indirectly bear a proportionate
share of the expenses of such mutual funds including operating
costs, and investment advisory and administrative fees.
Options on Securities (All Funds, except Cash Reserve
Money Market Fund and International Multi-Manager Fund). The
Funds may purchase put and call options and write covered put and
call options on securities in which each Fund may invest directly
and that are traded on registered domestic securities exchanges
or that result from separate, privately negotiated transactions
(i.e., over-the-counter (OTC) options). The writer of a call
option, who receives a premium, has the obligation, upon
exercise, to deliver the underlying security against payment of
the exercise price during the option period. The writer of a
put, who receives a premium, has the obligation to buy the
underlying security, upon exercise, at the exercise price during
the option period.
The Funds may write put and call options on securities only
if they are covered, and such options must remain covered as long
as the Fund is obligated as a writer. A call option is covered
if a Fund owns the underlying security covered by the call or has
an absolute and immediate right to acquire that security without
additional cash consideration (or for additional cash
consideration if the underlying security is held in a segregated
account by its custodian) upon conversion or exchange of other
securities held in its portfolio. A put option is covered if a
Fund maintains cash, U.S. Treasury bills or other high grade
short-term obligations with a value equal to the exercise price
in a segregated account with its custodian.
The principal reason for writing put and call options is to
attempt to realize, through the receipt of premiums, a greater
current return than would be realized on the underlying
securities alone. In return for the premium received for a call
option, the Funds forego the opportunity for profit from a price
increase in the underlying security above the exercise price so
long as the option remains open, but retain the risk of loss
should the price of the security decline. In return for the
premium received for a put option, the Funds assume the risk that
the price of the underlying security will decline below the
exercise price, in which case the put would be exercised and the
Fund would suffer a loss. The Funds may purchase put options in
an effort to protect the value of a security it owns against a
possible decline in market value.
Writing of options involves the risk that there will be no
market in which to effect a closing transaction. An
exchange-traded option may be closed out only on an exchange that
provides a secondary market for an option of the same series.
OTC options are not generally terminable at the option of the
writer and may be closed out only by negotiation with the
holder. There is also no assurance that a liquid secondary
market on an exchange will exist. In addition, because OTC
options are issued in privately negotiated transactions exempt
from registration under the Securities Act of 1933, there is no
assurance that the Funds will succeed in negotiating a closing
out of a particular OTC option at any particular time. If a
Fund, as covered call option writer, is unable to effect a
closing purchase transaction in the secondary market or
otherwise, it will not be able to sell the underlying security
until the option expires or it delivers the underlying security
upon exercise.
The staff of the SEC has taken the position that purchased
options not traded on registered domestic securities exchanges
and the assets used as cover for written options not traded on
such exchanges are generally illiquid securities. However, the
staff has also opined that, to the extent a mutual fund sells an
OTC option to a primary dealer that it considers creditworthy and
contracts with such primary dealer to establish a formula price
at which the fund would have the absolute right to repurchase the
option, the fund would only be required to treat as illiquid the
portion of the assets used to cover such option equal to the
formula price minus the amount by which the option is
in-the-money. Pending resolution of the issue, the Funds will
treat such options and, except to the extent permitted through
the procedure described in the preceding sentence, assets as
subject to each such Fund's limitation on investments in
securities that are not readily marketable.
Dollar Ross Transactions - (Short Term High Quality
Fund). The Fund may enter into dollar roll transactions wherein
the Fund sells fixed income securities, typically mortgage-backed
securities, and makes a commitment to purchase similar, but not
identical, securities at a later date from the same party. Like
a forward commitment, during the roll period no payment is made
for the securities purchased and no interest or principal
payments on the security accrue to the purchaser, but the Fund
assumes the risk of ownership. The Fund is compensated for
entering into dollar roll transactions by the difference between
the current sales price and the forward price for the future
purchase, as well as by the interest earned on the cash proceeds
of the initial sale. Like other when-issued securities or firm
commitment agreements, dollar roll transactions involve the risk
that the market value of the securities sold by the Fund may
decline below the price at which a Fund is committed to purchase
similar securities. In the event the buyer of securities under a
dollar roll transaction becomes insolvent, the Fund's use of the
proceeds of the transaction may be restricted pending a
determination by the other party, or its trustee or receiver,
whether to enforce the Fund's obligation to repurchase the
securities. The Fund will engage in roll transactions for the
purpose of acquiring securities for its portfolio and not for
investment leverage. The Fund will limit its obligations on
dollar roll transactions to 35 percent of the Fund's net
assets.
Swap Agreements (Short Term High Quality Fund). To
manage its exposure to different types of investments, the Fund
may enter into interest rate, currency and mortgage (or other
asset) swap agreements and may purchase and sell interest rate
"caps," "floors" and "collars." In a typical interest rate swap
agreement, one party agrees to make regular payments equal to a
floating interest rate on a specified amount (the "notional
principal amount") in return for payments to a fixed interest
rate on the same amount for a specified period. If a swap
agreement provides for payment in different currencies, the
parties may also agree to exchange the notional principal amount.
Mortgage swap agreements are similar to interest rate swap
agreements, except that the notional principal amount is tied to
a reference pool of mortgages. In a cap or floor, one party
agrees, usually in return for a fee, to make payments under
particular circumstances. For example, the purchaser of an
interest rate cap has the right to receive payments to the extent
a specified interest rate exceeds an agreed upon level; the
purchaser of an interest rate floor has the right to receive
payments to the extent a specified interest rate falls below an
agreed upon level. A collar entitles the purchaser to receive
payments to the extent a specified interest rate falls outside an
agreed upon range.
Swap agreements may involve leverage and may be highly
volatile; depending on how they are used, they may have a
considerable impact on the Fund's performance. Swap agreements
involve risks depending upon the counterparties creditworthiness
and ability to perform as well as the Fund's ability to terminate
its swap agreements or reduce its exposure through offsetting
transactions. The Adviser monitors the creditworthiness of
counterparties to these transactions and intends to enter into
these transactions only when they believe the counterparties
present minimal credit risks and the income expected to be earned
from the transaction justifies the attendant risks.
Futures, Related Options and Options on Stock Indices
(Stock Appreciation Fund, and International Multi-Manager Fund).
Each Fund, except for the International Multi-Manager Fund, may
attempt to reduce the risk of investment in equity securities by
hedging a portion of its portfolio through the use of certain
futures transactions, options on futures traded on a board of
trade and options on stock indices traded on national securities
exchanges. The International Multi-Manager Fund has a
non-fundamental policy prohibiting it from purchasing or selling
call options or engaging in the writing of such options. Such
policy made may be changed without shareholder approval by a vote
of the majority of the Portfolio's Board of Trustees. Each Fund,
except for the International Multi-Manager Fund, may hedge a
portion of its portfolio by purchasing such instruments during a
market advance or when the Adviser anticipates an advance. In
attempting to hedge a portfolio, a Fund, except for the
International Multi-Manager Fund, may enter into contracts for
the future delivery of securities and futures contracts based on
a specific security, class of securities or an index, purchase or
sell options on any such futures contracts, and engage in related
closing transactions. Each Fund, except for the International
Multi-Manager Fund, will use these instruments primarily as a
hedge against changes resulting from market conditions in the
values of securities held in its portfolio or which it intends to
purchase.
A stock index assigns relative weighing to the common
stocks in the index, and the index generally fluctuates with
changes in the market values of these stocks. A stock index
futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock
index at the close of the last trading day of the contract and
the price at which the agreement is made. Each Fund, except for
the International Multi-Manager Fund, will sell stock index
futures only if the amount resulting from the multiplication of
the then current level of the indices upon which such futures
contracts are based, and the number of futures contracts which
would be outstanding, do not exceed one-third of the value of the
Fund's net assets.
When a futures contract is executed, each party deposits
with a broker or in a segregated custodial account up to 5% of
the contract amount, called the "initial margin," and during the
term of the contract, the amount of the deposit is adjusted based
on the current value of the futures contract by payments of
variation margin to or from the broker or segregated account.
In the case of options on stock index futures, the holder of
the option pays a premium and receives the right, upon exercise
of the option at a specified price during the option period, to
assume the option writer's position in a stock index futures
contract. If the option is exercised by the holder before the
last trading day during the option period, the option writer
delivers the futures position, as well as any balance in the
writer's futures margin account. If it is exercised on the last
trading day, the option writer delivers to the option holder cash
in an amount equal to the difference between the option exercise
price and the closing level of the relevant index on the date the
option expires. In the case of options on stock indexes, the
holder of the option pays a premium and receives the right, upon
exercise of the option at a specified price during the option
period, to receive cash equal to the dollar amount of the
difference between the closing price of the relevant index and
the option exercise price times a specified multiple, called the
"multiplier."
During a market decline or when the Adviser anticipates a
decline, each Fund, except the International Multi-Manager Fund,
may hedge a portion of its portfolio by selling futures contracts
or purchasing puts on such contracts or on a stock index in order
to limit exposure to the decline. This provides an alternative
to liquidation of securities positions and the corresponding
costs of such liquidation. Conversely, during a market advance
or when the Adviser anticipates an advance, each Fund may hedge a
portion of its portfolio by purchasing futures, options on these
futures or options on stock indices. This affords a hedge
against a Fund not participating in a market advance at a time
when it is not fully invested and serves as a temporary
substitute for the purchase of individual securities which may
later be purchased in a more advantageous manner. Each Fund will
sell options on futures and on stock indices only to close out
existing positions.
Interest Rate Futures Contracts (All Funds, except for
International Multi-Manager Fund). These Funds may, to a limited
extent, enter into interest rate futures contracts--i.e.,
contracts for the future delivery of securities or index-based
futures contracts--that are, in the opinion of the Adviser,
sufficiently correlated with the Fund's portfolio. These
investments will be made primarily in an attempt to protect a
Fund against the effects of adverse changes in interest rates
(i.e., "hedging"). When interest rates are increasing and
portfolio values are falling, the sale of futures contracts can
offset a decline in the value of a Fund's current portfolio
securities. The Funds will engage in such transactions primarily
for bona fide hedging purposes.
Options on Interest Rate Futures Contracts (All Funds,
except International Multi-Manager Fund). These Funds may
purchase put and call options on interest rate futures contracts,
which give a Fund the right to sell or purchase the underlying
futures contract for a specified price upon exercise of the
option at any time during the option period. Each Fund may also
write (sell) put and call options on such futures contracts. For
options on interest rate futures that a Fund writes, such Fund
will receive a premium in return for granting to the buyer the
right to sell to the Fund or to buy from the Fund the underlying
futures contract for a specified price at any time during the
option period. As with futures contracts, each Fund will purchase
or sell options on interest rate futures contracts primarily for
bona fide hedging purposes.
Foreign Exchange Contracts (International Multi-Manager
Fund). Changes in foreign currency exchange rates will affect
the U.S. dollar values of securities denominated in currencies
other than the U.S. dollar. The rate of exchange between the
U.S. dollar and other currencies fluctuates in response to forces
of supply and demand in the foreign exchange markets. These
forces are affected by the international balance of payments and
other economic and financial conditions, government intervention,
speculation and other factors. When investing in foreign
securities, the Portfolio usually effects currency exchange
transactions on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign exchange market. The Portfolio incurs
foreign exchange expenses in converting assets from one currency
to another.
The Portfolio may enter into foreign currency forward
contracts or currency futures for the purchase or sale of foreign
currency to "lock in" the U.S. dollar price of the securities
denominated in a foreign currency or the U.S. dollar value of
interest and dividends to be paid on such securities, or to hedge
against the possibility that the currency of a foreign country in
which the Portfolio has investments may suffer a decline against
the U.S. dollar. A forward currency contract is an obligation to
purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed
upon by the parties, at a price set at the time for the contract.
This method of attempting to hedge the value of the Portfolio's
portfolio securities against a decline in the value of a currency
does not eliminate fluctuations in the underlying prices of the
securities. Although the strategy of engaging in foreign currency
transactions could reduce the risk of loss due to a decline in
the value of the hedged currency, it could also limit the
potential gain from an increase in the value of the currency.
The Portfolio does not intend to maintain a net exposure to such
contracts where the fulfillment of the Portfolio's obligations
under such contracts would obligate the Portfolio to deliver an
amount of foreign currency in excess of the value of the
Portfolio's portfolio securities or other assets denominated in
the currency. The Portfolio will not enter into these contracts
for speculative purposes and will not enter into non hedging
currency contracts. These contracts involve a risk of loss if
the Portfolio Advisers fail to predict currency values
correctly.
Risks of Options and Futures Contracts. One risk involved
in the purchase and sale of futures and options is that a Fund
may not be able to effect closing transactions at a time when it
wishes to do so. Positions in futures contracts and options on
futures contracts may be closed out only on an exchange or board
of trade that provides an active market for them, and there can
be no assurance that a liquid market will exist for the contract
or the option at any particular time. To mitigate this risk, each
Fund will ordinarily purchase and write options only if a
secondary market for the options exists on a national securities
exchange or in the over-the-counter market. Another risk is that
during the option period, if a Fund has written a covered call
option, it will have given up the opportunity to profit from a
price increase in the underlying securities above the exercise
price in return for the premium on the option (although the
premium can be used to offset any losses or add to a Fund's
income) but, as long as its obligation as a writer continues,
such Fund will have retained the risk of loss should the price of
the underlying security decline. Investors should note that
because of the volatility of the market value of the underlying
security, the loss from investing in futures transactions is
potentially unlimited. In addition, a Fund has no control over
the time when it may be required to fulfill its obligation as a
writer of the option. Once a Fund has received an exercise
notice, it cannot effect a closing transaction in order to
terminate its obligation under the option and must deliver the
underlying securities at the exercise price.
The Funds' successful use of stock index futures contracts,
options on such contracts and options on indices depends upon the
ability of the Adviser to predict the direction of the market and
is subject to various additional risks. The correlation between
movements in the price of the futures contract and the price of
the securities being hedged is imperfect and the risk from
imperfect correlation increases in the case of stock index
futures as the composition of the Funds' portfolios diverge from
the composition of the relevant index. Such imperfect
correlation may prevent the Funds from achieving the intended
hedge or may expose the Funds to risk of loss. In addition, if
the Funds purchase futures to hedge against market advances
before they can invest in common stock in an advantageous manner
and the market declines, the Funds might create a loss on the
futures contract. Particularly in the case of options on stock
index futures and on stock indices, the Funds' ability to
establish and maintain positions will depend on market liquidity.
The successful utilization of options and futures transactions
requires skills different from those needed in the selection of
the Funds' portfolio securities. The Funds believe that the
Adviser possesses the skills necessary for the successful
utilization of such transactions.
The Funds are permitted to engage in bona fide hedging
transactions (as defined in the rules and regulations of the
Commodity Futures Trading Commission) without any quantitative
limitations. Futures and related option transactions which are
not for bona fide hedging purposes may be used provided the total
amount of the initial margin and any option premiums attributable
to such positions does not exceed 5% of each Fund's liquidating
value after taking into account unrealized profits and unrealized
losses, and excluding any in-the-money option premiums paid. The
Funds will not market, and are not marketing, themselves as
commodity pools or otherwise as vehicles for trading in futures
and related options. The Funds will segregate liquid assets such
as cash, U.S. Government securities or other liquid high grade
debt obligations to cover the futures and options.
"When Issued" and "Forward Commitment" Transactions (All
Funds). The Funds may purchase securities on a when issued and
delayed delivery basis and may purchase or sell securities on a
forward commitment basis. When issued or delayed delivery
transactions arise when securities are purchased by a Fund with
payment and delivery taking place in the future in order to
secure what is considered to be an advantageous price and yield
to the Fund at the time of entering into the transaction. A
forward commitment transaction is an agreement by a Fund to
purchase or sell securities at a specified future date. When a
Fund engages in these transactions, the Fund relies on the buyer
or seller, as the case may be, to consummate the sale. Failure
to do so may result in the Fund missing the opportunity to obtain
a price or yield considered to be advantageous. When issued and
delayed delivery transactions and forward commitment transactions
may be expected to occur a month or more before delivery is due.
However, no payment or delivery is made by a Fund until it
receives payment or delivery from the other party to the
transaction. A separate account containing only liquid assets
such as cash, U.S. Government securities, or other liquid high
grade debt obligations equal to the value of purchase commitments
will be maintained until payment is made. Such securities have
the effect of leverage on the Funds and may contribute to
volatility of a Fund's net asset value. For further information,
see the SAI.
Loans of Portfolio Securities (All Funds). To increase
current income, each Fund may lend its portfolio securities in an
amount up to 33 % of each such Fund's total assets to brokers,
dealers and financial institutions, provided certain conditions
are met, including the condition that each loan is secured
continuously by collateral maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of
the securities loaned. These transactions involve a loan by the
applicable Fund and are subject to the same risks as repurchase
agreements. For further information, see the SAI.
Repurchase Agreements (All Funds). The Funds may enter into
repurchase agreements with any bank and broker-dealer which, in
the opinion of the Trustees, presents a minimal risk of
bankruptcy. Under a repurchase agreement a Fund acquires
securities and obtains a simultaneous commitment from the seller
to repurchase the securities at a specified time and at an agreed
upon yield. The agreements will be fully collateralized and the
value of the collateral, including accrued interest,
marked-to-market daily. The agreements may be considered to be
loans made by the purchaser, collateralized by the underlying
securities. If the seller should default on its obligation to
repurchase the securities, a Fund may experience a loss of income
from the loaned securities and a decrease in the value of any
collateral, problems in exercising its rights to the underlying
securities and costs and time delays in connection with the
disposition of securities. The Money Market Fund may not invest
more than 10% and the Non-Money Market Funds may not invest more
than 15% of its net assets in repurchase agreements maturing in
more than seven business days or in securities for which market
quotations are not readily available. For more information about
repurchase agreements, see "Investment Policies" in the SAI.
Reverse Repurchase Agreements (All Funds). The Funds may
also enter into reverse repurchase agreements to avoid selling
securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a
segregated account in which it will maintain liquid assets in an
amount at least equal to the repurchase price marked to market
daily (including accrued interest), and will subsequently monitor
the account to ensure that such equivalent value is maintained.
The Fund pays interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
Risks of Techniques Involving Leverage. Utilization of
leveraging involves special risks and may involve speculative
investment techniques. Certain Funds may borrow for other than
temporary or emergency purposes, lend their securities, enter
reverse repurchase agreements, and purchase securities on a when
issued or forward commitment basis. In addition, certain Funds
may engage in dollar roll transactions. Each of these
transactions involve the use of "leverage" when cash made
available to the Fund through the investment technique is used to
make additional portfolio investments. The Funds use these
investment techniques only when the Adviser believes that the
leveraging and the returns available to the Fund from investing
the cash will provide shareholders a potentially higher
return.
Leverage exists when a Fund achieves the right to a
return on a capital base that exceeds the investment the Fund has
invested. Leverage creates the risk of magnified capital losses
which occur when losses affect an asset base, enlarged by
borrowings or the creation of liabilities, that exceeds the
equity base of the Fund. Leverage may involve the creation of a
liability that requires the Fund to pay interest (for instance,
reverse repurchase agreements) or the creation of a liability
that does not entail any interest costs (for instance, forward
commitment transactions).
The risks of leverage include a higher volatility of the
net asset value of the Fund's shares and the relatively greater
effect on the net asset value of the shares caused by favorable
or adverse market movements or changes in the cost of cash
obtained by leveraging and the yield obtained from investing the
cash. So long as a Fund is able to realize a net return on its
investment portfolio that is higher than interest expense
incurred, if any, leverage will result in higher current net
investment income being realized by the Fund than if the Fund
were not leveraged. On the other hand, interest rates change
from time to time as does their relationship to each other
depending upon such factors as supply and demand, monetary and
tax policies and investor expectations. Changes in such factors
could cause the relationship between the cost of leveraging and
the yield to change so that rates involved in the leveraging
arrangement may substantially increase relative to the yield on
the obligations in which the proceeds of the leveraging have been
invested. To the extent that the interest expense involved in
leveraging approaches the net return on the Fund's investment
portfolio, the benefit of leveraging will be reduced, and, if the
interest expense on borrowings were to exceed the net return to
shareholders, the Fund's use of leverage would result in a lower
rate of return than if the Fund were not leveraged. Similarly,
the effect of leverage in a declining market could be a greater
decrease in net asset value per share than if the Fund were not
leveraged. In an extreme case, if the Fund's current investment
income were not sufficient to meet the interest expense of
leveraging, it could be necessary for the Fund to liquidate
certain of its investments at an inappropriate time. The use of
leverage may be considered speculative.
Portfolio Turnover. The Funds generally will not engage
in the trading of securities for the purpose of realizing
short-term profits, but each Fund will adjust its portfolio as it
deems advisable in view of prevailing or anticipated market
conditions or fluctuations in interest rates to accomplish its
respective investment objective. For example, each Fund may sell
portfolio securities in anticipation of an adverse market movement.
Other than for tax purposes, frequency of portfolio turnover will
not be a limiting factor if a Fund considers it advantageous to
purchase or sell securities. The Funds do not anticipate that
the respective annual portfolio turnover rates will exceed the
following: Short Term High Quality Fund, 400%; Intermediate Bond
Income Fund, 500%; Stock Appreciation Fund, 150%; and
International Multi-Manager Fund, 100%. A high rate of portfolio
turnover involves correspondingly greater transaction expenses
than a lower rate, which expenses must be borne by each Fund and
its shareholders. High portfolio turnover rates may also make it
more difficult for the Funds to satisfy the requirement for
qualification as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), that less
than 30% of each Funds' gross income in any tax year be derived
from gains on the sale of securities held for less than less than
three months.
INVESTMENT RESTRICTIONS
(All Funds, except as indicated)
The Funds also operate under certain investment
restrictions. Certain of the Funds' investment restrictions are
not listed below. For a complete list of the Funds' investment
restrictions, see the section in the Funds' SAI entitled
"Investment Restrictions." Investment restriction Nos. 2,3,4 and
5 are fundamental policies of the Funds, which can be changed
only when permitted by law and approved by a majority of the
Funds' outstanding voting securities. A "majority of the
outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented in person or by proxy or (ii)
more than 50% of the outstanding shares. See "Other Information
- --Voting". Investment Restriction No. 1 is a non fundamental
policy of the Funds and can be changed by approval of a majority
of the Board of Trustees.
(1) No Fund may invest more than 15% (10% with respect to
the Money Market Fund) of the aggregate value of its net assets
in investments which are illiquid, or not readily marketable
(including repurchase agreements having maturities of more than
seven calendar days, time deposits having maturities of more than
seven calendar days, and securities of foreign issuers that are
not listed on a recognized domestic or foreign securities
exchange).
(2) No Fund may borrow money or pledge or mortgage its
assets, except that a Fund may enter into reverse repurchase
agreements or borrow from banks up to 33 1/3% (10% with respect
to the International Multi-Manager Fund) of the current value of
its total net assets for temporary or emergency purposes or to
meet redemptions, each Fund (except the International Multi-Manager
Fund) has adopted a non-fundamental policy to limit such
borrowing to 10% of its net assets and those borrowings may be
secured by the pledge of not more than 15% of the current value
of that Fund's total net assets (but investments may not be
purchased by a Fund while any such borrowings exist).
(3) No Fund may make loans, except loans of portfolio
securities and except that a Fund may enter into repurchase
agreements with respect to its portfolio securities and may
purchase the types of debt instruments described in this
Prospectus.
(4) No Fund may invest more than 25% of its total
assets in the securities of any one industry, excluding the Cash
Reserve Money Market Fund which will invest more than 25% of its
total assets in instruments issued by the domestic banking
industry. For this purpose, U.S. Government securities (and
repurchase agreements related thereto) are not considered
securities of a single industry.
(5) No Fund will, with respect to 75% of its total assets,
invest more than 5% of its total assets in the securities of any
one issuer (except for U.S. Government securities), or purchase
more than 10% of the outstanding voting securities of any such
issuer. The Money Market Fund is subject to these
diversification requirements with respect to 100% of its assets.
If a percentage restriction on investment policies or the
investment or use of assets set forth in this Prospectus are
adhered to at the time a transaction is effected, later changes
in percentage resulting from changing asset values will not be
considered a violation.
As a matter of Fundamental Policy, notwithstanding any
limitation, each Fund is authorized to seek to achieve its
investment objective by investing all of its investable assets in
an investment company having substantially the same investment
objective and policies as the Fund.
RISKS OF INVESTING IN THE FUNDS
Certain Risk Considerations
The Money Market Fund attempts to maintain a constant net
asset value of $1.00 per share, although there can be no
assurance that the Money Market Fund will always be able to do
so. The Money Market Fund may not achieve as high a level of
current income as other funds that do not limit their investment
to the high quality securities in which the Money Market Fund
invests.
The Money Market Fund's Policy of concentrating in the
domestic banking industry could increase the Fund's exposure to
economic or regulatory developments relating to or affecting
banks. Banks are subject to extensive governmental regulation
which may limit both the amounts and types of loans and other
financial commitments they can make and the interest rates and
fees they can charge. The financial condition of banks is
largely dependent on the availability and cost of capital funds,
and can fluctuate significantly when interest rates change. In
addition, general economic conditions may affect the financial
condition of banks.
The price per share of each of the other Funds will
fluctuate with changes in value of the investments held by the
Fund. For example, the value of a bond Fund's shares will
generally fluctuate inversely with the movements in interest
rates and a stock Fund's shares will generally fluctuate as a
result of numerous factors, including but not limited to
investors' expectations about the economy and corporate earnings
and interest rates. Shareholders of a Fund should expect the
value of their shares to fluctuate with changes in the value of
the securities owned by that Fund. Additionally, a Fund's
investment in smaller companies may involve greater risks than
investments in large companies due to such factors as limited
product lines, markets and financial or managerial resources, and
less frequently traded securities that may be subject to more
abrupt price movements than securities of larger companies.
There is, of course, no assurance that a Fund will achieve
its investment objective or be successful in preventing or
minimizing the risk of loss that is inherent in investing in
particular types of investment products. In order to attempt to
minimize that risk, the Adviser monitors developments in the
economy, the securities markets, and with each particular issuer.
Also, as noted earlier, each diversified Fund is managed within
certain limitations that restrict the amount of a Fund's
investment in any single issuer.
Foreign Securities (All Funds). Investing in the
securities of issuers in any foreign country, including ADRs and
EDRs, involves special risks and considerations not typically
associated with investing in U.S. companies. These include
differences in accounting, auditing and financial reporting
standards; generally higher commission rates on foreign portfolio
transactions; the possibility of nationalization, expropriation
or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political
instability which could affect U.S. investments in foreign
countries. Additionally, foreign securities and dividends and
interest payable on those securities may be subject to foreign
taxes, including taxes withheld from payments on those
securities. Foreign securities often trade with less frequency
and volume than domestic securities and, therefore, may exhibit
greater price volatility. Additional costs associated with an
investment in foreign securities may include higher custodial
fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in
foreign exchange rates also will affect the value of securities
denominated or quoted in currencies other than the U.S. dollar
and, with respect to the Money Market Fund, may affect the
ability to maintain net asset value. A Fund's objectives may be
affected either unfavorably or favorably by fluctuations in the
relative rates of exchange between the currencies of different
nations, by exchange control regulations and by indigenous
economic and political developments. Through a Fund's policies,
management endeavors to avoid unfavorable consequences and to
take advantage of favorable developments in particular nations
where, from time to time, it places a Fund's investments. See
the SAI for further information about foreign securities.
Small Capitalization Stocks (Stock Appreciation Fund).
Small capitalization stocks are more volatile than larger
capitalization stocks. The Fund may invest in relatively new or
unseasoned companies, which are in their early stages of
development, or small companies positioned in new and emerging
industries. Securities of small and unseasoned companies present
greater risks than securities of larger, more established
companies. The companies in which the Fund may invest may have
relatively small revenues and limited product lines, and may have
a small share of the market for their products or services.
Small companies may lack depth of management. They may be unable
to internally generate funds necessary for growth or potential
development or to generate such funds through external financing
on favorable terms. They may be developing or marketing new
products or services for which markets are not yet established
and may never become established. Due to these and other
factors, small companies may incur significant losses, and
investments in such companies are therefore speculative.
Certain Risks of Investing in the International Multi-Manager
Fund
The International Multi-Manager Fund's investment in the
Portfolio may be affected by the actions of other large investors
in the Portfolio, if any. For example, if the Portfolio had a
large investor other than the International Multi-Manager Fund
that redeemed its interest in the Portfolio, the Portfolio's
remaining investors (including the International Multi-Manager
Fund) might, as a result, experience higher pro rata operating
expenses, thereby producing lower returns.
The International Multi-Manager Fund may withdraw its
entire investment from the Portfolio at any time, if the Board
determines that it is in the best interests of the International
Multi-Manager Fund and its shareholders to do so. The
International Multi-Manager Fund might withdraw, for example, if
there were other investors in the Portfolio with power to, and
who did by a vote of the shareholders of all investors (including
the International Multi-Manager Fund), change the investment
objective or policies of the Portfolio in a manner not acceptable
to the Board. A withdrawal could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution)
by the Portfolio. That distribution could result in a less
diversified portfolio of investments for the International
Multi-Manager Fund and could affect adversely the liquidity of the
International Multi-Manager Fund's portfolio. If the
International Multi-Manager Fund decided to convert those
securities to cash, it usually would incur brokerage fees or
other transaction costs. If the International Multi-Manager Fund
withdrew its investment from the Portfolio, the Board would
consider what action might be taken, including the management of
the International Multi-Manager Fund's assets in accordance with
its investment objective and policies by the Adviser or the
investment of all of the International Multi-Manager Fund's
investable assets in another pooled investment entity having
substantially the same investment objective as the International
Multi-Manager Fund. The inability of the International
Multi-Manager Fund to find a suitable replacement investment, in
the event the Board decided not to permit the Adviser to manage the
International Multi-Manager Fund's assets, could have a
significant impact on shareholders of the International
Multi-Manager Fund.
Each investor in the Portfolio, including the
International Multi-Manager Fund, will be liable for all
obligations of the Portfolio, but not any other portfolio of AMR
Trust. The risk to an investor in the Portfolio of incurring
financial loss on account of such liability, however, would be
limited to circumstances in which the Portfolio was unable to
meet its obligations. Upon liquidation of the Portfolio,
investors would be entitled to share pro rata in the net assets
of the Portfolio available for distribution to investors.
Investors should be aware that the Fund, unlike mutual
funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by
investing all of its investable assets in a corresponding
Portfolio of the AMR Trust, which is a separate investment
company. Since the Fund will invest only in the Portfolio, the
Fund's shareholders will acquire only an indirect interest in the
investments of the Portfolio. Historically, the Manager has
sponsored traditionally structured funds and, therefore, has
limited experience with funds that invest all their assets in a
separate portfolio.
In addition to selling its interests to the Fund, the
Portfolio may sell its interests to other non-affiliated
investment companies and/or other institutional investors. All
institutional investors in the Portfolio will pay a proportionate
share of the Portfolio's expenses and will invest in that
Portfolio on the same terms and conditions. However, if another
investment company invests all of its assets in a Portfolio, it
would not be required to sell its shares at the same public
offering price as a Fund and would be allowed to change different
sales commissions. Therefore, investors in a Fund may experience
different returns from investors in another investment company
that invests exclusively in that Fund's corresponding
Portfolio.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the
direction of the Board of Trustees. Information about the
Trustees, as well as the Trust's executive officers, may be found
in the SAI under the heading "Management--Trustees and Officers."
The Adviser: INTRUST Bank, N.A.
INTRUST Bank, N.A. in Wichita, formerly First National Bank in
Wichita (the "Adviser"), serves as the Funds' investment adviser
under an advisory agreement with the Trust (the "Advisory
Agreement"). Under the Advisory Agreement, the Adviser invests
the assets of the portfolio, and continuously reviews, supervises
and administers the Portfolio's investment program. The Adviser
discharges its responsibilities subject to the supervision of,
and policies set by, the Trustees of the Trust.
The Adviser is a majority-owned subsidiary of INTRUST
Financial Corporation (formerly First Bancorp of Kansas), a bank
holding company. The Adviser is a national banking association
which provides a full range of banking and trust services to
clients. As of September 30, 1996, total assets under management
were approximately $1.17 billion. The principal place of
business address of the Adviser is 105 North Main Street, Box
One, Wichita, Kansas 67201.
For the advisory services it provides to the Funds, INTRUST
receives fees based on average daily net assets up to the
following annualized rates: Cash Reserve Money Market Fund,
0.25%; Short-Term High Quality Fund, 0.40%; Intermediate Bond
Income Fund, 0.40%; Stock Appreciation Fund, 1.00% and
International Multi-Manager Fund, 1.25%.
Subadvisers:
AMR Investment Services, Inc. AMR, located at 4333 Amon
Carter Boulevard, MD 5645, Fort Worth, Texas 76155, is a
wholly-owned subsidiary of AMR Corporation, the parent company of
American Airlines, Inc., and was organized in 1986 to provide
business management, advisory, administrative and asset
management consulting services. American Airlines, Inc. is not
responsible for investments made by AMR. As of September 30,
1996, AMR provides investment advice with respect to
approximately $15.3 billion in assets, including approximately
$10.8 billion of assets on behalf of AMR Corporation and its
primary subsidiary, American Airlines, Inc. For the subadvisory
services it provides to the Cash Reserve Money Market Fund, AMR
receives from the Adviser and not the Funds monthly fees based
upon average daily net assets at the annual rate of 0.20%.
The Cash Reserve Money Market Fund is substantially identical
to the American AAdvantage Money Market Fund. Set forth below
are certain performance data for the Institutional Clas of the
American AAdvantage Money Market Fund. The data shown below
reflects total return for the periods shown, reduced by the
actual expense ratio for such Fund. To the extent such Fund had
expense waivers on reimbursements in effect during the periods
indicated below, such Funds actual performance would have been
lower had such expense waivers or reimbursements not been in
effect. INTRUST Fund fees and expenses may be higher than such
expenses and if applied would have reduced the performance below.
This performance information is deemed relevant since the
American AAdvantage Money Market Fund has been managed using the
same investment objectives, policies and restrictions and
portfolio managers as those to be used by INTRUST Cash Reserve
Money Market Fund. However, this performance data is not
necessarily indicative of the past or future performance of any
of the INTRUST Funds. The American AAdvantage Money Market Fund
and the INTRUST Cash Reserve Money Market Fund are separate
funds. This performance does not represent the past performance
of the INTRUST Cash Reserve Money Market Fund, which is newly
organized and has no performance of its own.
AMERICAN AADVANTAGE MONEY MARKET FUND ANNUALIZED TOTAL RETURN
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
Lipper Institutional Money
Market Index
1 Year 5.6% 5.27%
3 Years 5.06% 4.77%
5 Years 4.62% 4.27%
Since Inception (9/1/87) 6.20% 5.85%
Galliard Capital Management Galliard Capital Management,
Inc. is sub-adviser to the Short Term High Quality Fund and the
Intermediate Bond income Fund. Galliard, a wholly owned
subsidiary of Norwest Bank Minnesota, was formed July 1, 1995 to
specialize in the management of institutional fixed income
portfolios. Karl Tourville and Richard Merriam are co-managers
of the Short Term High Quality Fund and the Intermediate Bond
Income Fund. In his 12 year career in Washington Square Capital
Management, Inc. (A subsidiary of Northwestern National Life
Insurance Company) Galliard Principal Richard Merriam was manager
of the Marketable Security Group which employed a similar fixed
income style with great success. Karl Tourville, formerly head
of Fixed Income at Norwest Investment Management, similarly
developed an outstanding track record as a fixed income manager
in his nine year career with Norwest. For the subadvisory
services it provides to the Short Term High Qualify Fund and
Intermediate Bond Income Fund, Galliard receives from the Adviser
and not the Funds, monthly fees based upon daily net assets at
the annual rate of 0.125% and 0.125%, respectively.
Galliard Capital Management, Inc. is sub-adviser to the
Intermediate Bond Income Fund. The investment returns below are
actual returns of Galliard's Intermediate Core Composite of
separate accounts which are managed in an investment style
substantially the same as the Intermediate Bond Income Fund. To
the extent Galliard's corporate returns reflect expense waivers
or reimbursements, actual performance would have been lower had
such expense waivers or reimbursements not been in effect.
Galliard's first full year of investment results are consistent
with prior results generated by the firm's Principals in this
management approach which is designed to consistently outperform
a stated benchmark.
GALLIARD COMPOSITE RETURNS
Lehman Brothers Intermediate
Government Corporate Index
1 Year (ended September 30, 1996) 4.80% 5.13%
Galliard composites are calculated weighing the market value
of each component. Accounts are placed in a composite at the end
of the first full calendar quarter following their inception or
as agreed upon by the client. All composites are calculated net
of estimated INTRUST Intermediate Bond Income Fund's
Institutional Service Class fees as set forth in the Fee Table in
this Prospectus. Private accounts are not subject to certain
investment limitations, diversification requirements, and other
restrictions imposed by the 1940 Act and the Internal Revenue
Code which, if applicable, may have adversely affected
performance. As a result, portfolio management strategies used
on Composites and those for the Fund may vary. This performance
does not represent historical performance of the INTRUST Short
Term High Quality Fund or Intermediate Bond Income Fund which are
newly organized and have no performance of their own. This
performance should not be interpreted as indicative of future
performance of any INTRUST Funds, which may be higher or lower
than that shown. Past performance is no guarantee of future
results.
ARK Asset Management
Ark Asset Management Co., Inc. ("Ark") serves as Sub-adviser
to the Stock Appreciation Fund. Located in New York, Ark's
predecessor was established in 1929 as the private money
management division of Lehman Brothers. In 1989, the division
became an independent company when the employees purchased the
institutional money management business from Lehman Brothers. As
of September 30, 1996, Ark managed approximately $22.6 billion,
including $12.4 billion in large capitalization value portfolios,
for more than 260 institutional and individual clients, with a
minimum investment size for private accounts of $50 million. For
the subadvisory services it provides to the Stock Appreciation
Fund, Ark receives, from the Adviser and not the Funds, monthly
fees based upon daily net assets at the annual rate of 0.45%.
The following chart describes the investment personnel with Ark
primarily responsible for the Fund:
Years Experience
Investment
Individual/Title with Ark Education Experience
Recent Experience
C. Charles Hatzel
Vice Chairman 30 Ark or Ark's
predecessor 30
John E. Bailey 15 Ark 2
Managing Director Loomis, Sayles 9
Steven M. Steiner 26 Ark 5
Managing Director Equitable Life 9
Wm. G. Steuernagel 23 Ark or Ark's
Managing Director predecessor 10
The table that follows presents performance data for the
large cap value Product. Information presented is based on
performance data provided by each ARK portfolio manager for
accounts ("Accounts") it manages that have investment objectives,
policies, styles and strategies substantially similar to the ones
that will be employed in the INTRUST Stock Appreciation Fund.
The information does not represent the Stock Appreciation Fund's
performance, as it is newly organized and has no performance
record of its own. The Accounts are primarily managed for
tax-exempt investors, and are not subject to diversification and
other requirements that apply to mutual funds under applicable
securities, tax and other laws that, if applicable, may have
adversely affected performance. As a result, portfolio
management strategies used on the Accounts and those used on the
Stock Appreciation Fund may vary in some respects. The
information should not be considered a prediction of the future
performance of the Stock Appreciation Fund. The actual
performance may be higher or lower than that shown.
The table shows the total returns for various periods
ended September 30, 1996, of the large cap value Product as
compared to a relevant unmanaged market index. To the extent
expense waivers or reimbursements were in effect during the
period indicated below, actual returns would have been lower had
such expense waivers or reimbursements not been in effect. The
performance shown below is adjusted to give effect to the
projected annual expenses for the Stock Appreciation Fund's
Institutional Service Class shares during its initial fiscal
period as set forth in the Fee Table in this Prospectus.
Annualized Rates of Return for
Periods Ending September 30, 1996
ARK S&P 500 Index
1 Year 19.32% 20.33%
3 Years 18.20% 15.23%
5 Years 16.50% 15.23%
10 Years 15.25% 14.99%
Since Inception
4/1/95 16.28% 15.95%
International Equity Portfolio
AMR serves as investment manager and administrator to the
Portfolio. Hotchkis and Wiley, Morgan Stanley Asset Management
Inc. and Templeton Investment Counsel, Inc. currently serve as
investment advisers to the Portfolio. Fleming is also an
investment adviser of the Portfolio; however, none of the
Portfolio's assets have been allocated to Fleming at this
time.
The investment advisory fees payable to AMR by the AMR Trust
are 0.43% of the average annual daily net assets of the
Portfolio. The investment advisory agreement for the
International Multi-Manager Fund provides for an investment
advisory fee payable to INTRUST by the Trust of 1.25% of the
average annual daily net assets of the Fund. All investment
advisory fees are accrued daily and paid monthly.
Except for AMR, none of the Portfolio Advisers provide
any services to the Portfolio except for portfolio investment
management and related recordkeeping services.
William F. Quinn has served as President of AMR since it
was founded in 1986 and Nancy A. Eckl currently serves as Vice
President-Trust Investments of AMR. Ms. Eckl previously served
as Vice President-Finance and Compliance of AMR from December
1990 to May 1995. In these capacities, Mr. Quinn and Ms. Eckl
have primary responsibility for the day-to-day operations of the
Portfolio. These responsibilities include oversight of the
Portfolio Advisers, regular review of each Portfolio Adviser's
performance and asset allocations among Portfolio Advisers.
Hotchkis and Wiley, 800 West Sixth Street, 5th Floor, Los
Angeles, California 90017, is a professional investment
counseling firm which was founded in 1980 by John F. Hotchkis and
George Wiley. Hotchkis and Wiley is a division of Merrill Lynch
Capital Management Group, a wholly-owned subsidiary of Merrill
Lynch & Co., Inc. Assets under management as of December 31,
1995, were approximately $9.0 billion, which included
approximately $988 million of assets of AMR Corporation and its
subsidiaries and affiliated entities. Hotchkis and Wiley also
serves as an investment adviser to the Balanced Portfolio and the
Growth and Income Portfolio of the AMR Trust. The advisory
contract provides for AMR to pay Hotchkis and Wiley an annualized
fee equal to 0.60% of the first $10 million of assets under its
discretionary management, .50% of the next $140 million of
assets, 0.30% on the next $50 million of assets and 0.20% of all
excess AMR Trust assets managed by Hotchkis and Wiley.
Morgan Stanley Asset Management Inc., 1221 Avenue of the
Americas, New York, New York 10020, is a wholly owned subsidiary
of Morgan Stanley Group Inc. MSAM provides portfolio management
and named fiduciary services to taxable and nontaxable
institutions, international organizations and individuals
investing in United States and international equity and debt
securities. As of September 30, 1995, MSAM had assets under
management totaling approximately $55.2 billion, including
approximately $40.1 billion under active management and $15.1
billion as named fiduciary or fiduciary adviser. As of December
31, 1995, MSAM had investment authority over approximately $404
million of assets of AMR Corporation and its subsidiaries and
affiliated entities. For its services, AMR pays MSAM an annual
fee equal to .80% of the first $25 million in AMR Trust assets
under its discretionary management, .60% of the next $25 million
in assets, .50% of the next $24 million in assets and .40% on all
excess assets.
Rowe Price-Fleming International, Inc. , 100 East Pratt
Street, Baltimore, Maryland 21020, is a professional investment
counseling firm founded in 1979. Fleming is a joint venture
owned entirely by its three parent companies. T. Rowe Price,
Robert Fleming and Jardine Fleming. As of December 31, 1995,
Fleming had assets under management totaling approximately $22.2
billion, including approximately $197 million of assets of AMR
and its subsidiaries and affiliates entities. Fleming serves as
an investment adviser to the Portfolio, although AMR does not
presently intend to allocate assets from the Portfolio to
Fleming. For its services to the Portfolio when total assets
under Fleming's management are less than $200 million, AMR will
pay Fleming an annualized fee equal to 0.75% of the first $20
million, 0.60% of the next $30 million and 0.50% on amounts over
$50 million. When assets under Fleming's management exceed $200
million but are less than $500 million, AMR will pay Fleming an
annualized fee equal to 0.50% on all assets. When assets under
Fleming's management exceed $500 million but are less than $750
million, AMR will pay an annualized fee equal to 0.45% on all
assets, and when assets exceed $750 million, AMR will pay Fleming
a flat fee of 0.40% on all assets. When asset levels are between
$184 million and $200 million, Fleming will credit AMR with an
adjustment for the difference between the two fee schedules. The
credit is determined by pro-rating the difference between the
original tiered fee and the flat fee ($80,000 per annum at all
asset levels) over the difference between $200 million and the
current asset size for billing purposes.
Templeton Investment Counsel, Inc. , 500 East Broward
Blvd., Suite 2100, Fort Lauderdale, Florida 33394-3091, is a
professional investment counseling firm which has been providing
investment services since 1979. Templeton is indirectly owned by
Franklin Resources, Inc. As of December 31, 1995, Templeton had
discretionary investment management authority with respect to
approximately $14.4 billion of assets, including approximately
$288 million of assets of AMR Corporation and its subsidiaries
and affiliated entities. For its services, AMR pays Templeton an
annualized fee equal to .50% of the first $100 million in AMR
Trust assets under its discretionary management, .35% of the next
$50 million in assets, .30% of the next $250 million in assets
and .25% on assets over $400 million.
The AMR Trust and AMR also entered into a Management
Agreement dated October 1, 1995 that obligates AMR to provide or
oversee all administrative, investment advisory and portfolio
management services for the AMR Trust.
Solely for the purpose of determining the applicable
percentage rates when calculating the fees for each Portfolio
Adviser other than MSAM, there shall be included all other assets
or trust assets of American Airlines, Inc. also under management
by each respective Portfolio Adviser. For the purpose of
determining the applicable percentage rates when calculating
MSAM's fees, all equity account assets managed by MSAM on behalf
of American Airlines, Inc. shall be included. The inclusion of
any such assets will result in lower overall fee rates being
applied to the Portfolio.
Based upon the advice of counsel, INTRUST believes that the
performance of investment advisory services for the Funds will
not violate the Glass-Steagall Act or other applicable banking
laws or regulations. However, future statutory or regulatory
changes, as well as future judicial or administrative decisions
and interpretations of present and future statutes and
regulations, could prevent INTRUST from continuing to perform
such services for the Funds. If INTRUST were prohibited from
acting as investment adviser to the Funds, it is expected that
the Board of Trustees would recommend to shareholders approval of
a new investment advisory agreement with another qualified
investment adviser selected by the Board or that the Board would
recommend other appropriate action.
The Sponsor and Distributor
BISYS, the Funds' Sponsor and Distributor (the
"Distributor"), has its principal office at 3435 Stelzer Road,
Columbus, Ohio 43219. The Distributor will receive orders for,
sell, and distribute shares of the Fund. BISYS also serves as
administrator and distributor of other mutual funds
The Distributor may from time to time pay a bonus or
other incentive to dealers that employ registered representatives
who sell a minimum dollar amount of shares of the Funds. Such
bonus or other incentive may take the form of payment for travel
expenses, including lodging, incurred in connection with trips
taken by qualifying registered representatives and members of
their families to places within or without the United States, or
other bonuses, such as gift certificates or the cash equivalent
of such bonuses.
The Funds have adopted a Rule 12b-1 Distribution Plan and
Agreement (the "Plan") pursuant to which the Funds may reimburse
the Distributor, or others, on a monthly basis for costs and
expenses incurred by the Distributor in connection with the
distribution and marketing of shares of the Funds. These costs
and expenses, which are subject to a maximum limit of 0.25% per
annum of the average daily net assets of the shares of the Funds,
include: (i) advertising by radio, television, newspapers,
magazines, brochures, sales literature, direct mail or any other
form of advertising; (ii) expenses of employees or agents of the
Distributor, including salary, commissions, travel and related
expenses; (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of
shares, including promotional incentives and fees calculated with
reference to the average daily net asset value of shares held by
shareholders who have a brokerage or other service relationship
with the broker-dealer or other institution receiving such fees;
(iv) costs of printing prospectuses, statements of additional
information and other materials to be given or sent to
prospective investors; (v) such other similar services as the
Trustees determine to be reasonably calculated to result in sales
of shares of the Funds; (vi) costs of shareholder servicing
incurred by broker-dealers, banks or other financial
institutions; and (vii) other direct and indirect
distribution-related expenses, including the provision of services
with respect to maintaining the assets of the Funds. The Funds
will pay all costs and expenses in connection with the preparation,
printing and distribution of its Prospectus to current
shareholders and the operation of its Plan, including related
legal and accounting fees. No Fund will be liable for
distribution expenditures made by the Distributor in any given
year in excess of the maximum amount payable under the Plan for
that Fund year.
Administrative Services
The Funds have also entered into an Administrative
Services Contract with BISYS pursuant to which BISYS provides
certain management and administrative services necessary for the
Funds' operations, including: (i) general supervision of the
operation of the Funds, including coordination of the services
performed by the Funds' Adviser, transfer agent, custodian,
independent accountants and legal counsel, regulatory compliance,
including the compilation of information for documents such as
reports to, and filings with, the SEC and state securities
commissions, and preparation of proxy statements and shareholder
reports for the Funds; (ii) general supervision relative to the
compilation of data required for the preparation of periodic
reports distributed to the Funds' officers and Board of Trustees;
and (iii) furnishing office space and certain facilities required
for conducting the business of the Funds. For these services,
BISYS receives from each Fund a fee, payable monthly, at the
annual rate of 0.15% of each Fund's average daily net assets.
Pursuant to a Services Agreement between the Trust and the
Administrator, BISYS assists the Trust with certain transfer and
dividend disbursing agent functions and receives a fee of $15 per
account per year plus out-of-pocket expenses. Pursuant to a Fund
Accounting Agreement between the Trust and the Administrator, the
Administrator assists the Trust in calculating net asset values
and provides certain other accounting services for each Fund
described therein, for an annual fee of $30,000 per Fund plus
out-of-pocket expenses.
For the International Multi-Manager Fund, BISYS is paid
0.10% of assets for administrative services.
Service Organizations
Various banks, trust companies, broker-dealers (other than
the Sponsor) or other financial organizations (collectively,
"Service Organizations") also may provide administrative services
for the Funds, such as maintaining shareholder accounts and
records. The Funds may pay fees to Service Organizations (which
vary depending upon the services provided) in amounts up to an
annual rate of 0.05% of the daily net asset value of the Funds'
shares owned by shareholders with whom the Service Organization
has a servicing relationship. The Institutional Premium Class
may pay fees to Service Organization in amounts up to an annual
rate of 0.50% of the daily net asset value of the Fund's shares
owned by Shareholders with whom the Service Organization has a
servicing relationship for record keeping, communication with and
education of shareholders, fiduciary services (excluding
investment management) and asset allocation services.
Some Service Organizations may impose additional or
different conditions on their clients, such as requiring their
clients to invest more than a Fund's minimum initial or
subsequent investments or charging a direct fee for servicing.
If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Funds. Each
Service Organization has agreed to transmit to its clients a
schedule of any such fees. Shareholders using Service
Organizations are urged to consult with them regarding any such
fees or conditions.
The Glass-Steagall Act and other applicable laws provide
that, among other things, banks may not engage in the business of
underwriting, selling or distributing securities. There is
currently no precedent prohibiting banks from performing
administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either
Federal or state regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform
all or a part of its servicing activities. If a bank were
prohibited from so acting, its shareholder clients would be
permitted to remain shareholders of the Funds and alternative
means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences.
Other Expenses
Each Fund bears all costs of its operations, other than
expenses specifically assumed by BISYS and the Adviser. The
costs borne by the Funds include legal and accounting expenses,
Trustees' fees and expenses, insurance premiums, custodian and
transfer agent fees and expenses, expenses incurred in acquiring
or disposing of the Funds' portfolio securities, expenses of
registering and qualifying the Funds' shares for sale with the
SEC and with various state securities commissions, expenses of
obtaining quotations on the Funds' portfolio securities and
pricing of the Funds' shares, expenses of maintaining the Funds'
legal existence and of shareholders' meetings, and expenses of
preparing and distributing to existing shareholders reports,
proxies and prospectuses. Each Fund bears its own expenses
associated with its establishment as a series of the Trust; these
expenses are amortized over a five-year period from the
commencement of a Fund's operations. See "Management" in the
SAI. Trust expenses directly attributable to a Fund are charged
to that Fund; other expenses are allocated proportionately among
all of the Funds in the Trust in relation to the net assets of
each Fund.
FUND SHARE VALUATION
The net asset value per share of the Funds is calculated
at 12:00 noon (Eastern time) for the Money Market Fund and at
4:15 p.m. (Eastern time) for each of the Non-Money Market Funds,
Monday through Friday, on each day the New York Stock Exchange is
open for trading (a "Business Day"), which excludes the following
business holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day; and the following additional business holidays for
the Money Market Funds: Martin Luther King's Birthday, Columbus
Day and Veterans Day. The net asset value per share of each
share class is computed by dividing the value of the net assets
attributable to each class (i.e., the value of the assets less
the liabilities) by the total number of such class's outstanding
shares. All expenses, including fees paid to the Adviser, the
Administrator and the distributor, are accrued daily and taken
into account for the purpose of determining the net asset value.
Expenses directly attributable to a Fund are charged to the Fund;
other expenses are allocated proportionately among each Fund
within the Trust in relation to the net assets of each Fund, or
on another reasonable basis. Each share class within the Fund is
charged with the direct expenses of that class and with a
proportion of the general expenses of the Fund. These general
expenses (e.g., investment advisory fees) are allocated among the
classes of shares based on the relative value of their
outstanding shares.
Securities listed on an exchange are valued on the basis
of the last sale prior to the time the valuation is made. If
there has been no sale since the immediately previous valuation,
then the current bid price is used. Quotations are taken from
the exchange where the security is primarily traded. Portfolio
securities which are primarily traded on foreign exchanges may be
valued with the assistance of a pricing service and are generally
valued at the preceding closing values of such securities on
their respective exchanges, except that when an occurrence
subsequent to the time a foreign security is valued is likely to
have changed such value, then the fair value of those securities
will be determined by consideration of other factors by or under
the direction of the Board of Trustees. Over-the-counter
securities are valued on the basis of the bid price at the close
of business on each business day. Securities for which market
quotations are not readily available are valued at fair value as
determined in good faith by or at the direction of the Board of
Trustees. Notwithstanding the above, bonds and other
fixed-income securities are valued by using market quotations and
may be valued on the basis of prices provided by a pricing
service approved by the Board of Trustees. All assets and
liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the mean between the bid and asked
prices of such currencies against U.S. dollars as last quoted by
any major bank (except for the Portfolio, which translates such
securities at prevailing market rates).
Trading in securities on European, Far Eastern and other
international securities exchanges and over the counter markets
is normally completed well before the close of business of each
Fund Business Day. In addition, trading in foreign securities
generally or in a particular country or countries may not take
place on all Fund Business Days. Trading does take place in
various foreign markets, however, on days on which the
International Multi-Manager Fund's net asset value is not
calculated. Calculation of the net asset value per share of the
International Multi-Manager Fund may not occur contemporaneously
with the determination of the prices of the foreign securities
used in the calculation. Events affecting the values of foreign
securities that occur after the time their prices are determined
and before the International Multi-Manager Fund's determination
of net asset value will not be reflected in the International
Multi-Manager Fund's calculation of net asset value unless the
Portfolio Advisers determine that the particular event would
materially affect net asset value, in which case an adjustment
will be made.
For the Portfolio in which the International Multi-Manager
Fund invests, the Portfolio Advisers place orders for the
purchase and sale of the Portfolio's assets with brokers and
dealers its selects. The Portfolio Advisers seek the "best
execution" for all portfolio transactions, but the Portfolio may
pay higher than the lowest available commission rates when the
Portfolio Advisers believe it is reasonable to do so in light of
the value for the brokerage and research services provided by the
broker effecting the transaction. Commission rates for brokerage
transactions are fixed on many foreign securities exchanges, and
this may cause higher brokerage expenses to the Portfolio than
would be the case for comparable transactions effected on United
States securities exchanges. Subject to the Portfolio's policy
of obtaining the best price consistent with the quality of
execution of transactions, the Portfolio Advisers may employ
broker dealer affiliates of the Portfolio Advisers to effect
brokerage transactions for the Portfolio. The Portfolio's
payment of commission for these affiliated brokers is subject to
procedures adopted by AMR Trust's Board of Trustees to provide
that the commissions will not exceed the usual and customary
broker's commissions charged by unaffiliated brokers. No
specific portion of the Portfolio's brokerage will be directed to
an affiliated broker and in no event will a broker affiliated
with the Portfolio Advisers receive brokerage transactions in
recognition of research services provided to any of them.
The Portfolio Advisers anticipate that the annual
portfolio turnover rate in the Portfolio will be less than
100%.
The Money Market Fund uses the amortized cost method to
value its portfolio securities and seek to maintain a constant
net asset value of $1.00 per share, although there may be
circumstances under which this goal cannot be achieved. The
amortized cost method involves valuing a security at its cost and
amortizing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest rates
on the market value of the security. See the SAI for a more
complete description of the amortized cost method.
PURCHASE OF FUND SHARES
<PAGE>
Orders for the purchase of shares will be executed at the
net asset value per share next determined after an order has been
received.
[The following purchase procedures do not apply to
certain fund or trust accounts that are managed by INTRUST. The
customer should consult his or her trust administrator for proper
instructions.]
All funds received are invested in full and fractional
shares of the appropriate Fund. Certificates for shares are not
issued. The Administrator maintains records of each
shareholder's holdings of Fund shares, and each shareholder
receives a statement of transactions, holdings and dividends.
The Funds reserve the right to reject any purchase.
An investment may be made using any of the following
methods:
Through an Authorized Broker, Investment Adviser or Service
Organization. Shares are available to new and existing
shareholders through authorized brokers, investment advisers and
Service Organizations. To make an investment using this method,
simply complete a Purchase Application and contact your broker,
investment adviser or Service Organization with instructions as
to the amount you wish to invest. Your broker will then contact
the Distributor to place the order on your behalf on that day.
Orders received by your broker or Service Organization for
the Non-Money Market Fund in proper order prior to the
determination of net asset value and transmitted to the
Distributor prior to the close of its business day (which is
currently 5:00 p.m., Eastern time), will become effective that
day. Orders for the Money Market Fund received prior to 12:00
noon will become effective that day. Brokers who receive orders
are obligated to transmit them promptly. You should receive
written confirmation of your order within a few days of receipt
of instructions from your broker.
By Wire. Investments may be made directly through the
use of wire transfers of Federal funds. Contact your bank and
request it to wire Federal funds to the applicable Fund. In most
cases, your bank will either be a member of the Federal Reserve
Banking System or have a relationship with a bank that is. Your
bank may charge a fee for handling the transaction. To purchase
shares by a Federal funds wire, please first contact Furman Selz
Mutual Funds Client Services at (800) ________. They will
establish a record of information for the wire to insure the
correct processing of funds. You can reach the Wire Desk at
(800) ________.
Then, have your bank wire funds using the following
instructions:
[Instructions]
_______________________
_______________________
_______________________
As long as you have read the Prospectus, you may establish a
new regular account through the Wire Desk; IRAs may not be opened
in this way. When new accounts are established by wire, the
distribution options will be set to reinvest and the social
security or tax identification number ("TIN") will not be
certified until a signed application is received. Completed
applications should be forwarded immediately to the Distributor.
With the Purchase Application, the shareholder can specify other
distribution options and add any special features offered by a
Fund. Should any dividend distributions or redemptions be paid
before the TIN is certified, they will be subject to 31% Federal
income tax withholding.
Institutional Accounts. Bank trust departments and other
institutional accounts may place orders directly with the
Distributor by telephone at (800) _______.
MINIMUM PURCHASE REQUIREMENTS
[The minimum initial investment in the Funds is $1,000
unless the investor is a purchaser who at the time of purchase,
has a balance of $1,000 or more in any of the INTRUST Funds, is a
purchaser through a trust investment manager or account manager
or is administered by the Adviser, is an employee or an ex-employee
of INTRUST Financial Corporation or is an employee of
any of its affiliates, the Administrator , or any other service
provider, or is an employee of any trust customer of INTRUST
Financial Corporation or any of its affiliates. Note that the
minimum is $250 for an IRA, other than an IRA for which Fourth
Financial Corporation or any of its affiliates acts as trustee or
custodian. Any subsequent investments, including an IRA
investment, must be at least $50. All initial investments should
be accompanied by a completed Purchase Application. A Purchase
Application accompanies this Prospectus. Different minimums
apply, and a separate application is required for IRA
investments. The Funds reserve the right to reject purchase
orders.
INDIVIDUAL RETIREMENT ACCOUNTS
All Funds may be used as a funding medium for IRAs.
Shares may also be purchased for IRAs established with INTRUST
Financial Corporation or any of its affiliates or other
authorized custodians. Completion of a special application is
required in order to create such an account, and the minimum
initial investment for an IRA is $250. Contributions to IRAs are
subject to prevailing amount limits set by the Internal Revenue
Service. A $7.50 establishment fee and an annual $15 maintenance
and custody fee is payable with respect to each IRA, and there
will be a $12 termination fee when the account is closed. For
more information concerning investments by IRAs, call the Funds
at (800) _______.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in
one Fund for shares in another Fund in the Trust. Before
engaging in an exchange transaction, a shareholder should read
carefully the Prospectus describing the Fund into which the
exchange will occur, which is available without charge and can be
obtained by writing to the Fund at 3435 Stelzer Road, Columbus,
Ohio 43219, or by calling _______________. The minimum amount
for an initial exchange is $500. No minimum is required in
subsequent exchanges. The Trust may terminate or amend the terms
of the exchange privilege at any time.
A new account opened by exchange must be established with
the same name(s), address and social security number as the
existing account. All exchanges will be made based on the net
asset value next determined following receipt of the request by a
Fund in good order, plus any applicable sales charge. An
exchange is taxable as a sale of a security on which a gain or
loss may be recognized. Shareholders should receive written
confirmation of the exchange within a few days of the completion
of the transaction. Shareholders will receive at least 60 days'
prior written notice of any modification or termination of the
exchange privilege.
Exchange by Mail. To exchange Fund shares by mail,
simply send a letter of instruction to the Administrator. The
letter of instruction must include: (i) your account number; (ii)
the Fund from and the Fund into which you wish to exchange your
investment; (iii) the dollar or share amount you wish to
exchange; and (iv) the signatures of all registered owners or
authorized parties. All signatures must be guaranteed by an
eligible guarantor institution including a member of a national
securities exchange or by a commercial bank or trust company,
broker-dealers, credit unions and savings associations.
Exchange by Telephone. To exchange Fund shares by telephone
or if you have any questions simply call the Funds at (800)
You should be prepared to give the telephone representative
the following information: (i) your account number, social
security or tax identification number and account registration;
(ii) the name of the Fund from and the Fund into which you wish
to transfer your investment; and (iii) the dollar or share amount
you wish to exchange. The conversation may be recorded to
protect you and the Funds. Telephone exchanges are available
only if the shareholder so indicates by checking the "yes" box on
the Purchase Application. See "Redemption of Fund Shares--By
Telephone" for a discussion of telephone transactions generally.
Automatic Investment Program. An eligible shareholder may
also participate in the Automatic Investment Program, an
investment plan that automatically debits money from the
shareholder's bank account and invests it in one or more of the
Funds in the Trust through the use of electronic funds transfers
or automatic bank drafts. Shareholders may elect to make
subsequent investments by transfers of a minimum of $50 on either
the fifth or twentieth day of each month into their established
Fund account. Contact the Funds for more information about the
Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in part,
on any Business Day. Shares will be redeemed at the net asset
value next determined after a redemption request in good order
has been received by the applicable Fund. See "Determination of
Net Asset Value" in the SAI. A redemption may be a taxable
transaction on which gain or loss may be recognized. Generally,
however, gain or loss is not expected to be realized on a
redemption of shares of the Money Market Fund which seeks to
maintain a net asset value of $1.00 per share.
Redemption of shares purchased by check will be effected
immediately upon clearance of the purchase check which may take
up to 15 days after those shares have been credited to the
shareholder account. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the
period prior to the time the shares are redeemed, dividends on
the shares will continue to accrue and be payable and the
shareholder will be entitled to exercise all other beneficial
rights of ownership.
Once the shares are redeemed, a Fund will ordinarily send
the proceeds by check to the shareholder at the address of record
on the next business day. The Funds may, however, take up to
seven days to make payment. This will not be the customary
practice. Also, if the New York Stock Exchange is closed (or
when trading is restricted) for any reason other than the
customary weekend or holiday closing or if an emergency condition
as determined by the SEC merits such action, the Funds may
suspend redemptions or postpone payment dates.
Redemption Methods. To ensure acceptance of your redemption
request, it is important to follow the procedures described
below. Although the Funds have no present intention to do so,
the Funds reserve the right to refuse or to limit the frequency
of any telephone or wire redemptions. Of course, it may be
difficult to place orders by telephone during periods of severe
market or economic change, and a shareholder should consider
alternative methods of communications, such as couriers. The
Funds' services and their provisions may be modified or
terminated at any time by the Funds. If the Funds terminate any
particular service, they will do so only after giving written
notice to shareholders. Redemption by mail will always be
available to shareholders.
You may redeem your shares using any of the following
methods:
Through an Authorized Broker, Investment Adviser or
Service Organization. You may redeem your shares by contacting
your broker, investment adviser or Service Organization
representative, and instructing him or her to redeem your shares.
He or she will then contact the Distributor and place a
redemption trade on your behalf. He or she may charge you a fee
for this service.
By Mail. You may redeem your shares by sending a letter
directly to the Distributor. To be accepted, a letter requesting
redemption must include: (i) the Fund name and account
registration from which you are redeeming shares; (ii) your
account number; (iii) the amount to be redeemed, (iv) the
signatures of all registered owners; and (v) a signature
guarantee by any eligible guarantor institution including a
member of a national securities exchange or a commercial bank or
trust company, broker-dealers, credit unions and savings
associations. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.
By Telephone. You may redeem your shares by calling the
Funds toll free at (800) _______. You should be prepared to give
the telephone representative the following information: (i) your
account number, social security number and account registration;
(ii) the Fund name from which you are redeeming shares; and (iii)
the amount to be redeemed. The conversation may be recorded to
protect you and the Funds. Telephone redemptions are available
only if the shareholder so indicates by checking the "yes" box on
the Purchase Application or on the Optional Services Form. The
Funds employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. If the Funds fail to
employ such reasonable procedures, they may be liable for any
loss, damage or expense arising out of any telephone transactions
purporting to be on a shareholder's behalf. In order to assure
the accuracy of instructions received by telephone, the Funds
require some form of personal identification prior to acting upon
instructions received by telephone, record telephone instructions
and provide written confirmation to investors of such
transactions. Redemption requests transmitted via facsimile will
not be accepted.
By Wire. You may redeem your shares by contacting the Funds
by mail or telephone and instructing them to send a wire
transmission to your personal bank. Proceeds of wire redemption
for the Money Market Fund generally will be transferred to the
designated account on the day the request is received, provided
that it is received by 12:00 Noon (Eastern time).
Your instructions should include: (i) your account number,
social security or tax identification number and account
registration; (ii) the Fund name from which you are redeeming
shares; and (iii) the amount to be redeemed. Wire redemptions
can be made only if the "yes" box has been checked on your
Purchase Application, and attach a copy of a void check of
account where proceeds are to be wired. Your bank may charge you
a fee for receiving a wire payment on your behalf.
Check Writing. A check redemption ($500 minimum, no
maximum) feature is available with respect to the Money Market
Fund. Checks are free and may be obtained from the Funds. It is
not possible to use a check to close out your account since
additional shares accrue daily.
The above-mentioned services "By Telephone," "By Wire" and
"Check Writing" are not available for IRAs and trust
relationships of the Adviser and its affiliates.
Systematic Withdrawal Plan. An owner of $10,000 or more of
shares of a Fund may elect to have periodic redemptions from his
or her account to be paid on a monthly, quarterly, semi-annual or
annual basis. The minimum periodic payment is $100. A
sufficient number of shares to make the scheduled redemption will
normally be redeemed on the date selected by the shareholder.
Depending on the size of the payment requested and fluctuation in
the net asset value, if any, of the shares redeemed, redemptions
for the purpose of making such payments may reduce or even
exhaust the account. A shareholder may request that these
payments be sent to a predesignated bank or other designated
party. Capital gains and dividend distributions paid to the
account will automatically be reinvested at net asset value on
the distribution payment date.
Redemption of Small Accounts. Due to the disproportionately
higher cost of servicing small accounts, each Fund reserves the
right to redeem, on not less than 30 days' notice, an account in
a Fund that has been reduced by a shareholder to $500 or less.
However, if during the 30-day notice period the shareholder
purchases sufficient shares to bring the value of the account
above $500, this restriction will not apply.
Redemption in Kind. All redemptions of shares of the Funds
shall be made in cash, except that the commitment to redeem
shares in cash extends only to redemption requests made by each
shareholder of a Fund during any 90-day period of up to the
lesser of $250,000 or 1% of the net asset value of that Fund at
the beginning of such period. This commitment is irrevocable
without the prior approval of the SEC and is a fundamental policy
of the Funds that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in
excess of such amounts, the Board of Trustees reserves the right
to have the Funds make payment, in whole or in part, in
securities or other assets, in case of an emergency or any time a
cash distribution would impair the liquidity of a Fund to the
detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the securities
of that Fund are valued. If the recipient were to sell such
securities, he or she could receive less than the redemption
value of the securities and could incur certain transaction
costs.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
Each Fund intends to qualify annually and to elect to be
treated as a regulated investment company pursuant to the
provisions of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). By so qualifying and electing, each
Fund generally will not be subject to Federal income tax to the
extent that it distributes investment company taxable income and
net capital gains in the manner required under the Code.
Each Fund intends to distribute to its shareholders
substantially all of its investment company taxable income (which
includes, among other items, dividends and interest and the
excess, if any, of net short-term capital gains (generally
including any net option premium income) over net long-term
capital losses). The International Multi-Manager Fund's net
investment income consists of its share of the Portfolio's
dividends and interest (including discount) accrued on its
securities, less applicable expenses. The Money Market Fund, the
Intermediate Bond Income Fund, and the Short Term High Quality
Fund will declare distributions of such income daily and pay
those dividends monthly; the Stock Appreciation Fund and
International Multi-Manager Fund will pay dividends at least once
annually. Each Fund intends to distribute, at least annually,
substantially all net capital gains (the excess of net long-term
capital gains over net short-term capital losses). In
determining amounts of capital gains to be distributed, any
capital loss carryovers from prior years will be applied against
capital gains.
Distributions will be paid in additional Fund shares
based on the net asset value at the close of business on the
payment date of the distribution, unless the shareholder elects
in writing, not less than five full business days prior to the
record date, to receive such distributions in cash. Dividends
declared in, and attributable to, the preceding month will be
paid within five business days after the end of each month.
In the case of the Money Market Fund, shares purchased will
begin earning dividends on the day the purchase order is executed
and shares redeemed will earn dividends through the previous day.
Net investment income for a Saturday, Sunday or a holiday will be
declared as a dividend on the previous business day. In the case
of the other Funds that declare daily dividends, shares purchased <PAGE>
will begin earning dividends on the day after the purchase order
is executed, and shares redeemed will earn dividends through the
day the redemption is executed.
Investors who redeem all or a portion of Fund shares prior
to a dividend payment date will be entitled on the next dividend
payment date to all dividends declared but unpaid on those shares
at the time of their redemption.
Distributions of investment company taxable income
(regardless of whether derived from dividends, interest or
short-term capital gains) will generally be taxable to
shareholders as ordinary income. Distributions of net long-term
capital gains properly designated by a Fund as capital gain
dividends will be taxable as long-term capital gains, regardless
of how long a shareholder has held his Fund shares.
Distributions are taxable in the same manner whether received in
additional shares or in cash.
Earnings of the Funds not distributed on a timely basis in
accordance with a calendar year distribution requirement are
subject to a nondeductible 4% excise tax. To prevent imposition
of this tax, each Fund intends to comply with this distribution
requirement.
A distribution, including an "exempt-interest dividend,"
will be treated as paid on December 31 of the calendar year if it
is declared by a Fund during October, November, or December of
that year to shareholders of record in such a month and paid by a
Fund during January of the following calendar year. Such
distributions will be treated as received by shareholders in the
calendar year in which the distributions are declared, rather
than the calendar year in which the distributions are received.
A Fund's distributions with respect to a given taxable year
may exceed the current and accumulated earnings and profits of
that Fund available for distribution. In that event,
distributions in excess of such earnings and profits would be
characterized as a return of capital to shareholders for Federal
income tax purposes, thus reducing each shareholder's cost basis <PAGE>
in his Fund shares. Such distributions in excess of a
shareholder's cost basis in his shares would be treated as a gain
realized from a sale of such shares.
Special tax rules may apply to a Fund's acquisition of
financial futures contracts, and options on futures contracts.
Such rules may, among other things, affect whether gains and
losses from such transactions are considered to be short-term or
long-term, may have the effect of deferring losses and/or
accelerating the recognition of gains or losses, and, for
purposes of qualifying as a regulated investment company, may
limit the extent to which a Fund may be able to engage in such
transactions.
Any gain or loss realized by a shareholder upon the sale or
other disposition of shares of a Fund, or upon receipt of a
distribution in complete liquidation of a Fund, generally will be
a capital gain or loss which will be long-term or short-term,
generally depending upon the shareholder's holding period for the
shares. A loss realized by a shareholder on a redemption, sale,
or exchange of shares of a Fund held six months or less with
respect to which capital gain dividends have been paid will be
characterized as a long-term capital loss to the extent of such
capital gain dividends.
It is anticipated that a portion of the dividends paid by
the Funds (except the Money Market Fund and Intermediate Bond
Income Fund) will qualify and be designated by such Funds as
dividends eligible for the dividends-received deduction available
to corporations. The Code imposes various limitations
restricting the availability of the dividends received deduction.
Pending law proposals may affect the dividends received
deduction. Investors should consult their own tax advisers in
this regard.
The Funds may be required to withhold for Federal income tax
("backup withholding") 31% of the distributions and the proceeds
of redemptions payable to shareholders who fail to provide a
correct taxpayer identification number or to make required
certifications, or where a Fund or shareholder has been notified
by the Internal Revenue Service that the shareholder is subject
to backup withholding. Most corporate shareholders and certain
other shareholders specified in the Code and regulations are
exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against the
shareholder's U.S. Federal income tax liability.
Those Funds that may invest in securities of foreign issuers
may be subject to withholding and other similar income taxes
imposed by a foreign country. Each of these Funds intends to
elect, if it is eligible to do so under the Code, to
"pass-through" to its shareholders the amount of such foreign
taxes paid. If such an election is made by a Fund, each
shareholder of that Fund would be required to include in gross
income the taxable dividends received and the amount of pro rata
share of those foreign taxes paid by the Fund. Each shareholder
would be entitled either to deduct (as an itemized deduction) his
pro rata share of the foreign taxes in computing his taxable
income or to use it (subject to limitations) as a foreign tax
credit against his U.S. Federal income tax liability. No
deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Each shareholder will be notified
within 60 days after the close of a Fund's taxable year whether
the foreign taxes paid by the Fund will "pass-through" for that
year.
Shareholders will be notified annually by the Trust as to
the Federal tax status of distributions made by the Fund(s) in
which they invest. Depending on the residence of the shareholder
for tax purposes, distributions also may be subject to state and
local taxes, including withholding taxes. Foreign shareholders
may, for example, be subject to special withholding requirements.
Special tax treatment, including a penalty on certain
pre-retirement distributions, is accorded to accounts maintained
as IRAs. Shareholders should consult their own tax advisers as
to the Federal, state and local tax consequences of ownership of
shares of the Funds in their particular circumstances.
The Portfolio in which the International Multi-Manager
Fund invests is not required to pay Federal income taxes on its
net investment income and capital gain, as it is treated as a
partnership for Federal income tax purposes. All interest,
dividends and gains and losses of the Portfolio are deemed to
have been "passed through" to the International Multi-Manager
Fund in proportion to its holdings of the Portfolio, regardless
of whether such interest, dividends or gains have been
distributed by the Portfolio or losses have been realized by the
Portfolio. Investment income received by the International
Multi-Manager Fund from sources within foreign countries may be
subject to foreign income or other taxes. The International
Multi-Manager Fund intends to elect, if eligible to do so, to
permit its shareholders to take a credit (or a deduction) for
foreign income and other taxes paid by the Portfolio.
Shareholders of the International Multi-Manager Fund will be
notified of their share of those taxes and will be required to
include that amount as income. In that event, the shareholder
may be entitled to claim a credit or deduction for those
taxes.
OTHER INFORMATION
Capitalization Structure
INTRUST Funds Trust was organized as a Delaware business
trust on January 26, 1996, and currently consists of six
separately managed portfolios. The Board of Trustees may
establish additional portfolios in the future. The
capitalization of the Trust consists solely of an unlimited
number of shares of beneficial interest with a par value of
$0.001 each. When issued, shares of the Funds are fully paid,
non-assessable and freely transferable.
Each Fund offers two class of shares - the Institutional
Service Class and the Institutional Premium Class. The Funds are
offered at net asset value without a sales load only to certain
institutional investors, or other investors who at the time of
purchase have a balance of $1,000 or more invested in any of the
INTRUST Funds, are purchased through a trust investment manager
or account manager or administered by the Adviser, are employees
or ex-employees of INTRUST Financial Corporation or any of its
affiliates, employees of BISYS, or any other service provider, or
employees of any trust customer of INTRUST Financial Corporation
or any of its affiliates. Shareholders in the Institutional
Premium Class of shares may be subject to an additional
shareholder servicing charge of up to 0.50% of average net
assets. Call 800-_______ or contact your sales representative,
broker-dealer or bank to obtain more information about the Funds'
classes of shares.
Under Delaware law, shareholders could, under certain
circumstances, be held personally liable for the obligations of
the Trust. However, the Declaration of Trust disclaims liability
of the shareholders, Trustees or officers of the Trust for acts
or obligations of the Trust, which are binding only on the assets
and property of the Trust and requires that notice of the
disclaimer be given in each contract or obligation entered into
or executed by the Trust or the Trustees. The Declaration of
Trust provides for indemnification out of Trust property for all
loss and expense of any shareholder held personally liable for
the obligations of the Trust. The risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be
unable to meet its obligations and should be considered remote.
International Multi-Manager Fund Structure
The International Multi-Manager Fund invests all of its
assets in the Portfolio, a separate series of the AMR Trust, a
business trust organized under the laws of the State of New York
in October 1995. AMR Trust is registered under the 1940 Act as
an open end management investment company and currently has seven
separate portfolios. The assets of the Portfolio, a diversified
portfolio, belong only to, and the liabilities of the Portfolio
are borne solely by, the Portfolio and no other portfolio of AMR
Trust.
The International Multi-Manager Fund seeks to achieve its
investment objective by investing all of its investable assets in
the Portfolio, which has the same investment objective and
policies as the International Multi-Manager Fund. Accordingly,
the Portfolio directly acquires its own securities and the
International Multi-Manager Fund acquires an indirect interest in
those securities. The investment objective and fundamental
investment policies of the International Multi-Manager Fund and
the Portfolio can be changed only with shareholder approval. See
"Highlights," "Investment Policies and Practices of the Funds,"
and "Management of the Funds" for a complete description of the
Portfolio's investment objective, policies, restrictions,
management, and expenses.
The International Multi-Manager Fund's investment in the
Portfolio is in the form of a non transferable beneficial
interest. As of the date of this Prospectus, the International
Multi-Manager Fund, the American AAdvantage International Equity
Fund and the American Aadvantage International Equity Mileage
Fund are the only institutional investors that have invested all
of their assets in the Portfolio. The Portfolio may permit other
investment companies or institutional investors to invest in it.
All investors in the Portfolio will invest on the same terms and
conditions as the International Multi-Manager Fund and will pay a
proportionate share of the Portfolio's expenses.
The Portfolio normally will not hold meetings of investors
except as required by the 1940 Act. Each investor in the
Portfolio will be entitled to vote in proportion to its relative
beneficial interest in the Portfolio. On most issues subject to
a vote of investors, as required by the 1940 Act and other
applicable law, the International Multi-Manager Fund will solicit
proxies from shareholders of the International Multi-Manager Fund
and will vote its interest in the Portfolio in proportion to the
votes cast by its shareholders. If there are other investors in
the Portfolio, there can be no assurance that any issue that
receives a majority of the votes cast by International
Multi-Manager Fund shareholders will receive a majority of votes
cast by all investors in the Portfolio; indeed, if other investors
hold a majority interest in the Portfolio, they could hold have
voting control of the Portfolio.
The Portfolio will not sell its shares directly to
members of the general public. Another investor in the
Portfolio, such as an investment company, that might sell its
shares to members of the general public would not be required to
sell its shares at the same public offering price as the
International Multi-Manager Fund, could have different advisory
and other fees and expenses than the International Multi-Manager
Fund. Therefore, International Multi-Manager Fund shareholders
may have different returns than shareholders in another
investment company that invests exclusively in the Portfolio.
Voting
Shareholders have the right to vote in the election of
Trustees and on any and all matters on which, by law or under the
provisions of the Declaration of Trust, they may be entitled to
vote. The Trust is not required to hold regular annual meetings
of the Funds' shareholders and does not intend to do so. The
Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as Trustee if
requested in writing to do so by the holders of not less than 10%
of the outstanding shares of the Trust and in connection with
such meeting to comply with the shareholders' communications
provisions of Section 16(c) of the Act. See "Other
Information--Voting Rights" in the SAI.
Shares entitle their holders to one vote per share (with
proportionate voting for fractional shares). As used in this
Prospectus, the phrase "vote of a majority of the outstanding
shares" of a Fund (or the Trust) means the vote of the lesser of:
(1) 67% of the shares of a Fund (or the Trust) present at a
meeting if the holders of more than 50% of the outstanding shares
are present in person or by proxy; or (2) more than 50% of the
outstanding shares of a Fund (or the Trust).
Performance Information
A Fund may, from time to time, include its yield and total
return in advertisements or reports to shareholders or
prospective investors. Shareholders of the Institutional Premium
Class of shares will experience a lower net return on their
investment than shareholders of the Institutional Service Class
of Shares because of the additional shareholder servicing charge
to which the Institutional Premium Class shareholders are
subject. The methods used to calculate the yield and total
return of the Funds are mandated by the SEC. Quotations of
"yield" for a Fund (other than the Money Market Fund) will be
based on the investment income per share during a particular
30-day (or one month) period (including dividends and interest),
less expenses accrued during the period ("net investment
income"), and will be computed by dividing net investment income
by the maximum public offering price per share on the last day of
the period.
Quotations of "yield" for the Money Market Fund will be
based on the income received by a hypothetical investment (less a
pro-rata share of Fund expenses) over a particular seven-day
period, which is then "annualized" (i.e., assuming that the
seven-day yield would be received for 52 weeks, stated in terms
of an annual percentage return on the investment).
"Effective yield" for the Money Market Fund is calculated in
a manner similar to that used to calculate yield, but includes
the compounding effect of earnings on reinvested dividends.
Quotations of yield and effective yield reflect only a
Fund's performance during the particular period on which the
calculations are based. Yield and effective yield for a Fund
will vary based on changes in market conditions, the level of
interest rates and the level of that Fund's expenses, and no
reported performance figure should be considered an indication of
performance which may be expected in the future.
Quotations of average annual total return for a Fund (other
than the Money Market Fund) will be expressed in terms of the
average annual compounded rate of return of a hypothetical
investment in that Fund over periods of 1, 5 and 10 years (up to
the life of that Fund), reflect the deduction of a proportional
share of Fund expenses (on an annual basis), and assume that all
dividends and distributions are reinvested when paid.
Performance information for a Fund may be compared to
various unmanaged indices, such as those indices prepared by
Lipper Analytical Services, Standard & Poor's 500 Stock Index,
the Dow Jones Industrial Average and other entities or
organizations which track the performance of investment
companies. Any performance information should be considered in
light of the Fund's investment objectives and policies,
characteristics and quality of the Funds and the market
conditions during the time period indicated, and should not be
considered to be representative of what may be achieved in the
future. For a description of the methods used to determine yield
and total return for the Funds, see the SAI.
The International Multi-Manager Fund invests all of its
assets in the Portfolio. The Portfolio's predecessor fund, the
American AAdvantage International Equity Fund, has been in
existence since 8/7/91. Performance shown is based in part on
the American AAdvantage International Equity Fund, which also
invests in the Portfolio. Performance shown represents returns
of the Institutional Class of the American AAdvantage
International Equity Fund from its 8/7/91 inception. Average
annualized total return for this Fund (based on the Portfolio as
of September 1996 adjusted for estimated fees and expenses of the
Institutional Service Class of the International Multi-Manager
Fund as indicated in the Fee Table in this Prospectus) are as
follows:
Standard & Poors
ARK 500 Stock Index
1 Year: 19.32% 20.33%
3 Years: 18.20% 17.42%
5 Years: 16.50% 15.23%
10 Years: 15.25% 14.99%
Since Inception
(4/1/95): 16.28% 15.95%
Past performance is not indicative of future performance.
Account Services
All transactions in shares of the Funds will be reflected in
a statement for each shareholder. In those cases where a Service
Organization or its nominee is shareholder of record of shares
purchased for its customer, the Funds have been advised that the
statement may be transmitted to the customer at the discretion of
the Service Organization.
BISYS acts as the Funds' transfer agent. The Trust
compensates BISYS, the Trust's administrator, pursuant to a
Services Agreement described in "Management of the Fund --
Administrative Services" of this Prospectus, for providing
personnel and facilities to perform dividend disbursing and
transfer agency-related services for the Trust.
Shareholder Inquiries
All shareholder inquiries should be directed to the Funds at
3435 Stelzer Road, Columbus, Ohio 43219.
(General and Account Information: (800) _______.)
<PAGE>
APPENDIX
Description of Moody's bond ratings:
Excerpts from Moody's description of its four highest bond
ratings are listed as follows: Aaa judged to be the best
quality and they carry the smallest degree of investment risk;
Aa--judged to be of high quality by all standards. Together with
the Aaa group, they comprise what are generally known as high
grade bonds; A--possess many favorable investment attributes and
are to be considered as "upper medium grade obligations";
Baa--considered to be medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Other Moody's bond
descriptions include: Ba judged to have speculative elements,
their future cannot be considered as well assured; B generally
lack characteristics of the desirable investment; Caa are of
poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest;
Ca speculative in a high degree, often in default; C lowest
rated class of bonds, regarded as having extremely poor
prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to
rating categories. The modifier 1 indicates that the security is
in the higher end of its rating category; the modifier 2
indicates a mid-range ranking; and modifier 3 indicates a ranking
toward the lower end of the category.
Description of S&P's bond ratings:
Excerpts from S&P's description of its four highest bond
ratings are listed as follows: AAA-- highest grade obligations,
in which capacity to pay interest and repay principal is
extremely strong; AA--also qualify as high grade obligations,
having a very strong capacity to pay interest and repay
principal, and differs from AAA issues only in a small degree;
A--regarded as upper medium grade, having a strong capacity to pay
interest and repay principal, although they are somewhat more
susceptible to the adverse effects of changes in circumstances
and economic conditions than debt in higher rated categories;
BBB--regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC: Debt rated in these categories is regarded
as having predominantly speculative characteristics with respect
to capacity to pay interest and repay principal. While such debt
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
CI: The "CI" rating is reserved for income bonds on which
no interest is being paid.
S&P applies indicators "+, -," no character, and relative
standing within the major rating categories.
Description of Moody's ratings of notes and variable rate demand
instruments:
Moody's ratings for state and municipal short-term
obligations will be designated Moody's Investment Grade or MIG.
Such ratings recognize the differences between short-term credit
and long-term risk. Short-term ratings on issues with demand
features (variable rate demand obligations) are differentiated by
the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and
payments relying on external liquidity.
MIG 1/VMIG 1: This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2: This denotes high quality. Margins of protection
are ample although not as large as in the preceding group.
INTRUST FUNDS TRUST
A FAMILY OF
MUTUAL FUNDS
Address for
Trust Clients of INTRUST
Bank, N.A The Cash Reserve Money Market Fund
seeks to provide investors with
105 North Main Street current income, liquidity and the
Box one maintenance of a stable net
Wichita, Kansas, 67202 asset value of $1.00 per share by
investing in high
quality, short-term obligations
Investment Adviser The Short Term High Quality
Fund seeks to provide
investors with as high a level
of current income as is
consistent with liquidity
INTRUST Bank, N.A. and safety of principal
105 North Main Street by investing primarily in
Box one investment grade short/
Wichita, Kansas, 67202 intermediate term
obligations
The Intermediate Bond
Income Fund seeks to provide
Administrator and Sponsor investors with as high a
and Distributor level of current
income as is consistent with
managing for total
return by investing in fixed
BISYS Funds Services income securities
3435 Stelzer Road
Columbus, Ohio 43219
Custodian The Stock Appreciation
Fund seeks to
provide investors with long-term
capital appreciation
The International Multi-
Manager Fund seeks to
provide investors with long-term
INTRUST Bank, N.A. capital appreciation by
105 North Main Street investing all of its assets in
Box one the International
Wichita, Kansas, 67202 Equity Portfolio of the AMR Investment
Services Trust, which
invests primarily in equity
securities of issuers based
Counsel outside of the United States
Baker & McKenzie PROSPECTUS
805 Third Avenue
New York, New York 10022 December __, 1996
Independent Accountants Investment Adviser
INTRUST BANK, N.A.
Price Waterhouse LLP
1177 Avenue of Americas
New York, New York 10036<PAGE>
INTRUST FUNDS TRUST
3435 Stelzer Road, Columbus, Ohio 43219
General and Account Information: (800)
INTRUST BANK, N.A.--Investment Adviser
("INTRUST")
BISYS FUND SERVICES
Administrator, Sponsor and Distributor
("BISYS" or the "Administrator" or the "Distributor")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (the "SAI")
describes one money market fund (the "Money Market Fund") and five
non-money market funds (the "Non-Money Market Funds")
(collectively, the "Funds"), all of which are managed by INTRUST
Bank, N.A. The Funds are:
Money Market Fund
Cash Reserve Money Market Fund
Non Money Market Funds
Short Term High Quality Fund
Intermediate Bond Income Fund
Stock Appreciation Fund
Kansas Tax Exempt Bond Fund
International Multi-Manager Fund
Each Fund constitutes a separate investment portfolio
with distinct investment objectives and policies. Shares of the
Funds are sold to the public by BISYS as an investment vehicle for
individuals, institutions, corporations and fiduciaries,
including customers of INTRUST or its affiliates.
The International Multi-Manager Fund seeks its investment
objective by investing all of its investable assets in the
International Equity Portfolio ("Portfolio") of the AMR Investment
Services Trust ("AMR Trust") that has an identical investment
objective to the International Multi-Manager Fund.
This SAI is not a prospectus and is only authorized for
distribution when preceded or accompanied by a prospectus for the
applicable Fund dated December __, 1996 (the "Prospectus"). This
SAI contains additional and more detailed information than that
set forth in each Prospectus and should be read in conjunction with
the applicable Prospectus. The Prospectuses may be obtained
without charge by writing or calling the Funds at the address and
information number printed above.
December __, 1996<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES 2
INVESTMENT RESTRICTIONS 14
KANSAS RISK FACTORS 20
MANAGEMENT 21
Trustees and Officers 21
Trustees and Officers of AMR
Investment Services Trust 22
Investment Advisers 27
The Portfolio 28
Distribution of Fund Shares 29
Distribution Plan 30
Administrative Services 31
Service Organizations 32
EXPENSES 33
DETERMINATION OF NET ASSET VALUE 34
PORTFOLIO TRANSACTIONS 36
Portfolio Turnover 38
TAXATION 38
Kansas Tax Exempt Bond Fund. 46
OTHER INFORMATION 50
Capitalization 50
Voting Rights 50
Custodian Transfer Agent and Dividend
Disbursing Agent 51
Experts 51
Yield and Performance Information 52
<PAGE>
INVESTMENT POLICIES
The Prospectuses discuss the investment objectives of
the Funds and the policies to be employed to achieve those
objectives. This section contains supplemental information
concerning certain types of securities and other instruments in
which the Funds may invest, the investment policies and portfolio
strategies that the Funds may utilize, and certain risks
attendant to such investments, policies and strategies.
As a matter of fundamental Policy, notwithstanding
any limitation, each fund is authorized to seek to achieve its
investment objective by investing all of its investable assets in
an investment company having substantially the same investment
objective as the Fund.
U.S. Government Agency Obligations (All Funds). These
Funds may invest in obligations of agencies of the United States
Government. Such agencies include, among others, Farmers Home
Administration, Federal Farm Credit System, Federal Housing
Administration, Government National Mortgage Association,
Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority. The Funds may purchase securities
issued or guaranteed by the Government National Mortgage
Association which represent participations in Veterans
Administration and Federal Housing Administration backed mortgage
pools. Obligations of instrumentalities of the United States
Government include securities issued by, among others, Federal
Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Land Banks, Federal National Mortgage Association and the United
States Postal Service. Some of these securities are supported by
the full faith and credit of the United States Treasury (e.g.,
Government National Mortgage Association). Guarantees of
principal by agencies or instrumentalities of the U.S. Government
may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might
not be a market and thus no means of realizing the value of the
obligation prior to maturity.
Mortgage-Related Securities. (All Funds). These
Funds may, consistent with their respective investment objective
and policies, invest in mortgage-related securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities.
Mortgage-related securities, for purposes of the
Fund's Prospectus and this SAI, represent pools of mortgage loans
assembled for sale to investors by various governmental agencies
such as the Government National Mortgage Association and
government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage
Corporation, as well as by nongovernmental issuers such as
commercial banks, savings and loan institutions, mortgage
bankers, and private mortgage insurance companies. Although
certain mortgage-related securities are guaranteed by a third
party or otherwise similarly secured, the market value of the
security, which may fluctuate, is not so secured. If the Fund
purchases a mortgage-related security at a premium, that portion
may be lost if there is a decline in the market value of the
security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are
inversely affected by changes in interest rates. However, though
the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true since
in periods of declining interest rates the mortgages underlying
the securities are prone to prepayment. For this and other
reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages
and, therefore, it is not possible to predict accurately the
security's return to the Fund. In addition, regular payments
received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the
return a Fund will receive when these amounts are reinvested.
There are a number of important differences among the
agencies and instrumentalities of the U.S. Government that issue
mortgage-related securities and among the securities that they
issue. Mortgage-related securities created by the Government
National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are
guaranteed as to the timely payment of principal and interest and
such guarantee is backed by the full faith and credit of the
United States. GNMA is a wholly-owned U.S. Government
corporation within the Department of Housing and Urban
Development. GNMA certificates also are supported by the
authority of GNMA to borrow funds from the U.S. Government to
make payments under its guarantee. Mortgage-related securities
issued by the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also
known as "Fannie Maes") which are solely the obligations of the
FNMA and are not backed by or entitled to the full faith and
credit of the United States. The FNMA is a government-sponsored
organization owned entirely by private stock-holders. Fannie
Maes are guaranteed as to timely payment of the principal and
interest by FNMA. Mortgage-related securities issued by the
Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as ("Freddie
Macs" or "PCs"). The FHLMC is a corporate instrumentality of the
United States, created pursuant to an Act of Congress, which is
owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States
or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC currently guarantees timely payment of interest
and either timely payment of principal or eventual payment of
principal, depending upon the date of issue. When the FHLMC does
not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage,
but in no event later than one year after it becomes payable.
Commercial Paper (All Funds). Commercial paper
includes short-term unsecured promissory notes, variable rate
demand notes and variable rate master demand notes issued by
domestic and foreign bank holding companies, corporations and
financial institutions and similar taxable instruments issued by
government agencies and instrumentalities. All commercial paper
purchased by the Funds is, at the time of investment, rated in
one of the top two (top three with respect to the Short Term High
Quality Fund) rating categories of at least one Nationally
Recognized Statistical Rating Organization ("NRSRO") or, if not
rated, are, in the opinion of the Adviser, except for the
International Multi-Manager Fund, of an investment quality
comparable to rated commercial paper in which the Funds may
invest, or, with respect to the Cash Reserve Money Market Fund,
(i) rated "P-1" by Moody's Investors Service, Inc. ("Moody's")
and "A-1" or better by Standard & Poor's Corporation ("S&P") or
in a comparable rating category by any two NRSROs that have rated
the commercial paper or (ii) rated in a comparable category by
only one such organization if it is the only organization that
has rated the commercial paper (and provided the purchase is
approved or ratified by the Fund's Board of Trustees).
Corporate Debt Securities (All Funds, except Kansas
Tax Exempt Bond Fund). Fund investments in these securities are
limited to corporate debt securities (corporate bonds,
debentures, notes and similar corporate debt instruments) which
meet the rating criteria established for each Fund.
After purchase by a Fund, a security may cease to be
rated or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event will require a sale of such
security by the Fund. However, the Fund's Adviser will consider
such event in its determination of whether the Fund should
continue to hold the security. To the extent the ratings given
by a NRSRO may change as a result of changes in such
organizations or their rating systems, the Fund will attempt to
use comparable ratings as standards for investments in accordance
with the investment policies contained in the Prospectus and in
this SAI.
Foreign Securities (Intermediate Bond Income Fund,
Stock Appreciation Fund, and International Multi-Manager Fund).
Changes in foreign exchange rates will affect the value of
securities denominated or quoted in currencies other than the
U.S. dollar.
Since the Funds may invest in securities denominated in
currencies other than the U.S. dollar, and since those Funds may
temporarily hold funds in bank deposits or other money market
investments denominated in foreign currencies, a Fund may be
affected favorably or unfavorably by exchange control regulations
or changes in the exchange rate between such currencies and the
dollar. Changes in foreign currency exchange rates will
influence values within the Fund from the perspective of U.S.
investors. Changes in foreign currency exchange rates may also
affect the value of dividends and interest earned, gains and
losses realized on the sale of securities, and net investment
income and gains, if any, to be distributed to shareholders by
the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in
the foreign exchange markets. These forces are affected by the
international balance of payments and other economic and
financial conditions, government intervention, speculation and
other factors.
Those Funds that purchase foreign currency-denominated
securities may enter into foreign currency exchange contracts in
order to protect against uncertainty in the level of future
foreign exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are
entered into in the interbank market conducted between currency
traders (usually large commercial banks) and their customers.
Forward foreign currency exchange contracts may be bought or sold
to protect a Fund against a possible loss resulting from an
adverse change in the relationship between foreign currencies and
the U.S. dollar, or between foreign currencies. Although such
contracts are intended to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time,
they tend to limit any potential gain which might result should
the value of such currency increase.
Bank Obligations. (All Funds). A description of the
bank obligations which the Funds may purchase is set forth in the
Prospectuses. These obligations include, but are not limited to,
domestic, Eurodollar and Yankeedollar certificates of deposits,
time deposits, bankers' acceptances, commercial paper, bank
deposit notes and other promissory notes including floating or
variable rate obligations issued by U.S. or foreign bank holding
companies and their bank subsidiaries, branches and agencies.
Certificates of deposit are issued against funds deposited in an
eligible bank (including its domestic and foreign branches,
subsidiaries and agencies), are for a definite period of time,
earn a specified rate of return and are normally negotiable. A
bankers' acceptance is a short-term draft drawn on a commercial
bank by a borrower, usually in connection with a commercial
transaction. The borrower is liable for payment as is the bank,
which unconditionally guarantees to pay the draft at its face
amount on the maturity date. Eurodollar obligations are U.S.
Dollar obligations issued outside the United States by domestic
or foreign entities. Yankeedollar obligations are U.S. dollar
obligations issued inside the United States by foreign entities.
Bearer deposit notes are obligations of a bank, rather than a
bank holding company. Similar to certificates of deposit,
deposit notes represent bank level investments and, therefore,
are senior to all holding company corporate debt.
Variable and Floating Rate Demand and Master Demand
Obligations (All Funds). The Funds may, from time to time, buy
variable rate demand obligations issued by corporations, bank
holding companies and financial institutions and similar taxable
and tax-exempt instruments issued by government agencies and
instrumentalities. These securities will typically have a
maturity of 397 days or less with respect to the Money Market
Funds or five to twenty years with respect to the Non-Money
Market Funds, but carry with them the right of the holder to put
the securities to a remarketing agent or other entity on short
notice, typically seven days or less. The obligation of the
issuer of the put to repurchase the securities may or may not be
backed by a letter of credit or other obligation issued by a
financial institution. The purchase price is ordinarily par plus
accrued and unpaid interest.
The Funds may also buy variable rate master demand
obligations. The terms of these obligations permit the
investment of fluctuating amounts by the Funds at varying rates
of interest pursuant to direct arrangements between a Fund, as
lender, and the borrower. They permit weekly, and in some
instances, daily, changes in the amounts borrowed. The Funds
have the right to increase the amount under the obligation at any
time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may prepay up to the full
amount of the obligation without penalty. The obligations may or
may not be backed by bank letters of credit. Because the
obligations are direct lending arrangements between the lender
and the borrower, it is not generally contemplated that they will
be traded, and there is no secondary market for them, although
they are redeemable (and thus, immediately repayable by the
borrower) at principal amount, plus accrued interest, upon
demand. The Funds have no limitations on the type of issuer from
whom the obligations will be purchased. The Funds will invest in
variable rate master demand obligations only when such
obligations are determined by the Adviser or, pursuant to
guidelines established by the Board of Trustees, to be of
comparable quality to rated issuers or instruments eligible for
investment by the Funds.
When-Issued and Delayed-Delivery Securities (All
Funds). The Funds may purchase securities on a when-issued or
delayed-delivery basis. For example, delivery of and payment for
these securities can take place a month or more after the date of
the transaction. The securities so purchased are subject to
market fluctuation during this period and no income accrues to
the Fund until settlement takes place. To facilitate such
acquisitions, the Funds will maintain with the custodian a
separate account with a segregated portfolio of securities in an
amount at least equal to the value of such commitments. On the
delivery dates for such transactions, each Fund will meet
obligations from maturities or sales of the securities held in
the separate account and/or from cash flow. While the Funds
normally enter into these transactions with the intention of
actually receiving or delivering the securities, they may sell
these securities before the settlement date or enter into new
commitments to extend the delivery date into the future, if the
Adviser considers such action advisable as a matter of investment
strategy. Such securities have the effect of leverage on the
Funds and may contribute to volatility of a Fund's net asset
value.
Loans of Portfolio Securities (All Funds). The Funds
may lend their portfolio securities to brokers, dealers and
financial institutions, provided: (1) the loan is secured
continuously by collateral consisting of U.S. Government
securities or cash or approved bank letters of credit maintained
on a daily mark-to-market basis in an amount at least equal to
the current market value of the securities loaned; (2) the Funds
may at any time call the loan and obtain the return of the
securities loaned within five business days; (3) the Funds will
receive any interest or dividends paid on the loaned securities;
and (4) the aggregate market value of securities loaned will not
at any time exceed 33 % of the total assets of a particular
Fund.
The Funds will earn income for lending their securities
because cash collateral pursuant to these loans will be invested
in short-term money market instruments. In connection with
lending securities, the Funds may pay reasonable finders,
administrative and custodial fees. Loans of securities involve a
risk that the borrower may fail to return the securities or may
fail to provide additional collateral.
Repurchase Agreements (All Funds). The Funds may
invest in securities subject to repurchase agreements with any
bank or registered broker-dealer who, in the opinion of the
Trustees, and, for the International Multi-Manager Fund, the AMR
Trust Board, present a minimum risk of bankruptcy. Such
agreements may be considered to be loans by the Funds for
purposes of the Investment Company Act of 1940, as amended (the
"1940 Act"). A repurchase agreement is a transaction in which
the seller of a security commits itself at the time of the sale
to repurchase that security from the buyer at a mutually
agreed-upon time and price. The repurchase price exceeds the
sale price, reflecting an agreed-upon interest rate effective for
the period the buyer owns the security subject to repurchase.
The agreed-upon rate is unrelated to the interest rate on that
security. The Adviser and the Portfolio Advisers will monitor the
value of the underlying security at the time the transaction is
entered into and at all times during the term of the repurchase
agreement to insure that the value of the security always equals
or exceeds the repurchase price. In the event of default by the
seller under the repurchase agreement, the Funds may have
problems in exercising their rights to the underlying securities
and may incur costs and experience time delays in connection with
the disposition of such securities.
Securities loans will be made in accordance with the
following conditions: (1) the Fund must receive at least 100%
collateral in the form of cash or cash equivalents, securities of
the U.S. Government and its agencies and instrumentalities, and
approved bank letters of credit; (2) the borrower must increase the
collateral whenever the market value of the loaned securities
(determined on a daily basis) rises above the level of collateral;
(3) the Portfolio must be able to terminate the loan after notice,
at any time; (4) the Fund must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent
to any dividends, interest or other distributions on the securities
loaned, and any increase in market value of the loaned securities;
(5) the Fund may pay only reasonable custodian fees in connection
with the loan; and (6) voting rights on the securities loaned may
pass to the borrower, provided, however, that if a material event
affecting the investment occurs, the Trust Board or the AMR Trust
Board, as applicable, must be able to terminate the loan and vote
proxies or enter into an alternative arrangement with the borrower
to enable the Trust Board or the AMR Trust Board, as applicable, to
vote proxies.
Reverse Repurchase Agreements (All Funds). The Funds
may also enter into reverse repurchase agreements to avoid
selling securities during unfavorable market conditions to meet
redemptions. Pursuant to a reverse repurchase agreement, a Fund
will sell portfolio securities and agree to repurchase them from
the buyer at a particular date and price. Whenever a Fund enters
into a reverse repurchase agreement, it will establish a
segregated account in which it will maintain liquid assets in an
amount at least equal to the repurchase price marked to market
daily (including accrued interest), and will subsequently monitor
the account to ensure that such equivalent value is maintained.
The Fund pays interest on amounts obtained pursuant to reverse
repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by a Fund under the 1940 Act.
Guaranteed Investment Contracts (Short Term High
Quality Fund). The Fund may invest in guaranteed investment
contracts ("GICs") issued by insurance companies. Pursuant to
such contracts, the Fund makes cash contributions to a deposit
fund of the insurance company's general account. The insurance
company then credits to the deposit fund on a monthly basis
guaranteed interest at a rate based on an index. The GICs
provide that this guaranteed interest will not be less than a
certain minimum rate. The insurance company may assess periodic
charges against a GIC for expense and service costs allocable to
it, and these charges will be deducted from the value of the
deposit fund. The Fund will purchase a GIC only when the
Investment Adviser has determined that the GIC presents minimal
credit risks to the Fund and is of comparable quality to
instruments in which the Fund may otherwise invest. Because the
Fund may not receive the principal amount of a GIC from the
insurance company on seven days' notice or less, a GIC may be
considered an illiquid investment. The term of a GIC will be one
year or less.
In determining the average weighted portfolio
maturity of the Fund, a GIC will be deemed to have a maturity
equal to the period of time remaining until the next readjustment
of the guaranteed interest rate. The interest rate on a GIC may
be tied to a specified market index and is guaranteed not to be
less than a certain minimum rate.
Illiquid Securities (All Funds). Each Fund, except
for the International Multi-Manager Fund, has adopted a
fundamental policy with respect to investments in illiquid
securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale
because they have not been registered under the Securities Act of
1933, as amended ("Securities Act"), securities that are
otherwise not readily marketable and repurchase agreements having
a maturity of longer than seven days. Securities that have not
been registered under the Securities Act are referred to as
private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual
funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations
on resale may have an adverse effect on the marketability of
portfolio securities and a mutual fund might be unable to dispose
of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days. A mutual fund might
also have to register such restricted securities in order to
dispose of them resulting in additional expense and delay.
Adverse market conditions could impede such a public offering of
securities.
In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on
either an efficient institutional market in which the
unregistered security can be readily resold or on the issuer's
ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public
or to certain institutions may not be indicative of the liquidity
of such investments.
Each Fund may also invest in restricted securities
issued under Section 4(2) of the Securities Act, which exempts
from registration "transactions by an issuer not involving any
public offering." Section 4(2) instruments are restricted in the
sense that they can only be resold through the issuing dealer and
only to institutional investors; they cannot be resold to the
general public without registration. Restricted securities
issued under Section 4(2) of the Securities Act will be treated
as illiquid and subject to the Fund's investment restriction on
illiquid securities.
The Commission has adopted Rule 144A, which allows a
broader institutional trading market for securities otherwise
subject to restrictions on resale to the general public. Rule
144A establishes a "safe harbor" from the registration
requirements of the Securities Act applicable to resales of
certain securities to qualified institutional buyers. It is the
intent of the Funds to invest, pursuant to procedures established
by the Board of Trustees and subject to applicable investment
restrictions, in securities eligible for resale under Rule 144A
which are determined to be liquid based upon the trading markets
for the securities.
Pursuant to guidelines set forth by and under the
supervision of the Board of Trustees, the Adviser will monitor
the liquidity of restricted securities in a Fund's portfolio. In
reaching liquidity decisions, the Adviser will consider, among
other things, the following factors: (1) the frequency of trades
and quotes for the security over the course of six months or as
determined in the discretion of the Investment Adviser; (2) the
number of dealers wishing to purchase or sell the security and
the number of other potential purchasers over the course of six
months or as determined in the discretion of the Investment
Adviser; (3) dealer undertakings to make a market in the
security; (4) the nature of the security and the marketplace in
which it trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of
the transfer); and (5) other factors, if any, which the Adviser
deems relevant. The Adviser will also monitor the purchase of
Rule 144A securities to assure that the total of all Rule 144A
securities held by a Fund does not exceed 10% of the Fund's
average daily net assets. Rule 144A securities which are
determined to be liquid based upon their trading markets will
not, however, be required to be included among the securities
considered to be illiquid for purposes of Investment Restriction
No. 1. Investments in Rule 144A securities could have the effect
of increasing Fund illiquidity.
Foreign Currency Transactions (International
Multi-Manager Fund). Investments by the Portfolio in securities of
foreign companies will usually involve the currencies of foreign
countries. In addition, the Portfolio may temporarily hold funds
in bank deposits in foreign currencies pending the completion of
certain investment programs. Accordingly, the value of the
assets of the Portfolio, as measured in U.S. dollars, may be
affected by changes in foreign currency exchange rates and
exchange control regulations. In addition, the Portfolio may
incur costs in connection with conversions between various
currencies. The Portfolio may conduct foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate
prevailing in the foreign currency exchange market or by entering
into foreign currency forward basis at the spot rate prevailing
in the foreign currency exchange market or by entering into
foreign currency forward contracts ("forward contracts") to
purchase or sell foreign currencies. A forward contract involves
an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days (usually less than
one year) from the date of the contract agreed upon by the
parties, at a price at the time of the contract. Forward
contracts in the principal foreign currencies are traded in the
interbank market conducted directly between currency traders
(usually large commercial banks) and their customers and involve
the risk that the other party to the contract may fail to deliver
currency when due, which could result in losses to the Portfolio.
A forward contract generally has no requirement, and no
commissions are charged at any stage for trades. Foreign
exchange dealers realize a profit based on the difference between
the price at which they buy and sell various currencies.
The Portfolio may enter into forward contracts under
two circumstances. First, with respect to specific transactions,
when the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a
fixed amount of dollars, of the amount of foreign currency
involved in the underlying security transactions, the Portfolio
may be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S.
dollar and the subject foreign currency during the period between
the date the security is purchased or sold and the date on which
payment is made or received.
Second, the Portfolio may enter into forward contracts
in connection with existing portfolio positions. For example,
when the investment adviser of the Portfolio believes that the
currency of a particular foreign country may suffer a substantial
decline against the U.S. dollar, the Portfolio may enter into a
forward contract to sell, for a fixed amount of dollars, the
amount of foreign currency approximating the value of some or all
of the Portfolio's investment securities denominated in such
foreign currency.
The precise matching of the forward contract amounts
and the value of the securities involved will not generally be
possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in
the value of those securities between the date the forward
contract is entered into and the date it matures. The projection
of short-term currency market movement is extremely difficult,
and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk of
inaccurate predictions of currency price movements, which may
cause the Portfolio to incur losses on these contracts and
transaction costs. The Portfolio Adviser does not intend to enter
into forward contracts on a regular or continuous basis and will
not do so if, as a result, the Portfolio will have more than 25
percent of the value of its total assets committed to such
contracts or the contracts would obligate the Portfolio to
deliver an amount of foreign currency in excess of the value of
the Portfolio's investment securities or other assets denominated
in that currency.
There is no systematic reporting of last sale
information for foreign currencies, and there is no regulatory
requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large
transactions in the interbank market. The interbank market is
foreign currencies in a global around-the-clock market.
When required by applicable regulatory guidelines, the
Portfolio will set aside cash, U.S. Government Securities or
other liquid, high-grade debt securities in a segregated account
with its custodian in the prescribed amount.
Foreign Currency Options and Related Risks
(International Multi-Manager Fund). The Portfolio may take
positions in options on foreign currencies in order to hedge
against the risk of foreign exchange fluctuation on foreign
securities the Portfolio holds in its portfolio or which it
intends to purchase. Options on foreign currencies are affected
by the factors discussed in "Options Strategies" and "Foreign
Currency Transactions" above which influence foreign exchange
sales and investments generally.
The value of foreign currency options is dependent upon
the value of the foreign currency relative to the U.S. dollar and
has no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than those
that may be involved in the use of foreign currency options, the
Portfolio may be disadvantaged by having to deal in an odd lot
market (generally consisting of transactions of less than $1
million) for the underlying foreign currencies at prices that are
less favorable than for round lots.
To the extent that the U.S. options markets are closed
while the market for the underlying currencies remains open,
significant price and rate movements may take place in the
underlying markets that cannot be reflected in the options
markets.
INVESTMENT RESTRICTIONS
The following restrictions apply to each Fund except
the International Multi-Manager Fund and restate or are in
addition to those restrictions described under "Investment
Restrictions" in the Prospectuses. Investment Restriction Nos.
2, 3, 4, 7, 8, 12 and 16 are fundamental policies of the Funds,
which can be changed only when permitted by law and approved by a
majority of the Funds' outstanding voting securities. The
non-fundamental investment restrictions can be changed by approval
of a majority of the Board of Trustees. A "majority of the
outstanding voting securities" means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented in person or by proxy or (ii)
more than 50% of the outstanding shares.
Each Fund, except as indicated, may not:
(1) Invest more than 15% (10% with respect to the Money
Market Fund and Kansas Tax Exempt Bond Fund) of the value of
its net assets in investments which are illiquid (including
repurchase agreements having maturities of more than seven
calendar days, variable and floating rate demand and master
demand notes not requiring receipt of principal note amount
within seven days notice and securities of foreign issuers
which are not listed on a recognized domestic or foreign
securities exchange);
(2) Borrow money or pledge, mortgage or hypothecate its
assets, except that a Fund may enter into reverse repurchase
agreements or borrow from banks up to 33-1/3% of the current
value of its net assets for temporary or emergency purposes
or to meet redemptions. Each Fund has adopted a non-
fundamental policy to limit such borrowing to 10% of its net
assets and those borrowings may be secured by the pledge of
not more than 15% of the current value of its total net
assets (but investments may not be purchased by the Fund
while any such borrowings exist). The Short Term High
Quality Fund has adopted a non-fundamental policy to limit
its borrowings for other than temporary or defense purpose
or to meet redemptions to an amount not to exceed an amount
equal to 5% of its net assets.
(3) Issue senior securities, except insofar as a Fund may
be deemed to have issued a senior security in connection
with any repurchase agreement or any permitted borrowing;
(4) Make loans, except loans of portfolio securities and
except that a Fund may enter into repurchase agreements with
respect to its portfolio securities and may purchase the
types of debt instruments described in its Prospectus or the
SAI;
(5) Invest in companies for the purpose of exercising
control or management;
(6) Invest more than 10% of its net assets in shares of
other investment companies, except that each Fund may invest
all of its assets in another investment company;
(7) Invest in real property (including limited partnership
interests but excluding real estate investment trusts and
master limited partnerships, debt obligations secured by
real estate or interests therein, and securities issued by
other companies that invest in real estate or interest
therein), commodities, commodity contracts, or oil, gas and
other mineral resource, exploration, development, lease or
arbitrage transactions;
(8) Engage in the business of underwriting securities of
other issuers, except to the extent that the disposal of an
investment position may technically cause it to be
considered an underwriter as that term is defined under the
Securities Act of 1933;
(9) Sell securities short, except to the extent that a Fund
contemporaneously owns or has the right to acquire at no
additional cost securities identical to those sold short;
(10) Purchase securities on margin, except that a Fund may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities;
(11) Purchase or retain the securities of any issuer, if
those individual officers and Trustees of the Trust, the
Adviser, the Sponsor, or the Distributor, each owning
beneficially more than - of 1% of the securities of such
issuer, together own more than 5% of the securities of such
issuer;
(12) Purchase a security if, as a result, more than 25% of
the value of its total assets would be invested in
securities of one or more issuers conducting their principal
business activities in the same industry (except with
respect to the Cash Reserve Money Market Fund which will
concentrate its investments in obligations issued by the
banking industry), provided that (a) this limitation shall
not apply to obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities; (b) wholly
owned finance companies will be considered to be in the
industries of their parents; and (c) utilities will be
divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will
each be considered a separate industry;
(13) Invest more than 5% of its net assets in warrants which
are unattached to securities, included within that amount,
no more than 2% of the value of the Fund's net assets, may
be warrants which are not listed on the New York or American
Stock Exchanges;
(14) Write, purchase or sell puts, calls or combinations
thereof, except that the equity and fixed income funds may
purchase or sell puts and calls as otherwise described in
the Prospectus or SAI; however, no Fund will invest more
than 5% of its total assets in these classes of securities
for purposes other than bona fide hedging; or
(15) Invest more than 5% of the current value of its total
assets in the securities of companies which, including
predecessors, have a record of less than three years'
continuous operation provided each Fund may invest all or a
portion of its assets in another open end management
investment company with substantially the same investment
objective, policies and investment restrictions as the
Fund.
(16) With respect to 75% of its assets purchase a security
if as a result, (1) more than 5% of its total assets would
be invested in any one issuer other than the U.S. Government
or its agencies or instrumentalities, or (2) the Fund would
own more than 10% of the outstanding voting securities of
such issues. The Money Market Fund is subject to this
restriction with respect to 100% of its assets.
The following restrictions apply to the
International Multi-Manager Fund. All fundamental investment
policies and the non-fundamental policies of the Fund and its
corresponding Portfolio are identical. Therefore, although the
following discusses the investment policies of the Portfolio and
the AMR Trust's Board of Trustees ("AMR Trust Board"), it applies
equally to the Fund and the Trust's Board of Trustees
("Board").
The following seven restrictions have been adopted
by the Portfolio and may be changed with respect to the Portfolio
only by the majority vote of the Portfolio's outstanding
interests, which as used herein means the lesser of (a) 67% of
the interests of the Portfolio present at the meeting if the
holders of more than 50% of the interests are present and
represented at the interest holders' meeting or (b) more than 50%
of the interests of the Portfolio. Whenever the Fund is
requested to vote on a change in the investment restrictions of
its corresponding Portfolio, the Fund will hold a meeting of its
shareholders and will cast its votes as instructed by its
shareholders.
The Portfolio may not:
1. With respect to 75% of its assets purchase a security
if as a result, (1) more than 5% of its total assets would
be invested in any one issuer other than the U.S. Government
or its agencies or instrumentalities, or (2) the Fund would
own more than 10% of the outstanding voting securities of
such issues. The Money Market Fund is subject to this
restriction with respect to 100% of its assets.
2. Invest more than 25% of its total assets in the
securities of companies primarily engaged in any one
industry other than U.S. Government, its agencies and
instrumentalities.
3. Purchase or sell real estate or real estate limited
partnership interests, provided, however, that the Portfolio
may invest in securities secured by real estate or interests
therein or issued by companies which invest in real estate
or interests therein when consistent with the other policies
and limitations described in the Prospectus.
4. Purchase or sell commodities (including direct
interests and/or leases in oil, gas or minerals) or
commodities contracts, except with respect to forward
foreign currency exchange contracts, foreign currency
futures contracts and "when-issued" securities when
consistent with the other policies and limitations described
in the Prospectus.
5. Engage in the business of underwriting securities
issued by others, except to the extent that, in connection
with the disposition of securities, the Portfolio may be
deemed an underwriter under federal securities law.
6. Make loans to any person or firm, provided, however,
that the making of a loan shall not be construed to include
(i) the acquisition for investment of bonds, debentures,
notes or other evidences of indebtedness of any corporation
or government which are publicly distributed or (ii) the
entry into repurchase agreements and further provided,
however, that the Portfolio may lend its portfolio
securities to broker-dealers or other institutional
investors in accordance with the guidelines stated in the
Prospectus.
7. Purchase from or sell portfolio securities to its
officers, Trustees or other "interested persons" of the AMR
Trust, as defined in the Investment Company Act of 1940
("1940 Act"), including its investment advisers and their
affiliates, except as permitted by the 1940 Act and
exemptive rules or orders thereunder.
8. Issue senior securities except that the Portfolio may
engage in when-issued securities and forward commitment
transactions and may engage in currency futures and forward
currency contracts.
9. Borrow money, except from banks or through reverse
repurchase agreements for temporary purposes in an aggregate
amount not to exceed 10% of the value of its total assets at
the time of borrowing. In addition, although not a
fundamental policy, the Portfolio intends to repay any money
borrowed before any additional portfolio securities are
purchased.
The following non-fundamental investment
restrictions apply to the Portfolio and may be changed with
respect to the Portfolio by a majority vote of the AMR Trust
Board. The Portfolio may not:
1. Purchase securities on margin, effect short sales
(except that the Portfolio may obtain such short-term
credits as may be necessary for the clearance of purchases
or sales of securities) or purchase or sell call options or
engage in the writing of such options.
2. Purchase or retain the securities of an issuer if, to
the AMR Trust's knowledge, one or more of the trustees or
officers of the AMR Trust, or the investment adviser
responsible for the investment of the AMR Trust's assets or
its directors or officers, individually own beneficially
more than - of 1% of the securities of such issuer and
together own beneficially more than 5% of such
securities.
The Portfolio may invest up to 10% of its total assets
in the securities of other investment companies to the extent
permitted by law. The Portfolio may incur duplicate advisory or
management fees when investing in another mutual fund.
In addition, the Portfolio may not invest in warrants,
except as permitted by its investment policies as described in
the Prospectus, provided that the Portfolio shall not invest more
than 5% of its net assets, valued at the lower of cost or market,
in warrants or more than 2% of its net assets in warrants which
are not listed on the New York or American Stock Exchanges.
As a matter of fundamental policy, notwithstanding
any other limitation, each Fund is authorized to seek to achieve
its investment objective by investing all of its investable
assets in an investment company having substantially the same
investment objective and policies as the Fund.
KANSAS RISK FACTORS
The following information is a brief summary of
particular Kansas state factors effecting the Kansas Tax Exempt
Bond Fund and does not purport to be a complete description of
such factors. The financial condition of the state, its public
authorities and local governments could affect the market values
and marketability of, and therefore the net asset value per share
and the interest income of the Fund, or result in the default of
existing obligations, including obligations which may be held by
the Fund. Further, the state faces numerous forms of litigation
seeking significant damages which, if awarded, may adversely
affect the financial situation of the state or issuers located in
such state. It should be noted that the creditworthiness of
obligations issued by local issues may be unrelated to the
creditworthiness of a state, and there is no obligation on the
part of the state to make payment on such local obligations in
the event of default in the absence of a specific guarantee or
pledge provided by a state. The information contained below is
based primarily upon information derived from state official
statements, Certified Annual Financial Reports, state and
industry trade publications, newspaper articles, other public
documents relating to securities offerings of issuers of such
states, and other historically reliable sources. it has not been
independently verified by the Fund. The Fund makes no
representation or warranty regarding the completeness or accuracy
of such information. The market value of shares of the Fund may
fluctuate due to factors such as change in interest rates,
matters affecting a particular state, or for other reasons.
The information contained below is based primarily
upon information derived from state official statements,
Certified Annual Financial Reports, state and industry trade
publications, newspaper articles, other public documents relating
to securities offerings of issuers of such states, and other
historically reliable sources. It has not been independently
verified by the Fund. The Fund makes no representation or
warranty regarding the completeness or accuracy of such
information. The market value of shares of the Fund may
fluctuate due to factors such as changes in interest rates,
matters affecting a particular state, or for other reasons.
General Economic Conditions. Kansas is the 14th
largest state in terms of size with an area in excess of 82,000
square miles. It is rectangular in shape and is 411 miles long
from east to west and 208 miles wide. The geographic center of
the 48 contiguous states lies within its borders. Kansas became
the 34th state in 1861 and Topeka was chosen to be the capitol
later that year. The population of the State of Kansas has grown
from 2,477,588 in 1990 to 2,554,047 in 1994. This represents a
percentage increase of 3.1%. In comparison, the growth in
population of the United States was 4.7%.
Relatively strong growth in manufacturing and
construction employment propelled the state's 1995 employment
growth. Employment growth exceeded the national rate of increase,
a rarity in recent years. In only three of the prior 13 years had
Kansas employment growth exceeded that of the nation. All but one
of the state's major labor markets (finance, insurance and real
estate) had employment gain between 1994 and 1995. There are two
measures of employment in Kansas: place-of-residence data and
place-of-work data. The former are based on a sample survey of
Kansas households, while the latter are based on data primarily
obtained directly from firms as part of the unemployment
insurance program. In 1995, place-of-residence data indicated
that Kansas employment grew 2.8%, while place-of-work data showed
a 5.4% increase. The growth rates exceeded the corresponding
national growth rates of 1.6% and 2.3%. Average monthly
unemployment fell from 70,000 in 1994 to 56,200 in 1995.
Likewise, the average monthly unemployment rate fell from 5.3% to
4.2% from 1994 to 1995.
Budgetary Process. The Governor is statutorily
mandated to present spending recommendations to the Legislature.
"The Governor's Budget Report" reflects expenditures for both the
current and upcoming fiscal years and identifies the sources of
financing for those expenditures. The Legislature uses "The
Governor's Budget Report" as a guide as it appropriates the money
necessary for state agencies to operate. Only the Legislature can
authorize expenditures by the State of Kansas. The Governor
recommends spending levels, while the Legislature chooses whether
to accept or modify those recommendations. The Governor may veto
legislative appropriations, although the Legislature may override
any veto by two-thirds majority vote.
The state "fiscal year" runs from July 1 to the
following June 30 and is numbered for the calendar year in which
it ends. The "current fiscal year" is the one which ends the
coming June. The "actual fiscal year" is the year which concluded
the previous June. The "budget year" refers to the next fiscal
year, which begins the July following the Legislature's
adjournment.
In "The FY 1997 Governor's Budget Report," the
actual fiscal year is fiscal year 1995, the current fiscal year
is fiscal year 1996, and the budget year is fiscal year 1997. By
law, "The Governor's Budget Report" must reflect actual year
spending, the Governor's revised spending recommendations for the
current fiscal year, state agency spending requests for the
budget year, and the Governor's spending recommendations for the
budget year. The budget recommendations cannot include the
expenditure of anticipated income attributable to proposed
legislation.
Revenues and Expenditures. The State General Fund is
the largest of the "uncommitted" revenue sources available to the
state. It is also the fund to which most general tax receipts are
credited. The Legislature may spend State General Fund dollars
for any purpose. All revenues coming into the state treasury not
specifically authorized by statute or the constitution to be
placed in a separate fund are deposited in the State General
Fund.
Fiscal Year 1996. The Governor's fiscal year 1996
budget recommendations total $7.9 billion from all funding
sources and approximately $3.47 billion from the State General
Fund. The budget includes a total of 44,697.9 state employees, a
reduction of 118.7 from the amount approved by the 1995
Legislature. These recommendations reflect significant changes to
the budget approved by the 1995 Legislature. In September 1995,
the Governor announced the need for a 1.5% across-the-board
reduction to the budgets of most agencies funded through the
State General Fund. This action was necessary because of a
shortfall of approximately $25 million in estimated fiscal year
1995 receipts and resulting downward revisions to the consensus
revenue estimate made for fiscal year 1996. In addition to the
1.5% reduction, significant savings were available in agency
budgets because of a reduction in the funding requirements for
group health insurance rates for state employees and in the
funding necessary for the state share of local option school
budgets. In total, these adjustments allow the Governor to
recommend a budget which maintains the targeted 7.5% ending
balance for fiscal year 1996 while providing only necessary
supplemental appropriations to maintain commitments to higher
education and public schools. In addition, the Governor directed
all agencies under his supervision to reduce their workforce by
2% in fiscal year 1996 through attrition and retirements. The
salary savings attributable to those reductions will be
identified at the end of the fiscal year.
Fiscal Year 1997. The fiscal year 1997 budget
recommendations include all funding source expenditures of $7.8
billion, a reduction of almost $100 million from fiscal year
1996. The largest single source of fiscal year 1997 receipts is
the State General Fund, with 46.6% of the total receipts.
Individual income taxes account for the largest source of State
General Fund revenue, totaling $1.410 billion (39.9%) in fiscal
year 1997. The next largest category, sales and use taxes, is
projected to generate $1.392 billion (39.5%) for the State
General Fund during fiscal year 1997. State General Fund
expenditure recommendations for fiscal year 1997 are $3.52
billion, an increase of 1.4%. The Governor recommends that
$1,923.7 million, or 54.6% of State General Fund expenditures be
used for aid to local units of government.
Federal grants represent 21.9% of total receipts
from all funding sources, with 42 state agencies receiving $1.7
billion in fiscal year 1997. Of the $1.7 billion, 50.4% will go
to the Department of Social and Rehabilitation Services. This is
followed by the Department of Transportation, 15.4%, the
Department of Education, 12%, the Regents institutions, 5.8%, and
the Department of Health and Environment, 4.3%. The remaining
12.1% is distributed to 29 other agencies. Agency service charges
include revenues received for services provided by state
agencies. This includes charges for inspections, examinations,
and audits; fees collected for tuition and fees at the Regents
institutions; and admissions to the Kansas State Fair. This
revenue category represents 6.6% of total receipts for fiscal
year 1997.
Dedicated sales tax receipts represent revenues from
four taxes that are collected for a specific purpose and are
deposited in special revenue funds, rather than the State General
Fund. Taxes on motor fuels and vehicle registrations as well as a
dedicated sales tax of one-quarter of a cent are credited to the
State Highway Fund. A statewide property tax of 1.5 mills is
assessed for construction and maintenance of state buildings at
Regents institutions and state hospitals. This revenue category
represents 5.1% of total receipts for fiscal year 1997.
Other special revenue receipts include license fees,
interest earnings on special revenue funds, non-federal grants,
the sale of state property, and numerous other miscellaneous
revenue sources. This revenue category represents 8.9% of total
receipts for fiscal year 1997. Non revenue receipts are
collections and reimbursements not considered revenue. Examples
include collections by the Department of Human Resources for the
payment of unemployment benefits and collections by KPERSS for
payment of retirement benefits. Collections made by SRS from
absent parents for child support are also included in this
category. This category represents 8.5% of total receipts for
fiscal year 1997. Lottery ticket sales account for the remaining
2.4% of total receipts for fiscal year 1997 from all funding
sources.
It was clear from the beginning of the fiscal year
1997 budget process that the revenues available to state
government could not support continuation of existing levels of
service for all agencies. A variety of factors contributed to the
austerity of the fiscal year 1997 budget. First and most
important, for the past two fiscal years, the State General Fund
ending balance was significantly above the 7.5% ending balance
target, allowing expenditures to exceed receipts in both fiscal
years 1995 and 1996. In simple terms, fiscal year 1997 cannot
exceed receipts while complying with the ending balance
requirements. The expenditures in fiscal year exceeded receipts
by $106.6 million. In effect, the first claim on projected
increases in State General Fund receipts for fiscal year 1997
will be to correct this imbalance. Second, a variety of factors
required significant additional funding for the school finance
formula including enrollment growth, the second year of increased
aid requirements to offset motor vehicle tax reductions passed by
the 1995 Legislature, the remainder of the Real Estate Settlement
Procedures Act (RESPA) adjustment, and growth in capital
improvement aid. In addition, growth in inmate populations
required additional staff and funding for correctional
institutions. Further, caseload and cost increases in various
populations served by SRS seriously affected the fiscal year 1997
budget.
Debt Administration and Limitation. The State of
Kansas finances a portion of its capital expenditures with
various debt instruments. Of capital expenditures that are
debt-financed, revenue bonds and loans from the Pooled Money
Investment Board finance most capital improvements for buildings,
and certificates of participation and "third-party" financing pay
for most capital equipment. The Kansas Constitution makes
provision for the issuance of general obligation bonds subject to
certain restrictions; however, no bonds have been issued under
this provision for many years. No other provision of the
Constitution or state statute limits the amount of debt that can
be issued. As of June 30, 1995, the state had authorized but
unissued debt of $27,230,000.
Although the state has no General Obligation rating,
it seeks an underlying rating on specific issues of at least
"AA-" from Standard & Poor's and "A1" from Moodys. The ratings
for the most recently issued fixed rate bonds issued by the
Kansas Department of Transportation were "Aa" and "AA" from
Moodys and Standard & Poor's, respectively. The Kansas
Development Finance Authority is currently working with the
rating agencies to obtain a rating indicator for the State of
Kansas.
The Kansas Department of Transportation issues debt
to finance highway projects. The Comprehensive Highway Program
began during fiscal year 1989. The 20-year bonds will be retired
with motor fuel taxes, motor vehicle registration fees, retail
sales and compensating use taxes, and accrued interest. During
fiscal years 1994 and 1995, the state sold bonds totaling
approximately $151 million and $167.1 million, respectively.
Again, the largest use of the bond proceeds was $125 million and
$140 million for the Comprehensive Highway Program for these two
years, respectively.
Other State of Kansas debt is issued by the Kansas
Development Finance Authority (KDFA), an independent
instrumentality of the state which was created in 1987 for this
purpose. The Governor's budget recommendations for Regents
institutions are a significant departure from the traditional way
revenues from the Educational Building Fund (EBF) have been used
for construction projects at the state's universities. Based on
concerns for the aging buildings on the state's campuses, the
Governor recommends that KDFA issue bonds in fiscal year 1997 in
the amount of $156.5 million to address a wide variety of
rehabilitation and repair projects at the universities. With
interest earnings, the total project costs would be an estimated
$163.6 million. Debt service over the 15-year period will total
$228.4 million, with each year's debt service payment over the
next 15 years totaling $15 million. No project paid with bond
proceeds will have a life-expectancy of less than 20 years, so as
to "keep ahead" of the bonded indebtedness. Because the current
cost of borrowing money is less than the projected cost of
inflation for construction, it is more cost-effective to perform
the repairs now and leverage the EBF, rather than incurring
higher annual repair costs in the future. Rehabilitation and
repair projects at the campuses include compliance with the
Americans with Disability Act Accessibility Guidelines and life
safety codes, energy conservation projects, and improvements to
classrooms, in addition to the typical repairs made to aging
buildings.
Bonds totaling $4.4 million were issued by KDFA in
November 1990 to begin Energy Conservation Improvements Program
authorized by the 1990 Legislature. The bonds are retired by
utility cost savings from the energy conservation improvements
undertaken. Projects financed with the bond proceeds consist of
improvements at many of the state universities, the Department of
Administration, the Department of Social and Rehabilitation
Services, the Highway Patrol, and the Department of Corrections.
An amount of $5,000 was appropriated from the State General Fund
to the Department of Administration, the paying agent, for fiscal
year 1992 to begin retirement of the debt service. The second
series of bonds, issued in June 1992, totaled $3.6 million. On
October 1, 1993, a third series of bonds totaling $4,370,000
under the Energy Conservation Improvements Program was issued. In
August 1995, the fourth series of bond, totaling $2,734,000 was
issued. For fiscal year 1997, the debt service totals $1,785,007
from the State General Fund, $1,340,000 for principal and
$445,007 for interest. To date, $15.1 million in bonds has been
issued by the Kansas Development Finance Authority for those
projects. A fifth bond issue estimated to total $4.8 million is
scheduled for early 1996.
MANAGEMENT
Trustees and Officers
The principal occupations of the Trustees and executive
officers of the Trust for the past five years are listed below.
The address of each, unless otherwise indicated, is 3435 Stelzer
Road, Columbus, Ohio 43219. Trustees deemed to be "interested
persons" of the Trust for purposes of the 1940 Act are indicated
by an asterisk.
*JOHN J. PILEGGI, Age: 37, President and Chairman of the Board
of Trustees. Director of Furman Selz LLC since 1994; Senior
Managing Director of Furman Selz LLC (1992-1994); Managing
Director of Furman Selz LLC (1984-1992).
TERRY L. CARTER, Age: , Trustee. ________________________.
THOMAS F. KICE, Age: , Trustee. _________________________.
THOMAS E. SHEA, Age: , Trustee. __________________________.
DONALD BROSTROM, Age: 37, Principal Financial and Accounting
Officer. Director, Fund Services, Furman Selz LLC since 1986;
Managing Director of Furman Selz since 1995.
JOAN V. FIORE, Age: 39, Vice President and Secretary. Managing
Director and Counsel of Furman Selz LLC since 1991; Attorney at
the U.S. Securities and Exchange Commission, Division of
Investment Management (1986-1991).
CARRIE ZUCKERMAN, Age: 29, Assistant Secretary. Associate
Director, Corporate Secretary Services of Furman Selz LLC, since
1995; Associate of Furman Selz 1993-1995.
COMPENSATION TABLE*
Pension or
Retirement
Benefits Estimated
Aggregate Accured as Annual Total
Compensation Part of Benefits Compensation
from the Fund Upon from the
Fund Expenses Retirement Fund Complex
John J. Pileggi,
Trustee None 0 N/A None
Terry L. Carter,
Trustee $7,000 0 N/A $7,000
Thomas F. Kice,
Trustee $7,000 0 N/A $7,000
Thomas E. Shea,
Trustee $7,000 0 N/A $7,000
_____________________
* Represents the total compensation estimated to be paid for a
full fiscal year.
Trustees of the Trust not affiliated with the Sponsor
receive from the Trust an annual retainer of $1,000 and a fee of
$1,000 for each Board of Trustees meeting and $1,000 for each
Board committee meeting of the Trust attended and are reimbursed
for all out-of-pocket expenses relating to attendance at such
meetings. Trustees who are affiliated with the Sponsor do not
receive compensation from the Trust.
Officers and Trustees of the Trust, as a group, own
less than 1% of the outstanding shares of the Funds. Trustees and
Officers of AMR Investment Services Trust ("AMR Trust")
The following information relates to the principal
occupations of each Trustee and executive officer of the AMR
Trust during the past five years.
Unless otherwise indicated, the address of each
person listed below is 4333 Amon Carter Boulevard, MD 5645, Fort
Worth, Texas 76155.
Name, Age and Address Position with Principal Occupation During
AMR Trust Past 5 Years
William F. Quinn* (49) Trustee and President
President AMR Investment
Services, Inc. (November
1986-Present); Chairman,
American Airlines Employees
Federal Credit
Union (October 1989-Present);
Trustee, American
Performance Funds (September
1990-July 1994); Director,
Crescent Real Estate
Equities, Inc. (April 1994-
Present); Trustee, American
Aadvantage Funds and American
Aadvantage Mileage Funds
(1995-Present). <PAGE>
Alan D. Feld (59) Trustee Partner, Akin, Gump, Strauss,
1700 Pacific Ave., Suite 4100 Hauer & Feld LLP (1960-
Dallas, TX 75201-4618 Present)*; Director, Clear
Channel Communications
(1984-Present); Director,
CenterPoint Properties, Inc.
(1994-Present); Trustee,
American AAdvantage Funds and
American Aadvantage Mileage
Funds (October 1996-
Present). <PAGE>
Ben J. Fortson (64) Trustee President and CEO, Fortson
301 Commerce St., Suite 3301 Oil Company (1958-Present);
Fort Worth, TX 76102 Director, Kimbell Art
Foundation (1964-Present);
Director, Burnett
Foundation (1987-Present);
Honorary Trustee, Texas
Christian University
(1986-Present); Trustee,
American Aadvantage Funds
and American Aadvantage
Mileage Funds (October
1996-Present).
*The law firm of Akin, Gump, Strauss, Hauer & Feld LLP ("Akin,
Gump") provides legal services to American Airlines, Inc., an
affiliate of AMR Investment Services, Inc. Mr. Feld has advised
the AMR Trust that he has had no material involvement in the
services provided by Akin, Gump to American Airlines, Inc.
and that he has received no material benefit in connection with
these services. Akin, Gump does not provide legal services to AMR
Investment Services, Inc. or AMR Corporation.
John S. Justin (80) Trustee Chairman and Chief Executive
2821 West Seventh Street Officer, Justin Industries,
Fort Worth, Texas 76107 Inc. (a diversified holding
company) (1969-Present);
Executive Board Member, Blue
Cross/Blue Shield of Texas
(1985-Present); Board Member,
Zale Lipshy Hospital (June
1993-Present); Trustee, Texas
Christian University (1980-
Present); Director and
Executive Board Member,
Moncrief Radiation Center
(1985-Present); Director,
Texas New Mexico Enterprises
(1984-1993); Director, Texas
New Mexico Power Company
(1979-1993); Trustee, American
Aadvantage Funds and American
Aadvantage Mileage Funds
(1995-Present).
Stephen D. O'Sullivan*
(61) Trustee Consultant (July 1994-Present);
Vice President and Controller,
American Airlines, Inc. (April
1985-June 1994), Trustee,
American Aadvantage Funds and
American AAdvantage Mileage
Funds (1995-Present)
Roger T. Staubach
(55) Trustee Chairman of the Board and
6750 LBJ Freeway` Chief Executive Officer
Dallas, Texas 75240 (1982-Present) and President
(1983-1991) of The Staubach
Company (a commercial real
estate company); Director,
Halliburton Company (1991-
present); director, First USA,
Inc. (1993-present); Director,
Brinker International (1993-
present); Director, Columbus
Realty Trust (1994-present);
Member of the Advisory Board,
The Salvation Army; Member of
the Advisory Board, Dallas
International Sports
Commission; Member of the
Advisory Board, Hartford
Whalers Hocky Club; Trustee,
Institute for Aerobics
Research; Member of Executive
Council, Daytop/Dallas; former
quarterback of the Dallas
Cowboys professional football
team; Trustee, American
Aadvantage Funds and American
Aadvantage Mileage Funds
(1995-Present).
Nancy A. Eckl (34)
Vice President Vice President, AMR Investment
Services, Inc. (December
1990-Present).
Michael W. Fields (42)
Vice President Vice President, AMR Investment
Services, Inc. (August
1988-Present).
Barry Y. Greenberg (33)
Vice President and Assistant Director, Legal and
Secretary Compliance, AMR Investment
Services, Inc. (July 1995-Present);
Branch Chief (May
1992-June 1995) and Staff
Attorney (August 1988-May
1992), Securities and Exchange
Commission.
Rebecca L. Harris (29)
Treasurer Director of Finance (May
1995-Present), Controller
(November 1991-April 1995),
AMR Investment Services, Inc.
John B. Robertson (38)
Vice President Vice President (June
1991-Present).
Janice B. Schwarz (37)
Assistant Secretary Senior Business Systems
Coordinator (September
1996-Present);
Senior Compliance Analyst,
AMR Investment Services,
Inc. (December 1990-
September 1996).
Clifford J. Alexander
(53) Secretary Partner, Kirkpatrick & Lockhart
LLP (law firm)
Robert J. Zutz (44)
Assistant Secretary Partner, Kirkpatrick & Lockhart
LLP (law firm)
* Messrs. Quinn and O'Sullivan, by virtue of their current or
former positions, are deemed to be "interested persons" of the AMR
Trust as defined by the 1940 Act.
All Trustees and officers as a group own less than 1% of the
outstanding shares of the AMR Trust.
As compensation for their service to the AMR Trust, the
Independent Trustees and their spouses receive free air travel from
American Airlines, Inc., an affiliate of AMR. Trustees are also
reimbursed for any expenses incurred in attending Board meetings.
Mr. O'Sullivan, who as a retiree of American Airlines, Inc.,
already receives free airline travel, receives compensation
annually of up to three round-trip airline tickets for each of
his three adult children. The Trust does not pay for these travel
arrangements. However, the Trust compensates each Trustee with
payments in an amount equal to the Trustees' income tax on the
value of this free airline travel. These amounts are reflected in
the following table for the fiscal year ended October 31, 1995.
Pension or
Retirement
Benefits Estimated
Aggregate Accured as Annual Total
Compensation Part of AMR Benefits Compen-
from the AMR Trust's upon sation
Trust Expenses Retire- from
ment AMR's Fund
Complex
Name of Trustee
William F. Quinn $0 $0 $0 $0
David G. Fox [$27,510] $0 $0 [$27,510]
John S. Justin [$14,475] $0 $0 [$14,475]
Stephen D.
O'Sullivan $0 $0 $0 $0
Roger T.
Staubach(1) $0 $0 $0 $0
(1) Mr. Staubach became a Trustee in May 1995 and did not
receive tax reimbursement payments during fiscal year 1995 for his
travel during that year.
Investment Advisers
INTRUST BANK, N.A.
INTRUST Bank, N.A. ("INTRUST") has provided investment
advisory services to the Funds since inception pursuant to an
Advisory Agreement with the Trust (the "Advisory Agreement").
Subject to such policies as the Trust's Board of Trustees may
determine, INTRUST makes investment decisions for the Funds. The
Advisory Agreement provides that, as compensation for services
thereunder, INTRUST is entitled to receive from each Fund it
manages a monthly fee at an annual rate based upon average daily
net assets of the Fund as set forth in the table of Fund Expenses
in the Prospectus.
INTRUST Bank, N.A. is a majority-owned subsidiary of
INTRUST Financial Corporation (formerly First Bancorp of Kansas),
a bank holding company. INTRUST Bank, N.A. is a national banking
association which provides a full range of banking and trust
services to clients. As of September 30, 1996, total assets under
management were approximately $1.17 billion. The principal place
of business address of the Adviser is 105 North Main Street,
Box One, Wichita, Kansas 67201.
The Investment Advisory Contracts for the Funds will
continue in effect for a period beyond two years from the date of
their execution only as long as such continuance is approved
annually (i) by the holders of a majority of the outstanding voting
securities of the Funds or by the Board of Trustees
and (ii) by a majority of the Trustees who are not parties to such
Contract or "interested persons" (as defined in the 1940 Act) of
any such party. The Contracts may be terminated without penalty by
vote of the Trustees or the shareholders of the Funds, or by the
Adviser, on 60 days' written notice by either party to the Contract
and will terminate automatically if assigned.
Ark Asset Management Co., Inc. ("Ark") serves as
sub-adviser to the Stock Appreciation Fund. Located in New York,
Ark's predecessor was established in 1929 as the private money
management division of Lehman Brothers. In 1989, the division
became an independent company when the employees purchased the
institutional money management business from Shearson
Lehman Brothers. As of September 30, 1996, Ark managed
approximately $22.6 billion, including $12.4 billion in large
capitalization value portfolios, for more than 260 institutional
and individual clients, with a minimum investment size for private
accounts of $10 million.
Galliard Capital Management ("Galliard") serves as
sub-adviser to the Short-Term High Quality Fund and the
Intermediate Bond Income Fund. Galliard, a wholly-owned subsidiary
of Norwest Bank Minnesota, was formed July 1, 1995 to specialize in
the management of institutional fixed income portfolios.
AMR Investment Services, Inc. serves as sub-advisor to
the Cash Reserve Money Market Fund. AMR, located at 4333 Amon
Carter Boulevard, MD 5645, Fort Worth, Texas 76155, is a
wholly-owned subsidiary of AMR Corporation, the parent company of
American Airlines, Inc., and was organized in 1986 to provide
business management, advisory, administrative and asset
management consulting services. American Airlines, Inc. is not
responsible for investments made by AMR. As of September 30, 1996,
AMR provides investment advice with respect to approximately $15.3
billion in assets, including approximately $10.8 billion of assets
on behalf of AMR Corporation and its primary subsidiary, American
Airlines, Inc. For the subadvisory services it provides to the
Cash Reserve Money Market Fund, AMR receives from the Adviser and
not the Funds monthly fees based upon average daily net assets
at the annual rate of 0.__%.
The Portfolio
AMR oversees all administrative, investment advisory,
and portfolio management services to the Portfolio. The assets of
the Portfolio are allocated by AMR among one or more investment
advisers. AMR acts as investment adviser to the Portfolio and is
required to furnish at its expense all services, facilities and
personnel necessary in connection with managing and administering
the Portfolio's investments and effecting portfolio transactions
for the Portfolio.
AMR provides the Portfolio with office space, office
equipment and personnel necessary to manage and administer the
Portfolio's operations. This includes complying with reporting
requirements; corresponding with shareholders; maintaining internal
bookkeeping, accounting and auditing services and records; and
supervising the provision of services to the Portfolio, by third
parties. AMR also develops the investment program for the
Portfolio, selects and changes investment advisers (subject to
approval by the AMR Trust Board and appropriate interest holders),
allocates assets among investment advisers, monitors the investment
advisers' investment programs and results, and coordinates the
investment activities of the investment advisers to ensure
compliance with regulatory restrictions.
AMR pays the fees of the investment advisers of the
Portfolio. As compensation for paying the investment advisory fees
and for providing the Portfolio with advisory and asset allocation
services, AMR receives from AMR Trust an annualized fee which is
calculated and accrued daily, equal to the sum of 0.10% of the net
assets of the Portfolio, plus all fees payable by AMR
to the Portfolio Advisers.
AMR may enter into new or modified advisory agreements with
existing or new investment advisers without approval of
International Multi-Manager Fund shareholders or Portfolio interest
holders, but subject to approval of the Board and the AMR Trust
Board. The SEC issued an exemptive order which
eliminates the need for shareholder/interest holder approval,
subject to compliance with certain conditions.
The Advisory Agreement between the Portfolio and AMR will continue
in effect only if such continuance is specifically approved at
least annually by the Board of Trustees of the AMR Trust or by vote
of the holders of beneficial interest of the Portfolio, and in
either case by a majority of the Trustees of
the AMR Trust who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
The Advisory Agreement with respect to the Portfolio
is terminable without penalty by the Portfolio on 60 days' written
notice when authorized either by vote of the Portfolio's
shareholders or by a vote of a majority of the Board of Trustees of
the AMR Trust, or by AMR on not more than 60 days' nor less than 30
days' written notice, and will automatically terminate in the event
of its assignment. The Advisory Agreement also provides that, with
respect to the Portfolio, neither AMR nor its personnel
shall be liable for any error of judgment or mistake of law or for
any act or omission in the performance if its or their duties to
the Portfolio, except for willful misfeasance, bad faith or gross
negligence in the performance of AMR's or their duties or by reason
of reckless disregard of its or their obligations and duties under
the Advisory Agreement. The Advisory Agreement provides that AMR
may render services to others.
The advisory fees are accrued daily and paid monthly.
the Adviser, in its sole discretion, may waive all or any portion
of its advisory fee with respect to the Portfolio.
Following is a description of the Portfolio Advisers,
each of which has been retained by AMR, on behalf of the Portfolio,
to provide advisory services to the Portfolio.
Hotchkis and Wiley, 800 West Sixth Street, 5th Floor, Los
Angeles, California 90017, is a professional investment counseling
firm which was founded in 1980 by John F. Hotchkis and George
Wiley, who are the firm's founding General Partners. Assets under
management as of December 31, 1995 were approximately $9.0 billion,
which included approximately $988 million of assets of AMR and its
subsidiaries and affiliated entities. Hotchkis and Wiley
also serves as an investment adviser to the Balanced Portfolio and
the Growth and Income Portfolio of the AMR Trust. The advisory
contract provides for AMR to pay Hotchkis and Wiley an annualized
fee equal to .60% of the first $10 million of assets under its
discretionary management, .50% of the next $140
million of assets .30% on the next $50 million of assets and .20%
of all excess AMR Trust assets managed by Hotchkis and Wiley.
Morgan Stanley Asset Management Inc. ("MSAM"), 1221 Avenue
of the Americas, New York, New York 10020, is a wholly owned
subsidiary of Morgan Stanley Group Inc. MSAM provides portfolio
management and named fiduciary services to taxable and nontaxable
institutions, international organizations and individuals investing
in United States and international equity and debt
securities. As of September 30, 1995, MSAM had assets under
management totaling approximately $55.2 billion, including
approximately $40.1 billion under active management and $ 15. I
billion as named fiduciary or fiduciary adviser. As of December 31,
1995, MSAM had investment authority over approximately $404 million
of assets of AMR and its subsidiaries and affiliated entities. For
its services, AMR pays MSAM an annual fee equal to
.80% of the first $25 million in AMR Trust assets under its
discretionary management, .60% of the next $25 million in assets,
.50% of the next $24 million in assets and .40% on all excess
assets.
Rowe Price-Fleming International, Inc. ("Fleming"), 100
East Pratt Street, Baltimore, Maryland 21020, is a professional
investment counseling firm founded in 1979. Fleming is a joint
venture owned entirely by its three parent companies. T. Rowe
Price, Robert Fleming and Jardine Fleming. As of
December 31, 1995, Fleming had assets under management totaling
approximately $22.2 billion, including approximately $ 197 million
of assets of AMR and its subsidiaries and affiliates entities.
Fleming serves as an investment adviser to the Portfolio, although
AMR does not presently intend to allocate assets from the Portfolio
to Fleming. For its services to the Portfolio when total
assets under Fleming's management are less than $200 million, AMR
will pay Fleming an annualized fee equal to 0.75% of the first $20
million, 0.60% of the next $30 million and 0.50% on amounts over
$50 million. When assets under Fleming's management exceed $200
million but are less than $500 million, AMR will pay Fleming an
annualized fee equal to 0.50% on all assets. When assets
under Fleming's management exceed $500 million but are less than
$750 million, AMR will pay an annualized fee equal to 0.45% on all
assets, and when assets exceed $750 million, AMR will pay Fleming
a flat fee of 0.40% on all assets. When asset levels are between
$184 million and $200 million, Fleming will credit AMR with an
adjustment for the difference between the two fee
schedules. The credit is determined by pro-rating the difference
between the original tiered fee and the flat fee ($80,000 per annum
at all asset levels) over the difference between $200 million and
the current asset size for billing purposes.
Templeton Investment Counsel, Inc. ("Templeton"), 500 East
Broward Blvd., Suite 2100, Fort Lauderdale, Florida 33394-3091, is
a professional investment counseling firm which has been providing
investment services since 1979. Templeton is indirectly owned by
Franklin Resources, Inc. As of December 31, 1995, Templeton had
discretionary investment management authority with
respect to approximately $ 14.4 billion of assets, including
approximately $288 million of assets of AMR and its subsidiaries
and affiliated entities. For its services, AMR pays Templeton an
annualized fee equal to .50% of the first $ 100 million in AMR
Trust assets under its discretionary management,
.35% of the next $50 million in assets, .30% of the next $250
million in assets and .25% on assets over $400 million.
The AMR Trust and AMR also entered into a Management Agreement
dated October 1, 1995 that obligates AMR to provide or oversee all
administrative, investment advisory and portfolio management
services for the AMR Trust.
Distribution of Fund Shares
The Trust retains BISYS to serve as principal underwriter
for the shares of the Funds pursuant to a Distribution Contract.
The Distribution Contract provides that the Distributor will use
its best efforts to maintain a broad distribution of the Funds'
shares among bona fide investors and may enter into selling group
agreements with responsible dealers and dealer managers as well as
sell the Funds' shares to individual investors. The Distributor is
not obligated to sell any specific amount of shares.
Distribution Plan
The Trustees of the Fund have voted to adopt a Master
Distribution Plan (the "Plan") pursuant to Rule l2b-1 of the
Investment Company Act of 1940 (the "1940 Act") after having
concluded that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders. The Plan provides
for a monthly payment by the Fund to the Distributor in such
amounts that the Distributor may request or for direct payment by
the Fund, for certain costs incurred under the Plan, subject to
periodic Board approval, provided that each such payment is based
on the average daily value of the Fund's net assets
during the preceding month and is calculated at an annual rate not
to exceed 0.25%. (Certain expenses of the Fund may be reduced in
accordance with applicable state expense limitations. See "Fees
and Expenses"). The Distributor will use all amounts received
under the Plan for payments to broker-dealers or financial
institutions (but not including banks) for their assistance in
distributing shares of the Fund and otherwise promoting the sale
of Fund shares, including payments in amounts based on the average
daily value of Fund shares owned by shareholders in respect of
which the broker-dealer or financial institution has a distributing
relationship. The Distributor may also use all or any portion of
such fees to pay Fund expenses such as the printing and
distribution of prospectuses sent to prospective investors; the
preparation, printing and distribution of sales literature and
expenses associated with media advertisements.
The Plan provides for the Distributor to prepare and
submit to the Board of Trustees on a quarterly basis written
reports of all amounts expended pursuant to the Plan and the
purpose for which such expenditures were made. The Plan provides
that it may not be amended to increase materially the
costs which the Fund may bear pursuant to the Plan without
shareholder approval and that other material amendments of the Plan
must be approved by the Board of Trustees, and by the Trustees who
neither are "interested persons" (as defined in the 1940 Act) of
the Trust nor have any direct or indirect financial interest in the
operation of the Plan or in any related agreement, by vote cast in
person at a meeting called for the purpose of considering such
amendments. The selection and nomination of the Trustees of
the Trust has been committed to the discretion of the Trustees who
are not "interested persons" of the Trust. The Plan and the
related Administrative Services Contract between the Trust and the
Sponsor have been approved, and are subject to annual approval, by
the Board of Trustees and by the Trustees who neither are
"interested persons" nor have any direct or indirect financial
interest in the operation of the Plan or in the Administrative
Services Contract, by vote cast in person at a meeting called for
the purpose of voting on the Plan. The Board of Trustees and the
Trustees who are not "interested persons" and who have no direct or
indirect financial interest in the operation of the Plan or in the
Administrative Services Contract voted to approve the Plan at a
meeting held on November 25, 1996. The Plan was submitted to the
shareholders of the Fund and approved at a special meeting
held on November 25, 1996. The Plan is terminable with respect to
the Fund at any time by a vote of a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in the
Administrative Services Contract or by vote of the holders of a
majority of the shares of the Fund.
Administrative Services
BISYS provides management and administrative services
necessary for the operation of the Funds, including, among other
things: (i) preparation of shareholder reports and communications;
(ii) regulatory compliance, such as reports to and filings with the
SEC and state securities commissions; and (iii) general supervision
of the operation of the Funds, including coordination of the
services performed by the Adviser, the Distributor,
transfer agent, custodians, independent accountants, legal counsel
and others. In addition, BISYS furnishes office space and
facilities required for conducting the business of the Funds and
pays the compensation of the Funds' officers, employees and
Trustees affiliated with BISYS. For these services,
BISYS receives from each Fund a fee, payable monthly, at the
annual rate of 0.15% of each Fund's average daily net assets.
The Administrative Services Contract is for a one year term
and is subject to annual approval by a majority of the Trustees who
are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of the Administrative
Services Contract. The Administrative Services Contract will
terminate automatically in the event of its assignment.
Service Organizations
The Trust also contracts with banks (including the
Adviser), trust companies, broker-dealers (other than BISYS) or
other financial organizations ("Service Organizations") to provide
certain administrative services for the Funds. Services provided
by Service Organizations may include among other things: providing
necessary personnel and facilities to establish and maintain
certain shareholder accounts and records; assisting in
processing purchase and redemption transactions; arranging for the
wiring of funds; transmitting and receiving funds in connection
with shareholders orders to purchase or redeem shares; verifying
and guaranteeing client signatures in connection with redemption
orders, transfers among and changes in shareholders
designating accounts; providing periodic statements showing a
shareholder's account balance and, to the extent practicable,
integrating such information with other client transactions;
furnishing periodic and annual statements and
confirmations of all purchases and redemptions of shares in a
shareholder's account; transmitting proxy statements, annual
reports, and updating prospectuses and other communications from
the Funds to shareholders; and providing such other services as the
Funds or a shareholder reasonably may request, to the extent
permitted by applicable statute, rule or regulation.
Neither BISYS, nor the Distributor will be a Service Organization
or receive fees for servicing. Service Organizations for
Institution Premium Class shareholders may also provide
recordkeeping, communication with and education
of shareholders, fiduciary services (exclusive of investment
management) and asset allocation services.
Some Service Organizations may impose additional or
different conditions on their clients, such as requiring their
clients to invest more than the minimum initial or subsequent
investments specified by the Funds or charging a direct fee for
servicing. If imposed, these fees would be in addition to any
amounts which might be paid to the Service Organization by the
Funds. Each Service Organization has agreed to transmit to its
clients a schedule of any such fees. Shareholders using Service
Organizations are urged to consult them regarding any such fees or
conditions.
The Glass-Steagall Act and other applicable laws, among
other things, prohibit banks from engaging in the business of
underwriting, selling or distributing securities. There currently
is no precedent prohibiting banks from performing administrative
and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or
interpretations of such laws, as well as changes in either Federal
or state statutes or regulations relating to the permissible
activities of banks and their subsidiaries or affiliates, could
prevent a bank from continuing to perform all or a part of its
servicing activities. In addition, state
securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to
state law.
If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders of the Trust and
alternative means for continuing the servicing of such shareholders
would be sought. In that event, changes in the operation of the
Trust might occur and a shareholder serviced by such a bank might
no longer be able to avail itself of any services then being
provided by the bank. It is not expected that
shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
EXPENSES
Except for the expenses paid by the Adviser and BISYS,
the Funds bear all costs of their operations.
DETERMINATION OF NET ASSET VALUE
As indicated under "Fund Share Valuation" in the
applicable Prospectus, the Money Market Fund uses the amortized
cost method to determine the value of its portfolio securities
pursuant to Rule 2a-7 under the 1940 Act. The amortized cost
method involves valuing a security at its cost and
amortizing any discount or premium over the period until maturity
regardless of the impact of fluctuating interest rates on the
market value of the security. While this method provides certainty
in valuation, it may result in periods during which the value, as
determined by amortized cost, is higher or
lower than the price which the Fund would receive if the security
were sold. During these periods, the yield to a shareholder may
differ somewhat from that which could be obtained from a similar
fund which utilizes a method of valuation based upon market prices.
Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in lower value of a Fund's portfolio
on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would
result from an investment in a fund utilizing solely market values
and existing Fund shareholders would receive correspondingly less
income. The converse would apply during periods of rising interest
rates.
Rule 2a-7 provides that in order to value its
portfolio using the amortized cost method, the Money Market Fund
must maintain a dollar-weighted average portfolio maturity of 90
days or less, purchase securities having remaining maturities of
397 days or less and invest only in U.S. dollar denominated
eligible securities determined by the Trust's Board of Trustees to
be of minimal credit risks and which (1) have received the highest
short-term rating by at least two Nationally Recognized Statistical
Rating Organizations ("NRSROs"), such as "A-1" by Standard & Poor's
and "P-1" by Moody's; (2) are single rated and have received the
highest short-term rating by a NRSRO; or (3) are unrated, but are
determined to be of comparable quality by the Adviser or the
Adviser pursuant to guidelines approved by the Board and
subject to the ratification of the Board.
In addition, the Fund will not invest more than 5% of
its total assets in the securities (including the securities
collateralizing a repurchase agreement) of, or subject to puts
issued by, a single issuer, except that, the Fund may invest in
U.S. Government securities or repurchase agreements that are
collateralized by U.S. Government securities without any
such limitation, and the limitation with respect to puts does not
apply to unconditional puts if no more than 10% of a Fund's total
assets are invested in securities issued or guaranteed by the
issuer of the unconditional put. Investments in rated securities
not rated in the highest category by at least
two rating organizations (or one rating organization if the
instrument was rated by only one such organization), and unrated
securities not determined by the Board of Trustees to be comparable
to those rated in the highest rating category, will be limited to
5% of a Fund's total assets, with investment in
any one such issuer being limited to no more than the greater of 1%
of a Fund's total assets or $1,000,000.
Pursuant to Rule 2a-7, the Board of Trustees is also
required to establish procedures designed to stabilize, to the
extent reasonably possible, the price per share of the Funds, as
computed for the purpose of sales and redemptions, at $1.00. Such
procedures include review of the Fund's portfolio
holdings by the Board of Trustees, at such intervals as it may deem
appropriate, to determine whether the net asset value of the Funds
calculated by using available market quotations deviates from $l.00
per share based on amortized cost. The extent of any deviation
will be examined by the Board of Trustees. If such deviation
exceeds - of 1%, the Board of Trustees will
promptly consider what action, if any, will be initiated. In the
event the Board of Trustees determines that a deviation exists
which may result in material dilution or other unfair results to
investors or existing shareholders, the Board of Trustees will take
such corrective action as it regards as necessary and appropriate,
which may include selling portfolio instruments prior to maturity
to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or establishing
a net asset value per share by using available market quotations.
The Non-Money Market Fund values its portfolio securities
in accordance with the procedures described in the Prospectus.
PORTFOLIO TRANSACTIONS
Investment decisions for the Funds and for the other
investment advisory clients of the Adviser are made with a view to
achieving their respective investment objectives. Investment
decisions are the product of many factors in addition to basic
suitability for the particular client involved. Thus, a particular
security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the
same time. Likewise, a particular security may be bought for one
or more clients when one or more clients are selling the security.
In some instances, one client may sell a particular security to
another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as possible,
averaged as to price and allocated between such clients
in a manner which in the opinion of the Adviser is equitable to
each and in accordance with the amount being purchased or sold by
each. There may be circumstances when purchases or sales of
portfolio securities for one or more clients will have an adverse
effect on other clients.
The Funds have no obligation to deal with any dealer or
group of dealers in the execution of transactions in portfolio
securities. Subject to policies established by the Trust's Board
of Trustees and the AMR Trust Board, the Adviser and Portfolio
Advisers, as appropriate, are primarily responsible
for portfolio decisions and the placing of portfolio transactions.
In placing orders, it is the policy of the Funds and the Portfolio
to obtain the best results taking into account the broker-dealer's
general execution and operational facilities, the type of
transaction involved and other factors such as the dealer's risk in
positioning the securities. While the Adviser generally seeks
reasonably competitive spreads or commissions, the Funds will
not necessarily be paying the lowest spread or commission
available.
Purchases and sales of securities will often be
principal transactions in the case of debt securities and equity
securities traded otherwise than on an exchange. The purchase or
sale of equity securities will frequently involve the payment of a
commission to a broker-dealer who effects the transaction on behalf
of a Fund. Debt securities normally will be purchased or sold from
or to issuers directly or to dealers serving as market
makers for the securities at a net price. Generally, money market
securities are traded on a net basis and do not involve brokerage
commissions.
The cost of executing portfolio securities transactions
for the Money Market Fund primarily consists of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated
with the Funds or the Sponsor are prohibited from dealing with the
Funds as a principal in the purchase and sale of securities unless
a permissive order allowing such transactions is obtained from the
SEC.
The Adviser or Portfolio Advisers may, in circumstances in
which two or more broker-dealers are in a position to offer
comparable results, give preference to a dealer which has provided
statistical or other research services to the Adviser or Portfolio
Advisers. By allocating transactions in this manner, the Adviser
or Portfolio Advisers are able to supplement its research and
analysis with the views and information of securities firms. These
items, which in some cases may also be purchased for
cash, include such matters as general economic and securities
market reviews, industry and company reviews, evaluations of
securities and recommendations as to the purchase and sale of
securities.
Some of these services are of value to the Adviser in
advising various of their clients (including the Funds), although
not all of these services are necessarily useful and of value in
managing the Funds. The management fee paid by the Funds is not
reduced because the Adviser or Portfolio Advisers or their
affiliates receive such services.
As permitted by Section 28(e) of the Securities
Exchange Act of 1934 (the "Act"), the Adviser may cause the Funds
to pay a broker-dealer which provides "brokerage and research
services" (as defined in the Act) to the Adviser an amount of
disclosed commission for effecting a securities transaction for the
Funds in excess of the commission which another broker-dealer would
have charged for effecting that transaction.
Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. and subject to
seeking the most favorable price and execution available and such
other policies as the Trustees may determine, the Adviser may
consider sales of shares of the Funds as a factor in the selection
of broker-dealers to execute portfolio transactions for the
Funds.
Approach to Stock Selection
Investment advisers to the Portfoio will select equity
securities which, in their opinion, have above average growth
potential and are also selling at a discount to the market. This
approach focuses on the purchase of a diverse group of stocks below
their perceived economic value. Each of the investment
advisers determines the growth prospects of firms based upon a
combination of internal and external research using fundamental
economic cycle analysis and considering changing economic trends.
The determination of value is based upon the analysis of several
characteristics of the issuer and its equity securities including
price to earnings ratio, price to book value ratio, assets carried
below market value, financial strength and dividend yield.
Portfolio Turnover
Changes may be made in the portfolio consistent with the
investment objectives and policies of the Funds whenever such
changes are believed to be in the best interests of the Funds and
their shareholders. It is anticipated that the annual portfolio
turnover rate normally will not exceed the amounts stated in the
Funds' Prospectuses and financial statements. The portfolio
turnover rate is calculated by dividing the lesser of purchases
or sales of portfolio securities by the average monthly value of
the Fund's portfolio securities. For purposes of this calculation,
portfolio securities exclude all securities having a maturity when
purchased of one year or less.
TAXATION
The Funds intend to qualify and elect annually to be
treated as regulated investment companies under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To qualify
as a regulated investment company, a Fund must (a) distribute to
shareholders at least 90% of its investment company taxable income
(which includes, among other items, dividends, taxable interest and
the excess of net short-term capital gains over net long-term
capital losses); (b) derive in each taxable year at least
90% of its gross income from dividends, interest, payments with
respect to securities loans and gains from the sale or other
disposition of stock, securities or foreign currencies or other
income derived with respect to its business of investing in such
stock, securities or currencies; (c) derive less
than 30% of its gross income from the sale or other disposition of
certain assets (namely, (i) stock or securities; (ii) options,
futures, and forward contracts (other than those on foreign
currencies), and (iii) foreign currencies (including options,
futures, and forward contracts on such currencies) not directly
related to the Fund's principal business of investing
in stock or securities (or options and futures with respect to
stocks or securities)) held less than 3 months; and (d) diversify
its holdings so that, at the end of each quarter of the taxable
year, (i) at least 50% of the market
value of the Fund's assets is represented by cash and cash items
(including receivables), U.S. Government securities, the securities
of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of
this calculation to an amount not greater than 5% of the value of
the Fund's total assets and not greater than
10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in
the securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment
companies). In addition, a Fund earning tax-exempt
interest must, in each year, distribute at least 90% of its net
tax-exempt income. By meeting these requirements, the Funds
generally will not be subject to Federal income tax on their
investment company taxable income and net capital gains which are
distributed to shareholders. If the Funds do not
meet all of these Code requirements, they will be taxed as ordinary
corporations and their distributions will be taxed to shareholders
as ordinary income.
Taxation of the Portfolios
The portfolios have received a ruling from the IRS to the
effect that, among other things, each Portfolio is treated as a
separate partnership for federal income tax purposes and is not a
"publicly traded partnership." As a result, each Portfolio is not
subject to federal income tax; instead, each investor in a
Portfolio is not subject to federal income tax; instead, each
investor in a Portfolio, such as a Fund, is required to take into
account in determining its federal income tax liability its share
of the Portfolio's income, gains, losses, deductions, credits and
tax preference items, without regard to whether it has received any
cash distributions from the Portfolio.
Because the ruling from the IRS provides, as noted above,
the each Fund is deemed to own a proportionate share of its
corresponding Portfolio's assets and income for purposes of
determining whether the Fund satisfies the requirements to qualify
as a RIC, each Portfolio intends to conduct its operations so that
its corresponding Fund will be able to satisfy all those
requirements.
Distributions to a Fund from its corresponding Portfolio
(whether pursuant to a partial or complete withdrawal or otherwise)
will not result in the Fund's recognition of any gain or loss for
federal income tax purposes, except that (1) gains will be
recognized to the extent any cash that is distributed exceeds the
Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the
distribution is in liquidating of the Fund's entire interest in the
Portfolio and includes a disproportionate share of any unrealized
receivable held by the Portfolio and (3) loss will be recognized if
a liquidating distribution consists solely of cash and/or
unrealized receivables. A Fund's basis for its interest in its
corresponding Portfolio generally will equal the amount of cash and
the basis of any property the Fund invests in the Portfolio,
increased by the Fund's share of the Portfolio's net income and
gains and decreased by (a) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (b) the Fund's
share of the Portfolio's losses.
Amounts, other than tax-exempt interest, not
distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise
tax. To prevent imposition of the excise tax, each Fund must
distribute for each calendar year an amount equal to the
sum of (1) at least 98% of its ordinary income (excluding any
capital gains or losses) for the calendar year, (2) at least 98% of
the excess of its capital gains over capital losses (adjusted for
certain ordinary losses) for the one-year period ending October 31
of such year, and (3) all ordinary income and capital gains net
income (adjusted for certain ordinary losses) for
previous years that were not distributed during such years. A
distribution, including an "exempt-interest dividend," will be
treated as paid on December 31 of a calendar year if it is declared
by a Fund during October, November or December of that year to
shareholders of record on a date in such a month and
paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year
in which the distributions are declared, rather than the calendar
year in which the distributions are received.
Some Funds may invest in stocks of foreign companies
that are classified under the Code as passive foreign investment
companies ("PFICs"). In general, a foreign company is classified
as a PFIC under the Code if at least one-half of its assets
constitutes investment-type assets or 75% or more
of its gross income is investment-type income. Under the PFIC
rules, an "excess distribution" received with respect to PFIC stock
is treated as having been realized ratably over the period during
which the Fund or the Portfolio held the PFIC stock. A Fund itself
will be subject to tax on the portion, if any, of the excess
distribution that is allocated to the Fund's holding period
in prior taxable years (and an interest factor will be added to the
tax, as if the tax had actually been payable in such prior taxable
years) even though the Fund distributes the corresponding income to
shareholders. Excess distributions include any gain from the sale
of PFIC stock as well as certain distributions from a PFIC. All
excess distributions are taxable as ordinary income.
A Fund or the Portfolio may be able to elect
alternative tax treatment with respect to PFIC stock. Under an
election that currently may be available, a Fund or the Portfolio
generally would be required to include in its gross income its
share of the earnings of a PFIC on a current basis,
regardless of whether any distributions are received from the PFIC.
If this election is made, the special rules, discussed above,
relating to the taxation of excess distributions, would not apply.
In addition, other elections may become available that would affect
the tax treatment of PFIC stock held by a Fund. Each Fund's and the
Portfolio's intention to qualify annually as a regulated investment
company may limit its elections with respect to PFIC
stock.
Because the application of the PFIC rules may affect,
among other things, the character of gains, the amount of gain or
loss and the timing of the recognition of income with respect to
PFIC stock, as well as subject a Fund itself or the Portfolio to
tax on certain income from PFIC stock, the amount that must be
distributed to shareholders, and which will be
taxed to shareholders as ordinary income or long-term capital gain,
may be increased or decreased substantially as compared to a fund
that did not invest in PFIC stock. Investors should consult their
own tax advisors in this regard.
Distributions of investment company taxable income
generally are taxable to shareholders as ordinary income.
Distributions from certain of the Funds may be eligible for the
dividends-received deduction available to corporations. To the
extent dividends received by a Fund are attributable to
foreign corporations, a corporation that owns shares will not be
entitled to the dividends-received deduction with respect to its
pro rata portion of such dividends, since the dividends-received
deduction is generally available only with respect to dividends
paid by domestic corporations. Proposed legislation, if enacted,
would reduce the dividends received deduction from 70
to 50 percent.
Distributions of net long term capital gains, if any,
designated by the Funds as long term capital gain dividends are
taxable to shareholders as long-term capital gain, regardless of
the length of time the Funds' shares have been held by a
shareholder. All distributions are taxable to the
shareholder in the same manner whether reinvested in additional
shares or received in cash. Shareholders will be notified annually
as to the Federal tax status of distributions.
Distributions by a Fund reduce the net asset value of the
Fund's shares. Should a distribution reduce the net asset value
below a shareholder's cost basis, such distribution, nevertheless,
would be taxable to the shareholder as ordinary income or capital
gain as described above, even though, from an investment
standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider
the tax implications of buying shares just prior to a distribution
by the Funds. The price of shares purchased at that time includes
the amount of the forthcoming distribution. Those purchasing just
prior to a distribution will receive a distribution which will
nevertheless generally be taxable to them.
Upon the taxable disposition (including a sale or
redemption) of shares of a Fund, a shareholder may realize a gain
or loss depending upon his basis in his shares. Such gain or loss
generally will be treated as capital gain or loss if the shares are
capital assets in the shareholders hands. Such gain or loss will
be long-term or short-term, generally depending upon the
shareholder's holding period for the shares. However, a loss
realized by a shareholder on the disposition of Fund shares with
respect to which capital gain dividends have been paid will, to the
extent of such capital gain dividends, be treated as long term
capital loss if such shares have been held by the shareholder for
six months or less. A loss realized on the redemption,
sale or exchange of Fund shares will be disallowed to the extent an
exempt-interest dividend was received with respect to those shares
if the shares have been held by the shareholder for six months or
less. Further, a loss realized on a disposition will be disallowed
to the extent the shares disposed of are replaced (whether by
reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the shares
are disposed of. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
Shareholders receiving distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in
each share received equal to the net asset value of a share of the
Funds on the reinvestment date.
Under certain circumstances, the sales charge incurred in
acquiring shares of a Fund may not be taken into account in
determining the gain or loss on the disposition of those shares.
This rule applies where shares of a Fund are exchanged within 90
days after the date they were purchased and new shares of a Fund
are acquired without a sales charge or at a reduced sales charge.
In that case, the gain or loss recognized on the
exchange will be determined by excluding from the tax basis of the
shares exchanged all or a portion of the sales charge incurred in
acquiring those shares. This exclusion applies to the extent that
the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of having incurred the sales
charge initially. Instead, the portion of the
sales charge affected by this rule will be treated as a sales
charge paid for the new shares.
The taxation of equity options is governed by Code
section 1234. Pursuant to Code section 1234, the premium received
by a Fund for selling a put or call option is not included in
income at the time of receipt. If the option expires, the premium
is short-term capital gain to the Fund. If the Fund enters into a
closing transaction, the difference between the amount paid
to close out its position and the premium received is short-term
capital gain or loss. If a call option written by a Fund is
exercised, thereby requiring the Fund to sell the underlying
security, the premium will increase the amount
realized upon the sale of such security and any resulting gain or
loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With
respect to a put or call option that is purchased by a Fund, if the
option is sold, any resulting gain or loss will be
a capital gain or loss, and will be long-term or short-term,
depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or
short-term, depending upon the holding
period of the option. If the option is exercised, the cost of the
option, in the case of a call Option, is added to the basis of the
purchased security and, in the case of a put option, reduces the
amount realized on the underlying security in determining gain or
loss.
Certain of the options, futures contracts, and forward
foreign currency exchange contracts that several of the Funds may
invest in are so-called "section 1256 contracts." With certain
exceptions, gains or losses on section 1256 contracts generally are
considered 60% long-term and 40% short-term capital gains or losses
("60/40"). Also, section 1256 contracts held by a Fund at the end
of each taxable year (and, generally, for purposes of the 4% excise
tax, on October 31 of each year) are "marked-to-market" with
the result that unrealized gains or losses are treated as though
they were realized and the resulting gain or loss is treated as
60/40 gain or loss. Investors should contact their own tax
advisors in this regard.
Generally, the hedging transactions undertaken by a Fund
may result in "straddles" for Federal income tax purposes. The
straddle rules may affect the character of gains (or losses)
realized by a Fund. In addition, losses realized by a Fund on a
position that are part of a straddle may be deferred under the
straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such
losses are realized. Because only a few regulations implementing
the straddle rules have been promulgated, the tax consequences to
a Fund of hedging transactions are not entirely clear. Hedging
transactions may increase the amount of short-term capital gain
realized by a Fund which is taxed as ordinary income
when distributed to stockholders.
A Fund may make one or more of the elections available
under the Code which are applicable to straddles. If a Fund makes
any of the elections, the amount, character and timing of the
recognition of gains or losses from the affected straddle positions
will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or
losses from the affected straddle positions.
Because application of the straddle rules may affect
the character of gains or losses, defer losses and/or accelerate
the recognition of gains or losses from the affected straddle
positions, the amount which must be distributed to shareholders,
and which will be taxed to shareholders as ordinary income or
long-term capital gain, may be increased or decreased
substantially as compared to a fund that did not engage in such
hedging transactions. Investors should contact their own tax
advisors in this regard.
Certain requirements that must be met under the Code in
order for a Fund to qualify as a regulated investment company may
limit the extent to which a Fund will be able to engage in
transactions in options, futures, and forward contracts.
Under the Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time a Fund
accrues interest, dividends or other receivables, or accrues
expenses or other liabilities denominated in a foreign currency,
and the time the Fund actually collects such receivables,
or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities
denominated in a foreign currency and on disposition of certain
options and forward and futures contracts, gains or losses
attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or
contract and the date of disposition also are treated as ordinary
gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase, decrease, or eliminate
the amount of a Fund's investment company taxable income to be
distributed to its shareholders as ordinary income. Investors
should contact their own tax advisors in this regard.
Income received by a Fund from sources within foreign
countries may be subject to withholding and other similar income
taxes imposed by the foreign country. If more than 50% of the
value of a Fund's total assets at the close of its taxable year
consists of securities of foreign governments
and corporations, the Fund will be eligible and intends to elect to
"pass-through" to its shareholders the amount of such foreign taxes
paid by the Fund. Pursuant to this election, a shareholder would
be required to include in gross income (in addition to taxable
dividends actually received) his pro rata share of the foreign
taxes paid by a Fund, and would be entitled
either to deduct his pro rata share of foreign taxes in computing
his taxable income or to use it as a foreign tax credit against his
U.S. Federal income tax liability, subject to limitations. No
deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions, but such a shareholder may be eligible
to claim the foreign tax credit (see below). Each
shareholder will be notified within 60 days after the close of a
Fund's taxable year whether the foreign taxes paid by a Fund will
"pass-through" for that year and, if so, such notification will
designate (a) the shareholder's portion of the foreign taxes paid
to each such country and (b) the portion of the dividend which
represents income derived from foreign sources.
Generally, a credit for foreign taxes is subject to the
limitation that it may not exceed the shareholder's U.S. tax
attributable to his total foreign source taxable income. For this
purpose, if a Fund makes the election described in the preceding
paragraph, the source of the Fund's income flows through to its
shareholders. With respect to a Fund, gains from the sale of
securities will be treated as derived from U.S. sources and certain
currency fluctuations gains, including fluctuation gains from
foreign currency-denominated debt securities, receivables and
payables, will be treated as ordinary income derived from U.S.
sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income as defined for purposes
of the foreign tax credit) including foreign source passive income
of a Fund. The foreign tax credit may offset only 90% of the
alternative minimum tax imposed on corporations and individuals,
and foreign taxes generally may not be deducted in computing
alternative minimum taxable income.
The Funds are required to report to the Internal Revenue
Service ("IRS") all distributions except in the case of certain
exempt shareholders. All such distributions generally are subject
to withholding of Federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if (1) the
shareholder fails to furnish the Funds with and to
certify the shareholder's correct taxpayer identification number or
social security number, (2) the IRS notifies the Funds or a
shareholder that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to
notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he is not subject to backup
withholding. If the withholding provisions are applicable, any
such distributions, whether reinvested in additional shares or
taken in cash, will be reduced by the amounts required to be
withheld. Backup withholding is not an additional tax. Any amount
withheld may be credited against the shareholders U.S. Federal
income tax liability. Investors may wish to consult
their tax advisors about the applicability of the backup
withholding provisions.
The foregoing discussion relates only to Federal income
tax law as applicable to U.S. persons (i.e., U.S. citizens and
residents and U.S. corporations, partnerships, trusts and estates).
Distributions by the Funds also may be subject to state and local
taxes and their treatment under state and local income tax laws may
differ from the Federal income tax treatment. Distributions of a
Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities
may be exempt from state and local taxes in certain states.
Shareholders should consult their tax advisors with respect to
particular questions of Federal, state and local taxation.
Shareholders who are not U.S. persons should consult their tax
advisers regarding U.S. and foreign tax consequences of
ownership of shares of the Funds including the likelihood that
distributions to them would be subject to withholding of U.S. tax
at a rate of 30% (or at a lower rate under a tax treaty).
Kansas Tax Exempt Bond Fund. This Fund intends to manage
its portfolio so that it will be eligible to pay "exempt-interest
dividends" to shareholders. The Fund will so qualify if, at the
close of each quarter of its taxable year, at least 50% of the
value of its total assets consists of state, municipal, and certain
other securities, the interest on which is exempt from the regular
Federal income tax. To the extent that the Fund's
dividends distributed to shareholders are derived from such
interest income and are designated as exempt-interest dividends by
the Fund, they will be excludable from a shareholder's gross income
for Federal income tax purposes. Exempt-interest dividends,
however, must be taken into account by shareholders
in determining whether their total incomes are large enough to
result in taxation of up to 85% of their Social Security benefits
and certain railroad retirement benefits. The Fund will inform
shareholders annually as to the portion of the distributions from
the Fund which constitute exempt-interest
dividends. In addition, for corporate shareholders of the Fund,
exempt interest dividends may comprise part or all of an adjustment
to alternative minimum taxable income. Exempt-interest dividends
that are attributable to certain private activity bonds, while not
subject to the regular Federal income tax, may constitute an item
of tax preference for purposes of the alternative minimum tax.
To the extent that the Fund's dividends are derived from
its investment company taxable income (which includes interest on
its temporary taxable investments and the excess of net short-term
capital gain over net long-term capital loss), they are considered
ordinary (taxable) income for Federal income tax purposes. Such
dividends will not qualify for the dividends - received deduction
for corporations. Distributions, if any, of net long-term capital
gains (the excess of net long-term capital gain over net
short-term capital loss) designated by a Fund as long-term capital
gain dividends are taxable to shareholders as long-term capital
gain regardless of the length of time the shareholder has owned
shares of the Fund.
Upon redemption, sale or exchange of shares in this Fund,
a shareholder will realize a taxable gain or loss, depending on
whether the gross proceeds are more or less than the shareholder's
tax basis for the shares. The discussion above provides additional
detail about the income tax consequences of disposing of Fund
shares.
Deductions for interest expense incurred to acquire or
carry shares of the Fund may be subject to limitations that reduce,
defer, or eliminate such deductions. This includes limitations on
deducting interest on indebtedness properly allocable to investment
property (which may include shares of the Fund). In addition, a
shareholder may not deduct a portion of interest on indebtedness
incurred or continue to purchase or carry shares of
an investment company (such as this Fund) paying exempt-interest
dividends. Such disallowance would be in an amount which bears the
same ratio to the total of such interest as the exempt-interest
dividends bear to the total dividends, excluding net capital gain
dividends received by the shareholder. Under rules issued by the
IRS for determining when borrowed funds are considered used for the
purposes of purchasing or carrying particular assets,
the purchase of shares may be considered to have been made with
borrowed funds even though the borrowed funds are not directly
traceable to the purchase of shares.
Certain of the debt securities acquired by the Fund may
be treated as debt securities that were originally issued at a
discount. Original issue discount can generally be defined as the
difference between the price at which a security was issued and its
stated redemption price at maturity. Although no cash income is
actually received by the Fund, original issue discount on a
taxable debt security earned in a given year generally is treated
for Federal income tax purposes as interest and, therefore, such
income would be subject to the distribution requirements of the
Code. Original issue discount on an obligation, the interest from
which is exempt from Federal income tax, generally will constitute
tax-exempt interest income.
Some of the debt securities may be purchased by the Fund
at a discount which exceeds the original issue discount on such
securities, if any. This additional discount represents market
discount for Federal income tax purposes. The gain realized on the
disposition of any debt security having market discount will be
treated as ordinary taxable income to the extent it
does not exceed the accrued market discount on such debt security.
Generally, market discount accrues on a daily basis for each day
the debt security is held by the Fund at a constant rate over the
time remaining to the debt security's maturity or, at the election
of the Fund, at a constant yield to maturity which takes into
account the semi-annual compounding of interest.
Under Kansas law, a mutual fund which qualifies as a
regulated investment company generally must have at least 50% of
its total assets in Kansas state and local issues at the end of
each quarter of its taxable year in order to be eligible to pay
dividends which will be exempt from Kansas personal income tax.
Generally, shareholders who are Kansas residents will
not incur Kansas personal income tax on the amount of
exempt-interest dividends received by them from the Fund and
derived from Kansas state and local issues, whether taken in cash
or paid in additional shares. Gain on the sale or redemption of
Fund shares is subject to Kansas personal income tax.
Shareholders will normally be subject to Kansas personal
income tax on dividends paid from income derived from taxable
securities and other taxable investments, and from securities
issued by states other than Kansas and on distribution of capital
and other taxable gains.
The Fund will be required to report to the IRS all
distributions of investment company taxable income and net capital
gains and gross proceeds from the redemption or exchange of the
Fund's shares, except in the case of certain exempt shareholders.
All such distributions and proceeds from the redemption or exchange
of the Fund's shares may be subject to withholding of
Federal income tax at the rate of 31% in the case of non-exempt
shareholders who fail to furnish a Fund with their taxpayer
identification numbers and with required certifications regarding
their status under Federal income tax laws.
A deductible "environmental tax" of 0.12% is imposed on
a corporation's modified alternative minimum taxable income in
excess of $2 million. The environmental tax will be imposed even
if the corporation is not required to pay an alternative minimum
tax because the corporation's regular income tax liability exceeds
its minimum tax liability. To the extent that exempt-interest
dividends paid by a Fund are included in alternative minimum
taxable income, corporate shareholders may be subject to the
environmental tax.
Opinions relating to the validity of municipal securities
and the exemption of interest thereon from Federal income tax are
rendered by bond counsel to the issuers. The Fund, the Adviser and
its affiliates, and the Funds' counsel make no review of
proceedings relating to the issuance of state or municipal
securities on the bases of such opinions.
Persons who may be "substantial users" (or "related
persons" to substantial users) of facilities financed by private
activity bonds should consult their tax advisers before purchasing
shares of this Fund since the acquisition of shares of the Fund may
result in adverse tax consequences to them. In addition, all
shareholders of a Fund should consult their tax
advisers about the tax consequences to them of their investments in
the Fund.
Changes in the tax law, including provisions relating to
tax-exempt income, frequently come under consideration. If such
changes are enacted, the tax consequences arising from an
investment in Kansas Tax Exempt Bond Fund may be affected. Since
the Trust does not undertake to furnish tax advice, it is important
for shareholders to consult their tax advisers regularly about the
tax consequences to them of investing in one or more of
the INTRUST Funds.
OTHER INFORMATION
Capitalization
The Trust is a Delaware business trust established under
a Declaration of Trust dated January 26, 1996 and currently
consists of six separately managed portfolios. Each portfolio is
comprised of two classes of shares -- the "Institutional Service
Class" and the "Institutional Premium Class". The two classes are
identical with the exception that the shareholders in the
Institutional Premium Class may pay Service Organization
fees in an amount up to 0.50% of the daily net asset value of the
Fund's shares owned by shareholders with whom the Service
Organization has a servicing relationship for record keeping,
communications with and education of shareholders, fiduciary
services (excluding investment management) and
asset allocation services. The capitalization of the Trust
consists solely of an unlimited number of shares of beneficial
interest with a par value of $0.001 each. The Board of Trustees may
establish additional Funds (with different investment objectives
and fundamental policies) at any time in the future. Establishment
and offering of additional Funds will not alter the
rights of the Trust's shareholders. When issued, shares are fully
paid, non-assessable, redeemable and freely transferable. Shares
do not have preemptive rights or subscription rights. In any
liquidation of a Fund, each shareholder is entitled to receive his
pro rata share of the net assets of that Fund.
Expenses incurred in connection with each Fund's
organization and the public offering of its shares have been
deferred and are being amortized on a straight-line basis over a
period of not more than five years.
Voting Rights
Under the Declaration of Trust, the Trust is not required
to hold annual meetings of each Fund's shareholders to elect
Trustees or for other purposes. When certain matters affect only
one class of shares but not another, the shareholders would vote as
a class regarding such matters. It is not anticipated that the
Trust will hold shareholders' meetings unless
required by law or the Declaration of Trust. In this regard, the
Trust will be required to hold a meeting to elect Trustees to fill
any existing vacancies on the Board if, at any time, fewer than a
majority of the Trustees have been elected by the shareholders of
the Trust. In addition, the Declaration of Trust provides that the
holders of not less than two-thirds of the outstanding
shares of the Trust may remove persons serving as Trustee either by
declaration in writing or at a meeting called for such purpose.
The Trustees are required to call a meeting for the purpose of
considering the removal of persons serving as Trustee if requested
in writing to do so by the holders of not less than 10% of the
outstanding shares of the Trust. To the extent required by
applicable law, the Trustees shall assist shareholders who seek to
remove any person serving as Trustee.
The Trust's shares do not have cumulative voting rights,
so that the holders of more than 50% of the outstanding shares may
elect the entire Board of Trustees, in which case the holders of
the remaining shares would not be able to elect any Trustees.
Custodian Transfer Agent and Dividend Disbursing Agent
INTRUST acts as custodian of the Trust's assets.
BISYS acts as transfer agent for the Funds. The Trust compensates
BISYS for providing personnel and facilities to perform transfer
agency related services for the Trust at a rate intended to
represent the cost of providing such services. The International
Multi-Manager Fund pays no custodian fees as long as all of
its assets are invested in another mutual fund, but incurs its
pro-rata portion of the custody fees of Chase Manhattan Bank, N.A.
as Portfolio Custodian. The Trustees of the Portfolio have
reviewed and approved custodial arrangements for securities held
outside of the United States in accordance with Rule 17f-5 of the
1940 Act.
Experts
Price Waterhouse LLP has been selected as the
independent accountants for the Trust. Price Waterhouse LLP
provides audit services, tax return preparation and assistance and
consultation in connection with certain SEC filings. Price
Waterhouse LLP is located at 1177 Avenue of the Americas,
New York, New York 10036.
Yield and Performance Information
The Funds may, from time to time, include their yield,
effective yield, tax equivalent yield and average annual total
return in advertisements or reports to shareholders or prospective
investors.
Current yield for the Money Market Fund will be based on
the change in the value of a hypothetical investment (exclusive of
capital changes such as gains or losses from the sale of securities
and unrealized appreciation and depreciation) over a particular
seven-day period, less a pro-rata share of each Fund's expenses
accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the
"base period return"). The base period return is then
annualized by multiplying by 365/7, with the resulting yield figure
carried to at least the nearest hundredth of one percent.
"Effective yield" for the Money Market Fund assumes that all
dividends received during the base period have been reinvested.
Calculation of "effective yield" begins with the same
"base period return" used in the calculation of yield, which is
then annualized to reflect weekly compounding pursuant to the
following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1.
Quotations of yield for the Non-Money Market Fund will be
based on the investment income per share earned during a particular
30-day period, less expenses accrued during a period ("net
investment income") and will be computed by dividing net investment
income by the maximum offering price per share on the last day of
the period, according to the following formula:
YIELD = 2[(a-b + 1)6-l]
cd
where a = dividends and interest earned during the period, b =
expenses accrued for the period (net of any reimbursements), c =
the average daily number of shares outstanding during the period
that were entitled to receive dividends, and d = the maximum
offering price per share on the last day of the period.
Quotations of tax-equivalent yield for the Kansas Tax
Exempt Bond Fund will be calculated according to the following
formula:
TAX EQUIVALENT YIELD = ( E )
1-p
E = tax-exempt yield
p = stated income tax rate
Quotations of average annual total return will be
expressed in terms of the average annual compounded rate of return
of a hypothetical investment in a Fund over periods of 1, 5 and 10
years and since inception (up to the life of the Fund), calculated
pursuant to the following formula:
P (1 + T)n = ERV
(where P = a hypothetical initial payment of $l,000, T = the
average annual total return, n = the number of years, and ERV = the
ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the period). All total return figures will
reflect the deduction of the maximum sales charge and a
proportional share of Fund expenses (net of certain reimbursed
expenses) on an annual basis, and will assume that all dividends
and distributions are reinvested when paid.
Quotations of yield and total return will reflect only
the performance of a hypothetical investment in the Funds during
the particular time period shown. Yield and total return for the
Funds will vary based on changes in the market conditions and the
level of the Fund's expenses, and no reported performance figure
should be considered an indication of performance
which may be expected in the future.
In connection with communicating its yields or total
return to current or prospective unit holders, the Funds also may
compare these figures to the performance of other mutual funds
tracked by mutual fund rating services or to other unmanaged
indexed which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and
management costs.
Performance information for the Funds may be compared, in
reports and promotional literature, to: (i) the Standard & Poor's
500 Stock Index, Dow Jones Industrial Average, or other unmanaged
indices so that investors may compare the Funds' results with those
of a group of unmanaged securities widely regarded by investors as
representative of the securities markets in general;
(ii) other groups of mutual funds tracked by Lipper Analytical
Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or
persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment of
dividends but generally do not reflect deductions for
administrative and management costs and expenses.
Investors who purchase and redeem shares of the Funds
through a customer account maintained at a Service Organization may
be charged one or more of the following types of fees as agreed
upon by the Service Organization and the investor, with respect to
the customer services provided by the Service Organization:
account fees (a fixed amount per month or per year); transaction
fees (a fixed amount per transaction processed); compensating
balance requirements (a minimum dollar amount a customer must
maintain in order to obtain the services offered); or account
maintenance fees (a periodic charge based upon a percentage of the
assets in the account or of the dividends paid on those assets).
Such fees will have the effect of reducing the yield and
average annual total return of the Funds for those investors.
Investors who maintain accounts with the Trust as transfer agent
will not pay these fees.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1)Financial Statements included in Part A of this
Registration Statement: None.
(2)Financial Statements included in Part B of this
Registration Statement: None.
(b) Exhibits
*(1) Trust Instrument.
*(2) Bylaws of Registrant.
(3) None.
(4) None.
*(5)(a) Form of Master Investment Advisory Agreement
and Supplements between Registrant and Adviser.
*(5)(b) Form of Sub-Advisory Agreements between Adviser
and Sub-Advisers.
*(5)(c) Form of Master Administration Agreement and
Supplements between Registrant and
Administrator.
*(6) Form of Master Distribution Contract and
Supplements between Registrant and Distributor.
(7) None.
*(8) Form of Custodian Contract between Registrant and
Custodian.
*(9)(a) Form of Transfer Agency and Service Agreement
between Registrant and Transfer Agent.
*(10)(a)Consent of Baker & McKenzie, counsel to
Registrant.
*(11) Consent of Independent Accountants.
(12) None
*(13) Subscription Agreement.
(14) None.
*(15) Form of Rule 12b-1 Distribution Plan and Agreement
between Registrant and Distributor.
*(16) Schedule of Computation of Performance
Calculation.
*(17) Financial Data Schedule.
*(18) Rule 18f-3 Plan.
Other Exhibits
*(A) Power Of Attorney.
- -----------------
*To be filed by Amendment.
Item 25. Persons Controlled by or under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities at November 5, 1996.
Cash Reserve Money Market Fund None
Short-Term High Quality Fund None
Intermediate Bond Income Fund None
Stock Appreciation Fund None
International Multi-Manager Fund None
Kansas Tax Exempt Bond Fund None
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company Act
of 1940 (the "1940 Act") and pursuant to Article X of the
Registrant's Trust Instrument (Exhibit 1 to the Registration
Statement), Section 4 of the Master Investment Advisory Contract
between Registrant and the Adviser (Exhibit 5(a) to this
Registration Statement), Section 9 of the Investment Advisory
Agreement between Registrant and the Adviser (Exhibit 5(b) to this
Registration Statement) and Section 9 of the Master Distribution
Contract between Registrant and the Distributor (Exhibit 6 to this
Registration Statement), officers, trustees, employees and agents
of the Registrant will not be liable to the Registrant, any
shareholder, officer, trustee, employee, agent or other person
for any action or failure to act, except for bad faith, willful
misfeasance, gross negligence or reckless disregard of duties, and
those individuals may be indemnified against liabilities in
connection with the Registrant, subject to the same exceptions.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Securities Act") may be permitted
to trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant
understands that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
The Registrant will purchase an insurance policy insuring
its officers and trustees against liabilities, and certain costs of
defending claims against such officers and trustees, to the extent
such officers and trustees are not found to have committed conduct
constituting willful misfeasance, bad faith, gross negligence or
reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of
indemnification payments to officers under certain circumstances.
Section 4 of the Master Investment Advisory Contract
between Registrant and the Adviser, Section 9 of the Investment
Advisory Agreement between Registrant and the Adviser and Section
9 of the Master Distribution Contract between Registrant and the
Distributor limit the liability of the Adviser, and the Distributor
to liabilities arising from willful misfeasance, bad faith or gross
negligence in the performance of their respective duties or
from reckless disregard by them of their respective obligations and
duties under the agreements.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, By-Laws,
Investment Advisory Contracts and Distribution Contract in a manner
consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act so long as the interpretations of
Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.
Item 28. Business and Other Connections of INTRUST Bank, N.A.
INTRUST Bank, N.A. is a majority-owned subsidiary of INTRUST
Financial Corporation (formerly First Bancorp of Kansas), a bank
holding company. INTRUST Bank, N.A. is a national banking
association which provides a full range of banking and trust
services to clients. As of September 30, 1996 total
assets under management were approximately [$1.17] billion. The
principal place of business address of the Adviser is 105 North
Main Street, Box One, Wichita, Kansas 67201. The executive
officers of INTRUST Bank, N.A. and INTRUST Financial Corporation
and such executive officers' positions during the past five years
are as follows:
Name Position and Offices
[]
Business and Other Connections of the Adviser.
To be provided
Principal Occupation
Name and Position During Past Two Years
To be provided
Item 29. Principal Underwriter
(a) BISYS acts as Distributor/Underwriter for other
registered investment companies.
(b) Officers and Directors.
Name and Principal Positions and Offices Positions and
Business with Offices with
Address Registrant Underwriter
BISYS Fund Services,
Inc. None Sole General Partner
3435 Stelzer Road
Columbus, Ohio 43219
WC Subsidiary Corporation
150 Clove Road
Little Falls, New
Jersey 07424 None Sole Limited Partner
The BISYS Group, Inc.
150 Clove Road
Little Falls, New
Jersey 07424 None Sole Shareholder
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder are maintained at the offices of BISYS
located at 3435 Stelzer Road, Columbus, Ohio 43219.
Item 31. Management Services
Not applicable.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting of shareholders
for the purpose of voting upon the removal of a trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant undertakes to provide the support to
shareholders specified in Section 16(c) of the 1940 Act as though
that section applied to the Registrant.
(c) Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be certified,
within four to six months from the effective date of the
Registrant's 1933 Act Registration Statement.
(d) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, Registrant has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New
York, and State of New York, on November 5, 1996.
INTRUST FUNDS TRUST
By:_______________________
John J. Pileggi, President
and Sole Trustee
<PAGE>
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
John J. Pileggi Trustee and Principal November 5, 1996
Executive Officer
Donald Brostrom Vice President and November 5, 1996
Treasurer (Principal
Financial and Accounting
Officer)
<PAGE>
SIGNATURES
AMR Investment Services Trust has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A of the INTRUST FUNDS Trust to be signed on its behalf by the
undesigned only with respect to disclosures relating to the
International Equity Portfolio, a series of the AMR Investment
Services Trust, thereunto duly authorized, in the City of Fort
Worth and the State of Texas on November 5, 1996.
AMR INVESTMENT SERVICES TRUST
By:_____________________
William P. Quim
President
Attest:
________________________________
Barry Y. Greenberg
Vice President and Assistant Secretary
This Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A of the INTRUST TRUST Funds has been signed
below by the following persons in the capacities and on the dates
indicated only with respect to disclosures relating to the
International Equity Portfolio, a series of the AMR Investment
Services Trust.
Signature Title Date
___________________ President and November 5, 1996
William F. Quinn Trustee
Alan D. Feld*
___________________ Trustee November 5, 1996
Alan D. Feld
___________________ Trustee November 5, 1996
Ben J. Fortson
___________________ Trustee November 5, 1996
John S. Justin
___________________ Trustee November 5, 1996
Stephen D. O'Sullivan
____________________ Trustee November 5, 1996
Roger T. Staubach
*By_____________________________
William F. Quinn, Attorney-In-Fact
