<PAGE> 1
As filed with the Securities and Exchange Commission on June 27, 1997
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. | |
Post-Effective Amendment No. 1 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 4 |X|
(Check appropriate box or boxes)
INTRUST 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: (888) 266-8787
George O. Martinez, Esq.
BISYS Fund Services
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
It is proposed that this filing will become effective:
X immediately upon filing pursuant to Rule 485(b)
______ on , 1997 pursuant to Rule 485(b)
______ 60 days after filing pursuant to Rule 485(a)
______ on , 1997 pursuant to Rule 485(a)
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
has registered an indefinite number of shares of Capital Stock, $.001 par value
per share, of all series of the Registrant, now existing or hereafter created.
Registrant intends to file its Rule 24f-2 Notice on or before December 30, 1997.
<PAGE> 2
INTRUST FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Under the Securities Act of 1933
MONEY MARKET FUND
SHORT-TERM BOND FUND
STOCK FUND
INTERMEDIATE BOND FUND
INTERNATIONAL MULTI-MANAGER STOCK FUND
KANSAS TAX-FREE BOND FUND
<TABLE>
<CAPTION>
Part A Prospectus Caption
- ------ ------------------
<S> <C>
Item 1. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . Fund Expenses; Fee Table
Item 3. Condensed Financial
Information. . . . . . . . . . . . . . . . . Financial Highlights
Item 4. General Description of The Investment Policies and
Registrant . . . . . . . . . . . . . . . . . Practices of the Funds
Item 5. Management of the Fund . . . . . . . . . . . Management of the Fund
Item 5A. Management Discussion of Fund
Performance. . . . . . . . . . . . . . . . . Not Applicable
Item 6. Capital Stock and Other Securities . . . . . Dividends, Distributions and Federal
Income Tax; Other Information
Item 7. Purchase of Securities Fund Share Valuation; Pricing and
Being Offered . . . . . . . . . . . . . . . Purchase of Fund Shares
Item 8. Redemption or Repurchase . . . . . . . . . Redemption of Fund Shares
Item 9. Legal Proceedings . . . . . . . . . . . . . Not Applicable
</TABLE>
i
<PAGE> 3
MONEY MARKET FUND
SHORT-TERM BOND FUND
STOCK FUND
INTERMEDIATE BOND FUND
INTERNATIONAL MULTI-MANAGER STOCK FUND
KANSAS TAX-EXEMPT BOND FUND
<TABLE>
<CAPTION>
Statement of Additional
Part B Information Caption
- ------ -------------------
<S> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . Table of Contents
General Information and
Item 12. History . . . . . . . . . . . . . . . . . . Not Applicable
Item 13. Investment Objectives and
Policies . . . . . . . . . . . . . . . . . . Investment Policies; Investment
Restrictions
Item 14. Management of the
Registrant . . . . . . . . . . . . . . . . . Management
Item 15. Control Persons and Principal Holders of
Securities . . . . . . . . . . . . . . . . Management
Item 16. Investment Advisory and Other Services . . . Management; Other Information;
Custodian; Transfer Agent and
Dividend Disbursing Agent; Experts
Item 17. Brokerage Allocation . . . . . . . . . . . Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . Other Information; Capitalization;
Voting Rights
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . Pricing and Purchase of Fund Shares
(Part A); Redemption of Fund Shares
(Part A); Determination of Net Asset
Value
Item 20. Tax Status . . . . . . . . . . . . . . . . . Taxation
Item 21. Underwriters . . . . . . . . . . . . . . . . Management
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Item 22. Calculation of Performance Data . . .. . . Yields and Performance Information
Item 23. Financial Statements . . . . . . . . . . . . Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
iii
<PAGE> 5
PART A
<PAGE> 6
PRELIMINARY NOTE
The Registrant's Prospectus dated January 8, 1997, to which the interim
financial statements contained herein are added by Post-Effective Amendment No.
1, are incorporated by reference to the Registrant's filing of definitive copies
under Rule 497(c).
<PAGE> 7
MONEY MARKET FUND, SHORT-TERM BOND FUND, INTERMEDIATE BOND FUND, STOCK FUND,
INTERNATIONAL
MULTI-MANAGER STOCK FUND
PORTFOLIOS OF
INTRUST FUNDS TRUST
SUPPLEMENT DATED JUNE 27, 1997
TO THE PROSPECTUS DATED JANUARY 8, 1997
The table of "Financial Highlights (unaudited) for a share of beneficial
interest outstanding through the period ended April 30, 1997" below supplements
the unaudited financial statements of the Money Market Fund, Short-Term Bond
Fund, Intermediate Bond Fund, Stock Fund and International Multi-Manager Stock
Fund (the "Funds") portfolios of INTRUST FUNDS TRUST (the "Trust"), contained in
the Statement of Additional Information and sets forth certain information
regarding the investment operations of the Funds for the period presented.
This Supplement is provided to update, and should be read in conjunction with,
the information provided in the Prospectus.
Financial Highlights
(unaudited)
Selected ratios and data for a share of beneficial interest outstanding through
the period:
<TABLE>
<CAPTION>
MONEY MARKET SHORT-TERM INTERMEDIATE STOCK
FUND BOND FUND BOND FUND FUND
---------------- ---------------- ---------------- ----------------
JANUARY 23, JANUARY 21, JANUARY 21, JANUARY 21,
1997 TO 1997 TO 1997 TO 1997 TO
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1997 (a) 1997 (a) 1997 (a) 1997 (a)
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.000 $ 10.00 $ 10.00 $ 10.00
---------------- ---------------- ---------------- ----------------
INVESTMENT ACTIVITIES:
Net investment income 0.013 0.14 0.15 0.01
Net realized and unrealized gains
(losses) from investments -- (0.04) (0.09) (0.06)
---------------- ---------------- ---------------- ----------------
Total from Investment Operations 0.013 0.10 0.06 (0.05)
---------------- ---------------- ---------------- ----------------
DISTRIBUTIONS:
Net Investment Income (0.013) (0.14) (0.15) --
---------------- ---------------- ---------------- ----------------
Total Distributions (0.013) (0.14) (0.15) --
---------------- ---------------- ---------------- ----------------
NET ASSET VALUE,
END OF PERIOD $ 1.000 $ 9.96 $ 9.91 $ 9.95
================ ================ ================ ================
Total Return 1.29%(b) 1.02%(b) 0.61%(b) -0.50%(b)
RATIOS/ SUPPLEMENTAL DATA:
Net Assets at end of period $ 71,374,864 $ 37,886,841 $ 32,725,883 $ 44,979,962
Ratios of expenses to average net
assets 0.65%(c) 0.88%(c) 1.02%(c) 1.58%(c)
Ratio of net investment income to
average net assets 4.82%(c) 5.31%(c) 5.67%(c) 0.77%(c)
Ratio of expenses to average net
assets * 1.05%(c) 1.38%(c) 1.42%(c) 1.99%(c)
Ratio of net investment income to
average net assets * 4.42%(c) 4.81%(c) 5.27%(c) 0.36%(c)
Average Commission Rate -- -- -- 0.0012%
Portfolio turnover rate -- 48.57% 103.26% 17.05%
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
MULTI-
MANAGER
STOCK FUND
----------------
JANUARY 20,
1997 TO
APRIL 30,
1997 (a)
----------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.00
----------------
INVESTMENT ACTIVITIES:
Net investment income 0.04(d)
Net realized and unrealized gains
(losses) from investments 0.08(d)
----------------
Total from Investment Operations 0.12
----------------
DISTRIBUTIONS:
Net Investment Income --
----------------
Total Distributions --
----------------
NET ASSET VALUE,
END OF PERIOD $ 10.12
================
Total Return 1.20%(b)(d)
RATIOS/ SUPPLEMENTAL DATA:
Net Assets at end of period $ 24,307,697
Ratios of expenses to average net
assets 1.62%(c)(d)
Ratio of net investment income to
average net assets 2.19%(c)(d)
Ratio of expenses to average net
assets * 2.07%(c)(d)
Ratio of net investment income to
average net assets * 1.74%(c)(d)
Average Commission Rate -- (e)
Portfolio turnover rate --
</TABLE>
* During the period certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) The per share amounts and ratios reflect income and expenses assuming
inclusion of the International Multi-Manager Stock Fund's proportionate
share of the income and expenses of the AMR Investment Services Trust
International Equity Portfolio.
(e) Refer to AMR Investment Services International Equity Trust Portfolio
Financial Highlights.
<PAGE> 8
PART B
<PAGE> 9
INTRUST FUNDS TRUST
3435 Stelzer Road, Columbus, Ohio 43219
General and Account Information: (888) 266-8787
-----------------------------------------------------------------
INTRUST BANK, N.A.--Investment Adviser
("INTRUST" or the "Adviser")
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
- Money Market Fund
NON MONEY MARKET FUNDS
- Short-Term Bond Fund
- Intermediate Bond Fund
- Stock Fund
- Kansas Tax-Exempt Bond Fund
- International Multi-Manager Stock 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 Stock Fund seeks its investment
objective by investing all of its investable assets in the International Equity
Portfolio (the "Portfolio") of the AMR Investment Services Trust ("AMR Trust")
that has an identical investment objective to the International Multi-Manager
Stock 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
January 8, 1997 as supplemented June 27, 1997 (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.
January 8, 1997
As supplemented June 27, 1997
<PAGE> 10
TABLE OF CONTENTS
Page
INVESTMENT POLICIES.............................................2
INVESTMENT RESTRICTIONS........................................15
KANSAS RISK FACTORS............................................22
MANAGEMENT.....................................................28
Trustees and Officers.....................................28
Trustees and Officers of AMR Investment Services Trust....30
Investment Advisers.......................................35
The Portfolio.............................................37
Distribution of Fund Shares...............................40
Distribution Plan.........................................40
Administrative Services...................................42
Service Organizations.....................................42
EXPENSES.......................................................44
DETERMINATION OF NET ASSET VALUE...............................44
PORTFOLIO TRANSACTIONS.........................................45
Portfolio Turnover........................................47
TAXATION.......................................................48
Taxation of the Portfolio.................................49
Kansas Tax-Exempt Bond Fund...............................56
OTHER INFORMATION..............................................59
Capitalization............................................59
Voting Rights.............................................61
Custodian, Transfer Agent and Dividend Disbursing
Agent................................................62
Experts...................................................62
Yield and Performance Information.........................63
Financial Statements......................................66
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<PAGE> 11
INVESTMENT POLICIES
The Prospectus discusses 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
otherwise noted, 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. References below
to "All Funds" include the International Equity Portfolio of the AMR Investment
Services Trust (the "AMR Trust") (the "Portfolio") except where noted otherwise.
U.S. Government Agency Obligations (All Funds). The 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). The Funds may, consistent with
their respective investment objective and policies,
<PAGE> 12
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
-3-
<PAGE> 13
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 Bond Fund) rating categories of at least one Nationally
Recognized Statistical Rating Organization ("NRSRO") or, if not rated, are, in
the opinion of the Adviser or the Portfolio Advisers, as applicable, of an
investment quality comparable to rated commercial paper in which the Funds may
invest, or, with respect to the 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
-4-
<PAGE> 14
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 or the AMR Trust's Board of
Trustees, as applicable).
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 or Portfolio Advisers, as applicable, 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 Fund, Stock Fund, and
International Multi-Manager Stock 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 the 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
-5-
<PAGE> 15
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
-6-
<PAGE> 16
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 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. 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 Portfolio Advisers, as
applicable or, pursuant to guidelines established by the Board of Trustees or
the AMR Trust Board, as
-7-
<PAGE> 17
applicable, 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 or Portfolio Advisers consider 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
331/3% 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
-8-
<PAGE> 18
borrower may fail to return the securities or may fail to provide additional
collateral.
Securities loans will be made in accordance with the following
conditions: (1) the Funds or the Portfolio 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 Funds or the Portfolio must be able to terminate the loan after notice,
at any time; (4) the Funds or the Portfolio 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 Funds or the
Portfolio 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
Board of Trustees or 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 Board of Trustees or AMR Trust Board, as applicable, to
vote proxies.
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 or the AMR Trust Board, as applicable, 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
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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.
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 Bond 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 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
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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 Stock 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
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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 or the AMR
Trust Board, as applicable, 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 or the AMR Trust Board, as applicable, the Adviser or the
Portfolio Advisers, 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 Adviser or the Portfolio Advisers, as applicable; (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.
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Investments in Rule 144A securities could have the effect of increasing Fund
illiquidity.
Foreign Currency Transactions (International Multi-Manager Stock
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
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<PAGE> 23
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 Portfolio Advisers 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 Advisers do not intend to enter into forward contracts on a regular or
continuous basis.
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 Stock Fund). The Portfolio may take
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<PAGE> 24
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 "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.
The Portfolio Adviser's Approach to Stock Selection. The Portfolio
Advisers 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 Portfolio 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.
INVESTMENT RESTRICTIONS
The following restrictions apply to each Fund except the International
Multi-Manager Stock Fund and restate or are in addition to those restrictions
described under "Investment
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Restrictions" in the Prospectuses. Unless otherwise indicated, only 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% (10% for Kansas Tax-Exempt Bond Fund) of the current
value of its net assets for temporary or emergency purposes or to meet
redemptions. Each Fund (except Kansas Tax-Exempt Bond 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). With respect to the Kansas
Tax-Exempt Bond Fund, all borrowings in excess of 5% will be repaid before
additional investments are made. The Short-Term Bond Fund has adopted a
non-fundamental policy to limit its borrowings for other than temporary or
defensive purpose or to meet redemptions to an amount not to exceed an
amount equal to 5% of its net assets;
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<PAGE> 26
(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. This restriction is a fundamental policy of the Kansas
Tax-Exempt Bond Fund;
(6) Invest more than 10% of its net assets in shares of other
investment companies, except that the Kansas Tax-Exempt Bond Fund may only
purchase money market fund securities and 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. The Kansas Tax-Exempt Bond Fund's policy with respect to oil,
gas and other mineral resource, exploration, development or leases is a
non-fundamental policy;
(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. The Kansas Tax-Exempt Bond Fund
may not sell securities short;
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<PAGE> 27
(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 1/2 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
that this restriction does not apply to the 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. The Kansas Tax-Exempt Bond Fund
may not purchase warrants, strattles, or spreads;
(14) Write, purchase or sell puts, calls or combinations thereof,
except that the 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;
(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'
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continuous operation (except (i) obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities or (ii) municipal
securities which are rated by at least two NRSRO's or determined by the
Adviser to be of comparable quality) 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; or
(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 the above
restriction with respect to 100% of its assets. The Kansas Tax-Exempt Bond
Fund will not purchase more than 10% of the voting securities of any one
issuer.
The following restrictions apply to the International Multi-Manager
Stock Fund. All fundamental investment policies and non-fundamental policies of
the Fund and the Portfolio are identical. Therefore, although the following
discusses the investment policies of the Portfolio and the AMR Trust Board, it
applies equally to the Fund and the Trust's Board of Trustees.
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 the 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 total assets purchase a security if as
a result, (1) more than 5% of its total assets
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<PAGE> 29
would be invested in securities of any one issuer other than obligations
issued by the U.S. Government, its agencies and instrumentalities, or (2)
the Fund would own more than 10% of the voting securities of any one
issuer;
(2) Invest more than 25% of its total assets in the securities of
companies primarily engaged in any one industry other than the U.S.
Government, its agencies and instrumentalities. In addition, finance
companies as a group are not considered a single industry for purposes of
this Policy. Wholly-owned subsidiaries of finance companies will be
considered to be in the industries of their parent companies if their
activities are primarily related to financing the activities of their
parent;
(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-
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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," as defined under the 1940 Act, of
the AMR Trust, 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; or
(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; or
(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 1/2 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
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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 limitation
otherwise noted, 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
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fluctuate due to factors such as change 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
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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
state employees, a reduction of 118 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
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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
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<PAGE> 35
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.
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<PAGE> 36
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
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<PAGE> 37
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 age, address and principal occupations for the past five years of
each Trustee and executive officers of the Trust are listed below. The address
of each, unless otherwise indicated, is 3435 Stelzer Road, Columbus, Ohio 43219.
G.L. BEST, Age: 48, Trustee. Vice President, Finance and Administration, of
Williams Energy Services Company; Treasurer of The Williams Companies
(1992-1995).
TERRY L. CARTER, Age: 48, Trustee. Senior Vice President of QuikTrip
Corporation.
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<PAGE> 38
THOMAS F. KICE, Age: 47, Trustee. President of Kice Industries Inc.
GEORGE MILEUSNIC, Age: 42, Trustee. Executive Vice President of Operations of
North American Division of The Coleman Co., Inc.
JOHN J. PILEGGI, Age: 38, 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).
THOMAS E. SHEA, Age: 47, Trustee. Treasurer of Western Resources, Inc., a
diversified energy company.
DAVID BUNSTINE, Age 31, President. Director, BISYS Fund Services, Inc., since
1987.
THRESA B. DEWAR, Age: 41, Treasurer. Treasurer, BISYS Fund Services, Inc., since
March 1997; Vice President and Controller, Federated Administrative Services, a
subsidiary of Federated Investors, Inc.
MIKE PHILIPPS, Age: 33, Assistant Treasurer. Director, BISYS Fund Services,
Inc., since May 1996.
ELLEN STOUTAMIRE, Age: 48, Secretary, Vice President of Client Legal Services,
BISYS Fund Services; Associate Counsel, Franklin Templeton, Vice President and
General Counsel, Pioneer Western Corporation.
BRUCE TREFF, Age: 30, Assistant Secretary. Counsel, BISYS Fund Services, Inc.,
since 1995; Manager, Alliance Capital Management, L.P.
ALAINA METZ, Age: 29, Assistant Secretary. Chief Administrator, Administrative
and Regulatory Services, BISYS Fund Services, Limited Partnership, since June
1995; Supervisor, Mutual Fund Legal Department, Alliance Capital Management,
L.P., May 1989 to June 1995.
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<PAGE> 39
COMPENSATION TABLE*
<TABLE>
<CAPTION>
Pension or
Retirement Estimated
Aggregate Benefits Annual Total
Compensation Accrued as Benefits Compensation
from the Part of Fund Upon from the
Fund Expenses Retirement Fund complex
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
G.L. Best, Trustee $7,000 0 N/A $ 7,000
Terry L. Carter, Trustee $7,000 0 N/A $ 7,000
Thomas F. Kice, Trustee $7,000 0 N/A $ 7,000
George Mileusnic, Trustee $7,000 0 N/A $ 7,000
John J. Pileggi, Trustee $7,000 0 N/A $ 7,000
Thomas E. Shea, Trustee $7,000 0 N/A $ 7,000
</TABLE>
- ---------------------
* 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.
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<PAGE> 40
POSITION WITH PRINCIPAL OCCUPATION DURING
NAME, AGE AND ADDRESS AMR TRUST PAST 5 YEARS
- ---------------------- ------------- --------------------------------
William F. Quinn* (49) Trustee and President, AMR Investment
President Services, Inc. (1986-Present);
Chairman, American Airlines
Employees Federal Credit Union
(1989-Present); Trustee,
American Performance Funds
(September 1990-July 1994);
Director, Crescent Real Estate
Equities, Inc. (April 1994-
Present); Trustee, American
AAdvantage Funds (1987-
Present); and Trustee, American
AAdvantage Mileage Funds (1995-
Present).
Alan D. Feld (60) Trustee Partner, Akin, Gump, Strauss,
1700 Pacific Ave., Hauer & Feld LLP (1960-
Suite 4100 Present)**, Director, Clear
Dallas, TX 75201-4618 Channel Communications (1984-
Present); Director, CenterPoint
Properties, Inc. (1994-
Present); Trustee, American
AAdvantage Funds and American
AAdvantage Mileage Funds (1996-
Present).
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<PAGE> 41
Ben J. Fortson (65) Trustee President and CEO, Fortson Oil
301 Commerce St., Company (1958-Present);
Suite 3301 Director, Kimbell Art
Fort Worth, TX 76102 Foundation (1964-Present);
Director, Burnett Foundation
(1987-Present); Honorary
Trustee, Texas Christian
University (1986-Present);
Trustee, American AAdvantage
Funds and American AAdvantage
Mileage Funds (1996-Present).
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<PAGE> 42
John S. Justin (81) 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 (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 (1989-
Present); and Trustee, American
AAdvantage Mileage Funds (1995-
Present).
Stephen D. O'Sullivan*(61) Trustee Consultant (1994-Present); Vice
President and Controller,
American Airlines, Inc. (1985-
1994), Trustee, American
AAdvantage Funds (1987-
Present); and Trustee, American
AAdvantage Mileage Funds (1995-
Present)
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<PAGE> 43
Roger T. Staubach (55) Trustee Chairman of the Board and Chief
6750 LBJ Freeway Executive Officer (1982-
Dallas, Texas 75240 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
Hockey 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).
Kneeland Youngblood, M.D. Trustee Physician (1982-Present);
(40) President, Youngblood
2305 Cedar Springs Road Enterprises, Inc. (a health
Suite 401 care investment and management
Dallas, Texas 75201 firm) (1983-Present); Trustee,
Teachers Retirement System of
Texas (1993-Present); Director,
United States Enrichment
Corporation (1993-Present);
Director, Just For the Kids
(1995-Present); Member, Council
on Foreign Relations (1995-
Present); Trustee, American
AAdvantage Funds and American
AAdvantage Mileage Funds (1996-
Present).
Nancy A. Eckl (34) Vice President Vice President, AMR Investment
Services, Inc. (1990-Present).
Michael W. Fields (43) Vice President Vice President, AMR Investment
Services, Inc. (1988-Present).
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<PAGE> 44
Barry Y. Greenberg (34) Vice President Director, Legal and Compliance,
and AMR Investment Services, Inc.
Assistant (1995-Present); Branch Chief
Secretary (1992-June 1995) and Staff
Attorney (1988-1992),
Securities and Exchange
Commission.
Rebecca L. Harris (30) Treasurer Director of Finance (1995-
Present), Controller (1991-
1995), AMR Investment Services,
Inc.
John B. Robertson (39) Vice President Vice President, AMR Investment
Services, Inc. (1991-Present).
Thomas E. Jenkins, Jr. (30) Assistant Senior Compliance Analyst, AMR
Secretary Investment Services, Inc.
(1996-Present); Staff
Accountant (1994-1996) and
Compliance Examiner (1991-
1994), Securities and Exchange
Commission.
Adriana R. Posada (42) Assistant Senior Compliance Analyst
Secretary (1996-Present) and Compliance
Analyst (1993-Present), AMR
Investment Services, Inc.;
Special Sales Representative,
American Airlines, Inc. (1991-
1993).
Janice B. Schwarz (37) Assistant Senior Business Systems
Secretary Coordinator (1996-Present),
Senior Compliance Analyst, AMR
Investment Services, Inc.
(1990-1996).
Clifford J. Alexander (53) Secretary Partner, Kirkpatrick & Lockhart
LLP (law firm).
Robert J. Zutz (44) Assistant Partner, Kirkpatrick & Lockhart
Secretary 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.
** 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
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<PAGE> 45
connection with these services. Akin, Gump does not provide
legal services to AMR Investment Services, Inc. or AMR
Corporation.
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, 1996.
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits
Accrued as Part
Aggregate of Estimated Total
Compensation the AMR Annual Compensation
From the Trust's Benefits Upon From AMR's
Name of Trustee Trust Expenses Retirement Fund Complex
- -------------------------- ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0
John S. Justin $373 $0 $0 $1,492
Stephen D. O'Sullivan $458 $0 $0 $1,832
Roger T. Staubach $2,832 $0 $0 $11,330
</TABLE>
Investment Advisers
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
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<PAGE> 46
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 is a majority-owned subsidiary of INTRUST Financial
Corporation (formerly First Bancorp of Kansas), a bank holding company. INTRUST
is a national banking association which provides a full range of banking and
trust services to clients. As of May 31, 1997, total assets under management
were approximately $1.6 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 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 March 31, 1997,
ARK managed approximately $23.9 billion, including $14.5 billion in large
capitalization value portfolios, for more than 286 institutional and individual
clients. The minimum account size for a separately managed Large Cap Value
account is $50 million.
Galliard Capital Management ("Galliard") serves as sub-adviser to the
Short-Term Bond Fund and the Intermediate Bond 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. As of May 31, 1997,
Galliard managed approximately $3.1 billion in assets.
-37-
<PAGE> 47
AMR Investment Services, Inc. serves as sub-advisor to the 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
May 31, 1997, AMR provides investment advice with respect to approximately $17.4
billion in assets, including approximately $12.6 billion of assets on behalf of
AMR Corporation and its primary subsidiary, American Airlines, Inc. For the
subadvisory services it provides to the 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 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 also 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.
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<PAGE> 48
AMR may enter into new or modified advisory agreements with existing
or new investment advisers without approval of International Multi-Manager Stock
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. 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, 1996 were
-39-
<PAGE> 49
approximately $10.2 billion, which included approximately $1.4 billion 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 0.60% of the first $10 million of
assets under its discretionary management, 0.50% of the next $140 million of
assets 0.30% on the next $50 million of assets 0.20% of the next $800 million of
assets and 0.15% 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. On May 31, 1997, Morgan Stanley Group Inc. and Dean Witter,
Discover & Co. merged to form Morgan Stanley, Dean Witter, Discover & Co. As of
that date, Morgan Stanley Asset Management Inc., an investment adviser to the
AMR Investment Services Trust International Equity Portfolio, became a
subsidiary of Morgan Stanley, Dean Witter, Discover & Co. 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, 1996,
MSAM had assets under management totaling approximately $67.1 billion, including
approximately $50.2 billion under active management and $16.9 billion as named
fiduciary or fiduciary adviser. As of December 31, 1996, MSAM had investment
authority over approximately $314 million of assets of AMR and its subsidiaries
and affiliated entities. For its services, AMR pays MSAM an annual fee equal to
0.80% of the first $25 million in AMR Trust assets under its discretionary
management, 0.60% of the next $25 million in assets, 0.50% of the next $24
million in assets and 0.40% 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,
1996, Fleming had assets under management totaling approximately $29 billion,
including approximately $265 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
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<PAGE> 50
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, 1996, Templeton had discretionary investment management authority with
respect to approximately $21.7 billion of assets, including approximately $433.9
million of assets of AMR and its subsidiaries and affiliated entities. For its
services, AMR pays Templeton an annualized fee equal to 0.50% of the first $100
million in AMR Trust assets under its discretionary management, 0.35% of the
next $50 million in assets, 0.30% of the next $250 million in assets and 0.25%
on assets over $400 million.
The AMR Trust and AMR also entered into a Management Agreement dated
October 1, 1995, as amended December 17, 1996, 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.
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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%. 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
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"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 0.20% (15% for International
Multi-Manager Fund, while invested in the Portfolio) 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
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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 record keeping, 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
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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 INTRUST 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
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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 1/2 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 Funds value their portfolio securities in
accordance with the procedures described in the Prospectus.
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PORTFOLIO TRANSACTIONS
Investment decisions for the Funds and the Portfolio and for the other
investment advisory clients of the Adviser and the Portfolio Advisers 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 and the Portfolio Advisers, 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 and the Portfolio 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 and
Portfolio Advisers generally seek 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.
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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 and 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 and the Portfolio Advisers are able to supplement their 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 and Portfolio
Advisers 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 fees paid by the Funds and the Portfolio are 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 and Portfolio Advisers may cause the Funds to pay a
broker-dealer which provides "brokerage and research services" (as defined in
the Act) to the Adviser and Portfolio Advisers 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 and Portfolio 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.
Portfolio Turnover
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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
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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 Portfolio
The Portfolio has received a ruling from the IRS to the effect that,
among other things, the Portfolio is treated as a separate partnership for
federal income tax purposes and is not a "publicly traded partnership." As a
result, the Portfolio is not subject to federal income tax; instead, each
investor in the Portfolio, such as the International Multi-Manager Stock Fund
(the "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.
The Fund will be deemed to own a proportionate share of the
Portfolio's assets and income for purposes of determining whether the Fund
satisfies the requirements to qualify as a Regulated Investment Company.
Accordingly, the Portfolio intends to conduct its operations so that its
corresponding Funds will be able to satisfy all those requirements.
Distributions to the Fund from the 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)
gain 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 liquidation of the
Fund's entire interest in the Portfolio and includes a disproportionate share of
any unrealized receivables held by the Portfolio and (3) loss will be recognized
if a liquidation distribution consists solely of cash and/or unrealized
receivables. The Fund's basis for its interest in the 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.
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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 and the Portfolio 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 or, in the case
of the International Multi-Manager Stock Fund, the Portfolio'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) and the International
Multi-Manager Stock Fund will be taxed on its proportionate share of the
Portfolio's excess distributions allocated to that holding period 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
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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. The Portfolio
does not intend to acquire stock of issuers that are considered PFICs.
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
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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.
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
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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 and the Porfolio 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 or the Portfolio 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 or the
Portfolio may result in "straddles" for Federal income tax purposes. The
straddle rules may affect the character of gains (or losses) realized by a Fund
or the Portfolio. In addition, losses realized by a Fund or the Portfolio 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 or the Portfolio of hedging transactions are not entirely clear. Hedging
transactions may increase the amount of short-term capital gain realized by a
Fund or Portfolio which is taxed as ordinary income when distributed to
stockholders.
A Fund or the Portfolio may make one or more of the elections
available under the Code which are applicable to straddles. If a Fund or the
Portfolio 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
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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 or, in the case of the International Multi-Manager Stock Fund, the
Portfolio 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 or the Portfolio accrues
interest, dividends or other receivables, or accrues expenses or other
liabilities denominated in a foreign currency, and the time the Fund or the
Portfolio 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 or the Portfolio 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 or, in the case of the International Multi-Manager Stock Fund, its
proportionate share of such taxes paid by the Portfolio. 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 (or deemed 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
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<PAGE> 65
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 or the
Portfolio 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. 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 (including, in the case of the
International Multi-Manager Stock Fund, its proportionate share of the
Portfolio's foreign source passive income). 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 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.
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<PAGE> 66
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
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<PAGE> 67
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
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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.
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<PAGE> 69
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 additional 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,
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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.
As of June 4, 1997 , no person owned of record, or to the knowledge of
management beneficially owned five percent or more of the outstanding shares of
the respective Fund or classes except as set forth below:
Money Market Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 71,364,845.940 99.86%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Short-Term Bond Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 605,108.357 14.65%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 3,525,123.152 85.35%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Intermediate Bond Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 410,991.994 11.70%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
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<PAGE> 71
Transco & Company 3,102,600.198 88.30%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Stock Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 1,864,890.486 36.64%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 3,224,695.753 63.36%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Int'l Multi-Manager Stock Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 1,023,157.589 38.11%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 1,661,930.472 61.89%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Kansas Tax-Exempt Bond Fund Shares Percentage
Institutional Service Class Owned Owned
- --------------------------- ----- -----
Transco & Company 8,118,755.444 99.99%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
The Funds do not know the extent to which other holders of record were
beneficial owners of shares indicated.
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<PAGE> 72
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. An affiliate of 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 Stock 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
AMR Trust Board has reviewed and approved custodial arrangements for securities
held outside of the United States in accordance with Rule 17f-5 of the 1940 Act.
Experts
KPMG Peat Marwick LLP has been selected as the independent accountants
for the Trust. KPMG Peat Marwick LLP provides audit services, tax return
preparation and assistance and
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<PAGE> 73
consultation in connection with certain SEC filings. KPMG Peat Marwick LLP is
located at Two Nationwide Plaza, Columbus, Ohio, 43215.
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. For the Kansas Tax-Exempt Bond
Fund, such amounts may include returns from its predecessor Fund, the SEI Kansas
Tax Free Income Portfolio.
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.
For the seven-day period ended April 30, 1997, the seven-day effective
yield for the Money Market Fund was 4.29%.
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
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<PAGE> 74
were entitled to receive dividends, and d = the maximum offering price per share
on the last day of the period.
For the 30-day period ended April 30, 1997, the yield for the
Short-Term Bond Fund and Intermediate Bond Fund were 5.43% and 5.89%,
respectively.
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
For the 30-day period ended February 28, 1997, the yield for the
Kansas Tax-Exempt Bond Fund was 4.88% and tax equivalent yield, assuming a 39.6%
federal tax rate, was 8.08%. Such yield information includes the prior yield of
the SEI Kansas Tax Free Income Portfolio.
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:
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<PAGE> 75
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.
For the period from commencement of operations (January 20, 1997)
through April 30, 1997, the aggregate total return for the International
Multi-Manager Stock Fund was 1.20%. For the period from commencement of
operations (January 21, 1997) through April 30, 1997, the aggregate total return
for the Short-Term Bond Fund, Intermediate Bond Fund and Stock Fund were 1.02%,
0.61% and -0.50%, respectively.
For the one year, three year, five year periods ended February 28,
1997, and the period from commencement of operations (December 10, 1990) through
February 28, 1997, the average annual total returns for the Kansas Tax-Exempt
Bond Fund were 4.53%, 5.14%, 6.43% and 6.75%, respectively. Such performance
includes the prior performance of the SEI Kansas Tax Free Income Portfolio. And
of course, past performance is no guarantee as to future performance.
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
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<PAGE> 76
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.
Financial Statements
The Statement of Assets and Liabilities of the Money Market Fund dated
as of December 6, 1996 included herein have been so included in reliance upon
the report of KPMG Peat Marwick LLP, independent auditors, as experts in
accounting and auditing.
The Financial Statements of the Funds for the interim period ended
April 30, 1997 set forth below are unaudited.
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<PAGE> 77
INTRUST FUNDS TRUST
Money Market Fund
Statement of Assets and Liabilities
As of December 6, 1996
<TABLE>
<S> <C>
ASSETS:
Cash $100,000
Deferred organization expenses 30,000
--------
Total Assets 130,000
LIABILITIES:
Accrued organization expenses 30,000
--------
NET ASSETS: $100,000
========
NET ASSETS CONSIST OF:
Capital - 100,000 share of beneficial interest issued and
outstanding; unlimited shares authorized (par value $0.001)-
Institutional Service Class $100,000
========
NET ASSET VALUE:
Institutional Service Shares
($100,000/100,000 shares issued
and outstanding) - offering and
redemption price per share $ 1.00
========
</TABLE>
See notes to financial statements.
<PAGE> 78
INTRUST FUNDS TRUST
Money Market Fund
NOTES TO FINANCIAL STATEMENTS
December 6, 1996
1. ORGANIZATION
INTRUST Funds Trust (the "Company"), an open-end management investment
company established as a Delaware business trust, is registered under
the Investment Company Act of 1940 (the "1940 Act"). The Company offers
shares of the following funds: Money Market Fund, Short-Term Bond Fund,
Intermediate Bond Fund, Stock Fund, Kansas Tax-Exempt Bond Fund and
International Multi-Manager Stock Fund, each of which offers
Institutional Service Shares and Institutional Premium Shares. Both
classes of shares have identical rights and privileges except with
respect to Service Organization fees and voting rights on matters
affecting a single class of shares. The accompanying financial statement
relates only to the Money Market Fund (the "Fund"). The Fund had no
operations other than those actions relating to organizational matters.
As of December 6, 1996, all outstanding shares of the Fund are owned by
BISYS Fund Services, Ohio, Inc.
The investment objective of the Fund is to seek 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.
2. ORGANIZATION EXPENSES
All costs incurred by the Company in connection with the organization of
the Fund and the initial public offering of shares of the Fund,
principally professional fees and printing, have been deferred. Upon
commencement of operations of the Fund, the deferred organization
expenses will be amortized on a straight-line basis over a period of
five years. In the event that any of the initial shares of the Fund are
redeemed during the amortization period by any holder thereof, the
redemption proceeds will be reduced by any unamortized organization
expenses in the same proportion as the number of said shares being
redeemed bears to the number of initial shares that are outstanding at
the time of the redemption.
3. RELATED PARTY TRANSACTIONS
INTRUST Bank, N.A. ("Intrust") serves as the Company's Investment
Advisor. Under an advisory agreement with the Company, Intrust is
entitled to receive fees at an annualized rate of 0.25% of the Fund's
average daily net assets. AMR Investment Services, Inc. services as
investment sub-adviser to the Fund. BISYS Fund Services ("BISYS") serves
the Funds as Administrator and Sponsor. For its services as
Administrator, BISYS receives as fee at an amount of 0.20% of the Fund's
average daily net assets. BISYS also serves as Distributor for the
Fund's shares.
<PAGE> 79
Various banks, trust companies, broker-dealers (other than the Sponsor)
or other financial organizations (collectively, "Service Organizations")
may provide administrative services for the Fund, such as maintaining
shareholder accounts and records. The Fund may pay fees to Service
Organizations 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. The Institutional
Premium Class may pay fees to Service Organizations 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.
Certain officers of the Company are affiliated with BISYS. Such persons
are not paid directly by the Company for serving in those capacities.
4. ESTIMATES
The preparation of this financial statement requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statement.
<PAGE> 80
Independent Auditors' Report
----------------------------
The Shareholders and Trustees
of INTRUST FUNDS Trust Money Market Fund
We have audited the accompanying statement of assets and liabilities of the
INTRUST FUNDS Trust Money Market Fund (the Fund) as of December 6, 1996. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of December 6,
1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
December 6, 1996
<PAGE> 81
THE INTRUST FUNDS
MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
-------------- --------------------------------------------- -----------
<S> <C>
BANKERS ACCEPTANCES (16.8%):
$3,000,000 Bank of Tokyo Mitsubishi, Ltd., New York,
5.44%, 5/27/97 $ 2,988,387
1,000,000 Dai-Ichi Kangyo Bank, Ltd., Los Angeles,
5.43%, 5/15/97 997,916
2,000,000 Dia-Ichi Kangyo Bank, Ltd., New York,
5.61%, 5/21/97 1,993,800
3,000,000 Industrial Bank of Japan, Ltd., Los Angeles,
5.43%, 5/13/97 2,994,640
3,000,000 Sanwa Bank, Ltd., New York,
5.43%, 5/20/97 2,991,513
-----------
Total Bankers Acceptances 11,966,256
-----------
CERTIFICATES OF DEPOSIT (16.8%):
Domestic (4.2%):
3,000,000 Corestates Bank, N.A., 5.76%*, 4/9/98 3,000,000
-----------
Yankee Certificate of Deposit (12.6%):
3,000,000 Norinchukin Bank, 5.78%, 5/20/97 3,000,000
3,000,000 Banca CRT, SpA, 5.48%*, 2/20/98 3,000,000
3,000,000 Instituto Bancario San Paolo, SpA, 5.62%*, 5/22/98 3,000,000
-----------
9,000,000
-----------
Total Certificates of Deposit 12,000,000
-----------
COMMERCIAL PAPER (29.2%):
Brokerage Services (4.2%):
3,000,000 Smith Barney, Inc., 5.61%, 5/21/97 2,990,717
-----------
Business Credit (4.2%):
3,000,000 CIT Holdings, Inc., 5.59%, 5/22/97 2,990,288
-----------
Farm Machinery & Equipment (4.2%):
3,000,000 John Deere Capital Corp., 5.59%, 5/20/97 2,991,212
-----------
Finance Lessors (4.2%):
3,000,000 General Electric Capital Corp., 5.62%, 6/2/97 2,985,147
-----------
Financial Services (8.3%):
3,000,000 Ford Motor Credit Corp., 5.37%, 7/3/97 2,972,385
3,000,000 General Motors Acceptance Corp., 5.36%, 7/3/97 2,972,437
-----------
5,944,822
-----------
Personal Credit Institutions (4.1%):
3,000,000 American Express Credit Corp., 5.36%, 7/3/97 2,972,437
-----------
Total Commercial Paper 20,874,623
-----------
MEDIUM TERM NOTES (7.0%):
Banking (4.2%):
3,000,000 Fleet Financial Group, Inc., 5.60%*, 2/13/98 3,003,050
-----------
Business Credit (2.8%):
2,000,000 Sanwa Business Credit Corp., 5.46%*, 2/24/98 2,000,000
-----------
Total Medium Term Notes 5,003,050
-----------
</TABLE>
Continued
<PAGE> 82
THE INTRUST FUNDS
MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
-------------- --------------------------------------------- -----------
<S> <C>
TIME DEPOSITS (14.8%):
Banking (14.8%):
$3,000,000 Bank Brussells Lambert, 5.65%, 5/21/97 $ 3,000,000
3,000,000 Banque Paribas, 5.75%, 5/1/97 3,000,000
2,000,000 Swedbank, 5.75%, 5/1/97 2,000,000
2,549,911 Skandinaviska Enskilda Banken, 5.75%, 5/1/97 2,549,911
-----------
Total Time Deposits 10,549,911
-----------
VARIABLE RATE NOTES (15.4%):
Brokerage Services (7.0%):
3,000,000 Goldman Sachs Group, LP, 5.82%*, 10/24/97 3,000,000
2,000,000 Merrill Lynch Co., Inc., 5.47%*, 3/3/98 1,999,670
-----------
4,999,670
-----------
Construction Machinery & Equipment (4.2%):
3,000,000 Caterpillar Financial Service Corp., 5.76%*, 4/13/98 3,000,000
-----------
Financial Services (4.2%):
3,000,000 American Honda Finance Corp., 5.82%*, 4/9/98 2,998,898
-----------
Total Variable Rate Notes 10,998,568
-----------
Total (Cost--$71,392,408) $71,392,408
===========
</TABLE>
Percentages indicated are based on net assets of $71,374,864.
* Variable rate securities. The rate reflected on the Schedule of
Portfolio Investments is the rate in effect at April 30, 1997.
See notes to financial statements.
<PAGE> 83
THE INTRUST FUNDS
SHORT-TERM BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
- ------------ ---------------------------------------------- -----------
<S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (33.0%):
$500,000 Federal Home Loan Mortgage Corp.,
6.00%, 4/15/06 $ 491,710
1,000,000 Federal Home Loan Mortgage Corp.,
5.75%, 5/15/06 982,890
467,190 Federal National Mortgage Assoc.,
6.80%*, 11/1/21, Pool #365421 478,140
500,000 Green Tree Financial Corp.,
6.30%, 2/15/27 487,920
1,000,000 Household Consumer Loan Trust,
6.04%*, 3/15/07 998,750
607,877 Merrill Lynch Mortgage Investors, Inc.,
7.89%*, 1/25/05 619,493
675,923 Merrill Lynch Mortgage Investors, Inc.,
7.99%*, 2/25/23 686,349
1,000,000 Premier Auto Trust, 97-1-B,
6.55%, 9/6/03 991,590
1,082,060 Residential Funding Mortgage Securities, Series 1989-51,
7.52%*, 10/25/19 1,093,218
816,939 Resolution Trust Corp., 6.60%*, 8/25/23 818,216
224,203 SBA, 8.88%, 1/25/10, Pool #503653 242,980
249,380 SBA, 8.73%, 1/25/13, Pool #503664 271,513
223,816 SBA, 9.48%, 5/25/15, Pool #502966 250,674
250,000 SBA, 8.13%, 1/25/22, Pool #503694 275,313
800,000 Team Fleet Financing Corp., Series 97-1 A,
7.35%, 5/15/03 804,000
1,000,000 Vendee Mortgage Trust, 7.50%, 3/15/13 1,015,410
1,000,000 Vendee Mortgage Trust, 7.25%, 7/15/14 999,660
1,000,000 Vendee Mortgage Trust, Series 1992-1, 7.75%, 12/15/14 1,013,140
-----------
Total Collateralized Mortgage Obligations 12,520,966
-----------
CORPORATE BONDS (18.2%):
Banking (2.2%):
615,000 Chase Manhattan Corp., 10.13%, 11/1/00 676,500
160,000 Chemical Bank, 9.75%, 6/15/99 169,800
-----------
846,300
-----------
Financial Services (5.7%):
1,100,000 Ford Motor Credit Corp., 9.50%, 4/15/00 1,181,125
1,000,000 Transamerica Financial, Series E, 6.41%, 6/20/00 986,250
-----------
2,167,375
-----------
Industrial Goods & Services (5.2%):
1,000,000 Newell Co., 6.18%, 7/11/00 980,000
1,000,000 Tyco International, Ltd., 6.50%, 11/1/01 981,250
-----------
1,961,250
-----------
Oil Field Services (1.3%):
500,000 Colonial Pipeline, 7.13%, 8/15/02 502,500
-----------
Retail (3.8%):
385,000 May Department Stores Co., 9.88%, 6/15/00 418,206
1,000,000 Penny (J.C.) & Co., 6.95%, 4/1/00 1,006,250
-----------
1,424,456
-----------
Total Corporate Bonds 6,901,881
-----------
</TABLE>
Continued
<PAGE> 84
THE INTRUST FUNDS
SHORT-TERM BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
- ------------ ---------------------------------------------- -----------
<S> <C>
MEDIUM TERM NOTES (2.8%):
Banking (1.5%):
$500,000 First Interstate, 9.38%, 1/23/02 $ 546,875
-----------
Financial Services (1.3%):
500,000 Charles Schwab, 7.19%, 5/31/01 503,125
-----------
Total Medium Term Notes 1,050,000
-----------
U.S. GOVERNMENT AGENCY (6.6%):
Federal Home Loan Bank:
1,000,000 4.35%*, 3/26/98 984,200
Federal Home Loan Mortgage Corp.,:
500,000 5.01%*, 3/10/00 478,750
1,003,299 6.80%*, 4/1/29, Pool # 846367 1,029,003
-----------
Total U.S. Government Agency 2,491,953
-----------
U.S. TREASURY NOTES (37.0%):
1,000,000 5.13%, 3/31/98 993,550
3,400,000 6.25%, 6/30/98 3,409,010
3,000,000 6.13%, 8/31/98 3,000,960
5,100,000 5.75%, 12/31/98 5,069,196
1,500,000 8.00%, 8/15/99 1,552,680
-----------
Total U.S. Treasury Notes 14,025,396
-----------
INVESTMENT COMPANIES (1.5%):
577,880 Fedfund Money Market Fund 577,880
-----------
Total Investment Companies 577,880
-----------
Total (Cost--$37,651,704)(a) $37,568,076
===========
</TABLE>
- -------------
Percentages indicated are based on net assets of $37,886,841.
(a) Represents cost for federal tax purposes and differs from market
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 56,218
Unrealized depreciation (139,846)
------------
Net unrealized appreciation $ (83,628)
-----------
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates on an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investment is
the rate in effect at April 30, 1997.
ABBREVIATIONS
SBA Small Business Association
See notes to financial statements.
<PAGE> 85
THE INTRUST FUNDS
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- -----------
<S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (48.0%):
$750,000 Asset Securitization Corp., Series 1997-D4, Class A1C,
7.42%, 4/14/27 $ 762,296
700,000 EQCC Home Equity Loan Trust, 7.50%, 6/15/21 693,252
966,807 Federal National Mortgage Assoc., 7.94%*, 11/1/21,
Pool #365421, 989,466
350,000 General Mortgage Acceptance Corp. Commercial Mortgage
Securities, Inc., 7.22%, 2/15/06 343,875
1,000,000 Green Tree Financial Corp., Series 1993-2 Class A4,
6.90%, 7/15/18 997,620
500,000 Green Tree Financial Corp., 6.30%, 2/15/27 487,920
500,000 Household Consumer Loan Trust, 6.04%*, 3/15/07 499,375
607,877 Merrill Lynch Mortgage Investors, Inc., 7.89%*, 1/25/05 619,493
675,923 Merrill Lynch Mortgage Investors, Inc., 7.99%*, 2/25/23 686,349
1,000,000 Premier Auto Trust, 97-1-B, 6.55%, 9/6/03 991,590
1,082,060 Residential Funding Mortgage Securities, Series 1989-51,
7.52%*, 10/25/19 1,093,218
750,000 Resolution Trust Corp., 7.50%, 10/25/28 744,141
1,000,000 Salomon, 97 HUD1-A-3, 7.51%, 2/25/24 1,000,000
1,000,000 Team Fleet Financing Corp., Series 97-1 A, 7.35%, 5/15/03 1,005,000
1,000,000 Vendee Mortgage Trust, 7.50%, 3/15/13 1,015,410
1,000,000 Vendee Mortgage Trust, 7.25%, 7/15/14 999,660
1,000,000 Vendee Mortgage Trust, Series 1992-1, 7.75%, 12/15/14 1,013,140
1,000,000 Vendee Mortgage Trust, 7.50%, 9/15/17 1,012,350
750,000 Vendee Mortgage Trust, 8.00%, 7/15/18 759,015
-----------
Total Collateralized Mortgage Obligations 15,713,170
-----------
CORPORATE BONDS (33.5%):
Aerospace/Defense (2.5%):
750,000 AlliedSignal Inc., 9.20%, 2/15/03 827,813
-----------
Airlines (3.0%):
1,000,000 Continental Airlines Inc., 7.46%, 4/1/15 994,500
-----------
Apparel Manufacturers (2.2%):
750,000 Levi Strauss & Co., 6.80%, 11/1/03 731,250
-----------
Banking (5.5%):
1,000,000 Chase Manhattan Corp., 10.13%, 11/1/00 1,100,000
700,000 First Bank System, Inc., 7.63%, 5/1/05 714,000
-----------
1,814,000
-----------
Electronic & Electrical (3.3%):
500,000 Philips Electronics N.V., 7.75%, 4/15/04 511,250
500,000 Texas Instrument, Inc., 9.25%, 6/15/03 551,875
-----------
1,063,125
-----------
Financial Services (6.3%):
1,000,000 Ford Motor Credit Corp., 9.50%, 4/15/00 1,073,750
1,000,000 Transamerica Financial, Series E, 6.41%, 6/20/00 986,250
-----------
2,060,000
-----------
Industrial Goods & Services (3.0%):
1,000,000 Tyco International Ltd., 6.50%, 11/1/01 981,250
-----------
Oil Field Services (3.0%):
1,000,000 Petroleum Geo-Services, 7.50%, 3/7/07 995,000
-----------
</TABLE>
Continued
<PAGE> 86
THE INTRUST FUNDS
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- -----------
<S> <C>
CORPORATE BONDS, CONTINUED:
Retail (3.1%):
$1,000,000 May Department Stores Co., 7.15%, 8/15/04 $ 998,750
-----------
Tobacco & Tobacco Products (1.6%):
500,000 Philip Morris Cos., Inc., 7.63%, 5/15/02 508,125
-----------
Total Corporate Bonds 10,973,813
-----------
MEDIUM TERM NOTES (10.8%):
Banking (3.4%):
547,000 First Interstate Bancorp, 9.38%, 1/23/02 598,281
500,000 United Missouri Bancshares, Inc., 7.30%, 2/24/03 505,625
-----------
1,103,906
-----------
Financial Services (3.8%):
500,000 Charles Schwab, 7.19%, 5/31/01 503,125
750,000 Paine Webber Group, 6.90%, 8/15/03 733,125
-----------
1,236,250
-----------
Oil & Gas Production (2.2%):
750,000 Vastar Resources, Inc., 6.95%, 11/8/06 717,188
-----------
Semiconductors (1.4%):
500,000 Applied Materials, Inc., 6.70%, 9/6/05 476,250
-----------
Total Medium Term Notes 3,533,594
-----------
U.S. GOVERNMENT AGENCIES (3.1%):
Federal Home Loan Mortgage Corp.:
1,003,299 6.80%*, 4/1/29, Pool #846367 1,029,003
-----------
Total U.S. Government Agencies 1,029,003
-----------
U.S. TREASURY NOTES (3.2%):
1,000,000 8.00%, 8/15/99 1,035,120
-----------
Total U.S. Treasury Notes 1,035,120
-----------
INVESTMENT COMPANIES (0.6%):
189,593 Fedfund Money Market Fund 189,593
-----------
Total Investment Companies 189,593
-----------
Total (Cost--$32,634,106) $32,474,293
===========
</TABLE>
- -----------------
Percentages indicated are based on net assets of $32,725,883.
(a) Represents cost for federal tax purposes and differs from market value by
net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 76,059
Unrealized depreciation (235,872)
---------
Net unrealized appreciation $(159,813)
=========
</TABLE>
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates on an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investment is
the rate in effect at April 30, 1997.
See notes to financial statements.
<PAGE> 87
THE INTRUST FUNDS
STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
----------- --------------------------- ----------
<S> <C>
COMMON STOCKS (94.5%):
Aerospace/Defense (2.7%):
7,000 AlliedSignal, Inc. $ 505,750
7,800 Lockheed Martin Corp. 698,100
----------
1,203,850
----------
Automobiles (3.0%):
31,700 Ford Motor Co. 1,101,575
4,500 General Motors Corp. 260,437
----------
1,362,012
----------
Banking (2.0%):
1,000 Bankers Trust New York Corp. 81,375
3,400 Chase Manhattan Corp. 314,925
8,900 First Chicago NBD Corp. 500,625
----------
896,925
----------
Brewery (1.0%):
10,800 Anheuser-Busch Cos., Inc. 463,050
----------
Broadcasting/Cable (3.7%):
64,400 Tele-Communications, Inc., Class A(b) 889,525
17,700 US West Media Group(b) 305,325
17,300 Viacom, Inc.-Class B(b) 462,775
----------
1,657,625
----------
Building Products (1.2%):
14,700 Masco Corp. 554,925
----------
Chemicals (4.2%):
6,900 Du Pont (Ei) De Nemours & Co. 732,262
3,600 Eastman Chemical Co. 183,600
6,500 Hercules, Inc. 255,937
12,900 PPG Industries, Inc. 701,437
----------
1,873,236
----------
Computers & Peripherals (4.8%):
18,800 Digital Equipment Corp.(b) 561,650
9,800 International Business Machines Corp. 1,575,350
----------
2,137,000
----------
Diversified Operations (2.6%):
10,100 Cognizant Corp. 329,512
10,900 Fluor Corp. 599,500
6,000 Tenneco, Inc. 239,250
----------
1,168,262
----------
Electrical & Electronic (1.5%):
18,600 AMP, Inc. 667,275
----------
Electronic Components/Instruments (0.9%):
8,800 Raytheon Co. 383,900
----------
Environmental Services (1.0%):
14,600 WMX Technologies, Inc. 428,875
----------
</TABLE>
Continued
<PAGE> 88
THE INTRUST FUNDS
STOCK FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
----------- --------------------------- ----------
<S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (1.1%):
13,200 Dean Witter Discover & Co. $ 504,900
----------
Food Products & Services (2.4%):
50,600 Archer-Daniels-Midland Co. 929,775
2,000 CPC International, Inc. 165,250
----------
1,095,025
----------
Health Care (4.2%):
32,800 Columbia/HCA Healthcare Corp. 1,148,000
17,900 Humana, Inc.(b) 389,325
7,500 United Healthcare Corp. 364,687
----------
1,902,012
----------
Insurance (11.9%):
11,000 Aetna, Inc. 1,002,375
15,600 Allstate Corp. 1,021,800
11,000 American General Corp. 479,875
14,000 Chubb Corp. 808,500
6,700 General Re Corp. 1,120,575
7,700 Loews Corp. 707,438
2,600 UNUM Corp. 200,200
----------
5,340,763
----------
Machinery & Equipment (0.8%):
8,200 Deere & Co. 377,200
----------
Metals--Aluminum (0.9%):
6,100 Aluminum Co. of America 426,238
----------
Metals & Mining (1.6%):
20,200 Newmont Mining Corp. 699,425
----------
Office Equipment & Services (1.8%):
13,300 Xerox Corp. 817,950
----------
Oil--Integrated Companies (6.7%):
10,600 Amerada Hess Corp. 515,425
3,700 Atlantic Richfield Co. 503,662
2,300 Mobil Corp. 299,000
35,600 Occidental Petroleums Corp. 787,650
2,400 Texaco, Inc. 253,200
17,400 Unocal 663,375
----------
3,022,312
----------
Oil & Gas Exploration, Production & Services (4.7%):
5,300 Burlington Resources, Inc. 224,588
19,700 Dresser Industries, Inc. 588,538
17,500 Enron Corp. 658,438
23,800 Union Pacific Resources Group, Inc. 645,575
----------
2,117,139
----------
</TABLE>
Continued
<PAGE> 89
THE INTRUST FUNDS
Stock Fund
Schedule of Portfolio Investments
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
- ------------ ------------------------------------------------ -------------
<S> <C>
Common Stocks, continued:
Paper & Related Products (2.6%):
14,200 Champion International Co. $660,300
4,000 Georgia-Pacific Corp. 312,000
5,000 International Paper Co. 211,250
-------------
1,183,550
-------------
Pharmaceuticals (2.7%):
7,500 American Home Products Corp. 496,875
7,600 Bristol-Myers Squibb Co. 497,800
7,400 Pharmacia & Upjohn, Inc. 219,225
-------------
1,213,900
-------------
Photography (1.6%):
8,500 Eastman Kodak Co. 709,750
-------------
Printing & Publishing (0.6%):
2,900 Gannett Co., Inc. 253,025
-------------
Railroads (3.2%):
8,700 Burlington Northern Santa Fe 685,125
16,600 CSX Corp. 773,975
-------------
1,459,100
-------------
Retail (8.2%):
17,200 Albertson's, Inc. 567,600
23,900 Dillard Department Stores, Inc., Class A 737,913
19,800 Federated Department Stores, Inc.(b) 673,200
6,200 Gap, Inc. 197,625
13,600 May Department Stores Co. 629,000
13,100 Sears, Roebuck & Co. 628,800
8,900 Toys "R" Us, Inc. 253,650
-------------
3,687,788
-------------
Utilities--Electric (1.4%):
18,800 Texas Utilities Co. 634,500
-------------
Utilities--Telecommunications (9.5%):
45,500 AT&T Corp. 1,524,250
5,000 Frontier Corp. 79,375
19,900 GTE Corp. 912,913
20,300 NYNEX Corp. 1,050,525
12,900 SBC Communications, Inc. 715,950
-------------
4,283,013
-------------
Total Common Stocks 42,524,525
-------------
Investment Companies (4.5%):
2,019,618 Fedfund Money Market Fund 2,019,618
-------------
Total Investment Companies 2,019,618
-------------
Total (Cost--$45,045,009)(a) $44,544,143
=============
</TABLE>
Continued
<PAGE> 90
THE INTRUST FUNDS
Stock Fund
Schedule of Portfolio Investments
April 30, 1997
(Unaudited)
Percentages indicated are based on net assets of $44,979,962.
(a) Represents cost for federal tax purposes and differs from market value by
depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 1,253,096
Unrealized depreciation (1,753,962)
-------------
Net unrealized appreciation $ (500,866)
-------------
</TABLE>
(b) Represents non-income producing security.
See notes to financial statements.
<PAGE> 91
THE INTRUST FUNDS
Statements of Assets and Liabilities
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Money Short-Term Intermediate
Market Bond Bond
Fund (a) Fund (b) Fund (b)
--------------- --------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $71,392,408; $37,651,704; $32,634,106;
$45,045,009, respectively) $71,392,408 $ 37,568,076 $ 32,474,293
Investment in International Equity Portfolio, at value (cost $24,211,150) -- -- --
Interest receivable 170,781 476,962 409,323
Receivable from brokers for investments sold -- 7,851 --
Deferred organization costs 91,198 20,246 18,943
Prepaid expenses and other assets 35,911 5,104 4,661
----------- ------------ ------------
Total Assets 71,690,298 38,078,239 32,907,220
----------- ------------ ------------
LIABILITIES:
Dividends payable 282,833 165,227 154,579
Payable to brokers for investments purchased -- -- --
Accrued expenses and other payables:
Investment advisory fees 5,761 5,733 7,528
Administration fees 1,944 1,033 890
Custodian 3,796 2,104 1,993
Other 21,100 17,301 16,347
----------- ------------ ------------
Total Liabilities 315,434 191,398 181,337
----------- ------------ ------------
NET ASSETS:
Capital 71,374,767 38,027,263 33,012,997
Undistributed net investment income -- -- --
Accumulated undistributed net realized gains
(losses) from investment transactions 97 (56,794) (127,301)
Net unrealized appreciation (depreciation)
from investments -- (83,628) (159,813)
----------- ------------ ------------
Net Assets $71,374,864 $ 37,886,841 $ 32,725,883
=========== ============ ============
Outstanding Units of Beneficial Interest (Shares): 71,374,767 3,803,436 3,303,721
=========== ============ ============
Net Asset Value :
Service
Offering and redemption price per share $ 1.00 $ 9.96 $ 9.91
=========== ============ ============
</TABLE>
<TABLE>
<CAPTION>
International
Stock Multi-Manager
Fund (b) Stock Fund (c)
-------------- --------------
<S> <C> <C>
ASSETS:
Investments, at value (cost $71,392,408; $37,651,704; $32,634,106;
$45,045,009, respectively) $ 44,544,143 $ --
Investment in International Equity Portfolio, at value (cost $24,211,150) -- 24,317,211
Interest receivable 82,053 --
Receivable from brokers for investments sold 545,382 --
Deferred organization costs 20,873 11,118
Prepaid expenses and other assets 4,758 2,291
------------ -----------
Total Assets 45,197,209 24,330,620
------------ -----------
LIABILITIES:
Dividends payable -- --
Payable to brokers for investments purchased 163,964 --
Accrued expenses and other payables:
Investment advisory fees 29,115 6,587
Administration fees 1,185 --
Custodian 2,530 --
Other 20,453 16,336
------------ -----------
Total Liabilities 217,247 22,923
------------ -----------
NET ASSETS:
Capital 45,245,582 24,018,291
Undistributed net investment income 66,576 104,538
Accumulated undistributed net realized gains
(losses) from investment transactions 168,670 78,807
Net unrealized appreciation (depreciation)
from investments (500,866) 106,061
------------ -----------
Net Assets $ 44,979,962 $24,307,697
============ ===========
Outstanding Units of Beneficial Interest (Shares): 4,522,143 2,401,965
============ ===========
Net Asset Value :
Service
Offering and redemption price per share $ 9.95 $ 10.12
============ ===========
</TABLE>
(a)The Fund commenced operations on January 23, 1997.
(b)The Fund commenced operations on January 21, 1997.
(c)The Fund commenced operations on January 20, 1997.
See notes to financial statements.
<PAGE> 92
THE INTRUST FUNDS
STATEMENTS OF OPERATIONS
For the period ended April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Money Short-Term Intermediate International
Market Bond Bond Stock Multi-Manager
Fund (a) Fund (b) Fund (b) Fund (b) Stock Fund (c)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 980,143 $ 480,512 $ 461,876 $ 11,956 $ --
Dividend income -- 13,363 10,745 190,495 --
INVESTMENT INCOME ALLOCATED FROM
INTERNATIONAL EQUITY PORTFOLIO:
Interest income -- -- -- -- 31,416
Dividend income (net of foreign taxes of $27,451) -- -- -- -- 150,420
Expenses -- -- -- -- (28,102)
--------- --------- --------- --------- ---------
Total Income 980,143 493,875 472,621 202,451 153,734
--------- --------- --------- --------- ---------
EXPENSES:
Investment advisory fees 44,802 31,914 28,264 85,955 19,034
Administration fees 35,842 15,957 14,132 17,192 7,138
12b-1 fees 44,802 19,946 17,665 21,489 11,897
Shareholder Servicing Fees 11,255 5,827 5,116 6,334 3,507
Custodian and accounting fees 12,135 11,570 11,553 12,746 8,208
Legal and audit fees 9,480 6,334 6,139 7,245 3,907
Organization costs 2,152 1,288 1,232 1,288 1,008
Trustees' fees and expenses 2,442 1,693 1,586 1,744 1,372
Transfer agent fees 905 918 918 918 901
Registration and filing fees 13,480 7,727 7,245 8,888 5,226
Printing costs 7,840 4,959 4,650 5,518 7,277
Other 3,566 1,877 1,799 2,163 1,135
--------- --------- --------- --------- ---------
Total expenses before waivers 188,701 110,010 100,299 171,480 70,610
Less waivers (71,683) (39,541) (28,383) (35,605) (21,414)
--------- --------- --------- --------- ---------
Net Expenses 117,018 70,469 71,916 135,875 49,196
--------- --------- --------- --------- ---------
Net Investment Income 863,125 423,406 400,705 66,576 104,538
--------- --------- --------- --------- ---------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from investment
transactions 97 (56,794) (127,301) 168,670 78,807
Net change in unrealized appreciation (depreciation)
from investments -- (83,628) (159,813) (500,866) 106,061
--------- --------- --------- --------- ---------
Net realized/unrealized gains (losses)
from investments 97 (140,422) (287,114) (332,196) 184,868
--------- --------- --------- --------- ---------
Change in net assets
resulting from operations $ 863,222 $ 282,984 $ 113,591 $(265,620) $ 289,406
========= ========= ========= ========= =========
</TABLE>
(a) The Fund commenced operations on January 23, 1997.
(b) The Fund commenced operations on January 21, 1997.
(c) The Fund commenced operations on January 20, 1997.
<PAGE> 93
THE INTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Money Market Short-Term Intermediate Stock
Fund Bond Fund Bond Fund Fund (a)
---------------- --------------- -------------- --------------
January 23, 1997 January 21, 1997 January 21, 1997 January 21, 1997
to to to to
April 30, April 30, April 30, April 30,
1997 (a) 1997 (a) 1997 (a) 1997 (a)
---------------- --------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income $ 863,125 $ 423,406 $ 400,705 $ 66,576
Net realized gains (losses)
from investment transactions 97 (56,794) (127,301) 168,670
Net change in unrealized appreciation (depreciation)
from investments -- (83,628) (159,813) (500,866)
------------- ------------ ------------ ------------
Change in net assets resulting from operations 863,222 282,984 113,591 (265,620)
------------- ------------ ------------ ------------
Distributions to shareholders:
From net investment income (863,125) (423,406) (400,705) --
------------- ------------ ------------ ------------
Change in net assets from shareholder distributions (863,125) (423,406) (400,705) 0
------------- ------------ ------------ ------------
Capital Transactions:
Proceeds from shares issued 191,460,011 39,011,082 33,885,133 46,095,283
Dividends reinvested 885 24,879 20,102 --
Cost of shares redeemed (120,086,129) (1,008,698) (892,238) (849,701)
------------- ------------ ------------ ------------
Change in net assets from share transactions 71,374,767 38,027,263 33,012,997 45,245,582
------------- ------------ ------------ ------------
Change in net assets 71,374,864 37,886,841 32,725,883 44,979,962
Net Assets:
Beginning of period 0 0 0 0
------------- ------------ ------------ ------------
End of period $ 71,374,864 $ 37,886,841 $ 32,725,883 $ 44,979,962
============= ============ ============ ============
Share Transactions:
Issued 191,460,011 3,902,379 3,392,126 4,609,681
Reinvested 885 2,499 2,031 --
Redeemed (120,086,129) (101,442) (90,436) (87,538)
============= ============ ============ ============
Change in shares 71,374,767 3,803,436 3,303,721 4,522,143
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
International
Multi-Manager
Stock Fund (a)
---------------
January 20, 1997
to
April 30,
1997 (a)
---------------
(Unaudited)
<S> <C>
Net investment income $ 104,538
Net realized gains (losses)
from investment transactions 78,807
Net change in unrealized appreciation (depreciation)
from investments 106,061
------------
Change in net assets resulting from operations 289,406
------------
Distributions to shareholders:
From net investment income --
------------
Change in net assets from shareholder distributions 0
------------
Capital Transactions:
Proceeds from shares issued 24,579,395
Dividends reinvested --
Cost of shares redeemed (561,104)
------------
Change in net assets from share transactions 24,018,291
------------
Change in net assets 24,307,697
Net Assets:
Beginning of period 0
------------
End of period $ 24,307,697
============
Share Transactions:
Issued 2,458,061
Reinvested --
Redeemed (56,096)
============
Change in shares 2,401,965
============
</TABLE>
(a) Period from commencement of operations
<PAGE> 94
THE INTRUST FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The INTRUST Funds Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
diversified management investment company established as a Delaware business
trust. The Trust is authorized to offer two classes of shares: Institutional
Service and Institutional Premium. The Institutional Premium shares may be
subject to additional Shareholder Servicing fees. The Trust currently
consists of five active funds. The accompanying financial statements and
financial highlights are those of the Money Market Fund, Short-Term Bond
Fund, Intermediate Bond Fund, Stock Fund and the International Multi-Manager
Stock Fund (individually a "Fund", collectively the "Funds"). Each Fund is
currently offered in the Institutional Service Class only.
The Money Market Fund seeks to provide 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 Bond Fund seeks current
income consistent with liquidity and safety of principal by investing
primarily in investment grade short-term obligations. The Intermediate Bond
Fund seeks current income consistent with managing for total return by
investing in fixed income securities. The Stock Fund seeks long-term capital
appreciation. The International Multi-Manager Stock Fund seeks long-term
capital appreciation by investing in equity securities of issuers based
outside the United States. This Fund seeks to achieve its objective by
investing all of its investable assets in the International Equity Portfolio
(the "Portfolio) of the AMR Investment Services Trust. The percentage of the
AMR Investment Services Trust International Equity Fund owned by the Fund as
of April 30, 1997 was 4.1%. The financial statements of the Portfolio,
including its portfolio of investments, are included elsewhere in this
report and should be read in conjunction with the International
Multi-Manager Stock Fund's financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses for the period. Actual results could differ from those estimates.
Security Valuation
Securities of the Money Market Fund are valued utilizing the amortized cost
method permitted in accordance with Rule 2a-7 under the 1940 Act. Under the
amortized cost method, discount or premium is amortized on a constant basis
to the maturity of the security. In addition, the Funds may not (a) purchase
any instrument with a remaining maturity greater than thirteen months unless
such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days.
Investment in common stocks, corporate bonds, municipal bonds, asset backed
securities and U.S. Government securities of the variable net asset funds
are valued at their market values determined on the latest available bid
prices in the principal market (closing sales prices if the principal market
is an exchange) in which securities are normally traded.
Repurchase Agreements
The Funds may invest in repurchase agreements with any bank and broker-
dealer which in the opinion of the
-continued-
<PAGE> 95
THE INTRUST FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Trustees, presents a minimal risk of bankruptcy. Each repurchase agreement
is recorded at cost. The Fund requires that the securities purchased in a
repurchase agreement transaction be fully collateralized and the value of
the collateral, including accrued interest, be marked to market daily. 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. Repurchase agreements are
considered to be loans by a fund under the 1940 Act.
Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements to avoid selling
securities in unfavorable market conditions to meet redemptions. When a Fund
enters into a reverse repurchase agreement a segregated account will be used
to 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 amount 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.
Written Options
The Funds may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to the current
value of the options written. Premiums received from writing options which
expire are treated as realized gains. Premiums received from writing
options, which are either exercised or closed, are offset against the
proceeds received or amount paid on the transaction to determine realized
gains or losses.
Futures Contracts
The Funds may enter into futures contracts for the delayed delivery of
securities at a fixed price at some future date or for the change in the
value of a specified financial index over a predetermined time period. Cash
or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received by the Fund based on the daily change
in the market value of the position are recorded as unrealized appreciation
or depreciation until the contract is closed out, at which time the
appreciation or depreciation is realized.
Indexed Securities
The Stock Fund may invest in indexed securities whose value is linked either
directly or inversely to changes in stock indices or other reference
instruments. Indexed securities may be more volatile than the referenced
instrument itself, but any loss is limited to the amount of the original
investment.
Mortgage Rolls
The Funds may enter into dollar roll transactions in which the Fund sells
fixed income securities, typically mortgage-backed securities, for delivery
in the current month and simultaneously contracts to repurchase
substantially similar securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the mortgage-backed
securities. The Fund is compensated by fee income or the difference between
the current sales price and the lower forward price for the future purchase.
Securities Lending
To generate additional income, the Funds may lend their portfolio securities
in an amount up to 33% of each such Fund's total assets pursuant to
agreements requiring that the loan be continuously secured 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. As of April 30, 1997 the
Funds had no securities on loan.
-continued-
<PAGE> 96
THE INTRUST FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
Security Transactions and Related Income
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined on the specific
identification cost method. Interest income and expenses are recognized on
the accrual basis. Dividends are recorded on the ex-dividend date. Interest
income, including any discount or premium, is accrued as earned using the
effective interest method.
Expenses
Expenses directly attributable to a Fund are charged directly to that Fund,
while the expenses which are attributable to more than one Fund of the Trust
are allocated among the respective Funds. Each class of shares bears its
pro-rata portion of expenses attributable to its series, except that each
class separately bears expenses related specifically to that class, such as
distribution fees.
Dividends and Distributions to Shareholders
Dividends from net investment income for the Money Market Fund, Short-Term
Bond Fund and the Intermediate Bond Fund are declared daily and paid
monthly. Dividends from net investment income for the Stock Fund and the
International Multi-Manager Stock Fund are declared and paid at least once
annually. Net realized capital gains, if any, are distributed at least
annually. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments for mortgage-backed securities, expiring capital
loss carryforwards, and deferrals of certain losses. Permanent book and tax
basis differences have been reclassified among the components of net assets.
Federal Income Taxes
The Trust treats each Fund as a separate entity for Federal income tax
purposes. Each Fund intends to qualify as a regulated investment company by
complying with the provisions available to certain investment companies as
defined in applicable sections of the Internal Revenue Code, and to make
distributions from net investment income and from net realized capital gains
sufficient to relieve it from all, or substantially all, Federal income
taxes.
Organization Costs
Costs incurred by the Trust in connection with its organization, including
the fees and expenses of registering and qualifying its shares for
distribution have been deferred and are being amortized using the
straight-line method over a period of five years beginning with the
commencement of each Fund's operations. All such costs, which are
attributable to more than one Fund of the Trust, have been allocated among
the respective Funds pro-rata, based on the relative net assets of each
Fund. In the event that any of the initial shares are redeemed during such
period by any holder thereof, the related Fund will be reimbursed by such
holder for any unamortized organization costs in the proportion as the
number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of redemption.
3. SHARES OF BENEFICIAL INTEREST:
-continued-
<PAGE> 97
THE INTRUST FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
The Trust has an unlimited number of shares of beneficial interest, with no
par value, which may, without shareholder approval, be divided into an
unlimited number of series of such shares and any series may be classified
or reclassified into one or more classes. Currently, shares of the Trust are
authorized to be offered through five series and two classes: Institutional
Service and Institutional Premium. As of April 30, 1997, no shareholders
were in the Institutional Premium Class. Shareholders are entitled to one
vote for each full share held and will vote in the aggregate and not by
class or series, except as otherwise expressly required by law or when the
Board of Trustees has determined that the matter to be voted on affects only
the interest of shareholders of a particular class or series.
4. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
The Trust and INTRUST Bank, N.A. (the "Adviser") are parties to an
investment advisory agreement under which the Adviser is entitled to receive
an annual fee, computed daily and paid monthly, equal to the following
percentages of the Funds' average net assets: 0.25% of the Money Market
Fund, 0.40% of the Short-Term Bond Fund and the Intermediate Bond Fund,
1.00% of the Stock Fund and 0.40% of the International Multi-Manager Stock
Fund. The investment advisory agreement for the International Multi-Manager
Stock Fund also provides for an investment advisory fee of 1.25% of the
average daily net assets of the Fund, if the Fund does not invest all of its
assets in the Portfolio or another investment company.
The Trust and BISYS Fund Services (the "Administrator) are parties to an
administrative services contract under which the Administrator provides
services for a fee that is computed daily and paid monthly, at an annual
rate of 0.20% of the Funds' average daily net assets except the
International Multi-Manager Stock fund which pays at an annual rate of
0.15%.
The Trust and BISYS Fund Services (the "Distributor") are parties to a
distribution agreement under which shares of the funds are sold on a
continuous bases. Each class is subject to a distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. As provided in the Plan the Trust
will pay the Distributor 0.25% per annum of the average daily net assets of
the Funds.
Other financial organizations also may provide administrative services for
the Funds, such as maintaining shareholder accounts and records. The Funds
may pay fees to Service Organizations in amounts up to an annual rate of
0.08% of the daily net asset value of the Funds' shares owned by
shareholders with whom the Service Organizations has a servicing
relationship. The Institutional Premium Class may pay additional fees up to
0.50% of the daily net asset value of the Funds' shares owned by
shareholders with whom the Service Organization has a servicing
relationship.
The Advisor, the Administrator and the Distributor voluntarily agreed to
waive a portion of their fees. For the period ended April 30, 1997, fees in
the following amounts were waived:
-continued-
<PAGE> 98
THE INTRUST FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Investment Fund
Advisory Fees Administration Accounting Custodian 12b-1 Fees
Waived Fees Waived Fees Waived Fees Waived Waived
------ ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C>
Money Market Fund $26,881 $ -- $ -- $-- $44,802
Short-Term Bond Fund 16,755 2,840 -- -- 19,946
Intermediate Bond Fund 7,773 2,945 -- -- 17,665
Stock Fund 11,174 2,942 -- -- 21,489
International Multi-Manager Stock Fund 2,379 7,138 -- -- 11,897
</TABLE>
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities and purchased options) during the period
ended April 30, 1997 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Short-Term Bond Fund $40,371,778 $11,481,797
Intermediate Bond Fund 52,655,449 24,974,187
Stock Fund 48,184,956 5,328,581
</TABLE>
6. FINANCIAL INSTRUMENTS:
Investing in financial instruments such as written options, futures,
structured notes and indexed securities involves risk in excess of the
amounts reflected in the Statement of Assets and Liabilities. The face or
contract amounts reflect the extent of the involvement the Funds have in the
particular class of instrument. Risks associated with these instruments
include an imperfect correlation between the movements in the price of the
instruments and the price of the underlying securities and interest rates,
an illiquid secondary market for the instruments or inability of
counterparties to perform under the terms of the contract. The Funds enter
into these contracts primarily as a means to hedge against adverse
fluctuation in securities.
-continued-
<PAGE> 99
THE INTRUST FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Money Market
Fund
-------------
January 23, 1997
to
April 30,
1997 (a)
-------------
(Unaudited)
<S> <C>
Net Asset Value,
Beginning of Period $ 1.000
------------
Investment Activities:
Net investment income 0.013
------------
Total from Investment Activities 0.013
------------
Distributions:
Net investment income (0.013)
------------
Total Distributions (0.013)
------------
Net Asset Value,
End of Period $ 1.000
============
Total Return 1.29%(b)
Ratios/Supplementary Data:
Net Assets at end of period $ 71,374,864
Ratio of expenses to
average net assets 0.65%(c)
Ratio of net investment income
to average net assets 4.82%(c)
Ratio of expenses to
average net assets * 1.05%(c)
Ratio of net investment income
to average net assets * 4.42%(c)
</TABLE>
-----------
* During the period certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have
been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 100
THE INTRUST FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Short-Term
Bond Fund
----------------
January 21, 1997
to
April 30,
1997 (a)
----------------
(Unaudited)
<S> <C>
Net Asset Value,
Beginning of Period $ 10.00
--------------
Investment Activities:
Net investment income 0.14
Net realized and unrealized gains (losses)
from investments (0.04)
--------------
Total from Investment Activities 0.10
--------------
Distributions:
Net investment income (0.14)
--------------
Total Distributions (0.14)
--------------
Net Asset Value,
End of Period $ 9.96
==============
Total Return 1.02%(b)
Ratios/Supplementary Data:
Net Assets at end of period $ 37,886,841
Ratio of expenses to
average net assets 0.88%(c)
Ratio of net investment income
to average net assets 5.31%(c)
Ratio of expenses to
average net assets * 1.38%(c)
Ratio of net investment income
to average net assets * 4.81%(c)
Portfolio turnover 48.57%
</TABLE>
------------
* During the period certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as i
(a)Period from commencement of operations.
(b)Not annualized.
(c)Annualized.
See notes to financial statements.
<PAGE> 101
THE INTRUST FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Intermediate
Bond Fund
--------------
January 21, 1997
to
April 30,
1997 (a)
--------------
(Unaudited)
<S> <C>
Net Asset Value,
Beginning of Period $ 10.00
--------------
Investment Activities:
Net investment income 0.15
Net realized and unrealized gains (losses)
from investments (0.09)
--------------
Total from Investment Activities 0.06
--------------
Distributions:
Net investment income (0.15)
--------------
Total Distributions (0.15)
--------------
Net Asset Value,
End of Period $ 9.91
==============
Total Return 0.61%(b)
Ratios/Supplementary Data:
Net Assets at end of period $ 32,725,883
Ratio of expenses to
average net assets 1.02%(c)
Ratio of net investment income
to average net assets 5.67%(c)
Ratio of expenses to
average net assets * 1.42%(c)
Ratio of net investment income
to average net assets * 5.27%(c)
Portfolio turnover 103.26%
</TABLE>
- ------------
* During the period certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 102
THE INTRUST FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Stock
Fund
----------------
January 21, 1997
to
April 30,
1997 (a)
----------------
(Unaudited)
<S> <C>
Net Asset Value,
Beginning of Period $ 10.00
---------------
Investment Activities:
Net investment income 0.01
Net realized and unrealized gains (losses)
from investments (0.06)
---------------
Total from Investment Activities (0.05)
---------------
Net Asset Value,
End of Period $ 9.95
===============
Total Return -0.50%(b)
Ratios/Supplementary Data:
Net Assets at end of period $ 44,979,962
Ratio of expenses to
average net assets 1.58%(c)
Ratio of net investment income
to average net assets 0.77%(c)
Ratio of expenses to
average net assets * 1.99%(c)
Ratio of net investment income
to average net assets * 0.36%(c)
Portfolio turnover 17.05%
Average commision rate paid 0.0012
------------
</TABLE>
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
<PAGE> 103
THE INTRUST FUNDS
Financial Highlights
<TABLE>
<CAPTION>
International
Multi-Manager
Stock Fund
-------------------
January 20, 1997
to
April 30,
1997 (a)
-------------------
(Unaudited)
<S> <C>
Net Asset Value,
Beginning of Period $ 10.00
-----------------
Investment Activities:
Net investment income 0.04
Net realized and unrealized gains (losses)
from investments 0.08
-----------------
Total from Investment Activities 0.12
-----------------
Net Asset Value,
End of Period $ 10.12
=================
Total Return 1.20%(b)
Ratios/Supplementary Data:
Net Assets at end of period $ 24,307,697
Ratio of expenses to
average net assets 1.62%(c)
Ratio of net investment income
to average net assets 2.19%(c)
Ratio of expenses to
average net assets * 2.07%(c)
Ratio of net investment income
to average net assets * 1.74%(c)
Average commision rate paid - (d)
</TABLE>
------------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Refer to AMR Investment Services International Equity Trust Portfolio
Financial Highlights.
See notes to financial statements.
<PAGE> 104
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
-------- ---------
(dollars in thousands)
<S> <C> <C>
AUSTRALIA COMMON STOCKS - 4.19%
Australia & New Zealand Banking Group 843,442 $ 5,400
Brambles Industries, Limited 179,000 3,247
Burns Philip and Company, Limited 400,000 667
CSR, Limited 633,000 2,345
Coles Myer, Limited Australian 323,000 1,574
Davids, Limited 688,173 667
GIO Australia Holdings, Limited 486,509 1,445
Goodman Fielder, Limited 1,150,000 1,510
News Corporation, Limited 210,000 970
News Corporation Preferred Rights 230,000 879
North, Limited 136,000 481
Pioneer International, Limited 960,000 3,167
QBE Insurance Group, Limited 429,197 2,459
---------
TOTAL AUSTRALIA COMMON STOCKS 24,811
---------
AUSTRIA COMMON STOCKS - 0.88%
Boehler-Uddeholm 31,185 2,250
Evn Energie-Versorgung Niederroesterreich AG 3,960 491
Mayr-Melnhof Karton AG 16,000 758
VA Technologie AG 11,000 1,710
---------
TOTAL AUSTRIA COMMON STOCKS 5,209
---------
BELGIUM COMMON STOCKS - 0.41%
GIB Holdings, Limited, NPV 22,000 955
Solvay Et Cie, NPV 2,500 1,498
---------
TOTAL BELGIUM COMMON STOCKS 2,453
---------
CANADA COMMON STOCKS - 1.97%
Anderson Exploration, Limited 115,000 1,329
Bank of Nova Scotia 67,839 2,575
Canadian Imperial Bank of Commerce 120,000 2,756
IMASCO, Limited 119,000 3,240
Noranda, Incorporated 70,500 1,488
Oshawa Group, Limited 16,700 262
---------
TOTAL CANADA COMMON STOCKS 11,650
---------
DENMARK COMMON STOCKS - 0.98%
Den Danske Bank 16,000 1,384
Novo Nordisk AS, "B" 10,400 1,029
Teledanmark AS, "B" 16,700 803
Unidanmark AS, "A" 52,200 2,582
---------
TOTAL DENMARK COMMON STOCKS 5,798
---------
FINLAND COMMON STOCKS - 2.40%
Enso-Gutzeit OY 187,000 1,545
Huhtamaki Group 1 Free 25,000 1,083
</TABLE>
<PAGE> 105
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Merita Bank, Limited 785,000 2,549
Metsa-Serla OY, "B" 100,000 749
Nokia OY, "A" 48,500 3,024
UPM-Kymmene OY 231,400 5,292
-------
TOTAL FINLAND COMMON STOCKS 14,242
-------
FRANCE COMMON STOCKS - 7.84%
Adecco SA 3,855 1,287
Alcatel Alsthom CG 43,100 4,793
Axa SA 27,542 1,695
Banque Nationale de Paris 90,500 3,861
Bertrande Faure 29,500 1,413
Bongrain SA 2,370 897
Elf Aquitaine SA 75,500 7,322
Groupe Danone 14,700 2,141
La Farge-Coppee SA 86,208 5,654
Pechiney SA 35,858 1,339
Pernod-Ricard 49,107 2,523
Peugot SA 9,100 906
Rhone-Poulenc, "A" 50,000 1,682
Sa Des Galeries Lafayette 162 65
Saint Gobain 11,739 1,573
Scor SA 26,000 1,016
Schneider SA 12,600 710
Total Petroleum Company, "B" 49,900 4,138
Usinor Sacilor 191,856 2,899
Valeo SA 8,350 515
-------
TOTAL FRANCE COMMON STOCKS 46,429
-------
GERMANY - 5.10%
PREFERRED STOCKS - 0.72%
Herlitz AG 8,947 902
Spar Handels AG 3,400 44
Volkswagen AG 6,800 3,338
-------
TOTAL GERMANY PREFERRED STOCKS 4,284
-------
COMMON STOCKS - 4.38%
BASF AG 49,900 1,925
BAYER AG 162,925 6,481
Commerzbank AG 143,000 3,856
Deutsche Bank AG 36,000 1,900
Hoechst AG 29,300 1,150
Karstadt AG 6,500 1,951
Mannesmann AG 1,940 763
Muenchener Rueckversicherungs AG 300 494
Varta AG (non-income producing) 1,520 233
Veba AG 69,200 3,591
</TABLE>
<PAGE> 106
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Viag AG 4,350 1,939
Volkswagen AG 2,650 1,680
---------
TOTAL GERMANY COMMON STOCKS 25,963
---------
TOTAL GERMANY 30,247
---------
HONG KONG COMMON STOCKS - 4.21%
Cheung Kong Holdings, Limited 235,000 2,063
China Light and Power Company 789,000 3,555
Dickson Concepts (International), Limited 643,000 2,374
Hang Lung Development Company, Limited 1,268,000 2,341
Hong Kong Electric Holdings 308,400 1,091
Hong Kong Telecommunications, Limited 1,790,400 3,074
HSBC Holdings, Limited 114,500 2,897
Hutchinson Whampoa, Limited 200,000 1,485
National Mutual of Asia, Limited 1,700,000 1,756
New Asia Realty and Trust Company, Limited 135,000 498
New World Development Company, Limited 459,000 2,649
Peregrine Investments Holdings, Limited 550,000 845
Peregrine Investments Holdings, Limited Warrants 55,000 8
Swire Pacific, Limited, "A" 40,000 309
---------
TOTAL HONG KONG COMMON STOCKS 24,945
---------
IRELAND COMMON STOCKS - 0.50%
Jefferson Smurfit 1,199,242 2,936
---------
TOTAL IRELAND COMMON STOCKS 2,936
---------
ITALY - 2.61%
PREFERRED STOCK - 0.17%
Concessioni E Contruzioni Autostrade 525,000 1,012
---------
TOTAL ITALY PREFERRED STOCK 1,012
---------
COMMON STOCKS - 2.44%
Burgo (Cartiere) SPA 220,000 1,217
Danieli Group Risp 473,960 1,705
Fiat SPA 700,000 2,310
Instituto Nazionale Delle Assicurazioni 770,000 1,032
Merloni Elettrodomestici SPA 185,500 467
Olivetti Ing C, & Co 711,000 208
Sasib SPA 500,000 929
STET Risp Non Convertible 550,000 2,601
Telecom Italia, SPA Non Convertible Risp 110,000 237
Sta Finanziaria Telefonica Torino 1,015,000 3,765
---------
TOTAL ITALY COMMON STOCKS 14,471
---------
TOTAL ITALY 15,483
---------
JAPAN COMMON STOCKS - 11.65%
Aisin Seiki Company, Limited 123,000 1,783
</TABLE>
<PAGE> 107
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Aoyama Trading Company 18,000 508
Bridgestone Corporation 54,000 1,149
Canon, Incorporated 74,000 1,755
Chudenko Corporation 28,000 715
Daibiru Corporation 143,000 1,577
Daicel Chemical 184,000 693
Daikin Industries 14,000 110
Dainippon Ink & Chemical 57,000 213
Daiwa House Industry Company, Limited 166,000 1,857
East Japan Railway Company 313 1,354
Fuji Photo Film 193,000 7,376
Hitachi Koki Company, Limited 70,000 444
Hitachi, Limited 383,000 3,471
Isuzu Motors, Limited 67,000 252
KAO Corporation 180,000 2,099
Kioto Manufacturing Company, Limited 108,000 655
Kirin Brewery Company, Limited 38,000 329
Matsushita Electric Industrial Company 226,000 3,615
MOS Food Services 89,000 1,206
NKK Corporation 461,000 995
Nichicon Corporation 234,000 2,563
Nichido Fire & Marine Insurance 304,000 1,636
Nintendo Company, Limited 37,300 2,727
Nippon Fire and Marine Insurance 287,000 1,131
Nippon Telegraph & Telephone Corporation 193 1,361
Promise Company, Limited 77,000 3,185
Ryosan Company 12,000 254
Sekisiu Chemical Company, Limited 332,000 3,192
Shionogi & Company 36,000 240
Sony Corporation 88,800 6,465
Sumitomo Marine & Fire Insurance 402,000 2,474
Sumitomo Rubber Industries 124,000 811
Suzuki Motor Company, Limited 193,000 2,053
TDK Corporation 25,000 1,802
Toyo Seikan Kaisha 121,000 2,221
Yamanouchi Pharmaceutical 110,000 2,349
Yamato Kogyo Company, Limited 35,000 303
Yodogawa Steel Works 375,000 2,122
-------
TOTAL JAPAN COMMON STOCKS 69,045
-------
MEXICO COMMON STOCKS - 0.16%
Alfa, SA 175,000 945
-------
TOTAL MEXICO COMMON STOCKS 945
-------
MALAYSIA COMMON STOCKS - 1.19%
Arab Maylasian Finance 780,000 1,709
Bolton Properties 909,000 1,441
</TABLE>
<PAGE> 108
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Golden Hope Plantations BHD 752,000 1,192
Hicom Holdings BHD 195,300 432
Kedah Cement Holdings BHD 729,000 1,133
Malaysian International Shipping Corporation BHD 505,666 1,138
-------
TOTAL MALAYSIA COMMON STOCKS 7,045
-------
NETHERLANDS COMMON STOCKS - 7.02%
ABN AMRO Holdings NV 58,900 4,048
Aegon NV 40,000 2,834
Akzo Nobel NV 55,030 7,090
Fortis Amev NV 76,054 2,869
Hollandshce Beton Groep NV 15,804 3,432
Internationale Nederlanden Groep NV 242,845 9,536
Koninklijke Bijenkorf Beheer NV 17,400 1,148
Phillips Electronics 114,900 5,998
Royal PTT Nederland NV 76,480 2,717
Unilever NV 10,000 1,945
-------
TOTAL NETHERLANDS COMMON STOCKS 41,617
-------
</TABLE>
<TABLE>
<CAPTION>
NEW ZEALAND - 1.00% Par
FOREIGN BONDS - 0.01% Amount
Brierley Investments, Limited, ---------
<S> <C> <C>
Subordinated Convertible, 9.00%, Due 6/30/1998 $ 63 53
-------
TOTAL NEW ZEALAND FOREIGN BONDS 53
-------
</TABLE>
<TABLE>
<CAPTION>
Shares
COMMON STOCKS - 0.99% ---------
<S> <C> <C>
Brierley Investments, Limited 1,400,000 1,233
Fisher & Paykel, Limited 210,000 754
Fletcher Challenge Paper 382,500 849
Fletcher Challenge Building 775,250 2,177
Lion Nathan, Limited 355,000 854
---------
TOTAL NEW ZEALAND COMMON STOCKS 5,867
---------
TOTAL NEW ZEALAND 5,920
---------
NORWAY COMMON STOCKS - 2.14%
Den Norsk Bank, Series A 462,200 1,668
Kvaerner Industries AS 49,789 2,475
Norsk Hydro AS 40,000 1,949
Nycomed AS 278,500 4,009
Saga Petroleum, Series B Free 100,000 1,615
Unitor AS 80,000 977
---------
TOTAL NORWAY COMMON STOCKS 12,693
---------
SINGAPORE COMMON STOCKS - 0.78%
Hong Kong Land 869,149 1,808
Inchcape Berhad 275,000 960
</TABLE>
<PAGE> 109
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Sembawang Corporation 258,000 1,115
Singapore Finance Limited 27,000 40
Van Der Horst 240,000 690
-------
TOTAL SINGAPORE COMMON STOCKS 4,613
-------
SPAIN COMMON STOCKS - 3.76%
Banco Espana Credito SA 7,000 62
Banco Popular Espanol 7,000 1,486
Banco De Santander SA 40,860 3,077
Iberdrola SA 329,957 3,727
Repsol SA (BR) 120,100 5,040
Telefonica De Espana 308,600 7,912
Uralita (non-income producing) 119,250 992
-------
TOTAL SPAIN COMMON STOCKS 22,296
-------
SWEDEN COMMON STOCKS - 3.20%
Assidoman AB 48,000 1,202
Astra AB, "B" Free 20,700 822
Electrolux AB, "B" 44,100 2,529
Esselte AB, Class "A" 2,000 43
Esselte AB, Class "B" 17,000 388
Fastighets AB Tornet 1,970 21
Marieberg Tidnings 77,267 1,802
Nordbanken AS 29,900 918
Pharmacia & Upjohn, Incorporated 24,400 703
Skandia Forsakrings AB 23,100 668
SKF AB, "B" Free 97,300 2,108
Sparbanken Sverige AB, "A" 91,700 1,636
Stora Kopparsbergs Bergslags, "A" 42,100 582
Stora Kopparsbergs Bergslags, "B" 25,800 354
Svedala Industries, "A" Free 90,000 1,652
Svenska Cellulosa, "B" Free 53,900 1,154
Svenska Handelsbanken, "A" 3,200 88
Volvo AB 90,000 2,266
-------
TOTAL SWEDEN COMMON STOCKS 18,936
-------
SWITZERLAND COMMON STOCKS - 6.50%
ABB AG 1,100 1,333
Ciba Specialty Chemicals AG 2,453 211
Forbo Holding AG 3,280 1,322
Holderbank Financial Glarus-B 2,030 1,580
Nestle SA 7,065 8,583
Novartis AG 5,332 7,028
Schindler Holding AG 1,110 1,345
SGS Holding SA (Reg) 4,200 1,633
SGS Holding SA (BR) 240 497
SIG AG 1,540 4,228
</TABLE>
<PAGE> 110
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Sulzer AG (Reg) 1,800 1,240
Sulzer AG (Part Cert) 4,907 3,377
Swiss Reinsurance Company 4,316 4,997
Zurich Versicherungs 3,400 1,117
---------
TOTAL SWITZERLAND COMMON STOCKS 38,491
---------
UNITED KINGDOM COMMON STOCKS - 17.11%
Albert Fisher Group, PLC 262,500 168
Allied Domecq, PLC 516,910 3,661
Associated British Foods Group, PLC 42,400 367
Bank of Scotland 166,700 1,001
Barclays, PLC 27,900 520
Barratt Developments, PLC 350,000 1,474
BAT Industries, PLC 672,800 5,688
BG, PLC 1,150,000 3,340
British Telecommunications 503,500 3,697
BTR, PLC 1,315,600 5,390
Burmah Castrol, PLC 124,800 2,050
Burton Group, PLC 335,000 829
Chubb Security 167,200 1,215
Coats Viyella, PLC 1,573,500 3,357
Commercial Union, PLC 172,500 1,910
Cortaulds, PLC 285,000 1,538
Energy Group, PLC 124,000 981
English China Claylord Group 139,544 464
Grand Metropolitan, PLC 500,800 4,193
Hanson, PLC 468,500 2,269
Harrisons & Crosfield, PLC 1,391,800 2,766
Hillsdown Holdings, PLC 1,013,100 2,984
Hyder, PLC 238,000 3,315
Imperial Chemical Industries, PLC 27,000 307
Imperial Tobacco Group 195,100 1,282
Kwik Save Group, PLC 198,900 976
Lex Service 350,000 2,002
London Pacific Group, PLC 130,000 451
National Grid Group, PLC 203,053 736
National Power, PLC 50,000 433
National Westminster Bank, PLC 326,400 3,866
Northern Foods, PLC 500,000 1,700
Peninsular & Orient Steam Company 162,350 1,582
PowerGen, PLC 351,790 3,693
Racal Electronics, PLC 203,300 787
Reckitt & Colman, PLC 355,527 4,831
Redland, PLC 877,900 4,986
Rolls Royce, PLC 201,400 792
Royal & Sun Alliance Insurance Group 263,200 2,086
Safeway, PLC 309,677 1,711
</TABLE>
<PAGE> 111
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
Salvesen (Christian), PLC 449,977 1,898
Scottish Hydro-Electric, PLC 78,750 503
Shell Transportation & Trading Company, PLC 45,000 796
Southern Electric, PLC 109,846 780
Storehouse 109,900 390
Tate & Lyle, PLC 276,600 2,062
Tesco, PLC 343,819 1,992
Thames Water Group, PLC 189,800 2,086
Unilever, PLC 127,300 3,351
WPP Group, PLC 300,000 1,229
Wace Group, PLC 719,700 882
---------
TOTAL UNITED KINGDOM COMMON STOCKS 101,367
---------
UNITED STATES - 11.65%
FOREIGN SECURITIES DENOMINATED IN U.S.
DOLLARS - 2.31%
Cho Hung Bank GDR 405,800 2,201
Dairy Farm International 908,000 672
G P Batteries International Limited 137,000 404
G P Batteries Warrants Expiration 11/15/2000 34,250 34
Jardine Matheson Holdings, Limited 797,000 4,384
Jardine Strategic 1,325,000 4,505
Jardine Strategic Holdings Warrants 66,250 24
Telmex ADR 35,000 1,444
---------
TOTAL FOREIGN SECURITIES DENOMINATED IN
U.S. Dollars 13,668
---------
</TABLE>
<TABLE>
<CAPTION>
Par
U. S. GOVERNMENT AND AGENCY OBLIGATIONS Amount
(NOTE A) - 6.64% -------
<S> <C> <C>
Federal Farm Credit Banks, Discount Note, 5.33%,
Due 5/19/1997 $ 3,485 3,475
Federal Home Loan Mortgage Corporation
Discount Note, 5.36%, Due 5/13/1997 4,855 4,846
Discount Note, 5.41%, Due 5/14/1997 3,005 2,999
Discount Note, 5.40%, Due 5/15/1997 5,800 5,787
Federal National Mortgage Association, Discount Note,
5.40%, Due 5/2/1997 5,780 5,778
Student Loan Mortgage Association, Discount Note,
5.40%, Due 5/7/1997 5,800 5,794
U. S. Treasury Bill
5.13%, Due 5/8/1997 329 329
4.97%, Due 5/15/1997 9,185 9,166
4.71%, Due 6/5/1997 1,203 1,197
-------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS 39,371
-------
SHORT-TERM INVESTMENTS (NOTE B) - 2.70%
Bank of New York, TD, 5.4375%, Due 5/2/1997 9,000 9,000
Nestle Capital Corporation, CP, 5.525%, Due 5/2/1997 7,000 6,997
-------
TOTAL SHORT-TERM INVESTMENTS 15,997
-------
TOTAL UNITED STATES 69,036
-------
</TABLE>
<PAGE> 112
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Value
------- -------
(dollars in thousands)
<S> <C> <C>
TOTAL INVESTMENTS - 97.25% (COST $492,869) 576,207
-------------
OTHER ASSETS, NET OF LIABILITIES - 2.75% 16,293
-------------
TOTAL NET ASSETS - 100% $ 592,500
=============
</TABLE>
Based on the cost of investments of $493,013 for federal income tax purposes at
April 30, 1997, the aggregate gross unrealized appreciation was $102,432, the
aggregate gross unrealized depreciation was $19,238, and the net unrealized
appreciation of investments was $83,194.
(A) Rates associated with United States Government Bonds represent maturity
from time of purchase.
(B) Rates associated with short-term investments represent yield to next reset
date.
ABBREVIATIONS:
AB - Company (Sweden)
ADR - American Depository Receipt (United States)
AG - Company (Austria, Germany, Switzerland)
AS - Company (Denmark, Norway, Sweden)
BHD - Berhard (Malaysia)
BR - Bearer (Spain, Switzerland)
CG - Company General (France)
CP - Commercial Paper (United States)
GDR - Global Depository Receipt (United States)
NPV - No Par Value (Belgium)
NV - Company (Netherlands)
OY - Company (Finland)
PLC - Public Limited Corporation (UK)
SA - Company (France, Mexico, Spain, Switzerland)
SPA - Company (Italy)
TD - Time Deposit (United States)
<PAGE> 113
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
INDUSTRY DIVERSIFICATION
APRIL 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Percent of
Net Assets
--------
<S> <C>
Basic Industry........................................ 29.05%
Capital Goods......................................... 9.66%
Consumer Goods & Services............................. 21.25%
Energy................................................ 4.60%
Financing, Insurance & Real Estate.................... 18.23%
Transportation........................................ 1.25%
Utilities............................................. 3.87%
Short-Term Investments................................ 9.34%
Other Assets/Liabilities.............................. 2.75%
------
NET ASSETS..................... 100.00%
======
</TABLE>
<PAGE> 114
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY TRUST PORTFOLIO
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
ASSETS: (000)
----
<S> <C>
Investments in securities at value
(cost - $492,869).................. $ 576,207
Cash, including foreign currency..... 21,607
Unrealized appreciation on foreign
currency contracts ............... 2,088
Dividends and interest receivable ... 2,632
Reclaims receivable ................. 618
Receivable for investments sold ..... 246
Deferred organization costs ......... 30
---------
TOTAL ASSETS .................. 603,428
---------
LIABILITIES:
Payable for investments purchased ... 9,845
Management and investment advisory
fees payable (Note 2) ............ 777
Accrued organization costs .......... 33
Other liabilities ................... 273
---------
TOTAL LIABILITIES ............. 10,928
---------
NET ASSETS APPLICABLE TO INVESTORS'
BENEFICIAL INTERESTS ............. $ 592,500
=========
</TABLE>
<PAGE> 115
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY TRUST PORTFOLIO
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME: (000)
---
<S> <C>
Interest income ........................................ $ 1,206
Dividend income (net of foreign taxes of $784) ......... 5,539
Income derived from securities lending, net ............ 142
--------
TOTAL INVESTMENT INCOME ............................ 6,887
--------
EXPENSES:
Management and investment advisory
fees (Note 2) ........................................ 1,135
Custodian fees ......................................... 218
Professional fees ...................................... 12
Organizational Costs ................................... 4
Other expenses ......................................... 23
--------
TOTAL EXPENSES .................................... 1,392
--------
NET INVESTMENT INCOME ........................................... 5,495
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ....................... 6,344
Net realized loss on foreign currency
transactions ........................................ (1,371)
Change in net unrealized appreciation or depreciation of
investments .......................................... 59,431
Change in net unrealized depreciation of foreign currency
contracts and translations .......................... (28,041)
--------
NET GAIN ON INVESTMENTS ........................... 36,363
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................................... 41,858
========
</TABLE>
<PAGE> 116
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY TRUST PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, October 31,
1997 (Unaudited) 1996
--------- ---------
INCREASE IN NET ASSETS: .......................... (000)
OPERATIONS: ---
<S> <C> <C>
Net investment income .................... $ 5,495 $ 8,135
Net realized gain on investments and
foreign currency transactions ......... 4,973 11,172
Change in net unrealized appreciation or
depreciation of investments and
foreign currency translations ......... 31,390 30,752
--------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ....... 41,858 50,059
--------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Contributions ............................ 196,875 397,164
Withdrawals .............................. (50,729) (42,727)
--------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS ............ 146,146 354,437
--------- ---------
NET INCREASE IN NET ASSETS ....................... 188,004 404,496
--------- ---------
NET ASSETS:
Beginning of period .......................... 404,496 --
--------- ---------
End of Period ................................ $ 592,500 $ 404,496
========= =========
</TABLE>
FINANCIAL HIGHLIGHTS:
<TABLE>
RATIOS:
<S> <C> <C>
Expenses to average net assets
(annualized) ..................... 0.57% 0.56%
Net investment income to average net
assets (annualized) ............. 2.27% 2.50%
Portfolio turnover rate ............. 6% 19%
Average commission rate paid ........ 0.0141 0.0192
</TABLE>
<PAGE> 117
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The AMR Investment Services Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a no-load open-end management
investment company which was organized as a trust under the laws of the State of
New York pursuant to a Declaration of Trust dated as of June 27, 1995 and
amended on August 11, 1995. The AMR Investment Services International Equity
Portfolio (the "Portfolio") is one of the portfolios of the Trust. The Portfolio
commenced active operations on November 1, 1995. The Declaration of Trust
permits the Board of Trustees (the "Trustees") to issue beneficial interests in
the Portfolio.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services.
The following is a summary of the significant accounting policies
followed by the Portfolio.
Security Valuation
Equity securities that are primarily traded on domestic securities
exchanges are valued at the last quoted sales price on a designated exchange
prior to the close of trading on the New York Stock Exchange (the "Exchange")
or, lacking any current sales, on the basis of the last current bid price prior
to the close of trading on the Exchange. Portfolio securities that are primarily
traded on foreign securities exchanges are generally valued at the preceding
closing values of such securities on their respective exchanges where primarily
traded. Over-the-counter equity securities are valued on the basis of the last
bid price on that date prior to the close of trading. Debt securities (other
than short-term securities) normally will be valued on the basis of prices
provided by a pricing service and may take into account appropriate factors such
as institution-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. In some cases, the prices of debt securities may be determined using
quotes obtained from brokers. Securities for which market quotations are not
readily available are valued at fair value, as determined in good faith and
pursuant to procedures approved by the Board. Investment grade short-term
obligations with 60 days or less to maturity are valued using the amortized cost
method.
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale. Dividend income is recorded on the ex-dividend date except
certain dividends from foreign securities which are recorded as soon as the
information is available to the Portfolio. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
amortization of premiums or accretion of discounts on investment grade
short-term securities and zero coupon instruments. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
Currency Translation
All assets and liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the bid price of such currencies
against U.S. dollars as last quoted by a recognized dealer. Income, expenses and
purchases and sales of investments are translated into U.S. dollars at the rate
of exchange prevailing on the respective dates of such transactions. The
Portfolio includes that portion of the results of operations resulting from
changes in foreign exchange rates with net realized and unrealized gain on
investments, as appropriate.
Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts to
hedge the exchange rate risk on investment transactions or to hedge the value of
portfolio securities denominated in foreign currencies. Forward foreign currency
contracts are valued at the forward exchange rate prevailing on the day of
valuation.
Federal Income and Excise Taxes
<PAGE> 118
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED) (CONTINUED)
The Portfolio will be treated as a partnership for federal income tax
purposes. As such, each investor in the Portfolio will be taxed on its share of
the Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of sub-chapter M of the
Internal Revenue Code. Accordingly, no provision for United States federal
income or excise tax is necessary.
Deferred Organization Expenses
Expenses incurred by the Portfolio in connection with its organization
are being amortized on a straight-line basis over a five-year period.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement which
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory and portfolio management services. Investment assets of the
Portfolio are managed by multiple investment advisers which have entered into
separate investment advisory agreements with the Manager. As compensation for
performing the duties required under the Management Agreement, the Manager
receives from the Portfolio an annualized fee equal to .10% of the average daily
net assets of the Portfolio plus amounts paid by the Manager to the investment
advisors hired by the Manager to direct investment activities of the Portfolio.
Management fees are paid as follows (dollars in thousands):
<TABLE>
<CAPTION>
Amount paid to Investment Net Amount paid to
Management Fee Rate Management Fee Advisors Manager
------------------- -------------- -------- -------
<S> <C> <C> <C>
.25% - .90% $1,135 $893 $242
</TABLE>
Other
Certain officers or trustees of the Portfolio are also officers of the
Manager or American. The Portfolio makes no direct payments to its officers.
Unaffiliated trustees and their spouses are provided free unlimited air
transportation on American. However, the Portfolio compensates each Trustee with
payments in an amount equal to the Trustee's income tax on the value of this
free airline travel. For the period ended April 30, 1997, the cost of air
transportation was not material to the Portfolio.
3. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the period ended April 30, 1997 were
$146,613,000 and $26,221,000, respectively.
<PAGE> 119
AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED) (CONTINUED)
4. COMMITMENTS
In order to protect itself against a decline in the value of particular
foreign currencies against the U.S. dollar, the Portfolio has entered into
forward contracts to deliver or receive foreign currency in exchange for U.S.
dollars as described below. The Portfolio bears the market risk that arises from
changes in foreign exchange rates, and accordingly, the unrealized gain (loss)
on these contracts is reflected in the accompanying financial statements. The
Portfolio also bears the credit risk if the counterparty fails to perform under
the contract. At April 30, 1997, the Portfolio had outstanding forward foreign
currency contracts as follows:
<TABLE>
<CAPTION>
Contracts to Deliver
(amounts in thousands) Settlement Unrealized
Date Value Gain/(Loss)
------------ ---------- ----------
<S> <C> <C> <C> <C>
3,500 AUD 1/12/98 $ 2,734 $ 1
1,246 DEM 5/5/97 720 0
10,000 DEM 6/19/97 5,796 1,075
300,000 ESP 12/2/97 2,064 246
34,000 FRF 6/19/97 5,849 949
21,700 FRF 6/19/97 3,733 524
18,500 SEK 9/16/97 2,372 420
---------- ----------
Total contracts to deliver
(Receivable amount $26,483) $23,268 $ 3,215
========== ==========
Contracts to Receive
(amounts in thousands)
10,000 DEM 6/19/97 $ 5,796 $(1,113)
135 GBP 5/1/97 219 (1)
53 GBP 5/2/97 86 0
13 GBP 5/6/97 22 0
378 HKD 5/1/97 49 0
256 IEP 5/1/97 384 (13)
1,402 NLG 5/5/97 720 0
---------- ----------
Total contracts to receive
(Payable amount $8,403) $ 7,276 $(1,127)
========== ==========
</TABLE>
5. SECURITIES LENDING
The Portfolio participates in a securities lending program under which
securities are loaned to selected institutional investors for a fee. All such
loans require collateralization with cash, securities of the U.S. Government and
its agencies or letters of credit that at all times equal at least 100% of the
market value of the loaned securities plus accrued interest. At April 30, 1997,
securities with a market value of approximately $82,376,000 were loaned by the
Portfolio. The non-cash collateral for these loans totaled $5,197,000 and the
cash collateral totaled $81,479,000.
<PAGE> 120
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements included in Part A of this
Registration Statement: Financial Highlights for the
Period Ended April 30, 1997 (unaudited).
(2) Financial Statements included in Part B of this
Registration Statement: Schedule of Portfolio
Investments (unaudited), Statement of Changes in Net
Assets for the Period Ended April 30, 1997
(unaudited), Statement of Assets and Liabilities
dated April 30, 1997 (unaudited), Statement of
Operations for the Period Ended April 30, 1997
(unaudited), Financial Highlights for the Period
Ended April 30, 1997, Notes to Financial Statements
dated April 30, 1997 (unaudited), Statement of Assets
and Liabilities and Notes Thereto as of December 6,
1996, Report of Independent Accountants.
(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) (d) Form of Master Administration
Agreement and Supplements between
Registrant and Administrator.*
(6) Form of Master Distribution Contract and
Supplements between Registrant and
Distributor.*
<PAGE> 121
(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.*
(9) (b) Form of Service Organization
Agreement.*
(10) 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.*
- ------------------------
* Previously filed on December 23, 1996 as part of Pre-Effective
Amendment Number Three and incorporated by reference herein.
** Filed with this Post-Effective Amendment Number One on June 27, 1997.
- 2 -
<PAGE> 122
-3-
<PAGE> 123
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities at June 4, 1997.
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund 2
Short-Term Bond Fund 3
Intermediate Bond Fund 3
Stock Fund 3
International Multi-Manager 3
Stock Fund
Kansas Tax-Exempt Bond 6
Fund
</TABLE>
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), and Section 14 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
- 4 -
<PAGE> 124
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 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 May 31, 1997 total assets under
management were approximately $1.6 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 two years
are as follows:
INTRUST Bank, N.A.
<TABLE>
<CAPTION>
Name Position and Office
---- -------------------
<S> <C>
C.Q. Chandler, IV Chairman, President and Chief Executive
Officer (Vice Chairman prior to February,
1996)
</TABLE>
- 5 -
<PAGE> 125
<TABLE>
<CAPTION>
<S> <C>
J.V. Lentell Vice Chairman
Ron Baldwin Vice Chairman (Hired February, 1996;
Executive Vice President, Fourth Financial
Corporation prior to February, 1996)
Rick Beach Executive Vice President (Senior Vice
President, INTRUST Financial Corporation
prior to March, 1996)
INTRUST Financial Corporation
Name Position and Office
---- -------------------
C.Q. Chandler Chairman and Chief Executive Officer
C.Q. Chandler, IV President
J.V. Lentell Vice Chairman - INTRUST Bank, N.A.
Ron Baldwin Vice Chairman - INTRUST Bank, N.A.
(Hired February, 1996; Executive Vice
President, Fourth Financial Corporation
prior to February, 1996)
Rick Beach Executive Vice President (Senior Vice
President, prior to March, 1996)
</TABLE>
Item 29. Principal Underwriter
(a) BISYS acts as Distributor/Underwriter for other
registered investment companies.
(b) Officers and Directors.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Positions and Offices with
Business Address Registrant Underwriter
- ---------------- ---------- -----------
<S> <C> <C>
BISYS Fund Services, Inc. None Sole General Partner
3435 Stelzer Road
Columbus, Ohio 43219
</TABLE>
- 6 -
<PAGE> 126
<TABLE>
<CAPTION>
<S> <C> <C>
WC Subsidiary Corporation None Sole Limited Partner
150 Clove Road
Little Falls, New Jersey 07424
The BISYS Group, Inc. None Sole Shareholder
150 Clove Road
Little Falls, New Jersey 07424
</TABLE>
(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 and INTRUST at 105 North Main Street, Box One, Wichita,
Kansas 63201 and AMR Investment Services, Inc., at 4333 Amon Carter Boulevard,
MD, 5645, Forth Worth, Texas 76155.
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 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.
- 7 -
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and 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
June 27, 1997.
INTRUST FUNDS TRUST
By: /s/ David Bunstine
-------------------------------------
David Bunstine, President
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.
- 8 -
<PAGE> 128
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Terry L. Carter*
- -----------------------------
Terry L. Carter Trustee June 27, 1997
/s/ Thomas F. Kice*
- -----------------------------
Thomas F. Kice Trustee June 27, 1997
/s/ George Mileusnic*
- -----------------------------
George Mileusnic Trustee June 27, 1997
/s/ John J. Pileggi
- -----------------------------
John J. Pileggi Trustee June 27, 1997
/s/ Thomas E. Shea*
- -----------------------------
Thomas E. Shea Trustee June 27, 1997
/s/ G.L. Best*
- -----------------------------
G.L. Best Trustee June 27, 1997
/s/ David Bunstine
- -----------------------------
David Bunstine President June 27, 1997
/s/ Thresa B. Dewar Treasurer (Principal June 27, 1997
- ----------------------------- Financial and Accounting
Thresa B. Dewar Officer)
</TABLE>
- 9 -
<PAGE> 129
*By: /s/ John J. Pileggi
--------------------------------------
John J. Pileggi, Attorney-In-Fact
* Pursuant to Power of Attorney filed with Pre-Effective Amendment No. 2.
- 10 -
<PAGE> 130
SIGNATURES
AMR Investment Services Trust has duly caused this
Post-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, "hereunto duly authorized, in the City of
Fort Worth and the State of Texas on June 27, 1997.
AMR INVESTMENT SERVICES TRUST
By: /s/ William F. Quinn
--------------------------------
William F. Quinn
President
Attest:
/s/ Barry Y. Greenberg
- ----------------------------------------
Barry Y. Greenberg
Vice President and Assistant Secretary
This Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A of the INTRUST Funds Trust 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William F. Quinn
- ----------------------------------
William F. Quinn President and Trustee June 27, 1997
/s/ Alan D. Feld
- ----------------------------------
Alan D. Feld Trustee June 27, 1997
/s/ Ben J. Fortson
- ----------------------------------
Ben J. Fortson Trustee June 27, 1997
/s/ John S. Justin
- ----------------------------------
John S. Justin Trustee June 27, 1997
/s/ Stephen D. O'Sullivan
- ----------------------------------
Stephen D. O'Sullivan Trustee June 27, 1997
/s/ Roger T. Staubach
- ----------------------------------
Roger T. Staubach Trustee June 27, 1997
/s/ Dr. Kneeland Youngblood Trustee June 27, 1997
- ----------------------------------
Dr. Kneeland Youngblood
</TABLE>
- 11 -
<PAGE> 131
*By: /s/ William F. Quinn
---------------------------------------
William F. Quinn, Attorney-In-Fact
- 12 -
<PAGE> 1
EXHIBIT 2
Bylaws of Registrant
-13-
<PAGE> 2
As Amended February 13, 1997
BY-LAWS
OF
INTRUST FUNDS TRUST
These Bylaws of INTRUST Funds Trust (the "Trust"), a Delaware
business trust, are subject to the Trust's Trust Instrument dated January 26,
1996 as from time to time amended, supplemented or restated (the "Trust
Instrument"). Capitalized terms used herein which are defined in the Trust
Instrument are used as therein defined.
ARTICLE I
PRINCIPAL OFFICE
The principal office of the Trust shall be located in New
York, New York or such other location as the Trustees may, from time to time,
determine. The Trust may establish and maintain such other offices and places of
business as the Trustees may, from time to time, determine.
<PAGE> 3
ARTICLE II
OFFICERS AND THEIR ELECTION
Officers
Section 1. The officers of the Trust shall be President, a
Treasurer, a Secretary, and such other officers as the Trustees may from time to
time elect. The Trustees may delegate to any officer or committee the power to
appoint any subordinate officers or agents. It shall not be necessary for any
Trustee or other officer to be a holder of Shares in the Trust.
Election of Officers
Section 2. The President, Treasurer and Secretary shall be
chosen by the Trustees. Two or more offices may be held by a single person
except the offices of President and Secretary. Subject to the provisions of
Section 12 hereof, the President, the Treasurer and the Secretary shall each
hold office until their successors are chosen and qualified and all other
officers shall hold office at the pleasure of the Trustees.
- 2 -
<PAGE> 4
Resignations
Section 3. Any officer of the Trust may resign,
notwithstanding Section 2 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
ARTICLE III
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
Management of The Trust-General
Section 1. The business and affairs of the Trust shall be
managed by, or under the direction of, the Trustees, and they shall have all
powers necessary and desirable to carry out their responsibilities, so far as
such powers are not inconsistent with the laws of the State of Delaware, the
Trust Instrument or with these Bylaws.
- 3 -
<PAGE> 5
Executive and Other Committees
Section 2. The Trustees may elect from their own number an
executive committee, which shall have any or all the powers of the Trustees
while the Trustees are not in session. The Trustees may also elect from their
own number other committees from time to time. The number composing such
committees and the powers conferred upon the same are to be determined by vote
of a majority of the Trustees. All members of such committees shall hold such
offices at the pleasure of the Trustees. The Trustees may abolish any such
committee at any time. Any committee to which the Trustees delegate any of their
powers or duties shall keep records of its meetings and shall report its actions
to the Trustees. The Trustees shall have power to rescind any action of any
committee, but no such rescission shall have retroactive effect.
Compensation
Section 3. Each Trustee and each committee member may receive
such compensation for his services and reimbursement for his expenses as may be
fixed from time to time by resolution of the Trustees.
- 4 -
<PAGE> 6
Chairman of the Trustees
Section 4. The Trustees shall appoint from among their number
a Chairman who shall serve as such at the pleasure of the Trustees. When
present, he shall preside at all meetings of the Shareholders and the Trustees,
and he may, subject to the approval of the Trustees, appoint a Trustee to
preside at such meetings in his absence. He shall perform such other duties as
the Trustees may from time to time designate.
President
Section 5. The President shall be the chief executive officer
of the Trust and, subject to the direction of the Trustees, shall have general
administration of the business and policies of the Trust. Except as the Trustees
may otherwise order, the President shall have the power to grant, issue, execute
or sign such powers of attorney, proxies, agreements or other documents as may
be deemed advisable or necessary in the furtherance of the interests of the
Trust or any Series thereof. He shall also have the power to employ attorneys,
accountants and other advisers and agents and counsel for the Trust. The
President shall perform such
- 5 -
<PAGE> 7
duties additional to all of the foregoing as the Trustees may from time to
designate.
Treasurer
Section 6. The Treasurer shall be the principal financial and
accounting officer of the Trust. He shall deliver all funds and securities of
the Trust which may come into his hands to such company as the Trustees shall
employ as Custodian in accordance with the Trust Instrument and applicable
provisions of law. He shall make annual reports regarding the business and
condition of the Trust, which reports shall be preserved in Trust records, and
he shall furnish such other reports regarding the business and condition of the
Trust as the Trustees may from time to time require. The Treasurer shall perform
such additional duties as the Trustees may from time to time designate.
Secretary
Section 7. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at their
respective meetings. He shall have the
- 6 -
<PAGE> 8
custody of the seal of the Trust. The Secretary shall perform such additional
duties as the Trustees may from time to time designate.
Vice President
Section 8. Any Vice President of the Trust shall perform such
duties as the Trustees or the President may from time to time designate. At the
request or in the absence or disability of the President, the Vice President
(or, if there are two or more Vice Presidents, then the senior of the Vice
Presidents present and able to act) may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
Assistant Treasurer
Section 8. Any Assistant Treasurer of the Trust shall perform
such duties as the Trustees or the Treasurer may from time to time designate,
and, in the absence of the Treasurer, the senior Assistant Treasurer, present
and able to act, may perform all the duties of the Treasurer.
- 7 -
<PAGE> 9
Assistant Secretary
Section 9. Any Assistant Secretary of the Trust shall perform
such duties as the Trustees or the Secretary may from time to time designate,
and, in the absence of the Secretary, the senior Assistant Secretary, present
and able to act, may perform all the duties of the Secretary.
Subordinate Officers
Section 10. The Trustees from time to time may appoint such
other officers or agents as they may deem advisable, each of whom shall have
such title, hold office for such period, have such authority and perform such
duties as the Trustees may determine. The Trustees from time to time may
delegate to one or more officers or committees of Trustees the power to appoint
any such subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties.
- 8 -
<PAGE> 10
Surety Bonds
Section 11. The Trustees may require any officer or agent of
the Trust to execute a bond (including, without limitation, any bond required by
the Investment Company Act of 1940, as amended ("the 1940 Act") and the rules
and regulations of the Securities and Exchange Commission ("Commission")) to the
Trust in such sum and with such surety or sureties as the Trustees may
determine, conditioned upon the faithful performance of his duties to the Trust
including responsibility for negligence and for the accounting of any of the
Trust's property, funds or securities that may come into his hands.
Removal
Section 12. Any officer may be removed from office whenever in
the judgment of the Trustees the best interest of the Trust will be served
thereby, by the vote of a majority of the Trustees given at any regular meeting
or any special meeting of the Trustees. In addition, any officer or agent
appointed in accordance with the provisions of Section 10 hereof may be removed,
- 9 -
<PAGE> 11
either with or without cause, by any officer upon whom such power of removal
shall have been conferred by the Trustees.
Remuneration
Section 13. The salaries or other compensation, if any, of the
officers of the Trust shall be fixed from time to time by resolution of the
Trustees.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Special Meetings
Section 1. A special meeting of the shareholders shall be
called by the Secretary whenever (i) ordered by the Trustees or (ii) requested
in writing by the holder or holders of at least 10% of the Outstanding Shares
entitled to vote. If the Secretary, when so ordered or requested, refuses or
neglects for more than 30 days to call such special meeting, the Trustees or the
Shareholders so requesting, may, in the name of the Secretary, call the meeting
by giving notice thereof in the manner required when notice is given
- 10 -
<PAGE> 12
by the Secretary. If the meeting is a meeting of the Shareholders of one or more
Series or classes of Shares, but not a meeting of all Shareholders of the Trust,
then only special meetings of the Shareholders of such one or more Series or any
Classes thereof shall be entitled to notice of and to vote at such meeting.
Notices
Section 2. Except as above provided, notices of any meeting of
the Shareholders shall be given by the Secretary by delivering or mailing,
postage prepaid, to each Shareholder entitled to vote at said meeting, written
or printed notification of such meeting at least fifteen days before the
meeting, to such address as may be registered with the Trust by the Shareholder.
Notice of any Shareholder meeting need not be given to any Shareholder if a
written waiver of notice, executed before or after such meeting, is filed with
the record of such meeting, or to any Shareholder who shall attend such meeting
in person or by proxy. Notice of adjournment of a Shareholders' meeting to
another time or place need not be given, if such time and place are announced at
the meeting and reasonable notice is given to persons present at
- 11 -
<PAGE> 13
the meeting and the adjourned meeting is held within a reasonable time after the
date set for the original meeting.
Voting-Proxies
Section 3. Subject to the provisions of the Trust Instrument,
shareholders entitled to vote may vote either in person or by proxy, provided
that either (i) an instrument authorizing such proxy to act is executed by the
Shareholder in writing and dated not more than eleven months before the meeting,
unless this instrument specifically provides for a longer period or (ii) the
Trustees adopt by resolution an electronic, telephonic, computerized or other
alternative to execution of a written instrument authorizing the proxy to act
which authorization is received no more than eleven months before the meeting.
Proxies shall be delivered to the Secretary of the Trust or other persons
responsible for recording the proceedings before being voted. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives specific written notice to the contrary from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the
- 12 -
<PAGE> 14
holder thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden in proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voting, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein or in the Trust Instrument, as these By-laws or such Trust Instrument may
be amended or supplemented from time to time, all matters relating to the
giving, voting or validity or proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and the
Shareholders were shareholders of a Delaware corporation.
Place of Meeting
Section 4. All special meetings of the Shareholders shall be
held at the principal place of business of the Trust or at
- 13 -
<PAGE> 15
such other place in the United States as the Trustees may designate.
Action Without a Meeting
Section 5. Any action to be taken by Shareholders may be taken
without a meeting if all shareholders entitled to vote on the matter consent to
the action in writing and the written consents are filed with the records of
meetings of Shareholders of the Trust. Such consent shall be treated for all
purposes as a vote at a meeting of the Trustees held at the principal place of
business of the Trust.
- 14 -
<PAGE> 16
ARTICLE V
TRUSTEES' MEETINGS
Special Meetings
Section 1. Special meetings of the Trustees may be called
orally or in writing by the Chairman of the Board of Trustees or any two other
Trustees.
Regular Meetings
Section 2. Regular meetings of the Trustees may be held at
such places and at such times as the Trustees may from time to time determine;
each Trustee present at such determination shall be deemed a party calling the
meeting and no call or notice will be required to such Trustee provided that any
Trustee who is absent when such determination is made shall be given notice of
the determination by the Chairman or any two other Trustees, as provided for in
Section 4.04 of the Trust Instrument.
Quorum
- 15 -
<PAGE> 17
Section 3. A majority of the Trustees shall constitute a
quorum for the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees.
Notice
Section 4. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the party calling the meeting to each
Trustee, as provided for in Section 4.04 of the Trust Instrument. A written
notice may be mailed, postage prepaid, addressed to him at his address as
registered on the books of the Trust or if not so registered, at his last known
address.
Place Of Meeting
Section 5. All special meetings of the Trustees shall be held
at the principal place of business of the Trust or such other place as the
Trustees may designate. Any meeting may adjourn to any place.
Special Action
- 16 -
<PAGE> 18
Section 6. When all the Trustees shall be present at any
meeting, however called or wherever held, or shall assent to the holding of the
meeting without notice, or shall sign a written assent thereto filed with the
record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.
Action By Consent
Section 7. Any action by the Trustees may be taken without a
meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be treated, for
all purposes, as a vote at a meeting of the Trustees held at the principal place
of business of the Trustees.
Participation in Meetings By Conference Telephone
Section 8. Trustees may participate in a meeting of Trustees
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall
- 17 -
<PAGE> 19
constitute presence in person at such meeting. Any meeting conducted by
telephone shall be deemed to take place at and from the principal office of the
Trust.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Beneficial Interest
Section 1. The beneficial interest in the Trust shall at all
times be divided into such transferable Shares of one or more separate and
distinct Series, or classes thereof, as the Trustees shall from time to time
create and establish. The number of Shares is unlimited, and each Share of each
Series or class thereof shall be without par value and shall represent an equal
proportionate interest with each other Share in the Series, none having priority
or preference over another, except to the extent that such priorities or
preferences are established with respect to one or more classes of shares
consistent with applicable law and any rule or order to the Commission.
Transfer of Shares
- 18 -
<PAGE> 20
Section 2. The Shares of the Trust shall be transferable, so
as to affect the rights of the Trust, only by transfer recorded on the books of
the Trust, in person or by attorney.
Equitable Interest Not Recognized
Section 3. The Trust shall be entitled to treat the holder of
record of any Share or Shares of beneficial interest as the holder in fact
thereof, and shall not be bound to recognize any equitable or other claim or
interest in such Share or Shares on the part of any other person except as may
be otherwise expressly provided by law.
Share Certificate
Section 4. No certificates certifying the ownership of Shares
shall be issued except as the Trustees may otherwise authorize. The Trustees may
issue certificates to a Shareholder of any Series or class thereof for any
purpose and the issuance of a certificate to one or more Shareholders shall not
require the
- 19 -
<PAGE> 21
issuance of certificates generally. In the event that the Trustees authorize the
issuance of Share certificates, such certificate shall be in the form prescribed
from time to time by the Trustees and shall be signed by the President or a Vice
President and by the Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary. Such signatures may be facsimiles if the certificate is signed by a
transfer or shareholder services agent or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for Shares, the Trustees or
the transfer or shareholder services agent may either issue receipts therefor or
may keep accounts upon the books of the Trust for the record holders of such
Shares, who shall in either case be deemed, for all purposes hereunder, to be
holders of certificates for such Shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
- 20 -
<PAGE> 22
Loss of Certificate
Section 5. In the case of the alleged loss or destruction or
the mutilation of a Share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
Discontinuance of Issuance of Certificates
Section 6. The Trustees may at any time discontinue the
issuance of Share certificates and may, by written notice to each Shareholder,
require the surrender of Share certificates to the Trust for cancellation. Such
surrender and cancellation shall not affect the ownership of Shares in the
Trust.
ARTICLE VII
OWNERSHIP OF ASSETS OF THE TRUST
The Trustees, acting for and on behalf of the Trust, shall be
deemed to hold legal and beneficial ownership of any income earned on securities
held by the Trust issued by any business entity formed, organized or existing
under the laws of any
- 21 -
<PAGE> 23
jurisdiction other than a state, commonwealth, possession or colony of the
United States or the laws of the United States.
ARTICLE VIII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be open to
the inspection of the Shareholders; and no Shareholder shall have any right to
inspect any account or book or document of the Trust except as conferred by law
or otherwise by the Trustees or by resolution of the Shareholders.
ARTICLE IX
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any
Covered Person or employee of the Trust, including any Covered Person or
employee of the Trust who is or was serving at the request of the Trust as a
Trustee, officer or employee of a corporation, partnership, joint venture, trust
or other enterprise
- 22 -
<PAGE> 24
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Trustees would
have the power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance
that protects or purports to protect any Trustee or officer of the Trust against
any liability to the Trust or its Shareholder to which he would otherwise be
subject by reason or willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE X
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"INTRUST FUNDS TRUST
THE STATE OF DELAWARE"
- 23 -
<PAGE> 25
The form of the seal shall be subject to alternation by the
Trustees and the seal may be used by causing it or a facsimile to be impressed
or affixed or printed or otherwise reproduced.
Any officer or Trustee of the trust shall have authority to
affix the seal of the Trust to any document, instrument or other paper executed
and delivered by or on behalf of the Trust; however, unless otherwise required
by the Trustees, the seal shall not be necessary to be placed on and its absence
shall not impair the validity of any document, instrument, or other paper
executed by or on behalf of the Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust shall end on such date as the
Trustees shall from time to time determine.
ARTICLE XII
AMENDMENTS
- 24 -
<PAGE> 26
These Bylaws may be amended at any meeting of the Trustees of
the Trust by a majority vote.
ARTICLE XIII
REPORT TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the Trust including financial
statements which shall be certified at least annually by independent public
accountants.
XIV
HEADINGS
Headings are placed in these Bylaws for convenience of
reference only and in case of any conflict, the text of these Bylaws rather than
the headings shall control.
- 25 -
<PAGE> 1
EXHIBIT 10
Consent of Baker & McKenzie, Counsel of Registrant
-15-
<PAGE> 2
EXHIBIT 10
June 26, 1997
INTRUST Funds Trust
3435 Stelzer Road
Columbus, Ohio 43219
Dear Sirs:
We hereby consent to the reference to our firm in Post Effective
Amendment No. 1 to INTRUST Funds Trust's Registration Statement filed on form
N-1A.
Very truly yours,
BAKER & MCKENZIE
<PAGE> 1
EXHIBIT 11
Consent of Independent Accountants
-16-
<PAGE> 2
Exhibit 11
Auditors' Consent
The Board of Trustees of
INTRUST Funds Trust:
We consent to the use of our report included herein and dated December 6, 1996
for the INTRUST Funds Trust Money Market Fund as of December 6, 1996 and to the
reference to our firm under the heading "Experts" in the Statement of
Additional Information.
Columbus, Ohio
June 27, 1997
<PAGE> 1
EXHIBIT 16
Schedule of Computation of Performance Calculation
-17-
<PAGE> 2
INTRUST FUNDS TRUST
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
INTRUST MONEY MARKET FUND
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE PERIOD OF A
HYPOTHETICAL $1,000 INVESTMENT MADE AT THE BEGINNING OF THE
PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
SINCE INCEPTION: ( 01/23/97 TO 04/30/97 ):
( 1,012.9 /1,000) - 1 = 1.29%
QUARTERLY: ( 01/31/97 TO 04/30/97 ):
( 1,011.7 /1,000) - 1 = 1.17%
MONTHLY: ( 03/31/97 TO 04/30/97 ):
( 1,004.0 /1,000) - 1 = 0.40%
<PAGE> 3
INTRUST FUNDS TRUST
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
INTRUST SHORT-TERM BOND FUND
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = REDEEMABLE VALUE AT THE END OF THE PERIOD OF A HYPOTHETICAL
$1,000 INVESTMENT MADE AT THE BEGINNING OF THE PERIOD.
P = A HYPOTHETICAL INITIAL INVESTMENT OF $1,000.
EXAMPLE:
SINCE INCEPTION: ( 01/21/97 TO 04/30/97 ):
( 1,010.2 /1,000) - 1 = 1.02%
QUARTERLY: ( 01/31/97 TO 04/30/97 ):
( 1,007.9 /1,000) - 1 = 0.79%
MONTHLY: ( 03/31/97 TO 04/30/97 ):
( 1,007.5 /1,000) - 1 = 0.75%
<PAGE> 4
INTRUST FUNDS TRUST
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
INTRUST INTERMEDIATE BOND FUND
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE PERIOD OF A
HYPOTHETICAL $1,000 INVESTMENT MADE AT THE BEGINNING OF THE
PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
SINCE INCEPTION: ( 01/21/97 TO 04/30/97 ):
( 1,006.1 /1,000) - 1 = 0.61%
QUARTERLY: ( 01/31/97 TO 04/30/97 ):
( 1,003.7 /1,000) - 1 = 0.37%
MONTHLY: ( 03/31/97 TO 04/30/97 ):
( 1,012.0 /1,000) - 1 = 1.20%
<PAGE> 5
INTRUST FUNDS TRUST
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
INTRUST STOCK FUND
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE PERIOD OF A
HYPOTHETICAL $1,000 INVESTMENT MADE AT THE BEGINNING OF THE
PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
SINCE INCEPTION: ( 01/21/97 TO 04/30/97 ):
( 995.0 /1,000) - 1 = -0.50%
QUARTERLY: ( 01/31/97 TO 04/30/97 ):
( 990.0 /1,000) - 1 = -1.00%
MONTHLY: ( 03/31/97 TO 04/30/97 ):
( 1,025.8 /1,000) - 1 = 2.58%
<PAGE> 6
INTRUST FUNDS TRUST
EXHIBIT 16
TOTAL RETURN
NO LOAD CALCULATIONS
INTRUST INTERNATIONAL MULTI-
MANAGER STOCK FUND
AGGREGATE TOTAL RETURN
WITH SALES LOAD OF: 0.00%
T = (ERV/P) - 1
WHERE: T = TOTAL RETURN
ERV = ENDING REDEEMABLE VALUE AT THE END OF THE PERIOD OF A
HYPOTHETICAL $1,000 INVESTMENT MADE AT THE BEGINNING OF THE
PERIOD.
P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000.
EXAMPLE:
SINCE INCEPTION: ( 01/21/97 TO 04/30/97 ):
( 1,012.0 /1,000) - 1 = 1.20%
QUARTERLY: ( 01/31/97 TO 04/30/97 ):
( 1,023.3 /1,000) - 1 = 2.33%
MONTHLY: ( 03/31/97 TO 04/30/97 ):
( 995.1 /1,000) - 1 = -0.49%
<PAGE> 7
INTRUST FUNDS TRUST
EXHIBIT 16
30-DAY S.E.C. YIELD CALCULATIONS
INTRUST SHORT-TERM BOND FUND
(a-b)
---------------
30-Day S.E.C. Yield Equation= 2 *{[( (cd) +1) exponent 6]-1} =
WHERE a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the
period that were entitled to receive dividends
d = The maximum offering price (NAV for No Load) per
share on the last day of the period
WITHOUT 0.00% LOAD:
( 190,319.76 - 25,092.66 )
------------------------------
= 2 *{[( +1) exponent 6]-1} = 5.43%
( 3,708,145.130 * 9.96 )
The performance was computed based on the thirty day period
ending April 30, 1997
<PAGE> 8
INTRUST FUNDS TRUST
EXHIBIT 16
30-DAY S.E.C. YIELD CALCULATIONS
INTRUST INTERMEDIATE BOND FUND
(a-b)
------------------
30-Day S.E.C. Yield Equation= 2 *{[( (cd) +1) exponent 6]-1} =
WHERE a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the
period that were entitled to receive dividends
d = The maximum offering price (NAV for No Load) per
share on the last day of the period
WITHOUT 0.00% LOAD:
( 179,563.65 - 24,984.52 )
------------------------------
= 2 *{[( +1) exponent 6]-1} = 5.89%
( 3,219,297.560 * 9.91 )
The performance was computed based on the thirty day period
ending April 30, 1997
<PAGE> 9
INTRUST FUNDS TRUST
EXHIBIT 16
YIELD COMPUTATION SCHEDULE
INTRUST MONEY MARKET FUND
<TABLE>
<CAPTION>
7 DAY YIELD CALCULATION 30 DAY YIELD CALCULATION
----------------------- ------------------------
Base period 7 Days 30 Days
Beginning Account Balance - 1 share at $1.00 1.000000000 1.000000000
----------- -----------
<S> <C> <C>
Dividend Declaration
APRIL 1 0.0001372370
APRIL 2 0.0001368160
APRIL 3 0.0001357050
APRIL 4 0.0001343900
APRIL 5 0.0001343900
APRIL 6 0.0001343900
APRIL 7 0.0001345680
APRIL 8 0.0001344120
APRIL 9 0.0001353360
APRIL 10 0.0001354900
APRIL 11 0.0001358120
APRIL 12 0.0001358110
APRIL 13 0.0001358110
APRIL 14 0.0001342990
APRIL 15 0.0001344850
APRIL 16 0.0001334180
APRIL 17 0.0001333390
APRIL 18 0.0001333040
APRIL 19 0.0001333030
APRIL 20 0.0001333040
APRIL 21 0.0001334340
APRIL 22 0.0001333660
APRIL 23 0.0001336680
APRIL 24 0.0001336330
APRIL 25 0.000133579 0.0001335790
APRIL 26 0.000133580 0.0001335800
APRIL 27 0.000133579 0.0001335790
APRIL 28 0.000134781 0.0001347810
APRIL 29 0.000134827 0.0001348270
APRIL 30 0.000135150 0.0001351500
Less: Deductions from Shareholders Accounts 0.000000000 0.000000000
----------- -----------
Base period return 0.000805496 0.004035217
----------- -----------
Ending Account Balance 1.000805496 1.004035217
Less: Beginning Account Balance 1.000000000 1.000000000
----------- -----------
Difference 0.000805496 0.004035217
Base Period Return
(Difference/Beginning Account Balance) 0.000805496 0.004035217
Yield Quotation
(Base Period Return * 365/Base Period) 4.20% 4.91%
Effective Yield Quotation
[(Base Period Return + 1) exponent
(365/Base Period)] - 1 4.29% 5.02%
</TABLE>
The quotations were computed based on the seven and thirty days ending April 30,
1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 1
<NAME> THE INTRUST MONEY MARKET FUND
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-23-1997
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 71,392,408
<INVESTMENTS-AT-VALUE> 71,392,408
<RECEIVABLES> 170,781
<ASSETS-OTHER> 127,109
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,690,298
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315,434
<TOTAL-LIABILITIES> 315,434
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 71,374,767
<SHARES-COMMON-STOCK> 71,374,767
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 97
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 71,374,864
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 980,143
<OTHER-INCOME> 0
<EXPENSES-NET> 117,018
<NET-INVESTMENT-INCOME> 863,125
<REALIZED-GAINS-CURRENT> 97
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 863,222
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 863,222
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 191,460,011
<NUMBER-OF-SHARES-REDEEMED> 120,086,129
<SHARES-REINVESTED> 885
<NET-CHANGE-IN-ASSETS> 71,374,864
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 44,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 188,701
<AVERAGE-NET-ASSETS> 66,745,177
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .013
<PER-SHARE-GAIN-APPREC> .000
<PER-SHARE-DIVIDEND> .013
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> .650
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 2
<NAME> THE INTRUST SHORT-TERM BOND FUND
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-21-1997
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 37,651,704
<INVESTMENTS-AT-VALUE> 37,568,076
<RECEIVABLES> 484,813
<ASSETS-OTHER> 25,350
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,078,329
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191,398
<TOTAL-LIABILITIES> 191,398
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,027,263
<SHARES-COMMON-STOCK> 3,803,436
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 56,794
<ACCUM-APPREC-OR-DEPREC> (83,628)
<NET-ASSETS> 37,886,841
<DIVIDEND-INCOME> 13,363
<INTEREST-INCOME> 480,512
<OTHER-INCOME> 0
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