<PAGE> 1
As filed with the Securities and Exchange Commission on November 30, 1998
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. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 10 [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
William Tomko
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)
Copy to:
Steven R. Howard, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to Rule 485(b)
_XX_ on November 30, 1998 pursuant to Rule 485(b)
____ 75 days after filing pursuant to Rule 485(a)
____ on _______, 1998 pursuant to Rule 485(a)
Title of Securities being registered: Shares of Beneficial Interest, par value
$0.001.
Registrant has adopted a master-feeder operating structure for the
International Multi-Manager Stock Fund and the NestEgg Funds. In that regard,
this Post-Effective Amendment includes the signature pages for the AMR
Investment Services Trust with respect to the International Equity Portfolio, of
which the International Multi-Manager Stock Fund invests all of its investable
assets, and Master Investment Portfolio, with respect to the LifePath Master
Portfolios, of which each of the corresponding NestEgg Funds invests all of its
investable assets.
The prospectus and statement of additional information dated March 2,
1998 relating to the Money Market Fund, the Short-Term Bond Fund, the
Intermediate Bond Fund, the Stock Fund, the International Multi-Manager Stock
Fund and the Kansas Tax-Exempt Bond Fund of the Intrust Funds Trust (the
"Trust"), filed with the Securities and Exchange Commission via EDGAR on
February 27, 1998 as part of post-effective amendment number 3 to the Trust's
Registration Statement on Form N-1A (File No. 333-447) under Rule 485(b) under
the Securities Act of 1933, as amended (the "1933 Act"), and in final form under
Rule 497 (c) under the 1933 Act via EDGAR on March 4, 1998 (File No.811-7505) is
incorporated herein by reference as if set forth in its entirety.
<PAGE> 2
2
INTRUST FUNDS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 485(a)
Under the Securities Act of 1933
MONEY MARKET FUND
SHORT-TERM BOND FUND
INTERMEDIATE BOND FUND
STOCK FUND
INTERNATIONAL MULTI-MANAGER STOCK FUND
KANSAS TAX-EXEMPT BOND FUND
NESTEGG 2000 FUND
NESTEGG 2010 FUND
NESTEGG 2020 FUND
NESTEGG 2030 FUND
NESTEGG 2040 FUND
N-1A Item No. Location
PART A Prospectus Caption
- ------ ------------------
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Financial Information Fund Expenses; Fee Table
Item 4. General Description of Registrant Investment Objectives and
Policies; Risk Consideration;
Investment Policies and
Practice
Item 5. Management of Fund Management of the Funds
Item 5A. Management Discussion of Fund Not Applicable
Performance
Item 6. Capital Stock and Other Securities Dividends, Distributions and
Federal Income Tax; Other
Information; Performance
Information
Item 7. Redemption or Repurchase Redemption of Fund Shares
Item 8. Purchase of Securities Being Fund Share Valuation;
Offered Purchase of Fund Shares;
Exchange of Fund Shares
Item 9. Legal Proceedings Not Applicable
<PAGE> 3
NESTEGG 2000 FUND
NESTEGG 2010 FUND
NESTEGG 2020 FUND
NESTEGG 2030 FUND
NESTEGG 2040 FUND
MONEY MARKET FUND
Series of INTRUST Funds Trust
- --------------------------------------------------------------------------------
INTRUST Funds Trust (the "Trust") is an open-end management investment
company. This Prospectus contains information about six of the Trust's
funds -- the five NestEgg Funds (the "NestEgg Funds") and the Money Market Fund
(each a "Fund").
- THE NESTEGG FUNDS HAVE DIFFERENT ASSET ALLOCATION STRATEGIES FOR
INVESTING TOWARD FUTURE GOALS OF SHAREHOLDERS SUCH AS RETIREMENT. THE
NUMBERS IN THE NESTEGG FUNDS' NAMES ARE TARGET DATES; THE NEARER ITS
TARGET DATE THE MORE CONSERVATIVELY EACH NESTEGG FUND INVESTS. OVER TIME,
EACH NESTEGG FUND GENERALLY WILL REDUCE ITS INVESTMENT IN STOCKS AND
INCREASE ITS INVESTMENT IN BONDS AND MONEY MARKET INSTRUMENTS.
- THE MONEY MARKET FUND SEEKS TO PROVIDE INVESTORS WITH CURRENT INCOME,
LIQUIDITY AND THE MAINTENANCE OF A STABLE NET ASSET VALUE OF $1.00 PER
SHARE BY INVESTING IN HIGH QUALITY, U.S. DOLLAR-DENOMINATED SHORT-TERM
OBLIGATIONS WHICH ARE DETERMINED BY THE ADVISER TO PRESENT MINIMAL CREDIT
RISKS.
This prospectus describes two classes of shares of each Fund, the
Institutional Premium Class and the Institutional Service Class shares. See
"Other Information Capitalization Structure."
Each of the NestEgg Funds invests all of its assets in a separate series
(each a "Master Portfolio") of the Master Investment Portfolio ("MIP"), each an
open-end, management investment company. Each NestEgg Fund, unlike other mutual
funds which directly acquire and manage their own portfolios of securities,
seeks to achieve its investment objective by investing all of its investable
assets in another mutual fund whose objective and policies are substantially
identical. This two-tiered investment approach is commonly referred to as a
master-feeder fund structure.
PLEASE READ THIS PROSPECTUS BEFORE INVESTING AND RETAIN IT FOR FUTURE
REFERENCE. IT SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUNDS THAT AN
INVESTOR SHOULD KNOW BEFORE INVESTING. A STATEMENT OF ADDITIONAL INFORMATION
("SAI") DATED NOVEMBER 30, 1998, CONTAINING ADDITIONAL AND MORE DETAILED
INFORMATION ABOUT THE NESTEGG FUNDS AND THE MONEY MARKET FUND HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") AND IS AVAILABLE, ALONG WITH
OTHER MATERIALS, ON THE SEC INTERNET WEB SITE (HTPP://WWW.SEC.GOV). THE SAI IS
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. THE SAI IS AVAILABLE WITHOUT
CHARGE BY CALLING THE TRUST AT (888) 266-8787 OR BY WRITING THE TRUST AT THE
ADDRESS PRINTED ON THE BACK OF THE PROSPECTUS.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT ADVISER FOR INVESTMENT ADVISER FOR SUBADVISER FOR INTRUST'S
THE MASTER PORTFOLIOS-- INTRUST FUNDS TRUST-- MONEY MARKET FUND--
BARCLAYS GLOBAL FUND ADVISORS INTRUST BANK, N.A. AMR INVESTMENT SERVICES, INC.
("BGFA") ("INTRUST" OR "ADVISER") ("AMR")
- ----------------------------------------------------------------------------------------------------------
</TABLE>
THE TRUST'S FUNDS ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY INTRUST OR BGFA OR ANY OF THEIR AFFILIATES. THE
TRUST'S SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. THERE CAN BE NO ASSURANCE THAT THE MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. AN INVESTMENT IN A
FUND INVOLVES CERTAIN INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THESE AUTHORITIES PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS
NOVEMBER 30, 1998
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND EXPENSES............................................... 1
INVESTMENT OBJECTIVES AND POLICIES.......................... 6
RISK CONSIDERATIONS......................................... 13
INVESTMENT POLICIES AND PRACTICES........................... 16
MANAGEMENT OF THE FUNDS..................................... 32
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX............. 38
FUND SHARE VALUATION........................................ 40
PURCHASE OF FUND SHARES..................................... 41
OTHER INFORMATION........................................... 46
</TABLE>
(i)
<PAGE> 5
FUND EXPENSES
The following expense table illustrates all expenses and fees that an
investor in the Institutional Service Class of Shares of the NestEgg Funds and
the Money Market Fund will incur. The NestEgg Funds' expenses are based on
estimated expenses for the Funds' first full year of operations. The Money
Market Fund's expenses are based on the actual expenses incurred by the Fund in
the fiscal year ended October 31, 1997.
FEE TABLE
INSTITUTIONAL SERVICE CLASS
<TABLE>
<CAPTION>
NESTEGG NESTEGG NESTEGG NESTEGG NESTEGG MONEY
2000 2010 2020 2030 2040 MARKET
FUND FUND FUND FUND FUND FUND
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:................ None None None None None None
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price).................. None None None None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price)......................................... None None None None None None
Deferred Sales Load (as a percentage of
redemption of proceeds)........................ None None None None None None
Redemption Fees(1)............................... None None None None None None
Exchange Fees.................................... None None None None None None
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average daily net assets):
Management Fees (after waivers and
reimbursements)(2)............................. 0.70%(5) 0.70%(5) 0.70%(5) 0.70%(5) 0.70%(5) 0.15%
12b-1 Fees (after waivers)(2, 3)................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses (after waivers and
reimbursements)(2, 4).......................... 0.80% 0.80% 0.80% 0.80% 0.80% 0.54%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (After Waivers And
reimbursements)(2)............................. 1.50% 1.50% 1.50% 1.50% 1.50% 0.69%
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
(1) Shareholders may be charged a wire redemption fee by their bank for
receiving a wire payment on their behalf.
(2) Absent waivers and reimbursements, Management Fees, 12b-1 Fees, Other
Expenses and Total Fund Operating Expenses as long as the Funds remain
invested in the MIP or another investment company would be .70%, .25%, 2.95%
and 3.90% for the NestEgg 2000 Fund; .70%, .25%, 2.95% and 3.90% for the
NestEgg 2010 Fund; .70%, .25%, 2.95% and 3.90% for the NestEgg 2020 Fund;
.70%, .25%, 2.95% and 3.90% for the NestEgg 2030 Fund; .70%, .25%, 2.95% and
3.90% for the NestEgg 2040 Fund, respectively. Absent waivers and
reimbursements, Management Fees, 12b-1 Fees, Other Expenses and Total Fund
Operating Expenses for the Money Market Fund would be 0.25%, 0.25%, 0.71%
and 1.21%.
<PAGE> 6
(3) The fee under each Fund's Distribution Plan and Agreement is calculated on
the basis of the average net assets of each Fund at an annual rate not to
exceed 0.25%.
(4) Includes a fee of 0.25% for shareholder servicing.
(5) The NestEgg Funds each pay BISYS a 0.20% administrative fee (0.20% without
waivers) and each Master Portfolio pays advisory and administrative fees, of
which each NestEgg Fund bears its pro rata portion. The Trust's Board of
Trustees believes that the aggregate per share expenses of each NestEgg Fund
and the respective Master Portfolio will be approximately equal to the
expenses such Fund would incur if its assets were invested directly in
securities of its own portfolio. Management Fees are 0.55% at the Master
Portfolio level and 0.15% at the Fund level (0.15% at the Fund level without
waivers).
EXAMPLE OF EXPENSES
An investor would pay the following expenses on a $1,000 investment in a
Fund, assuming (1) 5% gross annual return and (2) redemption at the end of each
time period (parenthetical amounts represent expenses without waivers or
reimbursements):
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
NestEgg 2000 Fund.............. $15 ($39) $47 ($119) N/A N/A
NestEgg 2010 Fund.............. $15 ($39) $47 ($119) N/A N/A
NestEgg 2020 Fund.............. $15 ($39) $47 ($119) N/A N/A
NestEgg 2030 Fund.............. $15 ($39) $47 ($119) N/A N/A
NestEgg 2040 Fund.............. $15 ($39) $47 ($119) N/A N/A
Money Market Fund.............. $ 7 ($12) $22 ($38) $38 ($66) $86 ($147)
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE REPRESENT A HYPOTHETICAL ILLUSTRATION OF
THE EXPENSES ASSOCIATED WITH A $1,000 INVESTMENT OVER STATED PERIODS, BASED ON
THE EXPENSES IN THE ABOVE TABLE AND AN ASSUMED ANNUAL RATE OF RETURN OF 5%. THIS
ANNUAL RATE OF RETURN SHOULD NOT BE CONSIDERED AN INDICATION OF ACTUAL OR
EXPECTED PERFORMANCE OF A FUND NOR A REPRESENTATION OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN.
2
<PAGE> 7
The following expense table illustrates all expenses and fees that an
investor in the Institutional Premium Class of shares of the NestEgg Funds and
the Money Market Fund will incur. The NestEgg Funds' expenses are based on
estimated expenses for the Funds first full year of operations. The Money Market
Fund's expenses are based on the actual expenses incurred by Fund in the fiscal
year ended October 31, 1997.
FEE TABLE
INSTITUTIONAL PREMIUM CLASS
<TABLE>
<CAPTION>
NESTEGG NESTEGG NESTEGG NESTEGG NESTEGG MONEY
2000 2010 2020 2030 2040 MARKET
FUND FUND FUND FUND FUND FUND
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases (as
a percentage of offering price).......... None None None None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price)................................... None None None None None None
Deferred Sales Load (as a percentage of
redemption of proceeds).................. None None None None None None
Redemption Fees(1)......................... None None None None None None
Exchange Fees.............................. None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net
assets):
Management Fees (after waivers and
reimbursements)2......................... 0.70%5 0.70%5 0.70%5 0.70%5 0.70%5 0.15%
12b-1 Fees (after waivers)2, 3............. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Expenses (after waivers and
reimbursements)2, 4...................... 0.80% 0.80% 0.80% 0.80% 0.80% 0.54%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (after
waivers And reimbursements)2............. 1.50% 1.50% 1.50% 1.50% 1.50% 0.69%
==== ==== ==== ==== ==== ====
</TABLE>
- ---------------
1 Shareholders may be charged a wire redemption fee by their bank for receiving
a wire payment on their behalf.
2 Absent waivers and reimbursements, Management Fees, 12b-1 Fees, Other Expenses
and Total Fund Operating Expenses as long as the Funds remain invested in the
MIP or another investment company would be .70%, .75%, 2.95% and 4.40% for the
NestEgg 2000 Fund; .70%, .75%, 2.95% and 4.40% for the NestEgg 2010 Fund;
.70%, .75%, 2.95% and 4.40% for the NestEgg 2020 Fund; .70%, .75%, 2.95% and
4.40% for the NestEgg 2030 Fund; .70%, .75%, 2.95% and 4.40% for the NestEgg
2040 Fund; and 0.25%, 0.75%, 0.71% and 1.71% for the Money Market Fund,
respectively.
3
<PAGE> 8
3 The fee under each Fund's Distribution Plan and Agreement is calculated on the
basis of the average net assets of each Fund at an annual rate not to exceed
0.75%.
4 Includes a fee of 0.25% for shareholder servicing.
5 The NestEgg Funds each pay BISYS a 0.20% administrative fee (0.20% without
waivers) and each Master Portfolio pays advisory and administrative fees, of
which each NestEgg Fund bears its pro rata portion. The Trust's Board of
Trustees believes that the aggregate per share expenses of each NestEgg Fund
and the respective Master Portfolio will be approximately equal to the
expenses such Fund would incur if its assets were invested directly in
securities of its own portfolio. Management Fees are 0.55% at the Master
Portfolio level and 0.15% at the Fund level (0.15% at the Fund level without
waivers).
EXAMPLE OF EXPENSES
An investor would pay the following expenses on a $1,000 investment in a
Fund, assuming (1) 5% annual return and (2) redemption at the end of each time
period (parenthetical amounts represent expenses without waivers or
reimbursements):
<TABLE>
<CAPTION>
NESTEGG NESTEGG NESTEGG NESTEGG NESTEGG MONEY
2000 2010 2020 2030 2040 MARKET
FUND FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...................... $15 ($44) $15 ($44) $15 ($44) $15 ($44) $15 ($44) $ 7 ($17)
3 years..................... $47 ($133) $47 ($133) $47 ($133) $47 ($133) $47 ($133) $22 ($54)
5 years..................... N/A N/A N/A N/A N/A $38 ($93)
10 years.................... N/A N/A N/A N/A N/A $86 ($202)
</TABLE>
THE AMOUNTS LISTED IN THE EXAMPLE REPRESENT A HYPOTHETICAL ILLUSTRATION OF
THE EXPENSES ASSOCIATED WITH A $1,000 INVESTMENT OVER STATED PERIODS, BASED ON
THE EXPENSES IN THE ABOVE TABLE AND AN ASSUMED ANNUAL RATE OF RETURN OF 5%. THIS
ANNUAL RATE OF RETURN SHOULD NOT BE CONSIDERED AN INDICATION OF ACTUAL OR
EXPECTED PERFORMANCE OF A FUND NOR A REPRESENTATION OF PAST OR FUTURE EXPENSES;
ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE> 9
FINANCIAL HIGHLIGHTS
The following table presents per share financial information for the Money
Market Fund for the fiscal year ended October 31, 1998 (unaudited) and the
period from January 23, 1997 to October 31, 1997 (audited). The audited
Financial Highlights were audited by KPMG Peat Marwick LLP, independent
auditors, whose report on the financial statements of the Money Market Fund
appears in the Trusts' Annual Report for the fiscal year ended October 31, 1997
(the "Annual Report"). These statements should be read in conjunction with the
"Independent Auditors' Report," the other audited financial statements and
related notes which are contained in the Annual Report. Additional performance
information is set forth in the Annual Report which is available upon request
and without charge by calling (888) 266-8787.
<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------
FISCAL YEAR JANUARY 23,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(UNAUDITED) 1997(a)
---------------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 1.00 $ 1.00
------- -------
Net investment income..................................... 0.05 0.04
Net realized and unrealized gain (loss) from
investments............................................. -- --
------- -------
Total income from investment operations................... 0.05 0.04
------- -------
DISTRIBUTIONS:
Net investment income..................................... (0.05) (0.04)
Net realized gains from investments....................... -- --
------- -------
Total distributions....................................... (0.05) (0.04)
------- -------
Net change in net asset value per share................... -- --
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 1.00 $ 1.00
======= =======
TOTAL RETURN................................................ 4.27% 3.86%(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)...................... $50,746 $55,566
Ratios to average net assets:
Expenses.................................................. 0.67% 0.71%(c)
Net investment income..................................... 5.04% 4.92%(c)
Expenses*................................................. 1.03% 1.03%(c)
Net investment income*.................................... 4.69% 4.52%(c)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratio would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
5
<PAGE> 10
INVESTMENT OBJECTIVES AND POLICIES
Each NestEgg Fund has a fundamental policy that allows it to invest all of
its assets in a Master Portfolio of the MIP. All other investment policies of
the NestEgg Funds are identical to those of the corresponding Master Portfolio.
Each NestEgg Fund's investment experience corresponds directly with the relevant
Master Portfolio's investment experience. This type of arrangement between the
NestEgg Funds and the Master Portfolios is known as a "master-feeder"
arrangement. The Trust's Board of Trustees believes that the Funds will achieve
certain efficiencies and economies of scale through the master-feeder structure,
and that the aggregate expenses of the Funds will be less than if the Funds
invested directly in the securities held by the Portfolio. For simplicity,
references to the investments and investment policies and risks of the NestEgg
Funds, unless otherwise indicated, should be understood as references to the
investments and investment policies and risks of the Master Portfolios.
The NestEgg Funds may withdraw their investment from the Master Portfolios
at any time if the Board of Trustees determines that it is in the best interest
of the Fund and its shareholders to do so. In such event, the Board would
consider alternative arrangements such as investing all of the Portfolio's
assets in another investment company with the same investment objective as the
Fund. No assurance exists that satisfactory alternative arrangements would be
available.
THE NESTEGG FUNDS:
Each NestEgg Fund seeks to provide long-term investors with an asset
allocation strategy designed to maximize assets for retirement or for other
purposes consistent with the quantitatively measured risk that investors, on
average, may be willing to accept given their investment time horizons.
Specifically:
- - NestEgg 2000 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2000.
- - NestEgg 2010 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2010.
- - NestEgg 2020 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2020.
- - NestEgg 2030 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2030.
- - NestEgg 2040 Fund is managed for investors planning to retire (or begin to
withdraw substantial portions of their investment) approximately in the year
2040.
The differences in objectives and policies among the Master Portfolios
determine the types of portfolio securities in which each Master Portfolio
invests and can be expected to affect the degree of risk to which each Master
Portfolio and, therefore, the corresponding Fund, is subject and the performance
of each Master Portfolio and corresponding Fund.
6
<PAGE> 11
Shares of each NestEgg Fund are sold to investors without a sales charge.
Investors can invest, reinvest or redeem NestEgg Fund Shares at any time without
charge or penalty imposed by the NestEgg Fund.
Investors are encouraged to invest in a particular NestEgg Fund based on
the decade of anticipated retirement or when such investors anticipate beginning
to withdraw substantial portions of their account. For example, the NestEgg 2000
Fund is designed for investors in their 60s who plan to retire (or begin to
withdraw substantial portions of their investment) in approximately 2000; the
NestEgg 2010 Fund is designed for investors in their 50s who plan to retire (or
begin to withdraw as described above) in approximately 2010; and so on. In
addition, when making an investment decision, investors should evaluate their
individual risk profile, recognizing, for example, that the NestEgg 2040 Fund is
designed for investors with a high tolerance for risk while the NestEgg 2000
Fund is designed for investors with a low tolerance for risk. The Master
Portfolios were the first mutual funds of their kind to offer a flexible
investment strategy designed to change over specific time horizons.
The NestEgg Funds follow an asset allocation strategy among three broad
investment classes: equity securities and debt instruments of issuers located
throughout the world and cash in the form of money market instruments. Each
NestEgg Fund invests varying percentages of its portfolio in equity securities,
debt instruments and money market instruments. The later-dated Funds tend to be
more heavily invested in equity securities and generally bear more risk than the
earlier-dated Funds. The later-dated Funds generally have an expectation of
greater total return. The investment class weightings of the NestEgg 2040 Fund
at a given time might be 100%, 0% and 0% among equity securities, debt
securities and cash, respectively, while the weightings of the NestEgg 2000 Fund
might be 25%, 50% and 25%, respectively. These weightings will change
periodically. The difference in the investment class weightings is based on the
statistically determined risk that investors, on average, may be willing to
accept given their investment time horizons in an effort to maximize assets in
anticipation of retirement or for other purposes. As each NestEgg Fund
approaches its designated time horizon, it generally is managed more
conservatively, on the premise that individuals investing for retirement desire
to reduce investment risk in their retirement accounts as they age. When a Fund
reaches its target date, it will enter its "retirement phase" during which it
will seek to maximize assets consistent with the risk that an average investor
in retirement may be willing to accept. The Fund will continue to follow an
asset allocation strategy among three broad investment classes: equity and debt
securities of domestic and foreign issuers and cash in the form of money market
instruments. However, unlike the remaining NestEgg Funds with target dates,
during its retirement phase a NestEgg Fund will no longer reduce investment risk
through time. Instead, the Fund is expected to have a long-term average mix of
approximately 20% equity securities, with the remainder in debt securities and
some cash. In the same manner as all NestEgg Funds, a Fund in its retirement
phase will continue to employ a tactical asset allocation component, which will
alter the investment mix to account for changing expected risks and
opportunities. When other NestEgg Funds reach their target date, it is expected
that they will be combined with the retirement phase Fund under the same
investment strategy.
7
<PAGE> 12
As of September 30, 1998, asset allocations in the Master Portfolios were
approximately as follows:
<TABLE>
<CAPTION>
2000 2010 2020 2030 2040
MASTER MASTER MASTER MASTER MASTER
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Equity Securities
Domestic........................... 16.06% 35.72% 53.18% 63.36% 79.28%
International...................... 4.55% 9.55% 13.50% 17.90% 20.43%
Debt Securities.................... 51.95% 41.79% 25.86% 18.19% 0.00%
Cash............................... 27.44% 12.94% 7.46% 5.55% 0.28%
</TABLE>
The Master Portfolios may invest in a wide range of U.S. and foreign
investments and market sectors and may shift their allocations among investments
and sectors from time to time. To manage the Master Portfolios, BGFA employs a
proprietary investment model (the "Model") that analyzes extensive financial and
economic data, including risk correlation and expected return statistics. The
Model selects indices representing segments of the global equity and debt
markets and the Master Portfolios invest to create market exposure by purchasing
representative samples of the indices in an attempt to replicate their
performance. The Funds employ both tactical and strategic asset allocation
techniques when investing assets in their portfolios. The majority (75%) of the
total allocation is strategic in nature. The strategic allocation is long term
based. The tradeoff between expected returns and risks for asset classes that
determine the allocation is based on the time horizon of the Fund. As each Fund
nears its target date, the allocation becomes more conservative, shifting to
less risky assets such as shorter duration fixed income and money market
instruments. Short-term volatility in the markets will have only small effects
on the strategic allocation. The progression to less risky assets is a
relatively steady process resulting in only minor monthly changes to the asset
allocation. Forty years from now, the strategic allocation of NestEgg 2040 will
look very similar to the strategic allocation of today's NestEgg 2000.
The tactical allocation makes up the remaining portion (25%) of the entire
allocation. Tactical allocation takes advantage of shorter-term market
conditions shifting into assets that appear undervalued on a risk-adjusted
basis. The strategies use two types of tactical allocations. The more
conservative approach of shifting from long duration bonds to short duration
bonds and cash plays a larger role in the NestEgg 2000 Fund than in the other
Funds. The NestEgg 2040 Fund, for example, makes more use of the second, and
more aggressive, type of tactical allocation which shifts assets between stocks,
bonds and cash.
The relative weightings for each Master Portfolio of the various investment
classes are expected to change over time, with the 2040 Master Portfolio
adopting in the 2020-2030s characteristics similar to the 2000 Master Portfolio
today. BGFA may in the future refine the Model, or the financial and economic
data analyzed by the Model, in ways that could result in changes to recommended
allocations.
Each Master Portfolio evaluates the risk that an average investor may be
willing to accept based on the investor's investment time horizon. As a result,
the investment risk level of a particular
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<PAGE> 13
Fund generally decreases as time passes and investors near retirement. Each
LifePath Master Portfolio also adjusts the amount of investment risk taken based
on how well compensated this risk is expected to be. This investment risk
adjustment is based on short-term market conditions and the attractiveness of
various asset classes.
The Model allocates across asset classes based upon an analysis of
extensive financial and economic data, including relative risk and return
statistics. BGFA has broad latitude in allocating the Master Portfolio's
investments and in refining the Model. The asset mix is not based on the
subjective judgement of any one single person, but is based on this model as
maintained and updated by a group of BGFA and BGI investment professionals. BGFA
may invest in fewer asset classes than listed below, particularly for any Master
Portfolio with less than $150 million in total assets. The asset allocation mix
selected by the Model is the most important factor in determining the investment
performance of each Master Portfolio.
BGFA manages other portfolios which also invest in accordance with the
Model. The performance of each of those other portfolios is likely to vary from
the performance of Master Portfolios. Such variation in performance is primarily
due to different equilibrium asset-mix assumptions used for the various
portfolios, timing differences in the implementation of the Model's
recommendations and differences in expenses and liquidity requirements. The
overall management of each Master Portfolio is based on the recommendation of
the Model, and no person is primarily responsible for recommending the mix of
asset classes in each Master Portfolio or the mix of securities within the asset
classes. Decisions relating to the Model are made by BGFA's investment
committee.
The estimated rates of portfolio turnover for each of the Funds during
their first year of operation are as follows:
<TABLE>
<CAPTION>
FIRST YEAR
NESTEGG FUND TURN-OVER
------------ ----------
<S> <C>
2000.............................................. 17%
2010.............................................. 24%
2020.............................................. 28%
2030.............................................. 40%
2040.............................................. 5%
</TABLE>
EQUITY SECURITIES. The Master Portfolios seek U.S. equity market exposure
through investment in securities representative of the following indices of
common stocks:
- - The S&P/BARRA Value Stock Index (consisting of primarily large-capitalization
U.S. stocks with lower-than-average price/book ratios).
- - The S&P/BARRA Growth Stock Index (consisting of primarily
large-capitalization U.S. stocks with higher-than-average price/book ratios).
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- - The Intermediate Capitalization Value Stock Index (consisting of primarily
medium-capitalization U.S. stocks with lower-than-average price/book ratios).
- - The Intermediate Capitalization Growth Stock Index (consisting of primarily
medium-capitalization U.S. stocks with higher-than-average price/book
ratios).
- - The Intermediate Capitalization Utility Stock Index (consisting of primarily
medium-capitalization U.S. utility stocks).
- - The Micro Capitalization Market Index (consisting of primarily
small-capitalization U.S. stocks).
- - The Small Capitalization Value Stock Index (consisting of primarily
small-capitalization U.S. stocks with lower-than-average price/book ratios).
- - The Small Capitalization Growth Stock Index (consisting of primarily
small-capitalization U.S. stocks with higher-than-average price/book ratios).
The Master Portfolios seek foreign equity market exposure through
investment in foreign equity securities, American Depositary Receipts or
European Depositary Receipts of issuers whose securities are representative of
the following indices of foreign equity securities:
- - The Morgan Stanley Capital International (MSCI) Japan Index (consisting of
primarily large-capitalization Japanese stocks).
- - The Morgan Stanley Capital International Europe, Australia, Far East Index
(MSCI EAFE) Ex-Japan Index (consisting of primarily large-capitalization
foreign stocks, excluding Japanese stocks).
The Master Portfolios also may seek U.S. and foreign equity market exposure
through investment in equity securities of U.S. and foreign issuers that are not
included in the indices listed above.
DEBT SECURITIES. The Master Portfolios seek U.S. debt market exposure
through investment in securities representative of the following indices of U.S.
debt securities:
- - The Lehman Brothers Long-Term Government Bond Index (consisting of all U.S.
Government bonds with maturities of at least ten years).
- - The Lehman Brothers Intermediate-Term Government Bond Index (consisting of
all U.S. Government bonds with maturities of less than ten years and greater
than one year).
- - The Lehman Brothers Long-Term Corporate Bond Index (consisting of all U.S.
investment-grade corporate bonds with maturities of at least ten years).
- - The Lehman Brothers Intermediate-Term Corporate Bond Index (consisting of all
U.S. investment-grade corporate bonds with maturities of less than ten years
and greater than one year).
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<PAGE> 15
- - The Lehman Brothers Mortgage-Backed Securities Index (consisting of all
fixed-coupon mortgage pass-throughs issued by the Federal National Mortgage
Association, Government National Mortgage Association and Federal Home Loan
Mortgage Corporation with maturities greater than one year).
The Master Portfolios seek foreign debt market exposure through investment
in securities representative of the following index of foreign debt securities:
- - The Salomon Brothers Non-U.S. World Government Bond Index (consisting of
foreign government bonds with maturities of greater than one year).
Each U.S. and foreign debt security is expected to be part of an issuance
with a minimum outstanding amount at the time of purchase of approximately $50
million and $100 million, respectively. Each security in which a Master
Portfolio invests must be rated at least "Baa" by Moody's Investors Service,
Inc. ("Moody's"), or "BBB" by Standard & Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff") or, if
unrated, deemed to be of comparable quality by BGFA in accordance with
procedures approved by MIP's Board of Trustees. See "Risk Considerations" below.
MONEY MARKET INSTRUMENTS. The money market instrument portion of the
portfolio of each Master Portfolio generally is invested in high-quality money
market instruments, including U.S. Government obligations, obligations of
domestic and foreign banks, short-term corporate debt instruments and repurchase
agreements. See "Other Investment Policies and Practices" below for a more
complete description of the money market instruments in which each Master
Portfolio may invest.
THE MONEY MARKET FUND
The investment objective of the Money Market Fund is to provide investors
with current income, liquidity and the maintenance of a stable net asset value
of $1.00 per share by investing in high quality, U.S. dollar-denominated
short-term obligations which are determined by the Adviser to present minimal
credit risks.
The Money Market Fund may invest in obligations permitted to be purchased
under Rule 2a-7 of the Investment Company Act of 1940 (the "1940 Act")
including, but not limited to, (1) obligations of the U.S. Government or its
agencies or instrumentalities; (2) commercial paper, loan participation
interests, medium-term notes, asset-backed securities and other promissory
notes, including floating or variable rate obligations; and (3) domestic,
Yankeedollar and Eurodollar certificates of deposit, time deposits, bankers'
acceptances, commercial paper, bearer deposit notes and other promissory notes,
including floating or variable rate obligations issued by U.S. or foreign bank
holding companies and their bank subsidiaries, branches and agencies. The Money
Market Fund will invest only in issuers or instruments that at the time of
purchase (1) have received the highest short-term rating by at least two
Nationally Recognized Statistical Rating Organizations ("NRSROs") such as "A-1"
by S&P and "P-1" by Moody's; (2) are single rated and have received the highest
short-term rating by a NRSRO; or (3) are unrated, but are determined to be of
comparable quality by the Adviser or SubAdviser pursuant to guidelines approved
by the Trust's
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<PAGE> 16
Board and subject to ratification by the Trust's Board. The Money Market Fund
may also purchase securities on a "when-issued" basis and purchase or sell them
on a "forward commitment" basis.
The Money Market Fund will concentrate its investments in obligations
issued by the banking industry. Concentration in this context means the
investment of more than 25% of the Money Market Fund's assets in such industry.
However, for temporary defensive purposes during periods when the Adviser
believes that maintaining this concentration may be inconsistent with the best
interest of shareholders, the Money Market Fund will not maintain this
concentration. The Money Market Fund's policy of concentration in the banking
industry increases the Fund's exposure to market conditions prevailing in that
industry.
The Money Market Fund may also invest in variable rate master demand
obligations which are unsecured demand notes that permit the indebtedness
thereunder to vary, and provide for periodic adjustments in the interest rate.
Because master demand obligations are direct lending arrangements between the
Money Market Fund and the issuer, they are not normally traded. There is no
secondary market for the notes; however, the period of time remaining until
payment of principal and accrued interest can be recovered under a variable rate
master demand obligation generally will not exceed seven days. To the extent
this period is exceeded, the obligation in question would be considered
illiquid. Issuers of variable rate master demand obligations must satisfy the
same criteria as set forth for other promissory notes (e.g., commercial paper).
The Money Market Fund will invest in variable rate master demand obligations
only when such obligations are determined by the Adviser, pursuant to guidelines
established by the Board of Trustees, to be of comparable quality to rated
issuers or instruments eligible for investment by the Money Market Fund. In
determining dollar-weighted average portfolio maturity, a variable rate master
demand obligation, the principal amount of which must unconditionally be paid in
397 calendar days, will be deemed to have a maturity equal to the earlier of the
period of time remaining until the next readjustment of the interest rate or the
period of time remaining until the principal amount can be recovered from the
issuer on demand. A variable rate master demand obligation, the principal amount
of which is scheduled to be paid in more than 397 calendar days, that is subject
to a demand feature, shall be deemed to have a maturity equal to the longer of
the period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand.
Amortized Cost Method of Valuation for the Money Market Fund
Portfolio investments of the Money Market Fund are valued based on the
amortized cost valuation technique pursuant to Rule 2a-7 under the 1940 Act
("Rule 2a-7"). Obligations in which the Money Market Fund invests generally have
remaining maturities of 397 days or less, although upon satisfying certain
conditions of Rule 2a-7, the Fund may, to the extent otherwise permissible,
invest in instruments subject to repurchase agreements and certain variable and
floating rate obligations that bear longer final maturities. The dollar-weighted
average portfolio maturity of the Money Market Fund will not exceed 90 days. See
the SAI for an explanation of the amortized cost valuation method.
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<PAGE> 17
RISK CONSIDERATIONS
THE NESTEGG FUNDS
GENERAL
Since the investment characteristics and, therefore, investment risks
directly associated with such characteristics of each NestEgg Fund correspond to
those of the Master Portfolio in which such NestEgg Fund invests, the following
is a discussion of the risks associated with the investments of the Master
Portfolios. Once again, unless otherwise specified, references to the investment
policies and risks of a NestEgg Fund also should be understood as references to
the investment policies and risks of the corresponding Master Portfolio.
The net asset value per share of each class of a NestEgg Fund is neither
insured nor guaranteed, is not fixed and should be expected to fluctuate.
EQUITY SECURITIES
The stock investments of the NestEgg Funds are subject to equity market
risk. Equity market risk is the possibility that common stock prices will
fluctuate or decline over short or even extended periods. The U.S. stock market
tends to be cyclical, with periods when stock prices generally rise and periods
when prices generally decline. Throughout the first six months of 1998, the
stock market, as measured by the S&P 500 Index and other commonly used indices,
was trading at or close to record levels. There can be no guarantee that these
performance levels will continue.
DEBT SECURITIES
The debt instruments in which the NestEgg Funds invest are subject to
credit and interest rate risk. Credit risk is the risk that issuers of the debt
instruments in which the Funds invest may default on the payment of principal
and/or interest. Interest-rate risk is the risk that increases in market
interest rates may adversely affect the value of the debt instruments in which
the Funds invest. The value of the debt instruments generally changes inversely
to market interest rates. Debt securities with longer maturities, which tend to
produce higher yields, are subject to potentially greater capital appreciation
and depreciation, as well as being more sensitive to interest rate changes, than
obligations with shorter maturities. Changes in the financial strength of an
issuer or changes in the ratings of any particular security may also affect the
value of these investments.
Although some of the NestEgg Funds' securities are guaranteed by the U.S.
Government, its agencies or instrumentalities, such securities are subject to
interest rate risk and the market value of these securities, upon which the
Funds' daily net asset value is based, will fluctuate. No assurance can be given
that the U.S. Government would provide financial support to its agencies or
instrumentalities where it is not obligated to do so.
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<PAGE> 18
FOREIGN SECURITIES
The NestEgg Funds may invest in securities of foreign issuers. Investing in
the securities of issuers in any foreign country, including through American
Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and similar
securities, involves special risks and considerations not typically associated
with investing in U.S. companies. These include differences in accounting,
auditing and financial reporting standards; generally higher commission rates on
foreign portfolio transactions; the possibility of nationalization,
expropriation or confiscatory taxation; adverse changes in investment or
exchange control regulations (which may include suspension of the ability to
transfer currency from a country); and political, social and monetary or
diplomatic developments that could affect U.S. investments in foreign countries.
Additionally, dispositions of foreign securities and dividends and interest
payable on those securities may be subject to foreign taxes, including
withholding taxes. Foreign securities often trade with less frequency and volume
than domestic securities and, therefore, may exhibit greater price volatility.
Additional costs associated with an investment in foreign securities may include
higher custodial fees than apply to domestic custodial arrangements and
transaction costs of foreign currency conversions. Changes in foreign exchange
rates also will affect the value of securities denominated or quoted in
currencies other than the U.S. dollar. A NestEgg Fund's performance may be
affected either unfavorably or favorably by fluctuations in the relative rates
of exchange between the currencies of different nations, by exchange control
regulations and by indigenous economic and political developments.
OTHER INVESTMENT CONSIDERATIONS
Because the Master Portfolios may shift investment allocations
significantly from time to time, their performance may differ from funds which
invest in one asset class or from funds with a stable mix of assets. Further,
shifts among asset classes may result in relatively high turnover and
transaction (i.e., brokerage commission) costs. Portfolio turnover also can
generate short-term capital gains tax consequences. During those periods in
which a higher percentage of certain NestEgg Funds' assets are invested in
long-term bonds, those NestEgg Funds' exposure to interest-rate risk will be
greater because the longer maturity of such securities means they are generally
more sensitive to changes in market interest rates than short-term securities.
Each NestEgg Fund also may lend its portfolio securities and enter into
futures transactions, each of which involves risk. The futures contracts and
options on futures contracts that each NestEgg Fund may purchase may be
considered derivatives. Derivatives are financial instruments whose values are
derived, at least in part, from the prices of other securities or specified
assets, indices or rates. Certain of the floating and variable-rate instruments
that each NestEgg Fund may purchase may also be considered derivatives. Each
NestEgg Fund may use some derivatives as part of its short-term liquidity
holdings and/or as substitutes for comparable market positions in the underlying
securities. Some derivatives may be more sensitive than direct securities to
changes in interest rates or sudden market moves. Some derivatives also may be
susceptible to fluctuations in yield or value due to their structure or contract
terms. A NestEgg Fund may not use derivatives to create leverage without
establishing adequate "cover" in compliance with SEC leverage rules.
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<PAGE> 19
Asset allocation and modeling strategies are employed by BGFA for other
investment companies and accounts advised or sub-advised by BGFA. If these
strategies indicate particular securities should be purchased or sold, at the
same time, by a NestEgg Fund and one or more of these investment companies or
accounts, available investments or opportunities for sales will be allocated
equitably to each by BGFA. In some cases, this procedure may adversely affect
the size of the position obtained for or disposed of by a NestEgg Fund or the
price paid or received by such Portfolio.
THE MONEY MARKET FUND
The Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share, although there can be no assurance that the Money Market Fund
will always be able to do so. The Money Market Fund may not achieve as high a
level of current income as other funds that do not limit their investment to the
high quality securities in which the Money Market Fund invests.
The Money Market Fund's policy of concentrating in the banking industry
could increase the Fund's exposure to economic or regulatory developments
relating to or affecting banks. Banks are subject to extensive governmental
regulation which may limit both the amounts and types of loans and other
financial commitments they can make and the interest rates and fees they can
charge. The financial condition of banks is largely dependent on the
availability and cost of capital funds, and can fluctuate significantly when
interest rates change. In addition, general economic conditions may affect the
financial condition of banks.
There is, of course, no assurance that a Fund will achieve its investment
objective or be successful in preventing or minimizing the risk of loss that is
inherent in investing in particular types of investment products. In order to
attempt to minimize that risk, the Adviser monitors developments in the economy,
the securities markets, and with each particular issuer. Also, as noted earlier,
each diversified Fund is managed within certain limitations that restrict the
amount of a Fund's investment in any single issuer.
YEAR 2000
Like other funds and business organizations around the world, the Funds
could be adversely affected if the computer systems used by the Adviser and the
Fund's other service providers do not properly process and calculate
date-related information for the year 2000 and beyond. The Funds have been
informed that the Adviser, and the Funds' other service providers (i.e.,
Sub-Adviser, Administrator, Transfer Agent, Fund Accounting Agent, Distributor
and Custodian) have developed and are implementing clearly defined and
documented plans to minimize the risk associated with the Year 2000 problem.
These plans include the following activities: inventorying of software systems,
determining inventory items that may not function properly after December 31,
1999, reprogramming or replacing such systems and retesting for Year 2000
readiness.
In addition, the service providers are obtaining assurances from their
vendors and suppliers in the same manner. Noncompliant Year 2000 systems upon
which the Fund is dependent may result in errors and account maintenance
failures. The Funds have no reason to believe that (1) the
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<PAGE> 20
Year 2000 plans of the Adviser and the Funds' other service providers will not
be completed by December 1999, and (2) the costs currently associated with the
implementation of their plans will have material adverse impact on the business,
operations or financial condition of the Funds or their service providers. In
addition, the Year 2000 problem may adversely affect the companies in which the
Funds invest. For example, these companies may incur substantial costs to
correct the problem and may suffer losses caused by data processing errors.
Since the ultimate costs or consequences of incomplete or untimely resolution of
the Year 2000 problem by the Funds' service providers are unknown to the Funds
at this time, no assurance can be made that such costs or consequences will not
have a material adverse impact on the Funds or their service providers.
The Funds and the Adviser will continue to monitor developments relating to
the Year 2000 problem, including the development of contingency plans for
providing back up computer services in the event of a systems failure.
EUROPEAN ECONOMIC AND MONETARY UNION
Several European countries are participating in the European Economic and
Monetary Union, which will establish a common European currency for
participating countries. This currency will commonly be known as the "Euro."
Each such participating country anticipates replacing its existing currency with
the Euro on January 1, 1999. Other European countries may participate after that
date. This conversion presents unique uncertainties, including whether the
payment and operational systems of banks and other financial institutions will
be ready by the scheduled launch date; the legal treatment of certain
outstanding financial contracts after January 1, 1999 that reflect to existing
currencies rather than the euro; the establishment of exchange rates for
existing currencies and the euro; and the creation of suitable clearing and
settlement payment systems for the new currency. These or other factors,
including political and economical risks, could cause market disruptions before
or after the interaction of the euro, and could adversely affect the value of
securities held by the Funds.
The Funds have been informed that the Adviser, and the Funds' other service
providers, as applicable, are taking steps to minimize the risk associated with
the conversion. In addition, where appropriate, certain service providers are
obtaining assurances from their vendors in the same manner.
Since the ultimate consequences of the conversion are unknown to the funds
at this time, no assurance can be made that such consequences will not have a
material adverse impact on the Funds. The Funds and the Adviser will continue to
monitor developments relating to the conversion.
INVESTMENT POLICIES AND PRACTICES
THE NESTEGG FUNDS
To the extent set forth in this Prospectus, each NestEgg Fund through its
investment in the corresponding Master Portfolio may invest in the securities
described below. To avoid the need to refer to both the NestEgg Funds and the
Master Portfolios in every instance, the following sections
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<PAGE> 21
generally refer to the Funds only. References to the investments and investment
policies and risks of the NestEgg Funds, unless otherwise indicated, should be
understood as references to the investments and investment policies and risks of
the corresponding master portfolios.
U.S. GOVERNMENT OBLIGATIONS. The NestEgg Funds may invest in various types
of U.S. Government obligations. U.S. Government obligations include securities
issued or guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities. Payment of principal and interest on U.S.
Government obligations (i) may be backed by the full faith and credit of the
United States (as with U.S. Treasury obligations and GNMA certificates) or (ii)
may be backed solely by the issuing or guaranteeing agency or instrumentality
itself (as with FNMA notes). In the latter case, the investor must look
principally to the agency or instrumentality issuing or guaranteeing the
obligation for ultimate repayment, which agency or instrumentality may be
privately owned. There can be no assurance that the U.S. Government would
provide financial support to its agencies or instrumentalities where it is not
obligated to do so. As a general matter, the value of debt instruments,
including U.S. Government obligations, declines when market interest rates
increase and rises when market interest rates decrease. Certain types of U.S.
Government obligations are subject to fluctuations in yield or value due to
their structure or contract terms.
SECURITIES OF NON-U.S. ISSUERS. The NestEgg Funds may invest in certain
securities of non-U.S. issuers as discussed below.
OBLIGATIONS OF FOREIGN GOVERNMENTS, SUPRANATIONAL ENTITIES AND BANKS. Each
NestEgg Fund may invest in U.S. dollar-denominated short-term obligations issued
or guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities that are determined by BGFA to be of
comparable quality to the other obligations in which such Fund may invest. The
NestEgg Funds may also invest in debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of each
Fund's assets invested in obligations of foreign governments and supranational
entities will vary depending on the relative yields of such securities, the
economic and financial markets of the countries in which the investments are
made and the interest rate climate of such countries.
Each NestEgg Fund may invest a portion of its total assets in high-quality,
short-term (one year or less) debt obligations of foreign branches of U.S. banks
or U.S. branches of foreign banks that are denominated in and pay interest in
U.S. dollars.
FOREIGN EQUITY SECURITIES AND DEPOSITARY RECEIPTS. Each NestEgg Fund's
assets may be invested in equity securities of foreign issuers and American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs") of such
issuers.
ADRs and EDRs may not necessarily be denominated in the same currency as
the securities into which they may be converted. ADRs are receipts typically
issued by a United States bank or trust company which evidence ownership of
underlying securities issued by a foreign corporation.
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EDRs, which are sometimes referred to as Continental Depositary Receipts
("CDRs"), are receipts issued in Europe typically by nonUnited States banks and
trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the
United States securities markets and EDRs and CDRs in bearer form are designed
for use in Europe. Each NestEgg Fund may invest in ADRs, EDRs and CDRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depositary, whereas a
depositary may establish an unsponsored facility without participation by the
issuer of the deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through voting rights to the holders of such receipts in respect of the
deposited securities.
FLOATING AND VARIABLE RATE OBLIGATIONS. Each NestEgg Fund may purchase debt
instruments with interest rates that are periodically adjusted at specified
intervals or whenever a benchmark rate or index changes. These adjustments
generally limit the increase or decrease in the amount of interest received on
the debt instruments. Floating and variable rate instruments are subject to
interest-rate risk and credit risk.
MORTGAGE RELATED SECURITIES. Each NestEgg Fund may invest in
mortgage-related securities ("MBSs"), which are securities representing
interests in a pool of loans secured by mortgages. The resulting cash flow from
these mortgages is used to pay principal and interest on the securities. MBSs
are assembled for sale to investors by various government-sponsored enterprises
such as the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC") or are guaranteed by such governmental
agencies as the Government National Mortgage Association ("GNMA"). Regardless of
the type of guarantee, all MBSs are subject to interest rate risk (i.e.,
exposure to loss due to changes in interest rates) and prepayment risk.
Prepayment risk is the risk to the Master Portfolios that, as interest rates
fall, homeowners will refinance existing mortgages, causing mortgage-backed
securities to have reduced yields.
GNMA MBSs include GNMA Mortgage Pass-through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the full and timely payment of
principal and interest by GNMA and such guarantee is backed by the authority of
GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development and, as such, Ginnie Maes are backed
by the full faith and credit of the federal government. In contrast, MBSs issued
by FNMA include FNMA Guaranteed Mortgage Pass-through Certificates ("Fannie
Maes") which are solely the obligations of FNMA and are neither backed by nor
entitled to the full faith and credit of the federal government). FNMA is a
government-sponsored enterprise which is also a private corporation whose stock
trades on the NYSE. Fannie Maes are guaranteed as to timely payment of principal
and interest by FNMA. MBSs issued by FHLMC include FHLMC Mortgage Participation
Certificates ("Freddie Macs" or "PCs"). FHLMC is a government sponsored
enterprise whose MBSs are solely obligations of FHLMC. Therefore, Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Bank and do
not constitute a debt or obligation of the United
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<PAGE> 23
States or of any Federal Home Loan Bank. FHLMC guarantees timely payment of
interest, but only ultimate payment of principal due under the obligations it
issues. FHLMC may, under certain circumstances, remit the guaranteed payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after the guarantee becomes payable.
FUTURES CONTRACTS AND OPTIONS TRANSACTIONS. Each NestEgg Fund may use
futures as a substitute for a comparable market position in the underlying
securities.
A futures contract is an agreement between two parties, a buyer and a
seller, to exchange a particular commodity or financial statement at a specific
price on a specific date in the future. An option transaction generally involves
a right, which may or may not be exercised, to buy or sell a commodity or
financial instrument at a particular price on a specified future date. Futures
contracts and options are standardized and traded on exchanges, where the
exchange serves as the ultimate counterpart for all contracts. Consequently, the
primary credit risk on futures contracts is the creditworthiness of the
exchange. Futures contracts are subject to market risk (i.e., exposure to
adverse price changes).
Although each of the NestEgg Funds intends to purchase or sell futures
contracts only if there is an active market for such contracts, no assurance can
be given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move to
the limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and potentially
subjecting a NestEgg Fund to substantial losses. If it is not possible, or if a
NestEgg Fund determines not to close a futures position in anticipation of
adverse price movements, the Fund will be required to make daily cash margin
payments.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES. Each NestEgg Fund
may invest in stock index futures and options on stock index futures as a
substitute for a comparable market position in the underlying securities. A
stock index future obligates the seller to deliver (and the purchaser to take),
effectively, an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect to
stock indices that are permitted investments, each NestEgg Fund intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity. There can be no
assurance that a liquid market will exist at the time when a NestEgg Fund seeks
to close out a futures contract or a futures option position. Lack of a liquid
market may prevent liquidation of an unfavorable position.
INTEREST RATE FUTURES CONTRACTS AND OPTIONS ON INTEREST RATE FUTURES
CONTRACTS. Each NestEgg Fund may invest in interest-rate futures contracts and
options on interest-rate futures contracts as a substitute for a comparable
market position in the underlying securities. The NestEgg Funds may also sell
options on interest-rate futures contracts as part of closing purchase
transactions
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to terminate their options positions. No assurance can be given that such
closing transactions can be effected or the degree of correlation between price
movements in the options on interest rate futures and price movements in the
NestEgg Funds' portfolio securities which are the subject of the transaction.
INTEREST RATE AND INDEX SWAPS. Each NestEgg Fund may enter into interest
rate and index swaps in pursuit of their investment objectives. Interest-rate
swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating
rate payments on fixed-rate payments). Index swaps involve the exchange by a
Fund with another party of cash flows based upon the performance of an index of
securities or a portion of an index of securities that usually include dividends
or income. In each case, the exchange commitments can involve payments to be
made in the same currency or in different currencies. A NestEgg Fund will
usually enter into swaps on a net basis. In so doing, the two payment streams
are netted out, with a Fund receiving or paying, as the case may be, only the
net amount of the two payments. If a NestEgg Fund enters into a swap, it will
maintain a segregated account on a gross basis, unless the contract provides for
a segregated account on a net basis. If there is a default by the other party to
such a transaction, a Fund will have contractual remedies pursuant to the
agreements related to the transaction.
The use of interest-rate and index swaps is a highly specialized activity
which involves investment techniques and risks different from those associated
with ordinary portfolio security transactions. There is no limit, except as
provided below, on the amount of swap transactions that may be entered into by a
NestEgg Fund. These transactions generally do not involve the delivery of
securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to swaps generally is limited to the net amount of payments
that a Fund is contractually obligated to make. There is also a risk of a
default by the other party to a swap, in which case a Fund may not receive net
amount of payments that a Fund contractually is entitled to receive.
FOREIGN CURRENCY AND FUTURES TRANSACTIONS. Foreign currency transactions
may occur on a spot (i.e., cash) basis at the rate prevailing in the currency
exchange market or on a forward basis. A forward currency exchange contract
involves an obligation to purchase or sell a specific currency at a set price on
a future date which must be more than two days from the date of the contract.
The forward foreign currency market offers less protection against default than
is available when trading currencies on an exchange, since a forward currency
contract is not guaranteed by an exchange or clearinghouse. Therefore, a default
on a forward currency contract would deprive a NestEgg Fund of unrealized
profits or force such Fund to cover its commitments for purchase or resale, if
any, at the current market price.
Each NestEgg Fund may combine forward currency exchange contracts with in
vestments in securities denominated in other currencies.
Each NestEgg Fund also may maintain short positions in forward currency
exchange transactions, which would involve the Fund agreeing to exchange an
amount of a currency it did not currently own for another currency at a future
date in anticipation of a decline in the value of the currency sold relative to
the currency such Fund contracted to receive in the exchange.
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Unlike trading on domestic futures exchanges, trading on foreign futures
exchanges is not regulated by the Commodity Futures Trading Commission (the
"CFTC") and generally is subject to greater risks than trading on domestic
exchanges. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and an investor may look only to the broker for
performance of the contract. BGFA, however, considers on an ongoing basis the
creditworthiness of such counterparties. In addition, any profits that a NestEgg
Fund might realize in trading could be eliminated by adverse changes in the
exchange rate; adverse exchange rate changes also could cause a Fund to incur
losses. Transactions on foreign exchanges may include both futures contracts
which are traded on domestic exchanges and those which are not. Such
transactions may also be subject to withholding and other taxes imposed by
foreign governments.
INVESTMENT COMPANY SECURITIES. Each NestEgg Fund may invest in securities
issued by other investment companies which principally invest in securities of
the type in which the NestEgg Fund invests. Under the 1940 Act, a NestEgg Fund's
investment in such securities currently is limited to, subject to certain
exceptions, (i) 3% of the total voting stock of any one investment company, (ii)
5% of the NestEgg Fund's net assets with respect to any one investment company
and (iii) 10% of the NestEgg Fund's net assets in the aggregate. Investments in
the securities of other investment companies generally will involve duplication
of advisory fees and certain other expenses. The NestEgg Fund may also purchase
shares of exchange listed closed-end funds.
ILLIQUID SECURITIES. Each NestEgg Fund may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with its investment objective.
Such securities may include securities that are not readily marketable, such as
privately issued securities and other securities that are subject to legal or
contractual restrictions on resale, floating and variable-rate demand
obligations as to which the NestEgg Fund cannot exercise a demand feature on not
more than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement more than seven days after
notice.
SHORT-TERM INSTRUMENTS AND TEMPORARY INVESTMENTS. Each NestEgg Fund may
invest in the following high-quality money market instruments on an ongoing
basis to provide liquidity, for temporary purposes when there is an unexpected
level of shareholder purchases or redemptions or when "defensive' strategies are
appropriate: (i) short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including government-sponsored
enterprises); (ii) negotiable certificates of deposit ("CDs"), bankers'
acceptances, fixed time deposits and other obligations of domestic banks
(including foreign branches) that have more than $1 billion in total assets at
the time of investment and that are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by the
FDIC; (iii) commercial paper rated at the date of purchase "Prime1" by Moody's
or "A1+" or "A1" by S&P, or, if unrated, of comparable quality as determined by
BGFA or Wells Fargo Bank; (iv) nonconvertible corporate debt securities (e.g.,
bonds and debentures) with remaining maturities at the date of purchase of not
more than one year that are rated at least "Aa" by Moody's or "AA" by S&P; (v)
repurchase agreements; and (vi) short-term, U.S. dollar denominated obligations
of foreign banks (including U.S. branches) that, at the time of investment have
more than $10 billion,
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or the equivalent in other currencies, in total assets and in the opinion of
BGFA are of comparable quality to obligations of U.S. banks which may be
purchased by the Fund.
BANK OBLIGATIONS. Each NestEgg Fund may invest in bank obligations,
including certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions.
Certificates of deposit are negotiable certificates evidencing the
obligation of a bank to repay funds deposited with it for a specified period of
time.
Time deposits are nonnegotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by a NestEgg Fund will not benefit from insurance
from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations, bearing fixed, floating or variable-interest
rates.
COMMERCIAL PAPER AND SHORT-TERM CORPORATE DEBT INSTRUMENTS. Each NestEgg
Fund may invest in commercial paper (including variable amount master demand
notes), which consists of short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payee of such notes whereby both parties have the
right to vary the amount of the outstanding indebtedness on the notes. The
investment adviser and/or subadviser to each NestEgg Fund monitors on an ongoing
basis the ability of an issuer of a demand instrument to pay principal and
interest on demand.
Each NestEgg Fund also may invest in nonconvertible corporate debt
securities (e.g., bonds and debentures) with not more than one year remaining to
maturity at the date of settlement. A Fund will invest only in such corporate
bonds and debentures that are rated at the time of purchase at least "Aa" by
Moody's or "AA" by S&P. Subsequent to its purchase by the Fund, an issue of
securities may cease to be rated or its rating may be reduced below the minimum
rating required for purchase by the Fund. The investment adviser and/or
subadviser to each Fund will consider such an event in determining whether the
Fund should continue to hold the obligation. To the extent the Fund continues to
hold such obligations, it may be subject to additional risk of default.
REPURCHASE AGREEMENTS. Each NestEgg Fund may enter into repurchase
agreements wherein the seller of a security to a Fund agrees to repurchase that
security from the Fund at a mutually agreed upon time and price. The period of
maturity is usually quite short, often overnight or a few days, although it may
extend over a number of months. A Fund may enter into repurchase
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agreements only with respect to securities that could otherwise be purchased by
the Fund, and all repurchase transactions must be collateralized. A Fund may
incur a loss on a repurchase transaction if the seller defaults and the value of
the underlying collateral declines or is otherwise limited or if receipt of the
security or collateral is delayed. The Funds may participate in pooled
repurchase agreement transactions with other funds advised by BGFA.
FORWARD COMMITMENTS, WHEN ISSUED PURCHASES AND DELAYED DELIVERY
TRANSACTIONS. Each NestEgg Fund may purchase or sell securities on a
when-issued or delayed delivery basis and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
Securities purchased or sold on a when-issued, delayed-delivery or forward
commitment basis involve a risk of loss if the value of the security to be
purchased declines, or the value of the security to be sold increases, before
the settlement date. Although a Fund will generally purchase securities with the
intention of acquiring them, a Fund may dispose of securities purchased on a
when-issued, delayed-delivery or a forward commitment basis before settlement
when deemed appropriate by the adviser.
BORROWING MONEY. As a fundamental policy, each NestEgg Fund is permitted
to borrow to the extent permitted under the 1940 Act. However, each NestEgg Fund
currently intends to borrow money only for temporary or emergency (not
leveraging) purposes, and may borrow up to one-third of the value of its total
assets (including the amount borrowed) valued at the lesser of cost or market,
less liabilities (not including the amount borrowed) at the time the borrowing
is made. While borrowings exceed 5% of a Fund's total assets, the Fund will not
make any new investments.
LOANS OF PORTFOLIO SECURITIES. Each NestEgg Fund may lend securities from
their portfolios to brokers, dealers and financial institutions (but not
individuals) in order to increase the return on such Fund's portfolio. The value
of the loaned securities may not exceed one-third of a Fund's total assets and
loans of portfolio securities are fully collateralized based on values that are
marked-to-market daily. The Funds will not enter into any portfolio security
lending arrangement having a duration of longer than one year. The principal
risk of portfolio lending is potential default or insolvency of the borrower. In
either of these cases, a Fund could experience delays in recovering securities
or collateral or could lose all or part of the value of the loaned securities.
The Funds may pay reasonable administrative and custodial fees in connection
with loans of portfolio securities and may pay a portion of the interest or fee
earned thereon the borrower or a placing broker.
CONVERTIBLE SECURITIES. Each NestEgg Fund may purchase fixed-income
convertible securities, such as bonds or preferred stock, which may be converted
at a stated price within a specified period of time into a specified number of
shares of common stock of the same or a different issuer. Convertible securities
are senior to common stock in a corporation's capital structure, but usually are
subordinated to nonconvertible debt securities. While providing a fixed-income
stream (generally higher in yield than the income from a common stock but lower
than that afforded by a nonconvertible debt security), a convertible security
also affords an investor the opportunity, through its conversion feature, to
participate in the capital appreciation of the common stock into which it is
convertible.
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In general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common stock if
the security is converted). As a fixed-income security, the market value of a
convertible security generally increases when interest rates decline and
generally decreases when interest rates rise. However, the price of a
convertible security also is influenced by the market value of the security's
underlying common stock. Thus, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.
RATINGS. The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and,
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market value risk of such
obligations. Therefore, although these ratings may be an initial criterion for
selection of portfolio investments, BGFA also evaluates such obligations and the
ability of their issuers to pay interest and principal. Each Fund relies on
BGFA's judgment, analysis and experience in evaluating the creditworthiness of
an issuer. In this evaluation, BGFA takes into consideration, among other
things, the issuer's financial resources, its sensitivity to economic conditions
and trends, the quality of the issuer's management and regulatory matters. It
also is possible that a rating agency might not timely change the rating on a
particular issue to reflect subsequent events.
CERTAIN FUNDAMENTAL POLICIES OF THE NESTEGG FUNDS
Each NestEgg Fund and Master Portfolio may (i) borrow money to the extent
permitted under the 1940 Act; (ii) invest up to 5% of its total assets in the
obligations of any single issuer, except that up to 25% of the value of the
total assets of such Fund or Master Portfolio may be invested and obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
may be purchased, without regard to any such limitation; and (iii) invest up to
25% of the value of its total assets in the securities of issuers in a
particular industry or group of closely related industries, provided there is no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. This paragraph describes
fundamental policies that cannot be changed as to a Fund or Master Portfolio
without approval by the holders of a majority (as defined in the 1940 Act) of
the outstanding voting securities of such Fund or Master Portfolio, as the case
may be. See "Investment Objectives and Management Policies" in the SAI.
CERTAIN NONFUNDAMENTAL POLICIES OF THE NESTEGG FUNDS
Each NestEgg Fund and Master Portfolio may (i) purchase securities of any
company having less than three years' continuous operation (including operations
of any predecessors) if such purchase does not cause the value of its
investments in all such companies to exceed 5% of the value of its total assets;
(ii) pledge, hypothecate, mortgage or otherwise encumber its assets, but only to
secure permitted borrowings; and (iii) invest up to 15% of the value of its net
assets in repurchase
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agreements providing for settlement in more than seven days after notice and in
other illiquid securities. See "Investment Objectives and Management Policies"
in the SAI.
THE MONEY MARKET FUND
Set forth below is a discussion of the various investments and investment
policies of the Money Market Fund. Additional information about the investment
policies of the Money Market Fund appears in the SAI.
The Money Market Fund, in pursuing its investment objective, will comply
with Rule 2a-7. Thus, descriptions of investment techniques and portfolio
instruments are qualified by the provisions and limitations of Rule 2a-7.
The Money Market Fund will attempt to achieve its investment objective by
investing in the following money market instruments:
U.S. TREASURY OBLIGATIONS. The Fund may invest in U.S. Treasury
obligations, which are backed by the full faith and credit of the United States
Government as to the timely payment of principal and interest. U.S. Treasury
obligations consist of bills, notes, and bonds and separately traded interest
and principal component parts of such obligations known as STRIPS which
generally differ in their interest rates and maturities. U.S. Treasury bills,
which have original maturities of up to one year, notes, which have maturities
ranging from one year to 10 years, and bonds, which have original maturities of
10 to 30 years, are direct obligations of the United States Government.
U.S. GOVERNMENT SECURITIES. U.S. Government securities are obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
U.S. Government securities include debt securities issued or guaranteed by U.S.
Government-sponsored enterprises and federal agencies and instrumentalities.
Some types of U.S. Government securities are supported by the full faith and
credit of the United States Government or U.S. Treasury guarantees, such as
mortgage-backed certificates guaranteed by the Government National Mortgage
Association ("GNMA"). Other types of U.S. Government securities, such as
obligations of the Student Loan Marketing Association, provide recourse only to
the credit of the agency or instrumentality issuing the obligation. In the case
of obligations not backed by the full faith and credit of the United States
Government, the investor must look to the agency issuing or guaranteeing the
obligation for ultimate repayment.
COMMERCIAL PAPER. Commercial paper includes short-term unsecured
promissory notes, variable rate demand notes and variable rate master demand
notes issued by both domestic and foreign bank holding companies, corporations
and financial institutions and United States Government agencies and
instrumentalities. All commercial paper purchased by the Fund is rated "P-1" by
Moody's and "A-1" or better by S&P or in a comparable rating category by any two
NRSROs that have rated the commercial paper or (ii) rated in a comparable
category by only one such organization if it is the only organization that has
rated the commercial paper.
CORPORATE DEBT SECURITIES. The Fund may purchase corporate debt
securities, subject to the rating and quality requirements. The Fund may invest
in both rated commercial paper and rated corporate debt obligations of foreign
issuers that meet the same quality criteria applicable to
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investments by the Fund in commercial paper and corporate debt obligations of
domestic issuers. These investments, therefore, are not expected to involve
significant additional risks as compared to the risks of investing in comparable
domestic securities. Generally, all foreign investments carry with them both
opportunities and risks not applicable to investments in securities of domestic
issuers, such as risks of foreign political and economic instability, adverse
movements in foreign exchange rates, the imposition or tightening of exchange
controls or other limitations on repatriation of foreign capital, changes in
foreign governmental attitudes toward private investment (possibly leading to
nationalization, increased taxation or confiscation of foreign assets) and added
difficulties inherent in obtaining and enforcing a judgment against a foreign
issuer of securities should it default.
MORTGAGE-RELATED SECURITIES. The Fund is permitted to invest in
mortgage-related securities subject to the rating and quality requirements
specified with respect to each such Fund. Mortgage pass-through securities are
securities representing interests in "pools" of mortgages in which payments of
both interest and principal on the securities are made monthly, in effect,
"passing through" monthly payments made by the individual borrowers on the
mortgage loans which underlie the securities (net of fees paid to the issuer or
guarantor of the securities). Early repayment of principal on mortgage
pass-through securities (arising from prepayments of principal due to sale of
the underlying property, refinancing, or foreclosure, net of fees and costs
which may be incurred) may expose the Fund to a lower rate of return upon
reinvestment of principal. Also, if a security subject to prepayment has been
purchased at a premium, in the event of prepayment the value of the premium
would be lost. Like other fixed-income securities, when interest rates rise, the
value of mortgage-related securities generally will decline; however, when
interest rates decline, the value of mortgage-related securities with prepayment
features may not increase as much as other fixed-income securities. In
recognition of this prepayment risk to investors, the Public Securities
Association (the "PSA") has standardized the method of measuring the rate of
mortgage loan principal prepayments. The PSA formula, the Constant Prepayment
Rate or other similar models that are standard in the industry will be used by
the Fund in calculating maturity for purposes of investment in mortgage-related
securities. The inverse relation between interest rates and value of fixed
income securities will be more pronounced with respect to investments by the
Fund in mortgage-related securities, the value of which may be more sensitive to
interest rate changes.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government in the case of securities
guaranteed by GNMA or guaranteed by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by the Federal National
Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC"), which are supported only by the discretionary authority of the U.S.
Government to purchase the agency's obligations). Mortgage pass-through
securities created by non-governmental issuers (such as commercial banks,
savings and loan institutions, private mortgage insurance companies, mortgage
bankers and other secondary market issuers) may be supported in various forms of
insurance or guarantees issued by governmental entities.
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Collateralized Mortgage Obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMOs may be collateralized by whole mortgage loans
but are more typically collateralized by portfolios of mortgage pass-through
securities guaranteed by GNMA, FHLMC or FNMA. CMOs are structured in multiple
classes, with each class bearing a different stated maturity or interest rate.
The inverse relation between interest rates and value of fixed income securities
will be more pronounced with respect to investments by the Fund in
mortgage-related securities, the value of which may be more sensitive to
interest rate changes.
ASSET-BACKED SECURITIES. The Fund is permitted to invest in asset-backed
securities. Through the use of trusts and special purpose subsidiaries, various
types of assets, primarily home equity loans and automobile and credit card
receivables, are being securitized in pass-through structures similar to the
mortgage pass-through structures described above. Consistent with the Fund's
investment objectives, policies and quality standards, the Fund may invest in
these and other types of asset-backed securities which may be developed in the
future.
Asset-backed securities involve certain risks that are not posed by
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the benefit of a complete security interest in
the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities. The risks associated with
asset-backed securities are often reduced by the addition of credit enhancements
such as a letter of credit from a bank, excess collateral or a third-party
guarantee.
DOMESTIC AND FOREIGN BANK OBLIGATIONS. These obligations include but are
not restricted to certificates of deposit, commercial paper, Yankeedollar
certificates of deposit, bankers' acceptances, Eurodollar certificates of
deposit and time deposits, promissory notes and medium-term deposit notes. The
Fund will not invest in any obligations of its affiliates, as defined under the
1940 Act.
The Fund limits its investment in United States bank obligations to
obligations of United States banks (including foreign branches). The Fund limits
its investment in foreign bank obligations to United States dollar-denominated
obligations of foreign banks (including United States branches of foreign banks)
which in the opinion of the Adviser, are of an investment quality comparable to
obligations of United States banks which may be purchased by the Funds. There is
no limitation on the amount of the Fund's assets which may be invested in
obligations of foreign banks meeting the conditions set forth herein.
Fixed time deposits may be withdrawn on demand by the investor, but may be
subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation. There are no
contractual restrictions on the right to transfer a beneficial interest in a
fixed time deposit to a third party, although there is no market for such
deposits. Investments in
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fixed time deposits subject to withdrawal penalties maturing in more than seven
days may not exceed 10% of the value of the net assets of the Fund.
Obligations of foreign banks involve somewhat different investment risks
than those affecting obligations of United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that the obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal and interest on those obligations and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks, or that the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not subject to examination by any United States
Government agency or instrumentality.
Investments in Eurodollar and Yankeedollar obligations involve additional
risks. Most notably, there generally is less publicly available information
about foreign companies; there may be less governmental regulation and
supervision; they may use different accounting and financial standards; and the
adoption of foreign governmental restrictions may adversely affect the payment
of principal and interest on foreign investments. In addition, not all foreign
branches of United States banks are supervised or examined by regulatory
authorities as are United States banks, and such branches may not be subject to
reserve requirements.
STRIPS AND ZERO COUPON SECURITIES. The Fund may invest in separately
traded principal and interest components of securities backed by the full faith
and credit of the United States Treasury. The principal and interests components
of United States Treasury bonds with remaining maturities of longer than ten
years are eligible to be traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are separately issued by
the United States Treasury at the request of depository financial institutions,
which then trade the component parts separately. The interest component of
STRIPS may be more volatile than that of United States Treasury bills with
comparable maturities. In accordance with Rule 2a-7, the Fund's investments in
STRIPS are limited to those with maturity components not exceeding thirteen
months. The Fund will not actively trade in STRIPS.
The Fund may invest in zero coupon securities. A zero coupon security pays
no interest to its holder during its life and is sold at a discount to its face
value at maturity. The market prices of zero coupon securities generally are
more volatile than the market prices of securities that pay interest
periodically and are more sensitive to changes in interest rates than non-zero
coupon securities having similar maturities and credit qualities.
VARIABLE RATE DEMAND OBLIGATIONS. Variable rate demand obligations have a
maturity of 397 days or less but carry with them the right of the holder to put
the securities to a remarketing agent or other entity on short notice, typically
seven days or less. Generally, the remarketing agent
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<PAGE> 33
will adjust the interest rate every seven days (or at other intervals
corresponding to the notice period for the put), in order to maintain the
interest rate at the prevailing rate for securities with a seven-day maturity.
The remarketing agent is typically a financial intermediary that has agreed to
perform these services. Variable rate master demand obligations permit a Fund to
invest fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. Because the
obligations are direct lending arrangements between the Fund and the borrower,
they will not generally be traded, and there is no secondary market for them,
although they are redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. The borrower also may
prepay up to the full amount of the obligation without penalty. While master
demand obligations, as such, are not typically rated by credit rating agencies,
if not so rated, a Fund may, under its minimum rating standards, invest in them
only if, in the opinion of the Adviser or Portfolio Advisers, as applicable,
they are of an investment quality comparable to other debt obligations in which
the Fund may invest and are within the credit quality policies, guidelines and
procedures established by the Board of Trustees or AMR Board, as applicable. See
the SAI for further details on variable rate demand obligations and variable
rate master demand obligations.
OTHER MUTUAL FUNDS. The Fund may invest in shares of other open-end,
management investment companies, subject to the limitations of the 1940 Act and
subject to such investments being consistent with the overall objective and
policies of the Fund making such investment, provided that any such purchases
will be limited to short-term investments in shares of unaffiliated investment
companies. The purchase of securities of other mutual funds results in
duplication of expenses such that investors indirectly bear a proportionate
share of the expenses of such mutual funds including operating costs, and
investment advisory and administrative fees.
"WHEN-ISSUED" AND "FORWARD COMMITMENT" TRANSACTIONS. The Fund may purchase
securities on a when-issued and delayed-delivery basis and may purchase or sell
securities on a forward commitment basis. When-issued or delayed-delivery
transactions arise when securities are purchased by the Fund with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price and yield to the Fund at the time of entering into the
transaction. A forward commitment transaction is an agreement by a Fund to
purchase or sell securities at a specified future date. When the Fund engages in
these transactions, the Fund relies on the buyer or seller, as the case may be,
to consummate the sale. Failure to do so may result in the Fund missing the
opportunity to obtain a price or yield considered to be advantageous.
When-issued and delayed-delivery transactions and forward commitment
transactions may be expected to occur a month or more before delivery is due.
However, no payment or delivery is made by the Fund until it receives payment or
delivery from the other party to the transaction. A separate account containing
only liquid assets equal to the value of purchase commitments will be maintained
until payment is made. Such securities have the effect of leverage on the Funds
and may contribute to volatility of a Fund's net asset value. For further
information, see the SAI.
LOANS OF PORTFOLIO SECURITIES. To increase current income, the Fund may
lend its portfolio securities in an amount up to 33 1/3% of its total assets to
brokers, dealers and financial institutions, provided certain conditions are
met, including the condition that each loan is secured continuously
29
<PAGE> 34
by collateral maintained on a daily marked-to-market basis in an amount at least
equal to the current market value of the securities loaned. These transactions
involve a loan by the Fund and are subject to the same risks as repurchase
agreements. For further information, see the SAI.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
any bank and broker-dealer which, in the opinion of the Trustees, presents a
minimal risk of bankruptcy. Under a repurchase agreement the Fund acquires
securities and obtains a simultaneous commitment from the seller to repurchase
the securities at a specified time and at an agreed upon yield. The agreements
will be fully collateralized and the value of the collateral, including accrued
interest, marked-to-market daily. The agreements may be considered to be loans
made by the purchaser, collateralized by the underlying securities. If the
seller should default on its obligation to repurchase the securities, the Fund
may experience a loss of income from the loaned securities and a decrease in the
value of any collateral, problems in exercising its rights to the underlying
securities and costs and time delays in connection with the disposition of
securities. The Fund may not invest more than 10% of its net assets in
repurchase agreements maturing in more than seven business days or in securities
for which market quotations are not readily available. For more information
about repurchase agreements, see "Investment Policies" in the SAI.
REVERSE REPURCHASE AGREEMENTS. The Fund may also enter into reverse
repurchase agreements to avoid selling securities during unfavorable market
conditions to meet redemptions. Pursuant to a reverse repurchase agreement, the
Fund will sell portfolio securities and agree to repurchase them from the buyer
at a particular date and price. Whenever the Fund enters into a reverse
repurchase agreement, it will establish a segregated account in which it will
maintain liquid assets in an amount at least equal to the repurchase price
marked to market daily (including accrued interest), and will subsequently
monitor the account to ensure that such equivalent value is maintained. The Fund
pays interest on amounts obtained pursuant to reverse repurchase agreements.
Reverse repurchase agreements are considered to be borrowings by a Fund under
the 1940 Act.
RISKS OF TECHNIQUES INVOLVING LEVERAGE. Use of leveraging involves special
risks and may involve speculative investment techniques. The Fund may borrow for
other than temporary or emergency purposes, lend their securities, enter reverse
repurchase agreements, and purchase securities on a when issued or forward
commitment basis. Each of these transactions involve the use of "leverage" when
cash made available to the Fund through the investment technique is used to make
additional portfolio investments. The Fund uses these investment techniques only
when the Adviser believes that the leveraging and the returns available to the
Fund from investing the cash will provide shareholders a potentially higher
return.
Leverage exists when a Fund achieves the right to a return on a capital
base that exceeds the investment the Fund has invested. Leverage creates the
risk of magnified capital losses which occur when losses affect an asset base,
enlarged by borrowings or the creation of liabilities, that exceeds the equity
base of the Fund. Leverage may involve the creation of a liability that requires
the Fund to pay interest (for instance, reverse repurchase agreements) or the
creation of a liability that does not entail any interest costs (for instance,
forward commitment transactions).
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<PAGE> 35
The risks of leverage include a higher volatility of the net asset value of
a Fund's shares and the relatively greater effect on the net asset value of the
shares caused by favorable or adverse market movements or changes in the cost of
cash obtained by leveraging and the yield obtained from investing the cash. So
long as a Fund is able to realize a net return on its investment portfolio that
is higher than interest expense incurred, if any, leverage will result in higher
current net investment income being realized by such Fund than if the Fund were
not leveraged. On the other hand, interest rates change from time to time as
does their relationship to each other depending upon such factors as supply and
demand, monetary and tax policies and investor expectations. Changes in such
factors could cause the relationship between the cost of leveraging and the
yield to change so that rates involved in the leveraging arrangement may
substantially increase relative to the yield on the obligations in which the
proceeds of the leveraging have been invested. To the extent that the interest
expense involved in leveraging approaches the net return on a Fund's investment
portfolio, the benefit of leveraging will be reduced, and, if the interest
expense on borrowings were to exceed the net return to shareholders, such Fund's
use of leverage would result in a lower rate of return than if the Fund were not
leveraged. Similarly, the effect of leverage in a declining market could be a
greater decrease in net asset value per share than if a Fund were not leveraged.
In an extreme case, if a Fund's current investment income were not sufficient to
meet the interest expense of leveraging, it could be necessary for such Fund to
liquidate certain of its investments at an inappropriate time. The use of
leverage may be considered speculative.
CERTAIN FUNDAMENTAL POLICIES OF THE MONEY MARKET FUND
The following describes fundamental policies of the Money Market Fund that
can be changed only when permitted by law and approved by a majority of the
Fund's outstanding voting securities. A "majority of the outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented in person or by
proxy or (ii) more than 50% of the outstanding shares. See "Other Information --
Voting."
(1) The Fund may not borrow money or pledge or mortgage its assets, except that
the Fund may enter into reverse repurchase agreements or borrow from banks
up to 33 1/3% of the current value of its total net assets for temporary or
emergency purposes or to meet redemptions. The 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 the Fund's total net assets (but investments may not be
purchased by the Fund while any such borrowings exist).
(2) The Fund may not make loans, except loans of portfolio securities and except
that the Fund may enter into repurchase agreements with respect to its
portfolio securities and may purchase the types of debt instruments
described in this Prospectus.
(3) The Fund may not invest more than 25% of its total assets in the securities
of any one industry, except that the Fund may invest more than 25% of its
total assets in instruments issued by the banking industry. For this
purpose, U.S. Government securities (and repurchase agreements related
thereto) are not considered securities of a single industry. In addition,
finance
31
<PAGE> 36
companies as a group are not considered a single industry for purposes of
this policy. Wholly owned 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 companies.
(4) The Fund will not, with respect to 100% of its total assets, invest more
than 5% of its total assets in the securities of any one issuer (except for
U.S. Government securities), or purchase more than 10% of the outstanding
voting securities of any such issuer.
The Money Market Fund's diversification tests are measured at the time of
initial purchases, and are calculated as specified in Rule 2a-7 which may allow
the Fund to exceed limits specified in this Prospectus for certain securities
subject to guarantees or demand features. The Fund will be deemed to satisfy the
maturity requirements described in this Prospectus to the extent it satisfies
Rule 2a-7 maturity requirements.
It is the intention of the Funds, unless otherwise indicated, that with
respect to the Funds' policies that are the result of the application of law
(for example, Rule 2a-7 with respect to the Money Market Fund) the Funds will
take advantage of the flexibility provided by rules or interpretations of the
SEC currently in existence or promulgated in the future or changes to such laws.
As a matter of fundamental policy, notwithstanding any limitation
otherwise, 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.
CERTAIN ADDITIONAL NONFUNDAMENTAL POLICIES
The Fund may not invest more than 10% of the aggregate value of its net
assets in investments which are illiquid, or not readily marketable (including
repurchase agreements having maturities of more than seven calendar days, time
deposits having maturities of more than seven calendar days, and securities of
foreign issuers that are not listed on a recognized domestic or foreign
securities exchange). This is a non-fundamental policy of the Fund and can be
changed by approval of a majority of the Board of Trustees.
If a percentage restriction on investment policies or the investment or use
of assets set forth in this Prospectus are adhered to at the time a transaction
is effected, later changes in percentage resulting from changing asset values
will not be considered a violation.
MANAGEMENT OF THE FUNDS
The business and affairs of each Fund are managed under the direction of
the Board of Trustees. Information about the Trustees, as well as the Trust's
executive officers, may be found in the SAI under the heading
"Management -- Trustees and Officers."
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<PAGE> 37
THE ADVISER: INTRUST BANK, N.A.
INTRUST Bank, N.A. in Wichita, formerly First National Bank in Wichita,
serves as the Funds' investment adviser under an advisory agreement with the
Trust (the "Advisory Agreement"). Under the Advisory Agreement, the Adviser
invests the assets of the portfolio, and continuously reviews, supervises and
administers the Master Portfolios' investment program. The Adviser discharges
its responsibilities subject to the supervision of, and policies set by, the
Trustees of the Trust.
The Adviser is a majority-owned subsidiary of INTRUST Financial Corporation
(formerly First Bancorp of Kansas), a bank holding company. The Adviser is a
national banking association which provides a full range of banking and trust
services to clients. As of December 31, 1997, total assets under management were
approximately $2 billion. The principal place of business address of the Adviser
is 105 North Main Street, Box One, Wichita, Kansas 67201.
For the advisory services it provides to the Money Market Fund, the Adviser
receives fees based on average daily net assets up to an annualized rate of
0.25%.
INTRUST may receive advisory fees up to 0.15% of the average daily net
assets of each NestEgg Fund when the Fund invests all of its investable assets
in a Master Portfolio or another investment company. While the NestEgg Funds
invest all of their investable assets in the MIP or another investment company,
the Adviser will select such company, monitor the performance of such company,
coordinate the Funds' relationship with such company and communicate with the
Funds' Board of Trustees and shareholders regarding the performance of such
company and the Funds' two-tier structure. In addition, if the Adviser is not
satisfied with the performance of the MIP, the Adviser may recommend to the
Board of Trustees other investment companies for the Fund to invest in, or
recommend that the Adviser manage the Funds themselves. The Adviser may receive
advisory fees up to 1.25% of the average daily net assets of the Funds should
the Adviser decide not to invest all of the Funds' investable assets in the MIP
or another investment company. Paul D. Worth, Senior Vice President at INTRUST,
is responsible for day-to-day management of the NestEgg Funds. Mr. Worth has
over 12 years of experience in the investment industry, including management of
equity funds, investment portfolios and relationships, and investment product
development.
THE ADVISER TO THE MASTER PORTFOLIOS
BGFA serves as investment adviser to each Master Portfolio. BGFA provides
investment guidance and policy direction in connection with the management of
each Master Portfolio's assets. BGFA is an indirect subsidiary of Barclays Bank
PLC ("Barclays") and is located at 45 Fremont Street, San Francisco, California
94105. As of April 30, 1998, BGFA and its affiliates provided investment
advisory services for approximately $575 billion of assets. MIP has agreed to
pay to BGFA a monthly fee at the annual rate of 0.55% of each Master Portfolio's
average daily net assets as compensation for its advisory services.
BGFA, Barclays and their affiliates deal, trade and invest for their own
account in the types of securities in which a Master Portfolio may invest and
may have deposit, loan and commercial
33
<PAGE> 38
banking relationships with the issuers of securities purchased by a Master
Portfolio. BGFA has informed MIP that in making investment decisions the Adviser
does not obtain or use material inside information in its possession.
Counsel to the MIP and special counsel to BGFA has advised the MIP and BGFA
that BGFA and its affiliates may perform the services contemplated by the
Investment Advisory Contracts and this prospectus without violation of the
Glass-Steagall Act. Such counsel has pointed out, however, that there are no
controlling judicial or administrative interpretations or decisions and that
future judicial or administrative interpretations of, or decisions related to,
present federal or state statutes, including the Glass-Steagall Act, and
regulations relating to the permissible activities of banks and their
subsidiaries and affiliates, as well as future changes in such statutes,
regulations and judicial or administrative decisions or interpretations, could
prevent such entities from continuing to perform, in whole or in part, such
services. If any such entity were prohibited from performing any such services,
it is expected that new agreements would be proposed or entered into with
another entity or entities qualified to perform such services.
Based upon the advice of counsel to INTRUST, INTRUST believes that the
performance of investment advisory services for the Funds will not violate the
Glass-Steagall Act or other applicable banking laws or regulations. However,
future statutory or regulatory changes, as well as future judicial or
administrative decisions and interpretations of present and future statutes and
regulations, could prevent INTRUST from continuing to perform such services for
the Funds. If INTRUST were prohibited from acting as investment adviser to the
Funds, it is expected that the Board of Trustees would recommend to shareholders
approval of a new investment advisory agreement with another qualified
investment adviser selected by the Board or that the Board would recommend other
appropriate action.
THE SUBADVISER TO THE MONEY MARKET FUND
AMR, located at 4333 Amon Carter Boulevard, MD5645, 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
December 31, 1997, AMR provides investment advice with respect to approximately
$18.4 billion in assets, including approximately $14.2 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 Fund's monthly fees based upon average daily net
assets at the annual rate of 0.20%.
PAST PERFORMANCE OF THE SUBADVISER
The Money Market Fund is substantially identical to other pooled accounts,
including investment companies, advised by AMR. Set forth below are certain
performance data for The Money Market Fund and for such pooled accounts ("Money
Market Composite"). The Money Market Composite consists of the American
AAdvantage Money Market Fund (from September 1987 to present), the American
Performance Cash Management Fund (from October 1990 to
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<PAGE> 39
present), the FUNDS IV Cash Reserve Fund (from September 1994 through September
1996), the American AAdvantage Money Market Mileage Fund (from November 1995 to
present), the AMR Investment Services Strategic Cash Business Trust (from July
1996 to present) and the INTRUST Money Market Fund (from February 1997 to
present). Expenses of the portfolios in the Money Market Composite range from
approximately 0.11% for the AMR Investment Services Strategic Cash Business
Trust to approximately 0.85% for the American Performance Cash Management Fund.
The Strategic Cash Business Trust is an unregistered pooled account and as such
is not subject to certain requirements that apply to mutual funds under the
applicable securities, tax and other laws that, if applicable, may have
adversely affected performance. The data shown below reflects total return for
the periods shown, reduced by the actual expense ratio for such funds. To the
extent such funds had expense waivers or reimbursements in effect during the
periods indicated below, such funds' actual performance would have been lower
had such expense waivers or reimbursements not been in effect. INTRUST Fund fees
and expenses may be higher than such expenses and if applied would have reduced
the performance below. The performance information for the Money Market
Composite is deemed relevant since the AMR accounts have been managed using the
same investment objectives, policies and restrictions and portfolio managers as
those used by INTRUST Money Market Fund. However, this performance data is not
necessarily indicative of the past or future performance of any of the INTRUST
Funds. The AMR pooled accounts and the INTRUST Money Market Fund are separate
funds. The Money Market Composite performance does not represent the past
performance of the INTRUST Money Market Fund.
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURNS
FOR THE PERIODS ENDED SEPTEMBER 30, 1998
-------------------------------------------------
MONEY MARKET MONEY LIPPER INSTITUTIONAL
COMPOSITE MARKET FUND MONEY MARKET INDEX
------------ ----------- --------------------
<S> <C> <C> <C>
1 Year.................................... 5.38% 5.16% 5.58%
3 Years................................... 5.42% N/A 5.44%
5 Years................................... 5.14% N/A 5.09%
10 Years.................................. 5.86% N/A 5.68%
Since Inception*.......................... 6.01% 5.12% 5.83%
</TABLE>
* The inception date of the Money Market Fund is January 23, 1997; the inception
date for the AMR Money Market Composite is September 1, 1987. Since inception
returns for the Lipper Institutional Money Market Index is calculated using
September 1, 1987 as the inception date.
THE SPONSOR AND DISTRIBUTOR
BISYS Fund Services ("BISYS"), the Funds' Sponsor and Distributor (the
"Distributor"), has its principal office at 3435 Stelzer Road, Columbus, Ohio
43219. The Distributor will receive orders for, sell, and distribute shares of
the Fund. BISYS also serves as administrator and distributor of other mutual
funds.
The Distributor may from time to time pay a bonus or other incentive to
dealers that employ registered representatives who sell a minimum dollar amount
of shares of the Funds. Such bonus or
35
<PAGE> 40
other incentive may take the form of payment for travel expenses, including
lodging, incurred in connection with trips taken by qualifying registered
representatives and members of their families to places within or without the
United States, or other bonuses, such as gift certificates or the cash
equivalent of such bonuses.
The Funds have adopted a Rule 12b-1 Distribution Plan and Agreement (the
"Plan") pursuant to which the Funds may reimburse the Distributor, or others, on
a monthly basis for costs and expenses incurred by the Distributor in connection
with the distribution and marketing of shares of the Funds. These costs and
expenses, which are subject to a maximum limit of 0.25% of the average daily net
assets of the shares of the Funds per annum for the Institutional Service Class
shares and a maximum limit of 0.75% of the average daily net assets of the
shares of the Funds per annum for the Institutional Premium Class shares,
include: (i) advertising by radio, television, newspapers, magazines, brochures,
sales literature, direct mail or any other form of advertising; (ii) expenses of
employees or agents of the Distributor, including salary, commissions, travel
and related expenses; (iii) payments to broker-dealers and financial
institutions for services in connection with the distribution of shares,
including promotional incentives and fees calculated with reference to the
average daily net asset value of shares held by shareholders who have a
brokerage or other service relationship with the broker-dealer or other
institution receiving such fees; (iv) costs of printing prospectuses, statements
of additional information and other materials to be given or sent to prospective
investors; (v) such other similar services as the Trustees determine to be
reasonably calculated to result in sales of shares of the Funds; (vi) costs of
shareholder servicing incurred by broker-dealers, banks or other financial
institutions; and (vii) other direct and indirect distribution-related expenses,
including the provision of services with respect to maintaining the assets of
the Funds. The Funds will pay all costs and expenses in connection with the
preparation, printing and distribution of its Prospectus to current shareholders
and the operation of its Plan, including related legal and accounting fees. No
Fund will be liable for distribution expenditures made by the Distributor in any
given year in excess of the maximum amount payable under the Plan for that Fund
year.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANTS
The Funds have also entered into an Administration Agreement with BISYS
(the "Administrator") pursuant to which BISYS provides certain management and
administrative services necessary for the Funds' operations, including: (i)
general supervision of the operation of the Funds, including coordination of the
services performed by the Funds' Adviser, transfer agent, custodian, independent
accountants and legal counsel, regulatory compliance, including the compilation
of information for documents such as reports to, and filings with, the SEC and
state securities commissions, and preparation of proxy statements and
shareholder reports for the Funds; (ii) general supervision relative to the
compilation of data required for the preparation of periodic reports distributed
to the Funds' officers and Board of Trustees; and (iii) furnishing office space
and certain facilities required for conducting the business of the Funds. For
these services, BISYS receives from the Money Market Fund a fee, payable
monthly, at the annual rate of 0.20% of the Fund's average daily net assets and
0.20% of the NestEgg Funds' average daily net assets.
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<PAGE> 41
BISYS Fund Services, Inc. serves as the Trust's Transfer Agent. BISYS Fund
Services, Inc. serves as the Fund Accountant to the Money Market Fund. Investors
Bank & Trust serves as Fund Accountant to the NestEgg Funds.
SERVICE ORGANIZATIONS
Various banks, trust companies, broker-dealers (other than the Sponsor) or
other financial organizations (collectively, "Service Organizations") also may
provide administrative services for the Funds, such as maintaining shareholder
accounts and records. The Funds may pay fees to Service Organizations (which
vary depending upon the services provided) in amounts up to an annual rate of
0.25% of the daily net asset value of the Funds' shares owned by shareholders
with whom the Service Organization has a servicing relationship.
Some Service Organizations may impose additional or different conditions on
their clients, such as requiring their clients to invest more than a Fund's
minimum initial or subsequent investments or charging a direct fee for
servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Funds. Each Service
Organization has agreed to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations are urged to consult with them
regarding any such fees or conditions.
The Glass-Steagall Act and other applicable laws provide that, among other
things, banks may not engage in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state regulations relating
to the permissible activities of banks and their subsidiaries or affiliates,
could prevent a bank Service Organization from continuing to perform all or a
part of its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Funds and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
OTHER EXPENSES
Each Fund bears all costs of its operations, other than expenses
specifically assumed by the Distributor and the Adviser. The costs borne by the
Funds include legal and accounting expenses, Trustees' fees and expenses,
insurance premiums, custodian and transfer agent fees and expenses, expenses
incurred in acquiring or disposing of the Funds' portfolio securities, expenses
of registering and qualifying the Funds' shares for sale with the SEC and with
various state securities commissions, expenses of obtaining quotations on the
Funds' portfolio securities and pricing of the Funds' shares, expenses of
maintaining the Funds' legal existence and of shareholders' meetings, and
expenses of preparing and distributing to existing shareholders reports, proxies
and prospectuses.
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<PAGE> 42
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAX
GENERAL
The Funds intend to each qualify and elect to be treated as regulated
investment companies pursuant to the provisions of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Funds intends to continue to
so qualify annually. By so qualifying and electing, the Funds generally will not
be subject to Federal income tax to the extent that each distributes investment
company taxable income and net capital gains in the manner required under the
Code.
The Funds intend to distribute to its shareholders substantially all of
each investment company's taxable income (which includes, among other items,
dividends and interest and the excess, if any, of net short-term capital gains
(generally including any net option premium income) over net long-term capital
losses).
Investors who redeem all or a portion of Fund shares prior to a dividend
payment date will be entitled on the next dividend payment date to all dividends
declared but unpaid on those shares at the time of their redemption.
If you elect to receive distribution in cash and checks (1) are returned
and marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
DIVIDENDS AND DISTRIBUTIONS -- THE NESTEGG FUNDS
The Funds intend to declare and pay quarterly dividends of substantially
all of their net investment income. The Funds distribute any net realized
capital gains at least annually, in all events in a manner consistent with the
provisions of the 1940 Act and the Internal Revenue Code. No Fund will make
distributions from net realized securities gains unless capital loss carryovers,
if any, have been utilized or have expired. All dividends and distributions are
automatically reinvested at net asset value in shares of the Fund paying such
dividend or distribution, unless payment in cash is requested and your
arrangement with a Shareholder Servicing Agent permits the processing of cash
payments.
Dividends and capital gain distributions have the effect of reducing the
NAV per share by the amount distributed on the payment date. Although a dividend
or distribution paid to an investor on newly issued shares shortly after
purchase would represent, in substance, a return of capital, the dividend or
distribution may consist of net investment income or net realized capital gain
and, accordingly, would be taxable to the investor.
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<PAGE> 43
DIVIDENDS AND DISTRIBUTIONS -- THE MONEY MARKET FUND
The Fund will declare distributions of such income daily and pay those
dividends monthly. The Fund intends to distribute at least annually,
substantially all net capital gains (the excess of net long-term capital gains
over net short-term capital losses). In determining amounts of capital gains to
be distributed, any capital loss carryovers from prior years will be applied
against capital gains.
Distributions will be paid in additional Fund shares based on the net asset
value at the close of business on the payment date of the distribution, unless
the shareholder elects in writing, not less than five full business days prior
to the record date, to receive such distributions in cash. Dividends declared
in, and attributable to, the preceding month will be paid within five business
days after the end of each month.
Shares purchased will begin earning dividends on the day the purchase order
is executed and shares redeemed will earn dividends through the previous day.
Net investment income for a Saturday, Sunday or a holiday will be declared as a
dividend on the previous business day.
TAXES
GENERAL
Distributions of investment company taxable income (regardless of whether
derived from dividends, interest or short-term capital gains) will generally be
taxable to shareholders as ordinary income. Distributions of net long-term
capital gains properly designated by a Fund as capital gain dividends will be
taxable as long-term capital gains, regardless of how long a shareholder has
held his Fund shares. Distributions are taxable in the same manner whether
received in additional shares or in cash.
Earnings of the Funds not distributed on a timely basis in accordance with
a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To prevent imposition of this tax, each Fund intends to comply with
this distribution requirement.
A distribution will be treated as paid on December 31 of the calendar year
if it is declared by a Fund during October, November, or December of that year
to shareholders of record in such a month and paid by a Fund during January of
the following calendar year. Such distributions will be treated as received by
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.
The Fund's distributions with respect to a given taxable year may exceed
the current and accumulated earnings and profits of the Fund available for
distribution. In that event, distributions in excess of such earnings and
profits would be characterized as a return of capital to shareholders for
Federal income tax purposes, thus reducing each shareholder's cost basis in his
Fund shares. Such distributions in excess of a shareholder's cost basis in his
shares would be treated as a gain realized from a sale of such shares.
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<PAGE> 44
Your redemptions (including redemptions in-kind) and exchanges of Fund
shares will ordinarily result in a taxable capital gain or loss, depending on
the amount you receive for your shares (or are deemed to receive in the case of
exchanges) and the cost of your shares. See "Federal Income Taxes Disposition of
Fund Shares" in the SAI.
Foreign shareholders may be subject to different tax treatment, including
withholding taxes. See "Federal Income Taxes Foreign Shareholders" in the SAIs.
In certain circumstances, U.S. residents may also be subject to with holding
taxes. See "Federal Income Taxes Backup Withholding" in the SAI.
BENEFIT PLAN INVESTORS
As a general matter, benefit plans, their sponsors and their participants
are not subject to federal income taxes at the time of receipt of net investment
income and capital gain distributions.
However, such tax-exempt investors may be subject to tax on certain
unrelated taxable income which could arise, for example, when such investors
acquire shares in the Fund through the use of leverage. Tax-exempt investors
should consult their tax advisors regarding the Unrelated Business Taxable
Income Rules.
The foregoing discussion regarding taxes is based on tax laws which were in
effect as of the date of this Prospectus and summarizes only some of the
important federal tax considerations generally affecting the Funds and their
shareholders. It is not intended as a substitute for careful tax planning; you
should consult your tax advisor with respect to your specific tax situation as
well as with respect to foreign, state and local taxes. Further federal tax
considerations are discussed in the SAI.
FUND SHARE VALUATION
SHARE VALUE -- THE NESTEGG FUNDS
Shares of the Funds are sold on a continuous basis at the applicable
offering price (net asset value per share) next determined after an order in
proper form is received by the Transfer Agent. Net asset value ("NAV") per share
is determined as of the close of regular trading on the NYSE (currently 4:00
p.m., New York time) each Business Day.
The NAV per share of each class of shares of each Fund is computed by
dividing the net assets (i.e., the value of the assets less the liabilities)
attributable to such class of shares by the total number of the outstanding
shares of each class. The value of the net assets of each class of shares is
determined daily by adjusting the net assets at the beginning of the day by the
value of shareholder activity, net investment income and net realized and
unrealized gains or losses for that day. Net investment income is calculated
each day as daily income less expenses. The NAV of each class of shares of each
Fund is expected to fluctuate daily and is expected to differ. Each Fund's
investment in the corresponding Master Portfolio is valued at the NAV of such
Master Portfolio's shares. Each Master Portfolio calculates the NAV of its
shares on the same days and at the same time as the corresponding Fund. Except
for debt obligations with remaining maturities of 60 days or less, which
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<PAGE> 45
are valued at amortized cost, each Master Portfolio's assets are valued at
current market prices, or if such prices are not readily available, at fair
value as determined in good faith in accordance with guidelines approved by
MIP's Board of Trustees. Prices used for such valuations may be provided by
independent pricing services. For further information regarding the methods
employed in valuing each Master Portfolio's investments, see "Determination of
Net Asset Value" in the SAI.
SHARE VALUE -- MONEY MARKET FUND
The net asset value per share of the Money Market Fund is calculated at
12:00 noon (Eastern time), Monday through Friday, on each day the New York Stock
Exchange is open for trading (a "Business Day"), which excludes the following
business holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, Columbus Day and Veterans Day. The net asset value per share of
each share class is computed by dividing the value of the net assets
attributable to each class (i.e., the value of the assets less the liabilities)
by the total number of such class's outstanding shares. All expenses, including
fees paid to the Adviser, the Administrator and the Distributor, are accrued
daily and taken into account for the purpose of determining the net asset value.
Expenses directly attributable to the Fund are charged to the Fund; other
expenses are allocated proportionately among each Fund within the Trust in
relation to the net assets of each Fund, or on another reasonable basis. Each
share class within the Fund is charged with the direct expenses of that class
and with a proportion of the general expenses of the Fund. These general
expenses (e.g., investment advisory fees) are allocated among the classes of
shares based on the relative value of their outstanding shares.
The Fund uses the amortized cost method to value its portfolio securities
and seeks to maintain a constant net asset value of $1.00 per share, although
there may be circumstances under which this goal cannot be achieved. The
amortized cost method involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security. See the SAI for
a more complete description of the amortized cost method.
PURCHASE OF FUND SHARES
Orders for the purchase of shares will be executed at the net asset value
per share next determined after an order has been received.
The following purchase procedures do not apply to certain fund or trust
accounts that are managed by INTRUST. The customer should consult his or her
trust administrator for proper instructions.
All funds received are invested in full and fractional shares of the
appropriate Fund. Certificates for shares are not issued. The Transfer Agent
maintains records of each shareholder's holdings of Fund shares, and each
shareholder receives a statement of transactions, holdings and dividends. The
Funds reserve the right to reject any purchase. The Funds do not accept
third-party checks or foreign checks.
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<PAGE> 46
An investment may be made using any of the following methods:
THROUGH AN AUTHORIZED BROKER, INVESTMENT ADVISER OR SERVICE
ORGANIZATION. Shares are available to new and existing shareholders through
authorized brokers, investment advisers and Service Organizations. To make an
investment using this method, simply complete a Purchase Application and contact
your broker, investment adviser or Service Organization with instructions as to
the amount you wish to invest. Your broker will then contact the Distributor to
place the order on your behalf on that day.
Orders received by your broker or Service Organization for the NestEgg
Funds in proper order prior to the determination of net asset value and
transmitted to the Distributor prior to the close of its business day (which is
currently 4:00 p.m., Eastern time), will become effective that day. Orders for
the Money Market Fund received prior to 12:00 noon will become effective that
day. Brokers who receive orders are obligated to transmit them promptly. You
should receive written confirmation of your order within a few days of receipt
of instructions from your broker.
BY MAIL. Mail completed application and check made payable to the
appropriate fund or to "The INTRUST Funds Trust" to:
INTRUST Funds Trust
P.O. Box 182498
Columbus, OH 43218-2498
BY WIRE. Investments may be made directly through the use of wire transfers
of Federal funds. Please phone the Funds at (888) 266-8787 for instructions on
opening an account or purchasing additional shares by wire transfer.
OTHER PURCHASE INFORMATION. Requests in "good order" must include the
following documentation: (a) a letter of instruction, if required, signed by all
registered owners of the shares in the names in which they are registered; (b)
any required signatures guaranteed; and (c) other supporting legal documents, if
required, in the case of estates, trusts, guardianships, custodianships,
corporations, pension and profit sharing plans and other organizations.
INSTITUTIONAL ACCOUNTS. Bank trust departments and other institutional
accounts may place orders directly with the Distributor by telephone at
(888)266-8787.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Funds is $1,000 unless the investor
is a purchaser who at the time of purchase, has a balance of $1,000 or more in
any of the INTRUST Funds, is a purchaser through a trust investment manager or
account manager or is administered by INTRUST, is an employee or an ex-employee
of INTRUST Financial Corporation or is an employee of any of its affiliates,
BISYS, or any other service provider, or is an employee of any trust customer of
INTRUST Financial Corporation or any of its affiliates. Note that the minimum is
$250 for an IRA, other than an IRA for which INTRUST Financial Corporation or
any of its affiliates acts as trustee or custodian. Any subsequent investments,
including an IRA investment, must be at least
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<PAGE> 47
$50. All initial investments should be accompanied by a completed Purchase
Application. A Purchase Application accompanies this Prospectus. Different
minimums apply, and a separate application is required for IRA investments. The
Funds reserve the right to reject purchase orders.
INDIVIDUAL RETIREMENT ACCOUNTS
Shares may also be purchased for IRAs established with INTRUST Financial
Corporation or any of its affiliates or other authorized custodians. Completion
of a special application is required in order to create such an account, and the
minimum initial investment for an IRA is $250. Contributions to IRAs are subject
to prevailing amount limits set by the Internal Revenue Service. For more
information concerning investments by IRAs, call the Funds at (888) 266-8787.
EXCHANGE OF FUND SHARES
The Funds offer two convenient ways to exchange shares in one Fund for
shares in another Fund in the Trust. Before engaging in an exchange transaction,
a shareholder should read carefully the Prospectus describing the Fund into
which the exchange will occur, which is available without charge and can be
obtained by writing to the Fund at 3435 Stelzer Road, Columbus, Ohio 43219, or
by calling (888) 266-8787. The Trust may terminate or amend the terms of the
exchange privilege at any time.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by a Fund in good order. An exchange is taxable as a sale of a security
on which a gain or loss may be recognized. Shareholders should receive written
confirmation of the exchange within a few days of the completion of the
transaction. Shareholders will receive at least 60 days prior written notice of
any modification or termination of the exchange privilege.
EXCHANGE BY MAIL. To exchange Fund shares by mail, simply send a letter of
instruction to the Funds. The letter of instruction must include: (i) your
account number; (ii) the Fund from and the Fund into which you wish to exchange
your investment; (iii) the dollar or share amount you wish to exchange; and (iv)
the signatures of all registered owners or authorized parties.
EXCHANGE BY TELEPHONE. To exchange Fund shares by telephone or if you have
any questions simply call the Funds at (888) 266-8787. You should be prepared to
give the telephone representative the following information: (i) your account
number, social security or tax identification number and account registration;
(ii) the name of the Fund from and the Fund into which you wish to exchange your
investment; and (iii) the dollar or share amount you wish to exchange. The
conversation may be recorded to protect you and the Funds. See "Redemption of
Fund Shares -- By Telephone" for a discussion of telephone transactions
generally.
AUTOMATIC INVESTMENT PROGRAM. An eligible shareholder may also participate
in the Automatic Investment Program, an investment plan that automatically
debits money from the shareholder's bank account and invests it in one or more
of the Funds in the Trust through the use of electronic
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<PAGE> 48
funds transfers or automatic bank drafts. Shareholders may elect to make
subsequent investments by transfers of a minimum of $50 on either the fifth or
twentieth day of each month into their established Fund account. Contact the
Funds for more information about the Automatic Investment Program.
REDEMPTION OF FUND SHARES
Shareholders may redeem their shares, in whole or in part, on any Business
Day. Shares will be redeemed at the net asset value next determined after a
redemption request in good order has been received by the applicable Fund. See
"Determination of Net Asset Value" in the SAI. A redemption may be a taxable
transaction on which gain or loss may be recognized. Generally, however, gain or
loss is not expected to be realized on a redemption of shares of the Money
Market Fund which seeks to maintain a net asset value of $1.00 per share.
Redemption of shares purchased by check will be effected immediately and
the proceeds will be made available upon clearance of the purchase check which
may take up to 15 days after those shares have been credited to the shareholder
account. Shareholders may avoid this delay by investing through wire transfers
of Federal funds. During the period prior to the time the shares are redeemed,
dividends on the shares will continue to accrue and be payable and the
shareholder will be entitled to exercise all other beneficial rights of
ownership.
Once the shares are redeemed, a Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next Business Day. The
Funds may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than the customary weekend or holiday closing or if an emergency condition as
determined by the SEC merits such action, the Funds may suspend redemptions or
postpone payment dates.
REDEMPTION METHODS. To ensure acceptance of your redemption request, it is
important to follow the procedures described below. Although the Funds have no
present intention to do so, the Funds reserve the right to refuse or to limit
the frequency of any telephone or wire redemptions. Of course, it may be
difficult to place orders by telephone during periods of severe market or
economic change, and a shareholder should consider alternative methods of
communications, such as couriers. The Funds' services may be modified or
terminated at any time by the Funds. If the Funds terminate any particular
service, they will do so only after giving written notice to shareholders.
Redemption by mail will always be available to shareholders.
You may redeem your shares using any of the following methods:
THROUGH AN AUTHORIZED BROKER, INVESTMENT ADVISER OR SERVICE
ORGANIZATION. You may redeem your shares by contacting your broker, investment
adviser or Service Organization representative, and instructing him or her to
redeem your shares. He or she will then contact the Distributor and place a
redemption trade on your behalf. You may be charged a fee for this service.
BY MAIL. You may redeem your shares by sending a letter directly to the
Funds. To be accepted, a letter requesting redemption must include: (i) the Fund
name and account registration
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<PAGE> 49
from which you are redeeming shares; (ii) your account number; (iii) the amount
to be redeemed; (iv) the signatures of all registered owners; and (v) a
signature guarantee by any eligible guarantor institution including a member of
a national securities exchange or a commercial bank or trust company,
broker-dealers, credit unions and savings associations. Corporations,
partnerships, trusts or other legal entities may be required to submit
additional documentation.
BY TELEPHONE. You may redeem your shares by calling the Funds toll free at
(888) 266-8787. You should be prepared to give the telephone representative the
following information: (i) your account number, social security number and
account registration; (ii) the Fund name from which you are redeeming shares;
and (iii) the amount to be redeemed. The conversation may be recorded to protect
you and the Funds. The Funds employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. If the Funds fail to employ
such reasonable procedures, they may be liable for any loss, damage or expense
arising out of any telephone transactions purporting to be on a shareholder's
behalf. In order to assure the accuracy of instructions received by telephone,
the Funds require some form of personal identification prior to acting upon
instructions received by telephone, record telephone instructions and provide
written confirmation to investors of such transactions. This option will be
suspended for a period of 10 days following a telephonic address change.
BY WIRE. You may redeem your shares by contacting the Funds by mail or
telephone and instructing them to send a wire transmission to your personal
bank. Proceeds of wire redemption for the Money Market Fund generally will be
transferred to the designated account on the day the request is received,
provided that it is received by 12:00 noon (Eastern time).
Your instructions should include: (i) your account number, social security
or tax identification number and account registration; (ii) the Fund name from
which you are redeeming shares; and (iii) the amount to be redeemed. Wire
redemptions can be made only if the "yes" box has been checked on your Purchase
Application. Additionally, the "Banking Instructions" section must be completed
and a copy of a voided check must be included with your Purchase Application.
Your bank may charge you a fee for receiving a wire payment on your behalf.
Please phone the Funds at (888) 266-8787 for information regarding redemptions
via wire transfer.
CHECK WRITING. A check redemption ($500 minimum, no maximum) feature is
available with respect to the Money Market Fund. Checks are free and may be
obtained from the Funds. It is not possible to use a check to close out your
account since additional shares accrue daily.
The above-mentioned services "By Telephone," "By Wire" and "Check Writing"
are not available for IRAs and trust relationships of the Adviser and its
affiliates.
SYSTEMATIC WITHDRAWAL PLAN. An owner of $10,000 or more of shares of a
Fund may elect to have periodic redemptions from his or her account to be paid
on a monthly, quarterly, semi-annual or annual basis. The minimum periodic
payment is $100. A sufficient number of shares to make the scheduled redemption
will normally be redeemed on the date selected by the shareholder. Depending on
the size of the payment requested and fluctuation in the net asset value, if
any, of the shares redeemed, redemptions for the purpose of making such payments
may reduce or even exhaust the account. A shareholder may request that these
payments be sent to a predesignated
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<PAGE> 50
bank or other designated party. Capital gains and dividend distributions paid to
the account will automatically be reinvested at net asset value on the
distribution payment date.
REDEMPTION OF SMALL ACCOUNTS. Due to the disproportionately higher cost of
servicing small accounts, each Fund reserves the right to redeem, on not less
than 30 days' notice, an account in a Fund that has been reduced by a
shareholder to $500 or less. However, if during the 30-day notice period the
shareholder purchases sufficient shares to bring the value of the account above
$500, this restriction will not apply.
REDEMPTION IN KIND. All redemptions of shares of the Funds shall be made
in cash, except that the commitment to redeem shares in cash extends only to
redemption requests made by each shareholder of a Fund during any 90-day period
of up to the lesser of $250,000 or 1% of the net asset value of that Fund at the
beginning of such period. This commitment is irrevocable without the prior
approval of the SEC and is a fundamental policy of the Funds that may not be
changed without shareholder approval. In the case of redemption requests by
shareholders in excess of such amounts, the Board of Trustees reserves the right
to have the Funds make payment, in whole or in part, in securities or other
assets, in case of an emergency or any time a cash distribution would impair the
liquidity of a Fund to the detriment of the existing shareholders. In this
event, the securities would be valued in the same manner as the securities of
that Fund are valued. If the recipient were to sell such securities, he or she
could receive less than the redemption value of the securities and could incur
certain transaction costs.
OTHER INFORMATION
CAPITALIZATION STRUCTURE
INTRUST Funds Trust was organized as a Delaware business trust on January
26, 1996, and currently consists of eleven separately managed portfolios. The
Board of Trustees may establish additional portfolios in the future. The
capitalization of the Trust consists solely of an unlimited number of shares of
beneficial interest with a par value of $0.001 each. When issued, shares of the
Funds are fully paid, non-assessable and freely transferable.
Each NestEgg Fund and the Money Market Fund offer two classes of
shares -- the Institutional Premium Class and the Institutional Service Class.
The Institutional Premium Class shares may bear a 12b-1 fee of up to 0.75% of
the Fund's average daily net assets. The Institutional Service Class shares are
offered only to certain institutional investors, or other investors who at the
time of purchase have a balance of $1,000 or more invested in any of the INTRUST
Funds, are purchased through a trust investment manager or account manager or
administered by INTRUST, are employees or ex-employees of INTRUST Financial
Corporation or any of its affiliates, employees of BISYS, or any other service
provider, or employees of any trust customer of INTRUST Financial Corporation or
any of its affiliates. Shareholders in the Institutional Premium Class of shares
of the NestEgg Funds or the Money Market Fund may be subject to an additional
shareholder servicing charge of up to 0.50% of average net assets which
shareholders of the Institutional Service Class are
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<PAGE> 51
not subject. Call (888) 266-8787 or contact your sales representative,
broker-dealer or bank to obtain more information about the Funds' classes of
shares.
SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, the NestEgg Funds
seek to achieve their investment objectives by investing all of their assets in
a corresponding portfolio of the MIP, a separate registered investment company
with the same investment objective as the NestEgg Funds. Therefore, an
investor's interest in the MIP's securities is indirect. In addition to selling
a beneficial interest to the NestEgg Funds, the MIP may sell beneficial
interests to other mutual funds or institutional investors. Such investors will
invest in the MIP on the same terms and conditions and will pay a proportionate
share of the MIP's expenses. However, the other investors investing in the MIP
are not required to sell their shares at the same public offering price as the
NestEgg Funds or subject to comparable variations in sales loads and other
operating expenses. Therefore, investors in the NestEgg Funds should be aware
that these differences may result in differences in returns experienced by
investors in the different funds that may invest in the MIP. Such differences in
returns are also present in other mutual fund structures.
The Board of Trustees believes that the NestEgg Funds will achieve certain
efficiencies and economies of scale through the master-feeder structure, and
that the aggregate expenses of the NestEgg Funds will be less than if the
NestEgg Funds invested directly in the securities held by the MIP.
Smaller funds investing in the MIP may be materially affected by the
actions of larger funds investing in the MIP. For example, if a large fund
withdraws from the MIP, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the MIP may become less diverse, resulting in
increased portfolio concentration and potential risk. Also, funds with a greater
pro rata ownership in the MIP could have effective voting control of the
operations of the MIP. Except as permitted by the Commission, whenever the
Trust's Funds are requested to vote on matters pertaining to the MIP, the
Trust's Funds will hold a meeting of shareholders of the NestEgg Funds and will
cast all of its votes in the same proportion as the votes of the NestEgg Funds'
shareholders. NestEgg Funds' shareholders who do not vote will not affect the
Funds votes at the MIP meeting. The percentage of the Trust's votes representing
NestEgg Funds' shareholders not voting will be voted by the Trustees or officers
of the Trust in the same proportion as the NestEgg Funds' shareholders who do,
in fact, vote.
Certain changes in the MIP's investment objective, policies or restrictions
may require the NestEgg Funds to withdraw their interest in the MIP. Such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the MIP). If securities are distributed, the
NestEgg Funds could incur brokerage, tax or other charges in converting the
securities to cash. In addition, the distribution in kind may result in a less
diversified portfolio of investments or adversely affect the liquidity of the
NestEgg Funds. Notwithstanding the above, there are other means for meeting
redemption requests, such as borrowing.
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<PAGE> 52
The NestEgg Funds may withdraw their investment from the MIP at any time,
if the Board of Trustees of INTRUST determines that it is in the best interests
of the shareholders of the NestEgg Funds to do so. Upon any such withdrawal, the
Board of Trustees of the Trust would consider what action might be taken,
including the investment of all the assets of the NestEgg Funds in another
pooled investment entity having the same investment objective as the NestEgg
Funds or the retaining of an investment adviser to manage the NestEgg Funds
assets in accordance with the investment policies described above with respect
to the MIP.
PERFORMANCE INFORMATION
A Fund may, from time to time, include its yield and total return in
advertisements or reports to shareholders or prospective investors. The methods
used to calculate the yield and total return of the Funds are mandated by the
SEC. Quotations of "yield" for the NestEgg Funds will be based on the investment
income per share during a particular 30-day (or one month) period (including
dividends and interest), less expenses accrued during the period ("net
investment income"), and will be computed by dividing net investment income by
the maximum public offering price per share on the last day of the period.
Quotations of "yield" for the Money Market Fund will be based on the income
received by a hypothetical investment (less a pro-rata share of Fund
expenses)over a particular seven-day period, which is then "annualized" (i.e.,
assuming that the seven-day yield would be received for 52 weeks, stated in
terms of an annual percentage return on the investment). "Effective yield" for
the Money Market Fund is calculated in a manner similar to that used to
calculate yield, but includes the compounding effect of earnings on reinvested
dividends. The yield and effective yield for the Money Market Fund at October
31, 1998 were 5.16% and 5.29%.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result. Total return is calculated by subtracting the
amount of the net asset value per share at the beginning of a stated period from
the net asset value per share at the end of the period (after giving effect to
the reinvestment of dividends and distributions during the period), and dividing
the result by the net asset value per share at the beginning of the period.
The NestEgg Funds invest all of their investable assets in the
corresponding Master Portfolios. Performance show below is the performance
information of the corresponding Master Portfolio managed by BGFA: LifePath 2000
Master Portfolio, LifePath 2010 Master Portfolio, LifePath 2020 Master
Portfolio, LifePath 2030 Master Portfolio, and LifePath 2040 Master Portfolio.
This performance has not been adjusted to reflect the fees and expenses which
will apply to the applicable NestEgg Funds. The performance would have been
lower had such fees and expenses been taken into account in calculating the
performance. The one year total returns represent performance of the Master
Portfolios from September 30, 1997 through September 30, 1998. The three year
returns represent performance of the Master Portfolios from September 30,
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<PAGE> 53
1995 through September 30, 1998. The return since inception represents the
performance of the Master Portfolios from March 1, 1994 through September 30,
1998.
<TABLE>
<CAPTION>
ANNUALIZED RATES OF RETURN FOR
PERIODS ENDING SEPTEMBER 30, 1998
----------------------------------------------------------
2000 LEHMAN LIFEPATH LIPPER FLEXIBLE
MASTER AGGREGATE 2000 PORTFOLIO
PORTFOLIO BOND INDEX(1) BENCHMARK(3) FUND INDEX(4)
--------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
1 Year.................................. 7.53% 11.50% 10.29% 3.81%
3 Years................................. 9.04% 8.67% 10.78% 12.69%
Since Inception......................... 8.57% 7.98% 9.95% 11.69%
</TABLE>
<TABLE>
<CAPTION>
ANNUALIZED RATES OF RETURN FOR
PERIODS ENDING SEPTEMBER 30, 1998
----------------------------------------------------------
2010 LEHMAN LIFEPATH LIPPER FLEXIBLE
MASTER AGGREGATE 2010 PORTFOLIO
PORTFOLIO BOND INDEX(1) BENCHMARK(3) FUND INDEX(4)
--------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
1 Year.................................. 7.42% 11.50% 11.34% 3.81%
3 Years................................. 12.72% 8.67% 12.81% 12.69%
Since Inception......................... 12.13% 7.98% 11.60% 11.69%
</TABLE>
<TABLE>
<CAPTION>
ANNUALIZED RATES OF RETURN FOR
PERIODS ENDING SEPTEMBER 30, 1998
--------------------------------------------------------
2020 WILSHIRE LIFEPATH LIPPER FLEXIBLE
MASTER 5000 EQUITY 2020 PORTFOLIO
PORTFOLIO INDEX(2) BENCHMARK(3) FUND INDEX(4)
--------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
1 Year.................................. 6.37% 3.28% 12.27% 3.81%
3 Years................................. 15.04% 19.24% 14.80% 12.69%
Since Inception......................... 14.30% 18.61% 13.23% 11.69%
</TABLE>
<TABLE>
<CAPTION>
ANNUALIZED RATES OF RETURN FOR
PERIODS ENDING SEPTEMBER 30, 1998
--------------------------------------------------------
2030 WILSHIRE LIFEPATH LIPPER FLEXIBLE
MASTER 5000 EQUITY 2030 PORTFOLIO
PORTFOLIO INDEX(2) BENCHMARK(3) FUND INDEX(4)
--------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
1 Year.................................. 6.26% 9.05% 13.00% 3.81%
3 Years................................. 16.77% 22.62% 16.73% 12.69%
Since Inception......................... 15.92% 21.15% 14.81% 11.69%
</TABLE>
49
<PAGE> 54
<TABLE>
<CAPTION>
ANNUALIZED RATES OF RETURN FOR
PERIODS ENDING SEPTEMBER 30, 1998
--------------------------------------------------------
2040 WILSHIRE LIFEPATH LIPPER FLEXIBLE
MASTER 5000 EQUITY 2040 PORTFOLIO
PORTFOLIO INDEX(2) BENCHMARK(3) FUND INDEX(4)
--------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
1 Year.................................. 4.74% 9.05% 13.69% 3.81%
3 Years................................. 18.18% 22.62% 18.66% 12.69%
Since Inception......................... 17.38% 21.15% 16.38% 11.69%
</TABLE>
(1) The Lehman Aggregate Bond Index is composed of the Lehman
Government/Corporate Index and the Mortgage-Backed Securities Index and
includes treasury issues, agency issues, corporate bond issues and mortgage
backed securities.
(2) The Wilshire 5000 Equity Index is composed of domestic equity securities of
companies in addition to a very small number of limited partnerships and
REITS.
(3) The LifePath Benchmarks represents returns of the BGI US Equity Market Index
(a blended index fund replicating the broad US equity market, large, medium
and small companies), EAFE (Europe, Australia and Far East equity
securities), the Lehman Aggregate Bond Index and US Treasury Bills and are
representative of the broad asset classes in each Master Portfolio.
(4) The Lipper Flexible Portfolio Fund Index's returns represent an average of
returns of certain mutual funds investing in domestic common stocks, bonds
and money market instruments in an asset allocation strategy as tracked by
Lipper Analytical Services.
Performance information for a Fund may be compared to various unmanaged
indices, such as those indices prepared by Lipper Analytical Services, Standard&
Poor's 500 Stock Index, the Dow Jones Industrial Average and other entities or
organizations which track the performance of investment companies. Any
performance information should be considered in light of the Fund's investment
objectives and policies, characteristics and quality of the Funds and the market
conditions during the time period indicated, and should not be considered to be
representative of what may be achieved in the future. For a description of the
methods used to determine yield and total return for the Funds, see the SAI.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Declaration of
Trust, they may be entitled to vote. The Trust is not required to hold regular
annual meetings of the Funds' shareholders and does not intend to do so. The
Trustees are required to call a meeting for the purpose of considering the
removal of a person serving as Trustee if requested in writing to do so by the
holders of not less than 10% of the outstanding shares of the Trust and in
connection with such meeting to comply with the shareholders' communications
provisions of Section 16(c) of the Act. See "Other Information--Voting Rights"
in the SAI.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of a
majority of the outstanding shares" of a
50
<PAGE> 55
Fund (or the Trust) means the vote of the lesser of: (1) 67% of the shares of a
Fund (or the Trust) present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy; or (2) more than 50% of
the outstanding shares of a Fund (or the Trust).
ACCOUNT SERVICES
All transactions in shares of the Funds will be reflected in a statement
for each shareholder. In those cases where a Service Organization or its nominee
is shareholder of record of shares purchased for its customer, the Funds have
been advised that the statement may be transmitted to the customer at the
discretion of the Service Organization.
BISYS Fund Services, Inc. acts as the Funds' transfer agent. The Trust
compensates BISYS Fund Services, Inc. pursuant to a Transfer Agency Agreement
described in "Management of the Fund--Administrator, Transfer Agent and Fund
Accountants" of this Prospectus, for providing personnel and facilities to
perform dividend disbursing and transfer agency-related services for the Trust.
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Funds at 3435 Stelzer
Road, Columbus, Ohio 43219.
General and Account Information: (888) 266-8787.
51
<PAGE> 56
Address for
Investment Adviser for Master
Investment Portfolio:
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
Investment Adviser for INTRUST Funds:
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Subadviser for The Money Market Fund
AMR Investment Services, Inc.
4333 Amon Carter Blvd. MD5645
Fort Worth, Texas 76155
Administrator and Sponsor and
Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
Custodian
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Counsel
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, New York 10019
Independent Auditors
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215
NESTEGG 2000 FUND
NESTEGG 2010 FUND
NESTEGG 2020 FUND
NESTEGG 2030 FUND
NESTEGG 2040 FUND
MONEY MARKET FUND
SERIES OF INTRUST FUNDS TRUST
PROSPECTUS
November 30, 1998
INTRUST LOGO
<PAGE> 57
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 58
5
<TABLE>
<CAPTION>
Statement of Additional
PART B Information Caption
- ------ -------------------
<S> <C> <C>
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objective and Policies Investment Objectives and
Management Policies;
Additional Permitted
Investment Activities
Item 14. Management of the Registrant Management; Trustees and
Officer of the Trust;
Trustees and Officers of the
Master Investment Portfolio
Item 15. Control Persons and Principal Management
Holders of Securities
Item 16. Investment Advisory and Other Management; Investment
Services Advisor to the Master
Portfolios; Investment
Advisor to the Funds;
Distribution; Administration
and Fund Accounting
Systems
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities Other Information;
Capitalization; Voting
Item 19. Purchase; Redemption and Pricing Purchase of Funds Shares
of Fund Shares (Part A); Redemption of
Fund Shares (Part A)
Item 20. Tax Status Taxation
Item 21. Underwriters Management
</TABLE>
<PAGE> 59
6
<TABLE>
<CAPTION>
Statement of Additional
PART B Information Caption
- ------ -------------------
<S> <C> <C>
Item 22. Calculation of Fund Performance Yield and Performance
Information; Custodian,
Transfer Agent and Dividend
Disbursing Agent;
Independent Auditors
</TABLE>
<PAGE> 60
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
NestEgg 2000 Fund
NestEgg 2010 Fund
NestEgg 2020 Fund
NestEgg 2030 Fund
NestEgg 2040 Fund
MONEY MARKET FUND
This Statement of Additional Information (the "SAI") describes one
Money Market Fund (The "Money Market Fund") and five NestEgg Funds (each a
"Fund", collectively the "NestEgg Funds") offered by INTRUST Funds Trust (the
"Trust"). The Trust is a registered investment company that currently offers
eleven series, including the Money Market Fund and the NestEgg Funds.
Each NestEgg Fund invests all of its assets in a separate portfolio
(each a "Master Portfolio") of the Master Investment Portfolio ("MIP") having
the same investment objective as the NestEgg Funds. Therefore, the investment
experience of each NestEgg Fund will correspond directly with the relevant
Master Portfolio's investment experience. The MIP is an open-end, series
investment company consisting of nine series including the Master Portfolios.
Barclays Global Fund Advisors ("BGFA") serves as investment adviser to the
corresponding Master Portfolio of each Fund. References to the investments,
investment policies and risks of the Funds unless otherwise indicated, should be
understood as references to the investments, investment policies and risks of
the corresponding Master Portfolios. INTRUST Bank, N.A. serves as investment
adviser (the "Adviser") to the Funds. AMR Investment Services, Inc. serves as
subadviser to The Money Market 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 Distributor to the Funds, as an investment vehicle for individuals,
institutions, corporations and fiduciaries, including customers of INTRUST or
its affiliates.
This SAI is not a prospectus and is only authorized for distribution
when preceded or accompanied by a prospectus for the Funds dated November 30,
1998 (the "Prospectus"). This SAI contains additional and more detailed
information than that set forth in the Prospectus and should be read in
conjunction with the Prospectus. The Prospectus may be obtained without charge
by writing or calling the Funds at the address and information number printed
above.
November 30, 1998
<PAGE> 61
TABLE OF CONTENTS
Page
----
INVESTMENT OBJECTIVES AND POLICIES.......................................4
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES...............................7
MANAGEMENT..............................................................14
ADMINISTRATION AND FUND ACCOUNTING......................................20
EXPENSES ...............................................................21
DETERMINATION OF NET ASSET VALUE........................................22
PORTFOLIO TRANSACTIONS..................................................23
TAXATION ...............................................................25
OTHER INFORMATION.......................................................31
2
<PAGE> 62
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES OF THE NESTEGG FUNDS
Each Fund invests all of its assets in the corresponding Master
Portfolio of the MIP (as shown below), which has the same investment objective
as the related Fund.
FUND CORRESPONDING MASTER PORTFOLIO
---- ------------------------------
NestEgg 2000 Fund LifePath 2000 Master Portfolio
NestEgg 2010 Fund LifePath 2010 Master Portfolio
NestEgg 2020 Fund LifePath 2020 Master Portfolio
NestEgg 2030 Fund LifePath 2030 Master Portfolio
NestEgg 2040 Fund LifePath 2040 Master Portfolio
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES. The Master Portfolios consist of five asset
allocation funds, each of which is a diversified fund offered by MIP.
Organizations and other entities such as the Funds that hold shares of
beneficial interest of a Master Portfolio may be referred to herein as "feeder
funds."
The Master Portfolios seek to provide long-term investors in a feeder
fund with an asset allocation strategy designed to maximize assets consistent
with the quantitatively measured risk such investors, on average, may be willing
to accept given their investment time horizons. The Master Portfolios invest in
a wide range of U.S. and foreign equity and debt securities and money market
instruments. Each Master Portfolio is managed for investors in a feeder fund
planning to retire (or begin to withdraw substantial portions of their
investment) approximately in the year stated in the title of the Fund in which
they invest (e.g., investors in the NestEgg 2000 Fund plan to retire in the year
2000).
As with all mutual funds, there can be no assurance that the investment
objective of each Master Portfolio will be achieved. Each Master Portfolio's
investment objective cannot be changed without approval by the holders of a
majority (as defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of such Master Portfolio's outstanding voting shares.
Each Fund and Master Portfolio has adopted investment policies which
may be fundamental or non-fundamental. Fundamental policies cannot be changed
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")) of the outstanding voting
securities of such Fund or Master Portfolio, as the case may be. Non-fundamental
policies may be changed without shareholder approval by vote of a majority of
the Trustees of the Trusts, as the case may be, at any time.
THE MASTER PORTFOLIOS
FUNDAMENTAL INVESTMENT RESTRICTIONS. Each of the Master Portfolios are
subject to the following investment restrictions, all of which are fundamental
policies.
3
<PAGE> 63
The Master Portfolios may not:
(1) invest more than 5% of its assets in the obligations of any single
issuer, except that up to 25% of the value of its total assets may be invested,
and securities issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities may be purchased, without regard to any such limitation.
(2) hold more than 10% of the outstanding voting securities of any
single issuer. This Investment Restriction applies only with respect to 75% of
its total assets.
(3) invest in commodities, except that each Master Portfolio may
purchase and sell (i.e., write) options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or
indexes.
(4) purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but each Master Portfolio may
purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.
(5) borrow money, except to the extent permitted under the 1940 Act.
For purposes of this investment restriction, a Fund's or Master Portfolio's
entry into options, forward contracts, futures contracts, including those
relating to indices, and options on futures contracts or indices shall not
constitute borrowing to the extent certain segregated accounts are established
and maintained by the Master Portfolio as described in prospectus.
(6) make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each Master
Portfolio may lend its portfolio securities in an amount not to exceed one-third
of the value of its total assets. Any loans of portfolio securities will be made
according to guidelines established by the SEC and the Board of Trustees of MIP
or the Board of Trustees of the Trust, as the case may be.
(7) act as an underwriter of securities of other issuers, except to the
extent that the Master Portfolios may be deemed an underwriter under the
Securities Act of 1933, as amended, by virtue of disposing of portfolio
securities.
(8) invest 25% or more of its total assets in the securities of issuers
in any particular industry or group of closely related industries except that,
in the case of each Master Portfolio, there shall be no limitation with respect
to investments in obligations of the U.S. Government, its agencies or
instrumentalities.
(9) issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act), except to the extent the activities permitted in investment
restriction nos. 3, 5, 12 and 13 may be deemed to give rise to a senior security
or as otherwise permitted under the rules and regulations or an exemptive order
of the Securities and Exchange Commission.
(10) purchase securities on margin, but each Master Portfolio may make
margin deposits in connection with transactions in options, forward contracts,
futures contracts, including those related to indexes, and options on futures
contracts or indexes.
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The Master Portfolios are
subject to the following non-fundamental policies.
4
<PAGE> 64
The Master Portfolios may not:
(1) invest in the securities of a company for the purpose of exercising
management or control, but each Master Portfolio will vote the securities it
owns in its portfolio as a shareholder in accordance with its views.
(2) pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
(3) purchase, sell or write puts, calls or combinations thereof, except
as may be described in the Master Portfolios' offering documents.
(4) purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) if such
purchase would cause the value of its investments in all such companies to
exceed 5% of the value of its total assets.
(5) enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of a Master Portfolio's net assets
would be so invested. Although each Fund and Master Portfolio reserves the right
to invest up to 15% of the value of its net assets in repurchase agreements
providing for settlement in more than seven days after notice and in other
illiquid securities, as long as such Fund's shares are registered for sale in a
state that imposes a lower limit on the percentage of a Fund's assets that may
be so invested, such Fund and Master Portfolio will comply with the lower limit.
Each Fund and Master Portfolio currently is limited to investing up to 10% of
the value of its net assets in such securities due to limits applicable in
several states.
(6) purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
(7) purchase, hold or deal in real estate limited partnerships.
(8) purchase warrants that exceed 2% of the value of the Fund's or the
Master Portfolio's net assets, if those warrants are not listed on the New York
or American Stock Exchanges.
(9) purchase or retain securities of any issuer if the officers or
Trustees of the Trust or the investment adviser owning beneficially more than
one-half of one percent (0.5%) of the securities of the issuer together owned
beneficially more than 5% of such securities.
(10) engage in any short sales other than short sales against the box.
5
<PAGE> 65
As a matter of general operating policy, each Fund and Master Portfolio
may invest up to 20% of the value of its total assets in foreign securities that
are not publicly traded in the United States.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
ADDITIONAL PERMITTED INVESTMENT ACTIVITIES
THE FUNDS AND THEIR CORRESPONDING MASTER PORTFOLIOS MAY PARTICIPATE IN
THE FOLLOWING ADDITIONAL PERMITTED INVESTMENT ACTIVITIES AS INDICATED:
BANK OBLIGATIONS. Each Master Portfolio may invest in bank obligations,
including certificates of deposit, time deposits and other short term
obligations of domestic banks, obligations of foreign branches of domestic banks
and obligations of domestic and foreign branches of foreign banks. Domestic
commercial banks organized under federal law are supervised and examined by the
Comptroller of the Currency and are required to be members of the Federal
Reserve System and to have their deposits insured by the Federal Deposit
Insurance Corporation (the "FDIC"). Domestic banks organized under state law are
supervised and examined by state banking authorities but are members of the
Federal Reserve System only if they elect to join. In addition, state banks
whose certificates of deposit ("CDs") may be purchased by each Master Portfolio
are insured by the FDIC (although such insurance may not be of material benefit
to the Master Portfolio, depending on the principal amount of the CDs of each
bank held by the Master Portfolio) and are subject to federal examination and to
a substantial body of federal law and regulation. As a result of federal or
state laws and regulations, domestic branches of domestic banks whose CDs may be
purchased by each Master Portfolio generally are required, among other things,
to maintain specified levels of reserves, are limited in the amounts which they
can loan to a single borrower and are subject to other regulations designed to
promote financial soundness. However, not all of such laws and regulations apply
to the foreign branches of domestic banks.
Obligations of foreign branches of domestic banks, foreign subsidiaries
of domestic banks and domestic and foreign branches of foreign banks, such as
CDs and time deposits ("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms of a specific
obligation and/or governmental regulation. Such obligations are subject to
different risks than are those of domestic banks. These risks include foreign
economic and political developments, foreign governmental restrictions that may
adversely affect payment of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on interest income.
These foreign branches and subsidiaries are not necessarily subject to the same
or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial record keeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a foreign
bank than about a domestic bank.
Obligations of U.S. branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation or by federal or state regulation
as well as governmental action in the country in
6
<PAGE> 66
which the foreign bank has its head office. A domestic branch of a foreign bank
with assets in excess of $1 billion may be subject to reserve requirements
imposed by the Federal Reserve System or by the state in which the branch is
located if the branch is licensed in that state.
In addition, federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the appropriate regulatory authority, by depositing
assets with a designated bank within the relevant state, a certain percentage of
their assets as fixed from time to time by such regulatory authority; and (2)
maintain assets within the relevant state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank payable at
or through all of its agencies or branches within the state. The deposits of
federal and State Branches generally must be insured by the FDIC if such
branches take deposits of less than $100,000.
In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, BGFA carefully evaluates such investments on a case-by-case
basis.
Each Master Portfolio may purchase CDs issued by banks, savings and
loan associations and similar thrift institutions with less than $1 billion in
assets, provided that such institutions are members of the FDIC, and further
provided such Master Portfolio purchases any such CD in a principal amount of
not more than $100,000, which amount would be fully insured by the Bank
Insurance Fund or the Savings Association Insurance Fund administered by the
FDIC. Interest payments on such a CD are not insured by the FDIC. No Master
Portfolio will own more than one such CD per such issuer.
FUTURES CONTRACTS. The Master Portfolios may use futures contracts as a
hedge against the effects of interest rate changes or changes in the market
value of the stocks comprising the index in which such Master Portfolio invests.
In managing their cash flows, these Master Portfolios also may use futures
contracts as a substitute for holding the designated securities underlying the
futures contract. A futures contract is an agreement between two parties, a
buyer and a seller, to exchange a particular commodity at a specific price on a
specific date in the future. At the time it enters into a futures transaction, a
Master Portfolio is required to make a performance deposit (initial margin) of
cash or liquid securities in a segregated account in the name of the futures
broker. Subsequent payments of "variation margin" are then made on a daily
basis, depending on the value of the futures position which is continually
"marked to market."
A Master Portfolio may engage only in futures contract transactions
involving (i) the sale of a futures contract (i.e., short positions) to hedge
the value of securities held by such Master Portfolio; (ii) the purchase of a
futures contract when such Master Portfolio hold a short position having the
same delivery month (i.e., a long position offsetting a short position); or
(iii) the purchase of a futures contract to permit the Master Portfolio to, in
effect, participate in the market for the designated securities underlying the
futures contract without actually owning such designated securities. When a
Master Portfolio purchases a futures contracts, it will create a segregated
account consisting of each or other liquid assets in an amount equal to the
total market value of such futures contract, less the amount of initial margin
for the contract.
7
<PAGE> 67
If a Master Portfolio enters into a short position in a futures
contract as a hedge against anticipated adverse market movements and the market
then rises, the increase in the value of the hedged securities will be offset,
in whole or in part, by a loss on the futures contract. If instead a Master
Portfolio purchases a futures contract as a substitute for investing in the
designated underlying securities, a Master Portfolio experiences gains or losses
that correspond generally to gains or losses in the underlying securities. The
latter type of futures contract transactions permits a Master Portfolio to
experience the results of being fully invested in a particular asset class,
while maintaining the liquidity needed to manage cash flows into or out of the
Master Portfolio (e.g., from purchases and redemptions of Master Portfolio
shares). Under normal market conditions, futures contract positions may be
closed out on a daily basis. The LifePath Master Portfolios expect to apply a
portion of their cash or cash equivalents maintained for liquidity needs to such
activities.
Transactions by a Master Portfolio in futures contracts involve certain
risks. One risk in employing futures contracts as a hedge against cash market
price volatility is the possibility that futures prices will correlate
imperfectly with the behavior of the prices of the securities in the Master
Portfolio's investment portfolio. Similarly, in employing futures contracts as a
substitute for purchasing the designated underlying securities, there is a risk
that the performance of the futures contract may correlate imperfectly with the
performance of the direct investments for which the futures contract is a
substitute. In addition, commodity exchanges generally limit the amount of
fluctuation permitted in futures contract prices during a single trading day,
and the existence of such limits may prevent the prompt liquidation of futures
positions in certain cases. Limits on price fluctuations are designed to
stabilize prices for the benefit of market participants; however, there could be
cases where the Master Portfolio could incur a larger loss due to the delay in
trading than it would have if no limit rules had been in effect.
In order to comply with undertakings made by the Master Portfolio
pursuant to Commodity Futures Trading Commission ("CFTC") Regulation 4.5, the
Master Portfolios will use futures and option contracts solely for bona fide
hedging purposes within the meaning and intent of CFTC Reg. 1.3(z); provided,
however, that in addition, with respect to positions in commodity futures or
commodity option contracts which do not come within the meaning and intent of
CFTC Reg. 1.3(z), the aggregate initial margin and premiums required to
establish such positions will not exceed five percent of the liquidation value
of the Master Portfolio's portfolio, after taking into account unrealized
profits and unrealized losses on any such contract it has entered into; and
provided further, that in the case of an option that is in-the-money at the time
of purchase, the in-the-money amount as defined in CFTC Reg.
190.01(x) may be excluded in computing such five percent.
FOREIGN CURRENCY TRANSACTIONS. Currency exchange rates may fluctuate
significantly over short periods of time. They generally are determined by the
forces of supply and demand in the foreign exchange markets and the relative
merits of investments in different countries, actual or perceived changes in
interest rates and other complex factors, as seen from an international
perspective. Currency exchange rates also can be affected unpredictably by the
intervention of U.S. or foreign governments or central banks, or by the failure
to intervene, or by currency controls or political developments in the United
States or abroad. The Master Portfolios intend to engage in foreign currency
transactions to maintain the same foreign currency exposure as the relevant
foreign securities index through which the Funds seek foreign equity market
exposure, but not as part of a defensive strategy to protect against
fluctuations in exchange rates. If a Master Portfolio enters into a foreign
currency transaction
8
<PAGE> 68
or forward contract, such Master Portfolio deposits, if required by applicable
regulations, with the MIP's custodian cash or high-grade debt securities in a
segregated account of the Master Portfolio in an amount at least equal to the
value of the Master Portfolio's total assets committed to the consummation of
the forward contract. If the value of the securities placed in the segregated
account declines, additional cash or securities is placed in the account so that
the value of the account equals the amount of the Master Portfolio's commitment
with respect to the contract.
At or before the maturity of a forward contract, a Master Portfolio may
either sell a portfolio security and make delivery of the currency, or may
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract pursuant to which such Master Portfolio
obtains, on the same maturity date, the same amount of the currency which it is
obligated to deliver. If the Master Portfolio retains the portfolio security and
engages in an offsetting transaction, such Master Portfolio, at the time of
execution of the offsetting transaction, incurs a gain or a loss to the extent
that movement has occurred in forward contract prices. Should forward prices
decline during the period between the Master Portfolio's entering into a forward
contract for the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Master Portfolio realizes a gain
to the extent the price of the currency it has agreed to sell exceeds the price
of the currency it has agreed to purchase. Should forward prices increase, the
Master Portfolio suffers a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The cost to a Master Portfolio of engaging in currency transactions
varies with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because transactions in
currency exchange usually are conducted on a principal basis, no fees or
commissions are involved. BGFA considers on an ongoing basis the
creditworthiness of the institutions with which a Master Portfolio enters into
foreign currency transactions. The use of forward currency exchange contracts
does not eliminate fluctuations in the underlying prices of the securities, but
it does establish a rate of exchange that can be achieved in the future. If a
devaluation generally is anticipated, the Master Portfolio may not be able to
contract to sell the currency at a price above the devaluation level it
anticipates.
The purchase of options on currency futures allows a Master Portfolio,
for the price of the premium it must pay for the option, to decide whether or
not to buy (in the case of a call option) or to sell (in the case of a put
option) a futures contract at a specified price at any time during the period
before the option expires.
FUTURE DEVELOPMENTS. Each Master Portfolio may take advantage of
opportunities in the areas of options and futures contracts and options on
futures contracts and any other derivative investments which are not presently
contemplated for use by such Master Portfolio or which are not currently
available but which may be developed, to the extent such opportunities are both
consistent with a Master Portfolio's investment objective and legally
permissible for the Master Portfolio. Before entering into such transactions or
making any such investment, a Master Portfolio would provide appropriate
disclosure in its prospectus or this SAI.
LENDING PORTFOLIO SECURITIES. To a limited extent, each Master
Portfolio may lend its portfolio securities to brokers, dealers and other
financial institutions (but not individuals),
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provided it receives cash collateral which is maintained at all times in an
amount equal to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, a Master Portfolio can increase its
income through the investment of the cash collateral or by receipt of a loan
premium from the borrower. For purposes of this policy, each Master Portfolio
considers collateral consisting of U.S. Government obligations or irrevocable
letters of credit issued by banks whose securities meet the standards for
investment by such Master Portfolio to be the equivalent of cash. From time to
time, a Master Portfolio may return to the borrower, or to a third party
unaffiliated with MIP which is acting as a "placing broker," a part of the
interest earned from the investment of collateral received in exchange for
securities loaned.
The SEC currently requires that the following conditions must be met
whenever portfolio securities are loaned: (1) the Master Portfolio must receive
at least 100% cash collateral from the borrower; (2) the borrower must increase
such collateral whenever the market value of the securities loaned rises above
the level of such collateral; (3) the Master Portfolio must be able to terminate
the loan at any time; (4) the Master Portfolio must receive reasonable interest
on the loan, as well as any dividends, interest or other distributions payable
on the loaned securities, and any increase in market value; (5) the Master
Portfolio may pay only reasonable custodian fees in connection with the loan;
and (6) while voting rights on the loaned securities may pass to the borrower,
the MIP's Board of Trustees must terminate the loan and regain the right to vote
the securities if a material event adversely affecting the investment occurs.
These conditions may be subject to future modification.
WARRANTS. Each Master Portfolio may invest generally up to 5% of its
net assets at the time of purchase in warrants, except that this limitation does
not apply to warrants acquired in units or attached to securities. A warrant is
an instrument issued by a corporation which gives the holder the right to
subscribe to a specified amount of the corporation's capital stock at a set
price for a specified period of time. The prices of warrants do not necessarily
correlate with the prices of the underlying securities.
FIXED INCOME OBLIGATIONS. Investors should be aware that even though
interest-bearing obligations are investments which promise a stable stream of
income, the prices of such securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Long-term obligations are affected to a greater extent by interest
rates than shorter term obligations. The values of fixed-income obligations also
may be affected by changes in the credit rating or financial condition of the
issuing entities. Once the rating of a portfolio security has been changed to a
rating below investment grade, the particular Master Portfolio considers all
circumstances deemed relevant in determining whether to continue to hold the
security. Certain obligations that may be purchased by the Master Portfolio,
such as those rated "Baa" by Moody's and "BBB" by S&P, Fitch and Duff, may be
subject to such risk with respect to the issuing entity and to greater market
fluctuations than certain lower yielding, higher rated fixed income securities.
Securities which are rated "Baa" by Moody's are considered medium-grade
obligations; they are neither highly protected nor poorly secured, and are
considered by Moody's to have speculative characteristics. Obligations rated
"BBB" by S&P are regarded as having adequate capacity to pay interest and repay
principal, and, while such debt securities ordinarily exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for securities in this category than in higher rated categories. Obligations
rated "BBB" by Fitch are considered investment grade and of satisfactory credit
quality; however,
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adverse changes in economic conditions and circumstances are more likely to have
an adverse impact on these obligations and, therefore, impair timely payment.
Obligations rated "BBB" by Duff have below average protection factors but
nonetheless are considered sufficient for prudent investment. If a security held
by a Master Portfolio is downgraded to a rating below investment grade, such
Master Portfolio may continue to hold the obligation until such time as BGFA
determines it to be advantageous for the Master Portfolio to sell the
obligation. If such a policy would cause a Master Portfolio to have 5% or more
of its net assets invested in obligations that have been downgraded below
investment grade, the Master Portfolio promptly would seek to dispose of such
obligations in an orderly manner.
REPURCHASE AGREEMENTS. Each Master Portfolio may engage in a repurchase
agreement with respect to any security in which it is authorized to invest,
although the underlying security may mature in more than thirteen months. The
Master Portfolio may enter into repurchase agreements wherein the seller of a
security to the Master Portfolio agrees to repurchase that security from the
Master Portfolio at a mutually agreed-upon time and price that involves the
acquisition by the Master Portfolio of an underlying debt instrument, subject to
the seller's obligation to repurchase, and the Master Portfolio's obligation to
resell, the instrument at a fixed price usually not more than one week after its
purchase. The Master Portfolio's custodian has custody of, and holds in a
segregated account, securities acquired as collateral by the Master Portfolio
under a repurchase agreement. The Master Portfolio may enter into repurchase
agreements only with respect to securities of the type in which it may invest,
including government securities and mortgage-related securities, regardless of
their remaining maturities, and requires that additional securities be deposited
with the custodian if the value of the securities purchased should decrease
below resale price. Certain costs may be incurred by the Master Portfolio in
connection with the sale of the underlying securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, disposition of the securities by the Master Portfolio may be delayed
or limited. While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delay and costs to the Master
Portfolio in connection with insolvency proceedings), it is the policy of the
Master Portfolio to limit repurchase agreements to selected creditworthy
securities dealers or domestic banks or other recognized financial institutions.
The Master Portfolio considers on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements. Repurchase
agreements are considered to be loans by a Master Portfolio under the Investment
Company Act of 1940 (the "1940 Act").
FLOATING- AND VARIABLE-RATE OBLIGATIONS. Each Master Portfolio may
purchase floating- and variable-rate demand notes and bonds, which are
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal at any time or at
specified intervals not exceeding 13 months. Variable-rate demand notes include
master demand notes which are obligations that permit a Master Portfolio to
invest fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Master Portfolio, as lender, and the borrower.
The interest rates on these notes fluctuate from time to time. The issuer of
such obligations ordinarily has a corresponding right, after a given period, to
prepare in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days' notice to the holders of
such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically at specified
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intervals. Frequently, such obligations are secured by letters of credit or
other credit support arrangements provided by banks. Because these obligations
are direct lending arrangements between the lender and borrower, it is not
contemplated that such instruments generally will be traded. There generally is
no established secondary market for these obligations, although they are
redeemable at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Master
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated by
credit rating agencies and each Master Portfolio may invest in obligations which
are not so rated only if the Adviser determines that at the time of investment
the obligations are of comparable quality to the other obligations in which such
Master Portfolio may invest. The Adviser, on behalf of each Master Portfolio,
considers on an ongoing basis the creditworthiness of the issuers of the
floating- and variable-rate demand obligations in such Master Portfolio's
portfolio. No Master Portfolio invests more than 15% of the value of its net
assets in illiquid securities including floating- or variable-rate demand
obligations whose demand feature is not exercisable within seven days. Such
obligations may be treated as liquid, provided that an active secondary market
exists.
INVESTMENT POLICIES OF THE MONEY MARKET FUND
The Prospectus discusses the investment objectives of the Money Market
Fund 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 Money Market Fund may invest, the investment
policies and portfolio strategies that the Money Market Fund may utilize, and
certain risks attendant to such investments, policies and strategies.
U.S. GOVERNMENT AGENCY OBLIGATIONS. The Money Market Fund 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 Money Market Fund 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. The Money Market Fund may, consistent with
their respective investment objective and policies, invest in mortgage-related
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
Mortgage-related securities, for purposes of the Fund's Prospectus and
this SAI, represent pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National Mortgage
Association and government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, as well as
by nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If the Fund purchases a mortgage-related security
at a premium, that portion may be lost if there is a decline in the market value
of the security whether resulting from changes in interest rates or prepayments
in the underlying mortgage collateral. As with other interest-bearing
securities, the prices of such securities are inversely affected by changes in
interest rates. However, though the value of a mortgage-related security may
decline when interest rates rise, the converse is not necessarily true since in
periods of declining interest rates the mortgages underlying the securities are
prone to prepayment. For this and other reasons, a mortgage-related security's
stated maturity may be shortened by unscheduled prepayments on the underlying
mortgages and, therefore, it is not possible to predict accurately the
security's return to the Fund. In addition, regular payments received in respect
of mortgage-related securities include both interest and principal. No assurance
can be given as to the return the Fund will receive when these amounts are
reinvested.
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There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities created by
the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest and such guarantee is backed by
the full faith and credit of the United States. GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban Development.
GNMA certificates also are supported by the authority of GNMA to borrow Money
Market Fund 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. 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 Money
Market Fund is, at the time of investment, rated in one of the top two rating
categories of at least one Nationally Recognized Statistical Rating Organization
("NRSRO") or, if not rated, are, in the opinion of the Adviser, as applicable,
of an investment quality comparable to rated commercial paper in which the Money
Market Fund 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 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.
CORPORATE DEBT SECURITIES. 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 the Fund.
After purchase by the Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require a sale of such security by the Fund. However, the
Fund's Adviser will consider such event in its determination of whether the Fund
should continue to hold the security. To the extent the ratings given by a NRSRO
may change as a result of changes in such organizations or their rating systems,
the Fund will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in the Prospectus and in this
SAI.
BANK OBLIGATIONS. A description of the bank obligations which the Money
Market Fund may purchase is set forth in the Prospectus. 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
Money Market Fund deposited in an eligible bank (including its domestic and
foreign branches, subsidiaries and agencies), are for a definite period of time,
earn a specified rate of return and are normally negotiable. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with a commercial transaction. The borrower is liable for
payment as is the bank, which unconditionally guarantees to pay the draft at its
face amount on the maturity date. Eurodollar obligations are U.S. Dollar
obligations issued outside the United States by domestic or foreign entities.
Yankeedollar obligations are U.S. dollar obligations issued inside the United
States by foreign entities. Bearer deposit notes are obligations of a bank,
rather than a bank holding company. Similar to certificates of deposit, deposit
notes represent bank level investments and, therefore, are senior to all holding
company corporate debt.
VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND OBLIGATIONS. The
Fund 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, 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.
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The Money Market Fund may also buy variable rate master demand
obligations. The terms of these obligations permit the investment of fluctuating
amounts by the Money Market Fund at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. They permit weekly,
and in some instances, daily, changes in the amounts borrowed. The Money Market
Fund has 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 Money Market Fund has no limitations on the type of issuer from whom
the obligations will be purchased. The Money Market Fund will invest in variable
rate master demand obligations only when such obligations are determined by the
Adviser or, pursuant to guidelines established by the Board of Trustees to be of
comparable quality to rated issuers or instruments eligible for investment by
the Money Market Fund.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. The Money Market Fund 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 Money Market Fund
will maintain with the custodian a separate account with a segregated portfolio
of liquid assets 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 Money Market Fund normally enters into these
transactions with the intention of actually receiving or delivering the
securities, it may sell these securities before the settlement date or enter
into new commitments to extend the delivery date into the future, if the Adviser
considers such action advisable as a matter of investment strategy. Such
securities have the effect of leverage on the Money Market Fund and may
contribute to volatility of the Fund's net asset value.
LOANS OF PORTFOLIO SECURITIES. The Money Market Fund may lend its
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 Money Market Fund may at any time call the loan
and obtain the return of the securities loaned within five business days; (3)
the Money Market Fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed 33-1/3% of the total assets of the Fund.
The Money Market Fund 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 Money
Market Fund may pay reasonable finders, administrative and custodial fees. Loans
of securities involve a risk that the borrower may fail to return the securities
or may fail to provide additional collateral.
Securities loans will be made in accordance with the following
conditions: (1) the Money Market Fund must receive at least 100% collateral in
the form of cash or cash equivalents, securities of the U.S. Government and its
agencies and instrumentalities, and approved bank letters of credit; (2) the
borrower must increase the collateral whenever the market value of the loaned
securities (determined on a daily basis) rises above the level of collateral;
(3) the Money Market Fund must be able to terminate the loan after notice, at
any time; (4) the Money Market Fund must receive reasonable interest on the loan
or a flat fee from the borrower, as well as amounts equivalent to any dividends,
interest or other distributions on the securities loaned, and any increase in
market value of the loaned securities; (5) the Money Market Fund may pay only
reasonable custodian fees in connection with the loan; and (6) voting rights on
the securities loaned may pass to the borrower, provided, however, that if a
material event affecting the investment occurs, the Board of Trustees 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 to vote proxies.
REPURCHASE AGREEMENTS. The Money Market Fund may invest in securities
subject to repurchase agreements with any bank or registered broker-dealer who,
in the opinion of the Trustees present a minimum risk of bankruptcy. Such
agreements may be considered to be loans by the Money Market Fund 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 will monitor the value of the
underlying security at the time the transaction is entered into and at all times
during the term of the repurchase agreement to insure that the value of the
security always equals or exceeds the repurchase price. In the event of default
by the seller under the repurchase agreement, the Money Market Fund 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. The Money Market Fund 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 the 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.
ILLIQUID SECURITIES. The 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.
The Fund may also invest in restricted securities issued under Section
4(2) of the Securities Act, which exempts from registration "transactions by an
issuer not involving any public offering." Section 4(2) instruments are
restricted in the sense that they can only be resold through the issuing dealer
and only to institutional investors; they cannot be resold to the general public
without registration. Restricted securities issued under Section 4(2) of the
Securities Act will be treated as illiquid and subject to the Fund's investment
restriction on illiquid securities.
The Commission has adopted Rule 144A, which allows a broader
institutional trading market for securities otherwise subject to restrictions on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act applicable to resales of certain
securities to qualified institutional buyers. It is the intent of the Funds' to
invest, pursuant to procedures established by the Board of Trustees and subject
to applicable investment restrictions, in securities eligible for resale under
Rule 144A which are determined to be liquid based upon the trading markets for
the securities.
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Pursuant to guidelines set forth by and under the supervision of the
Board of Trustees the Adviser will monitor the liquidity of restricted
securities in a Fund's portfolio. In reaching liquidity decisions, the Adviser
will consider, among other things, the following factors: (1) the frequency of
trades and quotes for the security over the course of six months or as
determined in the discretion of the 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 the Fund does not exceed 10% of the Fund's
average daily net assets. Rule 144A securities which are determined to be liquid
based upon their trading markets will not, however, be required to be included
among the securities considered to be illiquid for purposes of Investment
Restriction No. 1. Investments in Rule 144A securities could have the effect of
increasing Fund illiquidity.
INVESTMENT RESTRICTIONS OF THE MONEY MARKET FUND
The following restrictions apply the Fund and restate or are in
addition to those restrictions described under "Investment Restrictions" in the
Prospectus. Unless otherwise indicated, only Investment Restriction Nos. 2, 3,
4, 7, 8, 12 and 16 are fundamental policies of the Fund, which can be changed
only when permitted by law and approved by a majority of the Fund's outstanding
voting securities. The non-fundamental investment restrictions can be changed by
approval of a majority of the Board of Trustees. A "majority of the outstanding
voting securities" means the lesser of (i) 67% of the shares represented at a
meeting at which more than 50% of the outstanding shares are represented in
person or by proxy or (ii) more than 50% of the outstanding shares.
The Fund, except as indicated, may not:
(1) Invest more than 10% 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 the Fund may enter into reverse repurchase agreements or
borrow from banks up to 33-1/3% of the current value of its net assets
for temporary or emergency purposes or to meet redemptions. The 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).
(3) Issue senior securities, except insofar as the 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 the Fund may enter into repurchase agreements with respect to its
portfolio securities and may purchase the types of debt instruments
described in the Prospectus or the SAI;
(5) Invest in companies for the purpose of exercising control or
management.
(6) Invest more than 10% of its net assets in shares of other
investment companies and the Fund may invest all of its assets in
another investment company;
(7) Invest in real property (including limited partnership
interests but excluding real estate investment trusts and master
limited partnerships, debt obligations secured by real estate or
interests therein, and securities issued by other companies that invest
in real estate or interest therein), commodities, commodity contracts,
or oil, gas and other mineral resource, exploration, development, lease
or arbitrage transactions.
(8) Engage in the business of underwriting securities of other
issuers, except to the extent that the disposal of an investment
position may technically cause it to be considered an underwriter as
that term is defined under the Securities Act of 1933;
(9) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional
cost securities identical to those sold short.
(10) Purchase securities on margin, except that the 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;
(13) Invest more than 5% of its net assets in warrants which are
unattached to securities, included within that amount, no more than 2%
of the value of the Fund's net assets, may be warrants which are not
listed on the New York or American Stock Exchanges.
(14) Write, purchase or sell puts, calls or combinations thereof,
except that the Fund may purchase or sell puts and calls as otherwise
described in the Prospectus or SAI; however, the Fund will not 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' 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 100% 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.
MANAGEMENT
TRUSTEES AND OFFICERS OF THE TRUST
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: 49, Trustee. Vice President, Finance and
Administration, of Williams Energy Services Company; Treasurer of The Williams
Companies (1992-1995).
Terry L. Carter, Age: 49, Trustee. Senior Vice President of QuikTrip
Corporation.
Thomas F. Kice, Age: 48, Trustee. President of Kice Industries Inc.
George Mileusnic, Age: 43, Trustee. Executive Vice President of
Operations of North American Division of The Coleman Co., Inc.
John J. Pileggi, Age: 39, 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).
David Bunstine, Age 32, President. Vice President (1998-present),
Director (1987-1998), BISYS Fund Services, Inc.
Ellen Stoutamire, Age: 49, Secretary. Vice President of Client Legal
Services, BISYS Fund Services; Associate Counsel, Franklin Templeton, Vice
President (1995-1997) and formerly General Counsel, Pioneer Western Corporation.
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<PAGE> 75
COMPENSATION TABLE
11/1/97 THROUGH 10/31/98
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED ANNUAL COMPENSATION
COMPENSATION AS PART OF BENEFITS FROM
FROM FUND UPON THE FUND
THE TRUST EXPENSES RETIREMENT COMPLEX
---------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
G.L. Best, Trustee $1,500 0 N/A $1,500
Terry L. Carter, Trustee $2,500 0 N/A $2,500
Thomas F. Kice, Trustee $2,500 0 N/A $2,500
George Mileusnic, Trustee $2,500 0 N/A $2,500
John J. Pileggi, Trustee $2,500 0 N/A $2,500
</TABLE>
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.
As of November 20, 1998, Officers and Trustees of the Trust, as a
group, own less than 1% of the outstanding shares of the Funds.
MASTER/FEEDER STRUCTURE. Each Fund seeks to achieve its investment
objective by investing all of its assets into the corresponding Master Portfolio
of the MIP. The Funds and other entities investing in a Master Portfolio are
each liable for all obligations of such Master Portfolio. However, the risk of a
NestEgg Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the MIP itself is
unable to meet its obligations. Accordingly, the Trust's Board of Trustees
believes that neither a Fund nor its shareholders will be adversely affected by
investing Fund assets in a Master Portfolio. However, if a mutual fund or other
investor withdraws its investment from such Master Portfolio, the economic
efficiencies (e.g., spreading fixed expenses among a larger asset base) that the
Trust's Board believes may be available through investment in the Master
Portfolio may not be fully achieved. In addition, given the relative novelty of
the master/feeder structure, accounting or operational difficulties, although
unlikely, could arise. See "Management of the Funds" in the Prospectus for
additional description of the Funds' and Master Portfolios' expenses and
management.
A NestEgg Fund may withdraw its investment in a Master Portfolio only
if the Trust's Board of Trustees determines that such action is in the best
interests of such Fund and its shareholders. Upon any such withdrawal, the
Trust's Board would consider alternative investments, including investing all of
the Fund's assets in another investment company with the same investment
objective as the Fund or hiring an investment adviser to manage the Fund's
assets in accordance with the investment policies described below with respect
to the Master Portfolio.
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<PAGE> 76
The investment objective and other fundamental policies of a Master
Portfolio cannot be changed without approval by the holders of a majority (as
defined in the 1940 Act) of the Master Portfolio's outstanding interests. See
"Investment Objectives and Policies" in the Prospectus. Whenever a NestEgg Fund,
as an interestholder of the corresponding Master Portfolio, is requested to vote
on any matter submitted to interestholders of the Master Portfolio, the NestEgg
Fund will hold a meeting of its shareholders to consider such matters. The
NestEgg Fund will cast its votes in proportion to the votes received from its
shareholders. Shares for which the NestEgg Fund receives no voting instructions
will be voted in the same proportion as the votes received from the other
NestEgg Fund shareholders.
Certain policies of the Master Portfolio which are nonfundamental may
be changed by vote of a majority of the MIP's Trustees without interestholder
approval. If the Master Portfolio's investment objective or fundamental or
nonfundamental policies are changed, the Fund may elect to change its objective
or policies to correspond to those of the Master Portfolio. A Fund may also
elect to redeem its interests in the corresponding Master Portfolio and either
seek a new investment fund with a matching objective in which to invest or
retain its own investment adviser to manage the Fund's portfolio in accordance
with its objective. In the latter case, the NestEgg Fund's inability to find a
substitute investment Trust in which to invest or equivalent management services
could adversely affect shareholders' investments in the NestEgg Fund. The
NestEgg Funds will provide shareholders with 30 days' written notice prior to
the implementation of any change in the investment objective of the NestEgg Fund
or the Master Portfolio, to the extent possible. See "Investment Objectives and
Policies" in the Prospectus for additional information regarding the NestEgg
Fund's and the Master Portfolio's investment objectives and policies.
INVESTMENT ADVISER TO THE MASTER PORTFOLIOS
BGFA provides investment advisory services to each Master Portfolio
pursuant to separate Investment Advisory Contracts (each, a "BGFA Advisory
Contract") with MIP. Pursuant to the Advisory Contracts, BGFA furnishes to the
Trust's Board of Trustees periodic reports on the investment strategy and
performance of each Master Portfolio. BGFA has agreed to provide to the Master
Portfolios, among other things, money market security and fixed income research,
analysis and statistical and economic data and information concerning interest
rate and security market trends, portfolio composition, credit conditions and
average maturities of each Master Portfolio's investment portfolio.
BGFA is entitled to receive monthly fees at the annual rate of 0.55% of
each Master Portfolio's average daily net assets as compensation for its
advisory services to such Master Portfolio.
As to each Master Portfolio, the applicable BGFA Advisory Contract is
subject to annual approval by (i) MIP's Board of Trustees or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
such Master Portfolio, provided that in either event the continuance also is
approved by a majority of MIP's Board of Trustees who are not "interested
persons" (as defined in the 1940 Act) of MIP or BGFA, by vote cast in person at
a meeting called for the purpose of voting on such approval. As to each Master
Portfolio, the applicable BGFA Advisory Contract is terminable without penalty,
on 60 days' written notice by MIP's Board of Trustees or by vote of the holders
of a majority of such Master Portfolio's shares, or, on not less than 60 days'
written notice, by BGFA. The applicable BGFA
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<PAGE> 77
Advisory Contract terminates automatically, as to the relevant Master Portfolio,
in the event of its assignment (as defined in the 1940 Act).
INVESTMENT ADVISER TO THE FUNDS
INTRUST Bank, N.A. ("INTRUST") has provided investment advisory
services to the Funds since inception pursuant to an Advisory Agreement with the
Trust (the "Advisory Agreement"). Subject to such policies as the Trust's Board
of Trustees may determine, INTRUST makes investment decisions for the Funds. The
Advisory Agreement provides that, as compensation for services thereunder,
INTRUST is entitled to receive from each Fund it manages a monthly fee at an
annual rate based upon average daily net assets of the Fund as set forth in the
table of Fund Expenses in the Prospectus.
INTRUST 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 December 31, 1997, total assets under management were
approximately $2 billion. The principal place of business address of the Adviser
is 105 North Main Street, Box One, Wichita, Kansas 67201.
Under the terms of an Investment Advisory Agreement for the Funds
between the Trust and the Adviser ("Agreement"), the investment advisory
services of the Adviser to the Funds are not exclusive. The Adviser is free to,
and does, render investment advisory services to others.
The Agreement will continue in effect with respect to each Fund for a
period more than two years from the date of its execution, only as long as such
continuance is approved at least annually (i) by vote of the holders of a
majority of the outstanding voting securities of each Fund or by the Board of
Trustees and (ii) by a majority of the Trustees who are not parties to the
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party. The Agreement was approved by the Board of Trustees, including a majority
of the Trustees who are not parties to the Agreement or interested persons of
any such parties, at a meeting called for the purpose of voting on the
Agreement, held on August 7, 1998.
SUBADVISER TO THE MONEY MARKET FUND
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
December 31, 1997, AMR provides investment advice with respect to approximately
$18.4 billion in assets, including approximately $14.2 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%.
Advisory Fees. For the fiscal years ended October 31, 1998 and 1997,
advisory fees of the Money Market were the following amounts:
<TABLE>
<CAPTION>
FYE 10/31/98 FYE 10/31/97
EARNED WAIVED EARNED WAIVED
<S> <C> <C> <C> <C>
Money Market Fund $128,959 $ 54,443 $120,772 $ 72,463
</TABLE>
DISTRIBUTION OF FUND SHARES
The Trust retains Fund Services Limited Partnership dba BISYS Fund
Services ("BISYS") to serve as principal underwriter for the shares of the Funds
pursuant to a Distribution Contract. The Distribution Contract provides that the
Distributor will use its best efforts to maintain a broad distribution of the
Funds' shares among bona fide investors and may enter into selling group
agreements with responsible dealers and dealer managers as well as sell the
Funds' shares to individual investors. The Distributor is not obligated to sell
any specific amount of shares.
DISTRIBUTION PLAN
The Trustees of the Trust have voted to adopt on behalf of each Fund 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
18
<PAGE> 78
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 a 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% for the Institutional
Service Class and not to exceed 0.75% for the Institutional Premium Class. 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 Administration Agreement between the Trust and the Sponsor have been
approved, and are subject to annual approval, by the Board of Trustees and by
the Trustees who neither are "interested persons" nor have any direct or
indirect financial interest in the operation of the Plan or in the
Administrative Services Contract, by vote cast in person at a meeting called for
the purpose of voting on the Plan. The Board of Trustees and the Trustees who
are not "interested persons" and who have no direct or indirect financial
interest in the operation of the Plan or in the Administration Agreement voted
to approve the Plan at a meeting held on August 7, 1998. 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.
Distribution Fees. For the fiscal years ended October 31, 1998 and
1997, BISYS, as Distributor to the Money Market Fund was entitled to
distribution fees in the following amounts:
<TABLE>
<CAPTION>
FYE 10/31/98 FYE 10/31/97
EARNED WAIVED EARNED WAIVED
<S> <C> <C> <C> <C>
Money Market Fund $128,957 $128,957 $120,770 $120,770
</TABLE>
ADMINISTRATION AND FUND ACCOUNTING 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
19
<PAGE> 79
of 0.20% of each Fund's average daily net assets so long as the Funds are
invested in the MIP.
The Administration Agreement is for a one year term. The Administration
Agreement will terminate automatically in the event of its assignment.
Administration Fees. For the fiscal years ended October 31, 1998 and
1997, BISYS, as Administrator to the Money Market Fund was entitled to
distribution fees in the following amounts:
<TABLE>
<CAPTION>
FYE 10/31/98 FYE 10/31/97
EARNED WAIVED EARNED WAIVED
<S> <C> <C> <C> <C>
Money Market Fund $103,167 $ 0 $96,617 $ 0
</TABLE>
BISYS Fund Services, Inc. ("BFSI"), an affiliate of BISYS, serves as
the Fund Accounting Agent for the Money Market Fund pursuant to a Fund
Accounting Agreement. For the fiscal years ended October 31, 1998 and 1997,
BFSI, as Fund Accountant for the Fund was entitled to fees in the following
amounts:
<TABLE>
<CAPTION>
FYE 10/31/98 FYE 10/31/97
EARNED WAIVED EARNED WAIVED
<S> <C> <C> <C> <C>
Money Market Fund $ 30,352 $ 0 $24,065 $ 0
</TABLE>
Investors Bank & Trust serves as the Fund Accounting Agent to the
NestEgg Funds pursuant to a Fund Accounting Agreement.
SERVICE ORGANIZATIONS
The Trust also contracts with banks (including the Adviser), trust
companies, broker-dealers (other than BISYS) or other financial organizations
("Service Organizations") to provide certain administrative services for the
Funds. Services provided by Service Organizations may include among other
things: providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds; transmitting and
receiving funds in connection with shareholders orders to purchase or redeem
shares; verifying and guaranteeing client signatures in connection with
redemption orders, transfers among and changes in shareholders designating
accounts; providing periodic statements showing a shareholder's account balance
and, to the extent practicable, integrating such information with other client
transactions; furnishing periodic and annual statements and confirmations of all
purchases and redemptions of shares in a shareholder's account; transmitting
proxy statements, annual reports, and updating prospectuses and other
communications from the Funds to shareholders; and providing such other services
as the Funds or a shareholder reasonably may request, to the extent permitted by
applicable statute, rule or regulation. Neither BISYS, nor the Distributor will
be a Service Organization or receive fees for servicing. Service Organizations
for 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.
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<PAGE> 80
If a bank were prohibited from so acting, its shareholder clients would
be permitted to remain shareholders of the Trust and alternative means for
continuing the servicing of such shareholders would be sought. In that event,
changes in the operation of the Trust might occur and a shareholder serviced by
such a bank might no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.
EXPENSES
Except for the expenses paid by INTRUST and BISYS, the Funds bear all
costs of their operations.
DETERMINATION OF NET ASSET VALUE OF THE NESTEGG FUNDS
The securities of the Master Portfolios, including covered call options
written by a Master Portfolio, are valued at the last sale price on the
securities exchange or national securities market on which such securities
primarily are traded. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the most recent bid prices. Portfolio securities which are traded primarily
on foreign securities exchanges generally are valued at the preceding closing
values of such securities on their respective exchanges, except that when an
occurrence subsequent to the time a value was so established is likely to have
changed such value, then the fair value of those securities is determined by
consideration of other factors by or under the direction of the MIP's Board of
Trustees or its delegates. Short-term investments are carried at amortized cost,
which approximates market value. Any securities or other assets for which recent
market quotations are not readily available are valued at fair value as
determined in good faith by the MIP's Board of Trustees.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the MIP's Board of Trustees, are valued at fair value as
determined in good faith by or under the direction of the MIP's Board of
Trustees or its delegates. The MIP's Board of Trustees reviews the method of
valuation on a current basis. In making a good-faith valuation of restricted
securities, the following are generally considered: restricted securities that
are, or are convertible into, securities of the same class of securities for
which a public market exists usually are valued at market value less the same
percentage discount at which such securities were purchased. This discount may
be revised periodically if the Adviser believes that the discount no longer
reflects the value of the restricted securities. Restricted securities not of
the same class as securities for which a public market exists usually are valued
initially at cost. Any subsequent adjustment from cost is based upon
considerations deemed relevant by or under the direction of the MIP's Board of
Trustees or its delegates.
Any assets or liabilities initially expressed in terms of foreign
currency are translated into dollars using information provided by pricing
entities, such as Morgan Stanley Capital International or Gelderman Data
Service, or at a quoted market exchange rate as may be determined to be
appropriate by the Adviser. Forward currency contracts are valued at the current
cost of offsetting the contract. Because of the need to obtain prices as of the
close of trading on various exchanges throughout the world, the calculation of
net asset value does not take place contemporaneously with the determination of
prices of the foreign securities held
21
<PAGE> 81
by the Master Portfolios. In addition, foreign securities held by a Master
Portfolio may be traded actively in securities markets which are open for
trading on days when the Master Portfolio does not determine its net asset
value. Accordingly, there may be occasions when a Master Portfolio does not
calculate its net asset value but when the value of such Master Portfolio's
portfolio securities is affected by such trading activity.
Fixed income securities are valued each business day using available
market quotations or at fair value as determined by one or more independent
pricing services (collectively, the "Service") approved by the MIP's Board of
Trustees. The Service may use available market quotations and employ electronic
data processing techniques and/or a matrix system to determine valuations. The
Service's procedures are reviewed by the MIP's officers under the general
supervision of the MIP's Board of Trustees.
Expenses and fees, including advisory fees, are accrued daily and are
taken into account for the purpose of determining the net asset value of each
Master Portfolio's shares.
PORTFOLIO TRANSACTIONS OF THE NESTEGG FUNDS
Since each NestEgg Fund invests all of its assets in a corresponding
Master Portfolio of MIP, set forth below is a description of the Master
Portfolios' policies governing portfolio securities transactions.
Purchases and sales of equity securities on a securities exchange
usually are effected through brokers who charge a negotiated commission for
their services. Commission rates are established pursuant to negotiations with
the broker based on the quality and quantity of execution services provided by
the broker in light of generally prevailing rates. Orders may be directed to any
broker including, to the extent and in the manner permitted by applicable law,
INTRUST or Barclays Global Investors Services. In the over-the-counter market,
securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount.
Purchases of debt securities generally are principal transactions. Debt
securities normally are purchased or sold from or to dealers serving as market
makers for the securities at a net price. Debt securities may also be purchased
in underwritten offerings or directly from an issuer. Generally debt obligations
are traded on a net basis and do not involve brokerage commissions. The cost of
executing transactions in debt securities consists primarily of dealer spreads
and underwriting commissions. Under the 1940 Act, persons affiliated with MIP
are prohibited from dealing with MIP as a principal in the purchase and sale of
portfolio securities unless an exemptive order allowing such transactions is
obtained from the Commission or an exemption is otherwise available. The Master
Portfolios may purchase securities from underwriting syndicates of which INTRUST
or BGFA is a member under certain conditions in accordance with the provisions
of a rule adopted under the 1940 Act and in compliance with procedures adopted
by MIP's Board of Trustees.
MIP has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by MIP's Board of Trustees, BGFA, as adviser, is responsible for the
Master Portfolio's investment decisions and the
22
<PAGE> 82
placing of portfolio transactions. In placing orders, it is MIP's policy to
obtain the best overall terms taking into account the 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 involved. BGFA generally
seeks reasonably competitive spreads or commissions.
In assessing the best overall terms available for any transaction, BGFA
considers factors deemed relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. As a result, a
Master Portfolio may pay a broker/dealer which furnishes brokerage services a
higher commission than that which might be charged by another broker/dealer for
effecting the same transaction, provided that such commission is determined to
be reasonable in relation to the value of the brokerage services provided by
such broker/dealer. Certain of the broker/dealers with whom the Master
Portfolios may transact business may offer commission rebates to the Master
Portfolios. BGFA considers such rebates in assessing the best overall terms
available for any transaction. MIP's Board of Trustees will periodically review
the commissions paid by the Master Portfolios to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Master Portfolios.
Under Section 28(e) of the Securities Exchange Act of 1934, an adviser
shall not be "deemed to have acted unlawfully or to have breached its fiduciary
duty" solely because under certain circumstances it has caused the account to
pay a higher commission than the lowest available. To obtain the benefit of
Section 28(e), an adviser must make a good faith determination that the
commissions paid are "reasonable in relation to the value of the brokerage and
research services provided . . . viewed in terms of either that particular
transaction or its overall responsibilities with respect to the accounts as to
which it exercises investment discretion and that the services provided by a
broker provide an adviser with lawful and appropriate assistance in the
performance of its investment decision-making responsibilities." Accordingly,
the price to a Master Portfolio in any transaction may be less favorable than
that available from another broker/dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
PORTFOLIO TURNOVER
Changes may be made in the portfolio consistent with the investment
objectives and policies of the Funds whenever such changes are believed to be in
the best interests of the Funds and their shareholders. It is anticipated that
the annual portfolio turnover rate normally will not exceed the amounts stated
in the Funds' Prospectus 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.
DETERMINATION OF NET ASSET VALUE OF THE MONEY MARKET FUND
As indicated under "Fund Share Valuation" in the applicable Prospectus,
the Money Market Fund uses the amortized cost method to determine the value of
its portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
which the Fund would receive if the security were sold. During these periods,
the yield to a shareholder may differ somewhat from that which could be obtained
from a similar fund which utilizes a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in lower value of a Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.
Rule 2a-7 provides that in order to value its portfolio using the
amortized cost method, the Money Market Fund must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase securities having
remaining maturities of 397 days or less and invest only in U.S. dollar
denominated eligible securities determined by the Trust's Board of Trustees to
be of minimal credit risks and which (1) have received the highest short-term
rating by at least two Nationally Recognized Statistical Rating Organizations
("NRSROs"), such as "A-1" by Standard & Poor's and "P-1" by Moody's; (2) are
single rated and have received the highest short-term rating by a NRSRO; or (3)
are unrated, but are determined to be of comparable quality by the Adviser or
the Adviser pursuant to guidelines approved by the Board and subject to the
ratification of the Board.
In addition, the Fund will not invest more than 5% of its total assets
in the securities (including the securities collateralizing a repurchase
agreement) of, or subject to puts issued by, a single issuer, except that, the
Fund may invest in U.S. Government securities or repurchase agreements that are
collateralized by U.S. Government securities without any such limitation, and
the limitation with respect to puts does not apply to unconditional puts if no
more than 10% of a Fund's total assets are invested in securities issued or
guaranteed by the issuer of the unconditional put. Investments in rated
securities not rated in the highest category by at least two rating
organizations (or one rating organization if the instrument was rated by only
one such organization), and unrated securities not determined by the Board of
Trustees to be comparable to those rated in the highest rating category, will be
limited to 5% of the 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 Fund, 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.
PORTFOLIO TRANSACTIONS OF THE MONEY MARKET FUND
Investment decisions for the Fund and for the other investment advisory
clients of the Adviser and the Subadviser 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 Subadviser, 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.
Debt securities normally will be purchased or sold from or to issuers
directly or to dealers serving as market makers for the securities at a net
price. Generally, money market securities are traded on a net basis and do not
involve brokerage commissions.
The cost of executing portfolio securities transactions for the Money
Market Fund primarily consists of dealer spreads and underwriting commissions.
Under the 1940 Act, persons affiliated with the Funds or the Sponsor are
prohibited from dealing with the Funds as a principal in the purchase and sale
of securities unless a permissive order allowing such transactions is obtained
from the SEC.
The Adviser 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. By
allocating transactions in this manner, the Adviser 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 in advising various
of their clients (including the Fund), although not all of these services are
necessarily useful and of value in managing the Fund. The management fees paid
by the Fund are not reduced because the Adviser or their affiliates receive such
services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934
(the "Act"), the Adviser may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the Act) to the
Adviser an amount of disclosed commission for effecting a securities transaction
for the Fund in excess of the commission which another broker-dealer would have
charged for effecting that transaction.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Trustees may determine, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
TAXATION
The Money Market Fund has qualified and intends to qualify and elect
annually to be treated as regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). The NestEgg Funds intend
to qualify and elect annually to be treated as regulated investment companies
under Subchapter M of 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
23
<PAGE> 83
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; and (c)
diversify its holdings so that, at the end of each quarter of the taxable year,
(i) at least 50% of the market value of the Fund's assets is represented by cash
and cash items (including receivables), U.S. Government securities, the
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets and not greater than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies). In addition, a Fund
earning tax-exempt interest must, in each year, distribute at least 90% of its
net tax-exempt income. By meeting these requirements, the Funds generally will
not be subject to Federal income tax on their investment company taxable income
and net capital gains which are distributed to shareholders. If the Funds do not
meet all of these Code requirements, they will be taxed as ordinary corporations
and their distributions will be taxed to shareholders as ordinary income.
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 MIP 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. 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 MIP 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 MIP 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
24
<PAGE> 84
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 MIP'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 MIP 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 MIP 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 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
25
<PAGE> 85
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 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 Portfolio 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 MIP 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 MIP. In
addition, losses realized by a Fund or the MIP 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 MIP of
hedging transactions are not entirely clear. Hedging transactions may increase
the amount of short-term capital gain realized by a Fund or MIP which is taxed
as ordinary income when distributed to stockholders.
A Fund or the MIP may make one or more of the elections available under
the Code which are applicable to straddles. If a Fund or the MIP 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
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<PAGE> 86
rules applicable under certain of the elections may operate to accelerate the
recognition of gains or losses from the affected straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a Fund that did not engage in such hedging transactions.
Investors should contact their own tax advisors in this regard.
Certain requirements that must be met under the Code in order for a
Fund to qualify as a regulated investment company may limit the extent to which
a Fund will be able to engage in transactions in options, futures, and forward
contracts.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund or the MIP accrues interest,
dividends or other receivables, or accrues expenses or other liabilities
denominated in a foreign currency, and the time the Fund or the MIP 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 MIP 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 MIP. 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 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 MIP 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
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<PAGE> 87
fluctuation gains from foreign currency-denominated debt securities, receivables
and payables, will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income as defined for purposes of the foreign tax credit) including
foreign source passive income of a Fund. The foreign tax credit may offset only
90% of the alternative minimum tax imposed on corporations and individuals, and
foreign taxes generally may not be deducted in computing alternative minimum
taxable income.
The Funds are required to report to the IRS all distributions except in
the case of certain exempt shareholders. All such distributions generally are
subject to withholding of Federal income tax at a rate of 31% ("backup
withholding") in the case of non-exempt shareholders if (1) the shareholder
fails to furnish the Funds with and to certify the shareholder's correct
taxpayer identification number or social security number, (2) the IRS notifies
the Funds or a shareholder that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the shareholder fails to certify
that he is not subject to backup withholding. If the withholding provisions are
applicable, any such distributions, whether reinvested in additional shares or
taken in cash, will be reduced by the amounts required to be withheld. Backup
withholding is not an additional tax. Any amount withheld may be credited
against the shareholders U.S. Federal income tax liability. Investors may wish
to consult their tax advisors about the applicability of the backup withholding
provisions.
The foregoing discussion relates only to Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates). Distributions by the Funds also
may be subject to state and local taxes and their treatment under state and
local income tax laws may differ from the Federal income tax treatment.
Distributions of a Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. Shareholders should consult their
tax advisors with respect to particular questions of Federal, state and local
taxation. Shareholders who are not U.S. persons should consult their tax
advisers regarding U.S. and foreign tax consequences of ownership of shares of
the Funds including the likelihood that distributions to them would be subject
to withholding of U.S. tax at a rate of 30% (or at a lower rate under a tax
treaty).
OTHER INFORMATION
CAPITALIZATION
The Trust is a Delaware business trust established under a Declaration
of Trust dated January 26, 1996 and currently consists of eleven separately
managed portfolios. The capitalization of the Trust consists solely of an
unlimited number of shares of beneficial interest with a par value of $0.001
each. The Board of Trustees may establish additional Funds (with different
investment objectives and fundamental policies) at any time in the future.
Establishment and offering of additional Funds will not alter the rights of the
Trust's shareholders. When issued, shares are fully paid, non-assessable,
redeemable and freely transferable. Shares do not have preemptive rights or
subscription rights. In any liquidation of a Fund, each shareholder is entitled
to receive his pro rata share of the net assets of that Fund.
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<PAGE> 88
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.
As of November 20, 1998, no person owned of record, or to the knowledge
of management beneficially owned five percent or more of the outstanding shares
of the respective INTRUST Fund or classes except as set forth below (no shares
of the NestEgg Funds are currently outstanding):
Money Market Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 45,960,178.340 100.00%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Short-Term Bond Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 1,774,393.565 29.70%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 4,199,841.311 70.30%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Intermediate Bond Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 1,274,950.387 25.46%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 3,731,706.278 74.53%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Stock Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 4,227,712.314 51.30%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 3,905,370.367 47.39%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Int'l Multi-Manager Stock Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 3,182,843.300 58.64%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 2,186,708.882 40.29%
Cash Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Kansas Tax-Exempt Bond Fund
Institutional Service Class Shares Owned % Owned
- --------------------------- ------------ -------
Transco & Company 1,343,144.735 11.14%
Reinvest Account
c/o INTRUST Bank/Trust Division
105 N. Main
Wichita, KS 67201
Transco & Company 10,599,931.039 87.94%
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.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
INTRUST acts as custodian of the Trust's assets. BISYS Fund Services,
Inc. ("BFSI") acts as transfer agent for the Funds. BFSI and BISYS have offices
located at 3435 Stelzer Road, Columbus, Ohio 43219. The Trust compensates BFSI
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 Funds pay no custodian fees at the Fund level as long as all
of their assets are invested in another mutual fund, but they incur their
pro-rata portion of the custody fees of Investors Bank & Trust Company as the
Master Portfolios' Custodian. Investors Bank & Trust, as the Master Portfolios'
Custodian, has reviewed and approved custodial arrangements for securities held
outside of the United States in accordance with Rule 17f-5 of the 1940 Act.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has been selected as the independent auditors for
the Trust. KPMG Peat Marwick LLP provides audit services, tax return preparation
and assistance and 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.
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of
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<PAGE> 89
the initial investment, taking the "n"th root of the quotient (where "n" is the
number of years in the period) and subtracting 1 from the result.
Total return is calculated by subtracting the amount of the net asset
value per share at the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the reinvestment of
dividends and distributions during the period), and dividing the result by the
net asset value per share at the beginning of the period.
Performance information for the Funds may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, or other unmanaged indices so that investors may compare the
Funds' results with those of a group of unmanaged securities widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.
Investors who purchase and redeem shares of the Funds through a
customer account maintained at a Service Organization may be charged one or more
of the following types of fees as agreed upon by the Service Organization and
the investor, with respect to the customer services provided by the Service
Organization: account fees (a fixed amount per month or per year); transaction
fees (a fixed amount per transaction processed); compensating balance
requirements (a minimum dollar amount a customer must maintain in order to
obtain the services offered); or account maintenance fees (a periodic charge
based upon a percentage of the assets in the account or of the dividends paid on
those assets). Such fees will have the effect of reducing the yield and average
annual total return of the Funds for those investors. Investors who maintain
accounts with the Trust as transfer agent will not pay these fees.
YIELD AND PERFORMANCE INFORMATION OF THE MONEY MARKET FUND
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)[RAISED TO THE (365/7) POWER]] -- 1.
For the seven-day period ended October 31, 1998, the seven-day
effective yield for the Money Market Fund was 5.16%.
FINANCIAL STATEMENTS
The Report of Independent Auditors and Financial Statements of the
Trust for the period ended October 31, 1997 are incorporated herein by reference
to the Trust's Annual Report, such Financial Statements having been audited by
KPMG Peat Warwick LLP, independent auditors, and is so included and incorporated
by reference in reliance upon the report of said firm, which report is given
upon their authority as experts in auditing and accounting. Copies of the Annual
Report are available without charge upon request by writing to INTRUST Funds
Trust, 3435 Stelzer Road, Columbus, OH 43219-8006 or telephoning (888) 266-8787.
The Trust's unaudited financial statements for the fiscal year ended October 31,
1998 are included herein.
The Report of Independent Auditors and Financial Statements of the
Master Portfolios for the period ended February 28, 1998 are incorporated herein
by reference to the MIP's Annual Report, such Financial Statements having been
audited by KPMG Peat Marwick LLP, independent auditors, and is so included and
incorporated by reference in reliance upon the report of said firm, which report
is given upon their authority as experts in auditing and accounting.
30
<PAGE> 90
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1998
(Unaudited)
MONEY SHORT-TERM INTERMEDIATE
MARKET BOND BOND
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $50,618,097; $59,630,241;
$50,624,868, respectively) $ 50,618,097 $ 60,785,641 $ 52,581,205
Interest and dividends receivable 313,217 819,397 662,711
Receivable for investments sold -- 66,110 23,341
Deferred organizational costs 73,701 19,535 18,048
Prepaid expenses and other assets 521 356 257
-------------- ---------------- ----------------
Total Assets $ 51,005,536 $ 61,691,039 $ 53,285,562
-------------- ---------------- ----------------
LIABILITIES:
Dividends payable 212,978 275,052 249,453
Accrued expenses and other payables:
Investment advisory fees 6,601 9,891 13,067
Administration fees 1,109 1,346 1,166
Shareholder servicing fees 3,928 4,201 3,609
Other payables and accrued expenses 34,936 29,618 25,452
-------------- ---------------- ----------------
Total Liabilities 259,552 320,108 292,747
-------------- ---------------- ----------------
NET ASSETS $ 50,745,984 $ 61,370,931 $ 52,992,815
============== ================ ================
NET ASSETS consist of:
Capital 50,732,100 60,246,753 51,007,829
Accumulated undistributed net investment income 11,908 6,163 5,167
Accumulated undistributed net realized gains (losses) on investments 1,976 (37,385) 23,482
Net unrealized appreciation from investments -- 1,155,400 1,956,337
NET ASSETS -------------- ---------------- ----------------
$ 50,745,984 $ 61,370,931 $ 52,992,815
============== ================ ================
50,744,364 6,017,201 5,082,254
Outstanding units of Beneficial Interest (Shares): ============== ================ ================
NET ASSET VALUE:
Institutional Service Shares
Offering and redemption price per share $ 1.00 $ 10.20 $ 10.43
============== ================ ================
</TABLE>
See notes to unaudited financial statements.
<PAGE> 91
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
October 31, 1998
(Unaudited)
INTERNATIONAL KANSAS
STOCK MULTI-MANAGER TAX-EXEMPT
FUND STOCK FUND BOND FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $102,434,615; $55,618,787;
$129,138,639, respectively) $ 99,916,579 $ 55,537,238 $ 133,731,307
Cash --- 1,300 --
Interest and dividends receivable 117,751 --- 1,686,349
Receivable for investments sold 1,128,683 --- --
Receivable for capital shares issued --- 895 --
Deferred organizational costs 22,204 11,743 --
Prepaid expenses and other assets 487 257 72,942
------------- ------------- -------------
Total Assets $ 101,185,704 $ 55,551,433 $ 135,490,598
------------- ------------- -------------
LIABILITIES:
Dividends payable --- --- 538,775
Payable for investments purchased 503,214 --- 1,962,260
Accrued expenses and other payables:
Investment advisory fees 104,551 15,417 --
Administration fees 2,163 899 32,505
Shareholder servicing fees 6,488 3,524 --
Other payables and accrued expenses 45,227 27,053 39,594
------------- ------------- -------------
Total Liabilities 661,643 46,893 2,573,134
------------- ------------- -------------
NET ASSETS $ 100,524,061 $ 55,504,540 $ 132,917,464
============= ============= =============
NET ASSETS consist of:
Capital 88,486,737 53,116,267 127,726,970
Accumulated undistributed net investment income 491,990 850,528 --
Accumulated undistributed net realized gains on investments 14,063,370 1,619,294 597,826
Net unrealized appreciation (depreciation) from investments (2,518,036) (81,549) 4,592,668
------------- ------------- -------------
NET ASSETS $ 100,524,061 $ 55,504,540 $ 132,917,464
============= ============= =============
Outstanding units of Beneficial Interest (Shares): 8,327,993 4,980,507 12,198,012
============= ============= =============
NET ASSET VALUE:
Institutional Service Shares
Offering and redemption price per share $ 12.07 $ 11.14 $ 10.90
============= ============= =============
</TABLE>
See notes to unaudited financial statements.
<PAGE> 92
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF OPERATIONS
For the year ended October 31, 1998
(Unaudited)
MONEY SHORT-TERM INTERMEDIATE
MARKET BOND BOND
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 2,948,662 $ 3,579,237 $ 3,190,931
Dividend income --- 70,026 68,450
-------------- -------------- --------------
Total Income 2,948,662 3,649,263 3,259,381
EXPENSES:
Investment advisory fees 128,959 233,125 199,787
Administration fees 103,167 116,563 99,894
Fund accounting fees 30,352 39,973 38,652
Transfer agent fees 3,234 3,063 2,890
12b-1 fees 128,957 145,703 124,867
Shareholder servicing fees 44,756 47,217 40,498
Custodian fees 10,316 11,655 9,988
Legal and audit fees 30,929 42,652 51,030
Other 50,563 17,548 3,911
-------------- -------------- --------------
Total expenses before waivers/ reimbursements 531,232 657,499 571,517
Less expenses waived/ reimbursed (183,400) (268,092) (179,808)
-------------- -------------- --------------
Net expenses 347,832 389,407 391,709
-------------- -------------- --------------
NET INVESTMENT INCOME 2,600,830 3,259,856 2,867,672
-------------- -------------- --------------
REALIZED AND UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains on investment transactions 1,264 5,686 141,708
Net change in unrealized appreciation of investments --- 696,063 942,254
-------------- -------------- --------------
Net realized and unrealized gains on investments 1,264 701,749 1,083,962
-------------- -------------- --------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,602,094 $ 3,961,605 $ 3,951,634
============== ============== ==============
</TABLE>
See notes to unaudited financial statements.
<PAGE> 93
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF OPERATIONS, CONTINUED
For the year ended October 31, 1998
(Unaudited)
INTERNATIONAL KANSAS
STOCK MULTI-MANAGER TAX-EXEMPT
FUND STOCK FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ -- $ -- $ 6,072,818
Dividend income 1,836,633 --- 64,669
INVESTMENT INCOME ALLOCATED FROM
INTERNATIONAL EQUITY PORTFOLIO:
Interest income --- --- --
Dividend income --- 1,787,271 --
Income from securities lending --- --- --
Expenses --- (454,344) --
------------ ------------ ------------
Total Income 1,836,633 1,332,927 6,137,487
EXPENSES:
Investment advisory fees 928,393 225,903 360,231
Administration fees 185,680 84,714 240,155
Fund accounting fees 33,828 30,020 41,461
Transfer agent fees 9,036 5,693 7,352
12b-1 fees 232,097 141,189 --
Shareholder servicing fees 74,815 45,481 96,062
Custodian fees 18,566 --- 24,013
Legal and audit fees 66,299 46,884 65,595
Other 29,456 17,931 60,467
------------ ------------ ------------
Total expenses before waivers/ reimbursements 1,578,170 597,815 895,336
Less expenses waived/ reimbursed (352,787) (169,428) (643,130)
------------ ------------ ------------
Net expenses 1,225,383 428,387 252,206
------------ ------------ ------------
NET INVESTMENT INCOME 611,250 904,540 5,885,281
------------ ------------ ------------
REALIZED AND UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains on investment transactions 14,159,299 1,635,686 597,821
Net change in unrealized appreciation (depreciation) of investments (4,384,432) (988,061) 1,617,648
------------ ------------ ------------
Net realized and unrealized gains on investments 9,774,867 647,625 2,215,469
------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,386,117 $ 1,552,165 $ 8,100,750
============ ============ ============
</TABLE>
See notes to unaudited financial statements.
<PAGE> 94
INTRUST FUNDS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
MONEY MARKET FUND SHORT-TERM BOND FUND
----------------------------- -----------------------------
FOR THE YEAR JANUARY 23, FOR THE YEAR JANUARY 21,
ENDED 1997 TO ENDED 1997 TO
OCTOBER 31,1998 OCTOBER 31, OCTOBER 31,1998 OCTOBER 31,
1997 (a) 1997 (a)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 2,600,830 $ 2,378,643 $ 3,259,856 $ 1,774,822
Net realized gains (losses) on investment transactions 1,264 356 5,686 (43,673)
Net change in unrealized appreciation of investment
transactions --- --- 696,063 459,337
------------- ------------- ------------- -------------
Change in net assets resulting from operations 2,602,094 2,378,999 3,961,605 2,190,486
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,600,830) (2,378,643) (3,259,856) (1,774,822)
Capital Transactions:
Proceeds from shares issued 139,751,111 288,738,958 15,889,131 59,937,947
Dividends reinvested 5,335 3,437 917,278 271,696
Cost of shares redeemed (144,577,515) (233,176,962) (8,819,515) (7,943,019)
------------- ------------- ------------- -------------
Change in net assets from share transactions (4,821,069) 55,565,433 7,986,894 52,266,624
------------- ------------- ------------- -------------
Change in net assets (4,819,805) 55,565,789 8,688,643 52,682,288
NET ASSETS:
Beginning of period 55,565,789 --- 52,682,288 ---
------------- ------------- ------------- -------------
End of period $ 50,745,984 $ 55,565,789 $ 61,370,931 $ 52,682,288
============= ============= ============= =============
SHARE TRANSACTIONS:
Issued 139,751,111 288,738,958 1,573,861 5,989,140
Reinvested 5,335 3,437 90,835 27,099
Redeemed (144,577,515) (233,176,962) (872,890) (790,844)
------------- ------------- ------------- -------------
Change in shares (4,821,069) 55,565,433 791,806 5,225,395
============= ============= ============= =============
Undistributed net investment income included
in net assets:
End of period: $ 12,264 $ --- $ 6,163 $ ---
============= ============= ============= =============
(a) Period from commencement of operations.
</TABLE>
See notes to unaudited financial statements.
<PAGE> 95
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
(Unaudited)
INTERMEDIATE BOND STOCK FUND
----------------------------- -----------------------------
FOR THE YEAR JANUARY 21, FOR THE YEAR JANUARY 21,
ENDED 1997 TO ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31, OCTOBER 31, 1998 OCTOBER 31,
1997 (a) 1997 (a)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 2,867,672 $ 1,582,658 $ 611,250 $ 268,419
Net realized gains (losses) on investment transactions 141,708 (119,472) 14,159,299 3,822,119
Net change in unrealized appreciation
(depreciation) of investment transactions 942,254 1,014,083 (4,384,432) 1,866,396
------------- ------------- ------------- -------------
Change in net assets resulting from operations 3,951,634 2,477,269 10,386,117 5,956,934
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,867,672) (1,582,658) (395,475) ---
From net realized gains on investment transactions --- --- (3,918,048) ---
------------- ------------- ------------- -------------
Total distribution to shareholders (2,867,672) (1,582,658) (4,313,523) ---
CAPITAL TRANSACTIONS:
Proceeds from shares issued 14,471,629 48,871,160 29,168,396 82,543,202
Dividends reinvested 718,051 183,598 2,109,220 ---
Cost of shares redeemed (9,772,711) (3,457,485) (16,660,584) (8,665,701)
------------- ------------- ------------- -------------
Change in net assets from share transactions 5,416,969 45,597,273 14,617,032 73,877,501
------------- ------------- ------------- -------------
Change in net assets 6,500,931 46,491,884 20,689,626 79,834,435
NET ASSETS:
Beginning of period 46,491,884 --- 79,834,435 ---
------------- ------------- ------------- -------------
End of period $ 52,992,815 $ 46,491,884 $ 100,524,061 $ 79,834,435
============= ============= ============= =============
SHARE TRANSACTIONS:
Issued 1,410,418 4,881,163 2,494,495 7,832,137
Reinvested 69,956 18,288 191,573 ---
Redeemed (952,303) (345,268) (1,418,435) (771,777)
------------- ------------- ------------- -------------
Change in shares 528,071 4,554,183 1,267,633 7,060,360
============= ============= ============= =============
Undistributed net investment income included
in net assets:
End of period: $ 5,167 $ --- $ 491,990 $ 268,419
============= ============= ============= =============
</TABLE>
See notes to unaudited financial statements.
<PAGE> 96
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
(Unaudited)
INTERNATIONAL
MULTI-MANAGER STOCK FUND
------------------------------
FOR THE YEAR JANUARY 20,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
1997 (a)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 904,540 $ 419,357
Net realized gains on investment transactions 1,635,686 832,732
Net change in unrealized appreciation (depreciation) of
investment and foreign currency transactions (988,061) 906,512
------------- -------------
Change in net assets resulting from operations 1,552,165 2,158,601
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (499,827) ---
From net realized gains on investment transactions (351,828) ---
------------- -------------
Total distribution to shareholders (851,655) ---
CAPITAL TRANSACTIONS:
Proceeds from shares issued 29,807,759 41,627,048
Dividends reinvested 424,581 ---
Cost of shares redeemed (16,563,493) (2,650,466)
------------- -------------
Change in net assets from share transactions 13,668,847 38,976,582
------------- -------------
Change in net assets 14,369,357 41,135,183
NET ASSETS:
Beginning of period 41,135,183 ---
------------- -------------
End of period $ 55,504,540 $ 41,135,183
============= =============
SHARE TRANSACTIONS:
Issued 2,684,450 3,991,244
Reinvested 40,321 ---
Redeemed (1,493,886) (241,622)
------------- -------------
Change in shares 1,230,885 3,749,622
============= =============
Undistributed net investment income included
in net assets:
End of period: $ 850,528 $ 419,357
============= =============
<CAPTION>
KANSAS TAX-EXEMPT BOND FUND
----------------------------------------------
FOR THE YEAR SEPTEMBER 1, YEAR
ENDED 1997 TO ENDED
OCTOBER 31, 1998 OCTOBER 31, AUGUST 31,
1997 (b) 1997 (c)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 5,885,281 $ 863,968 $ 4,186,899
Net realized gains on investment transactions 597,821 192,740 142,735
Net change in unrealized appreciation (depreciation) of
investment and foreign currency transactions 1,617,648 511,072 1,312,942
------------- ------------- -------------
Change in net assets resulting from operations 8,100,750 1,567,780 5,642,576
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (5,885,281) (863,968) (4,508,562)
From net realized gains on investment transactions (332,132) --- ---
------------- ------------- -------------
Total distribution to shareholders (6,217,413) (863,968) (4,508,562)
CAPITAL TRANSACTIONS:
Proceeds from shares issued 40,349,944 7,791,225 31,077,025
Dividends reinvested 445,962 10,885 1,369
Cost of shares redeemed (13,377,639) (1,669,969) (7,497,873)
------------- ------------- -------------
Change in net assets from share transactions 27,418,267 6,132,141 23,580,521
------------- ------------- -------------
Change in net assets 29,301,604 6,835,953 24,714,535
NET ASSETS:
Beginning of period 103,615,860 96,779,907 72,065,372
------------- ------------- -------------
End of period $ 132,917,464 $ 103,615,860 $ 96,779,907
============= ============= =============
SHARE TRANSACTIONS:
Issued 3,735,461 729,086 2,933,096
Reinvested 41,258 1,018 129
Redeemed (1,235,603) (156,177) (707,944)
------------- ------------- -------------
Change in shares 2,541,116 573,927 2,225,281
============= ============= =============
Undistributed net investment income included
in net assets:
End of period: $ --- $ --- $ ---
============= ============= =============
(a) Period from commencement of operations.
(b) For the period from September 1, 1997 through October 31, 1997. The fund changed its fiscal year end from August to October.
(c) Formerly the Kansas Tax-Free Income Portfolio of the SEI Tax-Exempt Trust. See Note 1 for further information.
</TABLE>
See notes to unaudited financial statements.
<PAGE> 97
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
--------------------------------
FOR THE YEAR JANUARY 23,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (a)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000
-------------- --------------
Net investment income 0.050 0.038
Net realized and unrealized gain (loss) from investments --- ---
-------------- --------------
Total income from investment operations 0.050 0.038
-------------- --------------
DISTRIBUTIONS:
Net investment income (0.050) (0.038)
Net realized gains from investments --- ---
-------------- --------------
Total distributions (0.050) (0.038)
-------------- --------------
Net change in net asset value per share --- ---
-------------- --------------
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000
============== ==============
Total Return 4.27% 3.86% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 50,746 $ 55,566
Ratios to average net assets:
Expenses 0.67% 0.71% (c)
Net investment income 5.04% 4.92% (c)
Expenses* 1.03% 1.11% (c)
Net investment income* 4.69% 4.52% (c)
- ---------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary fee
reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
SHORT-TERM BOND FUND
--------------------------------
FOR THE YEAR JANUARY 21,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (a)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.08 $ 10.00
============== ==============
Net investment income 0.57 0.42
Net realized and unrealized gain (loss) from investments 0.12 0.08
-------------- --------------
Total income from investment operations 0.69 0.50
-------------- --------------
DISTRIBUTIONS:
Net investment income (0.57) -0.42
Net realized gains from investments --- ---
-------------- --------------
Total distributions (0.57) -0.42
-------------- --------------
Net change in net asset value per share 0.12 0.08
-------------- --------------
NET ASSET VALUE, END OF PERIOD $ 10.20 $ 10.08
============== ==============
TOTAL RETURN 6.10% 5.13% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 61,371 $ 52,682
Ratios to average net assets:
Expenses 0.67% 0.78% (c)
Net investment income 5.59% 5.48% (c)
Expenses* 1.13% 1.25% (c)
Net investment income* 5.13% 5.01% (c)
Portfolio Turnover Rate 84.41% (b)
- --------------------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary fee
reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
STOCK FUND
-----------------------------------
FOR THE YEAR JANUARY 21,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (a)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.31 $ 10.00
-------------- --------------
Net investment income 0.07 0.04
Net realized and unrealized gain (loss)
from investments 1.28 1.27
-------------- --------------
Total income from investment operations 1.35 1.31
-------------- --------------
DISTRIBUTIONS:
Net investment income (0.05) ---
Net realized gains from investments (0.54) ---
-------------- --------------
Total distributions (0.59) ---
-------------- --------------
Net change in net asset value per share 0.76 1.31
-------------- --------------
NET ASSET VALUE, END OF PERIOD $ 12.07 $ 11.31
============== ==============
TOTAL RETURN 7.58% 13.10% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 100,524 $ 79,834
Ratios to average net assets:
Expenses 1.32% 1.41% (c)
Net investment income 0.66% 0.63% (c)
Expenses* 1.70% 1.80% (c)
Net investment income* 0.28% 0.24% (c)
Portfolio Turnover Rate 71.76% (b)
- ----------------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary
fee reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
INTERMEDIATE BOND FUND
--------------------------------
FOR THE YEAR JANUARY 21,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (a)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.21 $ 10.00
-------------- --------------
Net investment income 0.59 0.45
Net realized and unrealized gain (loss) from investments 0.22 0.21
-------------- --------------
Total income from investment operations 0.81 0.66
-------------- --------------
DISTRIBUTIONS:
Net investment income (0.59) -0.45
Net realized gains from investments --- ---
-------------- --------------
Total distributions (0.59) -0.45
-------------- --------------
Net change in net asset value per share 0.22 0.21
-------------- --------------
NET ASSET VALUE, END OF PERIOD $ 10.43 $ 10.21
============== ==============
TOTAL RETURN 7.13% 6.77% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 52,993 $ 46,492
Ratios to average net assets:
Expenses 0.78% 0.90% (c)
Net investment income 5.74% 5.83% (c)
Expenses* 1.14% 1.27% (c)
Net investment income* 5.38% 5.46% (c)
Portfolio Turnover Rate 108.73% (b)
- ----------------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary fee
reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Commencement of operations.
(b) Not annualized.
(c) Annualized.
</TABLE>
<PAGE> 101
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
INTERNATIONAL MULTI-MANAGER STOCK FUND
--------------------------------------
FOR THE YEAR JANUARY 21,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (a)
- --------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.97 $ 10.00
-------------- --------------
Net investment income 0.18 0.11
Net realized and unrealized gain (loss) from investments 0.21 0.86
-------------- --------------
Total income from investment operations 0.39 0.97
-------------- --------------
DISTRIBUTIONS:
Net investment income (0.13) ---
Net realized gains from investments (0.09) ---
-------------- --------------
Total distributions (0.22) ---
-------------- --------------
Net change in net asset value per share 0.17 0.97
-------------- --------------
NET ASSET VALUE, END OF PERIOD $ 11.14 $ 10.97
============== ==============
TOTAL RETURN 5.29% 9.70% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 55,505 $ 41,135
Ratios to average net assets:
Expenses 1.56% 1.42% (c)
Net investment income 1.60% 1.91% (c)
Expenses* 1.86% 1.75% (c)
Net investment income* 1.30% 1.58% (c)
- ----------------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary fee
reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Commencement of operations
(b) Not annualized.
(c) Annualized.
</TABLE>
<PAGE> 102
<TABLE>
<CAPTION>
INTRUST FUNDS TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
KANSAS TAX-EXEMPT BOND FUND (a)
------------ -----------
FOR THE YEAR SEPTEMBER 1,
ENDED 1997 TO
OCTOBER 31, 1998 OCTOBER 31,
(Unaudited) 1997 (b)
- ----------------------------------------------------------- ------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.73 $ 10.66
------------ ------------
Net investment income 0.53 0.09
Net realized and unrealized gain (loss)
from investments 0.20 0.07
------------ ------------
Total income from investment operations 0.73 0.16
DISTRIBUTIONS:
Net investment income (0.53) (0.09)
Net realized gains from investments (0.03) ---
------------ ------------
Total distributions (0.56) (0.09)
------------ ------------
Net change in net asset value per share 0.17 0.07
------------ ------------
NET ASSET VALUE, END OF PERIOD $ 10.90 $ 10.73
============ ============
TOTAL RETURN 5.20% 1.51% (c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 132,917 $ 103,616
Ratios to average net assets:
Expenses 0.21% 0.21% (d)
Net investment income 4.90% 5.10% (d)
Expenses* 0.75% 0.82% (d)
Net investment income* 4.36% 4.49% (d)
Portfolio Turnover Rate --- 5.87% (c)
<CAPTION>
KANSAS TAX-EXEMPT BOND FUND (a)
------------------------------------------------------------
YEARS ENDED AUGUST 31,
1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.51 $ 10.63 $ 10.47 $ 10.91
------------ ------------ ------------ ------------
Net investment income 0.55 0.56 0.57 0.57
Net realized and unrealized gain (loss)
from investments 0.19 (0.12) 0.16 (0.42)
------------ ------------ ------------ ------------
Total income from investment operations 0.74 0.44 0.73 0.15
DISTRIBUTIONS:
Net investment income (0.59) (0.56) (0.57) (0.57)
Net realized gains from investments -- --- -- (0.02)
------------ ------------ ------------ ------------
Total distributions (0.59) (0.56) (0.57) (0.59)
------------ ------------ ------------ ------------
Net change in net asset value per share 0.15 (0.12) 0.16 (0.44)
------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 10.66 $ 10.51 $ 10.63 $ 10.47
============ ============ ============ ============
TOTAL RETURN 7.27% 4.23% 7.23% 1.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $ 96,780 $ 72,065 $ 65,834 $ 62,346
Ratios to average net assets:
Expenses 0.21% 0.21% 0.21% 0.21%
Net investment income 5.20% 5.31% 5.47% 5.36%
Expenses* 0.62% 0.51% 0.51% 0.54%
Net investment income* 4.79% 5.01% 5.17% 5.03%
Portfolio Turnover Rate 8.78% 12.71% 17.60% 10.57%
- ----------------------------
* During the period, certain fees were voluntarily reduced and/ or reimbursed. If such voluntary fee
reductions and/ or reimbursements had not occurred, the ratio would have been as indicated.
(a) Formerly the Kansas Tax Free Income Portfolio of the SEI Tax-Exempt Trust.
(b) For the period from September 1, 1997, through October 31, 1997. The Kansas Tax-Exempt
Bond Fund changed its fiscal year end to October 31, 1997.
(c) Not annualized.
(d) Annualized.
</TABLE>
<PAGE> 103
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The INTRUST Funds Trust (the "Trust") was established as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, diversified management investment company. The
Trust currently consists of six active funds. The Trust is authorized to offer
two classes of shares: Institutional Service and Institutional Premium. The
Institutional Premium shares, which have not yet been offered for sale, may be
subject to additional Shareholder Servicing fees. The accompanying financial
statements and financial highlights are those of the Money Market Fund, the
Short-Term Bond Fund, the Intermediate Bond Fund, the Stock Fund, the
International Multi-Manager Stock Fund, and the Kansas Tax-Exempt Bond Fund
(individually a "Fund", collectively the "Funds"). Each Fund is currently
offered in the Institutional Service Class only.
The Funds' investment objectives are as follows:
FUND OBJECTIVE
---- ---------
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.
Short-Term Bond Fund Seeks a high level of current income consistent with
liquidity and safety of principal by investing
primarily in investment grade short-term
obligations.
Intermediate Bond Fund Seeks current income consistent with managing for
total return by investing in fixed income
securities.
Stock Fund Seeks long-term capital appreciation by investing in
common stocks issued by companies with large market
capitalization.
International Multi-
Manager Stock Fund Seeks long-term capital appreciation by investing in
equity securities of issuers based outside the
United States.
Kansas Tax-Exempt Bond
Fund Seeks to preserve capital while producing current
income for the investor that is exempt from both
federal and Kansas state income taxes by investing
in municipal obligations with maturities ranging
from 1 to 15 years.
The International Multi-Manager Stock 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 Portfolio owned by the Fund
as of October 31, 1998 was approximately X.X%. The financial statements of the
Portfolio, including its schedule of investments, are included elsewhere in this
report and should be read in conjunction with the International Multi-Manager
Stock Fund's financial statements.
As approved by its shareholders at a special shareholders meeting held April 28,
1997, effective May 17, 1997, the Kansas Tax Free Income Portfolio (the "SEI
Fund") of the SEI Tax-Exempt Trust (the "SEI Trust") was reorganized into the
Fund as transacted by (a) the tax-free transfer of all the assets and
liabilities of the
<PAGE> 104
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
SEI Fund to the Fund in exchange for shares of the Fund; (b) the distribution of
the Fund's shares to shareholders of the SEI Fund; and (c) the termination of
the SEI Fund as a series of the SEI Trust. The Fund retained the investment
objectives and assumed the financial reporting history of the SEI Fund.
Effective September 1, 1997, the Kansas Tax-Exempt Bond Fund changed its fiscal
year end from August 31, to October 31.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in 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 effect 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 Money Market Fund may not (a)
purchase any instrument with a remaining maturity greater that thirteen months
unless such instrument is subject to a demand feature, or (b) maintain a
dollar-weighted average maturity which exceeds 90 days. Equity securities held
by a Fund are valued at the last reported sales price on the securities exchange
or in the principal over-the- counter market in which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. Debt securities held by
a Fund generally are valued based on quoted bid prices. Short-term debt
investments having maturities of 60 days or less are valued at amortized cost,
which approximates market value, and , if applicable, adjusted for foreign
exchange translation. Restricted securities and securities for which market
quotations are not readily available are valued at fair value using pricing
methods approved by the Trust's Board of Trustees. Securities may be valued by
independent pricing services, approved by the Trust's Board of Trustees, which
use prices provided by market-makers or estimates of market value obtained from
yield date relating to instruments or securities with similar characteristics.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND DELAYED DELIVERY BASIS:
Each Fund may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and/or yield, thereby involving the risk that the price
and/or yield obtained may be more or less than those available in the market
when delivery takes place. At the time a Fund makes the commitment to purchase a
security on a when-issued basis, the Fund records the transaction and reflects
the value of the security in determining net asset value. Normally, the
settlement date occurs within one month of the purchase. No payment is made by
the Fund and no interest accrues to the Fund during the period between purchase
and settlement. The Fund establishes a segregated account in which it maintains
cash and marketable securities equal in value to commitments for when-issued
securities. Securities purchased on a when-issued basis or delayed delivery
basis do not earn income until the settlement date.
<PAGE> 105
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
SECURITY TRANSACTIONS AND RELATED INCOME
The Funds, other than the International Multi-Manager Stock Fund, record
security transactions on a trade date basis. Net realized gains or losses from
sales of securities are determined on the specific identification cost method.
Interest income is recorded on the accrual basis and includes, where applicable,
the amortization of premiums or the accretion of discounts. Dividend income is
recorded on the ex-dividend date.
The International Multi-Manager Stock Fund records its share of the investment
income, dividend income, income from securities lending, expenses, and
unrealized and realized gains and losses of the Portfolio of the AMR Investment
Services Trust on a daily basis. The income, expenses, and gains and losses are
allocated daily to investors in the Portfolio based upon their investments in
the Portfolio. Such investments are adjusted on a daily basis.
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 based on relative net assets or another
appropriate basis. In addition to accruing its own expenses, the International
Multi-Manager Stock Fund records its proportionate share of the expenses of the
Portfolio of the AMR Investment Services Trust on a daily basis.
ORGANIZATION COSTS
Costs incurred in connection with the organization and initial registration of
the Funds 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. 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.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income for the Money Market Fund, Short-Term
Bond Fund, Intermediate Bond Fund and the Kansas Tax-Exempt Bond Fund are
declared daily and paid monthly. Distributions from net investment income for
the Stock Fund and the International Multi-Manager Stock Fund are declared and
paid at least once annually. Distributions from net realized capital gains, if
any, are distributed at least annually.
Distributions from net investment income and from net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These "book/tax" differences are
primarily due to differing treatments for mortgage-backed securities, expiring
capital loss carryforwards and deferrals of certain losses.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassifications.
Dividends and
<PAGE> 106
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
distributions to shareholders which exceed net investment income and net
realized gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of capital.
As of October 31, 1998, the following reclassifications have been made to
increase (decrease such accounts with offsetting adjustments made to capital:
<TABLE>
<CAPTION>
Accumulated
Undistributed Accumulated Net
Net Investment Realized Gain (Loss)
Income on Investments
------ --------------
<S> <C> <C>
Money Market Fund $ 12,264 1,264
Short-Term Bond Fund 6,163 0
Intermediate Bond Fund 5,167 26,528
Stock Fund 491,990 14,063,370
International Multi-Manager Stock Fund 850,528 1,619,294
</TABLE>
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.
3. 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;
0.40% of the International Multi-Manager Stock Fund; and 0.30% of the Kansas
Tax-Exempt Bond 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 Adviser is party to a sub-investment advisory agreement under which the
subadvisers are entitled to receive a fee from the Adviser, computed daily and
paid monthly, equal to the following percentages of the Funds' average net
assets: 0.20% of the Money Market Fund; 0.125% of the Short-Term Bond Fund and
the Intermediate Bond Fund; and 0.45% of the Stock Fund. The individual
subadvisers are listed as follows:
AMR Investment Services, Inc. - The Money Market Fund
Galliard Capital Management, Inc. - The Short-Term Bond Fund and the
Intermediate Bond Fund
ARK Asset Management, Inc. - The Stock Fund
<PAGE> 107
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
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%. For the Kansas Tax-Exempt Bond Fund,
prior to May 17, 1997, administrative services were provided by SEI Fund
Management 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
basis. Each class is subject to a distribution plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. As provided under 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.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios.
Additional information regarding related party transactions is as follows for
the year ending October 31, 1998:
<TABLE>
<CAPTION>
Money
Market Short-Term Intermediate
Fund Bond Fund Bond Fund
---- --------- ---------
<S> <C> <C> <C>
Investment Advisory Fees Waived $ 54,443 $122,390 $ 54,941
12b-1 Fees Waived 128,957 145,702 124,867
</TABLE>
<TABLE>
<CAPTION>
International Kansas
Multi-Manager Tax-Exempt
Stock Fund Stock Fund Bond Fund
---------- ---------- ---------
<S> <C> <C> <C>
Investment Advisory Fees Waived $120,690 $ 28,239 $360,231
Administration Fees Waived -- -- 120,076
12b-1 Fees Waived 232,097 141,189 --
Shareholder Services Fees Waived -- -- 96,062
Custody Fees Waived -- -- 24,013
Reimbursed Fees -- -- 42,748
</TABLE>
<PAGE> 108
INTRUST FUNDS TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
October 31, 1998(unaudited)
- --------------------------------------------------------------------------------
4. SHARES OF BENEFICIAL INTEREST:
The Trust has an unlimited number of shares of beneficial interest, with a par
value of $0.001, 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 six series and two classes: Institutional
Service and Institutional Premium. As of and for the periods ending October 31,
1998, 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.
5. SECURITIES TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities
(excluding short-term securities) during the year ended October 31, 1998 were as
follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
<S> <C> <C>
Short-Term Bond Fund $ 36,969,571 $31,407,619
Intermediate Bond Fund $ 25,404,180 $18,934,885
Stock Fund $103,278,595 $91,930,387
Kansas Tax-Exempt Bond Fund $ 42,369,424 $16,080,670
</TABLE>
6. CONCENTRATION OF CREDIT RISK:
The Kansas Tax-Exempt Bond Fund invests in debt instruments of municipal
issuers. The issuers' abilities to meet their obligations may be affected by
economic developments in a specific state or region. The Fund invests in
securities which include revenue bonds, tax exempt commercial paper, tax and
revenue anticipation notes, and general obligation bonds.
7. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year. As of
October 31, 1998 the ____ Fund had deferred losses of $_______ which will be
treated as arising on the first day of the fiscal year ending October 31, 1999.
During the year ended October 31, 1998, the following Funds declared long-term
capital gain distributions in the following amounts:
Fund Amount
- ---- ------
The Trust designates the following percentage of distributions eligible for the
dividends received deductions for corporations.
Fund Percentage
- ---- ----------
28.59%
17.83%
56.42%
4.25%
<PAGE> 109
PART C. OTHER INFORMATION
- -------
Item 23. Financial Statements and Exhibits
(a) Financial Statements included in Part A of this Registration
Statement:
(1) Financial Highlights for the fiscal year ended
October 31, 1997 (Audited).
(2) Financial Highlights of the Money Market Fund for the
fiscal year ended October 31, 1998 (Unaudited).
(b) Unaudited financial statements included in Part B of this
Registration Statement and audited financial statements
incorporated by reference into Part B of this Registration
Statement:
Money Market Fund, Short-Term Bond Fund, Intermediate Bond
----------------------------------------------------------
Fund and Stock Fund:
--------------------
(1) Independent Auditors' Report of KPMG Peat Marwick LLP
dated December 19, 1997*
(2) Statement of Assets and Liabilities dated October 31,
1997 (Audited) and October 31, 1998 (Unaudited)
(3) Statement of Operations for the period ended October
31, 1997 (Audited)* and October 31, 1998 (Unaudited)
(4) Statement of Changes in Net Assets for the period
ended October 31, 1997 (Audited)* and October 31,
1998 (Unaudited)
(5) Schedule of Portfolio Investments dated October 31,
1997 (Audited)* and October 31, 1998 (Unaudited)
(6) Notes to Financial Statements dated October 31, 1997
(Audited)* and October 31, 1998 (Unaudited)
(7) Financial Highlights for the period ended October 31,
1997 (Audited)* and October 31, 1998 (Unaudited)
International Multi-Manager Stock Fund:
---------------------------------------
(8) Report of Ernst & Young LLP, Independent Accountants
dated December 19, 1997*
(9) AMR Investment Services International Equity
Portfolio--Statements of Assets and Liabilities for
the year ended October 31, 1997 (Audited)* and
October 31, 1998 (Unaudited)
(10) AMR Investment Services International Equity
Portfolio--Statement of Operations for the year ended
October 31, 1997 (Audited)* and October 31, 1998
(Unaudited)
(11) AMR Investment Services International Equity
Portfolio --Statement of Changes in Net Assets dated
October 31, 1997 (Audited)* and October 31, 1998
(Unaudited)
(12) AMR Investment Services International Equity
Portfolio --Notes to Financial Statements dated
October 31, 1997* and October 31, 1998 (Unaudited)
(13) AMR Investment Services International Equity
Portfolio --Schedule of Investments dated October 31,
1997 (Audited)* and October 31, 1998 (Unaudited)
Kansas Tax-Exempt Bond Fund:
----------------------------
(14) Portfolio of Investments dated August 31, 1997**
(15) Statements of Assets and Liabilities dated August 31,
1997**
(16) Statements of Operations for the period ended August
31, 1997**
(17) Statements of Changes in Net Assets for the period
ended August 31, 1997**
(18) Notes to Financial Statements dated August 31, 1997**
(19) Independent Auditors' Report dated October 10, 1997**
** Incorporated by reference to the Fund's Annual Report
filed with the Securities and Exchange Commission on
January 7, 1998.
* Incorporated by reference to the Fund's Annual Report
filed with the Securities and Exchange Commission on
October 31, 1997.
(b) Exhibits:
(1) Trust Instrument.(2)
(2) Bylaws of Registrant.(2)
(3) None.
(4) None.
(5)(a) Form of Master Investment Advisory
Agreement and Supplements between
Registrant and Adviser relating to Money
Market Fund, Short-Term Bond Fund,
Intermediate Bond Fund, Stock Fund,
International Multi-Manager Stock Fund
and the Kansas Tax-Exempt Bond Fund.(1)
(5)(b) Form of Master Investment Advisory
Agreement and Supplements between
Registrant and Adviser relating to the
NestEgg Funds--filed herewith.
(5)(c) Form of Sub-Advisory Agreements between
Adviser and Sub-Advisers.(1)
<PAGE> 110
7
(5)(d) Form of Master Administration Agreement
and Supplements between Registrants and
Administrator.(1)
(5)(e) Agreement among AMR Investment Services
Trust, AMR Investment Services, Inc.,
INTRUST Funds Trust and BISYS Fund
Services, dated January 17, 1997--filed
herewith.
(5)(f) Investment Advisory Contracts by and
among BZW Barclays Global Fund Advisors
and Master Investment Portfolio, each
dated January 1, 1996, on behalf of each
of the LifePath 2000 Master Portfolio,
LifePath 2010 Master Portfolio, LifePath
2020 Master Portfolio, LifePath 2030
Master Portfolio, and LifePath 2040
Master Portfolio, are incorporated by
reference to Master Investment Portfolio
Amendment No. 3 to Registration Statement
on Form POS-AMI (1940 Act File No.
811-08162) filed with the Commission on
January 5, 1996.
(5)(g) Form of Third Party Feeder Fund Agreement
between Registrant and Master Investment
Portfolio with respect to NestEgg
Funds--filed herewith.
(6) Form of Master Distribution Contract and
Supplements between Registrant and
Distributor.(1)
(7) None.
(8)(a) Form of Custodian Contract between
Registrant and Custodian.(1)
(8)(b) Custody Agreement with Investors Bank &
Trust, N.A. with respect to the Master
Portfolios incorporated by reference to
Master Investment Portfolio Amendment No.
5 to Registration Statement on Form
POS-AMI (1940 Act File No. 811-08162)
filed with the Commission on June 30,
1997.
(9)(a) Form of Transfer Agency and Service
Agreement between Registrant and Transfer
Agent.(1)
(9)(b) Form of Service Organization
Agreement.(1)
(9)(c) Form of Fund Accounting Agreement between
Registrant and Investors Bank & Trust
Company with respect to NestEgg
Funds--filed herewith.
(10) Consent of Paul, Weiss, Rifkind, Wharton
& Garrison, counsel to Registrant.(5)
(11)(a) Consent to KPMG Peat Marwick LLP -- filed
herewith.
(11)(b) Consent of Arthur Andersen LLP.(4)
(11)(c) Consent of Ernst & Young LLP(4)
(12) None.
(13) Subscription Agreement.(1)
(14) None.
(15) Amended Form of Rule 12b-1 Distribution
Plan and Agreement between Registrant and
Distributor--filed herewith
(16) N/A
(17) Financial Data Schedules for INTRUST--
filed herewith
<PAGE> 111
8
(18) Rule 18f-3 Plan.(1)
Other Exhibits:
(A) Power of Attorney.(1)
(B) Power of Attorney dated February 9, 1998.(4)
(C) Powers of Attorney dated August 11, 1998 for
Master Investment Portfolio--filed herewith
(1) Previously filed on December 23, 1996 as part of Pre-Effective
Amendment No. 3 and incorporated by reference herein.
(2) Previously filed with Post-Effective Amendment No. 1 on June 27, 1997,
and incorporated by reference herein.
(3) Previously filed with Post-Effective Amendment No. 2 on December 22,
1997, and incorporated by reference herein.
(4) Previously filed with Post-Effective Amendment No. 3 on February 27,
1998, and incorporated by reference herein.
Item 25. Persons Controlled by or under Common Control with Registrant.
None.
Item 26. Number of Holders of Securities at November 20, 1998.
Money Market Fund 2
Short-term Bond Fund 3
Intermediate Bond Fund 3
Stock Fund 10
International Multi-Manager Stock Fund 7
Kansas Tax-Exempt Bond Fund 1
NestEgg 2000 Fund None
NestEgg 2010 Fund None
NestEgg 2020 Fund None
NestEgg 2030 Fund None
NestEgg 2040 Fund None
Item 27. Indemnification.
As permitted by Section 17(h) and (i) of the Investment
Company Act of 1940 (the "1940 Act") and pursuant to Article X of the
Registrant's Trust Instrument (Exhibit 1 to the Registration Statement), Section
4 of the Master
<PAGE> 112
9
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 option of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrant will purchase an insurance policy insuring its
officers and trustees against liabilities, and certain costs of defending claims
against such officers and trustees, to the extent such officers and trustees are
not found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers under certain circumstances.
Section 4 of the Master Investment Advisory Contract between
Registrant and the Adviser 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.
<PAGE> 113
10
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 December 31, 1997
total assets under management were approximately $2 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.
------------------
Name Position and Office
- ---- -------------------
C.Q. Chandler, IV Chairman, President and Chief
Executive Officer (Vice Chairman prior
to February, 1996)
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.
<PAGE> 114
11
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)
Business and Other Connections of BGFA
The LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030,
LifePath 2040 Master Portfolios are advised by Barclays Global Fund Advisors
("BGFA"), a wholly-owned subsidiary of Barclays Global Investors, N.A.
("BGI", formerly,Wells Fargo Institutional Trust Company).
BGFA's business is that of a registered investment adviser to certain
open-end, management investment companies and various other institutional
investors. Wells Fargo Bank's business is that of a national banking association
with respect to which it conducts a variety of commercial banking and trust
activities, including acting as investment adviser and/or sub-adviser to certain
open-end management investment companies and various other institutional
investors.
The directors and officers of BGFA consist primarily of persons who
during the past two years have been active in the investment management business
of the former sub-adviser to the Registrant, Wells Fargo Nikko Investment
Advisors ("WFNIA") and, in some cases, the service business of BGI. Each of the
directors and executive officers of BGFA will also have substantial
responsibilities as directors and/or officers of BGI. To the knowledge of the
Registrant, except as set forth below, none of the directors or executive
officers of BGFA is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.
<TABLE>
<CAPTION>
Name and Position Principal Business(es) During at
at BGFA Least the Last Two Fiscal Years
- ----------------- -------------------------------
<S> <C>
Frederick L.A. Grauer Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Patricia Dunn Director of BGFA and Co-Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105
Lawrence G. Tint Chairman of the Board of Directors of BGFA and Chairman
Chief Executive Officer of BGI and Director; 45 Fremont Street, San Francisco, CA 94105
Geoffrey Fletcher Chief Financial Officer of BGFA and BGI since May 1997 45
Fremont Street, San Francisco, CA 94105 Managing Director and
Principal Accounting Officer at Bankers Trust Company from 1988 -
1997 505 Market Street, San Francisco, CA 94111
</TABLE>
Item 29. Principal Underwriter
(a) BISYS acts as Distributor/Underwriter for other
registered investment companies:
BISYS FUND SERVICES LIMITED PARTNERSHIP
---------------------------------------
Alpine Equity Trust
The ARCH Fund, Inc.
American Performance Funds
AmSouth Mutual Funds
The BB&T Mutual Funds Group
The Coventry Group
ESC Strategic Funds, Inc.
The Eureka Funds
Fifth Third Funds
Hirtle Callaghan Trust
HSBC Funds Trust and HSBC Mutual Funds Trust
INTRUST Funds Trust
The Infinity Mutual Funds, Inc.
The Kent Funds
Magna Funds
Meyers Investment Trust
MMA Praxis Mutual Funds
M.S.D.&T. Funds
Pacific Capital Funds
The Parkstone Advantage Funds
Pegasus Funds
Puget Sound Alternative Investment Series Trust
Republic Advisor Funds Trust
Republic Funds Trust
The Riverfront Funds, Inc.
Sefton Funds Trust
The Sessions Group
Summit Investment Trust
Variable Insurance Funds
The Victory Portfolios
The Victory Variable Insurance Funds
Vintage Mutual Funds, Inc.
(b) Officers and Directors.
<TABLE>
<CAPTION>
Name and Principal Positions and Position
Business Address Offices with Registrant with Underwriter
- ---------------- ----------------------- ----------------
<S> <C> <C>
BISYS Fund Services, Inc. None Sole General Partner
3435 Stelzer Road
Columbus, Ohio 43219
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
(a) 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 (as administrators, transfer
agent, fund accountant and distributor) located at 3435 Stelzer Road, Columbus,
Ohio 43219 and INTRUST (as adviser and custodian) at 105 North Main Street, Box
One, Wichita, Kansas 63201 and AMR Investment Services, Inc., at 4333 Amon
Carter Boulevard, MD, 5645, Fort Worth, Texas 76155.
(b) BGFA maintains all records relating to their services as
adviser for the Master Investment Portfolio at 45 Fremont Street, San Francisco,
California 94105.
(c) Investors Bank & Trust Company maintains all records relating
to its services as fund accountant and custodian to the Master Portfolios at 89
South Street, Boston, Massachusetts 02111.
Item 31. Management Services.
<PAGE> 115
12
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.
<PAGE> 116
13
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 Columbus, and State of Ohio, on November 30,
1998.
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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Terry L. Carter* Trustee November 30, 1998
- ---------------------------
Terry L. Carter
/s/ Thomas F. Kice* Trustee November 30, 1998
- ---------------------------
Thomas F. Kice
/s/ George Mileusnic* Trustee November 30, 1998
- ---------------------------
George Mileusnic
/s/ John J. Pileggi* Trustee November 30, 1998
- ---------------------------
John J. Pileggi
/s/ G.L. Best* Trustee November 30, 1998
- ---------------------------
G.L. Best
/s/ David Bunstine* Trustee November 30, 1998
- ---------------------------
David Bunstine
</TABLE>
<PAGE> 117
14
<TABLE>
<S> <C> <C>
/s/ Paul Kane* President November 30, 1998
- ---------------------------
Paul Kane
*By: /s/ David Bunstine Treasurer November 30, 1998
- --------------------------- (Principal Financial
David Bunstine and Accounting
Attorney-in-Fact Officer)
</TABLE>
<PAGE> 118
17
SIGNATURES
AMR Fund Investment Services Trust has duly caused this
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A of the
INTRUST Funds Trust to be signed on its behalf by the undersigned 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 November 30, 1998.
AMR INVESTMENT SERVICES TRUST.
By: /s/ William F. Quinn
William F. Quinn, President
Attest:
By: /s/ Barry Y. Greenberg
Barry Y. Greenberg, Vice President
and Assistant Secretary
This Post-Effective Amendment No. 7 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>
By: /s/ William F. Quinn* President and Trustee November 30, 1998
--------------------------
William F. Quinn
By: /s/ Alan D. Feld* Trustee November 30, 1998
--------------------------
Alan D. Feld
By: /s/ Ben J. Fortson* Trustee November 30, 1998
--------------------------
Ben J. Fortson
</TABLE>
<PAGE> 119
18
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
By: /s/ John S. Justin* Trustee November 30, 1998
--------------------------
John S. Justin
By: /s/ Stephen D. O'Sullivan* Trustee November 30, 1998
--------------------------
Stephen D. O'Sullivan
By: /s/ Roger T. Staubach* Trustee November 30, 1998
--------------------------
Roger T. Staubach
By: /s/ Kneeland Youngblood* Trustee November 30, 1998
--------------------------
Kneeland Youngblood
By: /s/ William F. Quinn November 30, 1998
--------------------------
William F. Quinn
Attorney-in-Fact
</TABLE>
<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of INTRUST Funds Trust pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 7 to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Little Rock, State of Arkansas on the 30th day of
November, 1998.
MASTER INVESTMENT PORTFOLIO
LIFEPATH 2000 MASTER PORTFOLIO
LIFEPATH 2010 MASTER PORTFOLIO
LIFEPATH 2020 MASTER PORTFOLIO
LIFEPATH 2030 MASTER PORTFOLIO
LIFEPATH 2040 MASTER PORTFOLIO
By /s/ Richard H. Blank, Jr.
----------------------------------
Richard H. Blank, Jr.
Secretary and Treasurer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the date
indicated:
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
Secretary and Treasurer
/s/ Richard H. Blank, Jr. (Principal Financial Officer) November 30, 1998
- -----------------------------------
Richard H. Blank, Jr.
- ----------------------------------- Trustee November 30, 1998
Jack S. Euphrat*
Chairman, President
- ----------------------------------- (Principal Executive Officer), and Trustee November 30, 1998
R. Greg Feltus*
- ----------------------------------- Trustee November 30, 1998
Thomas S. Goho*
- ----------------------------------- Trustee November 30, 1998
W. Rodney Hughes*
- ----------------------------------- Trustee November 30, 1998
J. Tucker Morse*
</TABLE>
* Richard H. Blank, Jr. signs this document pursuant to powers of
attorney filed herewith.
*By /s/ Richard H. Blank, Jr.
--------------------------------
Richard H. Blank, Jr.
Attorney in Fact
<PAGE> 1
Exhibit 5(b)(i)
NESTEGG 2000 FUND
INTRUST FUNDS Trust
3435 Stelzer Road
Columbus, Ohio 43219
December __, 1998
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Advisory Contract Supplement
---------------------------------------
Dear Sirs or Madams:
This will confirm the agreement between INTRUST FUNDS Trust (the
"Trust") and INTRUST Bank, N.A. (the "Adviser") as follows:
NestEgg 2000 Fund (the "Fund") is a portfolio of the Trust which
has been organized as a business trust under the laws of the State of Delaware
and is an open-end management investment company. The Trust and the Adviser have
entered into a Master Investment Advisory Contract, dated November 25, 1996 (as
from time to time amended and supplemented, the "Master Advisory Contract"),
pursuant to which the Adviser has undertaken to provide or make provision for
the Trust for certain investment advisory and management services identified
therein and to provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this Investment Advisory
Contract Supplement have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. ADOPTION OF MASTER ADVISORY CONTRACT. The Master Advisory
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as provided in the Master
Advisory Contract and herein, the Fund shall pay a monthly fee on the first
business
<PAGE> 2
day of each month, based upon the average daily value (as determined on each
business day at the time set forth in the Prospectus for determining net asset
value per share) of the net assets of the Fund during the preceding month, at
the annual rate of 0.40%. INTRUST may receive up to 1.25% of the Fund's average
daily net assets for providing advisory services in the event the Fund does not
invest all of its investable assets in the Portfolio of another investment
company.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
NESTEGG 2000 FUND,
a Series of
INTRUST FUNDS TRUST
By: ___________________________
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
INTRUST BANK, N.A.
By: _____________________
Title:
<PAGE> 3
Exhibit 5(b)(ii)
NESTEGG 2010 FUND
INTRUST FUNDS Trust
3435 Stelzer Road
Columbus, Ohio 43219
December __ 1998
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Advisory Contract Supplement
---------------------------------------
Dear Sirs or Madams:
This will confirm the agreement between INTRUST FUNDS Trust (the
"Trust") and INTRUST Bank, N.A. (the "Adviser") as follows:
NestEgg 2010 Fund (the "Fund") is a portfolio of the Trust which
has been organized as a business trust under the laws of the State of Delaware
and is an open-end management investment company. The Trust and the Adviser have
entered into a Master Investment Advisory Contract, dated November 25, 1996 (as
from time to time amended and supplemented, the "Master Advisory Contract"),
pursuant to which the Adviser has undertaken to provide or make provision for
the Trust for certain investment advisory and management services identified
therein and to provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this Investment Advisory
Contract Supplement have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. ADOPTION OF MASTER ADVISORY CONTRACT. The Master Advisory
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as provided in the Master
Advisory Contract and herein, the Fund shall pay a monthly fee on the first
business day of each month, based upon
<PAGE> 4
the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month, at the annual rate of 0.40%.
INTRUST may receive up to 1.25% of the Fund's average daily net assets for
providing advisory services in the event the Fund does not invest all of its
investable assets in the Portfolio of another investment company.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
NESTEGG 2010 FUND,
a Series of
INTRUST FUNDS TRUST
By: ___________________________
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
INTRUST BANK, N.A.
By: _____________________
Title:
<PAGE> 1
Exhibit 5(b)(iii)
NESTEGG 2020 FUND
INTRUST FUNDS TRUST
3435 STELZER ROAD
COLUMBUS, OHIO 43219
December __, 1998
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Advisory Contract Supplement
---------------------------------------
Dear Sirs or Madams:
This will confirm the agreement between INTRUST FUNDS Trust (the
"Trust") and INTRUST Bank, N.A. (the "Adviser") as follows:
NestEgg 2020 Fund (the "Fund") is a portfolio of the Trust which
has been organized as a business trust under the laws of the State of Delaware
and is an open-end management investment company. The Trust and the Adviser have
entered into a Master Investment Advisory Contract, dated November 25, 1996 (as
from time to time amended and supplemented, the "Master Advisory Contract"),
pursuant to which the Adviser has undertaken to provide or make provision for
the Trust for certain investment advisory and management services identified
therein and to provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this Investment Advisory
Contract Supplement have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. ADOPTION OF MASTER ADVISORY CONTRACT. The Master Advisory
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as provided in the Master
Advisory Contract and
<PAGE> 2
herein, the Fund shall pay a monthly fee on the first business day of each
month, based upon the average daily value (as determined on each business day at
the time set forth in the Prospectus for determining net asset value per share)
of the net assets of the Fund during the preceding month, at the annual rate of
0.40%. INTRUST may receive up to 1.25% of the Fund's average daily net assets
for providing advisory services in the event the Fund does not invest all of its
investable assets in the Portfolio of another investment company.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
NESTEGG 2020 FUND,
a Series of
INTRUST FUNDS TRUST
By: ___________________________
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
INTRUST BANK, N.A.
By: _____________________
Title:
<PAGE> 1
Exhibit 5(b)(iv)
NESTEGG 2030 FUND
INTRUST FUNDS Trust
3435 Stelzer Road
Columbus, Ohio 43219
December __, 1998
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Advisory Contract Supplement
---------------------------------------
Dear Sirs or Madams:
This will confirm the agreement between INTRUST FUNDS Trust (the
"Trust") and INTRUST Bank, N.A. (the "Adviser") as follows:
NestEgg 2030 Fund (the "Fund") is a portfolio of the Trust which
has been organized as a business trust under the laws of the State of Delaware
and is an open-end management investment company. The Trust and the Adviser have
entered into a Master Investment Advisory Contract, dated November 25, 1996 (as
from time to time amended and supplemented, the "Master Advisory Contract"),
pursuant to which the Adviser has undertaken to provide or make provision for
the Trust for certain investment advisory and management services identified
therein and to provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this Investment Advisory
Contract Supplement have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. ADOPTION OF MASTER ADVISORY CONTRACT. The Master Advisory
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract.
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as provided in the Master
Advisory Contract and herein, the Fund shall pay a monthly fee on the first
business day of each month, based upon
<PAGE> 2
the average daily value (as determined on each business day at the time set
forth in the Prospectus for determining net asset value per share) of the net
assets of the Fund during the preceding month, at the annual rate of 0.40%.
INTRUST may receive up to 1.25% of the Fund's average daily net assets for
providing advisory services in the event the Fund does not invest all of its
investable assets in the Portfolio of another investment company.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
NESTEGG 2030 FUND,
a Series of
INTRUST FUNDS TRUST
By: ___________________________
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
INTRUST BANK, N.A.
By: _____________________
Title:
<PAGE> 1
Exhibit 5(b)(v)
NESTEGG 2040 FUND
INTRUST FUNDS Trust
3435 Stelzer Road
Columbus, Ohio 43219
December __ 1998
INTRUST Bank, N.A.
105 North Main Street
Box One
Wichita, Kansas 67202
Investment Advisory Contract Supplement
---------------------------------------
Dear Sirs or Madams:
This will confirm the agreement between INTRUST FUNDS Trust (the
"Trust") and INTRUST Bank, N.A. (the "Adviser") as follows:
NestEgg 2040 Fund (the "Fund") is a portfolio of the Trust which
has been organized as a business trust under the laws of the State of Delaware
and is an open-end management investment company. The Trust and the Adviser have
entered into a Master Investment Advisory Contract, dated November 25, 1996 (as
from time to time amended and supplemented, the "Master Advisory Contract"),
pursuant to which the Adviser has undertaken to provide or make provision for
the Trust for certain investment advisory and management services identified
therein and to provide certain other services, as more fully set forth therein.
Certain capitalized terms used without definition in this Investment Advisory
Contract Supplement have the meaning specified in the Master Advisory Contract.
The Trust agrees with the Adviser as follows:
1. ADOPTION OF MASTER ADVISORY CONTRACT. The Master Advisory
Contract is hereby adopted for the Fund. The Fund shall be one of the "Funds"
referred to in the Master Advisory Contract.
<PAGE> 2
2. PAYMENT OF FEES. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Adviser as provided in the Master
Advisory Contract and herein, the Fund shall pay a monthly fee on the first
business day of each month, based upon the average daily value (as determined on
each business day at the time set forth in the Prospectus for determining net
asset value per share) of the net assets of the Fund during the preceding month,
at the annual rate of 0.40%. INTRUST may receive up to 1.25% of the Fund's
average daily net assets for providing advisory services in the event the Fund
does not invest all of its investable assets in the Portfolio of another
investment company.
If the foregoing correctly sets forth the agreement between the
Trust and the Adviser, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
NESTEGG 2040 FUND,
a Series of
INTRUST FUNDS TRUST
By: ___________________________
Title:
The foregoing Contract
is hereby agreed to as of
the date hereof:
INTRUST BANK, N.A.
By: _____________________
Title:
<PAGE> 1
EXHIBIT 5(e)
AGREEMENT AMONG
AMR INVESTMENT SERVICES TRUST
AMR INVESTMENT SERVICES, INC.
INTRUST FUNDS TRUST
and
BISYS FUND SERVICES
THIS AGREEMENT is made and entered into as of the 17th day of January,
1997, by and among AMR Investment Services Trust ("AMR Trust"), INTRUST Funds
Trust ("Trust"), and BISYS Fund Services ("BISYS").
WHEREAS, the International Equity Portfolio ("Portfolio") is a series
of AMR Trust and the International Multi-Manager Fund ("Fund") is a series of
the Trust;
WHEREAS, the Portfolio and the Fund are each a series of separate
open-end management investment companies and each have the same investment
objectives and substantially the same investment policies;
WHEREAS, AMR serves as the manager of the Portfolio and BISYS services
as the administrator, sponsor and distributor of the Fund;
WHEREAS, the Fund desires to invest all of its investable assets in the
Portfolio in exchange for a beneficial interest in the Portfolio (the
"Investment") on the terms and conditions set forth in this Agreement; and
WHEREAS, the Portfolio believes that accepting the Investment is in the
best interests of the Portfolio and that the interests of existing investors in
the Portfolio will not be diluted as a result of its accepting the Investment;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein made and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agrees as follows.
ARTICLE I
THE INVESTMENT
1.1 Agreement to Effect the Investment. The Fund agrees to assign,
transfer and deliver all of the Fund's investable assets ("Asset") to the
Portfolio at each Closing (as hereinafter defined). The Portfolio agrees in
exchange therefor to issue to the Fund a beneficial interest ("Interest") in the
Portfolio equal in value to the net value of the Assets of the Fund conveyed to
the Portfolio on that date of Closing.
ARTICLE II
CLOSING AND CLOSING DATE
2.1 Time of Closing. The conveyance of the Assets in exchange for the
Interest, as described in Article I, together with related acts necessary to
consummate such transactions, shall occur initially on the date the Fund
commences an offering of its shares of the Fund to the public and at each
subsequent date as the Fund desires to make a further Investment in the
Portfolio (each, a "Closing"). All acts
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occurring at any Closing shall be deemed to occur simultaneously as of the last
daily determination of the Portfolio's net asset value on the date of Closing.
2.2 Related Closing Matters. On each date of Closing, the Trust, on
behalf of the Fund, shall authorize the Fund's custodian to deliver all of the
Assets held by such custodian to the Portfolio's custodian. The Fund's and the
Portfolio's custodians shall acknowledge, in a form acceptable to the other
party, their respective delivery and acceptance of the Assets. The Portfolio
shall deliver to the Company acceptable evidence of the Fund's ownership of the
Interest. In addition, each party shall deliver to each other party such bills
of sale, checks, assignments, securities instruments, receipts or other
documents as such other party or its counsel may reasonably request. Each of the
representations and warranties set forth in Article III shall be deemed to have
been made anew on each date of Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 The Trust and BISYS. The Trust and BISYS each represents and
warrants to AMR Trust and AMR that:
(a) Organization. The Trust is a trust duly organized, validly
existing and in good standing under the laws of the State of Delaware, the Fund
is a duly and validly designated series of the Trust, and the Trust and the Fund
have the requisite power and authority to own their property and conduct their
business as now being conducted and as proposed to be conducted pursuant to this
Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by the Trust and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Trust and the Fund and no other action or proceeding is necessary for the
execution and delivery of this Agreement by the Trust, the performance by the
Trust of its obligations hereunder and the consummation by the Trust of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Trust and constitutes a legal, valid and binding obligation of
the Trust in respect of the Fund, and is enforceable against them in accordance
with its terms.
(c) Authorization of Investment. The Investment has been duly
authorized by all necessary action on the part of the Board of Trustees of the
Trust.
(d) No Bankruptcy Proceedings. Neither the Trust nor the Fund is
under the jurisdiction of a court in a proceeding under Title ll of the United
States Code (the "Bankruptcy Code") or similar case within the meaning of
Section 368 (a) (3) (A) of the Bankruptcy Code.
(e) Fund Assets. The Fund's Assets will, at the initial Closing,
consist solely of cash.
(f) Fiscal Year. The fiscal year end for the Fund is October 31.
(g) Auditors. The Trust has appointed KPMG Peat Marwick LLP as the
Fund's independent public accountants to certify the Fund's financial statements
in accordance with Section 32 of the Investment Company Act of 1940, an amended
("1940 Act").
(h) Registration Statements. The Trust and BISYS (1) have reviewed
the Portfolio's registration statement on Form N-1A, as filed with the
Securities and Exchange Commission ("SEC"), and the Trust understands and agrees
to the Portfolio's policies and methods of operation as described
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therein, and (2) have provided to AMR Trust and AMR the Trust's most recent
registration statement on Form N-1A, as filed with the SEC, and all exhibits
contained or incorporated therein.
(i) Errors and Omissions Insurance Policy. The Trust has in force
an errors and omissions liability insurance policy insuring the Fund against
loss up to at least $2,000,000 for negligence or wrongful acts.
(j) SEC Filings. The Trust has duly filed all forms and other
documents (collectively, "SEC Filings") required to be filed under the
Securities Act of 1933, as amended ("1933 Act"), the Securities Exchange Act of
1934 ("1934 Act") and the 1940 Act (collectively, the "Securities Laws") in
connection with the registration as an investment company. The SEC Filings were
prepared in accordance with the requirements of the Securities Laws, as
applicable, and the rules and regulations of the SEC thereunder, and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) 1940 Act Registration. The Trust is duly registered as an
open-end management investment company under the 1940 Act and the Fund and its
shares are registered or qualified in any states where such registration or
qualification is necessary and such registrations or qualifications are in full
force and effect.
3.2 The Portfolio and AMR. The Portfolio and AMR each represents
warrants to the Trust and BISYS that:
(a) Organization. AMR Trust is a trust duly organized, validly
existing and in good standing under the common law of the State of New York, the
Portfolio is duly and validly designated series of AMR Trust, and AMR Trust the
Portfolio have the requisite power and authority to own their property and
conduct their business as now being conducted and as proposed to be conducted
pursuant to this Agreement.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by AMR Trust on behalf of the Portfolio and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of AMR Trust by its Board of Trustees and no other action on
the part of AMR Trust by its Board of Trustees and no other action on the part
of AMR necessary for the execution and delivery of this Agreement by AMR Trust,
the performance by AMR Trust of its obligations hereunder and the consummation
by AMR Trust of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by AMR Trust and constitutes a legal, valid and
binding obligation of AMR Trust enforceable against it in accordance with its
terms.
(c) Authorization of Issuance of Interest. The issuance by the
Portfolio of the Interest in exchange for the Investment by the Fund of its
Assets has been duly authorized by all necessary action on the part of the Board
of Trustees of AMR Trust. When issued in accordance with the terms of this
Agreement, the Interest will be validly issued, fully paid and non-assessable by
the Portfolio.
(d) No Bankruptcy Proceedings. Neither AMR Trust or the Portfolio
is under the jurisdiction of a court in a proceeding under Title 11 of the
Bankruptcy Code or similar case within the meaning of Section 368 (a) (3) (A) of
the Bankruptcy Code.
(E) Fiscal Year. The Fiscal year end of the Portfolio is October
31.
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<PAGE> 4
(f) Auditors. The Portfolio has appointed Ernst & Young LLP as the
Portfolio's independent public accountants to certify the Portfolio's
independent public accountants to certify the Portfolio's financial statements
in accordance with Section 32 of the 1940 Act.
(g) Registration Statement. The Trust and AMR have reviewed the
Trust's registration statement on Form N-1A which were provided to the Trust and
AMR pursuant Section 3.1 (h) of this Agreement tot extent that such registration
statement and exhibits relate to the Fund.
(h) Errors and Omissions Insurance Policy. AMR Trust and AMR have
in force an errors and omissions liability insurance policy insuring the
Portfolio against loss up to at least $10,000,000 for negligence or wrongful
acts.
(i) SEC Filings. The Portfolio has duly filed all SEC Filings
required to be filed with the SEC pursuant to the 1934 Act and the 1940 Act in
connection with any meetings of its investors and its registration as an
investment company. Beneficial interests in the Portfolio are not required to be
registered under the 1933 Act because such interests are offered solely in
private placement transactions that do not involve any "public offering" within
the meaning of Section 4 (2) of the 1933 Act. The SEC Securities Laws, as
applicable, and the rules and regulations of the SEC thereunder, and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(j) 1940 Act Registration. The Portfolio is duly registered as an
open-end management investment company under the 1940 Act and such registration
is in full force and effect.
(k) Tax Status. The Portfolio is taxable as a partnership under the
Internal Revenue Code of 1986, as amended (the "Code").
3.3 AMR. AMR represents and warrants to the Trust and BISYS that:
(a) Organization. AMR is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to conduct its business as now being
conducted.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by AMR have been duly authorized by all necessary action on the part
of AMR and no other action or proceeding is necessary for the execution and
delivery of this Agreement by AMR. This Agreement has been duly executed and
delivered by AMR and constitutes a legal, valid and binding obligation of AMR.
(c) Advisers Act. AMR is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act").
3.4 BISYS. BISYS represents and warrants to the Trust and AMR that:
(a) Organization. BISYS is a limited partnership validly existing
and in good standing under the laws of Ohio and has the requisite power and
authority to conduct its business as now being conducted.
(b) Authorization of Agreement. The execution and delivery of this
Agreement by BISYS have been duly authorized by all necessary action on the part
of BISYS and no other action or proceeding is necessary for the execution and
delivery of this Agreement by BISYS. This Agreement has
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<PAGE> 5
been duly executed and delivered by BISYS and constitutes a legal, valid and
binding obligation of BISYS.
ARTICLE IV
COVENANTS
4.1 The Trust and BISYS. The Trust and BISYS covenant as follows:
(a) Advance Review of Certain Documents. Either the Trust or BISYS
will furnish to AMR Trust and AMR, at least five business days prior to filing
or first use, as the case may be, with a draft of any amendment or supplement to
its Form N-1A registration statement to the extent that such document relates to
the Fund. Any proposed advertisement or sales literature relating to the Fund
will be furnished to AMR Trust and AMR by the party responsible for preparing
such materials with appropriate regulators or first use, whichever is sooner.
The Trust and BISYS will include in all such materials which relate to the Fund
any disclosures that may be required by law, and will include in all such
materials any material comments reasonably made by AMR or AMR Trust. However,
AMR and AMR Trust will not be liable for any errors or omissions in such
documents, whether or not they make any objection thereto, except to the extent
such errors or omissions result from information provided by AMR or AMR Trust.
The Trust and BISYS will not make any other written or oral representation about
the AMR Trust or AMR without their prior written consent.
(b) Tax Status. The Fund will qualify for treatment as a regulated
investment company under Subchapter M of the Code for all fiscal periods of the
Fund and Portfolio during which this Agreement is in effect, except to the
extent a failure to so qualify may result from any action or omission of the
Portfolio.
(c) Investment Securities. The Fund will own no investment security
other than its Interest in the Portfolio.
(d) Proxy Voting. If requested to vote on matters pertaining to AMR
Trust or the Portfolio, the Fund will (1) call timely meeting of shareholders of
the Fund for the purpose of seeking instructions from shareholders regarding
such matters, (2) vote the Fund's Interest proportionally as instructed by Fund
shareholders, and (3) vote the Fund's Interest with respect to the shares held
by Fund shareholders who do not give voting instructions in the same proportion
as the shares of Fund shareholders who do give voting instructions.
(e) Auditors. As long as the Fund's independent public accountants
differ from those of the Portfolio, the Fund shall be responsible for any
reasonable costs and expenses associated with the need for the Portfolio's
independent public accounts to provide information to the Fund's independent
public accountants.
4.2 Indemnification by the Trust.
(a) Indemnification. The Trust will indemnify and hold harmless ARM
Trust, the Portfolio, AMR and their respective trustees, directors, officers and
employees and each other person who controls AMR Trust, the Portfolio or AMR, as
the case may be, within the meaning of Section 15 of the 1933 Act (each a
"Covered Person" and collectively "Covered Persons"), against any and all
losses, claims, demands, damages, liabilities and expenses (each a "Liability"
and collectively the "Liabilities") (including, unless the Trust elects to
assume the defense pursuant to paragraph (b), the reasonable cost of
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<PAGE> 6
investigating and defending against any claims therefor and any counsel fees
incurred in connection therewith), joint or several, which:
(1) arise out of or are based upon any Securities Laws, any other
statute or common law or are incurred in connection with or as a result
of any formal or informal administrative proceeding or investigation by
a regulatory agency, insofar as such Liabilities arise out of or are
based upon the ground or alleged ground that any direct or indirect
omission or commission by the Trust or the Fund (either during the
course of its daily activities or in connection with the accuracy of
its representations or its warranties in this Agreement) caused or
continues to cause the Portfolio to violate any federal or state
securities laws or regulations or any other applicable domestic or
foreign law or regulations or common law duties or obligations, but
only to the extent that such Liabilities do not arise out of and are
not based upon an omission or commission of the Portfolio or AMR;
(2) arise out of the Trust or Fund having caused the Portfolio to be an
association taxable as a corporation rather than as a partnership;
(3) arise out of any misstatement of a material fact or an omission of
a material fact in the Trust's registration statement (including
amendments and supplements thereto) or in advertisements or sales
literature on behalf of the Trust, other than a misstatement or
omission arising from information provided by AMR Trust, the Portfolio
or AMR;
(4) result from the failure of any representation or warranty made by
the Trust or Fund to be accurate when made or the failure of such
parties to perform any covenant contained herein or otherwise to comply
with the terms of this Agreement; or
(5) arise out of any unlawful or negligent act or omission by the Trust
or Fund or any trustee, director, officer, employee of such persons;
provided, however, that in no case shall the Trust be liable with respect to any
claim made against any Covered Person unless the Covered Person shall have
notified the Trust in writing of the nature of the claim within a reasonable
time after the summons, other first legal process or formal or informal
initiation of a regulatory investigation or proceeding shall have been served
upon or provided to a Covered Person, or any federal, state or local tax
deficiency has come to the attention of the Trust, the Portfolio or a Covered
Person. Failure to notify the Trust of such claim shall not relieve it from any
liability that it may have to any Covered Person otherwise that on account of
the indemnification contained in this Section.
(b) Assumption of Defense. The Trust is entitled to participate at
its own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if the Trust elects to assume
the defense, such defense shall be conducted by legal counsel acceptable to the
applicable Covered Persons, which acceptance shall not be unreasonably withheld
or delayed. In the event the Trust elects to assume the defense of any such suit
and retain such counsel, each Covered Person and any other defendant or
defendants may retain additional counsel, but shall bear the fees and expenses
of such counsel unless (1) The Trust shall have specifically authorized the
retaining of such counsel or (2) the parties to such suit include any Covered
Person and the Trust, and any such Covered Person has been advised by counsel
that one or more legal defenses may be available t it that may not be available
to the Trust, in which case the Trust shall not be entitled to assume the
defense of such suit notwithstanding its obligation to bear the fees and
expenses of such counsel. The Trust shall not be liable to indemnify any Covered
Person for any settlement of any claim affected without the Trust's written
consent, which consent shall not be unreasonably withheld or delayed. The
indemnities set forth in
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<PAGE> 7
paragraph (a) will be in addition to any liability that the Trust in respect of
the Fund might otherwise have to a Covered Person.
4.3 Indemnification by BISYS.
(a) Indemnification. BISYS will indemnify and hold harmless ARM
Trust, the Portfolio, AMR and their respective trustees, directors, officers and
employees and each other person who controls AMR Trust, the Portfolio or AMR, as
the case may be, within the meaning of Section 15 of the 1933 Act (each a
"Covered Person" and collectively "Covered Persons"), against any and all
losses, claims, demands, damages, liabilities and expenses (each a "Liability"
and collectively the "Liabilities") (including, unless BISYS elects to assume
the defense pursuant to paragraph (b), the reasonable cost of investigating and
defending against any claims therefor and any counsel fees incurred in
connection therewith), joint or several, which:
(1) arise out of any misstatement of a material fact or an omission of
a material fact provided by BISYS in the Trust's registration statement
(including amendments and supplements thereto) or in advertisements or
sales literature prepared by BISYS on behalf of the Trust, other than a
misstatement or omission arising from information provided by AMR
Trust, the Portfolio or AMR;
(2) result from the failure of any representation or warranty made by
BISYS to be accurate when made or the failure of such parties to
perform any covenant contained herein or otherwise to comply with the
terms of this Agreement; or
(3) arise out of any unlawful or negligent act or omission by BISYS or
any director, officer, employee or agent of BISYS;
provided, however, that in no case shall BISYS be liable with respect to any
claim made against any Covered Person unless the Covered Person shall have
notified BISYS in writing of the nature of the claim within a reasonable time
after the summons, other first legal process or formal or informal initiation of
a regulatory investigation or proceeding shall have been served upon or provided
to a Covered Person, or any federal, state or local tax deficiency has come to
the attention of BISYS, the Portfolio or a Covered Person. Failure to notify
BISYS of such claim shall not relieve it from any liability that it may have to
any Covered Person otherwise than on account of the indemnification contained in
this Section.
(b) Assumption of Defense. BISYS is entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if BISYS elects to assume the
defense, such defense shall be conducted by legal counsel acceptable to the
applicable Covered Persons, which acceptance shall not be unreasonably withheld
or delayed. In the event BISYS elects to assume the defense of any such suit and
retain such counsel, each Covered Person and any other defendant or defendants
may retain additional counsel, but shall bear the fees and expenses of such
counsel unless (1) BISYS shall have specifically authorized the retaining of
such counsel or (2) the parties to such suit include any Covered Person and
BISYS, and any such Covered Person has been advised by counsel that one or more
legal defenses may be available to it that may not be available to BISYS, in
which case BISYS shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
BISYS shall not be liable to indemnify any Covered Person for any settlement of
any claim affected without BISYS' written consent, which consent shall not be
unreasonably withheld or delayed. The indemnities set forth in paragraph (a)
will be in addition to any liability that the Trust in respect of the Fund might
otherwise have to a Covered Person.
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<PAGE> 8
4.4 AMR and AMR Trust. AMR and AMR Trust, on behalf of the Portfolio,
covenants as follows:
(a) Advance Review of Certain Documents. AMR and AMR Trust will
furnish to the Trust of BISYS, at least five business days prior to filing or
first use, as the case may be, with a draft of any amendment or supplement to
its Form N-1A registration statement to the extent that such document relates to
any change in the investment practices of the Portfolio. AMR and AMR Trust will
not make any written or oral representation about the Trust, Fund or BISYS
without their prior written consent.
(b) Tax Status. The Portfolio will qualify to be taxed as a
partnership under the Code for all periods during which this Agreement is in
effect, except to the extent that the failure to so qualify results in whole or
in part from any action or omission of the Fund.
(c) Availability of Interests. Conditional upon the Company
complying with the terms of this Agreement, the Portfolio shall permit the Fund
to make additional Investments in the Portfolio on each business day on which
shares of the Fund are sold to the public; provided, however, that the Portfolio
may refuse to permit the Fund to make additional Investments in the Portfolio on
any day on which (1) the Portfolio has refused to permit all other investors in
the Portfolio to make additional Investments in the Portfolio or (2) the
Trustees of the Portfolio have reasonably determined that permitting additional
Investments by the Fund in the Portfolio could constitute a breach of their
fiduciary duties to the Portfolio.
4.5 Indemnification by AMR.
(a) Indemnification. AMR will indemnify and hold harmless the Fund,
BISYS, their respective trustees, directors, officers and employees and each
other person who controls the Fund or BISYS, as the case may be, within the
meaning of Section 15 of the 1933 Act (each "Covered Person" and collectively,
"Covered Persons"), against any and all losses, claims, demands, damages,
liabilities and expenses (each "Liability" and collectively the "Liabilities")
(including, unless AMR elects to assume the defense pursuant to paragraph (b),
the reasonable costs of investigating and defending against any claims therefor
and any counsel fees incurred in connection therewith), joint or several,
whether incurred directly by the Fund or BISYS or indirectly by the Fund or
BISYS through the Fund's Investment in the Portfolio, which
(1) arise out of or are based upon any Securities Laws, any other
statute or common law or are incurred in connection with or as a result
of any formal or informal administrative proceeding or investigation by
a regulatory agency, insofar as such Liabilities arise out of or are
based upon the ground or alleged ground that any direct or indirect
omission or commission by the Portfolio (either during the course of
its daily activities or in connection with the accuracy of its
representations or its warranties in this Agreement) caused or
continues to cause the Fund to violate any federal or state securities
laws or regulations or any other applicable domestic or foreign law or
regulations or common law duties or obligations, but only to the extent
that such Liabilities do not arise out of and are not based upon an
omission or commission of the Trust, Fund or BISYS;
(2) arise out the Portfolio having caused the Fund to fail to qualify
as a regulated investment company under the Code;
(3) arise out of any misstatement of a material fact or an omission of
a material fact in the Portfolio's registration statement (including
amendments and supplements thereto) or included at the request of AMR
or the Portfolio in advertising or sales literature used by the Fund,
other than
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<PAGE> 9
a misstatement of a material fact or an omission arising from
information provided by the Trust, Fund or BISYS;
(4) result from the failure of any representation or warranty made by
the Portfolio or AMR to be accurate when made or the failure of such
parties to perform any covenant contained herein or otherwise to comply
with the terms of this Agreement; or
(5) arise out of any unlawful or negligent act or omission by the
Portfolio, AMR or any director, trustee, officer, employee or agent of
such persons;
provided, however, that in no case shall AMR be liable with respect to any claim
made against any such Covered Person unless such Covered Person shall have
notified AMR in writing of the nature of the claim within a reasonable time
after the summons, other first legal process or formal or informal initiation of
a regulatory investigation or proceeding shall have been served upon or provided
to a Covered Person or any federal, state or local tax deficiency has come to
the attention of the Trust, BISYS or a Covered Person. Failure to notify AMR of
such claim shall not relieve it from any liability that it may have to any
Covered Person otherwise than on account of the indemnification contained in
this paragraph.
(b) Assumption of Defense. AMR is entitled to participate at its
own expense in the defense or, if it so elects, to assume the defense of any
suit brought to enforce any such liability, but, if AMR elects to assume the
defense, such defense shall be conducted by legal counsel acceptable to the
applicable Covered Persons, which consent shall not be unreasonably withheld or
delayed. In the event AMR elects to assume the defense of any such suit and
retain such counsel, each Covered Person and any other defendant or defendants
in the suit may retain additional counsel but shall bear the fees and expenses
of such counsel unless (1) AMR shall have specifically authorized the retaining
of such counsel or (2) the parties to such suit include any Covered Person and
BISYS, and any such Covered Person has been advised by counsel that one or more
legal defenses may be available to it that may not be available to BISYS, in
which case BISYS shall not be entitled to assume the defense of such suit
notwithstanding the obligation to bear the fees and expenses of such counsel.
AMR shall not be liable to indemnify any Covered Person for any settlement of
any such claim effected without BISYS' written consent, which consent shall not
be unreasonably withheld or delayed. The indemnities set forth in paragraph (a)
will be in addition to any liability that the Portfolio might otherwise have to
a Covered Person.
4.6 In-Kind Redemption. If the Fund desires to withdraw or redeem all
of its Interests in the Portfolio, the Portfolio can effect such redemption "in
kind" and in such a manner that the securities delivered to the Fund's custodian
for the account of the Fund will mirror, as closely as practicable, the
composition of the Portfolio immediately prior to such redemption. No other
withdrawal or redemption of any Interest in the Portfolio will be satisfied by
means of an "in kind" redemption except in compliance with Rule 18f-1 under the
1940 Act.
4.7 Reasonable Actions. Each party covenants that it will, subject to
the provisions of this Agreement, from time to time, as and when requested by
another party or in its own discretion, as the case may be, execute and deliver
or cause to be executed and delivered all such assignments and other
instruments, take or cause to be taken such actions, and do or cause to be done
all things reasonably necessary, proper or advisable in order to consummate the
transactions contemplated by this Agreement and to carry out its intent and
purpose.
ARTICLE V
CONDITIONS PRECEDENT
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<PAGE> 10
5.1 Conditions Precedent. The obligations of each party to consummate
the transactions provided for herein shall be subject to (a) performance by such
other parties of all the obligations to be performed by the other parties
hereunder on or before each Closing, and (b) all representations and warranties
of the other parties contained in this Agreement being true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of each date of Closing,
with the same force and effect as if made on and as of the time of such Closing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Notification of Certain Matters. Each party will give prompt notice
to the other parties of (a) the occurrence of non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause either (1) any
representation or warranty contained in this Agreement to be untrue or
inaccurate, or (2) any condition precedent set forth in Article V hereof to be
unsatisfied in any material respect at the time of any Closing and (b) any
material failure of a party or any trustee, director, officer, employee or agent
thereof to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by such person hereunder; provided, however, that the
delivery of any pursuant to this Section 6.1 shall not limit or the party
receiving such notice.
6.2 Access to Information. The Portfolio and the Fund shall afford each
other access at all reasonable times to such party's officers, employees and
agents and to all its relevant books and records and shall furnish each other
party with all relevant financial and other data and information as reasonably
requested; provided, however, that nothing contained herein shall obligate any
party to provide another party with access to their books and records as they
relate to any series of the Trust or AMR Trust, except as may be required to
comply with applicable law or any provision of this Agreement.
6.3 Confidentiality. Each party agrees that it shall hold in strict
confidence all data and information obtained from another party (unless such
information is or becomes readily ascertainable from public or published
information or trade sources) and shall ensure that its officers, employees and
authorized representatives do not disclose such information to others without
the prior written consent of the party from whom it was obtained, except if
disclosure is required by the SEC, any other regulatory body or the Fund's or
Portfolio's respective auditors, or in the opinion of counsel such disclosure is
required by law, and then only with as much prior written notice to the other
party as is practical under the circumstances.
6.4 Public Announcements. No party shall issue any press release or
otherwise make any public statements with respect to the matters covered by this
Agreement without the prior consent of the other parties hereto, which consent
shall not be unreasonably withheld; provided, however, that consent shall not be
required if, in the opinion of counsel, such disclosure is required by law,
provided further, however, that the party making such disclosure shall provide
the other parties hereto with as much prior written notice of such disclosure as
is practical under the circumstances.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination.
(a) This Agreement may be terminated by the mutual agreement of all
parties.
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(b) This Agreement may be terminated at any time by the Trust by
redeeming all of the Fund's Interest in the Portfolio.
(c) This Agreement may be terminated on not less than 30 days' prior
written notice by AMR or the Trust to the Fund and BISYS.
(d) This Agreement may be terminated immediately at any time upon
written notice to the other parties in the event that form proceedings are
instituted against another party to this Agreement by the SEC or any other
regulatory body, provided that the terminating party has a reasonable belief
that the institution of the proceeding is not without foundation and will have a
material adverse impact on the terminating party.
(e) The indemnification obligations in Article IV shall survive the
termination of this Agreement.
7.2 Amendment. This Agreement may be amended, modified or supplemented
at any time in such manner as may be mutually agreed upon in writing by the
parties.
7.3 Waiver. At any time prior to any Closing, any party may (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein.
ARTICLE VIII
DAMAGES
8.1 Damages. The parties agree that, if this Agreement is breached, the
remedy of money damages would not be adequate and agree that injunctive relief
would be the appropriate relief.
ARTICLE IX
GENERAL PROVISIONS
9.1 Notices. All notices and other communications given or made
pursuant hereto shall to in writing and shall be deemed to have duly given or
made when actually received in person or by fax, or three days after being sent
by certified or registered United States mail, return receipt requested, postage
prepaid, addressed as follows:
If to AMR or AMR Investment Services, Inc.
AMR Trust: 4333 Amon Carter Boulevard, MD-5645
Fort Worth, Texas 76155
Attn.: Barry Y. Greenberg, Esq.
Tel.: (817) 967-3514
Fax: (817) 967-0768
If to the Trust or INTRUST Funds Trust
or the Fund: 105 North Main Street
Box One
Wichita, KS 67202
11
<PAGE> 12
Attn.: Phillip Owings
Tel.: (316) 383-1458
Fax: (316) 383-5879
with a copy Steven R. Howard, Est.
to: Baker & McKenzie
805 Third Avenue
New York, NY 10022
Tel.: (212) 891-3000
Fax: (212) 891-3885
If to BISYS: BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Attn.: George O. Martinez
Tel.: (614) 470-8656
Fax: (614) 470-8625
9.2 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
9.3 Headings. The headings and captions contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.4 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
9.5 Entire Agreement. This Agreement and the agreements and other
documents delivered pursuant hereto set forth the entire understanding between
the parties concerning the subject matter of this Agreement and incorporate or
supersede all prior negotiations and understandings. There are no covenants,
promises, agreements, conditions or understandings, either oral or written,
between them relating to the subject matter of this Agreement other than those
set forth herein. No representation or warranty has been made by or on behalf of
any party to this Agreement (or any officer, director, trustee, employee or
agent thereof) to induce any other party to enter into this Agreement or to
abide by or consummate any transactions contemplated by any terms of this
Agreement, except representations and warranties expressly set forth herein.
9.6 Successors and Assignments. Each and all of the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and, except as otherwise specifically provided in this Agreement, their
respective successors and assigns. Notwithstanding the foregoing, no party shall
make any assignment of this Agreement or any rights or obligations hereunder
without the written consent of all other parties. As used herein, the term
"assignment" shall have the meaning ascribed thereto in the 1940 Act.
12
<PAGE> 13
9.7 Governing Law. This Agreement shall be governed by the construed in
accordance with the laws of the State of Texas without giving effect to the
choice of law or conflicts of law provisions thereof.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing one or more counterparts.
9.9 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, other than the parties
hereto and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
9.10 Interpretation. Any uncertainty or ambiguity existing herein shall
not presumptively be interpreted against any party, but shall be interpreted
according to the application of the rules of interpretation for arm's length
agreements.
9.11 Limitation of Liability. The parties acknowledge that the Trust
and AMR Trust have entered into this Agreement solely on behalf of the Fund and
Portfolio, respectively, and that no other series of Trust or AMR Trust shall
have any obligation hereunder with respect to any liabilities arising hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first written above.
AMR INVESTMENT SERVICES, INC.
By /s/ William F. Quinn
----------------------------------------------
William F. Quinn, President
AMR INVESTMENT SERVICES TRUST,
on behalf of itself and the International Equity
Portfolio, a series thereof
By /s/ William F. Quinn
----------------------------------------------
William F. Quinn, President
INTRUST FUNDS TRUST,
on behalf of itself and the International Multi-
Manager Fund, a series thereof
By /s/ Carrie Zuckerman
----------------------------------------------
Carrie Zuckerman, Secretary
BISYS Fund Services
By /s/ George O. Martinez
----------------------------------------------
George O. Martinez, Senior Vice President
13
<PAGE> 1
Exhibit 5(g)
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is made and entered into as of the
_____ day of __________, 1998, by and among [Feeder Fund], a [_____________
company/trust] (the "Company"), for itself and on behalf of its series, the
__________ Fund (the "Fund"), Fund Distributor (the "Distributor"), an Ohio
limited partnership, and Master Investment Portfolio ("MIP"), a Delaware
business trust, for itself and on behalf of its series, the ___________________
Master Portfolio ("Portfolio").
WITNESSETH
----------
WHEREAS, Company and MIP are each open-end management investment
companies;
WHEREAS, Fund and Portfolio have the same investment objective and
substantially the same investment policies;
WHEREAS, Fund desires to invest on an ongoing basis all of its
investable assets (the "Assets") in Portfolio (the "Investments") on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
made herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
------------------------------
1.1 Company. Company represents and warrants to MIP that:
(a) Organization. Company is a ____________
corporation/trust and Fund is a duly and validly
designated series of Company. Each of Company and
Fund has the requisite power and authority to own its
property and conduct its business as proposed to be
conducted pursuant to this Agreement.
(b) Authorization of Agreement. The execution and
delivery of this Agreement by Company on behalf of
Fund and the conduct of business contemplated hereby,
including the implementation of the Investments, have
been duly authorized by all necessary action on the
part of Company's Board of Directors and no other
action or proceeding is necessary for the execution
and delivery of this Agreement by Fund, or the
performance by Fund of its obligations hereunder.
This Agreement when executed and delivered by Company
on behalf of Fund shall constitute a legal, valid and
binding obligation of Company, enforceable against
Fund
<PAGE> 2
in accordance with its terms. No meeting of, or
consent by, shareholders of Fund is necessary to
approve or implement the Investments.
(c) 1940 Act Registration. Company is duly registered as
an open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act") and
such registration is in full force and effect.
(d) SEC Filings. Company has duly filed all forms,
reports, proxy statements and other documents
(collectively, the "SEC Filings") required to be
filed with the Securities and Exchange Commission
(the "SEC") under Securities Act of 1933 (the "1993
Act"), the Securities Exchange Act of 1934 (the "1934
Act") and the Investment Company Act of 1940 (the
"1940 Act") and the rules and regulations thereunder,
(collectively, the "Securities Laws") in connection
with the registration of Fund's shares, any meetings
of its shareholders and its registration as a series
of an investment company. All SEC Filings relating to
Fund comply in all material respects with the
requirements of the applicable Securities Laws and do
not, as of the date of this Agreement, contain any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading.
(e) Fund Assets. Fund currently intends on an ongoing
basis to invest substantially all of its Assets
solely in Portfolio.
(f) Registration Statement. Company has reviewed MIP's
and Portfolio's registration statement on Form N-1A,
as filed with the SEC, and agrees that Fund's
Investments will be subject to the terms thereof.
Fund understands and acknowledges that Portfolio has
the right, in its sole discretion, at any time, to
limit or reject additional Investments from Fund,
provided that MIP shall provide Company at least (90)
days' advance written notice, or such lesser time as
may be agreed to by the parties, of any such limit or
rejection.
(g) Insurance. Fund has in force reasonable insurance
coverage against any and all liabilities that may
arise as a result of Fund's business as a registered
investment company.
1.2 MIP. MIP represents and warrants to Company that:
(a) Organization. MIP is a trust duly organized, validly
existing and in good standing under the laws of the
State of Delaware and Portfolio is a duly and validly
designated series of MIP. Each of MIP and Portfolio
has the requisite power and authority to own its
property and conduct its business as now being
conducted.
2
<PAGE> 3
(b) Authorization of Agreement. The execution and
delivery of this Agreement by MIP on behalf of
Portfolio and the conduct of business contemplated
hereby have been duly authorized by all necessary
action on the part of MIP's Board of Trustees and no
other action or proceeding is necessary for the
execution and delivery of this Agreement by
Portfolio, or the performance by Portfolio of its
obligations hereunder. This Agreement when executed
and delivered by MIP on behalf of Portfolio shall
constitute a legal, valid and binding obligation of
MIP and Portfolio, enforceable against MIP and
Portfolio in accordance with its terms. No meeting
of, or consent by, interestholders of Portfolio is
necessary to approve the issuance of the interests
(as defined below) to Fund.
(c) Authorization of Issuance of Beneficial Interest. The
issuance by Portfolio of shares of beneficial
interest ("Interests") in exchange for the
Investments by Fund of its Assets has been duly
authorized by all necessary action on the part of the
Board of Trustees of MIP.
(d) 1940 Act Registration. MIP is duly registered as an
open-end management investment company under the 1940
Act and such registration is in full force and
effect.
(e) SEC Filings; Securities Exemptions. MIP has duly
filed all SEC Filings, as defined herein, relating to
Portfolio required to be filed with the SEC pursuant
to the 1940 Act. Interests in Portfolio are not
required to be registered under the 1933 Act, because
such Interests are offered solely in private
placement transactions which do not involve any
"public offering" within the meaning of Section 4(2)
of the 1933 Act. In addition, Interests in Portfolio
are either noticed for sale or exempt from notice
requirements under applicable securities laws in
those states or jurisdictions in which Interests are
offered and sold. All SEC Filings relating to
Portfolio comply in all material respects with the
requirements of the applicable Securities Laws, as
defined herein, and do not, as of the date of this
Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading.
(f) Tax Status. Based upon applicable IRS interpretations
and rulings, Portfolio is treated as a partnership
for federal income tax purposes under the Code for
its current taxable year.
1.3 Distributor. Distributor represents and warrants to MIP that
the execution and delivery of this Agreement by Distributor
have been duly authorized by all necessary for execution and
delivery of this Agreement by Distributor, or the performance
by Distributor of its obligations hereunder. This Agreement
when executed and delivered by Distributor shall constitute a
legal, valid and binding
3
<PAGE> 4
obligation of Distributor, enforceable against Distributor in
accordance with its terms.
ARTICLE II
COVENANTS
---------
2.1 Company. Company covenants that:
(a) Advance Review of Certain Documents. Company will
furnish MIP at least ten (10) business days prior to
the earlier of filing of first use, as the case may
be, with drafts of Fund's registration statement on
Form N-1A and any amendments thereto, and also will
give at least five (5) business days' advance notice
of any prospectus or statement of additional
information supplements. In addition, Company will
furnish or will cause to be furnished to MIP at least
five proposed advertising or sales literature that
contains language that describes or refers to MIP or
Portfolio and that was not previously approved by
MIP. Company agrees that it will include in all such
Fund documents any disclosures that may be required
by law, and that it will incorporate in all such Fund
documents any material reasonable comments made by
MIP. MIP will not, however, in any way be liable for
any errors or omissions in such documents, whether or
not it makes any objection thereto, except to the
extent such errors or omissions result from
information provided in Portfolio's 1940 Act
registration statement or otherwise provided by MIP
for inclusion therein. In addition, neither Fund nor
Distributor will make any other written or oral
representations about MIP or Portfolio other than
those contained in such documents without MIP's prior
written consent.
(b) SEC and Blue Sky Filings. Company will file all SEC
Filings required to be filed with the SEC under the
Securities Laws in connection with the registration
of Fund's shares, any meetings of its shareholders,
and its registration as a series of an investment
company. Company will file such similar or other
documents as may be required to be filed with any
securities commission or similar authority by the
laws or regulations of any state, territory or
possession of the United States, including the
District of Columbia, in which shares of Fund are or
will be noticed for sale ("State Filings"). Fund's
SEC Filings will comply in all material respects with
the requirements of the applicable Securities Laws,
and, insofar as they relate to information other than
that supplied or required to be supplied by
Portfolio, will not, at the time they are filed or
used to offer Fund shares, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading. Fund's State Filings will be
prepared in
4
<PAGE> 5
accordance with the requirements of applicable state
and federal law and the rules and regulations
thereunder.
(c) 1940 Act Registration. Company will be duly
registered as an open-end management investment
company under the 1940 Act.
(d) Tax Status. Fund will qualify for treatment as a
regulated investment company under Subchapter M of
the Code for any taxable year during which this
Agreement continues in effect, unless such lack of
qualification is solely as a result of Portfolio's
failure to meet (i) the income test imposed on
regulated investment companies under Section
851(b)(2) of the Code and (ii) the asset test imposed
on regulated investment companies under Section
851(b)(3) of the Code as if such Sections applied to
it.
(e) Fiscal Year. Fund shall take appropriate action to
adopt and maintain the same fiscal year end as
Portfolio (currently the last day February).
(f) Proxy Voting. If requested to vote on matters
pertaining to MIP or Portfolio, Fund will vote such
shares in accordance with applicable law.
(g) Compliance with Laws. Company shall comply, in all
material respects, with all applicable laws, rules
and regulations in connection with conducting its
operations as a registered investment company.
(h) Insurance. Fund will maintain in full force and
effect for so long as this Agreement is in effect
reasonable insurance coverage against any and all
liabilities that may arise as a result of Fund's
business as a registered investment company.
2.2 MIP. MIP covenants that:
(a) Signature Pages. MIP shall promptly provide all
required signature pages to Company for inclusion in
any SEC Filings of Company, provided Company is in
material compliance with its covenants and other
obligations under this Agreement at the time such
signature pages are provided and included in the SEC
Filing. Company and Distributor acknowledge and agree
that the provision of such signature pages does not
constitute a representation by MIP, its Trustees or
Officers, that such SEC Filing complies with
requirements of the applicable Securities Laws, or
that such SEC Filing does not contain any untrue
statement of a material fact or does not omit to the
state any material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading, except with respect to
information provided by MIP for inclusion in such SEC
Filing or for use by Company in preparing such
filing, which shall in any event
5
<PAGE> 6
include any written information obtained from MIP's
current registration statement on Form N-1A.
(b) Redemption. Except as otherwise provided in this
Section 2.2(b), redemptions of Interests owned by
Fund will be effected pursuant to Section 2.2(c). In
the event Fund desires to withdraw its entire
Investment from Portfolio, either by submitting a
redemption request or by terminating this Agreement
in accordance with Section 5.1 hereof, Portfolio,
unless otherwise agreed to by the parties, and in all
cases subject to Sections 17 and 18 of the 1940 Act
and the rules and regulations thereunder, will effect
such redemption "in kind" and in such a manner that
the securities delivered to Fund or its custodian for
the account of Fund mirror, as closely as
practicable, the composition of Portfolio immediately
prior to such redemption. Portfolio further agrees
that, to the extent legally possible, it will not
take or cause to be taken any action without
Company's prior approval that would cause the
withdrawal of Fund's Investments to be treated as a
taxable event to the Fund. Portfolio further agrees
to conduct its activities in accordance with all
applicable requirements of Rule 1.731-2(e) under the
Internal Revenue Code or any successor regulation.
(c) Ordinary Course Redemptions. Portfolio will effect
its redemptions in accordance with the provisions of
the 1940 Act and the rules and regulations
thereunder, including, without limitation, Section 17
thereof. All redemption requests other than a
withdrawal of Fund's entire Investment in Portfolio
under Section 2.2(b) or, at the sole discretion of
MIP, a withdrawal (or series of withdrawals over any
three (3) consecutive business days) of an amount
that exceeds 10% of Portfolio's net asset value will
be effected in cash at the next determined net asset
value after redemption request is received. Portfolio
will use its best efforts to settle redemptions on
the business day following the receipt of a
redemption request by Fund and if such next business
day settlement is not practicable, will immediately
notify Fund regarding the anticipated settlement
date, which shall in all events be a date permitted
under the 1940 Act.
(d) SEC Filings. MIP will file all SEC Filings required
to be filed with the SEC under the Securities Laws in
connection with any meetings of Portfolio's investors
and Portfolio's registration as a series of an
investment company and will provide copies of all
such definitive filings to Company. Portfolio's SEC
Filings will comply in all material respects with the
requirements of the applicable Securities Laws, and
will not, at the time they are filed or used, contain
any untrue statement of a material fact or omit to
state any material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading.
6
<PAGE> 7
(e) 1940 Act Registration. MIP will remain duly
registered as an open-end management investment
company under the 1940 Act.
(f) Tax Status Based upon applicable IRS interpretations
and rulings, Portfolio will continue to be treated as
a partnership for federal income tax purposes under
the Code. Portfolio will continue to satisfy (i) the
income test imposed on regulated investment companies
under Section 851(b)(2) of the Code and (ii) the
asset test imposed on regulated investment companies
under Section 851(b)(3) of the Code as if such
Sections applied to it for so long as this initial
Investment a copy of its opinion of counsel or
private letter ruling relating to the tax status of
Portfolio and agrees that Fund may rely upon such
opinion or ruling during the term of this Agreement.
(g) Securities Exemptions. Interests in Portfolio have
been and will continue to be offered and sold solely
in private placement transactions which do not
involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act or require registration
or notification under any state law.
(h) Advance Notice of Certain Changes. MIP shall provide
Company with at least one hundred twenty (120) days'
advance notice, or such lesser time as may be agreed
to by the parties, of any change in Portfolio's
investment objective, and at least sixty (60) days'
advance notice, or if MIP has knowledge that one of
the following changes is likely to occur more than
sixty (60) days in advance of such event, notice
shall be provided as soon as reasonably possible
after MIP obtains such knowledge, of any material
change in Portfolio's investment policies or
activities, any material increase in Portfolio's fees
or expenses, or any change in Portfolio's fiscal year
or time for calculating net asset value for purposes
of Rule 22c-1.
(i) Compliance with Laws. MIP shall comply, in all
material respects, with all applicable laws, rules
and regulations in connection with conducting its
operations as a registered investment company.
2.3 Reasonable Actions. Each party covenants that it will, subject
tot he provisions of this Agreement, from time to time, as and
when requested by another party or in its own discretion, as
the case may be, execute and deliver or cause to be executed
and delivered all such documents, assignments and other
instruments, take or cause to be taken such actions, and do or
cause to be done all things reasonably necessary, proper or
advisable in order to conduct the business contemplated by
this Agreement and to carry out its intent and purpose.
7
<PAGE> 8
ARTICLE III
INDEMNIFICATION
---------------
3.1 Company and Distributor.
(a) Company and Distributor agree, jointly and severally,
to indemnify and hold harmless MIP, Portfolio and
Portfolio's investment adviser, and any
director/trustee, officer, employee or agent of MIP,
Portfolio or Portfolio's investment adviser (in this
Section, each, a "Covered Person" and collectively
"Covered Persons"), against any and all losses,
claims, demands, damages, liabilities or expenses
(including, with respect to each Covered Person, the
reasonable cost of investigating and defending
against any claims therefor and any counsel fees
incurred in connection therewith, except as provided
in subparagraph (b)), that:
(j) arise out of or are based upon any violation
or alleged violation of any of the
Securities Laws, or any other applicable
statute, rule, regulation or common law, or
are incurred in connection with or as a
result of any formal or informal
administrative proceeding or investigation
by a regulatory agency, insofar as such
violation or alleged violation, proceeding
or investigation arises out of or is based
upon any direct or indirect omission or
commission (or alleged omission or
commission) by officers, employees or
agents, but only insofar as such omissions
or commissions relate to Fund; or
(ii) arise out of or are based upon any untrue
statement or alleged untrue statement of a
material fact contained in any advertising
or sales literature, prospectus,
registration statement, or any other SEC
Filing relating to Fund, or any amendments
or supplements to the foregoing (in this
Section, collectively "Offering Documents"),
or arise out of or are based upon the
omission or alleged omission to state
therein a material fact required to be
stated therein or necessary to make the
statements therein in light of the
circumstances under which they were made,
not misleading, in each case to the extent,
but only to the extent, that such untrue
statement or alleged untrue statement or
omission or alleged omission was not made in
the Offering Documents in reliance upon and
in conformity with MIP's registration
statement on Form N-1A and other written
information furnished by MIP to Fund or any
service provided of Fund for use therein or
for use by Fund in preparing such documents,
including but limited to any written
information contained in MIP's current
registration statement on Form N-1A;
provided, however, that in no case shall
Company or Distributor be liable for indemnification
hereunder with respect to any claims made against any
Covered Person unless a Covered Person shall have
notified
8
<PAGE> 9
Company or Distributor in writing within a reasonable
time after the summons, other first legal process,
notice of a federal, state or local tax deficiency,
or formal initiation of a regulatory investigation or
proceeding giving information of the nature of the
claim shall have properly been served upon or
provided to a Covered Person seeking indemnification.
Failure to notify Company or Distributor of such
claim shall not relieve Company or Distributor from
any liability that it may have to any Covered Person
otherwise than on account of the indemnification
contained in this Section.
(b) Company and Distributor each will be entitled to
participate at its own expense in the defense or, if
it so elects, to assume the defense of any suit
brought to enforce any such liability, but if Company
and/or Distributor elect(s) to assume the defense,
such defense shall be conducted by counsel chosen by
Company and/or Distributor, as applicable. In the
event Company and/or Distributor elect(s) to assume
the defense of any such suit and retain such counsel,
each Covered Person in the suit may retain additional
counsel but shall bear the fees and expenses of such
counsel unless (A) Company and Distributor shall have
specifically authorized the retaining of and payment
of fees and expenses of such counsel or (B) the
parties to such suit include any Covered Person and
Company and/or Distributor, and any such suit Covered
Person has been advised in a written opinion by
counsel reasonably acceptable to Company and
Distributor that one or more legal defenses may be
available to it that may not be available to Company
and/or Distributor, in which case Company and/or
Distributor shall not be entitled to assume the
defense of such suit notwithstanding their obligation
to bear the fees and expenses of one counsel to such
persons. Company shall not be required to indemnify
any Covered Person for any settlement of any such
claim effected without its written consent and
Distributor shall not be required to indemnify any
Covered Person for any settlement of any such claim
effected without its written consent, which consent,
in each case, shall not be unreasonably withheld or
delayed. The indemnities set forth in paragraph (a)
will be in addition to any liability that Company
and/or Distributor might otherwise have to Covered
Persons.
3.2 MIP .
(a) MIP agrees to indemnify and hold harmless Company,
Fund, Distributor, and any affiliate providing
services to Company and/or Fund, and any
trustee/director, officer, employee or agent of any
of them (in this Section, each, a "Covered Person"
and collectively, "Covered Persons"), against any and
all losses, claims, demands, damages, liabilities or
expenses (including, with respect to each Covered
Person, the reasonable cost of investigating and
defending against any claims therefor and any counsel
9
<PAGE> 10
fees incurred in connection therewith, except as
provided in subparagraph (b)), that:
(i) arise out of or are based upon any violation
or alleged violation of any of the
Securities Laws, or any other applicable
statute, result of any formal or informal
administrative proceeding or investigation
by a regulatory agency, insofar as such
violation or alleged violation, proceeding
or investigation arises out of or is based
upon any direct or indirect omission or
commission (or alleged omission or
commission) by MIP, or any of its trustees,
officers, employees or agents; or
(ii) arise out of or are based upon any untrue
statement or alleged untrue statement of a
material fact contained in any advertising
or sales literature, or any other SEC Filing
relating to Portfolio, or any amendments to
the foregoing (in this Section,
collectively, the "Offering Documents")
relating to Portfolio, or arise out of or
are based upon the omission or alleged
omission to state therein, a material fact
required to be stated therein, or necessary
to make the statements therein in light of
the circumstances under which they were
made, not misleading; or
(iii) arise out of or are based upon any untrue
statement or alleged untrue statement of a
material fact contained in any Offering
Documents relating to Company of Fund, or
arise out of or are based upon the omission
or alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
in light of the circumstances under which
they were made, not misleading, in each case
to the extent, but only to the extent, that
such untrue statement or alleged untrue
statement or omission or alleged omission
was made in reliance upon and in conformity
with written information contained in MIP's
current registration statement on Form N-1A.
provided, however, that in no case shall MIP
be liable for indemnification hereunder with respect
to any claims made against any Covered Person unless
a Covered Person shall have notified MIP in writing
within a reasonable time after the summons, other
first legal process, notice of a federal, state or
local tax deficiency, or formal initiation of a
regulatory investigation or proceeding giving
information of the nature of the claim shall have
properly been served upon or provided to a Covered
Person seeking indemnification. Without limiting the
generality of the foregoing, Portfolio's indemnity to
Covered Person shall include all relevant liabilities
of Covered Persons under the Securities Laws, as if
the Offering Documents constitute a "prospectus"
within the meaning of the 1933 Act, and MIP had
registered its interests under 1933
10
<PAGE> 11
Act pursuant to a registration statement meeting the
requirements of the 1933 Act. Failure to notify MIP
of such claim shall not relieve MIP from any
liability that it may have to any Covered Person
otherwise than on account of the indemnification
contained in this Section.
(b) MIP will be entitled to participate at its own
expenses in the defense or, if it so elects, to
assume the defense of any suit brought to enforce any
such liability, but, if MIP elects to assume the
defense, such defense shall be conducted by counsel
chosen by MIP. In the event MIP elects to assume the
defense of any such suit and retain such counsel,
each Covered Person in the suit may retain additional
counsel but shall bear the fees and expenses of such
counsel unless (A) MIP shall have specifically
authorized the retaining of and payment of fees and
expenses of such counsel or (B) the parties to such
suit include any Covered Person and MIP, and any such
Covered Person has been advised in a written opinion
by counsel reasonably acceptable to MIP that one or
more legal defenses may be available to it that may
not be available to MIP, in which case MIP shall not
be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and
expenses of one counsel to such persons. MIP shall
not be required to indemnify any Covered Person for
any settlement of any such claim effected without its
written consent, which consent shall not be
unreasonably withheld or delayed. The indemnities set
forth in paragraph (a) will be in addition to any
liability that MIP might otherwise have to Covered
Persons.
ARTICLE IV
ADDITIONAL AGREEMENTS
---------------------
4.1 Access to Information. Throughout the life of this Agreement,
Company and MIP shall afford each other reasonable access at
all reasonable times to such party's officers, employees,
agents and offices and to all relevant books and records and
shall furnish each other party with all relevant financial and
other data and information as such other party may reasonably
request.
4.2 Confidentiality. Each party agrees that it shall hold in
strict confidence all data and information obtained from
another party (unless such information is or becomes readily
ascertainable from public or published information or trade
sources or public disclosure of such information is required
by law) and shall ensure that its officers, employees and
authorized representatives do not disclose such information to
others without the prior written consent of the party from
whom it was obtained, except if disclosure is required by the
SEC, any other regulatory body, Fund's or Portfolio's
respective auditors, or in the opinion of counsel to the
disclosing party such disclosure is required by law, and then
only with as much prior written notice tot he other parties as
is practical under the circumstances. Each party hereto
acknowledges that the provisions of this
11
<PAGE> 12
Section 4.2 shall not prevent Company or MIP from filing a
copy of this Agreement as an exhibit to a registration
statement on Form N-1A as it relates to Fund or Portfolio,
respectively, and that such disclosure by Company or MIP shall
not require any additional consent from the other parties.
4.3 Obligations of Company and MIP. MIP agrees that the
obligations of Company under this Agreement shall be limited
in all cases to the assets of Fund, and that except to the
extent liability may be imposed under relevant Securities
Laws, MIP shall not seek satisfaction of any such obligation
from the officers, agents, employees, trustees or shareholders
of Company or other classes of series of Company. Company
agrees that the obligations MIP under this Agreement shall be
limited in all cases to the Assets of Portfolio and that
except to the extent liability may be imposed under relevant
Securities Laws, Company shall not seek satisfaction of any
such obligation from officers, agents, employees, trustees or
shareholders of MIP or other classes or series of MIP.
ARTICLE V
TERMINATION, AMENDMENT
----------------------
5.1 Termination. The provisions of Article III and Sections 4.2
and 4.3 shall survive any termination of this Agreement.
5.2 Amendment. This Agreement may be amended, modified or
supplemented at any time in such manner as may be mutually
agreed upon in writing by the parties.
ARTICLE VI
GENERAL PROVISIONS
------------------
6.1 Expenses. All costs and expenses incurred in connection with
this Agreement and the conduct of business contemplated hereby
shall be paid by the party incurring such costs and expenses.
6.2 Headings. The headings and captions contained in this
Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
6.3 Entire Agreement. Except as set forth below, this Agreement
sets forth the entire understanding between the parties
concerning the subject matter of this Agreement and
incorporates or supersedes all prior negotiations and
understandings. There are no covenants, promises, agreements,
conditions or understandings, either oral or written, between
the parties relating to the subject matter of this Agreement
other than those set forth herein and the terms, conditions
and descriptions set forth in MIP's Registration Statement, as
in effect from time to time.
12
<PAGE> 13
6.4 Successors. Each and all of the provisions of this Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
however, that neither this Agreement, nor any rights herein
granted may be assigned to, transferred to or encumbered by
any party, without the prior written consent of the other
parties hereto.
6.5 Governing Law. This Agreement shall be governed by the
construed in accordance with the laws of the State of
California; provided, however, that in the event of any
conflict between the 1940 act and the laws of California, the
1940 Act shall govern.
6.6 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by
signing one or more counterparts.
6.7 Third Parties. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give any person, other
than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.
6.8 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to
have been duly given or made when delivered in person or three
days after being sent by certified or registered United States
mail, return receipt requested, postage prepaid, addressed:
If to Fund:
-----------------
-----------------
-----------------
-----------------
If to Distributor:
-----------------
-----------------
-----------------
-----------------
If to MIP:
Chief Operating Officer
Master Investment Portfolio
c/o Stephens Inc.
111 Center Street
Little Rock, AR 72201
13
<PAGE> 14
6.9 Interpretation. Any uncertainty or ambiguity existing herein
shall not be interpreted against any party, but shall be
interpreted according to the application of the rules of
interpretation for arms' length agreements.
6.10 Operation of Fund. Except as otherwise provided herein, this
Agreement shall not limited authority of Fund, Company or
Distributor to take such action as it may deem appropriated or
advisable in connection with all matters relating to the
operation of Fund and the sale of its shares.
6.11 Relationship of Parties; No Joint Venture, Etc. It is
understood and agreed that neither Company nor Distributor
shall hold itself out as an agent of MIP with the authority to
bind such party, nor shall MIP hold itself out as an agent or
Company or Distributor with the Authority to bind such party.
6.12 Use of Name. Except as otherwise provided herein or required
by law (e.g., in Company's Registration Statement on Form
N-1A), neither Company, Fund nor or any affiliate thereof, or
to the relationship contemplated by this Agreement in any
advertising or promotional materials without the prior written
consent of MIP, nor shall MIP describe or refer to the name of
Company, Fund or Distributor or any derivation thereof, or any
affiliate thereof, or to the relationship contemplated by this
Agreement in any advertising or promotional materials without
the prior written consent of Company, Fund or Distributor, as
the case may be. In no case shall any such consents be
unreasonably withheld or delayed. In addition, the party
required to give its consent shall have at least three (3)
business days prior to the earlier of filing or first use, as
the case may be, to review the proposed advertising or
promotional materials.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the date
first written above.
COMPANY
On behalf of itself and ____________________
____________________ FUND
By:
Name:
Title:
DISTRIBUTOR
By:
Name:
Title:
MASTER INVESTMENT PORTFOLIO,
On behalf of its series, the ____________________
MASTER PORTFOLIO
By:
Name:
Title:
14
<PAGE> 1
Exhibit 9(c)
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of this ___ day of _________, 1996, between [Fund], a
company organized under the laws of the state of [State] (the "Fund") and
Investors Bank & Trust Company ("IBT").
The Fund, an open-end management investment company[, on behalf of the
portfolios listed on APPENDIX A hereto,] desires to retain IBT to perform
certain fund accounting services for the Fund, and IBT has indicated its
willingness to so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
1.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
1.2 BOARD. Board will mean the Board of Trustees of the Fund, as
the case may be.
1.3 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
1.4 PROPER INSTRUCTIONS. Proper Instructions shall mean instructions
(which may be continuing instructions) regarding matters signed or initialed by
an Authorized Person. Oral instructions will be considered Proper Instructions
if IBT reasonably believes them to have been given by an Authorized Person. The
Fund shall cause all oral instructions to be promptly confirmed in writing. IBT
shall act upon and comply with any subsequent Proper Instruction which modifies
a prior instruction and the sole obligation of IBT with respect to any follow-up
or confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires IBT to
act, the Fund shall give IBT specific Proper Instructions as to the action
required. Upon receipt by IBT of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and IBT agree in writing that such procedures afford adequate safeguards
for the Fund's assets.
2. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with IBT his or her
certification to IBT, in such form as may be acceptable to IBT, of (i) the names
and signatures of the Authorized Persons and (ii) the names of the members of
the Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. IBT will be
entitled to rely and act upon any Officers' Certificate given to it by the
<PAGE> 2
Fund which has been signed by Authorized Persons named in the most recent
certification received by IBT.
3. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
4. FUND EVALUATION AND YIELD CALCULATION
4.1 FUND EVALUATION. IBT shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of the Fund, such determination to be made in accordance with the
provisions of the Articles and By-laws of the Fund and Confidential Offering
Circular relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, IBT may rely in good
faith upon information furnished to it by any Authorized Person in respect of
(i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by IBT, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and IBT shall
not be responsible for any loss occasioned by such reliance or for any good
faith reliance on any quotations received from a source pursuant to (iii) above.
4.2. YIELD CALCULATION. IBT will compute the performance results of
the Fund (the "Yield Calculation") in accordance with the provisions of Release
No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the "Releases")
promulgated by the Securities and Exchange Commission, and any subsequent
amendments to, published interpretations of or general conventions accepted by
the staff of the Securities and Exchange Commission with respect to such
releases or the subject matter thereof ("Subsequent Staff Positions"), subject
to the terms set forth below:
(a) IBT shall compute the Yield Calculation for the Fund for
the stated periods of time as shall be mutually agreed upon, and communicate in
a timely manner the result of such computation to the Fund.
2
<PAGE> 3
(b) In performing the Yield Calculation, IBT will derive the
items of data necessary for the computation from the records it generates and
maintains for the Fund pursuant Section 3 hereof. IBT shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers.
(c) At the request of IBT, the Fund shall provide, and IBT
shall be entitled to rely on, written standards and guidelines to be followed by
IBT in interpreting and applying the computation methods set forth in the
Releases or any Subsequent Staff Positions as they specifically apply to the
Fund. In the event that the computation methods in the Releases or the
Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Fund, the
Fund or its designated agent shall have the full responsibility for making the
determination of how the security or payment is to be treated for purposes of
the computation and how the computation is to be made and shall inform IBT
thereof on a timely basis. IBT shall have no responsibility to make independent
determinations with respect to any item which is covered by this Section, and
shall not be responsible for its computations made in accordance with such
determinations so long as such computations are mathematically correct.
(d) The Fund shall keep IBT informed of all publicly available
information and of any non-public advice, or information obtained by the Fund
from its independent auditors or by its personnel or the personnel of its
investment adviser, or Subsequent Staff Positions related to the computations to
be undertaken by IBT pursuant to this Agreement and IBT shall not be deemed to
have knowledge of such information (except as contained in the Releases) unless
it has been furnished to IBT in writing.
5. FEES. For the services rendered pursuant to this Agreement, the Fund
agrees to pay IBT the fees set forth on APPENDIX B hereto.
6. ADDITIONAL SERVICES. IBT shall perform the additional services for
the Fund as are set forth on APPENDIX C hereto. APPENDIX C may be amended from
time to time upon agreement of the parties to include further additional
services to be provided by IBT to the Fund, at which time the fees set forth in
APPENDIX B shall be appropriately increased.
7. LIMITATION OF LIABILITY.
7.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall IBT or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold IBT and the Indemnified Parties
harmless from and against any and all loss, damage, liability, actions, suits,
claims, costs and expenses, including legal fees, (a "Claim") arising as a
result of any act or omission of IBT or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the gross negligence,
willful misfeasance or bad faith of IBT or any Indemnified Party. Without
limiting the foregoing, neither IBT nor the Indemnified Parties shall be liable
for, and IBT and the Indemnified Parties shall be indemnified against, any Claim
arising as a result of:
(a) Any act or omission by IBT or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any Officer's Certificate,
Proper Instructions, resolution of the Board,
3
<PAGE> 4
telegram, telecopier, notice, request, certificate or other instrument
reasonably believed by IBT to genuine;
(b) Information relied on in good faith by IBT and supplied by
any Authorized Person in connection with the calculation of (i) the net asset
value and public offering price of the shares of capital stock of the Fund or
(ii) the Yield Calculation; or
(c) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events.
7.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall IBT or the Indemnified Parties be liable to the Fund or any third
party for lost profits or lost revenues or any special, consequential, punitive
or incidental damages of any kind whatsoever in connection with this Agreement
or any activities hereunder.
8. TERMINATION.
8.1 The term of this Agreement shall be three years commencing upon
the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than ninety days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) Either party may terminate this Agreement during any
Renewal Term upon ninety days written notice to the other party. Any termination
pursuant to this paragraph 8.1(b) shall be effective upon expiration of such
ninety days, provided, however, that the effective date of such termination may
be postponed to a date not more than one hundred twenty days after delivery of
the written notice: (i) at the request of IBT, in order to prepare for the
transfer by IBT of all necessary records of the Fund held hereunder; or (ii) at
the request of the Fund, in order to give the Fund an opportunity to make
suitable arrangements for a successor fund accountant.
8.2 The Fund shall reimburse IBT for any reasonable expenses
incurred by IBT in connection with the termination of this Agreement.
8.3 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of IBT relating
to its performance of its duties as hereunder.
9. CONFIDENTIALITY. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly
4
<PAGE> 5
agree that each of them is entitled, in addition to all other remedies at low or
in equal to an injunction or injunctions without bond or other security to
prevent breaches of this provision.
10. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) had delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
(b) In the case of notices sent to IBT to:
Investors Bank & Trust Company
200 Clarendon Street
PO Box 9130
Boston, MA 02117-9130
Attention: ___________, Director - Client Management
With a copy to: John E. Henry, General Counsel
or at such other place as such party may from time to time
designate in writing.
11. AMENDMENTS. This Agreement may not be altered or amended, except
by an instrument in writing, executed by both parties.
12. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of IBT or by IBT without the written consent of the
Fund, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 16 hereof will not be deemed to be
an assignment within the meaning of this provision.
13. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
15. ENTIRE AGREEMENT. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
16. LIMITATION OF LIABILITY. IBT is hereby expressly put on notice of
the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that IBT shall not seek satisfaction
of any such obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
5
<PAGE> 6
17. SEVERAL OBLIGATIONS OF THE PORTFOLIOS. This Agreement is an
agreement entered into between IBT and the Fund with respect to each Portfolio.
With respect to any obligation of the Fund on behalf of any Portfolio arising
out of this Agreement, IBT shall look for payment or satisfaction of such
obligation solely to the assets of the Portfolio to which such obligation
relates as though IBT had separately contracted with the Fund by separate
written instrument with respect to each Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
[FUND]
By:___________________________________
Name:
Title:
INVESTORS BANK & TRUST COMPANY
By:___________________________________
Name:
Title:
6
<PAGE> 7
Appendices
----------
<TABLE>
<S> <C>
Appendix A.............................................................. Portfolios
Appendix B.............................................................. Fee Schedule
Appendix C.............................................................. Additional Services
</TABLE>
7
<PAGE> 1
EXHIBIT 10
November 30, 1998
INTRUST Funds Trust
105 North Main Street
Box One
Wichita, Kansas 67202
Re: INTRUST Funds Trust (Registration No. 333-22215)
- ----------------------------------------------------
Dear Sir/Madam:
It is our opinion that the securities being registered will when sold, be
legally issued, fully paid and non-assessable and we hereby consent to the
reference to our firm as Counsel in Post-Effective Amendment No. 7 to
Registration No. 333-22215.
Sincerely,
Paul, Weiss, Rifkind, Wharton & Garrision
<PAGE> 1
Exhibit 11(a)
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, OH 43215 Telephone 614 249 2300 Telefax 614 249 2348
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
INTRUST Funds Trust:
We consent to the incorporation by reference of our report dated December 19,
1997 and to the reference to our firm under the headings "Financial Highlights"
in the Prospectus and "Independent Auditors" in the Statement of Additional
Information included herein.
/s/ KPMG Peat Marwick LLP
Columbus, Ohio
November 30, 1998
<PAGE> 1
Exhibit 15(a)
RULE 12b-1 DISTRIBUTION PLAN
INSTITUTIONAL SERVICE CLASS
INTRUST FUNDS TRUST
3435 Stelzer Road
Columbus, OH 43219
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Dear Sirs:
This will confirm the agreement between INTRUST Funds Trust (the
"Trust") and BISYS Fund Services (the "Distributor") as follows:
1. Definitions. (a) The Trust is an open-end management investment
company organized under the laws of the State of Delaware. The Trust is
registered under the Investment Company Act of 1940, as amended (the "Act"). The
Trust's shares of beneficial interest may be classified into series in which
each series represents the entire undivided interests of a separate portfolio of
assets. For all purposes of this Plan, a "Fund" shall mean a separate portfolio
of assets of the Trust which has entered into a Rule 12b-1 Distribution Plan and
Supplement, and a "Series" shall mean the series of shares of beneficial
interest representing undivided interests in a Fund. All references herein to
this Plan shall be deemed to be references to this Plan as it may from time to
time be supplemented by Rule 12b-1 Distribution Plan Supplements.
(b) As permitted by Rule 12b-1, (the "Rule") under the Act, the Trust
has adopted a Distribution Plan for each Fund pursuant to which the Trust may
make certain payments to the Distributor for direct and indirect expenses
incurred in connection with the distribution of shares of the Funds. The Trust's
Board of Trustees has determined that there is a reasonable likelihood that the
Plan, if implemented, will benefit each Fund and its shareholders.
2. Adoption of Plan. The Trust hereby adopts this Plan, and the parties
hereto enter into this Plan, on the terms and conditions specified herein.
3. Distribution-Related Fee. (a) The Trust shall pay the Distributor a
monthly distribution-related fee on the first business day of each month in such
an amount as the Distributor may request, up to a maximum of 0.25% of the
average daily value of the Fund's net assets (as determined on each business day
at the time set forth in the
1
<PAGE> 2
Trust's currently effective prospectus for determining net asset value per
share) during the preceding month in which the Plan is implemented and shall be
calculated with respect to a particular Fund at the annual rate set forth in the
Supplement applicable to that Fund.
4. Purposes of Payment. The Distributor may use amounts received under
the Plan for (i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising, (ii)
expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expenses, (iii) payments to broker-dealers and
financial institutions for services in connection with the distribution of
shares, including promotional incentives and fees calculated with reference to
the average daily net asset value of shares held by shareholders who have a
brokerage or other service relationship with the broker-dealer or other
institution receiving such fees, (iv) costs of printing prospectuses, statements
of additional information and other materials to be given or sent to prospective
investors, (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of shares of the Funds, (vi) costs
of shareholder servicing which may be incurred by broker-dealers, banks or other
financial institutions, and (vii) other direct and indirect distribution-related
expenses, including the provision of services with respect to maintaining the
assets of the Funds. The services rendered by the Distributor hereunder are in
addition to the distribution and administrative services reasonably necessary
for the operation of the Trust and the Fund pursuant to the Master
Administrative Services Contract between the Trust and BISYS Fund Services, Inc.
and the Master Distribution Contract between the Trust and the Distributor,
other than those services which are to be provided by the investment adviser
pursuant to the Master Investment Advisory Agreement between the Trust and
INTRUST Bank, N.A.
5. Related Agreements. All other agreements relating to the
implementation of this Plan (the "related agreements") shall be in writing, and
such related agreements shall be subject to termination, without penalty, on not
more than sixty days' written notice to any other party to the agreement, in
accordance with the provisions of clauses (a) and (b) of paragraph hereof.
6. Approvals by Trustees and Shareholders. This Plan shall become
effective upon approval by (a) a majority of the Board of Trustees of the Trust
for each Fund, including a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any related agreements
(the "Plan Trustees"), pursuant to a vote cast in person at a meeting called for
the purpose of voting on this Plan, and (b) the holders of a majority of the
outstanding securities of a Fund (as defined in the Act). Related agreements
shall be subject to approval by the Trustees in the manner provided in clause
(a) of the preceding sentence.
2
<PAGE> 3
7. Duration and Annual Approval by Trustees. This Plan and any related
agreements shall continue in effect for a period of more than one year from the
date of their adoption or execution, provided such continuances are approved
annually by a majority of the Board of Trustees, including a majority of the
Plan Trustees, pursuant to a vote cast in person at a meeting called for the
purpose of voting on the continuance of this Plan or any related agreement.
8. Amendments. This Plan may be amended at any time with the approval
of a majority of the Board of Trustees, provided that (a) any material amendment
to this Plan must be approved by the Trustees in accordance with procedures set
forth in paragraph 7 hereof, and (b) any amendment to increase materially the
amount to be expended by the Fund pursuant to this Plan must also be approved by
the vote of the holders of a majority of the outstanding securities of the Fund
(as defined in the Act), provided that no approval shall be required in respect
of a Rule 12b-1 Distribution Plan Supplement entered into to add a Fund to those
covered by this Plan (or to amend or terminate such Supplement) by the holders
of the outstanding voting securities of any Series other than that of such Fund.
9. Termination. This Plan may be terminated at any time, without the
payment of any penalty by (a) the vote of a majority of the Plan Trustees or (b)
the vote of the holders of a majority of the outstanding voting securities of a
Fund (as defined in the Act). If this Plan is terminated with respect to any
Fund, it shall nonetheless remain in effect with respect to any remaining Funds.
10. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Trustees who are not "interested persons" of
the Trust (as defined in the Act) shall be committed to the discretion of the
Trustees then in office who are not "interested persons" of the Trust.
11. Effects of Assignment. To the extent that this Plan constitutes a
plan of distribution adopted pursuant to the Rule, it shall remain in effect as
such so as to authorize the use of the Fund's assets in the amounts and for the
purposes set forth herein, notwithstanding the occurrence of an assignment (as
defined in the Act). To the extent this Plan concurrently constitutes an
agreement relating to implementation of the plan of distribution, it shall
terminate automatically in the event of its assignment, and the Trust may
continue to make payments pursuant to this Plan, only (a) upon the approval of
the Board of Trustees in accordance with the procedures set forth in paragraph 7
hereof, and (b) if the obligations of the Distributor under this Plan are to be
performed by any organization other than the Distributor, upon such
organization's adoption and assumption in writing of all the provisions of this
Plan as party hereto.
12. Quarterly Reports to Trustees. The Distributor shall prepare and
furnish to the Board of Trustees, at least quarterly, a written report setting
forth all amounts
3
<PAGE> 4
expended pursuant to this Plan and any related agreements and the purposes for
which such expenditures were made. The written reports shall include a detailed
description of the continuing services provided by broker-dealers and other
financial intermediaries pursuant to paragraph 4 of this Plan.
13. Preservation of Records. The Trust shall preserve copies of this
Plan and any related agreements and any reports made pursuant to this Plan for a
period of not less than six years from the date of this Plan or any such related
agreement or report. For the first two years, copies of such documents shall be
preserved in an easily accessible place.
14. Limitations on Liability of Distributor. The Distributor shall give
the Trust the benefit of the Sponsor's best judgment and efforts in rendering
services under this Plan. As an inducement to the Distributor's undertaking to
render these services, the Trust agrees that the Distributor shall not be liable
under this Plan for any mistake in judgment or in any other event whatsoever
except for lack of good faith, provided that nothing in this Plan shall be
deemed to protect or purport to protect the Distributor against any liability to
the Trust or its shareholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Distributor's duties under this Plan or by reason of the
Distributor's reckless disregard of its obligations and duties hereunder.
15. Other Distribution-Related Expenditures. Nothing in this Plan shall
operate or be construed to limit the extent to which the Distributor or any
other person other than the Trust may incur costs and pay expenses associated
with the distribution of Fund Shares.
16. Miscellaneous. The Trust's Certificate of Trust, dated as of
January 26, 1996, is on file with the Secretary of State of the State of
Delaware. The obligations of the Trust are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees, or agents of the Trust, but only the Trust's
property shall be bound.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
INTRUST FUNDS TRUST
By:
-----------------------------
Title:
BISYS FUND SERVICES
By:
-----------------------------
Title:
4
<PAGE> 1
Exhibit 15(b)
RULE 12b-1 DISTRIBUTION PLAN
INSTITUTIONAL PREMIUM CLASS
INTRUST FUNDS TRUST
3435 Stelzer Road
Columbus, OH 43219
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Dear Sirs:
This will confirm the agreement between INTRUST Funds Trust (the
"Trust") and BISYS Fund Serives (the "Distributor") as follows:
1. Definitions. (a) The Trust is an open-end management investment
company organized under the laws of the State of Delaware. The Trust is
registered under the Investment Company Act of 1940, as amended (the "Act"). The
Trust's shares of beneficial interest may be classified into series in which
each series represents the entire undivided interests of a separate portfolio of
assets. For all purposes of this Plan, a "Fund" shall mean a separate portfolio
of assets of the Trust which has entered into a Rule 12b-1 Distribution Plan and
Supplement, and a "Series" shall mean the series of shares of beneficial
interest representing undivided interests in a Fund. All references herein to
this Plan shall be deemed to be references to this Plan as it may from time to
time be supplemented by Rule 12b-1 Distribution Plan Supplements.
(b) As permitted by Rule 12b-1, (the "Rule") under the Act, the Trust
has adopted a Distribution Plan for each Fund pursuant to which the Trust may
make certain payments to the Distributor for direct and indirect expenses
incurred in connection with the distribution of shares of the Funds. The Trust's
Board of Trustees has determined that there is a reasonable likelihood that the
Plan, if implemented, will benefit each Fund and its shareholders.
2. Adoption of Plan. The Trust hereby adopts this Plan, and the parties
hereto enter into this Plan, on the terms and conditions specified herein.
3. Distribution-Related Fee. (a) The Trust shall pay the Distributor a
monthly distribution-related fee on the first business day of each month in such
an amount as the Distributor may request, up to a maximum of 0.75% of the
average daily value of the Fund's net assets (as determined on each business day
at the time set forth in the
1
<PAGE> 2
Trust's currently effective prospectus for determining net asset value per
share) during the preceding month in which the Plan is implemented and shall be
calculated with respect to a particular Fund at the annual rate set forth in the
Supplement applicable to that Fund.
4. Purposes of Payment. The Distributor may use amounts received under
the Plan for (i) advertising by radio, television, newspapers, magazines,
brochures, sales literature, direct mail or any other form of advertising, (ii)
expenses of sales employees or agents of the Distributor, including salary,
commissions, travel and related expenses, (iii) payments to broker-dealers and
financial institutions fro services in connection with the distribution of
shares, including promotional incentives and fees calculated with reference to
the average daily net asset value of shares held by shareholders who have a
brokerage or other service relationship with the broker-dealer or other
institution receiving such fees, (iv) costs of printing prospectuses, statements
of additional information and other materials to be given or sent to prospective
investors, (v) such other similar services as the Trustees determine to be
reasonably calculated to result in the sale of shares of the Funds, (vi) costs
of shareholder servicing which may be incurred by broker-dealers, banks or other
financial institutions, and (vii) other direct and indirect distribution-related
expenses, including the provision of services with respect to maintaining the
assets of the Funds. The services rendered by the Distributor hereunder are in
addition to the distribution and administrative services reasonably necessary
for the operation of the Trust and the Fund pursuant to the Master
Administrative Services Contract between the Trust and BISYS Fund Services, Inc.
and the Master Distribution Contract between the Trust and the Distributor,
other than those services which are to be provided by the investment adviser
pursuant to the Master Investment Advisory Agreement between the Trust and
INTRUST Bank, N.A.
5. Related Agreements. All other agreements relating to the
implementation of this Plan (the "related agreements") shall be in writing, and
such related agreements shall be subject to termination, without penalty, on not
more than sixty days' written notice to any other party to the agreement, in
accordance with the provisions of clauses (a) and (b) of paragraph hereof.
6. Approvals by Trustees and Shareholders. This Plan shall become
effective upon approval by (a) a majority of the Board of Trustees of the Trust
for each Fund, including a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any related agreements
(the "Plan Trustees"), pursuant to a vote cast in person at a meeting called for
the purpose of voting on this Plan, and (b) the holders of a majority of the
outstanding securities of a Fund (as defined in the Act). Related agreements
shall be subject to approval by the Trustees in the manner provided in clause
(a) of the preceding sentence.
2
<PAGE> 3
7. Duration and Annual Approval by Trustees. This Plan and any related
agreements shall continue in effect for a period of more than one year from the
date of their adoption or execution, provided such continuances are approved
annually by a majority of the Board of Trustees, including a majority of the
Plan Trustees, pursuant to a vote cast in person at a meeting called for the
purpose of voting on the continuance of this Plan or any related agreement.
8. Amendments. This Plan may be amended at any time with the approval
of a majority of the Board of Trustees, provided that (a) any material amendment
to this Plan must be approved by the Trustees in accordance with procedures set
forth in paragraph 7 hereof, and (b) any amendment to increase materially the
amount to be expended by the Fund pursuant to this Plan must also be approved by
the vote of the holders of a majority of the outstanding securities of the Fund
(as defined in the Act), provided that no approval shall be required in respect
of a Rule 12b-1 Distribution Plan Supplement entered into to add a Fund to those
covered by this Plan (or to amend or terminate such Supplement) by the holders
of the outstanding voting securities of any Series other than that of such Fund.
9. Termination. This Plan may be terminated at any time, without the
payment of any penalty by (a) the vote of a majority of the Plan Trustees or (b)
the vote of the holders of a majority of the outstanding voting securities of a
Fund (as defined in the Act). If this Plan is terminated with respect to any
Fund, it shall nonetheless remain in effect with respect to any remaining Funds.
10. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Trustees who are not "interested persons" of
the Trust (as defined in the Act) shall be committed to the discretion of the
Trustees then in office who are not "interested persons" of the Trust.
11. Effects of Assignment. To the extent that this Plan constitutes a
plan of distribution adopted pursuant to the Rule, it shall remain in effect as
such so as to authorize the use of the Fund's assets in the amounts and for the
purposes set forth herein, notwithstanding the occurrence of an assignment (as
defined in the Act). To the extent this Plan concurrently constitutes an
agreement relating to implementation of the plan of distribution, it shall
terminate automatically in the event of its assignment, and the Trust may
continue to make payments pursuant to this Plan, only (a) upon the approval of
the Board of Trustees in accordance with the procedures set forth in paragraph 7
hereof, and (b) if the obligations of the Distributor under this Plan are to be
performed by any organization other than the Distributor, upon such
organization's adoption and assumption in writing of all the provisions of this
Plan as party hereto.
12. Quarterly Reports to Trustees. The Distributor shall prepare and
furnish to the Board of Trustees, at least quarterly, a written report setting
forth all amounts
3
<PAGE> 4
expended pursuant to this Plan and any related agreements and the purposes for
which such expenditures were made. The written reports shall include a detailed
description of the continuing services provided by broker-dealers and other
financial intermediaries pursuant to paragraph 4 of this Plan.
13. Preservation of Records. The Trust shall preserve copies of this
Plan and any related agreements and any reports made pursuant to this Plan for a
period of not less than six years from the date of this Plan or any such related
agreement or report. For the first two years, copies of such documents shall be
preserved in an easily accessible place.
14. Limitations on Liability of Distributor. The Distributor shall give
the Trust the benefit of the Sponsor's best judgment and efforts in rendering
services under this Plan. As an inducement to the Distributor's undertaking to
render these services, the Trust agrees that the Distributor shall not be liable
under this Plan for any mistake in judgment or in any other event whatsoever
except for lack of good faith, provided that nothing in this Plan shall be
deemed to protect or purport to protect the Distributor against any liability to
the Trust or its shareholders to which the Distributor would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Distributor's duties under this Plan or by reason of the
Distributor's reckless disregard of its obligations and duties hereunder.
15. Other Distribution-Related Expenditures. Nothing in this Plan shall
operate or be construed to limit the extent to which the Distributor or any
other person other than the Trust may incur costs and pay expenses associated
with the distribution of Fund Shares.
16. Miscellaneous. The Trust's Certificate of Trust, dated as of
January 26, 1996, is on file with the Secretary of State of the State of
Delaware. The obligations of the Trust are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees, or agents of the Trust, but only the Trust's
property shall be bound.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on its behalf by its duly authorized representative
as of the date first above written.
INTRUST FUNDS TRUST
By:
-----------------------------
Title:
BISYS FUND SERVICES
By:
-----------------------------
Title:
4
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<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET FUND
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<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
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<RECEIVABLES> 338,951
<ASSETS-OTHER> 109,632
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 47,915,535
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,552,449
<OTHER-INCOME> 0
<EXPENSES-NET> 183,251
<NET-INVESTMENT-INCOME> 1,369,198
<REALIZED-GAINS-CURRENT> 1,484
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<NET-CHANGE-FROM-OPS> 1,370,682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,369,198
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<NUMBER-OF-SHARES-SOLD> 59,857,717
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<SHARES-REINVESTED> 2,635
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 67,308
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 280,340
<AVERAGE-NET-ASSETS> 54,293,149
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 02
<NAME> SHORT-TERM BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 59,386,506
<INVESTMENTS-AT-VALUE> 59,762,912
<RECEIVABLES> 653,625
<ASSETS-OTHER> 43,834
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 60,460,371
<PAYABLE-FOR-SECURITIES> 1,208,040
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 365,607
<TOTAL-LIABILITIES> 1,573,647
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,514,815
<SHARES-COMMON-STOCK> 5,845,692
<SHARES-COMMON-PRIOR> 5,225,396
<ACCUMULATED-NII-CURRENT> 6,163
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 10,660
<ACCUM-APPREC-OR-DEPREC> 376,406
<NET-ASSETS> 58,886,724
<DIVIDEND-INCOME> 41,615
<INTEREST-INCOME> 1,738,904
<OTHER-INCOME> 0
<EXPENSES-NET> 192,048
<NET-INVESTMENT-INCOME> 1,588,471
<REALIZED-GAINS-CURRENT> 32,411
<APPREC-INCREASE-CURRENT> (82,931)
<NET-CHANGE-FROM-OPS> 1,537,951
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,588,471
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 982,514
<NUMBER-OF-SHARES-REDEEMED> 404,334
<SHARES-REINVESTED> 42,117
<NET-CHANGE-IN-ASSETS> 6,204,436
<ACCUMULATED-NII-PRIOR> 6,163
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 43,071
<GROSS-ADVISORY-FEES> 111,578
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 320,362
<AVERAGE-NET-ASSETS> 56,285,627
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> (.01)
<PER-SHARE-DIVIDEND> 0.28
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<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 0.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 03
<NAME> INTERMEDIATE BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 48,555,654
<INVESTMENTS-AT-VALUE> 49,446,910
<RECEIVABLES> 676,913
<ASSETS-OTHER> 32,305
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<TOTAL-ASSETS> 50,156,128
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 290,342
<TOTAL-LIABILITIES> 290,342
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,998,657
<SHARES-COMMON-STOCK> 4,887,627
<SHARES-COMMON-PRIOR> 4,554,183
<ACCUMULATED-NII-CURRENT> 5,167
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 29,294
<ACCUM-APPREC-OR-DEPREC> 891,256
<NET-ASSETS> 49,865,786
<DIVIDEND-INCOME> 1,542,511
<INTEREST-INCOME> 45,793
<OTHER-INCOME> 0
<EXPENSES-NET> 191,491
<NET-INVESTMENT-INCOME> 1,396,813
<REALIZED-GAINS-CURRENT> 88,932
<APPREC-INCREASE-CURRENT> (122,827)
<NET-CHANGE-FROM-OPS> 1,362,918
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,396,813
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 837,615
<NUMBER-OF-SHARES-REDEEMED> 537,647
<SHARES-REINVESTED> 33,476
<NET-CHANGE-IN-ASSETS> 3,373,902
<ACCUMULATED-NII-PRIOR> 5,167
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 118,226
<GROSS-ADVISORY-FEES> 96,308
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 278,168
<AVERAGE-NET-ASSETS> 48,571,730
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> 0.29
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> 0.29
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 10.20
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 04
<NAME> STOCK FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 88,595,811
<INVESTMENTS-AT-VALUE> 98,359,771
<RECEIVABLES> 2,615,240
<ASSETS-OTHER> 56,047
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101,031,058
<PAYABLE-FOR-SECURITIES> 1,397,937
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 250,583
<TOTAL-LIABILITIES> 1,648,520
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83,134,032
<SHARES-COMMON-STOCK> 7,887,270
<SHARES-COMMON-PRIOR> 7,060,360
<ACCUMULATED-NII-CURRENT> 137,220
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,347,326
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,763,960
<NET-ASSETS> 99,382,538
<DIVIDEND-INCOME> 65,557
<INTEREST-INCOME> 775,990
<OTHER-INCOME> 0
<EXPENSES-NET> 585,067
<NET-INVESTMENT-INCOME> 256,480
<REALIZED-GAINS-CURRENT> 6,443,255
<APPREC-INCREASE-CURRENT> 7,897,564
<NET-CHANGE-FROM-OPS> 14,597,299
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 395,475
<DISTRIBUTIONS-OF-GAINS> 3,918,048
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,421,153
<NUMBER-OF-SHARES-REDEEMED> 785,816
<SHARES-REINVESTED> 191,573
<NET-CHANGE-IN-ASSETS> 19,548,103
<ACCUMULATED-NII-PRIOR> 276,215
<ACCUMULATED-GAINS-PRIOR> 3,822,119
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 443,072
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 753,433
<AVERAGE-NET-ASSETS> 89,456,716
<PER-SHARE-NAV-BEGIN> 11.31
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.85
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.60
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 05
<NAME> INTERNATIONAL MULTI-MANAGER STOCK FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 58,026,474
<INVESTMENTS-AT-VALUE> 65,630,582
<RECEIVABLES> 895
<ASSETS-OTHER> 29,438
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,660,915
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 59,561
<TOTAL-LIABILITIES> 59,561
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,696,959
<SHARES-COMMON-STOCK> 5,334,068
<SHARES-COMMON-PRIOR> 3,749,622
<ACCUMULATED-NII-CURRENT> 308,874
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 991,413
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,604,108
<NET-ASSETS> 65,601,354
<DIVIDEND-INCOME> 680,915
<INTEREST-INCOME> 58,825
<OTHER-INCOME> (184,628)
<EXPENSES-NET> 192,226
<NET-INVESTMENT-INCOME> 362,886
<REALIZED-GAINS-CURRENT> 1,007,805
<APPREC-INCREASE-CURRENT> 6,697,596
<NET-CHANGE-FROM-OPS> 8,068,287
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 499,827
<DISTRIBUTIONS-OF-GAINS> 351,828
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,973,274
<NUMBER-OF-SHARES-REDEEMED> 429,149
<SHARES-REINVESTED> 40,321
<NET-CHANGE-IN-ASSETS> 24,466,171
<ACCUMULATED-NII-PRIOR> 445,815
<ACCUMULATED-GAINS-PRIOR> 335,436
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 102,909
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 269,408
<AVERAGE-NET-ASSETS> 52,016,091
<PER-SHARE-NAV-BEGIN> 10.97
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.48
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.30
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 06
<NAME> KANSAS TAX-EXEMPT BOND FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> OCT-31-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 117,537,033
<INVESTMENTS-AT-VALUE> 120,114,818
<RECEIVABLES> 1,666,460
<ASSETS-OTHER> 56,262
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121,837,539
<PAYABLE-FOR-SECURITIES> 1,993,285
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 559,822
<TOTAL-LIABILITIES> 2,553,107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 116,435,740
<SHARES-COMMON-STOCK> 11,151,629
<SHARES-COMMON-PRIOR> 9,656,896
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 270,907
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,557,785
<NET-ASSETS> 119,284,432
<DIVIDEND-INCOME> 35,799
<INTEREST-INCOME> 2,859,587
<OTHER-INCOME> 0
<EXPENSES-NET> 117,250
<NET-INVESTMENT-INCOME> 2,778,136
<REALIZED-GAINS-CURRENT> 270,902
<APPREC-INCREASE-CURRENT> (397,234)
<NET-CHANGE-FROM-OPS> 2,651,804
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<DISTRIBUTIONS-OF-INCOME> 2,778,136
<DISTRIBUTIONS-OF-GAINS> 332,133
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,840,872
<NUMBER-OF-SHARES-REDEEMED> 360,288
<SHARES-REINVESTED> 14,149
<NET-CHANGE-IN-ASSETS> 15,668,572
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 332,138
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 410,316
<AVERAGE-NET-ASSETS> 112,646,234
<PER-SHARE-NAV-BEGIN> 10.73
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.27
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 0.21
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 1
<NAME> THE INTRUST MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-23-1997
<PERIOD-END> APR-30-1997
<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> 5
<NAME> THE INTRUST INTERNATIONAL MULTI-MANAGER STOCK FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-20-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 24,211,150
<INVESTMENTS-AT-VALUE> 24,317,211
<RECEIVABLES> 0
<ASSETS-OTHER> 13,409
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,330,620
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22,923
<TOTAL-LIABILITIES> 22,923
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,018,291
<SHARES-COMMON-STOCK> 2,401,965
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 104,538
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 78,807
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 106,061
<NET-ASSETS> 24,307,697
<DIVIDEND-INCOME> 150,420
<INTEREST-INCOME> 31,416
<OTHER-INCOME> (28,102)
<EXPENSES-NET> 49,196
<NET-INVESTMENT-INCOME> 104,538
<REALIZED-GAINS-CURRENT> 78,807
<APPREC-INCREASE-CURRENT> 106,061
<NET-CHANGE-FROM-OPS> 289,406
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,458,061
<NUMBER-OF-SHARES-REDEEMED> 56,096
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,307,697
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,034
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 70,610
<AVERAGE-NET-ASSETS> 17,262,200
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .040
<PER-SHARE-GAIN-APPREC> .080
<PER-SHARE-DIVIDEND> .000
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 10.120
<EXPENSE-RATIO> 1.620
<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
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-21-1997
<PERIOD-END> APR-30-1997
<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
<EXPENSES-NET> 70,469
<NET-INVESTMENT-INCOME> 423,406
<REALIZED-GAINS-CURRENT> (56,794)
<APPREC-INCREASE-CURRENT> (83,628)
<NET-CHANGE-FROM-OPS> 282,984
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 423,406
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,902,379
<NUMBER-OF-SHARES-REDEEMED> 101,442
<SHARES-REINVESTED> 2,499
<NET-CHANGE-IN-ASSETS> 37,886,841
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,914
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 110,010
<AVERAGE-NET-ASSETS> 29,121,474
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .140
<PER-SHARE-GAIN-APPREC> (.040)
<PER-SHARE-DIVIDEND> .140
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.960
<EXPENSE-RATIO> .880
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 3
<NAME> THE INTRUST INTERMEDIATE BOND FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-21-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 32,634,106
<INVESTMENTS-AT-VALUE> 32,474,293
<RECEIVABLES> 409,323
<ASSETS-OTHER> 23,604
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,907,220
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 181,337
<TOTAL-LIABILITIES> 181,337
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,012,997
<SHARES-COMMON-STOCK> 3,303,721
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 127,301
<ACCUM-APPREC-OR-DEPREC> (159,813)
<NET-ASSETS> 32,725,883
<DIVIDEND-INCOME> 10,745
<INTEREST-INCOME> 461,876
<OTHER-INCOME> 0
<EXPENSES-NET> 71,916
<NET-INVESTMENT-INCOME> 400,705
<REALIZED-GAINS-CURRENT> (127,301)
<APPREC-INCREASE-CURRENT> (159,813)
<NET-CHANGE-FROM-OPS> 113,591
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 400,705
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,392,126
<NUMBER-OF-SHARES-REDEEMED> 90,436
<SHARES-REINVESTED> 2,031
<NET-CHANGE-IN-ASSETS> 32,725,883
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 28,264
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 100,299
<AVERAGE-NET-ASSETS> 25,790,586
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .150
<PER-SHARE-GAIN-APPREC> (.090)
<PER-SHARE-DIVIDEND> .150
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.910
<EXPENSE-RATIO> 1.020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001006242
<NAME> INTRUST FUNDS TRUST
<SERIES>
<NUMBER> 4
<NAME> THE INTRUST STOCK FUND
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JAN-21-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 45,045,009
<INVESTMENTS-AT-VALUE> 44,544,143
<RECEIVABLES> 627,435
<ASSETS-OTHER> 25,631
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45,197,209
<PAYABLE-FOR-SECURITIES> 163,964
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53,283
<TOTAL-LIABILITIES> 217,247
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,245,582
<SHARES-COMMON-STOCK> 4,522,143
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 66,576
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 168,870
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (500,866)
<NET-ASSETS> 44,979,962
<DIVIDEND-INCOME> 28,439
<INTEREST-INCOME> 174,012
<OTHER-INCOME> 0
<EXPENSES-NET> 135,875
<NET-INVESTMENT-INCOME> 66,576
<REALIZED-GAINS-CURRENT> 168,670
<APPREC-INCREASE-CURRENT> (500,866)
<NET-CHANGE-FROM-OPS> (265,620)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,609,681
<NUMBER-OF-SHARES-REDEEMED> 87,538
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 44,979,962
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 85,955
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 171,480
<AVERAGE-NET-ASSETS> 31,373,668
<PER-SHARE-NAV-BEGIN> 10.000
<PER-SHARE-NII> .010
<PER-SHARE-GAIN-APPREC> (.060)
<PER-SHARE-DIVIDEND> .000
<PER-SHARE-DISTRIBUTIONS> .000
<RETURNS-OF-CAPITAL> .000
<PER-SHARE-NAV-END> 9.950
<EXPENSE-RATIO> 1.580
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
EXHIBIT 99(c)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc. and Master
Investment Portfolio and any investment company whose fund(s) invest in a Master
Portfolio of Master Investment Portfolio (each, a "Company"), and any or all
amendments (including post-effective amendments) thereto and to file the same,
with any and all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and any state securities commissions
or authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: August 11, 1998 /s/ Jack S. Euphrat
--------------------
Jack S. Euphrat
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc. and Master
Investment Portfolio and any investment company whose fund(s) invest in a Master
Portfolio of Master Investment Portfolio (each, a "Company"), and any or all
amendments (including post-effective amendments) thereto and to file the same,
with any and all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and any state securities commissions
or authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: August 11, 1998 /s/ R. Greg Feltus
-------------------
R. Greg Feltus
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc. and Master
Investment Portfolio and any investment company whose fund(s) invest in a Master
Portfolio of Master Investment Portfolio (each, a "Company"), and any or all
amendments (including post-effective amendments) thereto and to file the same,
with any and all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and any state securities commissions
or authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: August 11, 1998 /s/ Thomas S. Goho
-------------------
Thomas S. Goho
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc. and Master
Investment Portfolio and any investment company whose fund(s) invest in a Master
Portfolio of Master Investment Portfolio (each, a "Company"), and any or all
amendments (including post-effective amendments) thereto and to file the same,
with any and all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and any state securities commissions
or authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: August 11, 1998 /s/ W. Rodney Hughes
---------------------
W. Rodney Hughes
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Marco E. Adelfio, Richard H. Blank, Jr., R. Greg Feltus and Robert M.
Kurucza, and each of them, his true and lawful attorney-in-fact and agent (each,
an "Attorney-in Fact") with full power of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, (i) to execute
the Registration Statement of each of MasterWorks Funds Inc. and Master
Investment Portfolio and any investment company whose fund(s) invest in a Master
Portfolio of Master Investment Portfolio (each, a "Company"), and any or all
amendments (including post-effective amendments) thereto and to file the same,
with any and all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission and any state securities commissions
or authorities, and (ii) to execute any and all federal or state regulatory
filings, including all applications with regulatory authorities, state charter
or organizational documents and any amendments or supplements thereto, to be
executed by, on behalf of, or for the benefit of, a Company. The undersigned
hereby grants to each Attorney-in-Fact full power and authority to do and
perform each and every act and thing contemplated above, as fully and to all
intents and purposes as he might or could do in person, and hereby ratifies and
confirms all that said Attorney-in-Fact may lawfully do or cause to be done by
virtue hereof.
Dated: August 11, 1998 /s/ J. Tucker Morse
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J. Tucker Morse
