<PAGE> 1
SEMI-ANNUAL
REPORT
APRIL 30, 1996
[AMERICAN AADVANTAGE FUNDS(R) LOGO]
MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
<PAGE> 2
Dear Fellow Shareholder:
We are pleased to report to you on the performance of the American
AAdvantage Money Market Funds and to provide you with a copy of the Semi-Annual
Report for the six months ended April 30, 1996.
Money Market Fund
For the six months ended April 30, 1996, the Institutional Class of the
Money Market Fund was ranked as the 9th best performing Institutional Money
Market Fund out of 154 funds as reported by Lipper Analytical Services with an
annualized total return of 5.57%. Similarly, during the same period, the
PlanAhead and Platinum Classes outperformed their Lipper retail benchmark.
Toward the end of 1995, the economy began to show signs of faltering while
the fear of inflation remained contained. In response, the Federal Reserve
lowered the Fed Funds rate 25 basis points on December 19, 1995 and again on
January 31, 1996. The Money Market Fund achieved its solid relative performance
during this period by maintaining a longer average maturity. On December 19th
and January 31st, the Fund's average maturity was 63 days and 71 days,
respectively. However, partially as a result of lower interest rates, the
economy started to exhibit indications of economic expansion and market
sentiment soon shifted from an easing bias to a more neutral directive. As a
result, a shift in portfolio strategy was implemented which included shortening
the Fund's average maturity to a more neutral investment posture. On April 30,
1996, the Fund's average maturity was 43 days.
U.S. Treasury Money Market Fund
The U.S. Treasury Money Market Fund strengthened its relative performance
for the six months ended April 30, 1996 versus the same period last year. The
Institutional Class had an annualized total return for the period of 5.34% and
was ranked the 21st best performing Institutional U.S. Treasury Money Market
Fund out of the Lipper Institutional U.S. Treasury Money Market Fund universe of
99 funds. Similarly, the PlanAhead and Platinum Classes outperformed their
Lipper retail benchmark, the U.S. Treasury Money Market Funds' Average. The Fund
continues to be rated "AAAm" by Standard & Poor's Corporation and meets the
National Association of Insurance Commissioners (NAIC) eligibility standards.
Municipal Money Market Fund
For the six months ended April 30, 1996, the Institutional Class of the
Municipal Money Market Fund reported an annualized total return of 3.63% and
ranked 3rd out of 71 Lipper Institutional Tax-Exempt Money Market Funds.
Similarly, the PlanAhead and Platinum Classes for the six month period ended
April 30, 1996 outperformed their Lipper retail benchmark, the Lipper Tax-Exempt
Money Market Funds' Average. Since its inception, the Municipal Money Market
Fund has invested exclusively in high credit worthy municipal issuers that have
been further credit enhanced by either a bank letter of credit or bond
insurance.
We are truly proud to report that each of the Money Market Funds performed
in the top quartile among their respective peer groups for this six month
period. We will continue to endeavor to achieve above average money market
returns for our shareholders. As always, if you have any questions regarding
your investment, do not hesitate to contact us. We look forward to continuing to
serve you.
Sincerely,
/s/ WILLIAM F. QUINN
William F. Quinn
President
American AAdvantage Funds
<PAGE> 3
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2
<PAGE> 4
AMERICAN AADVANTAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
Municipal Treasury
Money Money Money
Market Fund Market Fund Market Fund
-------------- ----------- -----------
(in thousands, except share and
per share amounts)
<S> <C> <C> <C>
ASSETS:
Investment in Portfolio, at value.................................. $ 1,510,952 $ 42,914 $ 98,713
Other.............................................................. - 16 -
-------------- ----------- -----------
TOTAL ASSETS................................................... 1,510,952 42,930 98,713
LIABILITIES:
Dividends payable.................................................. 6,239 106 359
Management and administrative services fees payable (Note 2)....... 363 59 105
Other liabilities.................................................. 165 - 19
-------------- ----------- -----------
TOTAL LIABILITIES.............................................. 6,767 165 483
-------------- ----------- -----------
NET ASSETS..................................................... $ 1,504,185 $ 42,765 $ 98,230
============== =========== ===========
ANALYSIS OF NET ASSETS:
Paid-in-capital.................................................... $ 1,504,185 $ 42,765 $ 98,230
============== =========== ===========
Shares outstanding (no par value):
Institutional Class................................................ 1,349,584,089 46,013 24,842,830
============== =========== ===========
PlanAhead Class.................................................... 56,960,084 590,684 1,160,920
============== =========== ===========
Platinum Class..................................................... 97,641,073 42,128,000 72,225,846
============== =========== ===========
Net Asset Value per share:
Institutional Class................................................ $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
PlanAhead Class.................................................... $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
Platinum Class..................................................... $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
</TABLE>
See accompanying notes
3
<PAGE> 5
AMERICAN AADVANTAGE FUNDS
STATEMENTS OF OPERATIONS
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
Municipal Treasury
Money Money Money
Market Fund Market Fund Market Fund
-------------- ----------- -----------
(in thousands)
<S> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO:
Allocated interest income.......................................... $ 40,136 $ 438 $ 2,150
Allocated Portfolio expenses (net of reimbursement of $9,081 for
the Municipal Money Market Fund)................................. (1,193) (13) (82)
-------------- ----------- -----------
TOTAL INVESTMENT INCOME........................................ 38,943 425 2,068
-------------- ----------- -----------
FUND EXPENSES:
Administrative service fees (Note 2):
Institutional Class................................................ 325 - 10
PlanAhead Class.................................................... 12 - -
Platinum Class..................................................... 121 59 99
Transfer agent fees:
Institutional Class................................................ 27 - 1
PlanAhead Class.................................................... 21 - -
Professional fees.................................................... 17 - 4
Registration fees and expenses....................................... 48 - 9
Distribution fees -- Platinum Class.................................. 60 30 50
Service Fees -- PlanAhead Class...................................... 62 1 1
Other................................................................ 5 - 1
-------------- ----------- -----------
TOTAL FUND EXPENSES............................................ 698 90 175
-------------- ----------- -----------
NET INVESTMENT INCOME.......................................... 38,245 335 1,893
-------------- ----------- -----------
REALIZED AND UNREALIZED GAIN FROM PORTFOLIO:
Net realized gain on investments..................................... 39 - 31
-------------- ----------- -----------
NET GAIN ON INVESTMENTS........................................ 39 - 31
-------------- ----------- -----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 38,284 $ 335 $ 1,924
============== =========== ===========
</TABLE>
See accompanying notes
4
<PAGE> 6
AMERICAN AADVANTAGE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Money U.S. Treasury Money
Money Market Market Fund Market Fund
Fund ----------------------- -----------------------
-------------------------- Six Months Six Months
Six Months Year Ended Ended Year Ended Ended Year Ended
Ended April October 31, April 30, October April 30, October
30, 1996 1995 1996 31, 1995 1996 31, 1995
----------- ------------ ---------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............... $ 38,245 $ 91,590 $ 335 $ 682 $ 1,893 $ 3,700
Net realized gain on investments.... 39 19 - - 31 8
----------- ------------ -------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... 38,284 91,609 335 682 1,924 3,708
----------- ------------ -------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class............... (35,828) (86,432) (1) (194) (1,004) (3,301)
Mileage Class..................... (19) (4,257) - (483) - (390)
PlanAhead Class................... (1,279) (901) (7) (5) (20) (9)
Platinum Class.................... (1,118) - (327) - (869) -
Net realized gain on investments:
Institutional Class............... (36) (18) - - (13) (7)
Mileage Class..................... - (1) - - - (1)
PlanAhead Class................... (2) - - - - -
Platinum Class.................... (2) - - - (18) -
----------- ------------ -------- --------- --------- ---------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS.................. (38,284) (91,609) (335) (682) (1,924) (3,708)
----------- ------------ -------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares....... 5,243,357 12,531,768 75,268 189,500 161,856 389,427
Reinvestment of dividends and
distributions..................... 24,825 54,680 229 668 1,475 2,823
Cost of shares redeemed............. (5,112,312) (13,189,189) (52,306) (191,043) (119,787) (411,339)
----------- ------------ -------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS.................. 155,870 (602,741) 23,191 (875) 43,544 (19,089)
----------- ------------ -------- --------- --------- ---------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 155,870 (602,741) 23,191 (875) 43,544 (19,089)
NET ASSETS:
Beginning of period................. 1,348,315 1,951,056 19,574 20,449 54,686 73,775
----------- ------------ -------- --------- --------- ---------
END OF PERIOD....................... $ 1,504,185 $ 1,348,315 $ 42,765 $ 19,574 $ 98,230 $ 54,686
=========== ============ ======== ========= ========= =========
</TABLE>
See accompanying notes
5
<PAGE> 7
AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American AAdvantage Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a no-load, open-end, management investment company with seven
separate funds: the American AAdvantage Balanced Fund, the American AAdvantage
Growth and Income Fund, the American AAdvantage International Equity Fund, the
American AAdvantage Limited-Term Income Fund, the American AAdvantage Money
Market Fund, the American AAdvantage Municipal Money Market Fund and the
American AAdvantage U.S. Treasury Money Market Fund. These financial statements
and notes to the financial statements relate to the Money Market, Municipal
Money Market and U.S. Treasury Money Market Funds (each a "Fund" and
collectively, the "Funds"). The Trust commenced sales of a second class of
shares of the Funds, designated as "Mileage Class" shares, on November 1, 1991
for the Money Market Fund, November 1, 1993 for the U.S. Treasury Money Market
Fund and on November 10, 1993 for the Municipal Money Market Fund. At the same
time, the existing shares of each Fund were redesignated as "Institutional
Class" shares. The Trust commenced sales on August 1, 1994 of a third class of
shares of the Funds, designated as "PlanAhead Class" shares and on November 7,
1995 a fourth class of shares of the Funds, designated as "Platinum Class"
shares. The Mileage Class of each Fund was terminated on November 15, 1995.
Each Fund invests all of its investable assets in the corresponding
portfolio of the AMR Investment Services Trust, an open-end diversified
management investment company, as follows:
<TABLE>
<S> <C> <C>
AMERICAN AADVANTAGE: --INVESTS ASSETS IN-- AMR INVESTMENT SERVICES TRUST:
-------------------- ------------------------------
Money Market Fund Money Market Portfolio
Municipal Money Market Fund Municipal Money Market Portfolio
U.S. Treasury Money Market Fund U.S. Treasury Money Market Portfolio
</TABLE>
Each AMR Investment Services Portfolio has the same investment objectives
as its corresponding Fund. The value of such investment reflects each Fund's
proportionate interest in the net assets of the corresponding portfolio (93.45%,
64.70% and 92.52% at April 30, 1996 of the AMR Investment Services Trust Money
Market, Municipal Money Market and U.S. Treasury Money Market Portfolios) (each
a "Portfolio" and collectively the "Portfolios", respectively). The financial
statements of the Portfolios are included elsewhere in this report and should be
read in conjunction with the Funds' financial statements.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned subsidiary
of AMR Corporation, the parent company of American Airlines, Inc. ("American"),
and was organized in 1986 to provide business management, advisory,
administrative and asset management consulting services to the Trust and other
investors.
The following is a summary of the significant accounting policies followed
by the Funds.
Valuation of Investments
Valuation of securities by the Portfolios is discussed in Note 1 of the
Portfolios' Notes to Financial Statements which are included elsewhere in this
report.
6
<PAGE> 8
AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited) (Continued)
- --------------------------------------------------------------------------------
Investment Income and Dividends to Shareholders
Each Fund records its share of net investment income, and realized and
unrealized gain and loss in the Portfolio each day. All net investment income
and realized and unrealized gain and loss of each Portfolio are allocated pro
rata among the corresponding Fund and other investors in each Portfolio at the
time of such determination. The Funds generally declare dividends daily from net
investment income and net short-term capital gain, if any, payable monthly.
Dividends are determined in accordance with income tax principles which may
treat certain transactions differently than generally accepted accounting
principles.
Federal Income and Excise Taxes
It is the policy of each of the Funds to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income as well as any net realized
capital gains on the sale of investments. Therefore, no federal income or excise
tax provision is required.
Expenses
Expenses directly attributable to a Fund are charged to that Fund's
operations. Expenses directly attributable to a Class of shares are charged to
that Class. Expenses incurred by the Trust with respect to any two or more of
the Funds are allocated in proportion to the net assets of each Fund, except
where allocations of direct expenses to each Fund can otherwise be made fairly.
Each share of each Fund, regardless of class, bears equally those expenses that
are allocated to the Fund as a whole.
Valuation of Shares
The price per share is calculated separately for each class of each Fund on
each day on which shares are offered for sale and orders accepted or upon
receipt of a redemption request. With respect to a class of a Fund, price per
share is computed by dividing the value of the Class's pro rata allocation of
the Fund's investments and other assets, less liabilities, by the number of
Class shares outstanding.
2. TRANSACTIONS WITH AFFILIATES
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Service Agreement
which obligates the Manager to provide or oversee administrative and management
services to the Funds. As compensation for performing the duties required under
the Administrative Services Agreement, the Manager receives an annualized fee of
.25% of the average daily net assets of the Institutional and PlanAhead Classes
of each of the Funds and .50% of the average daily net assets of the Platinum
Classes of each of the Funds.
7
<PAGE> 9
AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited) (Continued)
- --------------------------------------------------------------------------------
Distribution Plan
The Trust has adopted a "defensive" Distribution Plan in accordance with
Rule 12b-1 under the Investment Company Act of 1940, pursuant to which no fees
may be charged to the Funds for distribution purposes. However, the plan
authorizes the fees received by the Manager and the investment advisers hired by
the Manager to be used for distribution purposes. Under this plan, the Trust
does not intend to compensate the Manager or any other party, either directly or
indirectly, for the distribution of Trust shares. Each Platinum Class has
adopted a separate distribution plan pursuant to Rule 12b-1 which provides that
each Platinum Class will pay an annual fee of .25% of its average daily net
assets to the Manager as compensation for distribution assistance. The fee will
be payable without regard to whether the amount of the fee is more or less than
the actual expenses incurred in a particular month by the Manager for
distribution assistance.
Other
Certain officers or trustees of the Trust are also officers of the Manager
or American. The Trust makes no direct payments to its officers. Unaffiliated
trustees and their spouses are provided free unlimited air transportation on
American. However, the Trust compensates each Trustee with payments in an amount
equal to the Trustee's income tax on the value of this free airline travel. For
the period ended April 30, 1996, the cost of air transportation was not material
to any of the Funds. At April 30, 1996, AMR Corporation and subsidiary companies
and Employee Benefit Trusts thereof owned 1% of the Institutional Class of the
Municipal Money Market Fund.
3. CAPITAL SHARE TRANSACTIONS
The tables below summarize the activity in capital shares for each Class of
the Funds (in thousands). Each share is valued at $1.00:
<TABLE>
<CAPTION>
Period Ended April 30, 1996
- --------------------------------------------------
Money Market Fund Institutional Class Mileage Class PlanAhead Class Platinum Class
- -------------------------------------------------- ------------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Shares sold....................................... 5,044,975 654 71,829 125,899
Reinvestment of dividends......................... 22,889 -- 1,186 750
Shares redeemed................................... (4,924,321) (100,939) (58,044) (29,008)
--------------- ----------- ----------- ----------
Net increase (decrease) in shares outstanding..... 143,543 (100,285) 14,971 97,641
=============== =========== =========== ==========
Municipal Money Market Fund
- --------------------------------------------------
Shares sold....................................... 940 -- 1,169 73,159
Reinvestment of dividends......................... -- -- 6 223
Shares redeemed................................... (901) (19,438) (713) (31,254)
--------------- ----------- ----------- ----------
Net increase (decrease) in shares outstanding..... 39 (19,438) 462 42,128
=============== =========== =========== ==========
</TABLE>
8
<PAGE> 10
AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended April 30, 1996
- --------------------------------------------------
U.S. Treasury Money Market Fund Institutional Class Mileage Class PlanAhead Class Platinum Class
- -------------------------------------------------- ------------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Shares sold....................................... 42,918 26 1,152 117,760
Reinvestment of dividends......................... 822 -- 19 634
Shares redeemed................................... (66,081) (6,998) (539) (46,169)
--------------- ----------- ----------- -----------
Net increase (decrease) in shares outstanding..... (22,341) (6,972) 632 72,225
=============== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31, 1995
- --------------------------------------------------
Money Market Fund Institutional Class Mileage Class PlanAhead Class
- -------------------------------------------------- ------------------- ------------- ---------------
<S> <C> <C> <C>
Shares sold....................................... 12,106,153 297,557 128,058
Reinvestment of dividends......................... 50,158 3,863 659
Shares redeemed................................... (12,843,415) (259,020) (86,754)
--------------- ----------- -----------
Net increase (decrease) in shares outstanding..... (687,104) 42,400 41,963
=============== =========== ===========
Municipal Money Market Fund
- --------------------------------------------------
Shares sold....................................... 146,600 42,208 692
Reinvestment of dividends......................... 223 440 5
Shares redeemed................................... (156,552) (33,923) (568)
--------------- ----------- -----------
Net increase (decrease) in shares outstanding..... (9,729) 8,725 129
=============== =========== ===========
U.S. Treasury Money Market Fund
- --------------------------------------------------
Shares sold....................................... 371,049 16,404 1,974
Reinvestment of dividends......................... 2,455 362 6
Shares redeemed................................... (393,927) (15,962) (1,450)
--------------- ----------- -----------
Net increase (decrease) in shares outstanding..... (20,423) 804 530
=============== =========== ===========
</TABLE>
9
<PAGE> 11
AMERICAN AADVANTAGE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional Class
--------------------------------------------------------------------------
Period Ended Year Ended October 31,
April 30, -------------------------------------------------------
1996 1995 1994(1) 1993 1992
------------ ----------- ----------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ---------- ---------- ----------
Net investment income................... 0.03 0.06 0.04 0.03 0.04
Less dividends from net investment
income................................ (0.03) (0.06) (0.04) (0.03) (0.04)
------------ ----------- ---------- ---------- ----------
Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ =========== ========== ========== ==========
Total return (annualized)................. 5.42% 5.96% 3.85% 3.31% 4.41%
============ =========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (in
thousands)............................ $ 1,349,584 $ 1,206,041 $1,893,144 $2,882,947 $2,223,829
Ratios to average net assets
(annualized)(5):
Expenses.............................. 0.23% 0.23% 0.21% 0.23% 0.26%
Net investment income................. 5.49% 5.79% 3.63% 3.23% 4.06%
</TABLE>
- ---------------
(1) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(2) The PlanAhead Class commenced active operations on August 1, 1994. The
Platinum Class commenced active operations on November 7, 1995.
(3) Total return for the Platinum Class for the period ended April 30, 1996
reflects Institutional Class returns from November 1, 1995 through November
6, 1995 and returns of the Platinum Class from November 7, 1995
(commencement of operations) through April 30, 1996. Due to the different
expense structures between the classes, total return would vary from the
results shown had the Platinum Class been in operation for the entire year.
(4) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 1, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement
of operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.
(5) The method of determining average net assets was changed from a monthly
average to a daily average starting with the year ended October 31, 1992.
10
<PAGE> 12
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional
Class PlanAhead Class Platinum Class
------------ ----------------------------------------------- --------------
Year Ended Year Ended Period Ended Period Ended
October 31, Period Ended October 31, October 31 April 30,
1991 April 30, 1996 1995 1994(1)(2) 1996(2)(3)
----------- -------------- ----------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
0.07 0.03 0.05 0.01 0.02
(0.07) (0.03) (0.05) (0.01) (0.02)
--------- --------- --------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
7.18% 5.10% 5.60% 3.73%(4) 4.77%
========= ========= ========= ========= =========
$ 715,280 $ 56,960 $ 41,989 $ 25 $ 97,641
0.24% 0.56% 0.55% 0.70% 0.93%
6.93% 5.16% 5.56% 4.42% 4.63%
</TABLE>
11
<PAGE> 13
AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION> Platinum
Institutional Class PlanAhead Class Class
--------------------------------------- ------------------------------------------ -----------
Period Year Period Period Year Period Period
ended ended ended ended ended ended ended
April 30, October 31, October 31, April 30, October 31, October 31, April 30,
1996 1995 1994(1) 1996 1995 1994(1) 1996(1)(2)
----------- ----------- ----------- ---------- ----------- ------------ ----------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- --------
Net investment income........ 0.02 0.04 0.02 0.02 0.03 0.01 0.02
Less dividends from net
investment income.......... (0.02) (0.04) (0.02) (0.02) (0.03) (0.01) (0.02)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return (annualized)(3)... 3.57% 3.75% 2.44% 3.30% 3.39% 2.35%(4) 2.91%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(in thousands)............. $ 46 $ 7 $ 9,736 $ 591 $ 129 $ 0 $ 42,128
Ratios to average net assets
(annualized)(3):
Expenses................... 0.23% 0.35% 0.30% 0.49% 0.72% 0.77% 0.86%
Net investment income...... 3.48% 3.70% 2.38% 3.32% 3.32% 2.49% 2.75%
</TABLE>
- ---------------
(1) The Institutional Class commenced active operations on November 10, 1993.
The PlanAhead Class commenced active operations on August 1, 1994. The
Platinum Class commenced active operations on November 7, 1995.
(2) Total return for the Platinum Class for the period ended April 30, 1996
reflects Institutional Class returns from November 1, 1995 through November
6, 1995 and returns of the Platinum Class from November 7, 1995
(commencement of operations) through April 30, 1996. Due to the different
expense structures between the classes, total return would vary from the
results shown had the Platinum Class been in operation for the entire year.
(3) Operating results of each class of the Municipal Money Market Fund exclude
fees waived by the Manager. Had the Fund paid such fees, the ratio of
expenses and net investment income to average net assets for the
Institutional Class would have been as follows:
<TABLE>
<CAPTION>
Platinum
Institutional Class PlanAhead Class Class
--------------------------------------- ------------------------------------------ ----------
Period Year Period Period Year Period Period
ended ended ended ended ended ended ended
April 30, October 31, October 31, April 30, October 31, October 31, April 30,
1996 1995 1994 1996 1995 1994 1996
----------- ----------- ----------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of expenses to
average net assets
(annualized)............. 0.32% 0.55% 0.50% 0.58% 0.92% 0.97% 0.95%
Ratio of net investment
income to average net
assets (annualized)...... 3.40% 3.50% 2.18% 3.24% 3.12% 2.29% 2.66%
</TABLE>
(4) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 10, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.
12
<PAGE> 14
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13
<PAGE> 15
AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional Class
-----------------------------------------------
Period Year Ended October 31,
Ended April --------------------------------
30, 1996 1995 1994(1) 1993
----------- ------- ------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- --------
Net investment income........................................... 0.03 0.06 0.04 0.03
Less dividends from net investment income....................... (0.03) (0.06) (0.04) (0.03)
------- ------- ------ --------
Net asset value, end of period.................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ========
Total return (annualized)......................................... 5.20% 5.67% 3.70% 3.07%
======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of period (in thousands)........................ $24,843 $47,184 $67,607 $136,813
Ratios to average net assets (annualized)(5):
Expenses...................................................... 0.32% 0.32% 0.25% 0.23%
Net investment income......................................... 5.26% 5.49% 3.44% 2.96%
</TABLE>
- ---------------
(1) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(2) The Institutional Class commenced active operations on March 2, 1992. The
PlanAhead Class commenced active operations on August 1, 1994. The Platinum
Class commenced active operations on November 7, 1995.
(3) Total return for the Platinum Class for the period ended April 30, 1996
reflects Institutional Class returns from November 1, 1995 through November
6, 1995 and returns of the Platinum Class from November 7, 1995
(commencement of operations) through April 30, 1996. Due to the different
expense structures between the classes, total return would vary from the
results shown had the Platinum Class been in operation for the entire year.
(4) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 1, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.
(5) The method of determining average net assets was changed from a monthly
average to a daily average starting with the period ended October 31, 1994.
(6) Estimated based on expected annual expenses and actual average net assets.
14
<PAGE> 16
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional Platinum
Class PlanAhead Class Class
- ----------- ----------------------------------------------- ----------
Period Period Period Period
Ended Ended Year Ended Ended Ended
October 31, April 30, October 31, October 31, April 30,
1992(2) 1996 1995 1994(1)(2) 1996(2)(3)
- ----------- ----------- ----------- ----------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- --------
0.02 0.03 0.05 0.01 0.02
(0.02) (0.03) (0.05) (0.01) (0.02)
-------- ------- ------- ------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ========
3.61% 4.90% 5.19% 3.58%(4) 4.56%
======= ======= ======= ======= ========
$91,453 $ 1,161 $ 530 $ 0 $ 72,226
0.27%(6) 0.63% 0.76% 0.75% 0.97%
3.46%(6) 4.91% 5.19% 3.94% 4.38%
</TABLE>
15
<PAGE> 17
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
EURODOLLAR TIME DEPOSITS (NOTE A) - 7.99%
Bank Brussells Lambert,
5.375%, Due 5/1/1996........ $ 67,000 $ 67,000
CIBC, 5.25%, Due 5/1/1996..... 22,189 22,189
Fuji Bank, 5.40625%, Due
5/1/1996.................... 40,000 40,000
----------
TOTAL EURODOLLAR TIME
DEPOSITS................ 129,189
----------
CERTIFICATES OF DEPOSIT (NOTE A) - 12.56%
YANKEE DOLLAR, FOREIGN
BANKS - 11.07%
Banca CRT S.P.A., Variable
Rate, 5.25%, Due 3/10/1997.. 75,000 75,000
Mitsubishi Bank, New York,
5.80%, Due 5/31/1996........ 35,000 35,000
Postipankki Bank, Limited, New
York, 5.31%, Variable Rate
Demand, Due 9/5/1996 (Note
C).......................... 69,000 69,000
----------
TOTAL YANKEE CERTIFICATES
OF DEPOSIT.............. 179,000
----------
DOMESTIC BANKS - 1.49%
Banco Popular De Puerto Rico,
Variable Rate, 5.57%, Due
4/4/1997 (Note B)........... 24,000 24,000
----------
TOTAL DOMESTIC BANKS...... 24,000
----------
TOTAL CERTIFICATES OF
DEPOSIT................. 203,000
----------
YANKEE BANKERS' ACCEPTANCES
(NOTE A) - 18.02%
Bank of Tokyo, Los Angeles,
5.40%, Due 7/15/1996........ 10,500 10,385
Bank of Tokyo, New York,
5.14%, Due 8/1/1996......... 8,500 8,391
Dai-Ichi Kangyo Bank, Los
Angeles, 5.23%, Due
5/20/1996................... 5,000 4,986
Dai-Ichi Kangyo Bank, Los
Angeles, 5.16%, Due
8/7/1996.................... 5,000 4,932
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Dai-Ichi Kangyo Bank, New
York, 5.26%, Due 5/3/1996... $ 5,000 $ 4,999
Dai-Ichi Kangyo Bank, New
York, 5.27%, Due 5/7/1996... 9,100 9,092
Dai-Ichi Kangyo Bank, New
York, 5.90%, Due
5/15/1996................... 5,400 5,388
Dai-Ichi Kangyo Bank, New
York, 5.39%, Due
5/22/1996................... 30,000 29,906
Industrial Bank of Japan, Los
Angeles, 5.23%, Due
5/15/1996................... 6,300 6,287
Industrial Bank of Japan, Los
Angeles, 5.35%, Due
5/28/1996................... 47,000 46,814
Industrial Bank of Japan, New
York, 5.22%, Due 5/20/1996.. 5,950 5,934
Industrial Bank of Japan, New
York, 5.46%, Due 6/3/1996... 8,200 8,160
Industrial Bank of Japan, New
York, 5.45%, Due 6/17/1996.. 7,850 7,795
Industrial Bank of Japan, New
York, 5.24%, Due 7/15/1996.. 9,100 9,003
Mitsubishi Bank, New York,
5.79%, Due 5/17/1996........ 5,000 4,987
Mitsubishi Bank, New York,
5.80%, Due 5/22/1996........ 20,000 19,934
Mitsubishi Bank, New York,
5.24%, Due 6/5/1996......... 6,850 6,816
Mitsubishi Bank, New York,
5.45%, Due 6/11/1996........ 5,000 4,970
Sanwa Bank, Limited, New York,
6.05%, Due 5/2/1996......... 10,000 9,998
Sanwa Bank, Limited, New York,
5.25%, Due 5/7/1996......... 7,000 6,994
Sanwa Bank, Limited, New York,
5.24%, Due 5/13/1996........ 10,000 9,983
Sanwa Bank, Limited, New York,
5.25%, Due 5/13/1996........ 5,000 4,991
Sanwa Bank, Limited, New York,
5.83%, Due 5/17/1996........ 11,000 10,972
</TABLE>
See accompanying notes
16
<PAGE> 18
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Sanwa Bank, Limited, New York,
5.88%, Due 5/20/1996........ $ 2,000 $ 1,994
Sanwa Bank, Limited, New York,
5.23%, Due 5/24/1996........ 9,000 8,970
Sanwa Bank, Limited, New York,
5.22%, Due 6/10/1996........ 5,000 4,972
Sanwa Bank, Limited, New York,
5.23%, Due 6/26/1996........ 26,000 25,792
Sanwa Bank, Limited, New York,
5.18%, Due 8/5/1996......... 8,000 7,892
----------
TOTAL YANKEE BANKERS'
ACCEPTANCES............. 291,337
----------
PROMISSORY NOTES (NOTE A) - 0.80%
Goldman Sachs Group, L.P.,
5.25%, Due 7/3/1996......... 13,000 13,000
----------
TOTAL PROMISSORY NOTES.... 13,000
----------
COMMERCIAL PAPER (NOTE A) - 6.53%
Chrysler Financial
Corporation, 5.25%, Due
5/31/1996................... 60,000 59,741
Chrysler Financial
Corporation, 5.25%, Due
5/31/1996................... 46,000 45,801
----------
TOTAL COMMERCIAL PAPER.... 105,542
----------
VARIABLE RATE MEDIUM-TERM NOTES
(NOTE A) - 47.32%
American Honda Finance
Corporation, 5.49%, Due
1/27/1997................... 70,000 69,983
American Honda Finance
Corporation, 5.34%, Due
2/7/1997.................... 10,000 10,000
American Honda Finance
Corporation, 5.31% Due
3/14/1997................... 20,000 20,000
Bank of Boston, 5.41%, Due
1/24/1997................... 50,000 50,000
Bank of Boston, 5.50%, Due
1/24/1997................... 15,000 15,000
Bank of Boston, 5.51%, Due
1/29/1997................... 5,000 5,000
BanPonce Corporation, 5.79%,
Due 2/3/1997................ 40,000 40,057
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
BanPonce Financial
Corporation, 5.89%, Due
11/25/1996.................. $ 5,000 $ 5,010
BanPonce Financial
Corporation, 5.94%, Due
1/7/1997.................... 10,000 10,026
Bear Stearns Companies,
Incorporated, 5.52%, Due
1/17/1997................... 60,000 60,000
Bear Stearns Companies,
Incorporated, 5.31%, Due
3/5/1997.................... 15,000 15,000
Bear Stearns Companies,
Incorporated, 5.30%, Due
3/11/1997................... 25,000 25,000
CS First Boston, Incorporated,
5.59%, Due 2/11/1997........ 58,000 58,000
CS First Boston, Incorporated,
5.27%, Due 3/11/1997........ 42,000 42,000
General Electric Capital
Corporation, 5.47%, Due
10/3/1996................... 20,000 20,005
General Motors Acceptance
Corporation, 5.56%, Due
5/6/1996.................... 10,000 10,000
General Motors Acceptance
Corporation, 5.50%, Due
12/9/1996................... 25,000 25,034
General Motors Acceptance
Corporation, 5.27%, Due
2/23/1998................... 70,000 70,000
Lehman Brothers Holdings,
Incorporated, 5.75%, Due
8/30/1996................... 5,000 5,005
Lehman Brothers Holdings,
Incorporated, Euro 5.62%,
Due 10/16/1996.............. 10,000 9,999
Merrill Lynch & Company,
Incorporated, 5.52%, Due
1/14/1997................... 65,000 64,991
Merrill Lynch & Company,
Incorporated, 5.27%, Due
2/12/1997................... 30,000 30,000
Norwest Corporation, 5.49%,
Due 9/18/1996............... 25,000 25,010
Sanwa Business Credit
Corporation, 5.38%, Due
2/10/1997................... 10,000 9,997
</TABLE>
See accompanying notes
17
<PAGE> 19
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Sanwa Business Credit
Corporation, 5.37%, Due
3/4/1997.................... $ 20,000 $ 19,990
Sanwa Business Credit
Corporation, 5.63%, Due
1/10/1997................... 25,000 24,998
Sanwa Business Credit
Corporation, 5.63%, Due
1/10/1997................... 25,000 25,000
----------
TOTAL VARIABLE RATE
MEDIUM-TERM
NOTES................... 765,105
----------
MASTER NOTES (NOTE C) - 6.19%
Heller Financial,
Incorporated, Variable Rate
Demand, 5.81%, Due
12/20/1996.................. 65,000 65,000
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Heller Financial,
Incorporated, Variable Rate
Demand, 5.59%, Due
1/27/1997................... $ 10,000 $ 10,000
Heller Financial,
Incorporated, Variable Rate
Demand, 5.38%, Due
3/11/1997................... 25,000 25,000
----------
TOTAL MASTER NOTES........ 100,000
----------
TOTAL INVESTMENTS - 99.41%
(COST 1,607,173)............ 1,607,173
----------
OTHER ASSETS, NET OF
LIABILITIES - .59%.......... 9,600
----------
TOTAL NET ASSETS - 100%....... $1,616,773
==========
</TABLE>
- ---------------
Based on the cost of investments of $1,607,173 for federal income tax purposes
at April 30, 1996, there was no unrealized appreciation or depreciation of
investments.
(A) Rates associated with money market securities represent yield to maturity or
yield to next reset date.
(B) Obligation is subject to a same day credit quality put back to issuer.
(C) Obligation is subject to an unconditional put back to the issuer with seven
calendar days notice.
ABBREVIATION:
L.P. -- Limited Partnership
See accompanying notes
18
<PAGE> 20
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
MUNICIPAL BONDS - 92.03%
ALABAMA - 2.53%
Birmingham Baptist Medical
Centers - Alabama Special Care
Facilities Financing Authority
Revenue Bonds Series 1990A,
(Senior Living Communities,
Inc. Project), 4.50%, Due
9/1/2020, LOC Fuji Bank,
Limited, VRDO................. $1,200 $1,200
Birmingham Baptist Medical
Centers - Alabama Medical
Clinic Board Revenue Bonds
Series 1990A, (Western Medical
System, Inc. Project), 4.50%,
Due 6/1/2028, LOC Fuji Bank,
Limited, VRDO................. 480 480
------
TOTAL ALABAMA............... 1,680
------
ARIZONA - 5.73%
Industrial Development Authority
of Apache County Arizona
Series 1981B (Tucson Electric
Power Co. - Pollution Control
Project), 4.20%, Due
10/1/2021, LOC Bank of Tokyo-
Mitsubishi, Limited........... 2,400 2,400
Industrial Development Authority
of Apache County Arizona
Series 1985A (Tucson Electric
Power Co. - Springerville
Project), 4.15%, Due
12/1/2020, LOC Barclays Bank,
PLC VRDO...................... 500 500
Industrial Development Authority
of Pima County Arizona Series
1982A (Tucson Electric Power
Co. Gen. Project), 4.05%, Due
7/1/2022, LOC Bank of America,
NT & SA, VRDO................. 900 900
------
TOTAL ARIZONA............... 3,800
------
ARKANSAS - 1.81%
Little River County, Arkansas
Solid Waste Disposal Revenue
Bonds Series 1991,
(Georgia-Pacific Corp.
Project) 4.70%, Due 11/1/2026,
LOC Sumitomo Bank, Limited,
VRDO.......................... 1,200 1,200
------
TOTAL ARKANSAS.............. 1,200
------
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
CALIFORNIA - 3.16%
County of Sacramento, California
Revenue Bonds Series 1985A,
4.25%, Due 4/15/2007, LOC
Dai-Ichi Kangyo Bank, Limited,
VRDO.......................... $ 200 $ 200
County of Sacramento, California
Revenue Bonds Series 1985B,
4.25%, Due 4/15/2007, LOC
Dai-Ichi Kangyo Bank, Limited,
VRDO.......................... 100 100
Los Angeles County Housing
Authority (Sand Canyon Villas
Project) Series 1989A, 4.20%,
Due 11/1/2009, LOC Industrial
Bank of Japan, Limited,
VRDO.......................... 1,000 1,000
Los Angeles County Industrial
Development Authority Series
1987A-II, (Bicara, Limited
Project) 4.50%, Due 12/1/2007,
LOC Dai-Ichi Kangyo Bank,
Limited, VRDO................. 450 450
Los Angeles County Industrial
Development Authority (Gary A.
Brandy), 4.50%, Due 12/1/2007,
LOC Dai-Ichi Kangyo Bank,
Limited, VRDO................. 345 345
------
TOTAL CALIFORNIA............ 2,095
------
COLORADO - 1.66%
Adams County Colorado Industrial
Development Revenue Bonds
Series 1985, (City View Park
Project) 4.15%, Due 12/1/2015,
LOC Barclays Bank, PLC, VRDO.. 1,100 1,100
------
TOTAL COLORADO.............. 1,100
------
CONNECTICUT - 2.11%
Connecticut Development
Authority Solid Waste Disposal
Facility Revenue Bonds Series
1989A, (Exeter Energy Project)
4.30%, Due 12/1/2019, LOC
Sanwa Bank, Limited, VRDO..... 200 200
State of Connecticut
Unemployment Revenue Bond
Series 1993B, (Connecticut
Unemployment Revenue Bonds
"CURB") 4.35%, Due 11/1/2001,
LOC Bank of Tokyo-Mitsubishi,
Limited VRDO.................. 1,200 1,200
------
TOTAL CONNECTICUT........... 1,400
------
</TABLE>
See accompanying notes
19
<PAGE> 21
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
FLORIDA - 8.75%
Broward County, Florida Housing
Finance Authority Multifamily
Housing Revenue Bonds Series
1985 (Parkview Partnership,
Limited Project), 4.35%, Due
12/1/2010, LOC Fuji Bank,
Limited....................... $1,000 $1,000
City of Naples, Florida Hospital
Revenue Bonds Series 1992,
(Naples Community Hospital,
Inc. Project), 4.40%, Due
11/1/2022, LOC Mellon Bank,
N.A., VRDO.................... 100 100
Dade County, Florida Capital
Asset Acquisition Special
Obligation Bonds Series 1990,
4.60%, Due 10/1/2010, LOC
Sanwa Bank, Limited, VRDO..... 2,100 2,100
Indian River, Florida Hospital
District Hospital Revenue
Bonds Series 1985, 4.15%, Due
10/1/2015, LOC Kredietbank
N.V., VRDO.................... 100 100
Lee County, Florida Industrial
Development Authority Revenue
Bonds (Christian & Missionary
Alliance Foundation-Shell
Point Village Project) Series
1985, 4.35%, Due 4/1/2010, LOC
Banque Paribas, VRDO.......... 2,500 2,500
------
TOTAL FLORIDA............... 5,800
------
GEORGIA - 8.29%
Gainesville Redevelopment
Authority Series 1986, (Hotel
of Gainesville Assoc. Project)
Series 1986, 4.25%, Due
12/1/2007, LOC Sun Trust Bank,
Atlanta, VRDO................. 900 900
Industrial Development Authority
of Cartersville Series 1992,
(Sekisui Jushi America, Inc.
Project) 4.75%, Due 6/1/2012,
LOC Sanwa Bank, Limited,
VRDO.......................... 1,100 1,100
Thomaston-Upson County
Industrial Development Revenue
Authority (Yamaha Music
Manufacturing, Inc.), Series
1988, 4.75%, Due 8/1/2018, LOC
Bank of Tokyo-Mitsubishi,
Limited, VRDO................. 3,500 3,500
------
TOTAL GEORGIA............... 5,500
------
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
HAWAII - 0.75%
Hawaii Housing Finance &
Development Corporation Rental
Housing System Revenue Bonds
Series 1990B, 4.35%, Due
7/1/2025, LOC Industrial Bank
of Japan, Limited, VRDO....... $ 500 $ 500
------
TOTAL HAWAII................ 500
------
ILLINOIS - 3.99%
Illinois Development Finance
Authority (Illinois Power
Project) Series 1987D, 4.25%,
Due 3/1/2017, LOC Bank of
Tokyo-Mitsubishi, Limited..... 900 900
Illinois Educational Facilities
Authority (The Art Institute
of Chicago) Series 1987,
4.40%, Due 3/1/2027, LOC Bank
of Tokyo-Mitsubishi, Limited,
VRDO.......................... 350 350
Illinois Housing Development
Authority Multi-Family
Mortgage - Revenue Bonds (Hyde
Park Project) Series 1989,
4.55%, Due 2/1/2024, LOC
Sumitomo Bank, Limited,
VRDO.......................... 965 965
Oswego Illinois Industrial
Development Revenue Bonds
(Griffith Laboratories World
Wide, Inc. Project) Series
1995, 4.15%, Due 7/1/2025, LOC
ABN/AMRO Bank, VRDO........... 430 430
------
TOTAL ILLINOIS.............. 2,645
------
INDIANA - 3.10%
Fort Wayne Industrial Economic
Development Revenue Bonds
(ND-Tech Corporation Project)
Series 1989, 4.15%, Due
7/1/2009, LOC Societe
Generale, VRDO................ 600 600
Indianapolis, Indiana Resource
Recovery Revenue Bonds (Ogden
Martin System) Series 1987,
4.20%, Due 12/1/2016, LOC
Swiss Bank Corporation,
VRDO.......................... 400 400
</TABLE>
See accompanying notes
20
<PAGE> 22
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
Princeton Industrial Development
Revenue Bonds (Orion Electric
America, Inc. Project) Series
1987, 4.50%, Due 4/30/2017,
LOC Bank of Tokyo-Mitsubishi,
Limited, VRDO................. $ 455 $ 455
Seymour Economic Development
Revenue Bonds (Kobelco Metal
Powder of America, Inc.
Project) Series 1987, 4.75%,
Due 12/15/1997, LOC Industrial
Bank of Japan, Limited,
VRDO.......................... 600 600
------
TOTAL INDIANA............... 2,055
------
IOWA - 1.46%
Dubuque, Iowa Industrial
Development Revenue Bonds
(Swiss Valley Farms Company
Project) Series 1987, 4.55%,
Due 12/1/2001, LOC Rabobank
Nederland, VRDO............... 770 770
Polk County, Iowa Hospital
Equipment & Improvement
Revenue Bonds Series 1985A,
4.10%, Due 12/1/2005, Bond
Insurance-Municipal Bond
Investors Assurance
Corporation (MBIA), VRDO...... 200 200
------
TOTAL IOWA.................. 970
------
KENTUCKY - 6.48%
Bowling Green Industrial
Building Revenue Bonds (TWN
Fastener, Inc. Project) Series
1988, 4.75%, Due 3/1/2008, LOC
Industrial Bank of Japan,
Limited, VRDO................. 900 900
Georgetown Kentucky Public
Project Revenue Bond Series
1986, 4.60%, Due 12/1/2006,
LOC Bank of Tokyo-Mitsubishi
Limited, VRDO................. 600 600
Hopkinsville Industrial
Development Revenue Bonds
(American Precision Machinery
Inc., Project) Series 1990,
3.90%, Due 5/1/2000, LOC Bank
of Tokyo-Mitsubishi, Limited,
VRDO.......................... 1,400 1,400
Hopkinsville Kentucky Industrial
Building Revenue Refunding
Bonds (Co Par, Inc. Project)
Series 1994A, 4.55%, Due
4/1/2004, LOC Dai-Ichi Kangyo
Bank, Limited, VRDO........... 100 100
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
Shelbyville, Indiana Economic
Development Revenue Bonds
(Nippisun Indiana Corp.
Project) Series 1991, 4.55%,
Due 9/1/2006, LOC Industrial
Bank of Japan, Limited,
VRDO.......................... $1,200 $1,200
Shelbyville, Kentucky Industrial
Building Revenue Bonds
(Ichikoh Manufacturing, Inc.
Project) Series 1987, 4.75%,
Due 10/1/1997 LOC Industrial
Bank of Japan, Limited,
VRDO.......................... 100 100
------
TOTAL KENTUCKY.............. 4,300
------
LOUISIANA - 4.09%
Louisiana Public Facilities
Authority Capital Facilities
Revenue Bonds Series 1985A,
4.60%, Due 12/1/2005, LOC
Sumitomo Bank, Limited,
VRDO.......................... 1,210 1,210
Louisiana Public Facilities
Authority Hospital Revenue
Bonds (Willis Knighton Medical
Center Project), Series 1995,
4.10%, Due 9/1/2025, Bond
Insurance-AMBAC Indemnity
Corporation, VRDO............. 1,000 1,000
Louisiana Public Facilities
College & University Equipment
and Capital Facilities Revenue
Bonds Series 1985A, 4.10%, Due
9/1/2010, Bond Insurance-
Financial Guaranty Insurance
Company (FGIC), VRDO.......... 500 500
------
TOTAL LOUISIANA............. 2,710
------
MARYLAND -- 2.71%
Baltimore County Maryland
Hospital Revenue Bonds
(Sheppard and Enoch Pratt
Hospital Facility Project)
Series 1992, 4.10%, Due
7/1/2021, LOC Societe
Generale, VRDO................ 1,800 1,800
------
TOTAL MARYLAND.............. 1,800
------
MICHIGAN -- 0.30%
Kent Hospital Finance Authority
(Butterworth Hospital Project)
Series 1991A, 4.55%, Due
1/15/2020, LOC Sanwa Bank,
Limited, VRDO................. 200 200
------
TOTAL MICHIGAN.............. 200
------
</TABLE>
See accompanying notes
21
<PAGE> 23
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
MINNESOTA - 3.77%
St Paul, Minnesota Housing and
Redevelopment Authority
District Heating Revenue Bonds
Series 1982A, 4.25%, Due
12/1/2012, LOC Sumitomo Bank,
Limited, VRDO................. $2,500 $2,500
------
TOTAL MINNESOTA............. 2,500
------
MISSOURI - 2.11%
Missouri Higher Education Loan
Authority Revenue Bonds Series
1988A, 4.15%, Due 6/1/2017,
LOC National Westminster Bank,
PLC, VRDO..................... 1,400 1,400
------
TOTAL MISSOURI.............. 1,400
------
NEBRASKA - 1.36%
Lancaster County, Nebraska
Industrial Revenue Bonds (Sun-
Husker Foods, Incorporated
Project) Series 1989, 4.75%,
Due 8/15/2009, LOC Bank of
Tokyo-Mitsubishi, Limited,
VRDO.......................... 900 900
------
TOTAL NEBRASKA.............. 900
------
OHIO - 2.26%
Saint Mary's, Ohio Industrial
Development Revenue Bonds
(Setex Inc. Project) Series
1988, 4.75%, Due 12/1/2001,
LOC Industrial Bank of Japan,
Limited, VRDO................. 1,500 1,500
------
TOTAL OHIO.................. 1,500
------
PENNSYLVANIA - 6.59%
Cambria County Industrial
Development Authority Resource
Recovery Revenue Bonds
(Cambria Cogen Project) Series
1989V-1, 4.35%, Due 9/1/2019,
LOC Fuji Bank, Limited,
VRDO.......................... 700 700
Cambria County Industrial
Development Authority Resource
Recovery Revenue Bonds
(Cambria Cogen Project) Series
1989V-2, 4.35%, Due 9/1/2019,
LOC Fuji Bank, Limited,
VRDO.......................... 700 700
Cambria County Industrial
Development Authority Resource
Recovery Revenue Bonds
(Cambria Cogen Project) Series
1991V-1, 4.35%, Due 9/1/2019,
LOC Fuji Bank, Limited,
VRDO.......................... 200 200
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
Gettysburg Area Industrial
Development Authority
Industrial Development
Refunding Bonds (Dal-Tile
Corporation) Series 1987B,
4.30%, Due 3/1/2004, LOC
Credit Suisse, VRDO........... $1,670 $1,670
Northumberland County Industrial
Development Authority Resource
Recovery Revenue Bonds (Foster
Wheeler Mt. Carmel, Inc.
Project) Series 1987B, 4.25%
Due 2/1/2010, LOC Union Bank
of Switzerland, VRDO.......... 500 500
Northumberland County Industrial
Development Authority Resource
Recovery Revenue Bonds (Foster
Wheeler Mt. Carmel, Inc.
Project) Series 1987A, 4.25%,
Due 2/1/2010, LOC Union Bank
of Switzerland VRDO........... 600 600
------
TOTAL PENNSYLVANIA.......... 4,370
------
TENNESSEE - 1.21%
Blount County Industrial
Development Revenue Bonds
(Advanced Crystal Technology,
Inc. Project) Series 1988,
4.75%, Due 8/1/2008, LOC
Industrial Bank of Japan,
Limited, VRDO................. 500 500
Covington, Tennessee Industrial
Development Board Industrial
Development Revenue Bonds
(Charms Co. Project) Series
1992, 4.10%, Due 6/1/2027, LOC
Societe Generale, VRDO........ 300 300
------
TOTAL TENNESSEE............. 800
------
TEXAS - 4.22%
Brazos River Authority, Texas
Collateralized Pollution
Control Revenue Refunding
Bonds (Texas Utilities
Electric Company Project),
Series 1995B, 4.20%, Due
6/1/2030, LOC Union Bank of
Switzerland, VRDO............. 800 800
Harris County Industrial
Developement Revenue Bonds
(Zeon Chemicals Project)
Series 1989, 4.75%, Due
2/1/2009, LOC Industrial Bank
of Japan, Limited, VRDO....... 600 600
</TABLE>
See accompanying notes
22
<PAGE> 24
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
Harris County, Texas Industrial
Development Revenue Bonds
(Chusei "USA" Project), Series
1991C, 4.55%, Due 8/1/2001,
LOC Bank of Tokyo-Mitsubishi,
Limited, VRDO................. $ 100 $ 100
Montgomery County, Texas
Industrial Development
Corporation (Dal-Tile
Corporation Project), Series
1986B, 4.30%, Due 12/1/2003,
LOC Credit Suisse, VRDO....... 300 300
Sabine River Authority of Texas
Collateralized Pollution
Control Revenue Bonds, (Texas
Utilities Electric Company
Project) Series 1995C, 4.20%,
Due 6/1/2030, LOC Union Bank
of Switzerland, VRDO.......... 1,000 1,000
-------
TOTAL TEXAS................. 2,800
-------
UTAH - 1.51%
State Board of Regents Utah
Student Loan Revenue Bonds
Series 1988C, 4.15%, Due
11/1/2013, Bond Insurance-
AMBAC Indemnity Corporation,
VRDO.......................... 1,000 1,000
-------
TOTAL UTAH.................. 1,000
-------
VIRGINIA - 0.75%
Alexandria Industrial
Development Authority Resource
Recovery Revenue Bonds
(Alexandria/ Arlington
Waste-To-Energy Facility)
Series 1986A, 4.20%, Due
12/1/2016, LOC Swiss Bank
Corporation, VRDO............. 300 300
Virginia Housing Development
Authority Revenue Bonds (AHC
Service Corporation) Series
1987A, 4.25%, Due 9/1/2017,
LOC Bank of Tokyo-Mitsubishi,
Limited, VRDO................. 200 200
-------
TOTAL VIRGINIA.............. 500
-------
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
WASHINGTON - 9.65%
Port Angeles Industrial
Development Corporation
(Daishowa America Project)
Series 1992, 4.75%, Due
8/1/2007, LOC Industrial Bank
of Japan, Limited, VRDO....... $ 200 $ 200
Port Angeles Industrial
Development Corporation
(Daishowa America Project)
Series 1992B, 4.75%, Due
12/1/2007, LOC Industrial Bank
of Japan, Limited, VRDO....... 200 200
Port Everett Revenue Bonds
Series 1986, 4.75%, Due
12/1/2006, LOC Sumitomo Bank,
Limited, VRDO................. 1,200 1,200
Washington State Public Power
Supply Series 3A-1, 4.05%, Due
7/1/2018, LOC Bank of America,
NT & SA, VRDO................. 1,400 1,400
Washington Student Loan Finance
Association Revenue Bonds
Series 1987A, 4.40%, Due
12/1/2002, LOC Sanwa Bank,
Limited, VRDO................. 2,400 2,400
Washington Student Loan Finance
Association Revenue Bonds
Series 1987B, 4.40%, Due
12/1/2002, LOC Sanwa Bank,
Limited, VRDO................. 1,000 1,000
-------
TOTAL WASHINGTON............ 6,400
-------
WEST VIRGINIA - 1.68%
Marion County, West Virginia
Solid Waste Disposal Facility
(Grant Town Cogeneration
Project) Series 1990B, 4.15%,
Due 10/1/2017, LOC National
Westminster Bank PLC, VRDO.... 115 115
Marion County, West Virginia
Solid Waste Disposal Facility
(Grant Town Cogeneration
Project) Series 1990C, 4.15%,
Due 10/1/2017, LOC National
Westminster Bank, PLC, VRDO... 1,000 1,000
-------
TOTAL WEST VIRGINIA......... 1,115
-------
TOTAL MUNICIPAL BONDS....... 61,040
-------
</TABLE>
See accompanying notes
23
<PAGE> 25
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
MUNICIPAL COMMERCIAL PAPER (NOTE A) -- 1.13%
Carbon County Industrial
Development Authority Resource
Recovery Bonds (Panther Creek
Project) Series 1991A, 3.60%,
Due 4/10/1996, LOC National
Westminster Bank, PLC......... $ 750 $ 750
-------
TOTAL MUNICIPAL COMMERCIAL
PAPER..................... 750
-------
OTHER INVESTMENTS -- 6.55%
Lehman Municipal Money Market
Fund.......................... 3,146 3,146
Provident Institutional Funds
Municipal Cash Fund........... 1,201 1,201
-------
TOTAL OTHER INVESTMENTS..... 4,347
-------
TOTAL INVESTMENTS -- 99.71%
(COST $66,137)................ 66,137
-------
OTHER ASSETS, NET OF
LIABILITIES -- .29%........... 190
-------
TOTAL NET ASSETS -- 100%........ 66,327
=======
</TABLE>
- ---------------
Based on the cost of investments of $66,137 for federal income tax purposes at
April 30, 1996, there was no unrealized appreciation or depreciation of
investments.
(A) Rates associated with money market securities represent yield to maturity or
yield to next reset date.
ABBREVIATIONS:
LOC -- Letter of Credit
PLC -- Public Limited Corporation
VRDO -- Variable Rate Demand Obligation
See accompanying notes
24
<PAGE> 26
AMR INVESTMENT SERVICES TRUST U.S. TREASURY MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
REPURCHASE AGREEMENTS (NOTE A) - 86.62%
BA Securities, 5.30%, Dated
4/30/1996, Due 5/1/1996 with a
maturing value of $22,420.
(Collateralized by $22,695
U.S. Treasury Notes, due
4/30/1997, market value --
$22,865)...................... $ 22,416 $ 22,416
CS First Boston Corporation,
5.30%, Dated 4/30/1996, Due
5/1/1996 with a maturing value
of $35,005. (Collateralized by
$77,640 U.S. Treasury Strips,
Due 8/15/2007, market value -
$35,780)...................... 35,000 35,000
Nomura Securities International,
5.30%, Dated 4/30/1996 Due
5/1/1996 with a maturing value
of $35,005. (Collateralized by
$30,190 and $4,920 U.S.
Treasury Notes, Due 11/15/1996
and 5/15/1997, market
value - $30,621 and $5,104)... 35,000 35,000
--------
TOTAL REPURCHASE
AGREEMENTS................ 92,416
--------
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
UNITED STATES TREASURY
BILLS - 19.83%
U.S. Treasury Bills, 5.24%, Due
11/7/1996..................... $ 7,000 $ 6,820
U.S. Treasury Bills, 5.40%, Due
3/6/1997...................... 15,000 14,338
--------
TOTAL UNITED STATES TREASURY
BILLS..................... 21,158
--------
TOTAL INVESTMENTS - 106.45%
(COST - $113, 574)............ 113,574
--------
LIABILITIES, NET OF OTHER
ASSETS - (6.45%).............. (6,885)
--------
TOTAL NET ASSETS - 100%......... $106,689
========
</TABLE>
- ---------------
Based on the cost of investments of $113,574 for federal income tax purposes at
April 30, 1996, there was no unrealized appreciation or depreciation of
investments.
(A) Rates associated with money market securities represent yield to maturity.
See accompanying notes
25
<PAGE> 27
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
Money Municipal Treasury
Market Money Market Money Market
Portfolio Portfolio Portfolio
---------- ------------ ------------
(in thousands)
<S> <C> <C> <C>
ASSETS:
Investments in securities at value (cost -- $1,607,173; $66,137;
$113,574, respectively)*............................................ $1,607,173 $ 66,137 $113,574
Cash.................................................................. - - 6
Dividends and interest receivable..................................... 10,405 225 14
Deferred organization costs........................................... 39 39 39
Other................................................................. 117 - -
---------- -------- --------
TOTAL ASSETS...................................................... 1,617,734 66,401 113,633
========== ======== ========
LIABILITIES:
Payable for investments purchased..................................... - - 6,820
Management and investment advisory fees payable (Note 2).............. 819 6 52
Accrued organization costs............................................ 43 43 43
Other liabilities..................................................... 99 25 29
---------- -------- --------
TOTAL LIABILITIES................................................. 961 74 6,944
---------- -------- --------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS.................. $1,616,773 $ 66,327 $106,689
========== ======== ========
</TABLE>
*Includes repurchase agreements of $92,416 for the U.S. Treasury Money Market
Portfolio.
See accompanying notes
26
<PAGE> 28
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF OPERATIONS
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal
Money Money U.S. Treasury
Market Market Money Market
Portfolio Portfolio Portfolio
------- --------- -------------
(in thousands)
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income............................................................ $43,113 $ 855 $ 2,345
------- ----- -------
TOTAL INVESTMENT INCOME................................................ 43,113 855 2,345
------- ----- -------
EXPENSES:
Management and investment advisory fees (Note 2)........................... 1,133 26 65
Custodian fees............................................................. 91 3 5
Professional fees.......................................................... 15 6 6
Other...................................................................... 47 13 14
------- ----- -------
1,286 48 90
------- ----- -------
Less fees waived (Note 2).................................................. - 20 -
------- ----- -------
NET EXPENSES........................................................... 1,286 28 90
------- ----- -------
NET INVESTMENT INCOME.................................................. 41,827 827 2,255
------- ----- -------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................................... 42 - 33
------- ----- -------
NET GAIN ON INVESTMENTS................................................ 42 - 33
------- ----- -------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... $41,869 $ 827 $ 2,288
======= ===== =======
</TABLE>
See accompanying notes
27
<PAGE> 29
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal
Money Money U.S. Treasury
Market Market Money Market
Portfolio Portfolio Portfolio
---------- --------- -------------
(in thousands)
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income..................................................... $ 41,827 $ 827 $ 2,255
Net realized gain on investments.......................................... 42 - 33
---------- -------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 41,869 827 2,288
---------- -------- ---------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions................................................................. 6,779,135 127,607 228,937
Reductions................................................................ (5,204,231) (62,107) (124,536)
---------- -------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM TRANSACTIONS IN INVESTORS'
BENEFICIAL INTERESTS................................................ 1,574,904 65,500 104,401
---------- -------- ---------
NET INCREASE IN NET ASSETS............................................ 1,616,773 66,327 106,689
---------- -------- ---------
NET ASSETS:
Beginning of period....................................................... - - -
---------- -------- ---------
END OF PERIOD............................................................. $1,616,773 $ 66,327 $ 106,689
========== ======== =========
- ----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
- ----------------------------------------------------------------------------------------------------------------------
RATIOS:
Net investment income to average net assets (annualized).................. 5.53% 3.58% 5.22%
Expenses to average net assets (annualized)*.............................. 0.17% 0.12% 0.21%
</TABLE>
*Ratios to average net assets exclude fees waived by the Manager. Had the
Municipal Money Market Portfolio paid such fees the ratio of net investment
income and expenses to average net assets would have been 3.49% and .21%,
respectively.
See accompanying notes
28
<PAGE> 30
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
AMR Investment Services Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a no-load, open-end, management
investment company which was organized as a trust under the laws of the State of
New York pursuant to a Declaration of Trust dated as of June 27, 1995 and
amended on August 11, 1995. Beneficial interests in the Trust are divided into
seven separate series, each having distinct investment objectives and policies,
as follows: AMR Investment Services Balanced Portfolio, AMR Investment Services
Growth and Income Portfolio, AMR Investment Services International Equity
Portfolio, AMR Investment Services Limited-Term Income Portfolio, AMR Investment
Services Money Market Portfolio, AMR Investment Services Municipal Money Market
Portfolio, and AMR Investment Services U.S. Treasury Money Market Portfolio:
These financial statements and notes to the financial statements relate to the
Money Market, Municipal Money Market and U.S. Treasury Money Market Portfolios
(each a "Portfolio" and collectively the "Portfolios"). The assets of each
Portfolio belong only to that Portfolio, and the liabilities of each Portfolio
are borne solely by that Portfolio and no other. The Trust commenced active
operations on November 1, 1995.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned subsidiary
of AMR Corporation, the parent company of American Airlines, Inc. ("American"),
and was organized in 1986 to provide business management, advisory,
administrative and asset management consulting services.
The following is a summary of the significant accounting policies followed
by the Portfolios.
Security Valuation
Securities of the Portfolios are valued using the amortized cost method. In
the event that a deviation of 1/2 of 1% or more exists between the $1.00 per
share price of the Portfolios, calculated at amortized cost, and the price per
share calculated by reference to market quotations, or if there is any other
deviation which the Board believes would result in a material dilution to
shareholders or purchasers, the Board will promptly consider the appropriate
action which should be initiated.
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale. Interest income is earned from settlement date, recorded on
the accrual basis, and adjusted, if necessary, for amortization of premiums or
accretion of discounts. For financial and tax reporting purposes, realized gains
and losses are determined on the basis of specific lot identification.
Federal Income and Excise Taxes
The Portfolios will be treated as partnerships for federal income tax
purposes. As such, each investor in a Portfolio will be taxed on its share of
the Portfolio's ordinary income and capital gains. It is intended that each
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of sub-chapter M of the
Internal Revenue Code. Accordingly, no provision for United States federal
income or excise tax is necessary.
29
<PAGE> 31
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited) - (Continued)
- --------------------------------------------------------------------------------
Repurchase Agreements
Under the terms of a repurchase agreement, securities are acquired by a
Portfolio from a securities dealer or a bank which are subject to resale at a
later date. Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. All collateral is held through the Portfolios'
custodian bank and is monitored daily by each Portfolio so that the collateral's
market value exceeds the carrying value of the repurchase agreement.
Deferred Organization Expenses
Expenses incurred by a Portfolio in connection with its organization are
being amortized on a straight-line basis over a five-year period.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement which
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory and portfolio management services. The Manager serves as the
sole investment adviser to each of the Portfolios. As compensation for
performing the duties required under the Management Agreement, the Manager
receives from the Portfolios .15% of the average daily net assets of each of the
Portfolios. During the period ended April 30, 1996, the Manager waived
management fees totaling $20,000 for the Municipal Money Market Portfolio.
Other
Certain officers or trustees of the Trust are also officers of the Manager
or American. The Trust makes no direct payments to its officers. Unaffiliated
trustees and their spouses are provided free unlimited air transportation on
American. However, the Trust compensates each Trustee with payments in an amount
equal to the Trustee's income tax on the value of this free airline travel. For
the period ended April 30, 1996, the cost of air transportation was not material
to any of the Portfolios.
30
<PAGE> 32
[AMERICAN AADVANTAGE FUNDS(R) LOGO]
- Institutional Class -
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(817)967-3509
- PlanAhead Class -(SM)
P.O. Box 4580
Chicago, Illinois 60680-4580
(800)231-4252
- Platinum Class -(SM)
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800)967-9009
