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[AQUINAS]
1-877-AQUINAS
PROSPECTUS
March 1, 1998
American AAdvantage Money Market Fund(SM)-PlanAhead Class(R)
THIS PROSPECTUS contains important information about the PLANAHEAD CLASS
OF THE AMERICAN AADVANTAGE MONEY MARKET FUND ("Fund"), an investment portfolio
of the American AAdvantage Funds ("Trust") an open-end management investment
company. THE FUND SEEKS INCOME, LIQUIDITY AND THE MAINTENANCE OF A STABLE $1.00
PRICE PER SHARE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN THE MONEY MARKET
PORTFOLIO ("PORTFOLIO") OF THE AMR INVESTMENT SERVICES TRUST ("AMR TRUST") WHICH
IN TURN INVESTS IN HIGH QUALITY, SHORT-TERM OBLIGATIONS. The investment
experience of the Fund will correspond directly with the investment experience
of the Portfolio. Under a master-feeder operating structure, the Fund seeks its
investment objective by investing all of its investable assets in the Portfolio
as described above. The Portfolio's investment objective is identical to that of
the Fund. Whenever the phrase "all of the Fund's investable assets" is used, it
means that the only investment securities that will be held by the Fund will be
the Fund's interest in the Portfolio. AMR Investment Services, Inc. ("Manager")
provides investment management and administrative services to the Portfolio and
administrative services to the Fund. This master-feeder operating structure is
different from that of many other investment companies which directly acquire
and manage their own portfolios of securities. Accordingly, investors should
carefully consider this investment approach. See "Investment Objectives,
Policies and Risks -- Additional Information About the Portfolio." The Fund may
withdraw its investment in the Portfolio at any time if the Trust's Board of
Trustees ("Board") determines that it would be in the best interest of the Fund
and its shareholders to do so. Upon any such withdrawal, the Fund's assets would
be invested in accordance with the investment policies and restrictions
described in this Prospectus and the Statement of Additional Information
("SAI").
The Fund consists of multiple classes of shares designed to meet the
needs of different groups of investors. PlanAhead Class shares are available to
all investors, including smaller institutional investors, investors using
intermediary organizations such as discount brokers or plan sponsors, individual
retirement accounts and self-employed individual retirement plans. Prospective
PlanAhead Class investors should read this Prospectus carefully before making an
investment decision and retain it for future reference.
IN ADDITION TO THIS PROSPECTUS, a SAI dated March 1, 1998 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The SAI contains more detailed information about the Fund. For a free
copy of the SAI, call (800) 388-3344.
The Securities and Exchange Commission maintains a Web Site
(http://www.sec.gov) that contains the SAI, material incorporated by reference
and other information regarding the Fund and the Portfolio.
An investment in the Money Market Fund is neither insured nor guaranteed
by the U.S. Government and there can be no assurance that it will be able to
maintain a stable price of $1.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY SUCH STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
FEES AND EXPENSES........................................... 1
FINANCIAL HIGHLIGHTS........................................ 2
INTRODUCTION................................................ 3
INVESTMENT OBJECTIVE, POLICIES AND RISKS.................... 3
Other Investment Policies................................ 5
Brokerage Practices...................................... 6
Additional Information About the Portfolio............... 6
INVESTMENT RESTRICTIONS..................................... 7
YIELDS AND TOTAL RETURNS.................................... 8
MANAGEMENT AND ADMINISTRATION OF THE TRUSTS................. 8
Fund Management Agreement................................ 8
Administrative Services Agreement........................ 10
Distribution of Trust Shares............................. 10
Service Plan............................................. 10
Allocation of Fund Expenses.............................. 10
Principal Underwriter.................................... 11
Custodian................................................ 11
Transfer Agent........................................... 11
Independent Auditor...................................... 11
HOW TO PURCHASE SHARES...................................... 11
Opening An Account....................................... 11
HOW TO PURCHASE ADDITIONAL SHARES........................... 13
Adding to Your Account................................... 13
Automatic Investment Plan................................ 13
Additional Purchase Information.......................... 14
HOW TO SELL SHARES.......................................... 14
Ways to Sell Shares...................................... 14
Systematic Withdrawal Plan............................... 16
Additional Information About Redemptions................. 16
RETIREMENT ACCOUNTS......................................... 16
HOW TO EXCHANGE SHARES...................................... 17
INFORMATION AND HELP LINE................................... 17
VALUATION OF SHARES......................................... 17
DIVIDENDS AND TAX MATTERS................................... 17
GENERAL INFORMATION......................................... 18
SHAREHOLDER REPORTS......................................... 19
</TABLE>
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FEES AND EXPENSES
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets):
<TABLE>
<CAPTION>
MONEY
MARKET
FUND
------
<S> <C>
Management Fees............................................. 0.15%
12b-1 Fees.................................................. 0.00
Other Expenses.............................................. 0.39
----
Total Operating Expenses.................................... 0.54%
----
</TABLE>
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The above expenses reflect the expenses of the Fund and the Portfolio. The Board
believes that the aggregate per share expenses of the Fund and the Portfolio
will be approximately equal to the expenses that the Fund would incur if its
assets were invested directly in the type of securities held by the Portfolio.
EXAMPLES
A PlanAhead Class investor in the Fund would directly or indirectly pay
on a cumulative basis the following expenses on a $1,000 investment assuming a
5% annual return:
<TABLE>
<S> <C>
1 Year...................................................... $ 6
3 Years..................................................... $17
5 Years..................................................... $30
10 Years.................................................... $68
</TABLE>
The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses to be incurred directly or
indirectly as a shareholder in the PlanAhead Class of the Fund. Additional
information may be found under "Management and Administration of the Trusts."
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN AND PERFORMANCE MAY BE BETTER OR WORSE THAN THE 5% ANNUAL RETURN
ASSUMED IN THE EXAMPLE.
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FINANCIAL HIGHLIGHTS
The financial highlights in the following table have been derived from
financial statements of the Trust. The information has been audited by Ernst &
Young LLP, independent auditors. Such information should be read in conjunction
with the financial statements and the report of the independent auditors
appearing in the Annual Report incorporated by reference in the SAI, which
contains further information about performance of the Fund and can be obtained
by investors without charge.
<TABLE>
<CAPTION>
(For a share outstanding throughout the period)
MONEY MARKET FUND
--------------------------------------------------------------------------
PLANAHEAD CLASS INSTITUTIONAL CLASS
------------------------------------------------ -----------------------
Year Ended October 31, Period Ended Year Ended October 31,
--------------------------------- October 31, -----------------------
1997 1996 1995 1994(1) 1994 1993
---- ---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- ------ ---------- ----------
Net investment income 0.05(2) 0.05(2) 0.05 0.01 0.04 0.03
Less dividends from net
investment income (0.05) (0.05) (0.05) (0.01) (0.04) (0.03)
-------- -------- ------- ------ ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======= ====== ========== ==========
Total return (annualized) 5.28% 5.21% 5.60% 3.73%(3) 3.85% 3.31%
======== ======== ======= ====== ========== ==========
Ratios/supplemental data:
Net assets, end of period (in
thousands) $189,189 $106,890 $41,989 $ 25 $1,893,144 $2,882,974
Ratios to average net
assets(4)(5)(6):
Expenses 0.54%(2) 0.58%(2) 0.55% 0.70% 0.21% 0.23%
Net investment income 5.17%(2) 5.06%(2) 5.56% 4.42% 3.63% 3.23%
<CAPTION>
(For a share outstanding throughout the period)
MONEY MARKET FUND
------------------------------------------------------
INSTITUTIONAL CLASS
------------------------------------------------------
Year Ended October 31,
------------------------------------------------------
1992 1991(1) 1990 1989 1988
---- ------- ---- ---- ----
<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 0.04 0.07 0.08 0.09 0.08
Less dividends from net
investment income (0.04) (0.07) (0.08) (0.09) (0.08)
---------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ========
Total return (annualized) 4.41% 7.18% 8.50% 9.45% 7.54%
========== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (in
thousands) $2,223,829 $715,280 $745,405 $385,916 $330,230
Ratios to average net
assets(4)(5)(6):
Expenses 0.26% 0.24% 0.20% 0.22% 0.28%
Net investment income 4.06% 6.93% 8.19% 9.11% 7.54%
</TABLE>
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(1) The Money Market Fund commenced active operations on September 1, 1987
and on November 1, 1991, the existing shares of the Fund were designated
as Institutional Class shares. The PlanAhead Class commenced active
operations on August 1, 1994.
(2) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Money Market Portfolio.
(3) Total return 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 for the period August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return for the PlanAhead Class
would vary from the results shown had it been in operation for the entire
year.
(4) 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.
(5) Effective October 1, 1990, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to less than $.01 per share in each period on an
annualized basis.
(6) Annualized.
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INTRODUCTION
The Trust is an open-end, diversified management investment company
organized as a Massachusetts business trust on January 16, 1987. The Fund is a
separate investment portfolio of the Trust. The Fund invests all of its
investable assets in the Portfolio, which has an identical investment objective.
The Manager provides the Portfolio with business and asset management services
and it provides the Fund with administrative services. The Fund consists of
multiple classes of shares, including the "PlanAhead Class" which is available
to all investors, including smaller institutional investors, investors using
intermediary organizations such as discount brokers or plan sponsors, individual
retirement accounts ("IRAs") and self-employed individual retirement plans
("HR-10 Plans" or "Keogh Plans"). For further information about the Fund's other
classes, including eligibility requirements, call (800) 967-9009.
Although each class of shares is designed to meet the needs of different
categories of investors, all classes of the Fund share the same portfolio of
investments and a common investment objective. See "Investment Objective,
Policies and Risks." There is no guarantee that the Fund will achieve its
investment objective. Based on its value, a share of the Fund, regardless of
class, will receive a proportionate share of the investment income and the gains
(losses) earned (or incurred) by the Fund. It also will bear its proportionate
share of expenses that are allocated to the Fund as a whole. However, certain
expenses are allocated separately to each class of shares, thereby affecting the
relative performance of each class.
PlanAhead Class shares are offered without a sales charge at the net
asset value next determined after an investment is received and accepted. Shares
will be redeemed at the next share price calculated after receipt of a
redemption order. See "How to Purchase Shares" and "How to Redeem Shares."
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective and policies of the Fund and the Portfolio are
described below. Except as otherwise indicated, the investment policies of the
Fund may be changed at any time by the Board to the extent that such changes are
consistent with its investment objective. However, the Fund's investment
objective may not be changed without a majority vote of the Fund's outstanding
shares, which is defined as the lesser of (a) 67% of the shares of the Fund
present or represented if the holders of more than 50% of the shares are present
or represented at the shareholders' meeting, or (b) more than 50% of the shares
of the Fund (hereinafter, "majority vote"). The Portfolio's investment objective
may not be changed without a majority vote of the Portfolio's interest holders.
The Fund has a fundamental investment policy which allows it to invest
all of its investable assets in the Portfolio. All other fundamental investment
policies and the non-fundamental investment policies of the Fund and the
Portfolio are identical. Therefore, although the following discusses the
investment policies of the Portfolio and the AMR Trust's Board of Trustees ("AMR
Trust Board"), it applies equally to the Fund and the Board.
The Fund's investment objective is to seek current income, liquidity and
the maintenance of a stable $1.00 price per share. The Fund seeks to achieve
these objectives by investing all of its investable assets in the Portfolio,
which invests in high quality, U.S. dollar-denominated short-term obligations
that have been determined by the Manager or the AMR Trust Board to present
minimal credit risks.
The Portfolio may invest in obligations permitted to be purchased under
Rule 2a-7 under the Investment Company Act of 1940 ("1940 Act") including, but
not limited to, (1) obligations of the U.S. Government or its agencies or
instrumentalities; (2) loan participation interests, medium-term notes, funding
agreements and asset-
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backed securities; (3) domestic, Yankeedollar and Eurodollar certificates of
deposit, 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; and (4) repurchase agreements involving the
obligations listed above. The Portfolio will invest only in issuers or
instruments that at the time of purchase (1) have received the highest
short-term rating by two nationally recognized statistical rating organizations
("Rating Organizations") 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 Rating Organization; or (3) are unrated, but are determined to be of
comparable quality by the Manager pursuant to guidelines approved by the AMR
Trust Board and subject to ratification by the AMR Trust Board. See the SAI for
definitions of the foregoing instruments and rating systems. The Portfolio may
invest in other investment companies.
The Portfolio also may purchase or sell securities on a when-issued or
forward commitment basis. The purchase or sale of when-issued securities enables
an investor to hedge against anticipated changes in interest rates and prices by
locking in an attractive price or yield. The price of when-issued securities is
fixed at the time the commitment to purchase or sell is made, but delivery and
payment for the when-issued securities take place at a later date, normally one
to two months after the date of purchase. During the period between purchase and
settlement, no payment is made by the purchaser to the issuer and no interest
accrues to the purchaser. Such transactions therefore involve a risk of loss if
the value of the security to be purchased declines prior to the settlement date
or if the value of the security to be sold increases prior to the settlement
date. A sale of a when-issued security also involves the risk that the other
party will be unable to settle the transaction. Purchases and sales of
securities on a forward commitment basis involve a commitment to purchase or
sell securities with payment and delivery to take place at some future date,
normally one to two months after the date of the transaction. As with
when-issued securities, these transactions involve certain risks, but they also
enable an investor to hedge against anticipated changes in interest rates and
prices. Forward commitment transactions are executed for existing obligations,
whereas in a when-issued transaction, the obligations have not yet been issued.
When purchasing securities on a when-issued or forward commitment basis, a
segregated account of liquid assets at least equal to the value of purchase
commitments for such securities will be maintained until the settlement date.
The Portfolio will invest more than 25% of its assets in obligations
issued by the banking industry. However, for temporary defensive purposes during
periods when the Manager believes that maintaining this concentration may be
inconsistent with the best interest of shareholders, the Portfolio may not
maintain this concentration.
Investments in Eurodollar (U.S. dollar obligations issued outside the
United States by domestic or foreign entities) and Yankeedollar (U.S. dollar
obligations issued inside the United States by foreign entities) obligations
involve additional risks. Most notably, there generally is less publicly
available information about foreign issuers; there may be less governmental
regulation and supervision; foreign issuers may use different accounting and
financial standards; and the adoption of foreign governmental restrictions may
affect adversely 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.
Variable amount master demand notes in which the Portfolio may invest
are unsecured demand notes that permit the indebtedness thereunder to vary, and
provide for periodic adjustments in the interest rate. Because master demand
notes are direct lending arrangements between the Portfolio and the issuer, they
are not normally publicly 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 amount master demand note generally
will not exceed seven
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days. To the extent this period is exceeded, the note in question would be
considered illiquid. Issuers of variable amount master demand notes must satisfy
the same criteria as set forth for other promissory notes (e.g. commercial
paper). The Portfolio will invest in variable amount master demand notes only
when such notes are determined by the Manager, pursuant to guidelines
established by the AMR Trust Board, to be of comparable quality to rated issuers
or instruments eligible for investment by the Portfolio. In determining average
dollar weighted portfolio maturity, a variable amount master demand note will be
deemed to have a maturity equal to the longer 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.
Portfolio investments are valued based on the amortized cost valuation
technique pursuant to Rule 2a-7 under the 1940 Act. See the SAI for an
explanation of the amortized cost valuation method. Obligations in which the
Portfolio invests generally have remaining maturities of 397 days or less,
although instruments subject to repurchase agreements and certain variable and
floating rate obligations may bear longer final maturities. The average dollar-
weighted portfolio maturity of the Portfolio will not exceed 90 days. See
"Management and Administration of the Trusts."
OTHER INVESTMENT POLICIES
In addition to the investment policies described previously, the
Portfolio also may lend its securities, enter into fully collateralized
repurchase agreements and invest in private placement offerings.
* Securities Lending:
The Portfolio may lend securities to broker-dealers or other
institutional investors pursuant to agreements requiring that the loans be
continuously secured by any combination of cash, securities of the U.S.
Government and its agencies and instrumentalities and approved bank letters of
credit that at all times equal at least 100% of the market value of the loaned
securities. Such loans will not be made if, as a result, the aggregate amount of
all outstanding securities loans by the Portfolio would exceed 33 1/3% of its
total assets (including the market value of collateral received). The Portfolio
continues to receive interest on the securities loaned and simultaneously earns
either interest on the investment of the cash collateral or fee income if the
loan is otherwise collateralized. Should the borrower of the securities fail
financially, there is a risk of delay in recovery of the securities loaned or
loss of rights in the collateral. However, the Portfolio seeks to minimize this
risk by making loans only to borrowers which are deemed by the Manager to be of
good financial standing and which have been approved by the AMR Trust Board. For
purposes of complying with the Portfolio's investment policies and restrictions,
collateral received in connection with securities loans will be deemed an asset
of the Portfolio to the extent required by law. The Manager will receive
compensation for administrative and oversight functions with respect to
securities lending. The amount of such compensation will depend on the income
generated by the loan of the Portfolio's securities. The SEC has granted
exemptive relief that permits the Portfolio to invest cash collateral received
from securities lending transactions in shares of one or more private investment
companies managed by the Manager. Subject to receipt of exemptive relief from
the SEC, the Portfolio also may invest cash collateral received from securities
lending transactions in shares of one or more registered investment companies
managed by the Manager. See the SAI for further information regarding loan
transactions.
* Repurchase Agreements:
A repurchase agreement is an agreement under which securities are
acquired by the Portfolio from a securities dealer or bank subject to resale at
an agreed upon price on a later date. The Portfolio bears a risk of loss in
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the event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed or prevented from exercising its rights
to dispose of the collateral securities. However, the Manager attempts to
minimize this risk by entering into repurchase agreements only with financial
institutions which are deemed to be of good financial standing and which have
been approved by the AMR Trust Board. See the SAI for more information regarding
repurchase agreements.
* Private Placement Offerings:
Investments in private placement offerings are made in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 (the "1933 Act"), and resold to qualified institutional
buyers under Rule 144A under the 1933 Act ("Section 4(2) securities"). Section
4(2) securities are restricted as to disposition under the federal securities
laws, and generally are sold to institutional investors, such as the Portfolio,
that agree they are purchasing the securities for investment and not with an
intention to distribute to the public. Any resale by the purchaser must be
pursuant to an exempt transaction and may be accomplished in accordance with
Rule 144A. Section 4(2) securities normally are resold to other institutional
investors such as the Portfolio through or with the assistance of the issuer or
dealers that make a market in the Section 4(2) securities, thus providing
liquidity. The Portfolio will not invest more than 10% of its net assets in
Section 4(2) securities and illiquid securities unless the investment adviser
determines, by continuous reference to the appropriate trading markets and
pursuant to guidelines approved by the AMR Trust Board, that any Section 4(2)
securities held by the Portfolio in excess of this level are at all times
liquid.
The AMR Trust Board and the Manager, pursuant to the guidelines approved
by the AMR Trust Board, will carefully monitor the Portfolio's investments in
Section 4(2) securities offered and sold under Rule 144A, focusing on such
important factors, among others, as: valuation, liquidity, and availability of
information. Investments in Section 4(2) securities could have the effect of
reducing the Portfolio's liquidity to the extent that qualified institutional
buyers no longer wish to purchase these restricted securities.
BROKERAGE PRACTICES
The Portfolio normally will not incur any brokerage commissions on its
transactions because money market and debt instruments are generally traded on a
"net" basis with dealers acting as principal for their own accounts and without
a stated commission. The price of the obligation, however, usually includes a
profit to the dealer. Obligations purchased in underwritten offerings include a
fixed amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. No commissions or discounts are paid when
securities are purchased directly from an issuer.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO
As previously described, investors should be aware that the Fund, unlike
mutual funds that directly acquire and manage their own portfolios of
securities, seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, which is a separate investment company.
Since the Fund will invest only in the Portfolio, the Fund's shareholders will
acquire only an indirect interest in the investments of the Portfolio.
The Manager expects, although it cannot guarantee, that the Trust will
achieve economies of scale by investing in the AMR Trust. In addition to selling
its interests to the Fund, the Portfolio sells its interests to other
non-affiliated investment companies and/or other institutional investors. All
institutional investors in the Portfolio pay a proportionate share of the
Portfolio's expenses and invest in the Portfolio on the same terms and
conditions.
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However, other investment companies investing all of their assets in the
Portfolio are not required to sell their shares at the same public offering
price as the Fund and are allowed to charge different sales commissions.
Therefore, investors in the Fund may experience different returns from investors
in another investment company that invests exclusively in the Portfolio.
The Fund's investment in the Portfolio may be affected materially by the
actions of large investors in the Portfolio, if any. For example, as with all
open-end investment companies, if a large investor were to redeem its interest
in the Portfolio, the Portfolio's remaining investors could experience higher
pro rata operating expenses, thereby producing lower returns. As a result, the
Portfolio's security holdings may become less diverse, resulting in increased
risk. Institutional investors in the Portfolio that have a greater pro rata
ownership interest in the Portfolio than the Fund could have effective voting
control over the operation of the Portfolio. A change in the Portfolio's
fundamental objective, policies and restrictions, that is not approved by the
shareholders of the Fund could require the Fund to redeem its interest in the
Portfolio. Any such redemption could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution) by the Portfolio.
Should such a distribution occur, the Fund could incur brokerage fees or other
transaction costs in converting such securities to cash. In addition, a
distribution in kind could result in a less diversified portfolio of investments
for the Fund and could affect its liquidity adversely.
The Portfolio's and Fund's investment objectives and policies are
described above. See "Investment Restrictions" for a description of their
investment restrictions. The investment objective of the Fund can be changed
only with shareholder approval. The approval of the Fund and of other investors
in the Portfolio, if any, is not required to change the investment objective,
policies or limitations of the Portfolio, unless otherwise specified. Written
notice will be provided to shareholders of the Fund within thirty days prior to
any changes in the Portfolio's investment objective. If the investment objective
of the Portfolio changes and the shareholders of the Fund do not approve a
parallel change in the Fund's investment objective, the Fund would seek an
alternative investment vehicle or the Manager would actively manage the Fund.
See "Management and Administration of the Trusts" for a complete
description of the investment management fee and other expenses associated with
the Fund's investment in the Portfolio. This Prospectus and the SAI contain more
detailed information about the Fund and the Portfolio, including information
related to (1) the investment objective, policies and restrictions of the Fund
and the Portfolio, (2) the Board of Trustees and officers of the Trust and the
AMR Trust, (3) brokerage practices, (4) the Fund's shares, including the rights
and liabilities of its shareholders, (5) additional performance information,
including the method used to calculate yield and total return, and (6) the
determination of the value of the Fund's shares.
INVESTMENT RESTRICTIONS
The following fundamental investment restrictions and the
non-fundamental investment restriction are identical for the Fund and the
Portfolio. Therefore, although the following discusses the investment
restrictions of the Portfolio, it applies equally to the Fund. The following
fundamental investment restrictions may be changed with respect to the Fund by
the majority vote of the Fund's outstanding shares or with respect to the
Portfolio by the majority vote of the Portfolio's interest holders. The
Portfolio may not:
* Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the
U.S. Government, its agencies and instrumentalities, or purchase more
than 10% of the voting securities of any one issuer, with respect to
75% of the Portfolio's total assets. In
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addition, although not a fundamental investment restriction and
therefore subject to change without shareholder vote, the Portfolio
applies this restriction with respect to 100% of its assets.
* Except for the banking industry, invest more than 25% of its total
assets in the securities of companies primarily engaged in any one
industry, provided that: (i) this limitation does not apply to
obligations issued or guaranteed by the U.S. Government, its agencies
and instrumentalities; (ii) municipalities and their agencies and
authorities are not deemed to be industries; and (iii) financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance, and
diversified finance will be considered separate industries).
The following non-fundamental investment restriction may be changed with
respect to the Fund by a vote of a majority of the Board or with respect to the
Portfolio by a vote of a majority of the AMR Trust Board: the Portfolio may not
invest more than 10% of its net assets in illiquid securities, including time
deposits and repurchase agreements that mature in more than seven days.
The above percentage limits are based upon asset values at the time of
the applicable transaction; accordingly, a subsequent change in asset values
will not affect a transaction that was in compliance with the investment
restrictions at the time such transaction was effected. See the SAI for other
investment limitations.
YIELDS AND TOTAL RETURNS
From time to time each class of the Fund may advertise its "current
yield" and "effective yield." Both yield figures are based on historical
earnings and are not intended to indicate future performance. The current yield
refers to the investment income generated over a seven calendar-day period
(which period will be stated in the advertisement). This yield is then
annualized by assuming the amount of investment income generated during that
week is earned each week over a one-year period and is shown as a percentage of
the investment. The effective yield is calculated similarly but, when
annualized, the investment income earned is assumed to be reinvested. The
effective yield will be slightly higher than the current yield because of the
compounding effect of this assumed reinvestment. Each class of the Fund has
different expenses which will impact its performance.
Total return quotations advertised by the Fund may reflect the average
annual compounded (or aggregate compounded) rate of return during the designated
time period based on a hypothetical initial investment and the redeemable value
of that investment at the end of the period. The Fund will at times compare its
performance to applicable published indices, and also may disclose its
performance as ranked by certain ranking entities. See the SAI for more
information about the calculation of yields and total returns.
MANAGEMENT AND ADMINISTRATION OF THE TRUSTS
FUND MANAGEMENT AGREEMENT
The Board has general supervisory responsibility over the Trust's
affairs, while the business affairs of the AMR Trust are subject to the
supervision of the AMR Trust Board. The Manager provides or oversees all
administrative, investment advisory and portfolio management services for the
Trust pursuant to a Management Agreement dated April 3, 1987, as amended July
25, 1997, together with the Administrative Services Agreement described below.
The AMR Trust and the Manager also entered into a Management Agreement dated
October 1,
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<PAGE> 11
1995, as amended July 25, 1997, that obligates the Manager to provide or oversee
all administrative, investment advisory and portfolio management services for
the AMR Trust. The Manager, located at 4333 Amon Carter Boulevard, MD 5645, Fort
Worth, Texas 76155, is a wholly owned subsidiary of AMR Corporation ("AMR"), the
parent company of American Airlines, Inc., and was organized in 1986 to provide
investment management, advisory, administrative and asset management consulting
services. The Manager serves as the sole active investment adviser to the
Portfolio. As of December 31, 1997, the Manager had assets under management
totaling approximately $18.4 billion including approximately $6.1 billion under
active management and $12.3 billion as named fiduciary or fiduciary adviser. Of
the total, approximately $14.2 billion of assets are related to AMR. American
Airlines, Inc. is not responsible for investments made in the American
AAdvantage Funds.
The Manager provides the Trusts with office space, office equipment and
personnel necessary to manage and administer the Trusts' operations. This
includes complying with reporting requirements; corresponding with shareholders;
maintaining internal bookkeeping, accounting and auditing services and records;
and supervising the provision of services to the Trusts by third parties. The
Manager oversees the Portfolio's participation in securities lending activities
and any actions taken by the securities lending agent in connection with those
activities to ensure compliance with all applicable regulatory and investment
guidelines.
Except as otherwise provided below, the Manager bears the expense of
providing the above services. As compensation for providing the Portfolio with
advisory and asset allocation services, the Manager receives from the AMR Trust
an annualized advisory fee that is calculated and accrued daily, equal to 0.15%
of the net assets of the Portfolio. The advisory fee is payable quarterly in
arrears. To the extent that the Fund invests all of its investable assets in the
Portfolio, the Manager will not receive an advisory fee under its Management
Agreement with the Trust. The Manager receives compensation in connection with
securities lending activities. If the Portfolio lends its portfolio securities
and receives cash collateral from the borrower, the Manager may receive up to
25% of the net annual interest income (the gross interest earned by the
investment less the amount paid to the borrower as well as related expenses)
received from the investment of such cash. If a borrower posts collateral other
than cash, the borrower will pay to the lender a loan fee. The Manager may
receive up to 25% of the loan fees posted by borrowers. In addition, the Manager
is compensated through the Administrative Services Agreement as described below
for other services provided.
Each Management Agreement will continue in effect provided that annually
such continuance is specifically approved by a vote of the Board and the AMR
Trust Board, including the affirmative votes of a majority of the Trustees of
each Board who are not parties to the Management Agreement or "interested
persons" as defined in the 1940 Act of any such party ("Independent Trustees"),
cast in person at a meeting called for the purpose of considering such approval,
or by the vote of the Fund's shareholders or the Portfolio's interest holders. A
Management Agreement may be terminated with respect to the Fund or the Portfolio
at any time, without penalty, by a majority vote of outstanding Fund shares or
Portfolio interests on sixty (60) days' written notice to the Manager, or by the
Manager, on sixty (60) days' written notice to the Trust or the AMR Trust. A
Management Agreement will automatically terminate in the event of its
"assignment" as defined in the 1940 Act.
The Trust is responsible for expenses not otherwise assumed by the
Manager, including the following: audits by independent auditors; transfer
agency, custodian, dividend disbursing agent and shareholder recordkeeping
services; taxes, if any, and the preparation of each Fund's tax returns;
interest; costs of Trustee and shareholder meetings; printing and mailing
prospectuses and reports to existing shareholders; fees for filing reports with
regulatory bodies and the maintenance of the Funds' existence; legal fees; fees
to federal and state authorities for the registration of shares; fees and
expenses of Independent Trustees; insurance and fidelity bond premiums; and any
extraordinary expenses of a nonrecurring nature.
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<PAGE> 12
A majority of the Independent Trustees of the Board have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
between the Trust and the AMR Trust.
ADMINISTRATIVE SERVICES AGREEMENT
The Manager and the Trust entered into an Administrative Services
Agreement which obligates the Manager to provide the Fund those administrative
and management services (other than investment advisory services) described in
the Management Agreement. As compensation for these services, the Manager
receives an annualized fee of 0.05% of the net assets of the PlanAhead Class of
the Fund. The fee is payable quarterly in arrears.
DISTRIBUTION OF TRUST SHARES
Shares are distributed through the Fund's principal underwriter, Brokers
Transaction Services, Inc. ("BTS"). BTS is compensated by the Manager, and not
the Trust. The Trust does not incur any direct distribution expenses relating to
the PlanAhead Class. However, the Trust has adopted a Distribution Plan in
accordance with Rule 12b-1 under the 1940 Act which authorizes the use of any
fees received by the Manager in accordance with the Administrative Services and
the Management Agreements to be used for distribution purposes.
SERVICE PLAN
The PlanAhead Class has adopted a service plan ("Service Plan") which
provides that it will pay 0.25% per annum of its average daily net assets to the
Manager (or another entity approved by the Board). The Manager or these approved
entities may spend such amounts on any activities or expenses primarily intended
to result in or relate to the servicing of PlanAhead Class shares including but
not limited to payment of shareholder service fees and transfer agency or
sub-transfer agency expenses. The fee, which is included as part of the Fund's
"Other Expenses" in the Table of Fees and Expenses of this Prospectus, will be
payable monthly in arrears without regard to whether the amount of the fee is
more or less than the actual expenses incurred in a particular month by the
entity for the services provided pursuant to the Service Plan. The primary
expenses expected to be incurred under the Service Plan are transfer agency fees
and servicing fees paid to financial intermediaries such as plan sponsors and
discount brokers.
The Service Plan will continue in effect so long as its continuance is
approved at least annually by a majority of the Trustees, including the
affirmative votes of a majority of the Independent Trustees of the Board who are
not parties to the Service Plan cast in person at a meeting called for the
purpose of considering such approval, or by the vote of shareholders. The
Service Plan may be terminated with respect to a particular PlanAhead Class at
any time, without the payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of the Fund's PlanAhead Class.
ALLOCATION OF FUND EXPENSES
Expenses of the Fund generally are allocated equally among the shares of
the Fund, regardless of class. However, certain expenses approved by the Board
will be allocated solely to the class to which they relate.
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<PAGE> 13
PRINCIPAL UNDERWRITER
BROKERS TRANSACTION SERVICES, INC. ("BTS"), 7001 Preston Road, Dallas,
Texas 75205, serves as the principal underwriter of the Trust.
CUSTODIAN
STATE STREET BANK & TRUST COMPANY ("State Street"), Boston,
Massachusetts, serves as custodian for the Portfolio and the Fund.
TRANSFER AGENT
State Street serves as transfer agent and provides transfer agency
services for Fund shareholders through its affiliate NATIONAL FINANCIAL DATA
SERVICES, ("NFDS"), Kansas City, Missouri.
INDEPENDENT AUDITOR
The independent auditor for the Fund and the AMR Trust is ERNST & YOUNG
LLP, Dallas, Texas.
HOW TO PURCHASE SHARES
Shares are offered on a continuous basis. Purchase orders should be
directed to DST Systems, Inc. either by mail, by pre-authorized investment or by
wire as described below. The minimum initial purchase for each Fund is $500, or
$50 if you set up the Automatic Investment Plan. The Fund has no obligation to
accept purchase requests or maintain accounts which do not meet minimum purchase
requirements. Shares purchased through financial intermediaries may be subject
to transaction fees. The management of the Fund reserves the right to waive or
change the minimum investment requirements.
Orders to purchase shares of the Fund received by 4:00 p.m. Eastern Time
(or the close of the New York Stock Exchange ("Exchange"), whichever comes
first) Monday through Friday, excluding the following business holidays: New
Year's Day, Martin Luther King's Birthday, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day, and Christmas Day ("Business Day") will be executed at the
following day's net asset value per share provided federal funds became
available to the Fund on the day of purchase. The Trust reserves the right to
reject any order for the purchase of shares and to limit or suspend, without
prior notice, the offering of shares. "Federal funds" are funds deposited by a
commercial bank in an account at a federal reserve bank that can be transferred
to a similar account of another bank in one day and thus may be made immediately
available to the Fund through its custodian.
OPENING AN ACCOUNT
A completed and signed application is required for each new account
opened, regardless of the method chosen for making an initial investment. If
assistance is required in filling out the application, or if extra applications
are required, call 1-800-423-6369. See "Retirement Accounts" for information on
opening retirement accounts.
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<PAGE> 14
BY MAIL
To open an account by mail, complete the application form, include a
check payable to DST Systems, Inc. and mail both to:
DST Systems, Inc.
P.O. Box 419533
Kansas City, MO 64141-6533
To purchase shares by overnight or express mail, please use the
following street address:
DST Systems, Inc.
330 West 9th Street
Poindexter Bldg.
Kansas City, MO 64105
Your purchase must be made in U.S. dollars and checks must be drawn on
U.S. banks. The Fund is not permitted to accept third party checks (i.e., checks
not made payable to the Fund) or cash. DST Systems, Inc. ("DST") will charge a
$15 fee against a shareholder's account for any payment check returned for
insufficient funds. The shareholder will be responsible for any losses suffered
by the Fund as a result. To protect the Fund when a purchase is made by check
and a redemption (sale) of such shares is requested shortly thereafter, DST may
delay the payment of a redemption request until the check clears, which may take
up to fifteen days. If you anticipate redemptions soon after you purchase
shares, you may want to purchase shares by wire to avoid delays.
BY WIRE
You may purchase shares by direct wire transfer. Before establishing a
new account by wire transfer, please call DST at 1-800-423-6369. DST requires
that an application be completed and delivered to DST prior to the wire being
effected. A shareholder's financial institution may charge a fee for processing
a wire request. Funds should be wired through the Federal Reserve System as
follows:
UMB Bank, n.a.
ABA Number 101000695
(investor account number)
(name or account registration)
(social security or tax identification number)
American AAdvantage Money Market Fund-PlanAhead Class
BY EXCHANGE
You may buy shares in the Fund by exchanging shares from another fund.
The registration of the account from which the exchange is being made and the
account to which the exchange is being made must be identical.
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<PAGE> 15
HOW TO PURCHASE ADDITIONAL SHARES
ADDING TO YOUR ACCOUNT
You may add to your account at any time by choosing one of the following
purchase options. THE MINIMUM AMOUNT FOR AN ADDITIONAL INVESTMENT IS $250,
EXCEPT FOR 403(B) ACCOUNTS WHERE THE MINIMUM ADDITIONAL PURCHASE IS $10 AND
ACCOUNTS SET UP AS IRAS OR PURCHASES UNDER THE AUTOMATIC INVESTMENT PLAN WHERE
THE MINIMUM ADDITIONAL PURCHASE IS $50.
BY MAIL
When adding to your account by mail, please send the additional
investment form which appears at the bottom of each confirmation to DST. If you
do not have this form, you may send DST your investment accompanied by a note
giving the full name of the account and the Fund account number to P.O. Box
419533, Kansas City, Missouri 64141-6533.
BY WIRE
When making additional investments by wire transfer, please use the
wiring instructions for initial purchases, which are discussed above. Please
include the full registered name(s) of the account and the account number on the
bank wire instructions. You should use the same instructions as with a new
purchase, except that the account number must be included.
BY EXCHANGE
You may buy shares in the Fund by exchanging shares from another fund.
The registration of the account from which the exchange is being made and the
account to which the exchange is being made must be identical.
AUTOMATIC INVESTMENT PLAN
Once your account is open, you may purchase shares of the Fund
automatically, on a regular, convenient basis through the Fund's Automatic
Investment Plan. These investments must be in amounts of not less than $50 per
transaction. Under the Automatic Investment Plan, your designated bank or other
financial institution debits a preauthorized amount on your account by the 16th
day of each month and applies the amount to the purchase of Fund shares. The
Automatic Investment Plan must be implemented with a financial institution that
is a member of the Automated Clearing House ("ACH"). No service fee is currently
charged by the Fund for participating in the Automatic Investment Plan. A $15
fee will be imposed by DST if sufficient funds are not available in the
investor's account at the time of the automatic transaction. Applications to
establish the Automatic Investment Plan are available from DST. A $50 minimum
initial investment for the Fund must be made before the Automatic Investment
Plan may be established.
You may change the amount of your monthly investment at any time by
writing or calling DST at least 7 business days before the change is to become
effective.
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<PAGE> 16
ADDITIONAL PURCHASE INFORMATION
All applications to purchase Fund shares are subject to acceptance by
the Fund and are not binding until so accepted. The Fund does not accept
telephone orders for purchases of shares (other than by exchange), and it
reserves the right to reject applications in whole or in part.
HOW TO SELL SHARES
WAYS TO SELL SHARES
Shares of the Fund may be redeemed by mail, by telephone or by
pre-authorized automatic withdrawals on any Business Day. Requests for
redemption of shares received by 4:00 p.m. Eastern Time (or the close of the
Exchange, whichever comes first) on any Business Day will be processed at the
net asset value determined for the following Business Day. Proceeds from a
redemption of shares purchased by check or the Systematic Withdrawal Plan may be
withheld until the funds have cleared, which may take up to 15 days. Although
the Fund intends to redeem shares in cash, the Fund reserves the right to pay
the redemption price in whole or in part by a distribution of readily marketable
securities held by the Portfolio. See the SAI for further information concerning
redemptions in kind.
Redemption proceeds generally will be sent within one or two days.
However, if making immediate payment could affect the Fund adversely, it may
take up to seven days to send payment.
To ensure timely acceptance of a redemption request, please adhere to
the following procedures.
BY MAIL
For most redemption requests, you need only deliver to DST a written,
unconditional request to redeem your shares. You must sign the request for
redemption exactly as the shares are registered, including the signature of each
joint owner, and must specify either the number of shares or dollar amount of
shares that you would like redeemed. In certain situations, such as where
corporations, executors, administrators, trustees and guardians are involved,
additional documentation and signature guarantees may be required. If you have
any questions concerning the nature of such additional requirements, please call
DST in advance.
Redemption requests may be submitted directly to DST Systems, Inc., P.O.
Box 419533, Kansas City, MO 64141-6533, at no cost to the investor. They also
may be submitted through securities dealers, financial institutions or other
investment professionals who may charge a service fee. If a redemption request
is not sent directly to DST, it will be forwarded to DST, and the effective date
of redemption will be delayed until the request is received by DST. TO AVOID
DELAY, PLEASE SUBMIT REDEMPTION REQUESTS DIRECTLY TO DST.
The signatures on the redemption request need not be guaranteed unless
(i) the redemption request exceeds $25,000, (ii) the proceeds of the redemption
are requested to be sent by wire transfer, to a person other than the registered
shareholder or holders of the shares to be redeemed, or to be mailed to other
than the address as shown on the records of DST, or (iii) the redemption request
is to be received by DST within 30 days after the shareholder has requested a
change in the address of record or the bank or account designated to receive
redemption proceeds. In these cases, each signature on a redemption request must
be guaranteed by a commercial bank or trust company in the United States, a
member of the Exchange or other eligible guarantor institution.
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<PAGE> 17
DST will mail a check in payment for shares redeemed typically within
one or two days, but no later than the seventh day after receipt of the
redemption request in proper form and of all required documentation (except as
indicated above for certain redemptions of shares purchased by check).
BY TELEPHONE
All shareholders of the Fund may redeem shares by telephone, unless the
shareholder has specifically declined these privileges. If you do not wish to
have telephone privileges for your account, you must check the appropriate box
on the application or notify DST in writing. If this feature has not been
declined, you may redeem shares by phoning DST at 1-800-423-6369 and giving the
account name, account number and either the number of shares or the dollar
amount to be redeemed. Proceeds redeemed by telephone will be mailed only to
your address or wired to your bank as shown on the records of DST. Telephone
redemptions must be in amounts of $1,000 or more, but not more than $25,000.
Payment of the redemption proceeds for shares of the Fund redeemed by
telephone where you request wire payment will normally be made in federal funds
on the next business day. As stated above, DST will wire redemption proceeds
only to the bank and account designated on the application or in written
instructions subsequently received by DST, and only if the bank is a commercial
bank located within the United States. A shareholder's financial institution may
charge a fee for providing such a request. Each shareholder is responsible for
the verification of any such fee.
Shareholders must send a telephone redemption request form or a written
request to DST to arrange for telephone redemptions after the Fund account has
been opened or to change the bank, account or address designated to receive
redemption proceeds. The form or request must be signed by each registered
holder of the account and the signatures must be guaranteed by a commercial bank
or trust company in the United States, a member firm of the Exchange or other
eligible guarantor institution. Further documentation may be requested from
corporations, executors, administrators, trustees and guardians.
The Fund and DST reserve the right to refuse a telephone redemption if
they believe it is advisable to do so. Procedures for redeeming shares of the
Fund by telephone may be modified or terminated by the Fund or DST at any time.
Neither the Fund, DST nor their agents will be liable for following instructions
for telephone redemption transactions they reasonably believe to be genuine. The
Fund and DST will use reasonable procedures to confirm that telephone
instructions are genuine, and if they do not, they may be liable for any losses
due to unauthorized fraudulent instructions.
You should be aware that during periods of substantial economic or
market change, telephone or wire redemptions may be difficult to implement. If
you are unable to contact DST by telephone, shares may also be redeemed by
delivering the redemption request to DST by mail as described above.
BY CHECK
If you elect so on the application, shares of the Fund may be redeemed
through the check writing feature. There is no limit on the number of checks
written per month and no check redemption fees. Checks must be written in
amounts of $100 or more. Check drafts however, are not returned to you. If
copies of drafts are required, a service charge of $2 per check will be assessed
to you.
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<PAGE> 18
SYSTEMATIC WITHDRAWAL PLAN
You can set up automatic withdrawals from your account at monthly,
quarterly, or annual intervals. To begin distributions, you must have an initial
balance of $10,000 in your account and withdraw at least $250 per payment. To
establish the Systematic Withdrawal Plan, request a form by calling
1-800-423-6369.
Depending upon the size of the account and the withdrawals requested,
redemptions for the purpose of satisfying such withdrawals may reduce or even
exhaust the account. If the amount remaining in the account is not sufficient to
meet a Systematic Withdrawal Plan payment, the remaining amount will be redeemed
and the Plan will be terminated. The Fund reserves the right to suspend, modify,
amend or terminate the Plan at any time.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
To relieve the Fund of the cost of maintaining uneconomical accounts,
the Fund reserves the right to redeem the shares held in any account if, at the
time of any redemption of shares in the account, the value of the remaining
shares in the account falls below certain asset levels. Before such involuntary
redemption would occur, the shareholder would be given at least 60 days written
notice and, during that period, the shareholder could make an additional
investment to restore the account to at least a minimum amount, in which case
there would be no such redemption.
For full redemptions, unpaid dividends credited to an account up to the
date of redemption of all shares of the Fund generally will be paid at the time
of redemption.
RETIREMENT ACCOUNTS
The Fund offers the following retirement plans that may be funded with
purchases of the Fund's shares and may allow investors to shelter some of their
income from taxes:
INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who receive
compensation or earned income, even if they are active participants in a
qualified retirement plan (or certain similar retirement plans), may
establish their own tax-sheltered IRA. The Fund offers a prototype IRA plan
which may be adopted by individuals. DST currently charges an annual
maintenance fee of $12. Earnings on amounts held in an IRA are not taxed
until withdrawn. However, the amount of the deduction, if any, allowed for
IRA contributions is limited for individuals who are active participants in
an employer-maintained retirement plan and whose incomes exceed specific
limits.
MODEL 403(b)(7) PLAN. A model 403(b)(7) plan is available for
employees of certain charitable, educational and governmental entities.
MODEL 401(k) PLAN. A model 401(k) plan is available for employees
of corporations and other employers.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES ("SIMPLES"). A model
SIMPLE plan is available for employees of corporations and other employers.
To receive a retirement account application, or if you have questions
about establishing a retirement account, call 1-800-423-6369.
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<PAGE> 19
HOW TO EXCHANGE SHARES
Fund shares may be exchanged into shares of another fund. Certain
eligibility and investment minimum requirements apply. Shareholders may exchange
shares by sending a written request or by calling 1-800-423-6369.
INFORMATION AND HELP LINE
If you have any questions about the Fund or your account or need account
assistance or information, you may call our toll-free investors line at
1-800-423-6369. Our telephone representatives can provide the information or
service you need. You may also write to The Catholic Foundation, 5310 Harvest
Hill Road, Suite 248, Dallas, Texas, 75230, Attention: Corporate Secretary.
VALUATION OF SHARES
The net asset value of each share of the Fund is determined as of the
close of the Exchange, generally 4:00 p.m. Eastern time, on each Business Day.
The net asset value of all outstanding shares of the Fund will be determined by
computing the Fund's total assets (which is the value of the Fund's investment
in the Portfolio), subtracting all of the Fund's liabilities, and dividing the
result by the total number of Fund shares outstanding at such time. The net
asset value of shares of the PlanAhead Class will be determined based on a pro
rata allocation of the value of the Portfolio's investment income, expenses and
total capital gains and losses. The allocation will be based on comparative net
asset value at the beginning of the day except for expenses related solely to
one class of shares ("Class Expenses") which will be borne only by the
appropriate class of shares. Because of the Class Expenses, the net income
attributable to and the dividends payable may be different for each class of
shares.
DIVIDENDS AND TAX MATTERS
Dividends paid on each class of the Fund's shares are calculated at the
same time and in the same manner.
All of the Fund's net investment income and net short-term capital gain,
if any, generally is declared as dividends on each Business Day immediately
prior to the determination of the net asset value. Dividends generally will be
paid on the first day of the following month. The Fund's net investment income
attributable to the PlanAhead Class will consist of (1) that class' pro rata
share of the Fund's share of interest accrued and discount earned on the
Portfolio's securities less amortization of premium and expenses of both the
Portfolio and (2) the Fund's expenses attributable to the PlanAhead Class. The
Portfolio does not expect to realize net capital gain, and, therefore, the Fund
does not foresee paying any capital gain distributions. If the Fund (either
directly or indirectly through the Portfolio) incurs or anticipates any unusual
expenses, loss or depreciation that would affect its net asset value or income
for a particular period adversely, the Board would at that time consider whether
to adhere to the dividend policy described above or to revise it in the light of
the then prevailing circumstances.
Unless a shareholder elects otherwise on the account application, all
dividends and other distributions on the Fund's PlanAhead Class shares will be
automatically paid in additional PlanAhead Class shares of the Fund. However, a
shareholder may choose to have distributions of net capital gain paid in shares
and dividends paid in cash or to have all such distributions and dividends paid
in cash. An election may be changed at any time by delivering written notice
that is received by the transfer agent at least ten days prior to the payment
date for a dividend or other distribution.
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<PAGE> 20
The Fund is treated as a separate corporation for federal income tax
purposes and intends to qualify or to continue to qualify for treatment as a
regulated investment company under the Internal Revenue Code of 1986, as
amended. In each taxable year that the Fund so qualifies, the Fund (but not its
shareholders) will be relieved of federal income tax on that part of its
investment company taxable income (generally, net investment income plus any net
short-term capital gain) and net capital gain that it distributes to its
shareholders. However, the Fund will be subject to a nondeductible 4% excise tax
to the extent that it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that calendar year and its capital
gain net income for the one-year period ending on October 31 of that year, plus
certain other amounts. For these and other purposes, dividends and other
distributions declared by the Fund in October, November or December of any year
and payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if they are paid by the Fund during the following
January. The Portfolio has received a ruling from the Internal Revenue Service
that it is classified for federal income tax purposes as a partnership;
accordingly, it is not subject to federal income tax.
Dividends from the Fund's investment company taxable income are taxable
to its shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether received in cash or paid in additional Fund shares.
Distributions of a Fund's net capital gain (whether received in cash or paid in
additional Fund shares), when designated as such, generally are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares. A capital gain distribution from a Fund also may be offset by
capital losses from other sources.
The Fund notifies its shareholders following the end of each calendar
year of the amounts of dividends and capital gain distributions paid (or deemed
paid) that year.
The Fund is required to withhold 31% of all taxable dividends payable to
any individuals and certain other non-corporate shareholders who do not provide
the Fund with a correct taxpayer identification number or (except with respect
to redemption proceeds) who otherwise are subject to back-up withholding.
The foregoing is only a summary of some of the important tax
considerations generally affecting the Fund and its shareholders. Prospective
investors are urged to consult their own tax advisers regarding specific
questions as to the effect of federal, state or local income taxes on any
investment in the Trust. For further tax information, see the SAI.
GENERAL INFORMATION
The Trust currently is comprised of ten separate investment portfolios.
The Fund is comprised of three classes of shares, which can be issued in an
unlimited number. Each share represents an equal proportionate beneficial
interest in the Fund and is entitled to one vote. Only shares of a particular
class may vote on matters affecting that class. Only shares of a particular
Portfolio or series may vote on matters affecting that Portfolio or series. All
shares of the Trust vote on matters affecting the Trust as a whole. Share voting
rights are not cumulative, and shares have no preemptive or conversion rights.
Shares of the Trust are nontransferable. Each series in the Trust will not be
involved in any vote involving a Portfolio in which it does not invest its
assets. Shareholders of all of the series of the Trust, however, will vote
together to elect Trustees of the Trust and for certain other matters. Under
certain circumstances, the shareholders of one or more series could control the
outcome of these votes.
On most issues subjected to a vote of the Portfolio's interest holders,
as required by the 1940 Act, the Fund will solicit proxies from its shareholders
and will vote its interest in the Portfolio in proportion to the votes cast
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<PAGE> 21
by the Fund's shareholders. Because a Portfolio interest holder's votes are
proportionate to its percentage interests in the Portfolio, one or more other
Portfolio investors could, in certain instances, approve an action against which
a majority of the outstanding voting securities of the Fund had voted. This
could result in the Fund's redeeming its investment in the Portfolio, which
could result in increased expenses for the Fund. Whenever the shareholders of
the Fund are called to vote on matters related to the Portfolio, the Board shall
vote shares for which they receive no voting instructions in the same proportion
as the shares for which they do receive voting instructions. Any information
received from the Portfolio in the Portfolio's report to shareholders will be
provided to the shareholders of the Fund.
As a Massachusetts business trust, the Trust is not obligated to conduct
annual shareholder meetings. However, the Trust will hold special shareholder
meetings whenever required to do so under the federal securities laws or the
Trust's Declaration of Trust or By-Laws. Trustees can be removed by a
shareholder vote at special shareholder meetings.
The Manager has taken steps that it believes are reasonably designed to
address the potential failure of computer programs used by the Manager and the
Fund's service providers to address the Year 2000 issue. There can be no
assurance that these steps will be sufficient to avoid any adverse impact.
SHAREHOLDER REPORTS
Shareholders will receive periodic reports, including annual and
semi-annual reports which will include financial statements showing the results
of the Fund's operations and other information. The financial statements of the
Fund will be audited by the independent auditors at least annually. Shareholder
inquiries and requests for information should be made in writing to DST Systems,
Inc. P.O. Box 419533, Kansas City, MO 64141-6533, or by calling 1-800-423-6369.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN SALES
LITERATURE SPECIFICALLY APPROVED BY OFFICERS OF THE TRUST FOR USE IN CONNECTION
WITH THE OFFER OF ANY PLANAHEAD CLASS SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION
IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.
American AAdvantage Funds is a registered service mark of AMR Corporation.
PlanAhead Class is a registered service mark and American AAdvantage Money
Market Fund is a service mark of AMR Investment Services, Inc.
19
<PAGE> 22
[AQUINAS]
------------------------
PROSPECTUS
------------------------
AMERICAN AADVANTAGE MONEY MARKET FUND-PLANAHEAD CLASS
1-877-AQUINAS
------------------------
March 1, 1998
------------------------
PLAQU-PRO-0398
