SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AMERICAN AADVANTAGE MILEAGE FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
AMERICAN AADVANTAGE MILEAGE FUNDS
4151 AMON CARTER BOULEVARD
MD 2450
FORT WORTH, TX 76155
July __, 2004
Dear Shareholders:
The enclosed proxy materials relate to a Special Meeting of Shareholders
of the American AAdvantage Mileage Funds (the "Trust") to be held on August 11,
2004. As discussed in more detail in the Proxy Statement, you will be asked to
vote on several proposals. As a shareholder of a fund of the Trust (each a
"Fund"), you are asked to review the Proxy Statement carefully and to cast your
vote on the proposals. THE BOARD OF TRUSTEES (THE "TRUSTEES") RECOMMENDS A VOTE
FOR EACH OF THE PROPOSALS.
ELECTION OF TRUSTEES
At the meeting, all shareholders will be asked to re-elect the five
current Trustees and to elect three additional Trustees. The three additional
Trustees are independent of the Trust and its investment advisers.
CHANGES TO INVESTMENT POLICIES OF THE FUNDS
At the meeting, all shareholders will be asked to approve changes to
certain fundamental investment policies of the Funds. In particular, all
shareholders will be asked to approve changes to the fundamental investment
policies regarding investments in commodities, lending securities, issuing
senior securities, and borrowing. In addition, shareholders of the Money Market
Mileage Fund will be asked to approve a change to the fundamental investment
policy regarding the concentration of investments in the banking industry. The
proposed changes to the investment policies are designed to simplify and
modernize the investment restrictions of the Funds and to provide greater
flexibility in managing the Funds' assets. Except as specifically indicated
otherwise, the Trustees do not presently intend to make any significant changes
to a Fund's basic investment strategies. Shareholders would receive notice prior
to the implementation of any such change.
APPROVAL OF AN AMENDED AND RESTATED DECLARATION OF TRUST
At the meeting, all shareholders will be asked to approve the adoption of
an Amended and Restated Declaration of Trust. The Amended and Restated
Declaration of Trust would provide Trustees with more flexibility and, subject
to applicable law, broader authority to act without shareholder approval. This
increased flexibility will, under certain circumstances, allow the Trustees to
react more quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the Funds to operate in a more
efficient and economical manner. Adoption of the Amended and Restated
Declaration of Trust will not alter in any way the Trustees' existing fiduciary
obligations to act with due care and in the shareholders' interests. Among other
items, the Amended and Restated Declaration of Trust modifies or clarifies the
powers of the Trustees, voting powers of shareholders, the quorum requirement
for shareholder votes, reorganizations or terminations not requiring shareholder
approval and redemption of Fund shares.
VOTING PROCEDURES
Each Fund currently operates under a "master-feeder" structure, pursuant
to which a Fund seeks its investment objective by investing all of its
investable assets in a corresponding portfolio (each a "Portfolio") of the AMR
Investment Services Trust ("AMR Trust") that has an identical investment
objective to the corresponding Fund. Interest holders of the AMR Trust,
principally the Funds, will hold a separate meeting to elect Trustees and to
vote on proposed changes to certain fundamental investment policies of the
Portfolios of the corresponding Funds. In addition, the interest holders also
will vote on whether to approve a Conversion Agreement pursuant to which the AMR
Trust would convert from a New York common trust to a Massachusetts business
trust ("Conversion"). Approval of the Conversion would, in effect, include
approval of a new Declaration of Trust for the AMR Trust. There would be no
change in the management and operations of the AMR Trust and the Funds as a
result of the Conversion and it is anticipated that the Conversion would be a
tax-free event for shareholders.
Shareholders of each Fund will be asked to provide voting instructions to
the AMR Trust meeting. The Funds will cast their votes in the same proportion as
the votes cast by the Funds' shareholders at the meeting.
CONCLUSION
Your vote is important no matter how many shares you own. Voting your
shares early will avoid costly follow-up mail and telephone solicitation. Please
take a moment now to review the proxy materials and complete, sign, date and
return the enclosed Form of Proxy in the enclosed postage-paid envelope.
Alternatively, you may vote through the Internet. Please refer to the Form of
Proxy for the Internet address. If we do not hear from you by August __, 2004,
we may contact you. If you have any questions about the proposals or the voting
instructions, please call us at 1-800-388-3344.
Thank you for your attention to this matter and for your continued
investment in the Funds.
Sincerely,
William F. Quinn
President and Chairman of the Board
American AAdvantage Mileage Funds
AMERICAN AADVANTAGE MILEAGE FUNDS
4151 AMON CARTER BOULEVARD
MD 2450
FORT WORTH, TX 76155
-------------------------
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
-------------------------
Dear Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of American Aadvantage Mileage Funds (the "Trust") will be held at
2:00 p.m. Central Time on Wednesday, August 11, 2004, at AMR Investment
Services, Inc. ("Manager"), 4151 Amon Carter Boulevard, Fourth Floor, Board
Room, Fort Worth, Texas 76155. In connection therewith, shareholders are being
asked to consider and act upon the proposals at the Meeting set forth below.
Under a "master-feeder" structure, each Fund of the Trust seeks its
investment objective by investing all of its investable assets in a
corresponding portfolio of the AMR Investment Services Trust ("AMR Trust"). As a
result, shareholders of the Funds will be asked to vote on proposals with
respect to the AMR Trust that are substantially similar to those proposals for
the Trust.
(1) To elect a Board of Trustees;
(2) To approve changes to certain fundamental investment policies of the
Funds;
(3) To authorize the adoption of an Amended and Restated Declaration of
Trust;
(4) To authorize the Trust, on behalf of the Funds, to vote at a meeting
of the AMR Trust to elect a Board of Trustees;
(5) To authorize the Trust, on behalf of the Funds, to vote at a meeting
of the AMR Trust to approve changes to certain fundamental investment
policies of the AMR Trust;
(6) To authorize the Trust, on behalf of the Funds, to vote at a meeting
of the AMR Trust to approve a Conversion Agreement; and
(7) To transact any other business that may properly come before the
Board of Trustees, or any adjournment thereof, in the discretion of
the proxies or their substitutes.
Only holders of shares of beneficial interest of each Fund of record at
the close of business on June 14, 2004 are entitled to notice of, and to vote
at, the Meeting and any adjournments thereof. If you owned shares in more than
one Fund as of June 14, 2004, you may receive more than one proxy card. Please
be certain to vote each proxy card you receive.
By Order of the Board of Trustees,
Barry Y. Greenberg
Secretary
Fort Worth, Texas
July __, 2004
- ii -
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
It is important that you vote even if your account was closed
after the June 14, 2004 Record Date.
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card, and return the card in the envelope provided. If you sign,
date and return the proxy card but give no voting instructions, your shares will
be voted "FOR" the proposals described above.
To avoid the additional expense of further solicitation, we ask your
cooperation in mailing your proxy card promptly.
As an alternative to using the proxy card to vote, you may vote by
telephone, through the Internet or in person. To vote by telephone, please call
the toll free number listed on the enclosed proxy card. To vote via the
Internet, please access the website listed on your proxy card. Shares that are
registered in your name, as well as shares held in "street name" through a
broker, may be voted via the Internet or by telephone. To vote in this manner,
you will need the "control" number that appears on your proxy card. However, any
proposal submitted to a vote at the Meeting by anyone other than the officers or
Trustees of a Trust may be voted only in person or by written proxy. If we do
not receive your completed proxy card by August __, 2004, we may contact you.
If proxy cards submitted by corporations and partnerships are not signed
by the appropriate persons as set forth in the voting instructions on the proxy
cards, they will not be voted.
- --------------------------------------------------------------------------------
- iii -
AMERICAN AADVANTAGE MILEAGE FUNDS
4151 AMON CARTER BOULEVARD
MD 2450
FORT WORTH, TX 76155
---------------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 11, 2004
---------------------------
This document is a Proxy Statement for the American AAdvantage Mileage
Funds ("Trust"). The Trust has three separate investment portfolios (each a
"Fund" and collectively, the "Funds") that are currently in operation. The Funds
are as follows:
Money Market Mileage Fund
Municipal Money Market Mileage Fund
U.S. Government Money Market Mileage Fund
This Proxy Statement is furnished in connection with the solicitation of
proxies made by, and on behalf of, the Board of Trustees of the Trust to be used
at the Special Meeting of Shareholders of the Funds and at any adjournments
thereof ("Meeting"), to be held at 2:00 p.m. Central Time on Wednesday, August
11, 2004, at the offices of AMR Investment Services, Inc. ("Manager"). The
Manager serves as manager and administrator to the Trust and the AMR Investment
Services Trust ("AMR Trust") (collectively, the "Trusts"). SWS Financial
Services, Inc., located at 1201 Elm Street, Suite 3500, Dallas, Texas 75270,
serves as underwriter to the Trust. The purpose of the Meeting is set forth in
the accompanying Notice.
Each Fund seeks its investment objective by investing all of its
investable assets in a corresponding portfolio (each a "Portfolio") of the AMR
Trust, which has an identical investment objective to its corresponding Fund,
under a "master-feeder" structure. At a meeting of interest holders of the AMR
Trust, the Trust will vote its interest in the AMR Trust in proportion to the
votes cast by the Trust's shareholders at the Meeting. Likewise, each Fund will
vote its interest in its corresponding Portfolio of the AMR Trust in proportion
to the votes cast by that Fund's shareholders when a meeting of interest holders
of the corresponding Portfolio of the AMR Trust is called. The Trust or each
Fund of the Trust will vote shares for which they receive no voting instructions
in the same proportion as the shares for which they do receive voting
instructions. Because the Trust's votes are proportionate to its percentage
interest in the AMR Trust, the majority of the AMR Trust's interest holders
could approve an action against which a majority of the outstanding voting
securities of the Trust, on behalf of the Funds, had voted. Similarly, the
majority of a Portfolio's interest holders could approve an action against which
a majority of the voting securities of its corresponding Fund had voted.
This Proxy Statement and the accompanying proxy cards will be mailed to
shareholders on or about July [__], 2004. The solicitation of proxies will be
made by mail, but also may include telephone or oral communications by employees
of the Manager, who will not receive any compensation from the Trust for such
solicitation. Boston Financial Data Services, Inc. has been retained by the
Manager for the purposes of printing and mailing proxy materials to shareholders
and tabulating voting results at a cost of approximately [$________]. All
expenses incurred in connection with preparing these proxy materials will be
borne by the Trust.
A majority of each Fund's shares of beneficial interest outstanding on
June 14, 2004 ("Record Date"), represented in person or by proxy, constitutes a
quorum, and a quorum must be present for the transaction of business with
respect to Proposals 2 and 5. With respect to Proposals 1, 3, 4 and 6, a
majority of the Trust shares of beneficial interest outstanding on the Record
Date entitled to vote on a proposal, represented in person or by proxy,
constitutes a quorum and must be present for the transaction of business.
In the absence of a quorum or in the event that a quorum is present at the
Meeting but sufficient votes to approve any of the proposals are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies that they are entitled to vote FOR any such proposal in favor
of such an adjournment, and will vote those proxies required to be voted AGAINST
any such proposal against such adjournment. A shareholder vote may be taken on
one or more of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted FOR or
AGAINST any adjournment. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal. Accordingly, abstentions and broker
non-votes effectively will be a vote AGAINST adjournment or AGAINST Proposals 2,
3, 5 and 6, for which the required vote is a majority of the outstanding voting
securities (as defined below). Abstentions and broker non-votes will have no
effect on Proposals 1 and 4, for which the required vote is a plurality number
of the votes cast by the Trust.
The individuals named as proxies on the enclosed proxy cards will vote in
accordance with your directions as indicated thereon if your proxy vote is
received and has been properly executed. If your proxy vote is properly executed
and you give no voting instructions, your shares will be voted FOR the proposals
described in this Proxy Statement. The duly appointed proxies may, in their
discretion, vote upon such other matters as may properly come before the
Meeting. However, if the Funds have received a shareholder proposal to be
presented to shareholders at the Meeting within a reasonable time before the
proxy solicitation is made, the duly appointed proxies do not have discretionary
authority to vote upon such proposals. You may revoke your proxy card by giving
another proxy, by letter, telegram or facsimile revoking your initial proxy if
received by that Fund prior to the Meeting, or by appearing and voting at the
Meeting.
- 2 -
Each Fund offers two classes of shares, the Mileage Class and the Platinum
Class. Each share of each class is entitled to one vote. None of the Proposals
in this Proxy Statement require separate voting by class.
A list of the shares of each class of each Fund issued and outstanding as
of the Record Date is included in Appendix A. A list of shareholders who owned
of record five percent or more of the shares of a class of a Fund as of the
Record Date is included in Appendix B. To the knowledge of the Manager, the
executive officers and Trustees, as a group, owned less than one percent of the
outstanding shares of each Fund as of June 30, 2004. In addition, the Manager
has no knowledge of any purchases or sales exceeding 1% of the outstanding
securities of the Manager or its parent company by any Trustees of the Funds or
nominees for election as Trustees of the Funds since the beginning of the Funds'
most recent fiscal year.
Shareholders of record at the close of business on the Record Date will be
entitled to vote at the Meeting. Each full share of the Funds is entitled to one
vote and each fractional share is entitled to a proportionate share of one vote.
The Trust will request broker-dealers, custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of the shares
held of record by such persons. The Trust or the Manager may reimburse such
broker-dealers, custodians, nominees and fiduciaries for their reasonable
expenses incurred in connection with such proxy solicitation.
ONE COPY OF THIS PROXY STATEMENT MAY BE DELIVERED TO MULTIPLE SHAREHOLDERS
WHO SHARE A SINGLE ADDRESS. IF YOU WOULD LIKE TO OBTAIN AN ADDITIONAL COPY OF
THIS PROXY STATEMENT OR A COPY OF THE FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL
REPORTS TO SHAREHOLDERS, FREE OF CHARGE, WRITE TO THE MANAGER AT 4151 AMON
CARTER BOULEVARD, MD 2450, FORT WORTH, TEXAS 76155 OR CALL 1-800-388-3344. IF
YOU RECEIVE A PROXY STATEMENT FOR EACH SHAREHOLDER WHO SHARES YOUR ADDRESS AND
WOULD LIKE TO RECEIVE A SINGLE COPY OF SUCH MATERIAL IN THE FUTURE, PLEASE WRITE
TO OR CALL THE MANAGER AT THE ADDRESS AND TELEPHONE NUMBER INDICATED ABOVE.
Approval of Proposals 2 and 5 outlined below with respect to a Fund or
Trust requires the affirmative vote of the holders of a "majority of the
outstanding voting securities" of that Fund or Trust entitled to vote on the
particular proposal, as such term is defined in the Investment Company Act of
1940, as amended ("1940 Act"). For that purpose, a vote of the holders of a
"majority of the outstanding voting securities" of a Fund or Trust means the
lesser of either (1) the vote of 67% or more of the shares of such Fund or
Trust, as applicable, present at the Meeting if the holders of more than 50% of
the outstanding Fund or Trust shares are present or represented by proxy, or (2)
the vote of the holders of more than 50% of the outstanding shares of such Fund
or Trust.
Approval of Proposals 1 and 4 requires a plurality of the Trust's shares
voted in person or by proxy at the Meeting.
Approval of Proposals 3 and 6 requires a majority of the Trust's shares
voted in person or by proxy at the Meeting.
- 3 -
The following table outlines the proposals the shareholders of each Fund
are being asked to consider. As referenced below, "Money Market Mileage Fund"
refers to the American AAdvantage Money Market Mileage Fund.
FUNDS PROPOSALS
----- ---------
ALL FUNDS PROPOSAL 1:
-----------
Election of Board of Trustees of the Trust.
ALL FUNDS PROPOSAL 2(a):
--------------
Approval of a change to the fundamental
investment limitation on investments in
commodities with respect to each Fund of
the Trust.
ALL FUNDS PROPOSAL 2(b):
--------------
Approval of a change to the fundamental
investment limitation on lending
securities with respect to each Fund of
the Trust.
ALL FUNDS PROPOSAL 2(c):
--------------
Approval of deleting the fundamental
investment limitation on affiliated
transactions with respect to each Fund of
the Trust.
ALL FUNDS PROPOSAL 2(d):
--------------
Approval of a change to the fundamental
investment limitation on the issuance of
senior securities with respect to each
Fund of the Trust.
ALL FUNDS PROPOSAL 2(e):
--------------
Approval of a change to the fundamental
investment limitation on borrowing with
respect to each Fund of the Trust.
MONEY MARKET MILEAGE FUND PROPOSAL 2(f):
--------------
Approval of a change to the fundamental
investment limitation on concentration of
investments in the banking industry.
ALL FUNDS PROPOSAL 3:
-----------
Approval of an Amended and Restated
Declaration of Trust for the Trust.
ALL FUNDS PROPOSAL 4:
-----------
Election of Board of Trustees of the AMR
Trust.
- 4 -
ALL FUNDS PROPOSAL 5(a):
--------------
Approval of a change to the fundamental
investment limitation on investments in
commodities with respect to the
corresponding Portfolios of the AMR Trust.
ALL FUNDS PROPOSAL 5(b):
--------------
Approval of a change to the fundamental
investment limitation on lending
securities with respect to the
corresponding Portfolios of the AMR Trust.
ALL FUNDS PROPOSAL 5(c):
--------------
Approval of deleting the fundamental
investment limitation on affiliated
transactions with respect to the
corresponding Portfolios of the AMR Trust.
ALL FUNDS PROPOSAL 5(d):
--------------
Approval of a change to the fundamental
investment limitation on the issuance of
senior securities with respect to the
corresponding Portfolios of the AMR Trust.
ALL FUNDS PROPOSAL 5(e):
--------------
Approval of a change to the fundamental
investment limitation on borrowing with
respect to the corresponding Portfolios of
the AMR Trust.
MONEY MARKET MILEAGE FUND PROPOSAL 5(f):
--------------
Approval of a change to the fundamental
investment limitation on concentration of
investments in the banking industry with
respect to the corresponding Portfolio of
the AMR Trust.
ALL FUNDS PROPOSAL 6:
-----------
Approval of a Conversion Agreement and a
related new Declaration of Trust for the
AMR Trust.
- 5 -
------------------------------------
PROPOSALS 1 AND 4
ELECTION OF BOARD OF TRUSTEES
Proposals 1 and 4 relate to the election of eight Trustees to each Board
of Trustees of the Trust and the AMR Trust (each a "Board" and collectively, the
"Boards") at the Meeting. The Boards have nominated the individuals listed below
for election as Trustees, each to hold office until the next annual meeting of
shareholders and until his or her successor is elected and qualified. Five of
the nominees (William F. Quinn, Alan D. Feld, Stephen D. O'Sullivan, R. Gerald
Turner and Kneeland Youngblood) currently serve as Trustees of the Trust and the
AMR Trust. Each nominee has indicated a willingness to serve if elected. If any
of the nominees should not be available for election, the persons named as
proxies (or their substitutes) may vote for other persons in their discretion.
Management has no reason to believe that any nominee will be unavailable for
election. If shareholders approve Proposal 6 (conversion of the AMR Trust into a
Massachusetts business trust), the AMR Trust's Board of Trustees elected
pursuant to Proposal 4 would become the Board of Trustees of the new trust into
which the AMR Trust will convert.
W. Humphrey Bogart, Brenda A. Cline and Richard A. Massman were selected
by the Boards' Nominating Committee and recommended to the independent Board
members for election on April 29, 2004. The independent Board members nominated
and recommended their election by shareholders on April 29, 2004.
Mr. Quinn is deemed to be an "interested person" of the Trust and the AMR
Trust, as defined by the 1940 Act. Mr. Quinn is President of the Manager. Mr.
Feld is deemed to be an "interested person" of the AMR Trust. Mr. Feld's law
firm of Akin, Gump, Strauss, Hauer & Feld LLP ("Akin, Gump") has provided legal
services within the past two years to one or more of the investment advisers of
the AMR Trust. Mr. Feld is not deemed to be an "interested person" of the Trust.
The persons named as proxies on the enclosed proxy card will vote FOR the
election of the nominees listed below unless the shareholder specifically
indicates on his or her proxy card a desire to withhold authority to vote for
any nominee.
- 6 -
The eight nominees for Trustee of the Board, their ages, a description of
their principal occupations during the past five years, and the number of Trust
shares owned by each are listed in the tables below. Unless otherwise indicated,
the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450,
Fort Worth, TX 76155.
- --------------------------------------------------------------------------------------------------
POSITION, NUMBER OF
TERM OF PRINCIPAL PORTFOLIOS CURRENT DIRECTORSHIPS
NAME, AGE AND OFFICE AND OCCUPATION(S) IN FUND
ADDRESS LENGTH OF DURING PAST 5 YEARS COMPLEX*
TIME OVERSEEN
WITH THE BY TRUSTEE
TRUSTS OR
NOMINEE
FOR TRUSTEE
- --------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES/NOMINEES
- --------------------------------------------------------------------------------------------------
Term
Lifetime of
Trust until
removal,
resignation
or
retirement**
- --------------------------------------------------------------------------------------------------
William F. Trustee and President, AMR 27 Director, American Airlines
Quinn*** (56) President Investment Federal Credit Union
of the Services, Inc. (1979-1986, 2003-Present);
Trust and (1986-Present). Chairman, American Airlines
the AMR Federal Credit Union
Trust since (1989-2003); Chairman,
1995 Defined Benefit
Sub-Committee, Committee for
the Investment of Employee
Benefits (1982-Present);
Director, Crescent Real
Estate Equities, Inc.
(1994-Present); Director,
Pritchard, Hubble & Herr,
LLC (investment adviser)
(2001-Present); Advisory
Director, Southern Methodist
University Endowment Fund
(1996-Present).
- --------------------------------------------------------------------------------------------------
Alan D. Feld**** Trustee of Partner, Akin, 27 Director, Clear Channel
(67) the Trust Gump, Strauss, Communications
and the AMR Hauer & Feld, LLP (1984-Present); Trustee,
Trust since (law firm) CenterPoint Properties
1996 (1960-Present). (1994-Present).
- --------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES/NOMINEES
- --------------------------------------------------------------------------------------------------
- 7 -
- --------------------------------------------------------------------------------------------------
POSITION, NUMBER OF
TERM OF PRINCIPAL PORTFOLIOS CURRENT DIRECTORSHIPS
NAME, AGE AND OFFICE AND OCCUPATION(S) IN FUND
ADDRESS LENGTH OF DURING PAST 5 YEARS COMPLEX*
TIME OVERSEEN
WITH THE BY TRUSTEE
TRUSTS OR
NOMINEE
FOR TRUSTEE
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Term
Lifetime of
Trust until
removal,
resignation
or
retirement**
- --------------------------------------------------------------------------------------------------
Stephen D. Trustee of Consultant 27 None.
O'Sullivan (68) the and the (1994-Present).
AMR Trust
since 1995
- --------------------------------------------------------------------------------------------------
R. Gerald Turner Trustee of President, 27 Director, J.C. Penney
(58) the Trust Southern Methodist Company, Inc.
225 Perkins and the AMR University (1996-Present); Director,
Admin. Bldg., Trust since (1995-Present). Kronus Worldwide Inc.
Southern 2001 (chemical manufacturing)
Methodist Univ., (2003-Present); Director,
Dallas, Texas First Broadcasting
75275 Investment Partners, LLC
(2003-Present); Member,
United Way of Dallas Board
of Directors; Member,
Salvation Army of Dallas
Board of Directors; Member,
Methodist Hospital Advisory
Board; Member, Knight
Commission on
Intercollegiate Athletics.
- --------------------------------------------------------------------------------------------------
Kneeland Trustee of Managing Partner, 27 Trustee, The Hockaday School
Youngblood (48) the Trust Pharos Capital (1997-Present); Director,
100 Crescent and the AMR Group, LLC (a Starwood Hotels and Resorts
Court, Suite Trust since private equity (2001-Present); Member,
1740, Dallas, 1996 firm) Council on Foreign Relations
Texas 75201 (1998-Present). (1995-Present); Trustee, St.
Mark's School of Texas
(2002-Present).
- --------------------------------------------------------------------------------------------------
NOMINEES FOR
NON-INTERESTED
TRUSTEES
- --------------------------------------------------------------------------------------------------
W. Humphrey Nominee for Consultant, New 27 Board Member, Baylor
Bogart (60) Trustee of River Canada Ltd. University Medical Center
the Trust (mutual fund Foundation (1992-Present).
and the AMR servicing company)
Trust (1998-2003).
- --------------------------------------------------------------------------------------------------
Brenda A. Cline Nominee for Vice President, 27 Trustee, Texas Christian
(43) Trustee of Chief Financial University (1999-Present);
301 Commerce the Trust Officer, Treasurer Trustee, W.I. Cook
Street, Suite 2240 and the AMR and Secretary, Foundation, Inc. (d/b/a Cook
Fort Worth, TX Trust Kimbell Art Children's Health
76102 Foundation Foundation) (2001-Present).
(1993-Present).
- --------------------------------------------------------------------------------------------------
- 8 -
- --------------------------------------------------------------------------------------------------
POSITION, NUMBER OF
TERM OF PRINCIPAL PORTFOLIOS CURRENT DIRECTORSHIPS
NAME, AGE AND OFFICE AND OCCUPATION(S) IN FUND
ADDRESS LENGTH OF DURING PAST 5 YEARS COMPLEX*
TIME OVERSEEN
WITH THE BY TRUSTEE
TRUSTS OR
NOMINEE
FOR TRUSTEE
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Richard A. Nominee for Senior Vice 27 None.
Massman (60) Trustee of President and
the Trust General Counsel,
and the AMR Hunt Consolidated,
Trust Inc. (holding
company engaged in
energy, real
estate, farming,
ranching and
venture capital
activities)
(1994-Present).
- --------------------------------------------------------------------------------------------------
OFFICERS
- --------------------------------------------------------------------------------------------------
Nancy A. Eckl (41) Vice Vice President, N/A N/A
President Trust Investments,
since 1990 AMR Investment
Services, Inc.
(1990-Present).
- --------------------------------------------------------------------------------------------------
Michael W. Fields Vice Vice President, N/A N/A
(50) President Fixed Income
since 1989 Investments, AMR
Investment
Services, Inc.
(1988-Present).
- --------------------------------------------------------------------------------------------------
Barry Y. Vice Vice President, N/A Director, Pritchard, Hubble
Greenberg (41) President Legal and & Herr, LLC (investment
since 1995 Compliance, AMR adviser) (2004-Present).
and Investment
Secretary Services, Inc.
since 2004 (1995-Present).
- --------------------------------------------------------------------------------------------------
Rebecca L. Harris Treasurer Vice President, N/A N/A
(37) since 1995 Finance, AMR
Investment
Services, Inc.
(1995-Present).
- --------------------------------------------------------------------------------------------------
John B. Roberson Vice Vice President, N/A Director, Pritchard, Hubble
(46) President Director of Sales, & Herr, LLC (investment
since 1989 AMR Investment adviser) (2001-Present).
Services, Inc.
(1991-Present).
- --------------------------------------------------------------------------------------------------
* The Trust, AMR Trust, American AAdvantage Funds and American AAdvantage Select Funds
(collectively, the "Fund Complex") consist of 27 mutual funds.
** The Board has adopted a retirement plan that requires Trustees to retire no later than the
last day of the calendar year in which they reach the age of 70, with the exception of
Messrs. Quinn and O'Sullivan.
- 9 -
*** Mr. Quinn is deemed to be an "interested person" of the Trust and the AMR Trust, as
defined by the 1940 Act. Mr. Quinn is President of the Manager.
**** Mr. Feld is deemed to be an "interested person" of the AMR Trust, as defined by the
1940 Act. Mr. Feld's law firm of Akin, Gump has provided legal services within the past
two years to one or more of the advisers for the AMR Trust. Mr. Feld is not deemed to be
an "interested person" of the Trust.
The Trust and the AMR Trust have an Audit Committee, consisting of Messrs.
Feld, O'Sullivan, Turner, and Youngblood. The members of the Audit Committee for
the Trust are not "interested persons" as defined by the 1940 Act (collectively,
the "Non-Interested Trustees"). Except for Mr. Feld, the members of the Audit
Committee for the AMR Trust are not "interested persons" as defined by the 1940
Act of the AMR Trust. The Audit Committee has adopted a charter setting forth
its primary duties as follows: (1) to recommend to the Board auditors to be
retained for the next fiscal year, (2) to meet with the Trust's independent
auditors as necessary, (3) to consider the effect upon each Fund of any changes
in accounting principles or practices proposed by the Manager or the auditors,
(4) to review the fees charged by the auditors for audit and non-audit services,
(5) to investigate improprieties or suspected improprieties in Fund operations,
(6) to review the findings of SEC examinations and consult with the Manager on
appropriate responses, and (7) to report its activities to the full Board on a
regular basis and to make such recommendations with respect to the above and
other matters as the Audit Committee may deem necessary or appropriate. The
Audit Committee met three times during the fiscal year ended December 31, 2003.
The Trust and the AMR Trust also have a Nominating Committee that is
comprised of the Non-Interested Trustees (and Mr. Feld with respect to the AMR
Trust). The Nominating Committee has adopted a charter, which is included as
Appendix C, setting forth its primary duties as follows: (1) evaluate the
qualifications of potential interested and Non-Interested Trustees; (2) to
establish policies and procedures for the review of shareholder recommended
nominees; (3) make recommendations to the full Board for membership on Board
committees; and (4) review the Board's committee structure and duties.
Shareholder recommendations for Trustee candidates may be mailed in writing,
including a comprehensive resume and any supporting documentation, to the
Nominating Committee in care of the Funds, the Trust or the AMR Trust. The
Nominating Committee did not meet during the fiscal year ended December 31,
2003.
With respect to the criteria for selecting Non-Interested Trustees, it is
expected that all candidates will possess the following minimum qualifications:
(a) unquestioned personal integrity; (b) is not an "interested person" of the
Manager or its affiliates within the meaning of the 1940 Act; (c) does not have
a material relationship (E.G., commercial, banking, consulting, legal, or
accounting) that could create an appearance of lack of independence in respect
of the Manager and its affiliates; (d) has the disposition to act independently
in respect of the Manager and its affiliates and others in order to protect the
interests of the Funds and all shareholders; (e) has the ability to attend all
of the meetings per year; (f) demonstrates sound business judgment gained
through broad experience in significant positions where the candidate has dealt
with management, technical, financial or regulatory issues; (g) has sufficient
legal, financial or accounting knowledge to add value in the complex financial
environment of the Funds; and (h) has the capacity for the hard work and
attention to detail that is required to be an effective Non-Interested Trustee.
The Nominating Committee may determine that a candidate who does not have the
- 10 -
type of previous experience or knowledge referred to above should nevertheless
be considered as a nominee if the Nominating Committee finds that the candidate
had additional qualifications such that his or her qualifications, taken as a
whole, demonstrate the same level of fitness to serve as a Non-Interested
Trustee. The Nominating Committee may use a search firm or other sources to
identify and evaluating Board candidates.
In recommending the election of Messrs. Bogart and Massman and Ms. Cline,
the Nominating Committee noted the candidates' appropriate background experience
and their capabilities, integrity and diversity. The Committee also noted the
importance of financial experience as a special skill, which each candidate
possesses. In addition, with respect to Mr. Massman, the Committee considered
his extensive legal background. As part of the nomination process, the nominees
completed questionnaires requesting relevant information such as experience and
material transactions. Each nominee was recommended to the Nominating Committee
by the Chairman of the Board.
During the fiscal year ended December 31, 2003, the Board held a total of
four meetings. Each Trustee attended all of the meetings held during this
period. Each Trustee also attended all of the meetings of the committees of the
Board on which he served during that time.
Correspondence intended for each Trustee may be sent to the attention of
the individual Trustee or to the Board at 4151 Amon Carter Boulevard, MD 2450,
Fort Worth, TX 76155. All communications addressed to the Board of Trustees or
any individual Trustee will be logged and sent to the Board or individual
Trustee. The Trust and AMR Trust do not hold annual meetings and, therefore, do
not have a policy with respect to Trustees' attendance at such meetings.
- 11 -
The Trustees and nominees who own shares of any Fund are listed in the
following tables with the dollar range of their ownership in such Fund(s) and
the Trust as a whole as of [June 30, 2004].
FUNDS INTERESTED TRUSTEES NON-INTERESTED TRUSTEES
QUINN FELD* O'SULLIVAN TURNER YOUNGBLOOD
----- ----- ---------- ------ ----------
MONEY MARKET Over None None None None
$100,000
MUNICIPAL MONEY MARKET None None None None None
U.S. GOVERNMENT MONEY None None None None None
MARKET
TRUST ON AN AGGREGATE Over None None None None
BASIS $100,000
* Mr. Feld is deemed to be an "interested person" as defined by the 1940
Act of the AMR Trust only.
FUNDS NON-INTERESTED TRUSTEE NOMINEES
BOGART CLINE MASSMAN
------ ----- -------
MONEY MARKET None None None
MUNICIPAL MONEY MARKET None None None
U.S. GOVERNMENT MONEY None None None
MARKET
TRUST ON AN AGGREGATE None None None
BASIS
During the two most recently completed calendar years, Akin, Gump provided
legal services to American Airlines, Inc., an affiliate of the Manager. Mr. Feld
has advised the Trust that, during this period, he had no material involvement
in the services provided by Akin, Gump to American Airlines, Inc., that he
received no material benefit in connection with these services, and that Akin,
Gump did not provide legal services to the Manager or AMR Corporation, the
Manager's parent company, during this period.
As compensation for their service to the Fund Complex, Mr. Feld and the
Non-Interested Trustees (other than Mr. O'Sullivan) and their spouses receive
free air travel from American Airlines, Inc., an affiliate of the Manager. The
Fund Complex pays American Airlines the flight service charges incurred for
these travel arrangements. The Fund Complex also compensates each Trustee with
payments in an amount equal to the Trustees' income tax on the value of this
free airline travel. Mr. O'Sullivan, as a retiree of American Airlines, Inc.,
already receives flight benefits. Mr. O'Sullivan receives an annual retainer of
$40,000, plus $1,250 for each Board meeting attended. Trustees also are
reimbursed for any expenses incurred in attending Board meetings. These amounts
(excluding reimbursements) are reflected in the following table for the fiscal
year ended December 31, 2003. The compensation amounts below include the flight
service charges paid by the Fund Complex to American Airlines.
- 12 -
TOTAL COMPENSATION
AGGREGATE PENSION OR RETIREMENT FROM THE FUND
COMPENSATION FROM BENEFITS ACCRUED AS PART COMPLEX
NAME OF TRUSTEE THE TRUST OF THE TRUST'S EXPENSES (25 FUNDS)
- --------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
William F. Quinn $0 $0 $0
Alan D. Feld* $119 $0 $44,211
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
Ben Fortson** $21 $0 $7,659
Dee J. Kelly, Jr.*** $53 $0 $19,682
Stephen D. O' Sullivan $122 $0 $45,000
R. Gerald Turner $44 $0 $16,291
Kneeland Youngblood $98 $0 $36,207
- --------------------------------------------------------------------------------------------
* Mr. Feld is deemed to be an "interested person" as defined by the 1940 Act of the
AMR Trust only.
** Mr. Fortson retired from the Trust effective February 28, 2002. He now serves as
Trustee Emeritus.
*** Mr. Kelly resigned from the Trust effective February 21, 2003.
The Boards have adopted an Emeritus Trustee and Retirement Plan. The Plan
provides that a Trustee who has reached the age of 70 must retire from the Board
by the end of the calendar year in which the Trustee turns 70 and may elect
Trustee Emeritus status. Alternately, a Trustee who has served on the Board of
one or more Trusts for at least 5 years may elect to retire from the Boards at
an earlier age and immediately assume Trustee Emeritus status. A person may
serve as a Trustee Emeritus and receive related retirement benefits for a period
up to a maximum of 10 years. Only those Trustees who retire from the Boards and
elect Trustee Emeritus status may receive retirement benefits under the Plan. A
Trustee Emeritus must commit to provide certain ongoing services and advice to
the Board members and the Fund Complex; however, a Trustee Emeritus does not
have any voting rights at Board meetings and is not subject to election by
shareholders of the Funds.
REQUIRED VOTE
Election of each nominee as a Trustee of the Trust and the AMR Trust
requires the vote of a plurality of the votes cast at the Meeting in person or
by proxy, provided that a quorum is present. Shareholders who vote FOR Proposals
1 and 4 will vote FOR each nominee. THOSE SHAREHOLDERS WHO WISH TO WITHHOLD
THEIR VOTE ON ANY SPECIFIC NOMINEE(S) MAY DO SO ON THE PROXY CARD.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSALS 1 AND 4
----------------------
- 13 -
PROPOSALS 2 AND 5
APPROVAL OF CERTAIN CHANGES TO
THE FUNDS' AND THE PORTFOLIOS'
FUNDAMENTAL INVESTMENT POLICIES
The Board seeks shareholder approval to modify certain fundamental
investment policies of the Funds and the corresponding Portfolios of the Funds.
For easier reading throughout this section, the term "Fund" is used to refer to
either a Fund or its corresponding Portfolio. These fundamental investment
policies were adopted pursuant to the 1940 Act and can be changed only with
shareholder approval ("fundamental policies"). Some of these fundamental
policies reflect past regulatory, business or industry conditions, practices or
requirements that are no longer in effect. Accordingly, the Board seeks to
simplify and modernize the Funds' fundamental policies and to provide for
greater flexibility in managing the Funds' assets. Except as specifically
indicated otherwise, the Trustees do not presently intend to make any
significant changes to a Fund's basic investment strategies. Shareholders would
receive notice prior to the implementation of any such change.
Summary descriptions of each proposed change to the Funds' fundamental
policies are set forth below, together with a summary of the text of the
corresponding current fundamental policies. Policies and limitations that a Fund
has not specifically designated as being fundamental are considered to be
non-fundamental and may be changed by the Board of Trustees without shareholder
approval. The AMR Trust has adopted fundamental investment policies on behalf of
the Portfolios identical to those of the Funds. Thus, shareholders of the Funds
are also being asked to vote on changing these policies with respect to the
Portfolios. The Board has determined that each recommended change is in the best
interest of shareholders. The following table outlines which Funds will vote on
the items under Proposals 2 and 5.
PROPOSAL FUNDS
- -------- -----
PROPOSALS 2(a), 2(b), 2(c), 2(d) AND 2(e) ALL FUNDS
PROPOSAL 2(f) MONEY MARKET MILEAGE FUND
PROPOSALS 5(a), 5(b), 5(c), 5(d) AND 5(e) ALL FUNDS
PROPOSAL 5(f) MONEY MARKET MILEAGE FUND
PROPOSALS 2(a) AND 5(a): CHANGE IN FUNDAMENTAL POLICY ON INVESTMENTS IN
COMMODITIES.
Each Fund currently has a fundamental policy that provides as follows:
NO FUND MAY PURCHASE OR SELL COMMODITIES (INCLUDING DIRECT INTERESTS
AND/OR LEASES IN OIL, GAS OR MINERALS) OR COMMODITIES CONTRACTS, EXCEPT
WITH RESPECT TO FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS AND FOREIGN
- 14 -
CURRENCY FUTURES CONTRACTS WHEN CONSISTENT WITH OTHER POLICIES AND
LIMITATIONS DESCRIBED IN THE PROSPECTUSES.
In order to simplify this fundamental investment restriction and to make
the policy uniform among all the Funds, including other funds managed by the
Manager, the Board proposes that this policy be changed as follows:
NO FUND MAY INVEST IN PHYSICAL COMMODITIES UNLESS ACQUIRED AS A RESULT OF
OWNERSHIP OF SECURITIES OR OTHER INSTRUMENTS (BUT THIS SHALL NOT PREVENT
THE FUND FROM PURCHASING OR SELLING FOREIGN CURRENCY, OPTIONS, FUTURES
CONTRACTS, OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS, SWAPS, CAPS,
FLOORS, COLLARS, SECURITIES ON A FORWARD-COMMITMENT OR DELAYED-DELIVERY
BASIS, AND OTHER SIMILAR FINANCIAL INSTRUMENTS).
There is no current intention of the Funds to change their investment
strategies as a result of a change to this restriction.
PROPOSALS 2(b) AND 5(b): CHANGE IN FUNDAMENTAL POLICY ON LENDING
SECURITIES.
Each Fund currently has a fundamental policy that provides as follows:
NO FUND MAY MAKE LOANS TO ANY PERSON OR FIRM, PROVIDED, HOWEVER, THAT THE
MAKING OF A LOAN SHALL NOT BE CONSTRUED TO INCLUDE (i) THE ACQUISITION FOR
INVESTMENT OF BONDS, DEBENTURES, NOTES OR OTHER EVIDENCES OF INDEBTEDNESS
OF ANY CORPORATION OR GOVERNMENT WHICH ARE PUBLICLY DISTRIBUTED OR (ii)
THE ENTRY INTO REPURCHASE AGREEMENTS AND FURTHER PROVIDED, HOWEVER, THAT
EACH FUND MAY LEND ITS PORTFOLIO SECURITIES TO BROKER-DEALERS OR OTHER
INSTITUTIONAL INVESTORS IN ACCORDANCE WITH THE GUIDELINES STATED IN THIS
SAI [THE STATEMENT OF ADDITIONAL INFORMATION].
The Board proposes that this policy be changed as follows:
NO FUND MAY LEND ANY SECURITY OR MAKE ANY OTHER LOAN EXCEPT (1) AS
OTHERWISE PERMITTED UNDER THE 1940 ACT, (2) PURSUANT TO A RULE, ORDER OR
INTERPRETATION ISSUED BY THE SEC OR ITS STAFF, (3) THROUGH THE PURCHASE OF
A PORTION OF AN ISSUE OF DEBT SECURITIES IN ACCORDANCE WITH THE FUND'S
INVESTMENT OBJECTIVE, POLICIES AND LIMITATIONS, OR (4) BY ENGAGING IN
REPURCHASE AGREEMENTS WITH RESPECT TO PORTFOLIO SECURITIES.
The proposed policy provides greater flexibility in managing a Fund's
assets by clarifying that a Fund may lend securities as permitted under the 1940
Act or pursuant to a rule, order or interpretation issued the SEC or its staff.
However, the Funds do not currently lend their securities. Adoption of the
proposed limitation on lending is not expected to affect the way in which each
Fund is managed, the investment performance of each Fund, or the instruments in
which each Fund invests.
- 15 -
PROPOSALS 2(c) AND 5(c): ELIMINATION OF FUNDAMENTAL POLICY REGARDING
AFFILIATED TRANSACTIONS.
The Funds currently have a fundamental policy that provides as follows:
NO FUND MAY PURCHASE FROM OR SELL PORTFOLIO SECURITIES TO ITS OFFICERS,
TRUSTEES OR OTHER "INTERESTED PERSONS" OF THE TRUST, AS DEFINED IN THE
1940 ACT, INCLUDING ITS INVESTMENT ADVISERS AND THEIR AFFILIATES, EXCEPT
AS PERMITTED BY THE 1940 ACT AND EXEMPTIVE RULES OR ORDERS THEREUNDER.
The Board proposes that this policy be eliminated because it merely
restates a statutory prohibition under the 1940 Act and is just one of many
listed thereunder. As such, the Funds are fully subject to this restriction
regardless of whether the Funds have adopted a fundamental policy with respect
to these activities.
PROPOSALS 2(d) AND 5(d): CHANGE IN FUNDAMENTAL POLICY ON ISSUING SENIOR
SECURITIES.
The Funds currently have a fundamental policy that provides as follows:
NO FUND MAY ISSUE SENIOR SECURITIES, EXCEPT THAT A FUND MAY ENGAGE IN
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES TRANSACTIONS.
In order to clarify this fundamental investment restriction and to make
the policy uniform among all the Funds, including other funds managed by
Manager, the Board proposes that this policy be changed as follows:
NO FUND MAY ISSUE ANY SENIOR SECURITY EXCEPT AS OTHERWISE PERMITTED (1)
UNDER THE 1940 ACT OR (2) PURSUANT TO A RULE, ORDER OR INTERPRETATION
ISSUED BY THE SEC OR ITS STAFF.
There is no current intention of the Funds to change their investment
strategies as a result of a change to this restriction.
PROPOSALS 2(e) AND 5(e): CHANGE IN FUNDAMENTAL POLICY ON BORROWING.
The 1940 Act establishes limits on the ability of a Fund to borrow money.
Currently, the Funds' fundamental limitation on borrowing states as follows:
NO FUND MAY BORROW MONEY, EXCEPT FROM BANKS OR THROUGH REVERSE REPURCHASE
AGREEMENTS FOR TEMPORARY PURPOSES IN AN AGGREGATE AMOUNT NOT TO EXCEED 10%
OF THE VALUE OF ITS TOTAL ASSETS AT THE TIME OF BORROWING. IN ADDITION,
ALTHOUGH NOT A FUNDAMENTAL POLICY, THE FUNDS INTEND TO REPAY ANY MONEY
BORROWED BEFORE ANY ADDITIONAL PORTFOLIO SECURITIES ARE PURCHASED. SEE
"OTHER INFORMATION" FOR A FURTHER DESCRIPTION OF REVERSE REPURCHASE
AGREEMENTS.
- 16 -
In order to simplify this fundamental investment restriction and to make
the policy uniform among all the Funds, including other funds managed by the
Manager, the Board proposes that this policy be changed as follows:
NO FUND MAY BORROW MONEY, EXCEPT AS OTHERWISE PERMITTED UNDER THE 1940 ACT
OR PURSUANT TO A RULE, ORDER OR INTERPRETATION ISSUED BY THE SEC OR ITS
STAFF, INCLUDING (1) AS A TEMPORARY MEASURE, (2) BY ENTERING INTO REVERSE
REPURCHASE AGREEMENTS, AND (3) BY LENDING PORTFOLIO SECURITIES. FOR
PURPOSES OF THIS INVESTMENT LIMITATION, THE PURCHASE OR SALE OF OPTIONS,
FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS, SWAPS,
CAPS, FLOORS, COLLARS AND OTHER SIMILAR FINANCIAL INSTRUMENTS SHALL NOT
CONSTITUTE BORROWING.
The proposed change would make each Fund's limitation on borrowing money
no more restrictive than required by the 1940 Act. The Board of Trustees
believes that changing each Fund's fundamental limitation on borrowing in this
manner will permit other funds managed by the Manager to participate in an
interfund lending program that would be beneficial to the interests of
shareholders of those funds. There is no current intention of the Funds to
change their investment strategies as a result of a change to this restriction
or to participate in an interfund lending program.
PROPOSALS 2(f) AND 5(f): CHANGE IN FUNDAMENTAL POLICY ON CONCENTRATION FOR
THE MONEY MARKET MILEAGE FUND.
The Money Market Mileage Fund currently has a fundamental policy that
provides as follows:
NO FUND MAY INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN THE SECURITIES OF
COMPANIES PRIMARILY ENGAGED IN ANY ONE INDUSTRY (EXCEPT, WITH RESPECT TO
THE MONEY MARKET PORTFOLIO, FOR THE BANKING 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). [Emphasis
added.]
In order to provide the Money Market Mileage Fund with greater flexibility
in its investments, to reflect the continued consolidation in the banking and
financial services industry, and to bring the Fund on par with many other money
market funds, the Board proposes to replace the phrase "banking industry" with
"financial services companies." Thus, the Board proposes that this policy be
changed as follows:
NO FUND MAY INVEST MORE THAN 25% OF ITS TOTAL ASSETS IN THE SECURITIES OF
COMPANIES PRIMARILY ENGAGED IN ANY ONE INDUSTRY (EXCEPT, WITH RESPECT TO
THE MONEY MARKET PORTFOLIO, FOR FINANCIAL SERVICES COMPANIES), PROVIDED
THAT: (i) THIS LIMITATION DOES NOT APPLY TO OBLIGATIONS ISSUED OR
GUARANTEED BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES;
- 17 -
(ii) MUNICIPALITIES AND THEIR AGENCIES AND AUTHORITIES ARE NOT DEEMED TO
BE INDUSTRIES; AND (iii) FINANCIAL SERVICES 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). [Emphasis added.]
For purposes of this policy, financial services companies include banks,
broker-dealers, insurance companies, real estate-related companies and other
companies principally engaged in providing financial services to consumers and
industries.
REQUIRED VOTE
Approval of Proposals 2(a), 2(b), 2(c), 2(d) and 2(e) requires the
affirmative vote of the holders of the LESSER of (1) 67% or more of the shares
of each Fund present at the Meeting, if the holders of more than 50% of the
outstanding Fund shares are present or represented by proxy at the Meeting, or
(2) more than 50% of the outstanding shares of each Fund entitled to vote at the
Meeting.
Approval of Proposals 2(f) and 5(f) requires the affirmative vote of the
holders of the LESSER of (1) 67% or more of the shares of the Money Market
Mileage Fund present at the Meeting, if the holders of more than 50% of the
outstanding Money Market Mileage Fund shares are present or represented by proxy
at the Meeting, or (2) more than 50% of the outstanding shares of the Money
Market Mileage Fund entitled to vote at the Meeting.
Approval of Proposals 5(a), 5(b), 5(c), 5(d) and 5(e) requires the
affirmative vote of the holders of the LESSER of (1) 67% or more of the shares
of each Fund present at the Meeting, if the holders of more than 50% of the
outstanding Fund shares are present or represented by proxy at the Meeting, or
(2) more than 50% of the outstanding shares of each Fund entitled to vote at the
Meeting.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
PROPOSALS 2 AND 5
------------------------------------------
PROPOSAL 3
APPROVAL TO ADOPT AN
AMENDED AND RESTATED DECLARATION OF TRUST
The Board has approved, and recommends that the shareholders of the Trust
approve the adoption of, an Amended and Restated Declaration of Trust in the
form attached to this Proxy Statement as Appendix D ("New Declaration of
Trust"). The New Declaration of Trust has been marked to show changes from the
Trust's existing Amended and Restated Declaration of Trust ("Current Declaration
of Trust").
- 18 -
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts law,
broader authority to act without shareholder approval. This increased
flexibility will, under certain circumstances, allow the Trustees to react more
quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the Funds to operate in a more efficient and economical
manner. Adoption of the New Declaration of Trust will not alter in any way the
Trustees' existing fiduciary obligations to act with due care and in the
shareholders' interests. Before utilizing any new flexibility that the New
Declaration of Trust may afford, the Trustees must first consider the
shareholders' interests and then act in accordance with such interests.
On May 27, 2004, the Trustees approved the form of the New Declaration of
Trust and authorized the submission of the New Declaration of Trust to the
Trust's shareholders for their authorization at this Meeting. The Board finds
that adopting the New Declaration of Trust is in the best interest of
shareholders.
The New Declaration of Trust amends the Current Declaration of Trust in a
number of ways. The following discussion summarizes some of the more noteworthy
amendments to the Current Declaration of Trust effected by the New Declaration
of Trust. IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER
NON-SUBSTANTIVE AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF TRUST
AND THE CURRENT DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE NEW DECLARATION OF TRUST ITSELF, WHICH IS ATTACHED
AS APPENDIX D TO THIS PROXY STATEMENT, MARKED TO REFLECT CHANGES FROM THE
CURRENT DECLARATION OF TRUST.
CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
POWERS OF THE TRUSTEES. The New Declaration of Trust modifies the Current
Declaration of Trust to allow the Trustees, on behalf of the Trust, to borrow
money for temporary or emergency purposes from parties other than a bank. The
Current Declaration of Trust limits this power to borrowing from bank. This
change is intended to enhance the flexibility of the Board to meet its
obligations and is consistent with a certain order issued by the SEC with
respect to an interfund lending program for other funds managed by the Manager.
VOTING POWERS. The New Declaration of Trust modifies the voting powers of
shares. Under the New Declaration of Trust, votes will be counted based upon
their relative value and not on a one share equals one vote basis, which is
currently the standard in the Current Declaration of Trust. In particular, the
New Declaration of Trust provides that "On any matter submitted to a vote of the
Shareholders, each Shareholder shall be entitled to one vote for each dollar of
net asset value (number of Shares owned times net asset value per share) as to
any matter on which it is entitled to vote, and each fractional dollar amount
shall be entitled to a proportionate fractional vote." Each Declaration of Trust
provides for no cumulative voting in the election of Trustees.
The purpose of this recommended change is to allocate voting rights to
correspond more equitably to the value of a shareholder's investment. For
example, currently, a shareholder with $100 invested in a money market fund
likely would have 100 votes because a money market fund typically maintains a
- 19 -
stable $1.00 per share net asset value ("NAV"). In contrast, a shareholder with
$100 invested in a non-money market fund may have substantially fewer votes due
to the higher NAV per share of such funds and the resulting lower number of
shares owned.
QUORUM. The New Declaration of Trust requires that one-third of shares
entitled to vote at a meeting be present in person or by proxy in order to
constitute a quorum. The Current Declaration of Trust requires at least a
majority of those eligible shares be present in person or by proxy to constitute
a quorum. The revised provision decreases the quorum requirement from one-half
to one-third of the shares outstanding. The recommended change does not affect
the percentage required for shareholder approval of matters submitted for a
shareholder vote. The purpose of this recommended change is to provide greater
flexibility and reduce delay and costs that may be incurred with a higher quorum
requirement. This change also would make the quorum provision consistent with
that of the AMR Trust. Notwithstanding the revised provision, for certain
transactions, the 1940 Act establishes minimum quorum requirements. For example,
approval of advisory and management contracts typically requires at least a
majority of eligible shares to be present in person or by proxy in order to
constitute a quorum.
REDEMPTION OF SHARES. The New Declaration of Trust clarifies when the
Trustees may require shareholders to redeem shares. For example, the New
Declaration of Trust clarifies that Trustees may require redemption of shares
(1) to meet customer identification obligations under applicable anti-money
laundering regulations and (2) when a shareholder fails to pay for shares
purchased.
REORGANIZATION OR TERMINATION OF THE TRUST OR ITS SERIES OR CLASSES. The
New Declaration of Trust, like the Current Declaration of Trust, generally
permits the Trustees, subject to applicable federal and state law, to merge,
consolidate, reorganize, reincorporate or terminate all or a portion of the
Trust or any of its Funds or classes through the sale and conveyance of its
assets without shareholder approval. The New Declaration of Trust, however,
clarifies the Trustees' powers with respect to mergers, consolidations,
reorganizations, and terminations. The New Declaration of Trust continues to
provide the Trustees with the flexibility to reorganize all or a portion of the
Trust or any of its Funds or classes and achieve potential shareholder benefits
without incurring the delay and potential costs of a proxy solicitation. Such
flexibility should help to assure that the Trust and its Funds operate under the
most appropriate form of organization.
Regardless of the provisions under the New Declaration of Trust, before
allowing the Trust, a Fund, or class merger, consolidation, reorganization, or
termination to proceed without shareholder approval, the Trustees have a
fiduciary responsibility to first determine that the proposed transaction is in
the shareholders' interest. Any exercise of the Trustees' increased authority
under the New Declaration of Trust is also subject to any applicable
requirements of the 1940 Act and Massachusetts law. Of course, in all cases,
shareholders would receive written notification of any transactions. In certain
instances, notwithstanding the New Declaration of Trust, the 1940 Act may
require shareholder approval of a particular transaction. For example, certain
mergers, consolidations or reorganizations involving affiliated funds may
require shareholder approval pursuant to Rule 17a-8 under the 1940 Act,
notwithstanding the provisions of a fund's organizational documents.
- 20 -
OTHER CHANGES
Other changes to the New Declaration of Trust include:
(1) clarifying that the Trustees may (a) create and establish (and change
in any manner) shares or any funds or classes thereof with such
preferences, voting powers, rights and privileges as the Trustees
may, from time-to-time, (b) determine, divide or combine the shares
or any funds or classes into a greater or lesser number without
thereby changing the proportionate beneficial interests in the funds,
(c) classify or reclassify any issued shares into one or more funds
or classes of shares, (d) abolish any one or more funds or classes of
shares, and (e) take such other action with respect to the shares as
the Trustees may deem desirable;
(2) clarifying that the assets belonging to each particular fund shall be
charged with the liabilities of that fund and all expenses, costs,
charges and reserves attributable to that fund, and that any creditor
of any fund may look only to the assets of that fund to satisfy such
creditor's debt;
(3) clarifying that whenever a vacancy in the Board shall occur, until
such vacancy is filled, or while any Trustee is physically or
mentally incapacitated by reason of disease or otherwise, the other
Trustees shall have all the powers hereunder and the certificate of
the other Trustees of such vacancy or incapacity shall be conclusive;
and
(4) clarifying the powers of the Trustees to: (a) employ certain entities
as custodian of fund assets, consistent with the 1940 Act; (b)
allocate assets, liabilities, and expenses of the Trust among funds
or classes, as appropriate; (c) interpret the investment policies,
practices and limitations of any fund; (d) invest all or a portion of
the assets of any fund in one or more open-end investment companies;
(e) operate as and carry on the business of an investment company and
to exercise all the powers necessary and appropriate to the conduct
of such operations; and (f) in general, to carry on the business of
the Trust.
REQUIRED VOTE
Approval of Proposal 3 requires the vote of a majority of the votes cast
at the Meeting in person or by proxy, provided that a quorum is present.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 3
----------------------
- 21 -
PROPOSAL 6
APPROVAL OF CONVERSION AGREEMENT
FOR AMR TRUST
The Board has approved, and recommends that the shareholders of the Trust
approve, the adoption of a Conversion Agreement, in the form attached to this
Proxy Statement as Appendix E, pursuant to which the AMR Trust (and therefore
the Portfolios) would convert to a Massachusetts business trust ("Conversion").
In approving the Conversion, shareholders also would be approving, in effect, a
new Declaration of Trust for the AMR Trust ("New AMR Trust Declaration"). The
AMR Trust's Board of Trustees elected pursuant to Proposal 4 would become the
Board of Trustees of the New Trust (as defined below), which would adopt and
execute the New AMR Trust Declaration.
The AMR Trust was formed in 1995 as part of the implementation of a
"master-feeder" structure. At that time, the AMR Trust was organized as a New
York common law trust, rather than as a Massachusetts business trust (the
domicile and form for the other trusts in the Fund Complex), due to perceived
federal income tax advantages. Changes to the federal tax law since then have
eliminated the benefits of using the New York common law trust structure.
Accordingly, to help achieve the goal of uniformity across the Fund Complex, to
provide the Trustees with greater flexibility (subject to applicable law) and
broader authority to act without shareholder approval, and to allow the AMR
Trust to operate in a more efficient and economical manner, the Board recommends
that the AMR Trust convert to a Massachusetts business trust. The Board has
determined that the Conversion is in the best interest of the AMR Trust, each
Portfolio, each Fund holding an interest in a Portfolio and, as a result, is in
the best interest of shareholders of that Fund.
The Conversion will only result in a change in form and domicile of the
AMR Trust. It will not result in any change in the name, investment objective,
principal investment strategies, investment advisers, portfolio managers, or
services providers of any Portfolio, all of which remain the same for its
corresponding New Portfolio (as defined below). If the Conversion is approved,
the AMR Trust would be governed by the New AMR Trust Declaration. The New AMR
Trust Declaration is substantially similar to the proposed New Declaration of
Trust for the Trust (as referenced in Proposal 3), except as noted below.
THE FOLLOWING SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO
THE CONVERSION AGREEMENT ITSELF, WHICH IS ATTACHED AS APPENDIX E TO THIS PROXY
STATEMENT, AND THE NEW AMR TRUST DECLARATION ITSELF, WHICH IS ATTACHED AS
APPENDIX F TO THIS PROXY STATEMENT.
CONVERSION AGREEMENT
To accomplish the Conversion, a new "shell" trust ("New Trust") with four
portfolios (each a "New Portfolio") will be organized as a Massachusetts
business trust. If approved, each current Portfolio would transfer all of its
- 22 -
assets to its corresponding New Portfolio, which would assume all of the current
Portfolio's liabilities, in exchange for an interest in the New Portfolio, on a
date (to be determined by the Board and the Manager) as soon as practicable
following approval of the Conversion. Immediately thereafter, each Portfolio
would distribute its interest in the New Portfolio to its interestholders (such
as the Funds) in complete liquidation. Each Portfolio will be terminated as soon
as practicable thereafter. Upon completion of the Conversion, a Fund will hold
an interest in a New Portfolio, equal in net value to the interest it held in
the corresponding Portfolio immediately before the Conversion.
It is anticipated that the Conversion will not be a taxable event, with
the results that (1) no Portfolio, New Portfolio, Fund, shareholder of any Fund,
or any other interestholder in a Portfolio will recognize gain or loss for
federal income tax purposes as a result of the Conversion, (2) a New Portfolio's
tax basis in each asset it receives from a corresponding Portfolio pursuant to
the Conversion will equal that Portfolio's tax basis in that asset immediately
before the Conversion, and (3) a New Portfolio's holding period for each such
asset will include the corresponding Portfolio's holding period therefor. It
also is expected that each New Portfolio will be classified for federal tax
purposes as a partnership, just as each Portfolio currently is.
DECLARATION OF TRUST
The New AMR Trust Declaration is substantially similar to the proposed
declarations of trusts for the other trusts in the Fund Complex (all of which
will be in the form of the New Declaration of Trust), except for those
provisions reflecting the "partnership" features of the AMR Trust such as
allocations of income, deductions, and capital gains and losses, as described
below. Unlike the AMR Trust (and the Portfolios), each Fund is treated as a
corporation for purposes of federal tax purposes, which differs significantly
from partnership treatment. In addition, the New AMR Trust Declaration is
similar to the current Amended and Restated Declaration of Trust ("Current AMR
Trust Declaration") for the AMR Trust, except as described below.
1. COMPARISON OF THE NEW AMR TRUST DECLARATION AGAINST THE CURRENT AMR
TRUST DECLARATION. As mentioned above, the New AMR Trust Declaration is similar
to the Current AMR Trust Declaration, except as described below. In particular,
the New AMR Trust Declaration and the Current AMR Trust Declaration have similar
provisions regarding: (1) liability and indemnification of interestholders and
Trustees; (2) quorum requirements; (3) interestholders meetings; (4) voting; (5)
amendments to the declaration; and (6) liquidation and dissolution.
There are several noteworthy differences between the two declarations.
First, the New AMR Trust Declaration has been formatted and styled in a manner
consistent with the proposed New Declaration of Trust for the Trust. As a
result, the format and style of the New AMR Trust Declaration differs from that
of the Current AMR Trust Declaration. However, the format and style changes are
not substantive and have been included to make the document consistent with
others in the Fund Complex.
Second, the New AMR Trust Declaration would permit the Trustees to effect
mergers, consolidations, reorganizations and similar transactions without
approval of the interestholders of a Portfolio (New Portfolio). As a result,
these types of transactions would not require approval of shareholders of the
corresponding Fund. The Current AMR Trust Declaration does require
- 23 -
interestholder and, thus, shareholder, approval in order to effect these types
of transactions on behalf of the AMR Trust or any of its Portfolios. Under
certain circumstances, it may not be in the interestholders' (and shareholders')
interest to require a meeting (and to incur the related costs) to permit all or
a portion of the AMR Trust, a Portfolio (or New Portfolio) or class to merge,
consolidate, reorganize or reincorporate.
Regardless of the provisions under the New AMR Trust Declaration, before
allowing the New Trust or a New Portfolio, or class to merge, consolidate,
reorganize or reincorporate without interestholder (and shareholder) approval,
the Trustees have a fiduciary responsibility to first determine that the
proposed transaction is in the interestholders' best interest. Any exercise of
the Trustees' increased authority under the New AMR Trust Declaration is also
subject to any applicable requirements of the 1940 Act and Massachusetts law. Of
course, in all cases, affected parties would receive written notification of any
transactions. In certain instances, notwithstanding the New AMR Trust
Declaration, the 1940 Act may require interestholder (and shareholder) approval
of a particular transaction. For example, certain mergers, consolidations or
reorganizations involving affiliated funds may require approval pursuant to Rule
17a-8 under the 1940 Act, notwithstanding the provisions of a fund's
organizational documents.
Third, as described further below, the New AMR Trust Declaration clarifies
certain provisions reflecting the "partnership" features of the AMR Trust such
as allocations of income, deductions and capital gains and losses. However, the
New Trust will operate in the same manner as the AMR Trust with respect to
allocations of income, deductions, capital gains and losses and related matters.
2. COMPARISON OF THE NEW AMR TRUST DECLARATION TO THE PROPOSED NEW
DECLARATION OF TRUST FOR THE TRUST. As mentioned above, the New AMR Trust
Declaration is substantially similar to the proposed New Declaration of Trust
for the Trust referenced in Proposal 3. However, the New AMR Trust Declaration
differs from the Trust's New Declaration of Trust principally with respect to
the inclusion of provisions designed to implement each New Portfolio's federal
tax classification as a partnership. These provisions, which are technical in
nature, describe how a New Portfolio's income, deductions and capital gains and
losses will be allocated among its interestholders, which, in turn, will impact
the Funds holding an interest in that New Portfolio. The New AMR Trust
Declaration also contains certain other provisions designed to comply with the
applicable tax regulations governing partnerships.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 6
---------------------
- 24 -
INFORMATION ON THE TRUST'S INDEPENDENT ACCOUNTANTS
The Trust's financial statements for the fiscal year ended December 31,
2003 were audited by Ernst & Young LLP ("E&Y"), Sears Tower, 233 S. Wacker
Drive, Chicago, Illinois 60606. E&Y has informed the Trust that it has no
material direct or indirect financial interest in any of the Funds and that
investments in the Funds by its personnel and their family members are
prohibited where appropriate to maintaining the auditors' independence. In the
opinion of the Board, the services provided by E&Y are compatible with
maintaining the independence of the auditors. The Board appointed E&Y as the
independent accountants for the Trust for the fiscal year ending December 31,
2004.
Representatives of E&Y are not expected to be present at the Meeting, but
have been given the opportunity to make a statement if they so desire and will
be available should any matter arise requiring their presence.
AUDIT FEES
The aggregate fees billed by E&Y for professional services rendered for
the audit of the Trust's annual financial statements for the fiscal year ended
December 31, 2003, and the review of the financial statements included in the
Trust's annual report to shareholders were $19,257. The aggregate fees billed by
E&Y for professional services rendered for the audit of the Trust's annual
financial statements for the fiscal year ended December 31, 2002, and the review
of the financial statements included in the Trust's annual report to
shareholders were $18,202.
- 25 -
AUDIT-RELATED FEES
E&Y did not receive any fees for the fiscal years ended December 31, 2002
and December 31, 2003 for assurance and related services that are reasonably
related to the performance of the audit of the Trust's financial statements and
not reported above under "Audit Fees."
TAX FEES
The aggregate fees billed by E&Y for the fiscal year ended December 31,
2003 for professional services rendered for tax compliance, tax advice and tax
planning were $3,321. These fees were paid to E&Y for their review of the Funds'
2002 tax returns. The aggregate fees billed by E&Y for the fiscal year ended
December 31, 2002 for professional services rendered for tax compliance, tax
advice and tax planning were $1,954. These fees were paid to E&Y for their
review of the Funds' 2001 tax returns.
ALL OTHER FEES
E&Y did not receive fees for the fiscal years ended December 31, 2002 and
December 31, 2003 for products and services, other than the services reported
above.
PRE-APPROVAL POLICIES AND PROCEDURES
Pursuant to its charter, the Trust's Audit Committee shall have the
following duties and powers pertaining to pre-approval of audit and non-audit
services provided by the Trust's principal independent accountant: (1) approve,
prior to appointment, the engagement of auditors to annually audit and provide
their opinion on the Trust's financial statements, and, in connection therewith,
to review and evaluate matters potentially affecting the independence and
capabilities of the auditors; (2) to approve, prior to appointment, the
engagement of the auditors to provide non-audit services to the Trust, an
investment adviser to any Fund or any entity controlling, controlled by, or
under common control with an investment adviser that provides ongoing services
to the Trust, if the engagement relates directly to the operations and financial
reporting of the Trust; (3) to review the arrangements for and scope of the
annual audit and any special audits; and (4) to review and approve the fees
proposed to be charged to the Trust by the auditors for each audit and non-audit
service.
The Audit Committee has approved none of the fees disclosed above, except
for the "Audit Fees," in reliance on paragraph (c)(7)(i)(C) of Rule 2-01 of the
SEC's Regulation S-X.
AGGREGATE NON-AUDIT SERVICES
The aggregate non-audit fees billed by E&Y during the fiscal year ended
December 31, 2003 for services rendered to the Trust were $3,321. The aggregate
non-audit fees billed by E&Y during the fiscal year ended December 31, 2002 for
services rendered to the Trust were $1,954. E&Y did not render services to the
Manager or any entity controlling, controlled by, or under common control with
the Manager that provided ongoing services to the Trust during the applicable
periods.
- 26 -
SHAREHOLDER PROPOSALS
As a general matter, the Trust does not hold annual or other regular
meetings of shareholders. Shareholders wishing to submit proposals for inclusion
in a proxy statement for a subsequent shareholders' meeting should send their
written proposals to their Fund at 4151 Amon Carter Boulevard, MD 2450, Fort
Worth, Texas 76155 so as to be received a reasonable time before the proxy
solicitation for that meeting is made. Shareholder proposals that are submitted
in a timely manner will not necessarily be included in a Fund's proxy materials.
Inclusion of such proposals is subject to limitations under the federal
securities laws. In addition, the Trust is required to convene a special
shareholders' meeting upon written request for such a meeting by their
respective shareholders owning at least ten percent of their outstanding shares.
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other than
the matters set forth in this Proxy Statement, but should any other matter
requiring a vote of shareholders arise, the proxies will vote thereon according
to their best judgment and in the best interests of the Funds. SHAREHOLDER
REPORTS
The Trust's most recent Annual and Semi-Annual Reports have previously
been sent to shareholders and may be obtained without charge by calling
toll-free 1-800-388-3344 or by writing to the Trust at American AAdvantage
Mileage Funds, 4151 Amon Carter Boulevard, MD 2450, Fort Worth, TX 76155.
Dated: July __, 2004
- 27 -
APPENDIX A
----------
SHARES OF BENEFICIAL INTEREST
(AS OF JUNE 14, 2004)
FUND PLATINUM CLASS MILEAGE CLASS
---- -------------- -------------
Money Market Mileage Fund 423,745,864.300 48,043,205.950
Municipal Money Market Mileage 7,218,749.820 32,431,525.900
Fund
U.S. Government Money Market 7,404,963.770 11,822,308.350
Fund
A-1
APPENDIX B
----------
5% SHAREHOLDERS OF A CLASS OF A FUND
(AS OF JUNE 14, 2004)
MILEAGE CLASS NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES % OF CLASS
- ------------- ------------------------------- ---------------- ----------
Municipal Money Geoffrey Brod 3,115,746.750 9.61%
Market Mileage 41 Woodford Hills Drive
Avon, CT 06001-3925
Municipal Money Coleman M. Brandt & Grace L. Brandt 2,967,897.790 9.15%
Market Mileage 330 W 72nd St. Apt. 10A
New York, NY 10023-2649
U.S. Government Steven D. Blecher 2,034,740.220 17.21%
Money Market 24 Henry St.
Mileage Scarsdale, NY 10583-2602
U.S. Government Seymour Licht, Elaine Licht, Larry 1,443,127.080 12.21%
Money Market Licht, Alysia Krueger
Mileage P.O. Box 4383
Scottsdale, AZ 85261-4383
U.S. Government Nathan Nahmias ttee fbo VanAlden 1,000,587.290 8.46%
Money Market Assoc. Inc. Employee Retirement Trust
Mileage dtd 03/01/78
5011 Roma Ct.
Marina Del Rey, CA 90292-7271
U.S. Government Martin H. Proyect ttee Restated Oso 891,430.790 7.54%
Money Market Loco Tract D Trust u/a 10-14-2002
Mileage 411 Tano Rd.
Santa Fe, NM 87506-7029
B-1
APPENDIX C
----------
NOMINATING COMMITTEE CHARTER
----------------------------
APPENDIX C
----------
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
AMERICAN AADVANTAGE SELECT FUNDS
AMR INVESTMENT SERVICES TRUST
(COLLECTIVELY, THE "FUNDS")
NOMINATING COMMITTEE CHARTER
----------------------------
I. Nominating Committee Membership and Qualifications
The Nominating Committee of the Boards of Trustees (collectively, the
"Boards") of the above-referenced Trusts, shall be composed of all trustees who
are not "interested persons" of the Trust as defined by Section 2(a)(19) of the
Investment Company Act of 1940 ("Disinterested Trustees").
II. Purposes of the Nominating Committee
The purposes of the Nominating Committee are:
(a) to make recommendations regarding the nomination of Disinterested
Trustees to the Board;
(b) to evaluate qualifications of potential "interested" members of the
Board;
(c) to review shareholder recommendations for nominations to fill
vacancies on the Board; and
(d) to make recommendations to the full Board for nomination for
membership on all committees of the Board.
III. Duties and Powers of the Nominating Committee
To carry out its purposes, the Nominating Committee shall have the
following duties and powers:
(a) to evaluate the qualifications of potential Disinterested Trustees,
including their independence from the Funds' investment manager,
principal service providers and other affiliates;
(b) to evaluate the qualifications of potential "interested" members of
the Board and make recommendations to the full Board;
(c) to adopt, if deemed appropriate, specific, minimum qualifications
that the Committee believes a candidate must meet before being
considered as a candidate for Board membership;
(d) to establish policies and procedures for the review of any
shareholder recommendations for nominations to fill vacancies on the
Board;
(e) to make recommendations to the full Board for nomination for
membership on all committees of the Board;
(f) to review as necessary the responsibilities of any committees of the
Board and determine whether there is a continuing need for each
committee, whether there is a need for additional committees of the
Board, and whether committees should be combined or reorganized; and
C-1
(g) to perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the
foregoing.
IV. Operations of the Nominating Committee
(a) The Nominating Committee shall meet at least annually and at such
other times as deemed appropriate by the Committee.
(b) The Nominating Committee shall ordinarily meet in person; however,
members may attend telephonically, and the Committee may act by
written consent, to the extent permitted by law and by the Trusts'
bylaws.
(c) The Nominating Committee shall have the authority to meet privately
and to admit non-members, including members of management, counsel,
advisers and others by invitation.
(d) The Nominating Committee shall have the resources and authority
appropriate to discharge its responsibilities, including authority to
retain special counsel and other experts or consultants at the
expense of the Funds.
(e) The Nominating Committee shall prepare and retain minutes of its
meetings and report its activities to the full Board and make such
recommendations as the Committee may deem necessary or appropriate.
(f) The Nominating Committee may select one of its members to be the
chair and may select a vice chair.
(g) A majority of the members of the Nominating Committee shall
constitute a quorum for the transaction of business at any meeting of
the Committee. The action of a majority of the members of the
Nominating Committee present at a meeting at which a quorum is
present shall be the action of the Committee.
(h) The Board may amend this Charter on its own motion.
(i) The Committee shall review this Charter periodically and recommend
any changes to the full Board.
Dated as of
February 9, 2004
C-2
APPENDIX D
----------
FORM OF AN AMENDED AND RESTATED
-------------------------------
DECLARATION OF TRUST
--------------------
APPENDIX D
----------
AMERICAN AADVANTAGE MILEAGE FUNDS
AMENDED AND RESTATED
--------------------
FORM OF DECLARATION OF TRUST
----------------------------
AMENDED AND RESTATED DECLARATION OF TRUST, made _______, 2004 by each of
the Trustees whose signature is affixed hereto (the "Trustees").
WHEREAS, the declaration of trust for the Trust (as defined below) was
initially made on February 14, 1995, as amended and restated on July 19, 1995
("amended declaration of trust"), in order to establish a trust for the
investment and reinvestment of funds contributed thereto and agreed to manage
all property coming into their hands as trustees of a Massachusetts voluntary
association with transferable Shares in accordance with the provisions
hereinafter set forth; and
WHEREAS, the Trustees desire to further amend and restate the amended
declaration of trust for the sole purpose of supplementing the same to
incorporate amendments duly adopted.
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the Trust hereunder shall be held and managed in trust under this
Amended and Restated Declaration of Trust as herein set forth below.
ARTICLE I
---------
NAME, PRINCIPAL PLACE OF BUSINESS AND DEFINITIONS
-------------------------------------------------
Name
- ----
SECTION 1. This Trust shall be known as the "American AAdvantage Mileage
Funds" and the Trustee(s) shall conduct the business of the Trust under that
name or any other name as they may from time to time determine.
Principal Place of Business
- ---------------------------
SECTION 2. The principal place of business of the Trust shall be 4151 Amon
Carter Boulevard, Fort Worth, Texas 76155.
Resident Agent
- --------------
SECTION 3. The resident agent for the Trust in Massachusetts shall be CT
Corporation, 2 Oliver Street, Boston, Massachusetts, or such other person as the
Trustees may from time to time designate.
Definitions
- -----------
SECTION 4. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(42) of the 1940 Act,
whichever may be applicable) and "Principal Underwriter" shall have the
meanings given them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to the American AAdvantage Mileage Funds;
(c) "Net Asset Value" means the net asset value of each Series or
Class as determined in the manner provided in Article X, Section 3;
(d) "Shareholder" means a record owner of Shares of the Trust;
(e) The "Trustees" refers to the individual trustees in their capacity
as trustees duly elected or appointed and qualified hereunder and serving
as Trustee of the Trust and their successor or successors for the time
being in office as such trustee or trustees;
(f) "Shares" means the equal proportionate, transferable units of
interest into which the beneficial interest of the Trust or each Series
shall be divided from time to time, including such Class or Classes of
Shares as the Trustees may from time to time create and establish and
includes fractions of Shares as well as whole Shares consistent with the
requirements of federal and/or other securities laws;
(g) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time;
(h) "Declaration of Trust" shall mean this Amended and Restated
Declaration of Trust as further amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time
to time;
(j) "Class" refers to the class of Shares of a Series of the Trust
established in accordance with the provisions of Article III;
(k) "Series" refers to any series of Shares of the Trust established
in accordance with the provisions of Article III; and
(l) "Commission" refers to the U.S. Securities and Exchange
Commission.
D-2
ARTICLE II
----------
PURPOSE OF TRUST
----------------
The purpose of this Trust is to provide investors, through one or more
investment portfolios or series or classes thereof as designated by the
Trustees, with a continuous source of managed investments in securities.
ARTICLE III
-----------
BENEFICIAL INTEREST
-------------------
Shares of Beneficial Interest
- -----------------------------
SECTION 1. The Shares of the Trust shall be issued in one or more Series
and/or Classes as the Trustees may, without shareholder approval, authorize.
Each Series shall be preferred over all other series in respect of the assets
allocated to that Series. The beneficial interest in each Series shall at all
times be divided into Shares, with or without par value as the Trustees may
specify, each of which shall represent an equal proportionate interest in the
Series with each other Share of the same Series, none having priority or
preference over another. Each Series shall be represented by one or more Classes
of Shares, with each Class possessing such rights (including, notwithstanding
any contrary provision herein, voting rights) as the Trustees may, without
Shareholder approval, authorize. Shares of each Series, when issued, shall be
fully paid and non-assessable. The number of Shares authorized shall be
unlimited, and the Shares so authorized may be represented in part by fractional
Shares. The Trustees may from time to time, in their sole discretion and without
Shareholder approval: (a) create and establish (and change in any manner) Shares
or any Series or Classes thereof with such preferences, voting powers, rights
and privileges as the Trustees may, from time-to-time, determine; (b) divide or
combine the Shares or any Series or Classes into a greater or lesser number
without thereby changing the proportionate beneficial interests in the Series;
(c) classify or reclassify any issued Shares into one or more Series or Classes
of Shares; (d) abolish any one or more Series or Classes of Shares; and (e) take
such other action with respect to the Shares as the Trustees may deem desirable.
Ownership of Shares
- -------------------
SECTION 2. The ownership of Shares shall be recorded in the books of the
Trust. The Trustees may make such rules as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust shall be
conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by each Shareholder.
Investment in the Trust
- -----------------------
SECTION 3. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. As determined
by guidelines established by the Trustees, such investments may be in the form
of cash or securities in which the Trust (or each designated portfolio or
series) is authorized to invest, valued as provided in Article X, Section 3.
Investments in the Trust shall be credited to each Shareholder's account in the
form of full or fractional Shares at the Net Asset Value per Share next
determined after the investment is received; provided, however, that the
D-3
Trustees may, in their sole discretion: (a) impose a sales charge or other fee
upon investments in the Trust or Series or any Classes thereof; and (b) issue
fractional Shares. The Trustees shall have the right to refuse to accept
investments in the Trust at any time without any cause or reason whatsoever.
Assets and Liabilities of the Series and Classes of the Trust
- -------------------------------------------------------------
SECTION 4. All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series of the Trust. In addition, any
assets, income, earnings, profits and proceeds thereof, funds, or payments not
readily identifiable as belonging to any particular Series or Class, shall be
allocated by the Trustees between and among one or more of the Series or Classes
in such manner as, in their sole discretion, the Trustees deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes and shall be referred to
as assets belonging to that Series or Class. The assets belonging to a
particular Series shall be so recorded upon the books of the Trust and shall be
held by the Trustees in trust for the benefit of the holders of Shares of that
Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses may, in the
Trustees' discretion, be allocated solely to a particular Class and, in which
case, shall be borne by that Class. Any general liabilities, expenses, costs,
charges or reserves of the Trust that are not readily identifiable as belonging
to any particular Series or Class shall be allocated and charged by the Trustees
between or among any one or more of the Series or Classes in such manner as the
Trustees, in their sole discretion, deem fair and equitable and shall be
referred to as "liabilities belonging to" that Series or Class. Each such
allocation shall be conclusive and binding upon the Shareholders of all Series
or Classes for all purposes. Any credit of any Series may look only to the
assets of that Series to satisfy such creditor's debt. No Shareholder or former
Shareholder of any Series shall have a claim on or any right to any assets
allocated or belonging to any other Series.
No Preemptive Rights
- --------------------
SECTION 5. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
Status of Shares and Limitation on Personal Liability
- -----------------------------------------------------
SECTION 6. Shares shall be deemed to be personal property giving only the
rights provided in this Declaration of Trust. Every Shareholder by virtue of
having become a Shareholder shall be held to have expressly assented and agreed
to be bound by the terms hereof. No Shareholder of the Trust and of each Series
shall be personally liable for the debts, liabilities, obligations and expenses
D-4
incurred by, contracted for, or otherwise existing with respect to, the Trust or
by or on behalf of any Series. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust shall include a
recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
----------
THE TRUSTEES
------------
Management of the Trust
- -----------------------
SECTION 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility.
Election of Trustees
- --------------------
SECTION 2. Shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose. A Trustee shall not be required to be a
Shareholder of the Trust.
Term of Office of Trustees
- --------------------------
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided, except: (a) that any
Trustee may resign his or her trust by written instrument signed by him or her
and delivered to the Trust's President or the other Trustees, which resignation
shall take effect upon such delivery or upon such later date as is specified
therein; (b) that any Trustee may be removed at any time by written instrument,
signed by at least two-thirds (2/3) of the number of Trustees prior to such
removal, specifying the date when such removal shall become effective; (c) that
any Trustee who requests in writing to retire or who has become incapacitated by
illness or injury may retire by written instrument signed by a majority of the
other Trustees, specifying the date of his or her retirement; (d) a Trustee may
be removed at any Special Meeting of Shareholders of the Trust by a vote of
two-thirds (2/3) of the outstanding Shares; and (e) every Trustee must resign
his or her position effective no later than the last day of the calendar year in
which such Trustee becomes seventy (70) years of age. Upon the resignation or
removal of a Trustee, or his or her otherwise ceasing to be a Trustee, he or she
shall execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any Trust
property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his or her legal representatives shall
execute and deliver on his or her behalf such documents as the remaining
Trustees shall require as provided in the preceding sentence.
D-5
Resignation and Appointment of Trustees
- ---------------------------------------
SECTION 4. In case any vacancy of a Trustee position shall exist for any
reason, including, but not limited to, declination to assume office, death,
resignation, retirement, removal, or by reason of an increase in the number of
Trustees authorized, the remaining Trustees shall fill such vacancy by
appointing such other person as they in their discretion shall see fit,
consistent with the limitations under the 1940 Act. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in office
or by recording in the records of the Trust, whereupon the appointment shall
take effect. An appointment of a Trustee may be made by the Trustees then in
office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he or she shall
be deemed a Trustee hereunder. The power of appointment of Trustees is subject
to the provisions of Section 16(a) of the 1940 Act.
Temporary Absence of Trustee
- ----------------------------
SECTION 5. Any Trustee may, by power of attorney, delegate his or her power
for a period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder, except as herein otherwise expressly
provided.
Number of Trustees
- ------------------
SECTION 6. The number of Trustees serving hereunder at any time shall be
determined by the Trustees themselves and shall not be less than three (3) nor
more than twelve (12).
Effect of Death, Resignation, Etc. of a Trustee
- -----------------------------------------------
SECTION 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy
is filled, or while any Trustee is physically or mentally incapacitated by
reason of disease or otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy or
incapacity shall be conclusive.
Ownership of Trust Assets
- -------------------------
SECTION 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees or any successor Trustees. All of the assets of the Trust shall
at all times be considered as vested in the Trustees. No Shareholder shall be
D-6
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
---------
POWERS OF THE TRUSTEES
----------------------
Powers
- ------
SECTION 1. The Trustees, in all instances, shall act as principals and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust. Except as otherwise provided herein
or in the 1940 Act, the Trustees shall not in any way be bound or limited by
present or future laws or customs in regard to trust investments, but shall have
full authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of this
Trust. Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property and to hold cash or
other property uninvested, without in any event being bound or limited by
any present or future law or custom in regard to investments by Trustees,
and to sell, exchange, lend, pledge, mortgage, hypothecate write options on
and lease any or all of the assets of the Trust; to purchase and sell
options on securities, currencies, indices, futures contracts and other
financial instruments and enter into closing transactions in connection
therewith; to enter into all types of commodities contracts, including,
without limitation, the purchase and sale of futures contracts and forward
contracts on securities, indices, currencies and other financial
instruments; to engage in forward commitment, "when issued" and delayed
delivery transactions; to enter into repurchase agreements and reverse
repurchase agreements; and to employ all types of hedging techniques and
investment management strategies.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that the rights of amendment and repeal are not
reserved to Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ a bank, a company that is a member of a national
securities exchange, a trust company or such other entity permitted under
the 1940 Act as custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or
both.
D-7
(f) To provide for the distribution of interests of the Trust either
through a Principal Underwriter in the manner hereinafter provided for or
by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided.
(h) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, custodian
or underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XII, section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form; or in its
own name or in the name of a custodian or a nominee or nominees, subject in
whichever case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies.
(m) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern; and to pay
calls or subscriptions with respect to any security held in the Trust.
(n) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(o) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided.
(p) To borrow money for temporary or emergency purposes and not for
investment purposes. The Trustees shall not pledge, mortgage or hypothecate
the assets of the Trust except that, to secure borrowings, the Trustees may
pledge securities.
(q) To establish, from time to time, a minimum total investment for
Shareholders, and to require redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
D-8
Shareholder. No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order.
(r) To retain an administrator, manager, investment advisers and/or
investment subadvisers.
(s) To establish separate and distinct Series of Shares with
separately defined investment objectives, policies and purposes, and to
allocate assets, liabilities and expenses of the Trust to a particular
Series of Shares or to apportion the same among two or more Series,
provided that any liability or expense incurred by a particular Series of
Shares shall be payable solely out of the assets of that Series.
(t) To establish separate and distinct Classes of Shares for one or
more Series, with each Class having such rights and differences as
determined by the Trustees.
(u) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or managers,
Principal Underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, Principal Underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability.
(v) To allocate assets, liabilities, and expenses of the Trust to a
particular Series or Class, as appropriate, or to apportion the same among
two or more Series or Classes, as appropriate, provided that any
liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series as provided for
in Article III.
(w) To interpret the investment policies, practices and limitations of
any Series.
(x) Notwithstanding any other provision hereof, to invest all or a
portion of the assets of any Series in one or more open-end investment
companies, including investment by means of transfer of such assets in
exchange for an interest or interests in such investment company or
companies or by any other method approved by the Trustees.
D-9
(y) To operate as and carry on the business of an investment company
and to exercise all the powers necessary and appropriate to the conduct of
such operations.
(z) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purpose or the attainment
of any object or the furtherance of any power hereinbefore set forth,
either alone or in association with others, and to do every other act or
thing incidental or appurtenant to or growing out of or connected with the
aforesaid business or purposes, objects or powers.
Trustees and Officers as Shareholders
- -------------------------------------
SECTION 2. Subject only to the general limitations herein contained as to
the sale and purchase of Trust Shares and any restrictions that may be contained
in the Bylaws:
(a) Any Trustee, officer or other agent of the Trust may acquire, own
and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent;
(b) The Trustees may issue and sell or cause to be issued and sold
Shares to (and buy such Shares from) any such person or firm or company in
which such person is interested.
Action by the Trustees
- ----------------------
SECTION 3. Except as otherwise provided herein or in the 1940 Act, the
Trustees shall act by majority vote at a meeting duly called or by unanimous
written consent without a meeting or by telephone consent provided a quorum of
Trustees participate in any such telephonic meeting, unless the 1940 Act
requires that a particular action be taken only at an in-person meeting of the
Trustees. At any meeting of the Trustees, a majority of the Trustees shall
constitute a quorum. Meetings of the Trustees may be called orally or in writing
by the Chairman of the Trustees or by any two other Trustees. Notice of the
time, date and place of all meetings of the Trustees shall be given to each
Trustee as provided in the Bylaws.
Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who executes a written waiver of notice with
respect to the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any one of their number the authority
to approve particular matters or take particular actions on behalf of the Trust.
Written consents or waivers of Trustees may be executed in one or more
counterparts. Execution of a written consent or waiver and delivery thereof to
the Trust may be accomplished by facsimile or other electronic means including,
but not limited to, electronic mail.
Chairman of the Trustees
- ------------------------
SECTION 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees and to perform such duties as the Trustees may designate.
D-10
ARTICLE VI
----------
EXPENSES OF THE TRUST
---------------------
Payment of Expenses by the Trust
- --------------------------------
SECTION 1. Subject to the provisions of Article III, Section 4, the
Trustees are authorized to have paid from the Trust estate or the assets
belonging to the appropriate Series, as they deem fair and appropriate, for
expenses and disbursements, including, without limitation, fees and expenses of
Trustees who are not Interested Persons of the Trust, interest expenses, taxes,
fees and commissions of every kind, expenses of pricing Trust portfolio
securities, expenses of issue, repurchase and redemption of Shares including
expenses attributable to a program of periodic repurchases or redemptions,
expenses of registering and/or qualifying the Trust and its Shares under federal
and state laws and regulations, expenses of rating the Trust by independent
rating services, charges of investment advisers, managers, administrators,
custodians, transfer agents, and registrars, expenses of preparing and setting
up in type Prospectuses and Statements of Additional Information, expenses of
printing and distributing Prospectuses sent to existing Shareholders, auditing
and legal expenses, reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expenses, association
membership dues and for such non-recurring items as may arise, including
litigation to which the Trust is a party, and for all losses and liabilities
from them incurred in administering the Trust, and for the payment of such
expenses, disbursements, losses and liabilities the Trustees shall have a lien
on the assets belonging to the appropriate Series prior to any rights or
interests of the Shareholders thereto. This section shall not preclude the Trust
from directly paying any of the aforementioned fees and expenses.
ARTICLE VII
-----------
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
------------------------------------------------------------
Investment Adviser
- ------------------
SECTION 1. Subject to the applicable requirements of the 1940 Act, as
modified by or interpreted by any applicable order of the Commission or any
rules or regulations adopted or interpretative releases of the Commission
thereunder, the Trustees may, in their discretion from time to time, enter into
an investment advisory or similar contract(s) with respect to the Trust or any
Series thereof whereby the other party(ies) to such contract(s) shall undertake
to furnish the Trustees such management, investment advisory, statistical and
research facilities and services and such other facilities and services, if any,
and all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration of Trust, the
Trustees may authorize the investment adviser(s) (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities and other investment
instruments of the Trust on behalf of the Trustees or may authorize any officer,
agent, or Trustee to effect such purchases, sales or exchanges pursuant to
recommendations of the investment adviser (and all without further action by the
Trustees). Any such purchases, sales and exchanges shall be deemed to have been
authorized by all of the Trustees.
D-11
The Trustees may, subject to applicable requirements of the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretative releases of the Commission
thereunder, including those relating to Shareholder approval, authorize the
investment adviser to employ one or more subadvisers from time to time to
perform such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser and
subadviser.
Notwithstanding any contrary provisions herein, the Trustees can enter into
investment advisory or investment subadvisory contracts without Shareholder
approval permitted by an exemptive order of the Commission or similar relief
granted by the Commission or its staff, including a staff no-action position.
Principal Underwriter
- ---------------------
SECTION 2. The Trustees may in their discretion from time to time enter
into a contract(s) on behalf of the Trust or any Series of the Trust providing
for the sale of the Shares, whereby the Trust may either agree to sell the
Shares to the other party to the contract or appoint such other party its sales
agent for such Shares. In either case, the contract shall be on such terms and
conditions as may be prescribed in the Bylaws, if any, and such further terms
and conditions as the Trustees may in their discretion determine to be not
inconsistent with the provisions of this Article VII or of the Bylaws, if any;
and such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust. Alternatively, or in addition
thereto, the Trust can directly distribute its Shares and, if necessary in
connection with such distribution, register as a broker-dealer in appropriate
jurisdictions. The Trustees may in their discretion adopt a plan or plans of
distribution and enter into any related agreements whereby the Trust finances
directly or indirectly any activity that is primarily intended to result in
sales of Shares.
Transfer Agent
- --------------
SECTION 3. The Trustees may, in their discretion from time to time, enter
into transfer agency and Shareholder service contracts whereby the other party
shall undertake to furnish the Trust with transfer agency and Shareholder
services. The contracts shall be on such terms and conditions as the Trustees
may in their discretion determine are not inconsistent with the provisions of
this Declaration of Trust or of the Bylaws, if any. Such services may be
provided by one or more entities including one or more agents of such parties.
Parties to Contract
- -------------------
SECTION 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such
agreement shall be invalidated or rendered voidable by reason of the existence
of any relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
D-12
or by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article VII
or the Bylaws, if any. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to contracts entered
into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may
be financially interested or otherwise affiliated with persons who are parties
to any or all of the contracts mentioned in this Section 4.
Provisions and Amendments
- -------------------------
SECTION 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of Section
15 of the 1940 Act, as modified by or interpreted by any applicable order or
orders of the Commission or any rules or regulations adopted or interpretative
releases of the Commission, with respect to its continuance in effect, its
termination, and the method of authorization and approval of such contract or
renewal or amendment thereof.
ARTICLE VIII
------------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Voting Powers
- -------------
SECTION 1. The Shareholders shall have power to vote: (a) for the election
of Trustees as provided in Article IV, Section 2; (b) for the removal of
Trustees as provided in Article IV, Section 3(d); (c) with respect to any
investment advisory or subadvisory contract to the extent provided in Sections 1
and 5 of Article VII; (d) with respect to the amendment of this Declaration of
Trust as provided in Article XII, Section 7; (e) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or not a
court action, proceeding or claim should be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, provided,
however, that a Shareholder of a particular Series or Class shall not be
entitled to bring any derivative or class action on behalf of any other Series
or Class of the Trust; and (f) with respect to such additional matters relating
to the Trust as may be required or authorized by law, by this Declaration of
Trust, or the Bylaws of the Trust if any, or any registration and/or
qualification of the Trust with the Commission or any state, as the Trustees may
consider desirable.
On any matter submitted to a vote of the Shareholders, each Shareholder
shall be entitled to one vote for each dollar of net asset value (number of
Shares owned times net asset value per share) as to any matter on which the
Shareholder is entitled to vote, and each fractional dollar amount shall be
entitled to a proportionate fractional vote. There shall be no cumulative voting
in the election of Trustees. Shares may be voted in person or by proxy. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required or permitted by law, this Declaration of Trust or any
Bylaws of the Trust to be taken by Shareholders.
D-13
Meetings
- --------
SECTION 2. Special meetings of the Shareholders may be called by the
Trustees and may be held at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings also shall be called by
the Trustees for the purpose of removing one or more Trustees upon the written
request for such a meeting by Shareholders owning at least 10 percent of the
outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting
the qualifications set forth in Section 16(c) of the 1940 Act, as the same may
be amended from time to time or modified by or interpreted by any applicable
order or orders of the Commission or any rules or regulations adopted or
interpretative releases of the Commission, seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on such
a request for a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to the list of
the Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record. Shareholders shall be entitled to at least 15 days'
notice of any meeting.
Quorum and Required Vote
- ------------------------
SECTION 3. Holders of at least one-third (1/3) of the Shares entitled to
vote in person or by proxy shall constitute a Quorum for the transaction of
business at a Shareholders' meeting, except as may otherwise be required by the
1940 Act, other applicable law, this Declaration of Trust or the Bylaws. Where
any provision of law or of this Declaration of Trust or the Bylaws permits or
requires that holders of any Series or Class shall vote as a Series or Class
then holders of at least one-third (1/3) of the aggregate number of Shares of
that Series or Class entitled to vote shall be necessary to constitute a quorum
for the transaction of business by that Series or Class, except as may otherwise
be required by the 1940 Act, other applicable law, this Declaration of Trust or
the Bylaws. Any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after the
date set for the original meeting, without the necessity of further notice.
Except when a larger vote is required by any provision of this Declaration of
Trust, the Bylaws or law, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
where any provision of law or of this Declaration of Trust permits or requires
that the holders of any Series or Class shall vote as a Series or Class, then a
majority of the Shares of that Series or Class voted on the matter shall decide
that matter insofar as that Series or Class is concerned. Shareholders may act
by unanimous written consent. Actions taken by a Series or Class may be
consented to unanimously in writing by Shareholders of that Series or Class.
ARTICLE IX
----------
CUSTODIAN
---------
Appointment and Duties
- ----------------------
SECTION 1. The Trustees shall at all times employ a bank, a company that is
a member of a national securities exchange, trust company, or other entity
permitted under the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Commission or any rules or regulations adopted or
D-14
interpretative releases of the Commission thereunder, having capital, surplus
and undivided profits of at least two million dollars ($2,000,000), or such
other amount as shall be allowed by the Commission or by the 1940 Act, as
custodian on such basis of compensation as may be agreed upon between the
Trustees and the custodian. The custodian shall have authority as agent for the
Trust, but subject to such restrictions, limitations and other requirements, if
any, as may be contained in the Bylaws of the Trust:
(a) to hold the securities owned by the Trust and deliver the same
upon written order or oral order, if confirmed in writing, or by such
electronic means as are agreed to by the Trust and the custodian;
(b) to receive and receipt for any moneys due to the Trust and deposit
the same in its own banking department or elsewhere as the Trustees may
direct;
(c) to disburse such funds upon orders or vouchers;
(d) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(e) to compute, if authorized to do so by the Trustees, the Trust's
Net Asset Value in accordance with the provisions hereof.
If so directed by a Majority Shareholder Vote, the custodian shall
deliver and pay over all property of the Trust held by it as specified in such
vote.
Employment of Sub-Custodian
- ---------------------------
SECTION 2. The Trustees may also authorize the custodian to employ one or
more sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be (a) a bank, a company
that is a member of a national securities exchange, trust company or other
entity permitted under the 1940 Act, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or regulations adopted
or interpretative releases of the Commission thereunder, having capital, surplus
and undivided profits of at least two million dollars ($2,000,000) or such other
amount as shall be allowed by the Commission or by the 1940 Act, or (b) an
eligible foreign custodian in accordance with Rule 17f-5 under the 1940 Act or
any such applicable successor regulation.
Central Depository System
- -------------------------
SECTION 3. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may direct the custodian to deposit all or any part of
the securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
D-15
Exchange Act of 1934, as amended, or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act as from time to
time amended, pursuant to which system all securities of any particular class of
any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities; provided that all such deposits shall be subject to withdrawal only
upon the order of the Trust or its custodian, sub-custodians, or other
authorized agents.
ARTICLE X
---------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
Distributions
- -------------
SECTION 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in the
discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by
the laws of Massachusetts, at any time to declare and cause to be paid
dividends on Shares from assets of a particular Series, which dividends and
other distributions, at the election of the Trustees, may be paid daily or
otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, and may be
payable in Shares at the election of each Shareholder. All dividends and
other distributions on Shares of a particular Series shall be distributed
pro rata to the holders of that Series in proportion to the number of
Shares of that Series held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that
such dividends and other distributions shall appropriately reflect expenses
allocated to a particular Class of such Series.
(c) Anything in this Declaration of Trust to the contrary
notwithstanding, the Trustees may at any time declare and distribute pro
rata among the Shareholders a "stock dividend."
Redemptions
- -----------
SECTION 2. In case any Shareholder of record of a particular Series or
Class of a Series desires to dispose of its Shares, the Shareholder may deposit
at the office of the transfer agent or other authorized agent of the Trust a
written request or such other form of request, including, but not limited to,
electronic mail, as the Trustees may from time to time authorize, requesting
that the Trust purchase the Shares in accordance with this Section 2; and the
Shareholder so requesting shall be entitled to require the Series to purchase,
and the Trust or the Principal Underwriter of the Trust shall purchase, said
Shares, but only at the Net Asset Value thereof (as described in Section 3 of
this Article X) less such charges as are determined by the Trustees and
described in the Trust's Registration Statement under the Securities Act of
1933, as amended, or any Prospectus or Statement of Additional Information
D-16
contained therein, as supplemented. The Series shall make payment for any such
Shares to be redeemed, as aforesaid, in cash to the extent required by federal
law, and securities from the assets of that Series, and payment for such Shares
shall be made by the Series or the Principal Underwriter to the Shareholder of
record within seven (7) days after the date upon which the request is effective
or as otherwise determined by the Trustees. If Shares being redeemed have been
purchased by check, the Series may postpone payment until the Trust has
assurance that good payment has been collected for the purchase of the Shares.
The Trust may require Shareholders to pay a sales charge to the Trust, the
Principal Underwriter, or any other person designated by the Trustees upon
redemption or repurchase of Shares or any Series or Class in such amount as
shall be determined from time to time by the Trustees. The amount of such sales
charge may, but need not, vary depending on various factors including, without
limitation, the holding period of the redeemed or repurchased Shares. The
Trustees may also charge a redemption or repurchase fee in such amount as may be
determined from time to time by the Trustees.
Determination of Net Asset Value and Valuation of Portfolio Assets
- ------------------------------------------------------------------
SECTION 3. The term "Net Asset Value" of any Series or Class shall mean
that amount by which the assets of that Series or Class exceed its liabilities,
all as determined by or under the direction of the Trustees. Such value per
Share shall be determined separately for each Series or Class of Shares and
shall be determined on such days and at such times as the Trustees may
determine. Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such securities;
and with respect to other securities and assets, at the fair value as determined
in good faith by the Trustees, provided, however, that the Trustees, without
Shareholder approval, may alter the method of appraising portfolio securities
insofar as permitted under the 1940 Act and the rules, regulations and
interpretations thereof promulgated or issued by the Commission or insofar as
permitted by any order of the Commission. The Trustees may delegate any powers
and duties under this Section 3 with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the value per Share last
determined to be determined again in similar manner and may fix the time when
such redetermined value shall become effective.
Suspension of the Right of Redemption
- -------------------------------------
SECTION 4. The Trustees may declare a suspension of the right of redemption
or postpone the date of payment to the extent as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall specify but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment until the Trustees shall declare the suspension at an end. In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his or her request for redemption or receive payment based on the Net
Asset Value per Share existing after the termination of the suspension. In the
event that any Series is divided into Classes, the provisions of this Section,
to the extent applicable as determined in the discretion of the Trustees and
consistent with applicable law, may be equally applied to each such Class.
D-17
Required Redemptions
- --------------------
SECTION 5. The Trustees may require Shareholders to redeem Shares for any
reason under terms set by the Trustees, including, but not limited to, (a) the
failure of a Shareholder to supply a tax identification or similar number if
required to do so, (b) the failure of a Shareholder to pay when due for the
purchase of Shares issued to him, or (c) the failure to maintain a minimum
account balance as may be established by the Trustees. The redemption shall be
effected at the redemption price and in the manner provided in this Article X.
The holders of Shares shall upon demand disclose in writing such
information with respect to direct and indirect ownership of Shares as may be
necessary to comply with the provisions of the Code, or to comply with the
requirements of any other taxing authority.
ARTICLE XI
----------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
Limitation of Liability
- -----------------------
SECTION 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
neglect or wrongdoing of them or any officer, agent, employee or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Indemnification
- ---------------
SECTION 2.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by law
against liability and against all expenses reasonably incurred or paid
by him or her in connection with any claim, action, suit or proceeding
in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been a Trustee or officer and against
amounts paid or incurred by him or her in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
D-18
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office or (B) not to have acted in good faith in the
reasonable belief that his or her action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office: (A) by the court
or other body approving the settlement; (B) by at least a majority of
those Trustees who are neither interested persons of the Trust nor are
parties to the matter based upon a review of readily available facts
(as opposed to a full trial-type inquiry); or (C) by written opinion
of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry); provided, however,
that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees, or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has ceased
to be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 2 may be paid by the Trust from time to
time prior to final disposition thereof upon receipt of an undertaking by
or on behalf of such Covered Person that such amount will be paid over by
him to the Trust if it is ultimately determined that he or she is not
entitled to indemnification under this Section 2; provided, however, that:
(i) such Covered Person shall have provided appropriate security
for such undertaking,
(ii) the Trust is insured against losses arising out of any such
advance payments or
(iii) either a majority of Trustees who are neither interested
persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a
review of readily available facts (as opposed to a trial type inquiry
or full investigation), that there is reason to believe that such
Covered Person will be found entitled to indemnification under this
Section 2.
D-19
Shareholders
- ------------
SECTION 3. In case any Shareholder or former Shareholder of the Trust shall
be held to be personally liable solely by reason of his or her being or having
been a Shareholder and not because of his acts or omissions or for some other
reason the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets belonging to the applicable Series to be held harmless from and
indemnified against any loss and expense arising from such liability. The
applicable Series shall, upon request by the Shareholder, assume the defense of
any claim made against the Shareholder for any act or obligation of the Trust
and satisfy any judgment thereon.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
Trust Not A Partnership
- -----------------------
SECTION 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to bind
personally either the Trust's officers or any Shareholder. All persons extending
credit to, contracting with or having any claim against the Trust or the
Trustees shall look only to the assets of the Trust or of such Series for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of their agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which the Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee hereunder.
Trustee's Good Faith Action, Expert Advice, No Bond or Surety
- -------------------------------------------------------------
SECTION 2. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Section 1 of this Article XII and to Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1 of this
Article XII and to Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
D-20
Establishment of Record Dates
- -----------------------------
SECTION 3. The Trustees may close the stock transfer books of the Trust for
a period not exceeding 60 days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding 60 days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect as a record date
for the determination of the Shareholders entitled to notice of, and to vote at,
any such meeting or entitled to receive payment of any such dividend, or to any
such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of Shares, and in such case such Shareholders and
only such Shareholders as shall be Shareholders of record on the date so fixed
shall be entitled to such notice of, and to vote at such meeting, or to receive
payment of such dividend, or to receive such allotment or rights, or to exercise
such rights as the case may be, notwithstanding any transfer of any Shares on
the books of the Trust after any such record date fixed as aforesaid.
Termination of Trust, a Series or a Class
- -----------------------------------------
SECTION 4.
(a) This Trust shall continue without limitation of time but subject
to the provisions of paragraphs (b) and (c) of this Section 4.
(b) Subject to a Majority Shareholder Vote, the Trustees may:
(i) sell and convey through merger, consolidation, reorganization
or otherwise the assets of the Trust, a Series or a Class or Classes
to another trust, partnership, association or corporation organized
under the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act for adequate
consideration which may include the assumption of all outstanding
obligations, taxes and other liabilities accrued or contingent, of the
Trust and which may include shares of beneficial interest or stock of
such trust, partnership, association or corporation; or
(ii) at any time sell and convert into money all of the assets of
the Trust, a Series or Class, as appropriate.
Upon making provision for the payment of all such liabilities pursuant
to either clause (i) or (ii), by such assumption or otherwise, the
Trustees shall distribute the remaining proceeds or assets (as the
case may be) ratably among the Shareholders or any affected Series
then outstanding; however, the payment to any particular Class within
such Series may be reduced by any fees, expenses or charges allocated
to that Class. Nothing in this Declaration of Trust shall preclude the
D-21
Trustees from distributing such remaining proceeds or assets so that
holders of the Shares of a particular Class of the Trust or any
affected Series receive as their ratable distribution Shares solely of
an analogous class, as determined by the Trustees of such series,
trust, partnership, association or corporation.
(c) The Trustees may take any of the actions specified in
clauses (i) and (ii) of Section 4(b) above without obtaining a Majority
Shareholder Vote of any Series or Class or of the Trust, except as
otherwise required under the 1940 Act, if a majority of the Trustees
makes a determination that the continuation of a Series or Class or the
Trust is not in the best interest of such Series or Class or the Trust
or their respective Shareholders as a result of factors or events
adversely affecting the ability of such series or class or the Trust to
conduct its business and operations in an economically viable manner;
or that a merger, consolidation, reorganization or similar transaction
is in the best interest of the Series, Class or of the Trust, as
appropriate. Such factors and events may include the inability of a
Series, a Class or the Trust to maintain its assets at an appropriate
size, changes in law or regulations governing the Series or Class, or
the Trust or affecting assets of the type in which such Series or
Class, or the Trust invests, or economic developments or trends having
a significant adverse impact on the business or operations of such
Series, Class, or the Trust.
(d) Upon completion of the distribution of the remaining
assets as provided in paragraphs (b) and (c), the Trust, Series or
Class, as appropriate, shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder and
the right, title and interest of all parties shall be canceled and
discharged.
Filing of Copies, References, Headings
- --------------------------------------
SECTION 5. The original or a copy of this instrument and of each
Declaration of Trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument
and of each supplemental declaration of trust shall be filed by the Trustees
with the Secretary of the Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer or Trustee of the Trust as to whether or not any such supplemental
declarations of trust have been made and as to any matters in connection with
the Trust hereunder, and with the same effect as if it were the original may
rely on a copy certified by any officer or Trustee of the Trust to be a copy of
this instrument or of any such supplemental declaration of trust. In this
instrument or in any such supplemental declaration of trust, references to this
instrument, and the expressions "herein," "hereof" and "hereunder," shall be
deemed to refer to this instrument as amended or affected by any such
supplemental declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts each of which shall be deemed an original.
D-22
Applicable Law
- --------------
SECTION 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust.
Amendments
- ----------
SECTION 7. This instrument can be amended, supplemented or restated by
a majority vote of the Trustees. Amendments, supplements or restatements having
the purpose of materially decreasing the rights of Shareholders in regard to
liability and indemnification, as set forth in Article III Section 6 and Article
XI Section 3, respectively, shall require a Majority Shareholder Vote. Copies of
the amended, supplemented or restated Declaration of Trust shall be filed as
specified in Section 5 of this Article XII.
Fiscal Year
- -----------
SECTION 8. The fiscal year of the Trust shall end on a specified date
as determined by the Trustees; provided, however, that the Trustees may, without
Shareholder approval, change the fiscal year of the Trust.
Use of the Words "American AAdvantage" and "American Airlines"
- --------------------------------------------------------------
SECTION 9. AMR Corporation has consented to the use by the Trust of the
identifying words "American AAdvantage Mileage Funds." Such consent is
conditioned upon the employment of AMR Investment Services, Inc., its successors
or its affiliated companies as investment adviser or manager of the Trust. As
between the Trust and itself, AMR Corporation controls the use of the name of
the Trust insofar as such name contains the identifying words "American
AAdvantage Mileage Funds." AMR Corporation may from time to time use the
identifying words "American AAdvantage Mileage Funds" in other connections and
for other purposes, including, without limitation, in the names of other
corporations or businesses which it may manage, advise, sponsor or own, or in
which it may have a financial interest. AMR Corporation may require the Trust to
cease using the identifying words "American AAdvantage Mileage Funds" in the
name of the Trust if the Trust ceases to employ AMR Investment Services, Inc. or
another subsidiary or affiliate of AMR Corporation as investment adviser or
manager.
Notice to other Parties
- -----------------------
SECTION 10. Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or officer shall
give notice that this Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
D-23
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually but
are binding only upon the assets and property of the Trust, and may contain such
further recital as he and she or they may deem appropriate, but the omission
thereof shall not operate to bind any Trustees or Trustee or officers or officer
or Shareholders or Shareholder individually.
Provisions in Conflict with Law or Regulations
- ----------------------------------------------
SECTION 11.
(a) The provisions of this Declaration of Trust are severable,
and, if the Trustees shall determine, with the advice of counsel, that
any of such provisions is in conflict with the 1940 Act, Part I of
Subchapter M of Chapter 1 of the Code or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of this Declaration of Trust; provided, however,
that such determination shall not affect any of the remaining
provisions of this Declaration of Trust or render invalid or improper
any action taken or omitted prior to such determination.
(b) If any provision of this Declaration of Trust shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any
other jurisdiction or any other provision of this Declaration of Trust
in any jurisdiction.
D-24
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of
American AAdvantage Mileage Funds, have executed this instrument.
[INSERT TRUSTEE SIGNATURES]
D-25
APPENDIX E
----------
FORM OF CONVERSION AGREEMENT
----------------------------
APPENDIX E
----------
FORM OF CONVERSION AGREEMENT
----------------------------
This Agreement is dated as of _______, 2004, among AMR INVESTMENT
SERVICES TRUST, a New York common law trust ("OLD TRUST"), AMR INVESTMENT
SERVICES TRUST, a Massachusetts business trust ("NEW TRUST"), and AMR INVESTMENT
SERVICES, INC. ("ADVISER").
Old Trust is a New York common law trust registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended ("1940 ACT"), consisting of four segregated portfolios of assets
("series") listed on Schedule A hereto ("OLD PORTFOLIOS"). The parties wish to
effect the conversion of Old Trust to New Trust, a recently organized
Massachusetts business trust that consists of the four series listed on Schedule
A ("NEW PORTFOLIOS"; and together with the Old Portfolios, "PORTFOLIOS"), and
thereby to convert each Old Portfolio to the identically named New Portfolio
(each such Old Portfolio and New Portfolio being "corresponding" Portfolios),
through the transactions described below. Each New Portfolio will have the same
investment objective and policies as its corresponding Old Portfolio. (For
convenience, the balance of this Agreement will refer only to a single
Conversion (as defined below), one Old Portfolio, and one New Portfolio, but the
terms and conditions hereof shall apply separately to each Conversion and the
corresponding Portfolios participating therein.)
The Adviser serves as Old Trust's investment adviser and will serve as
New Trust's investment adviser. It is a party to this Agreement solely for the
purpose of making the representations in paragraph 5.
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. THE CONVERSION.
(a) Subject to the terms and conditions hereof and on the basis of and
in reliance on the covenants, agreements, representations, and warranties set
forth herein, as of 12:01 A.M. (Central Time) on _________, 2004 ("TRANSFER
TIME"), (1) Old Portfolio shall transfer all its Assets (as defined below) to
New Portfolio, (2) New Portfolio shall assume all of Old Portfolio's Liabilities
(as defined below), (3) New Portfolio shall issue to Old Portfolio interests in
New Portfolio having an aggregate net asset value equal to the fair market value
of each Asset as of the close of regular trading on the New York Stock Exchange
(currently 4:00 P.M. Eastern Time) on the last business day before the Transfer
Time ("VALUATION TIME"), determined according to the policies set forth in Old
Trust's registration statement, less the amount of the Liabilities ("NEW
PORTFOLIO INTERESTS"), and (4) immediately thereafter Old Portfolio shall
distribute the New Portfolio Interests to the holders of interests in Old
Portfolio ("OLD PORTFOLIO INTERESTS") ("INTERESTHOLDERS") in complete
liquidation thereof. (All such transactions are referred to herein as a
"CONVERSION.") No brokerage commissions, fees (except for customary transfer
fees), or other remuneration will be paid by Old Trust or New Trust in
connection with the transactions contemplated hereby.
(b) The distribution referred to in paragraph (a)(4) shall be
accomplished as follows. The Adviser shall deliver to New Trust a certificate
specifying each Interestholder's name, address, taxpayer identification number,
and proportionate Old Portfolio Interest. On receipt thereof, a capital account
on New Trust's records shall be established in the name of each Interestholder
in accordance with New Trust's Declaration of Trust and shall be credited with
the respective New Portfolio Interest to which such Interestholder is entitled.
(c) As a result of the Conversion, New Trust will succeed to Old
Trust's registration as an open-end management investment company under the 1940
Act.
2. ASSETS AND LIABILITIES.
(a) "ASSETS" shall mean all cash, cash equivalents, securities (except
as provided below), receivables (including interest and dividends receivable),
claims or rights of action (except for all rights, interests, and claims of Old
Portfolio or any of its Interestholders under this Agreement), rights to
register shares under applicable securities laws, and other property owned by
Old Portfolio and shown as assets on its books as of the Valuation Time.
(b) "LIABILITIES" shall mean all of Old Portfolio's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Transfer Time, and whether or not
specifically referred to in this Agreement.
3. REPRESENTATIONS OF OLD TRUST. Old Trust hereby represents and
warrants as follows:
(a) The execution and delivery of this Agreement has been duly
authorized by all requisite trust action and, assuming New Trust's due
authorization, execution, and delivery hereof, constitutes Old Trust's valid and
binding obligation, enforceable in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium, and other rights
affecting creditors' rights and general equitable principles;
(b) At the Transfer Time, Old Trust will have good title to the Assets,
free and clear of all mortgages, security interests, liens, charges, pledges,
and other encumbrances whatsoever ("LIENS"), except Liens on assets designated
to cover outstanding short sale positions and Liens on assets pledged to secure
loan proceeds used for the purpose of investing. On transfer of the Assets to
New Portfolio, it will acquire good title thereto, free and clear of all Liens;
(c) Old Trust will provide New Trust with true, accurate, and complete
copies of all books and records reasonably necessary in connection with Old
Trust's operations, including such for federal income tax and accounting
E-2
purposes, and will assist New Trust in gathering and analyzing information
related to Old Trust in order for New Trust to continue Old Trust's operations
as a registered investment company and to succeed to Old Trust's registration as
such;
(d) To the best of Old Trust's knowledge, the transfer is not the
result of the solicitation by a promoter, broker, or investment house;
(e) Subject to Old Trust's rights created under this Agreement, there
is no indebtedness between Old Trust and New Trust, and there will be no
indebtedness created in favor of Old Trust as a result of the Conversion;
(f) At the Transfer Time, the Assets will constitute "a diversified
portfolio of stocks and securities" within the meaning of Treas. Reg. ss.
1.351-1(c)(6)(i); and
(g) To the best of Old Trust's knowledge, no Interestholder has any
plan or intention to dispose of its New Portfolio Interest.
4. REPRESENTATIONS OF NEW TRUST. New Trust hereby represents and
warrants as follows:
(a) New Portfolio has not commenced operations and will not do so until
after the Conversion. Prior to the Transfer Time, there will be no issued and
outstanding interests or any other securities issued by New Trust;
(b) The execution and delivery of this Agreement has been duly
authorized by all requisite trust action and, assuming Old Trust's due
authorization, execution, and delivery hereof, constitutes New Trust's valid and
binding obligation, enforceable in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium, and other rights
affecting creditors' rights and general equitable principles;
(c) The issuance and delivery of New Portfolio Interests in accordance
with this Agreement have been duly authorized by all requisite trust action; and
such interests, when so issued in accordance with the provisions hereof, will be
validly issued, fully paid, and non-assessable by New Trust, free and clear of
all Liens;
(d) To the best of New Trust's knowledge, the transfer is not the
result of the solicitation by a promoter, broker, or investment house; and
(e) Subject to Old Trust's rights created under this Agreement, there
is no indebtedness between Old Trust and New Trust, and there will be no
indebtedness created in favor of Old Trust as a result of the Conversion.
5. REPRESENTATIONS OF THE ADVISER. The Adviser hereby represents and
warrants as follows:
E-3
(a) To the best of the Adviser's knowledge, the transfer is not the
result of the solicitation by a promoter, broker, or investment house;
(b) At the Transfer Time, the Assets will constitute "a diversified
portfolio of stocks and securities" within the meaning of Treas. Reg. ss.
1.351-1(c)(6)(i);
(c) To the best of the Adviser's knowledge, no Interestholder has any
plan or intention to dispose of its New Portfolio Interest;
(d) The Conversion will not result in diversification of Old Trust's
interests within the meaning of Treas. Reg. ss. 1.351-1(c)(1)(i); and
(e) The Assets constitute permissible investments under New Portfolio's
investment policies and limitations as set forth in New Trust's registration
statement.
6. TERMINATION. This Agreement and the transactions contemplated herein
may be terminated and abandoned by either party, at any time prior to the
Conversion, if circumstances develop that, in the opinion of its Board of
Trustees, in its sole discretion, make proceeding with this Agreement
inadvisable. In the event of any such termination, there shall be no liability
for damages to any party or Interestholder or their officers or agents.
7. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the internal laws of The Commonwealth of Massachusetts.
8. NATURE OF AGREEMENT. This Agreement is being executed by the
undersigned officers of Old Trust and New Trust solely as representatives
thereof, respectively, and not individually, and the obligations in this
Agreement are not binding on such officers individually, but are binding only on
the respective assets and property of Old Trust and New Trust.
E-4
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers designated below as of the date and
year first above written.
AMR INVESTMENT SERVICES TRUST, a
New York common law trust
By: __________________________________
Name: ______________________
Title: _____________________
AMR INVESTMENT SERVICES TRUST, a
Massachusetts business trust
By: __________________________________
Name:_______________________
Title:______________________
AMR INVESTMENT SERVICES, INC.
(only with respect to the representations in
paragraph 5)
By: __________________________________
Name:_______________________
Title:______________________
E-5
SCHEDULE A
OLD PORTFOLIOS NEW PORTFOLIOS
(SERIES OF OLD TRUST) (SERIES OF NEW TRUST)
Money Market Portfolio Money Market Portfolio
Municipal Money Market Portfolio Municipal Money Market Portfolio
U.S.Government Money Market U.S. Government Money Market
Portfolio Portfolio
International Equity Portfolio International Equity Portfolio
APPENDIX F
----------
FORM OF DECLARATION OF TRUST FOR NEW AMR TRUST
----------------------------------------------
[TO BE PROVIDED]
PROXY CARDS
-----------
PROXY CARDS
-----------
Vote on Trustees
1. To elect the following nominees as Trustees of the American AAdvantage
Funds, American AAdvantage Mileage Funds or American Aadvantage Select
Funds, as applicable (the "Trusts"): (01) Quinn, (02) Feld, (03) O'Sullivan,
(04) Turner, (05) Youngblood, (06) Bogart, (07) Cline, (08) Massman.
4. To authorize the Trusts, on behalf of the Funds, to vote at a meeting of the
AMR Investment Services Trust (the "AMR Trust") to elect the following
nominees as Trustees of the AMR Trust: (01) Quinn, (02) Feld,
(03) O'Sullivan, (04) Turner, (05) Youngblood, (06) Bogart, (07) Cline,
(08) Massman.
Vote on Proposals Relating to the Trusts
2. To approve changes to or elimination of certain fundamental investment
limitations of the Money Market Funds:
2a. Change to limitation on investment in commodities.
2b. Change to limitation on lending securities.
2c. Deletion of limitation on affiliated transactions.
2d. Change to limitation on issuance of senior securities.
2e. Change to limitation on borrowing.
2f. Change to limitation on concentration of investments in the banking
industry.
3. To approve an Amended and Restated Declaration of Trust for each Trust.
Vote on Proposals Relating to the AMR Trust
5. To authorize the Trusts, on behalf of the Money Market Funds, to vote at a
meeting of the AMR Trust to approve changes to or elimination of certain
fundamental investment limitations of the corresponhding Portfolio of the
AMR Trust:
5a. Change to limitation on investment in commodities.
5b. Change to limitation on lending securities.
5c. Deletion of limitation on affiliated transactions.
5d. Change to limitation on issuance of senior securities.
5e. Change to limitation on borrowing.
5f. Change to limitation on concentration of investments in the banking
industry.
6. To authorize the Trusts, on behalf of the Money Market Funds, to vote at a
meeting of the AMR Trust to approve a Conversion Agreement and a related new
Declaration of Trust for the AMR Trust.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
PROXY
AMERICAN AADVANTAGE MONEY MARKET FUND
AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND
AMERICAN AADVANTAGE MONEY MARKET SELECT FUND
Combined Special Meeting of Shareholders
August 11, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
The undersigned hereby appoints as proxies William F. Quinn, Barry Y.
Greenberg and Christina E. Sears, each with the power of substitution, and
hereby authorizes each of them to represent and to vote, as designated on the
reverse, all the shares of the above-referenced funds (the "Money Market Funds")
held of record by the undersigned on June 14, 2004, at the meeting of
shareholders to be held on August 11, 2004, or any adjournment thereof, with
discretionary power to vote upon such other business as may properly come before
the meeting. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" ALL PROPOSALS.
The undersigned hereby acknowledges receipt of the Proxy Statement prepared
on behalf of the Board of Trustees with respect to the matters designated on
the reverse. If any other matters properly come before the meeting about
which the proxy holders were not aware prior to the time of the solicitation,
authorization is given the proxy holders to vote in accordance with the views
of management thereon. Management is not aware of any such matters at this
time.
If voting by mail, please sign, date and promptly return this proxy in the
enclosed envelope.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
AMERICAN AADVANTAGE SELECT FUNDS
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Please vote immediately.
VOTE-BY-INTERNET
Log on to the Internet and go to
http://www.eproxyvote.com/aadxx
If you vote over the Internet, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
X PLEASE MARK VOTES AS IN THIS EXAMPLE.
- ---
Vote on Trustees
Proposal 1
FOR WITHHELD
----- -----
For all nominees except as noted below
----- ------------------
Proposal 4
FOR WITHHELD
----- -----
For all nominees except as noted below
----- ------------------
Vote on Proposals Relating to the Trusts
FOR AGAINST ABSTAIN
Proposal 2a ----- ----- -----
Proposal 2b ----- ----- -----
Proposal 2c ----- ----- -----
Proposal 2d ----- ----- -----
Proposal 2e ----- ----- -----
Proposal 2f ----- ----- -----
Proposal 3 ----- ----- -----
Vote on Proposals Relating to the AMR Trust
FOR AGAINST ABSTAIN
Proposal 5a ----- ----- -----
Proposal 5b ----- ----- -----
Proposal 5c ----- ----- -----
Proposal 5d ----- ----- -----
Proposal 5e ----- ----- -----
Proposal 5f ----- ----- -----
Proposal 6 ----- ----- -----
PLEASE REFER TO THE REVERSE OF THIS CARD
FOR THE RESOLUTIONS TO BE VOTED AT THE MEETING
NOTE: Individual shareholders must sign exactly as their name appears at
left. Either party of a joint account may sign, but that person must sign
exactly as his-her name appears to the left. For all other accounts, the
title of the individual signing must be designated unless it is explicit in
the account registration noted at left.
Signature: Date: Signature: Date:
--------------- ------ --------------- ------
Vote on Trustees
1. To elect the following nominees as Trustees of the American AAdvantage
Funds, American AAdvantage Mileage Funds or American Aadvantage Select
Funds, as applicable (the "Trusts"): (01) Quinn, (02) Feld, (03) O'Sullivan,
(04) Turner, (05) Youngblood, (06) Bogart, (07) Cline, (08) Massman.
4. To authorize the Trusts, on behalf of the Funds, to vote at a meeting of the
AMR Investment Services Trust (the "AMR Trust") to elect the following
nominees as Trustees of the AMR Trust: (01) Quinn, (02) Feld,
(03) O'Sullivan, (04) Turner, (05) Youngblood, (06) Bogart, (07) Cline,
(08) Massman.
Vote on Proposals Relating to the Trusts
2. To approve changes to or elimination of certain fundamental investment
limitations of the Funds:
2a. Change to limitation on investment in commodities.
2b. Change to limitation on lending securities.
2c. Deletion of limitation on affiliated transactions.
2d. Change to limitation on issuance of senior securities.
2e. Change to limitation on borrowing.
3. To approve an Amended and Restated Declaration of Trust for each Trust.
Vote on Proposals Relating to the AMR Trust
5. To authorize the Trusts, on behalf of the Funds, to vote at a meeting of the
AMR Trust to approve changes to or elimination of certain fundamental
investment limitations of the corresponhding Portfolio of the AMR Trust:
5a. Change to limitation on investment in commodities.
5b. Change to limitation on lending securities.
5c. Deletion of limitation on affiliated transactions.
5d. Change to limitation on issuance of senior securities.
5e. Change to limitation on borrowing.
6. To authorize the Trusts, on behalf of the Funds, to vote at a meeting of the
AMR Trust to approve a Conversion Agreement and a related new Declaration of
Trust for the AMR Trust.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
PROXY
<Table>
AMERICAN AADVANTAGE FUNDS AMERICAN AADVANTAGE MILEAGE FUNDS AMERICAN AADVANTAGE SELECT FUNDS
International Equity Fund Municipal Money Market Mileage Fund U.S. Government Money Market Select Fund
Municipal Money Market Fund U.S. Government Money Market Mileage Fund
U.S. Government Money Market Fund
</Table>
Combined Special Meeting of Shareholders
August 11, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
The undersigned hereby appoints as proxies William F. Quinn, Barry Y.
Greenberg and Christina E. Sears, each with the power of substitution, and
hereby authorizes each of them to represent and to vote, as designated on the
reverse, all the shares of the above-referenced funds (the "Funds") held of
record by the undersigned on June 14, 2004, at the meeting of shareholders to
be held on August 11, 2004, or any adjournment thereof, with discretionary
power to vote upon such other business as may properly come before the
meeting. UNLESS INDICATED TO THE CONTRARY, THIS PROXY SHALL BE DEEMED TO
GRANT AUTHORITY TO VOTE "FOR" ALL PROPOSALS.
The undersigned hereby acknowledges receipt of the Proxy Statement prepared
on behalf of the Board of Trustees with respect to the matters designated on
the reverse. If any other matters properly come before the meeting about
which the proxy holders were not aware prior to the time of the solicitation,
authorization is given the proxy holders to vote in accordance with the views
of management thereon. Management is not aware of any such matters at this
time.
If voting by mail, please sign, date and promptly return this proxy in the
enclosed envelope.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
AMERICAN AADVANTAGE SELECT FUNDS
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
Your vote is important. Please vote immediately.
VOTE-BY-INTERNET
Log on to the Internet and go to
http://www.eproxyvote.com/aaixx
If you vote over the Internet, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
X PLEASE MARK VOTES AS IN THIS EXAMPLE.
- ---
Vote on Trustees
Proposal 1
FOR WITHHELD
----- -----
For all nominees except as noted below
----- ------------------
Proposal 4
FOR WITHHELD
----- -----
For all nominees except as noted below
----- ------------------
Vote on Proposals Relating to the Trusts
FOR AGAINST ABSTAIN
Proposal 2a ----- ----- -----
Proposal 2b ----- ----- -----
Proposal 2c ----- ----- -----
Proposal 2d ----- ----- -----
Proposal 2e ----- ----- -----
Proposal 3 ----- ----- -----
Vote on Proposals Relating to the AMR Trust
FOR AGAINST ABSTAIN
Proposal 5a ----- ----- -----
Proposal 5b ----- ----- -----
Proposal 5c ----- ----- -----
Proposal 5d ----- ----- -----
Proposal 5e ----- ----- -----
Proposal 6 ----- ----- -----
PLEASE REFER TO THE REVERSE OF THIS CARD
FOR THE RESOLUTIONS TO BE VOTED AT THE MEETING
NOTE: Individual shareholders must sign exactly as their name appears at
left. Either party of a joint account may sign, but that person must sign
exactly as his-her name appears to the left. For all other accounts, the
title of the individual signing must be designated unless it is explicit in
the account registration noted at left.
Signature: Date: Signature: Date:
--------------- ------ --------------- ------