UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-9603
AMERICAN BEACON SELECT FUNDS
(Exact name of registrant as specified in charter)
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Address of principal executive offices)-(Zip code)
WILLIAM F. QUINN, PRESIDENT
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Name and address of agent for service)
Registrant's telephone number, including area code: (817) 967-3509
Date of fiscal year end: December 31, 2004
Date of reporting period: December 31, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
[AMERICAN AADVANTAGE SELECT FUNDS LOGO]
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 2004
[GLOBE GRAPHIC]
Money Market Fund
U.S. Government Money Market Fund
Managed by AMR Investments
Any opinions herein, including forecasts, reflect our judgement as of the end of
the reporting period and are subject to change. Each adviser's strategies and
each Fund's portfolio composition will change depending on economic and market
conditions. This report is not a complete analysis of market conditions and
therefore, should not be relied upon as investment advice. Although economic and
market information has been compiled from reliable sources, AMR Investment
Services, Inc. makes no representation as to the completeness or accuracy of the
statements contained herein.
American AAdvantage Select Funds
Letter to Shareholders
- --------------------------------------------------------------------------------
Fellow Shareholders:
Enclosed please find the Annual Report for the American AAdvantage Select Funds
for the twelve months ended December 31, 2004. During this time, the American
AAdvantage Select Funds outperformed their peers.
The year began with the lowest Fed Funds rate in 45 years at 1.0%. The U.S.
economy in 2004 can best be characterized as experiencing modest inflation with
a benign outlook. As a result, the Federal Reserve Board felt comfortable
increasing the short-term interest rate by 125 basis points to 2.25%. Even at
this level, the "real" interest rate is below historical levels.
The American AAdvantage Select Funds produced strong relative returns for the
year. The Money Market Select Fund returned 1.33% for the year, outperforming
the Lipper Institutional Money Market Average return of 1.00%. The U.S.
Government Money Market Select Fund outpaced the Lipper Institutional U.S.
Government Money Market Average with a return of 1.29% versus 0.99% for the
Average.
Looking forward, record trade deficits caused by a combination of the lower
value of the dollar and higher crude prices will have to be watched closely.
Although we expect continued increases in the Fed Funds rate, continued
unfettered trade deficit increases could cause the Fed to tighten more
aggressively. Thus, we will continue to actively manage the duration and
quality of the money market portfolios as we evaluate economic growth,
inflation, and the direction of interest rates.
Please review the enclosed portfolio listings and detailed financial data. As
always, we welcome the opportunity to serve your financial needs. Should you
have any questions about the enclosed information, please do not hesitate to
contact us at 800-967-9009. You may also access Fund and account information at
www.aafunds.com. Thank you for your continued confidence in the American
AAdvantage Select Funds.
Sincerely,
/s/ WILLIAM F. QUINN
William F. Quinn
President
American AAdvantage Select Funds
1
American AAdvantage Select Funds
Market and Performance Overview
- --------------------------------------------------------------------------------
The year began with an improving economic environment. However, while growth
indicators were robust, the labor market remained muted until the March
employment report was released in April. In March, U.S. employers created
353,000 new non-farm jobs, thereby removing the critical missing link between a
transitory cyclical rebound and the onset of a period of prolonged economic
expansion. The strong employment data caused a sharp sell-off in the fixed
income market in anticipation that the Federal Open Market Committee (FOMC)
would soon begin to raise the overnight Fed Funds rate. The first rate hike of
25 basis points occurred at the June 30th FOMC meeting, bringing the overnight
Fed Funds target to 1.25%. The FOMC continued its tightening policy of 25 basis
points at each of the remaining Fed meetings, bringing the Fed Funds target to
2.25% by the end of 2004.
Toward the end of the year, the U.S. economy gathered momentum, buoyed by a
decisive result of the November Presidential election. Monthly non-farm payroll
growth averaged over 200K, crude prices fell from their record highs, broad
equity indexes rallied, and most retailers reported a strong holiday shopping
season. Going forward, as long as productivity keeps pace with wage growth in a
gradually tightening labor market, it appears the Fed has no incentive of
abandoning its "measured" (25 basis point rate increases) policy adjustment
stance absent a sharp rise in commodity prices or a sharp fall in the U.S.
dollar.
As evidence mounted that money market interest rates would head higher in the
second half of the year, the weighted-average maturity of the American
AAdvantage Money Market Select Fund was allowed to roll down from above 50 days
to about 30 days. This strategy enabled the Fund to take advantage of higher
overnight rates. The rolldown became even more beneficial when the Fed raised
the overnight rate 25 basis points to 1.25% from 1.00% at the June FOMC meeting.
A shorter average maturity was maintained as the market began to anticipate
further interest rate increases by the Fed. A large position in variable rate
securities will likely be maintained in conjunction with a concentration in
overnight investments as the weighted-average maturity of the Fund will likely
remain in the 30 to 40 day range until evidence emerges that the Fed has
completed its current tightening cycle.
For the twelve months ended December 31, 2004, the total return of the American
AAdvantage Money Market Select Fund was 1.33%. The Fund outperformed the Lipper
Institutional Money Market Average return of 1.00% by 33 basis points. Lipper
Analytical Services ranked the Fund 10th among 304 and 12th among 260
Institutional Money Market Funds for the one-year and three-years ended December
31, 2004, respectively.
At the beginning of the year, the investment manager to the American AAdvantage
U.S. Government Money Market Select Fund maintained the Fund's weighted-average
maturity between 50 and 60 days. This strategy was accomplished primarily by
purchasing fixed rate agencies with maturities of six to nine months. In April,
the fixed income market began to sell off sharply after the release of the
strong March employment data and in anticipation of a Fed rate hike. In
response, the weighted-average maturity of the Fund was shortened by investing
the proceeds of maturing securities in overnight repurchase agreements or short
dated agencies. This strategy proved to be a good move as the FOMC implemented
its first rate hike of 25 basis points at the June 30th meeting. This increase
took the overnight Fed Funds target to 1.25%. As the FOMC continued its
monetary tightening policy of 25 basis points at each of the remaining Fed
meetings, the Fund continued to buy variable rate and short dated fixed rate
agencies. The year ended with the Fed Funds target at 2.25%, 125 basis points
higher than at the start of 2004. In response to monetary policy, the weighted-
average maturity of the Fund was shortened to around 15 days by year-end.
For the twelve months ended December 31, 2004, the total return of the American
AAdvantage U.S. Government Money Market Select Fund was 1.29%. The Fund
outperformed the Lipper Institutional U.S. Government Money Market Average
return of 0.99% by 30 basis points. Lipper Analytical Services ranked the Fund
3rd among 142 and 4th among 124 Institutional U.S. Government Money Market Funds
for the one-year and three-years ended December 31, 2004, respectively.
2
American AAdvantage Select Funds
Market and Performance Overview (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ANNUALIZED TOTAL RETURNS
---------------------------------
AS OF 12/31/04
---------------------------------
1 YEAR 5 YEARS 10 YEARS
-------- --------- ----------
Money Market (1,2) 1.33% 3.01% 4.29%
U.S. Government (1,3) 1.29% 2.89% 4.12%
</Table>
<FN>
1 Past performance is not indicative of future performance. An investment in
the American AAdvantage Select Funds is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although each Fund seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Funds. Fund
performance in the table above does not reflect the deduction of taxes a
shareholder would pay on distributions or the redemption of shares.
2 The Fund's performance is derived from a combination of the Fund's
performance and that of another fund (the "Companion Fund") not included in
this report. The Companion Fund has been managed by AMR Investments since
its inception on September 1, 1987. Like the Fund, the Companion Fund
invests all of its investable assets in a corresponding Portfolio of the AMR
Investment Services Trust. The performance results from inception through
December 31, 1999 are those of the Companion Fund. The Fund began offering
its shares on January 1, 2000. Thus, performance results shown from that
date through December 31, 2004 are for the Fund. Because the Companion Fund
had higher expenses, its performance was worse than the Fund would have
realized in the same period.
3 The Fund's performance is derived from a combination of the Fund's
performance and that of another fund (the "Companion Fund") not included in
this report. The Companion Fund has been managed by AMR Investments since
its inception on March 2, 1992. Like the Fund, the Companion Fund invests
all of its investable assets in a corresponding Portfolio of the AMR
Investment Services Trust. The performance results from inception through
November 30, 2001 are those of the Companion Fund. The Fund began offering
its shares on December 1, 2001. Thus, performance results shown from that
date through December 31, 2004 are for the Fund. Because the Companion Fund
had moderately higher expenses, its performance was slightly worse than the
Fund would have realized in the same period.
</FN>
<Table>
<Caption>
Portfolio Statistics as of December 31, 2004
Money Market U.S. Government
------------ ---------------
7-Day Current Yield* 2.18% 2.15%
7-Day Effective Yield* 2.20% 2.18%
30-Day Yield* 2.06% 2.07%
Weighted Average Msturity 35 Days 15 Days
Moody's Rating Aaa Aaa
Standard & Poor's Rating AAAm AAAm
</Table>
<FN>
* Annualized. You may call 1-800-231-4252 to obtain the Fund's current seven
day yield.
</FN>
<Table>
<Caption>
Money Market Portfolio - Top Ten Holdings as of December 31, 2004
% of
Net Assets
----------
Goldman Sachs Group 5.5%
Bank of Scotland Treasury Services plc 5.4%
Toyota Motor Credit Corporation 4.8%
Southtrust Bank 4.7%
National City Bank 4.6%
ABN AMRO Bank 4.6%
Wells Fargo & Company 4.5%
Royal Bank of Canada 3.7%
Societe Generale 3.7%
Fifth Third Bank 3.6%
</Table>
<Table>
<Caption>
Asset Allocation as of December 31, 2004
% of
Net Assets*
----------
Bank CDs, TDs, and Notes 45.5%
Corporate Notes 41.8%
Repurchase Agreements 9.7%
Funding Agreements 2.8%
Net Other Assets 0.2%
</Table>
* Percent of net assets portion of AMR Investment Services
Money Market Portfolio.
<Table>
<Caption>
Asset Allocation as of December 31, 2004
% of
Net Assets*
----------
Government Securities 53.5%
Repurchase Agreements 52.4%
Net Other Liabilities -5.9%
</Table>
* Percent of net assets portion of AMR Investment Services
U.S. Government Money Market Portfolio.
Fund Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs and (2) ongoing costs, including management fees, administrative service
fees, and other Fund expenses. The examples below are intended to help you
understand the ongoing cost (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of
the period in each Fund and held for the entire period from July 1, 2004
through December 31, 2004.
3
Actual Expenses
The "Actual" lines of the table provide information about actual account values
and actual expenses. You may use the information in this line, together with
the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading "Expenses Paid During Period" to estimate
the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The "Hypothetical" lines of the table provide information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed 5% per year rate of return before expenses (not the Fund's
actual return). You may compare the ongoing costs of investing in the Fund
with other funds by contrasting this 5% hypothetical example and the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period.
You should also be aware that the expenses shown in the table highlight only
your ongoing costs and do not reflect any transaction costs charged by the Fund.
Similarly, the expense examples for other funds do not reflect any transaction
costs charged by those funds, such as sales charges (loads), redemption fees or
exchange fees. Therefore, the "Hypothetical" lines of the table are useful in
comparing ongoing costs only and will not help you determine the relative total
costs of owning different funds. If you were subject to any transaction costs
during the period, your costs would have been higher.
<Table>
<Caption>
Beginning Ending Expenses
Account Account Paid During
Value Value the Period*
7/1/04 12/31/04 7/1/04-12/31/04
--------- --------- ---------------
Money Market
Actual $1,000.00 $1,008.23 $0.61
Hypothetical $1,000.00 $1,024.53 $0.61
(5% return
before expenses)
U.S. Government
Actual $1,000.00 $1,008.06 $0.60
Hypothetical $1,000.00 $1,024.54 $0.60
(5% return
before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratios for the six-month
period of 0.06% and 0.06% for the Money Market and U.S. Government Money Market
Select Funds, respectively, multiplied by the average account value over the
period, multiplied by the number derived by dividing the number of days in the
most recent fiscal half-year (184) by days in the year (366) to reflect the
half-year period.
4
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Trustees
American AAdvantage Money Market Select Fund
American AAdvantage U.S. Government Money Market Select Fund
We have audited the accompanying statements of assets and liabilities of the
American AAdvantage Money Market Select Fund and the American AAdvantage U.S.
Government Money Market Select Fund (collectively, "the Funds") (separate funds
comprising the American AAdvantage Select Funds) as of December 31, 2004, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for purposes of expressing an opinion
on the effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective American AAdvantage Select Funds at December 31, 2004, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
February 18, 2005
5
American AAdvantage Select Funds
Statements of Assets And Liabilities December 31, 2004
- --------------------------------------------------------------------------------
in thousands, except share and per share amounts
<Table>
<Caption>
U.S. Government
Money Market Money Market
-------------- ---------------
Assets:
Investments in Portfolio, at value......... $ 3,976,284 $ 193,529
Receivable from Manager for expense
reimbursement (Note 2)................... 40 -
-------------- ---------------
TOTAL ASSETS................................. 3,976,324 193,529
-------------- ---------------
Liabilities:
Dividends payable.......................... 3,090 233
Other liabilities.......................... 131 9
-------------- ---------------
TOTAL LIABILITIES............................ 3,221 242
-------------- ---------------
NET ASSETS................................... $ 3,973,103 $ 193,287
============== ===============
ANALYSIS OF NET ASSETS:
Paid-in-capital............................ $ 3,973,103 $ 193,287
-------------- ---------------
NET ASSETS................................... $ 3,973,103 $ 193,287
============== ===============
Shares outstanding (no par value)............ 3,973,103,073 193,287,503
============== ===============
Net asset value, offering and redemption
price per share............................ $ 1.00 $ 1.00
============== ===============
</Table>
See accompanying notes
6
American AAdvantage Select Funds
Statements of Operations Year Ended December 31, 2004
- --------------------------------------------------------------------------------
in thousands
<Table>
<Caption>
U.S. Government
Money Market Money Market
------------ ---------------
Investment Income Allocated From Portfolio:
Interest income............................ $ 60,684 $ 2,873
Portfolio Expenses......................... (4,845) (226)
------------ ---------------
Net investment income allocated
from Portfolio......................... 55,839 2,647
------------ ---------------
Fund Expenses:
Transfer agent fees........................ 128 7
Professional fees.......................... 38 --
Registration fees and expenses............. 19 --
Other expenses............................. 133 9
------------ ---------------
Total fund expenses...................... 318 16
------------ ---------------
Less reimbursement of expenses (Note 2).. 46 2
------------ ---------------
Net fund expenses........................ 272 14
------------ ---------------
Net Investment Income........................ 55,567 2,633
------------ ---------------
Realized Gain Allocated From Portfolio:
Net realized gain on investments......... 169 11
------------ ---------------
Net gain on investments................ 169 11
------------ ---------------
Net increase in net assets resulting
from operations.......................... $ 55,736 $ 2,644
============ ===============
</Table>
See accompanying notes
7
American AAdvantage Select Funds
Statements Of Changes In Net Assets
- --------------------------------------------------------------------------------
in thousands
<Table>
<Caption>
Money Market U.S. Government Money
Market
------------------------- -------------------------
Year Ended December 31, Year Ended December 31,
------------------------- -------------------------
2004 2004 2004 2004
----------- ----------- ----------- -----------
Increase (Decrease) in Net Assets:
Operations:
Net investment income............. $ 55,567 $ 39,914 $ 2,633 $ 1,362
Net realized gain (loss) on
investments................... 169 31 11 5
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations..... 55,736 39,945 2,644 1,367
----------- ----------- ----------- -----------
Distributions To Shareholders:
Net investment income............. (55,567) (39,916) (2,633) (1,362)
Net realized gain on investments.. (169) (22) (11) (5)
----------- ----------- ----------- -----------
Distributions to shareholders... (55,736) (39,938) (2,644) (1,367)
----------- ----------- ----------- -----------
Capital Share Transactions (at $1.00 per share):
Proceeds from sales of shares..... 55,001,001 52,230,559 1,169,538 721,183
Reinvestment of dividends and
distributions................... 30,516 16,049 772 109
Cost of shares redeemed........... (55,047,138) (53,287,925) (1,139,512) (668,817)
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets from capital share
transactions.................. (15,621) (1,041,317) 30,798 52,475
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets............................ (15,621) (1,041,310) 30,798 52,475
----------- ----------- ----------- -----------
Net Assets:
Beginning of period............... 3,988,724 5,030,034 162,489 110,014
----------- ----------- ----------- -----------
End of period*.................... $ 3,973,103 $ 3,988,724 $ 193,287 $ 162,489
=========== =========== =========== ===========
</Table>
See accompanying notes
8
American AAdvantage Select Funds
Notes To Financial Statements December 31, 2004
- --------------------------------------------------------------------------------
Note 1 - Organization and Significant Accounting Policies
Organization
American AAdvantage Select Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a no load, open-end management investment company with
separate series. The following series are included in this report: American
AAdvantage Money Market Select Fund and American AAdvantage U.S. Government
Money Market Select Fund (each a "Fund" and collectively, the "Funds"). The
American AAdvantage Money Market Select Fund commenced active operations on
January 1, 2000, and the American AAdvantage U.S. Government Money Market
Select Fund commenced active operations on December 1, 2001.
Each Fund invests all of its investable assets in the corresponding portfolio
of the AMR Investment Services Trust, an open-end diversified management
investment company, as follows: the American AAdvantage Money Market Select
Fund invests assets in the AMR Investment Services Money Market Portfolio and
the American AAdvantage U.S. Government Money Market Select Fund invests assets
in the AMR Investment Services U.S. Government Money Market Portfolio. Each
AMR Investment Services Trust Portfolio has the same investment objectives as
its corresponding Fund. The value of such investments reflects each Fund's
proportionate interest in the net assets of the corresponding portfolio (73.55%
and 77.56% at December 31, 2004, of the AMR Investment Services Money Market
and U.S. Government Money Market Portfolios, respectively) (each a "Portfolio"
and collectively the "Portfolios"). The financial statements of the Portfolios
are included elsewhere in this report and should be read in conjunction with
the Funds' financial statements.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned subsidiary of
AMR Corporation, the parent company of American Airlines, Inc. ("American"),
and was organized in 1986 to provide business management, advisory,
administrative and asset management consulting services to the Trust and other
investors.
The following is a summary of the significant accounting policies followed by
the Funds.
Valuation of Investments
The Funds record their investment in the Portfolios at fair value. Valuation
of securities by the Portfolios is discussed in Note 1 of the Portfolios' Notes
to Financial Statements which are included elsewhere in this report.
Investment Income
Each Fund records its share of net investment income (loss) and realized gain
(loss) in the Portfolio each day. All net investment income (loss) and
realized gain (loss) of each Portfolio are allocated pro rata among the
corresponding Fund and other investors in each Portfolio at the time of such
determination.
Dividends
The Funds generally declare dividends daily from net investment income and net
short-term gain, if any, payable monthly. Dividends to shareholders are
determined in accordance with federal income tax principles that may treat
certain transactions differently than U.S. generally accepted accounting
principles.
Federal Income and Excise Taxes
It is the policy of each of the Funds to comply with the requirements of
subchapter M of the Internal Revenue Code applicable to regulated investment
companies, and to distribute substantially all net investment income as well as
any net realized capital gains on the sale of investments. Therefore, no
federal income tax provision is required.
Expenses
Expenses directly attributable to a Fund are charged to that Fund's operations.
Expenses incurred by the Trust with respect to both Funds are allocated in
proportion to the net assets of each Fund, except where allocations of direct
expenses to each Fund can otherwise be made fairly. Each share of each Fund
bears equally those expenses that are allocated to the Fund as a whole.
Valuation of Shares
The price per share is calculated on each day on which shares are offered for
sale and orders accepted or upon receipt of a redemption request. Net asset
value per share is computed by dividing the value of each Fund's total assets
(which includes the value of the Fund's investment in the Portfolio), less
liabilities, by the number of Fund shares outstanding.
Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that
9
American AAdvantage Select Funds
Notes To Financial Statements December 31, 2004 (Continued)
- --------------------------------------------------------------------------------
affect the reported amounts in the financial statements. Actual results may
differ from those estimated.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
Note 2 - Fees and Transactions with Affiliates
Reimbursement of Expenses
The Manager contractually agreed to reimburse each Fund for other expenses
through December 31, 2004 to the extent that total annual Fund operating
expenses exceed 0.12%. For the year ended December 31, 2004, the Manager
reimbursed expenses totaling $46,276 and $2,418 to the Money Market and U.S.
Government Money Market Select Funds, respectively.
Expense Reimbursement Plan
The Funds have adopted an Expense Reimbursement Plan whereby the Manager may
seek repayment of expenses reimbursed for a period of up to three years.
However, reimbursement will occur only if a Fund's average net assets have
grown or expenses have declined sufficiently to allow reimbursement without
causing its expense ratio to exceed the previously agreed upon contractual
expense limit. Reimbursed expenses subject to potential recovery totaling
$8,002 and $11,073 for the Money Market and U.S. Government Money Market Select
Funds, respectively, will expire in 2006. Reimbursed expenses subject to
potential recovery totaling $46,276 and $2,418 for the Money Market and U.S.
Government Money Market Select Funds, respectively, will expire in 2007.
Other
Certain officers or trustees of the Trust are also current or former officers
or employees of the Manager or American. The Trust makes no direct payments to
its officers. Unaffiliated trustees and their spouses are provided unlimited
air transportation on American. In addition, the Trust compensates each
trustee with payments in an amount equal to the trustee's income tax on the
value of this free airline travel. Retired trustees and their spouses receive
American Airlines flight benefits, plus reimbursement of any tax liability
relating to such benefits, up to a maximum annual value of $40,000. One
trustee, as a retiree of American, already receives flight benefits. This
trustee receives an annual retainer of $40,000 plus $1,250 for each Board
meeting attended.
Note 3-Subsequent Event
Subsequent to December 31, 2004, AMR Investment Services, Inc. will become
American Beacon Advisors, Inc. and the American AAdvantage Select Funds will be
known as the American Beacon Select Funds. The name change becomes effective
March 1, 2005.
10
American AAdvantage Money Market Select Fund
Financial Highlights (For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------------
2004 2003 2002 2001(B) 2000
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Net investment income(A)................... 0.01 0.01 0.02 0.04 0.06
Less dividends from net investment income.. (0.01) (0.01) (0.02) (0.04) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return................................. 1.33% 1.13% 1.81% 4.28% 6.58%
========== ========== ========== ========== ==========
Ratios and supplemental data:
Net assets, end of period (in thousands)... $3,973,103 $3,988,724 $5,030,034 $5,589,030 $2,227,985
Ratios to average net assets (annualized)(A):
Expenses................................. 0.12% 0.12% 0.11% 0.12% 0.12%
Net investment income.................... 1.28% 1.14% 1.82% 3.84% 6.47%
Decrease reflected in above expense ratio
due to absorption of expenses by the
Manager................................ 0.00%(C) 0.00%(C) -- 0.00%(C) 0.03%
</Table>
- ---------------
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Money Market Portfolio.
(B) Prior to December 1, 2001, the American AAdvantage Money Market Select
Fund was known as the American Select Cash Reserve Fund.
(C) Amount is less than 0.01% per share.
11
American AAdvantage U.S. Government Money Market Select Fund
Financial Highlights (For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year Ended December 31, December 1 to
------------------------------------ December 31,
2004 2003 2002 2001(B)
---------- ---------- ------------ -------------
Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ------------ -------------
Net investment income(A)................... 0.01 0.01 0.02 --(D)
Less dividends from net investment income.. (0.01) (0.01) (0.02) --(D)
---------- ---------- ------------ -------------
Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ============ =============
Total return................................. 1.29% 1.11% 1.74% 0.20%(C)
========== ========== ============ =============
Ratios and supplemental data:
Net assets, end of period (in thousands)... $ 193,287 $ 162,489 $ 110,014 $ 2,822
Ratios to average net assets (annualized)(A):
Expenses................................. 0.12% 0.12% 0.12% 0.10%
Net investment income.................... 1.31% 1.09% 1.75% 2.06%
Decrease reflected in above expense ratio
due to absorption of expenses by the
Manager................................ 0.00%(E) 0.03% 0.03% --
</Table>
- ---------------
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services U.S. Government Money Market Portfolio.
(B) The American AAdvantage U.S. Government Money Market Select Fund commenced
active operations on December 1, 2001.
(C) Not annualized.
(D) Amount is less than $0.01 per share.
(E) Amount is less than 0.01%.
12
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Trustees
AMR Investment Services Money Market Portfolio
AMR Investment Services U.S. Government Money Market Portfolio
We have audited the accompanying statements of assets and liabilities of the
AMR Investment Services Money Market Portfolio and the AMR Investment Services
U.S. Government Money Market Portfolio (collectively, "the Portfolios")
(separate portfolios comprising the AMR Investment Services Trust), including
the schedules of investments, as of December 31, 2004, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Portfolios' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for purposes of expressing an opinion
on the effectiveness of the Portfolios' internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of December 31, 2004, by correspondence
with the custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios of the AMR Investment Services Trust at December 31, 2004,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
February 18, 2005
13
AMR Investment Services Money Market Portfolio
Schedule Of Investments December 31, 2004
- --------------------------------------------------------------------------------
in thousands, except share amounts
<Table>
<Caption>
PAR
AMOUNT VALUE
---------- ----------
REPURCHASE AGREEMENTS (Note B) - 9.74%
Goldman Sachs, 2.29%, Due 1/3/2005 $ 526,451 $ 526,451
----------
TOTAL REPURCHASE AGREEMENTS 526,451
----------
EURODOLLAR TIME DEPOSITS - 12.02%
ABN AMRO Bank, 2.18%, Due 1/3/2005 $ 250,000 $ 250,000
Royal Bank of Canada, 2.125%, Due 1/3/2005 200,000 200,000
Societe Generale, 2.25%, Due 1/3/2005 200,000 200,000
----------
TOTAL TIME DEPOSITS 650,000
----------
VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES (Note D) - 33.46%
Bank One, NA, 2.46%, Due 2/10/2005 25,000 25,007
Barclays Bank, 2.449%, Due 9/29/2005 50,000 49,968
Bayerische Landesbank, 2.21%, Due 5/9/2005 75,000 75,011
BNP Paribas, 2.265%, Due 8/23/2005 65,000 64,976
Canadian Imperial Bank, 2.42%, Due 6/15/2005 100,000 99,985
Credit Lyonnais, 2.385%, Due 9/12/2005 97,000 96,956
Credit Suisse First Boston Corporation, 2.559%, Due 9/26/2005 150,000 150,034
Fifth Third Bank, 2.21%, Due 11/14/2005 197,000 196,906
National City Bank,
2.13%, Due 1/3/2005 200,000 200,000
2.19%, Due 5/9/2005 50,000 50,002
Societe Generale, 2.045%, Due 1/30/2006 50,000 49,954
Southtrust Bank,
2.216%, Due 8/12/2005 150,000 149,976
2.549%, Due 9/29/2005 64,000 64,017
2.43%, Due 12/14/2005 40,000 39,989
SunTrust Bank, 2.02%, Due 10/3/2005 55,500 55,514
Toronto Dominion Bank, 2.38%, 9/12/2005 100,000 99,952
UBS AG, 2.03%, Due 1/30/2006 50,000 49,954
Unicredito Italiano, 2.439%, Due 12/19/2005 166,000 165,916
US Bank, NA, 2.485%, Due 12/29/2005 125,000 124,970
----------
TOTAL VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES 1,809,087
----------
VARIABLE RATE PROMISSORY NOTES (Note D) - 5.55%
Goldman Sachs Group, 2.28%, Due 8/9/2005 300,000 300,000
----------
TOTAL VARIABLE RATE PROMISSORY NOTES 300,000
----------
</Table>
See accompanying notes
14
AMR Investment Services Money Market Portfolio
Schedule Of Investments December 31, 2004
- --------------------------------------------------------------------------------
in thousands, except share amounts
<Table>
<Caption>
PAR
AMOUNT VALUE
---------- ----------
VARIABLE RATE FUNDING AGREEMENTS (Notes A and D) - 2.77%
Metropolitan Life Insurance Company,
2.48%, Due 11/21/2005 100,000 100,000
2.56%, Due 12/1/2005 50,000 50,000
----------
TOTAL VARIABLE RATE FUNDING AGREEMENTS 150,000
----------
MEDIUM-TERM NOTES - 36.28%
FIXED RATE - 5.41%
Bank of Scotland Treasury Services plc, 2.53%, Due 3/14/2005 292,360 292,403
----------
TOTAL FIXED RATE 292,403
----------
VARIABLE RATE (Note D) - 30.87%
American Honda Finance Corporation,
2.183%, Due 1/13/2005 25,000 25,001
2.386%, Due 2/11/2005 10,000 10,002
2.14%, Due 4/11/2005, 144A (Note C) 60,000 60,021
2.11%, Due 10/7/2005 25,000 25,018
Caterpillar Financial Services, 2.35%, Due 8/15/2005 71,000 71,038
Citigroup, Incorporated, 2.28%, Due 2/7/2005 170,965 170,983
Credit Suisse First Boston Corporation, 2.278%, Due 4/5/2005 45,000 45,032
General Electric Capital Corporation, 2.51%, Due 1/17/2006 180,000 180,000
General Electric Company, 2.15%, Due 10/24/2005 43,975 44,002
Merrill Lynch & Company, Incorporated,
2.37%, Due 1/13/2005 124,000 124,014
2.37%, Due 1/18/2005 20,000 20,003
Monumental Global Funding II, 144A (Note C)
2.146%, Due 7/1/2005 87,000 87,069
2.06%, Due 7/6/2005 55,000 55,015
Paccar Financial Corporation,
2.04%, Due 4/15/2005 35,000 35,001
2.00%, Due 7/11/2005 50,000 49,996
2.44%, Due 9/16/2005 40,000 39,993
Salomon Smith Barney Holdings, Incorporated, 2.086%, Due 4/1/2005 100,000 100,030
Toyota Motor Credit Corporation,
2.058%, Due 1/14/2005 50,000 50,001
2.266%, Due 2/11/2005 50,000 50,002
2.451%, Due 6/22/2005 41,500 41,494
2.02%, Due 10/7/2005 70,000 70,007
2.28%, Due 11/18/2005 50,000 50,003
</Table>
See accompanying notes
15
AMR Investment Services Money Market Portfolio
Schedule Of Investments December 31, 2004
- --------------------------------------------------------------------------------
in thousands, except share amounts
<Table>
<Caption>
PAR
AMOUNT VALUE
---------- ----------
US Bancorp, 2.65%, Due 9/16/2005 20,000 20,025
Wells Fargo and Company,
2.57%, Due 3/24/2005 80,000 80,015
2.379%, Due 9/29/2005 15,000 15,008
2.373%, Due 1/13/2006, 144A (Note C) 150,000 150,000
----------
TOTAL VARIABLE RATE 1,668,773
----------
TOTAL MEDIUM-TERM NOTES 1,961,176
----------
TOTAL INVESTMENTS - 99.82% (Cost $5,396,714) 5,396,714
----------
OTHER ASSETS, NET OF LIABILITIES - 0.18% 9,707
----------
TOTAL NET ASSETS - 100% $5,406,421
==========
</Table>
Based on the cost of investments of $5,396,714 for federal income tax purposes
at December 31, 2004, there was no unrealized appreciation or depreciation of
investments.
(A) Obligation is subject to an unconditional put back to the issuer with
ninety calendar days notice.
(B) Collateral held at Bank of New York for Goldman Sachs, 4.50% - 6.50%,
Due 11/1/2009 - 12/1/2034, Total Value - $536,980.
(C) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $352,105 or 6.51% of net
assets.
(D) The coupon rate shown on floating or adjustable rate securities represents
the rate at period end. The due date on these types of securities
reflects the final maturity date.
See accompanying notes
16
AMR Investment Services U.S. Government Money Market Portfolio
Schedule of Investments December 31, 2004
- --------------------------------------------------------------------------------
in thousands, except share amounts
<Table>
<Caption>
PAR
AMOUNT VALUE
---------- ----------
REPURCHASE AGREEMENTS (Note A) - 52.40%
Banc of America Securities, LLC, 2.23%, Due 1/4/2005 $ 15,000 $ 15,000
Goldman Sachs, 2.29%, Due 1/3/2005 50,737 50,737
UBS Tri Party,
2.20%, Due 1/3/2005 45,000 45,000
2.25%, Due 1/3/2005 20,000 20,000
----------
TOTAL REPURCHASE AGREEMENTS 130,737
----------
U.S. GOVERNMENT AGENCY INSTRUMENTS - 53.45%
Federal Home Loan Bank,
Discount Note, 2.15%, Due 1/21/2005 (Note B) 4,000 3,995
Variable Rate Note, 1.11%, Due 7/26/2005 (Note C) 15,000 14,998
Variable Rate Note, 1.10%, Due 8/2/2005 (Note C) 15,000 14,999
Variable Rate Note, 0.993%, Due 10/5/2005 (Note C) 5,000 4,998
Federal Home Loan Mortgage Corporation,
Discount Note, 2.29%, Due 1/24/2005 (Note B) 3,600 3,595
Discount Note, 2.29%, Due 2/1/2005 (Note B) 5,000 4,990
Agency Note, 3.875%, Due 2/15/2005 10,000 10,020
Discount Note, 2.395%, Due 3/15/2005 (Note B) 10,000 9,951
Variable Rate Note, 1.085%, Due 9/9/2005 (Note C) 5,000 5,001
Federal National Mortgage Association,
Discount Note, 2.30%, Due 2/4/2005 (Note B) 3,100 3,093
Agency Note, 1.375%, Due 2/11/2005 20,000 19,980
Discount Note, 2.40%, Due 2/23/2005 (Note B) 1,495 1,490
Discount Note, 2.39%, Due 3/4/2005 (Note B) 5,000 4,979
Variable Rate Note, 0.98%, Due 10/3/2005 (Note C) 10,000 9,995
Variable Rate Note, 1.47%, Due 10/3/2005 (Note C) 6,300 6,297
Variable Rate Note, 1.05%, Due 12/9/2005 (Note C) 15,000 14,992
----------
TOTAL U.S. GOVERNMENT AGENCY INSTRUMENTS 133,373
----------
TOTAL INVESTMENTS - 105.85% (Cost $264,110) 264,110
----------
LIABILITIES, NET OF OTHER ASSETS - (5.85%) (14,591)
----------
TOTAL NET ASSETS - 100% $ 249,519
==========
</Table>
Based on the cost of investments of $264,110 for federal income tax purposes
at December 31, 2003, there was no unrealized appreciation or depreciation of
investments.
(A) Collateral held at Bank of New York for BanC of America Securities, LLC,
5.00%, Due 4/1/2034, Total Value - $15,300; and Goldman Sachs, 5.50%, Due
2/1/2019 - 11/1/2034, Total Value - $51,751; and at JP Morgan Chase Bank for
UBS Securities, LLC, 2.851 - 4.102%, Due 11/1/2033 - 12/1/2034, Total Value
- $66,103.
(B) Rates represent discount rate.
(C) The coupon rate shown on floating or adjustable rate securities represents
the rate at period end. The due date on these types of securities reflects
the final maturity date.
See accompanying notes
17
AMR Investment Services Trust Portfolios
Statements of Assets and Liabilities December 31, 2004
- --------------------------------------------------------------------------------
in thousands
<Table>
<Caption>
U.S. Government
Money Market Money Market
------------ ---------------
Assets:
Investments in securities at value
(cost - $4,870,263 and $133,373, respectively)..... $ 4,870,263 $ 133,373
Repurchase agreements (cost - $526,451 and $130,737,
respectively)...................................... 526,451 130,737
Dividends and interest receivable.................... 10,311 443
------------ --------------
Total assets........................................... 5,407,025 264,553
------------ --------------
Liabilities:
Payable for investments purchased.................... -- 15,000
Management and investment advisory fees
payable (Note 2)................................... 422 22
Other liabilities.................................... 182 12
------------ --------------
Total liabilities...................................... 604 15,034
------------ --------------
Net assets applicable to investors' beneficial
interests............................................ $ 5,406,421 $ 249,519
============ ==============
</Table>
See accompanying notes
18
AMR Investment Services Trust Portfolios
Statements Of Operations Year Ended December 31, 2004
- --------------------------------------------------------------------------------
in thousands
<Table>
<Caption>
U.S. Government
Money Market Money Market
------------ ---------------
Investment Income:
Interest income................................... $ 77,015 $ 3,739
------------ ---------------
Total investment income......................... 77,015 3,739
------------ ---------------
Expenses:
Management and investment advisory fees (Note 2).. 5,461 265
Custodian fees.................................... 382 19
Professional fees................................. 132 3
Other expenses.................................... 125 11
------------ ---------------
Total expenses.................................. 6,100 298
------------ ---------------
Net Investment Income............................... 70,915 3,441
------------ ---------------
Realized Gain on Investments:
Net realized gain on investments.................. 208 15
------------ ---------------
Net gain on investments......................... 208 15
------------ ---------------
Net increase in net assets resulting from operations $ 71,123 $ 3,456
============ ===============
</Table>
See accompanying notes
19
AMR Investment Services Trust Portfolios
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
in thousands
<Table>
<Caption>
Money Market U.S. Government Money
Market
-------------------------- -------------------------
Year Ended December 31, Year Ended December 31,
-------------------------- -------------------------
2004 2003 2004 2003
----------- ------------ ----------- -----------
Increase (Decrease) in Net Assets:
Operations:
Net investment income....................... $ 70,915 $ 52,671 $ 3,441 $ 3,099
Net realized gain on investments............ 208 42 15 9
----------- ------------ ----------- -----------
Total increase in net assets
resulting from operations............... 71,123 52,713 3,456 3,108
----------- ------------ ----------- -----------
Transactions in Investors' Beneficial Interests:
Contributions............................... 59,602,193 55,478,689 1,351,736 1,085,963
Withdrawals................................. (59,216,512) (57,817,456) (1,340,743) (1,324,638)
----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from transactions in
investors' beneficial interests......... 385,681 (2,338,767) 10,993 (238,675)
----------- ------------ ----------- -----------
Net increase (decrease) in net assets......... 456,804 (2,286,054) 14,449 (235,567)
----------- ------------ ----------- -----------
Net Assets:
Beginning of period......................... 4,949,617 7,235,671 235,070 470,637
----------- ------------ ----------- -----------
End of period............................... $ 5,406,421 $ 4,949,617 $ 249,519 $ 235,070
=========== ============ =========== ===========
</Table>
See accompanying notes
20
AMR Investment Services Trust Portfolios
Financial Highlights
- --------------------------------------------------------------------------------
<Table>
<Caption>
Money Market
----------------------------------------
Year Ended December 31,
----------------------------------------
2004 2003 2002 2001 2000
------ ------ ------ ------ ------
Total Return:................................. 1.34% 1.13% 1.81% 4.30% N/A
Ratios to Average Net Assets (Annualized):
Expenses.................................. 0.11% 0.11% 0.11% 0.11% 0.11%
Net investment income..................... 1.30% 1.14% 1.81% 3.95% 6.40%
</Table>
21
AMR Investment Services Trust Portfolios
Financial Highlights
- --------------------------------------------------------------------------------
<Table>
<Caption>
U.S. Government Money Market
------------------------------------------------------------
Year Ended December 31,
------------------------------------------
2004 2003 2002 2001 2000
------ ------ ------ ------ ------
Total Return:................................. 1.30% 1.11% 1.74% 4.24% N/A
Ratios to Average Net Assets (Annualized):
Expenses.................................. 0.11% 0.12% 0.12% 0.11% 0.13%
Net investment income..................... 1.30% 1.13% 1.71% 3.99% 6.27%
</Table>
22
AMR Investment Services Trust
Notes to Financial Statements December 31, 2004
- --------------------------------------------------------------------------------
Note 1-Organization and Significant Accounting Policies
AMR Investment Services Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a no load, open-end management investment
company that was organized as a trust under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust dated as of November 1, 2004.
Prior to November 1, 2004, the Trust was organized as a trust under the laws of
the State of New York. Beneficial interests in the Trust are divided into
separate series, each having distinct investment objectives and policies.
These financial statements relate to the AMR Investment Services Money Market
Portfolio and the AMR Investment Services U.S. Government Money Market
Portfolio (each a "Portfolio" and collectively, the "Portfolios"). The assets
of each Portfolio belong only to that Portfolio, and the liabilities of each
Portfolio are borne solely by that Portfolio and no other.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned subsidiary of
AMR Corporation, the parent company of American Airlines, Inc. ("American"),
and was organized in 1986 to provide business management, advisory,
administrative and asset management consulting services.
The following is a summary of the significant accounting policies followed by
the Portfolios.
Security Valuation
Securities of the Portfolios are valued at fair value, which approximates
amortized cost. In the event that a deviation of 1/2 of 1% or more exists
between the $1.00 per share price of the Portfolios, calculated at amortized
cost, and the price per share calculated by reference to market quotations, or
if there is any other deviation that the Trust's Board of Trustees (the
"Board") believes would result in a material dilution to shareholders or
purchasers, the Board will promptly consider the appropriate action that should
be initiated.
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security purchase
or sale. Interest income is earned from settlement date, recorded on the
accrual basis, and adjusted, if necessary, for amortization of premiums or
accretion of discounts on investment grade short-term securities and zero
coupon instruments. For financial and tax reporting purposes, realized gains
and losses are determined on the basis of specific lot identification.
Federal Income and Excise Taxes
The Portfolios will be treated as partnerships for federal income tax purposes.
As such, each investor in a Portfolio will be taxed on its share of the
Portfolio's ordinary income and capital gains. It is intended that each
Portfolio's assets will be managed in such a way that an investor in the
Portfolios will be able to satisfy the requirements of subchapter M of the
Internal Revenue Code.
Repurchase Agreements
Under the terms of a repurchase agreement, securities are acquired by a
Portfolio from a securities dealer or a bank that are subject to resale at a
later date. Repurchase agreements are fully collateralized by U.S. Treasury or
U.S. Government agency securities. All collateral is held at the Portfolio's
custodian bank, State Street Bank and Trust Company, or at subcustodian banks.
The collateral is monitored daily by the Manager so that the collateral's
market value exceeds the carrying value of the repurchase agreement plus
accrued interest.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimated.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
Note 2-Transactions with Affiliates
Management Agreement
The Trust and the Manager are parties to a Management Agreement that obligates
the Manager to provide or oversee the provision of all administrative,
investment advisory and portfolio management services. The Manager serves as
the sole investment adviser to each of the Portfolios. As compensation for
performing the duties required under the Management Agreement, the Manager
receives from the
23
AMR Investment Services Trust
Notes to Financial Statements December 31, 2003 (Continued)
- --------------------------------------------------------------------------------
Portfolios 0.10% of the average daily net assets of each of the Portfolios.
Interfund Lending Program
Pursuant to an exemptive order by the Securities and Exchange Commission, the
Portfolios, along with other registered investment companies having management
contracts with the Manager, may participate in an interfund lending program.
This program provides an alternative credit facility allowing the Portfolios to
lend money to other participating series managed by the Manager. For the year
ended December 31, 2004, the Money Market Portfolio earned $1,070 under the
credit facility. This amount is included in interest income on the financial
statements.
Other
Certain officers or trustees of the Trust are also current or former officers
or employees of the Manager or American. The Trust makes no direct payments to
its officers. Unaffiliated trustees and their spouses are provided
free unlimited air transportation on American. In addition, the Trust
compensates each trustee with payments in an amount equal to the trustee's
income tax on the value of this free airline travel. Retired trustees and
their spouses receive American Airlines flight benefits, plus reimbursement of
any tax liability relating to such benefits, up to a maximum annual value of
$40,000. One trustee, as a retiree of American, already receives flight
benefits. This trustee receives an annual retainer of $40,000 plus $1,250 for
each Board meeting attended.
Note 3-Subsequent Event
Subsequent to December 31, 2004, the AMR Investment Services Money Market
Portfolios will become the American Beacon Master Money Market Portfolios. The
name change becomes effective March 1, 2005.
24
Special Meeting of Shareholders
(Unaudited)
- --------------------------------------------------------------------------------
A special meeting of shareholders of the American AAdvantage Select
Funds (the "Trust") was held on August 11, 2004. The meeting related to each
series of the Trust (the "Funds"). The purpose of the meeting was to
consider proposals regarding: (i) re-election of the five current Trustees
and the election of three additional Trustees and (ii) changes to certain
fundamental investment policies of the Funds. The Funds currently operate
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 Fund.
Interestholders of the AMR Trust, including the Funds, held a separate
meeting to elect Trustees and to vote on proposed changes to certain
fundamental investment policies of the Portfolios. In addition, the
interestholders voted 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. Shareholders of each Fund were asked to
provide voting instructions to the AMR Trust meeting. Each Fund cast its
votes at the AMR Trust meeting in the same proportion as the votes cast by
the Fund's shareholders.
Proposals 1, 3 and 5 were Trust-level matters and therefore required a
majority of the shareholders of the Trust to vote to achieve a quorum.
Proposals 2 and 4 were Fund-level matters and therefore required a majority
of the shareholders of a Fund to vote to achieve a quorum for that Fund. A
quorum of the Trust was present for Proposals 1, 3 and 5, and each proposal
was approved by shareholders. A quorum of each Fund was present for
Proposals 2 and 4, and each proposal was approved by shareholders. The
voting results for each Proposal are presented in the following tables.
(1) Elected the following Trustees to the Trust's Board of Trustees: W.
Humphrey Bogart, Brenda A. Cline, Alan D. Feld, Richard A. Massman,
Stephen D. O'Sullivan, William F. Quinn, R. Gerald Turner, and Kneeland
Youngblood.
<Table>
<Caption>
Trust
-----
FOR WITHHELD
----------------- ---------------
BOGART 2,537,673,977.270 0.000
CLINE 2,537,673,977.270 0.000
FELD 2,275,756,371.270 261,917,606.000
MASSMAN 2,537,673,977.270 0.000
O'SULLIVAN 2,537,673,977.270 0.000
QUINN 2,537,673,977.270 0.000
TURNER 2,537,673,977.247 0.000
YOUNGBLOOD 2,537,673,977.270 0.000
</Table>
(2)(a) Approved a change to the fundamental investment limitation on
investments in commodities.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(2)(b) Approved a change to the fundamental investment limitation on lending
securities.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(2)(c) Approved the deletion of the fundamental investment limitation on
affiliated transactions.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(2)(d) Approved a change to the fundamental investment limitation on the
issuance of senior securities.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(2)(e) Approved a change to the fundamental investment limitation on
borrowing.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(2)(f) Approved a change to the fundamental investment limitation on
concentration of investments in the banking industry.
<Table>
<Caption>
Money Mkt
-----------------
FOR 1,921,217,467.270
AGAINST 0.000
ABSTAIN 0.000
BROKER
NON-VOTES* 471,873,825.000
</Table>
(3) Authorized the Trust, on behalf of each Fund, to vote at a meeting of
the AMR Trust to elect a Board of Trustees.
<Table>
<Caption>
Trust
-----
FOR WITHHELD
----------------- ---------------
BOGART 2,537,673,977.270 0.000
CLINE 2,537,673,977.270 0.000
FELD 2,275,756,371.270 0.000
MASSMAN 2,537,673,977.270 0.000
O'SULLIVAN 2,537,673,977.270 0.000
QUINN 2,537,673,977.270 0.000
TURNER 2,537,673,977.270 0.000
YOUNGBLOOD 2,537,673,977.270 0.000
</Table>
(4)(a) Authorized the Trust, on behalf of each Fund, to vote at a meeting
of the AMR Trust to approve a change to the fundamental
investment limitation on investments in commodities with respect to
the corresponding Portfolio of the AMR Trust.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(4)(b) Authorized the Trust, on behalf of each Fund, to vote at a meeting
of the AMR Trust to approve a change to the fundamental
investment limitation on lending securities with respect to the
corresponding Portfolio of the AMR Trust.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(4)(c) Authorized the Trust, on behalf of each Fund, to vote at a meeting
of the AMR Trust to approve the deletion of the fundamental
investment limitation on affiliated transactions with respect to the
corresponding Portfolio of the AMR Trust.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(4)(d) Authorized the Trust, on behalf of each Fund, to vote at a meeting
of the AMR Trust to approve a change to the fundamental
investment limitation on the issuance of senior securities with
respect to the corresponding Portfolio of the AMR Trust.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(4)(e) Authorized the Trust, on behalf of each Fund, to vote at a meeting
of the AMR Trust to approve a change to the fundamental
investment limitation on borrowing with respect to the corresponding
Portfolio of the AMR Trust.
<Table>
<Caption>
Money Mkt Gov Money Mkt
----------------- ---------------
FOR 1,921,217,467.270 144,582,685.000
AGAINST 0.000 0.000
ABSTAIN 0.000 0.000
BROKER
NON-VOTES* 471,873,825.000 0.000
</Table>
(4)(f) Authorized the Trust, on behalf of the Money Market Mileage Fund, to
vote at a meeting of the AMR Trust to approve 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.
<Table>
<Caption>
Money Mkt
-----------------
FOR 1,921,217,467.270
AGAINST 0.000
ABSTAIN 0.000
BROKER
NON-VOTES* 471,873,825.000
</Table>
(5) Authorized the Trust, on behalf of each Fund, to vote at a meeting of
the AMR Trust to approve a Conversion Agreement.
<Table>
<Caption>
Trust
-----------------
FOR 1,921,238,456.270
AGAINST 144,561,696.000
ABSTAIN 0.000
BROKER
NON-VOTES* 471,873,825.000
</Table>
- ---------------------
* Certain broker-dealers, third party administrators and other
intermediaries who offer Fund shares to their clients vote on behalf of their
clients in favor of routine proposals (e.g., Proposals 1 and 3), while
entering a "non-vote" for all non-routine proposals. If the underlying
clients do not themselves vote the non-routine proposals, the shares remain
in the broker non-vote category and effectively count as "against" votes.
Trustees and Officers of the Trust and the AMR Investment Services Trust
(Unaudited)
- --------------------------------------------------------------------------------
The Trustees and officers of the Trust and AMR Trust are listed below, together
with their principal occupations during the past five years. Unless otherwise
indicated, the address of each person listed below is 4151 Amon Carter
Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-seven
funds in the fund complex that includes the AMR Trust, the American AAdvantage
Funds, the American AAdvantage Mileage Funds, and the American AAdvantage
Select Funds. The Trust's Statement of Additional Information contains
additional information about the Trustees and is available without charge by
calling 1-800-231-4252.
<Table>
<Caption>
POSITION, TERM OF
OFFICE AND LENGTH
OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT
NAME, AGE AND ADDRESS WITH EACH TRUST DIRECTORSHIPS
- --------------------- ----------------- ---------------------------------------------------------
INTERESTED TRUSTEES
TERM
------------------
Lifetime of Trust
until removal,
resignation or
retirement*
William F. Quinn** (56) President and President (1986-Present) and Director (2001-Present), AMR
Trustee of AMR Investment Services, Inc.;Chairman (1989-2003) and
Trust since 1995 Director (1979-1989, 2003-Present), American Airlines
and the Trust Federal Credit Union; Director, Crescent Real Estate
since 1999 Equities, Inc. (1994-Present); Director, Pritchard,Hubble
& Herr, LLC (investment adviser) (2001-Present); Director
of Investment Committee, Southern Methodist University
Endowment Fund (1996-Present); Member of Advisory Board,
Southern Methodist University Cox School of Business
(1999-2002); Member of Pension Manager Committee, New York
Stock Exchange (1997-1998, 2000-2002); Vice Chairman,
Committee for the Investment of Employee Benefits (2004-
Present); Chairman of Defined Benefit Sub-Committee,
Committee for the Investment of Employee Benefits (1982-2004);
Director, United Way of Metropolitan Tarrant County (1988-2000,
2004-Present): Trustee, American AAdvantage Funds (1987-
Present); Trustee, American AAdvantage Mileage Funds (1995-
-Present).
Alan D. Feld** (68) Trustee of AMR Partner, Akin, Gump, Strauss, Hauer & Feld, LLP (law firm)
Trust since 1996 (1960-Present); Director, Clear Channel Communications
and the Trust (1984-Present); Trustee, CenterPoint Properties, Inc.
since 1999 (1994-Present); Trustee, American AAdvantage Funds
(1996-Present); Trustee, American AAdvantage Mileage Funds
(1996-Present).
NON-INTERESTED TRUSTEES
TERM
------------------
Lifetime of Trust
until removal,
resignation or
retirement*
W. Humphrey Bogart (60) Trustee since 2004 Consultant, New River Canada Ltd. (mutual fund servicing
company) (1998-2003); Board Member, Baylor University Medical
Center Foundation (1992-2004); Trustee, American AAdvantage
Funds (2004-Present); Trustee, American AAdvantage Mileage
Funds (2004-Present).
Brenda A. Cline (44) Trustee since 2004 Vice President, Chief Financial Officer, Treasurer and
Secretary, Kimbell Art Foundation (1993-Present); Trustee,
Texas Christian University (1998-Present); Trustee, W.I. Cook
Foundation, Inc. (d/b/a Cook Children's Health Foundation)
(2001-Present); Trustee, American AAdvantage Funds (2004-
Present); Trustee, American AAdvantage Mileage Funds (2004-
Present).
Richard A. Massman (61) Trustee since 2004 Senior Vice President and General Counsel, Hunt Consolidated,
Inc. (holding company engaged in energy, real estate, farming,
ranching and venture capital activities) (1994-Present);
Trustee, American AAdvantage Funds (2004-Present); Trustee,
American AAdvantage Mileage Funds (2004-Present).
Stephen D. O'Sullivan (69) Trustee of AMR Consultant (1994-Present); Trustee, American AAdvantage
Trust since 1995 Funds (1987-Present); Trustee, American AAdvantage Mileage
and the Trust Funds (1995-Present).
since 1999
</Table>
29
Trustees and Officers of the Trust and the AMR Investment Services Trust
(Unaudited) (Continued)
- --------------------------------------------------------------------------------
<Table>
<Caption>
POSITION, TERM OF
OFFICE AND LENGTH
OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT
NAME, AGE AND ADDRESS WITH EACH TRUST DIRECTORSHIPS
- --------------------- ----------------- ---------------------------------------------------------
NON-INTERESTED TRUSTEES (CONT.)
R. Gerald Turner (59) Trustee since 2001 President, Southern Methodist University (1995-Present);
225 Perkins Admin. Bldg. Director, ChemFirst (1986-2002); Director, J.C. Penney
Southern Methodist Univ. Company, Inc. (1996- Present); Director, California Federal
Dallas, Texas 75275 Preferred Capital Corp. (2001- 2003); Director, Kronus
Worldwide Inc. (chemical manufacturing) (2003-Present);
Director, First Broadcasting 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;
Trustee, American AAdvantage Funds (2001-Present);
Trustee, American AAdvantage Mileage Funds (2001-Present).
Kneeland Youngblood (49) Trustee of AMR Managing Partner, Pharos Capital Group, LLC (a private
100 Crescent Court Trust since 1996 equity firm) (1998-Present); Director, Burger King Corporation
Suite 1740 and the Trust (2004-Present); Trustee, The Hockaday School (1997-Present);
Dallas, Texas 75201 since 1999 Director, Starwood Hotels and Resorts (2001-Present); Member,
Council on Foreign Relations (1995-Present); Director, Just For
the Kids (1995-2001); Director, L&B Realty Advisors (1998-2000);
Trustee, Teachers Retirement System of Texas (1993-1999);
Director, Starwood Financial Trust (1998-2001); Trustee, St.
Mark's School of Texas (2002-Present); Trustee, American
AAdvantage Funds (1996-Present); Trustee, American AAdvantage
Mileage Funds (1996-Present).
OFFICERS
TERM
------------------
One Year
Brian E. Brett (44) VP since 2004 Vice President, Director of Sales, AMR Investment Services,
Inc. (2004-Present); Regional Vice President, Neuberger Berman,
LLC (investment adviser) (1996-2004).
Nancy A. Eckl (42) VP of AMR Trust Vice President, Trust Investments, AMR Investment Services,
since 1995 and the Inc. (1990-Present).
Trust since 1999
Michael W. Fields (50) VP of AMR Trust Vice President, Fixed Income Investments, AMR Investment
since 1995 and the Services, Inc. (1988-Present).
Trust since 1999
Barry Y. Greenberg (41) VP of AMR Trust Vice President, Legal, Compliance and Administration, AMR
since 1995 and the Investment Services, Inc. (1995-Present); Director, Pritchard,
Trust since 1999 Hubble & Herr, LLC (investment adviser) (2004-Present).
Secretary since
2004
Rebecca L. Harris (38) Treasurer of AMR Vice President, Finance, AMR Investment Services, Inc.
Trust since 1995 (1995- Present).
and the Trust
since 1999
John B. Roberson (46) VP of AMR Trust Vice President, Client Relations & Special Projects, AMR
since 1995 and the Investment Services, Inc. (2004-Present); Vice President,
Trust since 1999 Director of Sales, AMR Investment Services, Inc. (1991-2004);
Director, Pritchard, Hubble & Herr, LLC (investment adviser)
(2001-Present).
</Table>
* 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.
** Mr. Quinn is deemed to be an "interested persons" of the Trust and AMR Trust,
as defined by the 1940 Act, because Mr. Quinn is President of the Manager.
Mr. Feld is deemed to be an "interested person" of the AMR Trust only, as
defined by the 1940 Act, because Mr. Feld's law firm of Akin, Gump, Strauss,
Hauer & Feld LLP has provided legal services within the past two years to
one or more of the AMR Trust's sub-advisers.
30
American AAdvantage Select Funds
Privacy Policy
(Unaudited)
- --------------------------------------------------------------------------------
The American AAdvantage Select Funds recognizes and respects the privacy of our
shareholders. We are providing this notice to you so you will understand how
shareholder information may be collected and used.
We may collect nonpublic personal information about you from one or more of
the following sources:
- information we receive from you on applications or other forms;
- information about your transactions with us or our service providers; and
- information we receive from third parties.
We do not disclose any nonpublic personal information about our shareholders
or former shareholders to anyone, except as permitted by law.
We restrict access to your nonpublic personal information to those employees
or service providers who need to know that information to provide products
or services to you. To ensure the confidentiality of your nonpublic personal
information, we maintain safeguards that comply with federal standards.
31
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[BACK COVER]
ITEM 2. CODE OF ETHICS.
The Trust has adopted a code of ethics that applies to its principal
executive and financial officers (the "Code"). The Trust did not amend the
Code nor did it grant any waivers to the provisions of the Code during the
period covered by the shareholder report presented in Item 1. The Code is
filed herewith as Exhibit 99.CODE ETH.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Trust's Board of Trustees has determined that Stephen O'Sullivan, a
member of the Trust's audit committee, is an "audit committee financial
expert" as defined in Form N-CSR. Mr. O'Sullivan is "independent" as defined
in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a)
<Table>
<Caption>
Audit Fees Fiscal Year Ended
- ---------- -----------------
$3,317 12/31/2003
$3,238 12/31/2004
</Table>
(b)
<Table>
<Caption>
Audit-Related Fees Fiscal Year Ended
- ------------------ -----------------
$0 12/31/2003
$0 12/31/2004
</Table>
(c)
<Table>
<Caption>
Tax Fees Fiscal Year Ended
- -------- -----------------
$1,500* 12/31/2003
$0 12/31/2004
</Table>
<FN>
* For review of 2002 tax returns
</FN>
(d)
<Table>
<Caption>
All Other Fees Fiscal Year Ended
- -------------- -----------------
$0 12/31/2003
$0 12/31/2004
</Table>
(e)(1) 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 accountant:
- to 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;
- to approve, prior to appointment, the engagement of the auditors to
provide non-audit services to the Trust, an investment adviser to any
series of the Trust 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;
- to review the arrangements for and scope of the annual audit and any
special audits; and
- 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 may delegate any portion of its authority, including the
authority to grant pre-approvals of audit and permitted non-audit services,
to a subcommittee of one or more members. Any decisions of the subcommittee
to grant pre-approvals shall be presented to the full audit committee at its
next regularly scheduled meeting.
(e)(2) None of the fees disclosed in paragraphs (b) through (d) above were
approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g)
<Table>
<Caption>
Aggregate Non-Audit Fees for Services Rendered to the:
- ------------------------------------------------------
Adviser's Affiliates Providing
Registrant Adviser Ongoing Services to Registrant Fiscal Year Ended
- ---------- ------- ------------------------------ -----------------
$1,500 $0 N/A 12/31/2003
$0 $0 N/A 12/31/2004
</Table>
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The schedules of investments for each series of the Trust are included in the
shareholder report presented in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Trust has made no material changes to the procedures by which shareholders
may recommend nominees to the Trust's Board of Trustees since the Trust last
disclosed such procedures in Schedule 14A.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon an evaluation within 90 days of the filing date of this
report, the principal executive and financial officers concluded that
the disclosure controls and procedures of the Trust are effective.
(b) There were no changes in the Trust's internal control over financial
reporting during the second fiscal quarter of the period covered by
this report that has materially affected, or is reasonably likely to
materially affect, the Trust's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Filed herewith as EX-99.CODE ETH.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the Trust as required by Rule
30a-2(a) under the Investment Company Act of 1940 is attached hereto
as EX-99.CERT.
(a)(3) Not Applicable.
(b) The certifications required by Rule 30a-2(b) under the Investment
Company Act of 1940 are attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): American Beacon Select Funds
By /s/ William F. Quinn
--------------------
William F. Quinn
President
Date: March 9, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By /s/ William F. Quinn
--------------------
William F. Quinn
President
Date: March 9, 2005
By /s/ Rebecca L. Harris
---------------------
Rebecca L. Harris
Treasurer
Date: March 9, 2005