--------------------------------------------------------------------------------
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The
ORBITEX
Cash Reserves
Fund
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Annual Report
December 31, 2001
[OBJECT OMITTED]
January 16, 2002
Dear Shareholder:
The past six months have proven to be some of the most challenging times in
market history for investors. As the economy began to weaken heading into the
month of September, markets weakened as well. Then, on September 11, 2001, the
market conditions were exacerbated by the tragic terrorist attacks that
astonished our nation. Now, with the triple threat of a prolonged military
conflict abroad, bio-terrorism at home and negative news flows, investors and
financial professionals alike are concerned about the economy and the market.
Ironically the end of September served to provide a temporary bottom in the
markets. The markets have rebounded smartly from those lows. Fixed income and
money market funds have been a safer place for many investors during this
volatile investment period. Although the Federal Reserve Board has continued to
lower interest rates creating higher prices and yield reductions, the Cash
Reserves Money Market Fund has performed well.
Looking toward the future, we plan to continue to manage the fund in accordance
with its objective in order to meet your expectations. The fund is sub-advised
by AMR, whose wealth of experience reaches the 16-year ▇▇▇▇ this year.
Thank you for entrusting us with your assets and supporting the Orbitex Group of
Funds. We look forward to serving your investment needs for many years to come.
If you have any questions or concerns, please call ▇-▇▇▇-▇▇▇▇▇▇▇.
Sincerely,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President--Orbitex Group of Funds
An investment in a money market fund is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
ORBITEX CASH RESERVES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2001
ASSETS:
Investment in AMR Investment Services Money
Market Portfolio, at cost/value $40,083,088
Receivable for fund shares sold 2,492,680
Receivable due from advisor (Note 3) 38,610
Prepaid expenses and other assets 10,999
-----------
Total Assets 42,625,377
-----------
LIABILITIES:
Dividends payable 10,596
Accrued expenses and other liabilities 24,304
-----------
Total Liabilities 34,900
-----------
Net Assets $42,590,477
===========
COMPOSITION OF NET ASSETS:
Paid in capital $42,590,477
-----------
Net Assets $42,590,477
===========
Institutional Shares:
(no par value per share) 38,154,645
-----------
Net Asset Value $ 1.00
===========
Investor Shares:
(no par value per share) 4,435,832
-----------
Net Asset Value $ 1.00
===========
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See Notes to Financial Statements.
-2-
ORBITEX CASH RESERVES FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
INVESTMENT INCOME - Allocated From AMR
INVESTMENT SERVICES MONEY MARKET PORTFOLIO:
Interest income $ 1,676,150
Net expense (Note 3) (42,157)
-----------
NET INVESTMENT INCOME ALLOCATED FROM AMR
INVESTMENT SERVICES MONEY MARKET PORTFOLIO 1,633,993
-----------
EXPENSES (Note 3):
Transfer agent fee (Institutional Shares) 53,024
Transfer agent fee (Investor Shares) 5,006
Fund accounting fee 38,776
Registration fees 16,573
Administration fee 8,000
Audit fee 8,000
Custodian fee 6,286
Distribution fee (Investor Shares) 4,972
Trustees' fees 4,551
Legal fee 3,302
Printing expense 2,990
Other 1,793
-----------
TOTAL EXPENSES 153,273
Less: Expenses reimbursed and fees waived (93,640)
-----------
NET EXPENSES 59,633
-----------
NET INVESTMENT INCOME 1,574,360
-----------
NET REALIZED GAIN - ALLOCATED FROM AMR
INVESTMENT SERVICES MONEY MARKET PORTFOLIO 4,892
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,579,252
===========
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See Notes to Financial Statements.
-3-
ORBITEX CASH RESERVES FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Year For the
Ended Period Ended
December 31, 2001 December 31, 2000 (1)
----------------- ---------------------
OPERATIONS:
Net investment income $ 1,574,360 $ 316,746
Net realized gain 4,892 --
------------ ------------
Increase in Net Assets From Operations 1,579,252 316,746
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Institutional Shares (1,513,603) (313,823)
Investor Shares (60,757) (2,923)
From net realized gains:
Institutional Shares (4,553) --
Investor Shares (339) --
------------ ------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (1,579,252) (316,746)
------------ ------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Institutional Shares:
Sales of Shares 19,592,068 27,998,573
Reinvestment of distributions 1,513,368 313,823
Redemption of Shares (9,634,485) (1,628,702)
------------ ------------
INCREASE IN NET ASSETS FROM INSTITUTIONAL SHARE TRANSACTIONS 11,470,951 26,683,694
------------ ------------
Investor Shares:
Sales of Shares 63,515,396 1,133,014
Reinvestment of distributions 40,393 2,923
Redemption of Shares (60,221,765) (34,129)
------------ ------------
INCREASE IN NET ASSETS FROM INVESTOR SHARE TRANSACTIONS 3,334,024 1,101,808
------------ ------------
NET INCREASE IN NET ASSETS 14,804,975 27,785,502
Net Assets, Beginning of Year 27,785,502 --
------------ ------------
NET ASSETS, END OF YEAR $ 42,590,477 $ 27,785,502
============ ============
------------
(1) For the period from June 7, 2000 (commencement of operations) to December
31, 2000.
--------------------------------------------------------------------------------
See Notes to Financial Statements.
-4-
Orbitex Cash Reserves Fund
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FINANCIAL HIGHLIGHTS
Institutional Shares Investor Shares
--------------------------------------------------------------
For the For the For the For the
Year Period Year Period
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2001 2000(1) 2001 2000(2)
--------------------------------------------------------------
Net Asset Value, Beginning of Year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Net investment income from investment operations 0.0408 0.0370 0.0372 0.0282
Distributions from net investment income (0.0408) (0.0370) (0.0372) (0.0282)
------------ ------------ ----------- -----------
Net Asset Value, End of Year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
============ ============ =========== ===========
Total Return (3)(4) 4.15% 6.59% 3.78% 6.22%
Ratio/Supplementary Data:
Net Assets, at End of Year (000's omitted) $ 38,155 $ 26,684 $ 4,436 $ 1,102
Ratio of Expenses to Average Net Assets:
Expenses including reimbursement/waiver (3)(5) 0.24% 0.24% 0.60% 0.60%
Expenses excluding reimbursement/waiver (3)(5) 0.48% 2.08% 0.84% 2.68%
Net investment income including reimbursement/waiver (3) 4.04% 6.50% 3.06% 6.16%
----------
(1) For the period June 7, 2000 (commencement of operations) to December 31,
2000.
(2) For the period July 18, 2000 (commencement of class) to December 31, 2000.
(3) Annualized, for periods less than one year.
(4) Total returns are historical and assume reinvestment of dividends and
capital gain distributions. Had the Advisor and Administrator not absorbed
a portion of the expenses, total returns would have been lower.
(5) Includes the Fund's share of the Portfolio's allocated expenses.
--------------------------------------------------------------------------------
See Notes to Financial Statements.
-5-
ORBITEX CASH RESERVES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
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NOTE 1. ORGANIZATION
The Orbitex Cash Reserves Fund (the "Fund") is a series of the Orbitex Group of
Funds (the "Trust"), a Trust organized in the State of Delaware in December
1996. The Trust is registered under the Investment Company Act of 1940, as
amended, as an open-end investment company. Currently, the Fund consists of four
classes of shares, two of which are active: Institutional Shares and Investor
Shares. The Trust Instrument of the Trust authorizes the Fund to issue an
unlimited number of shares of beneficial interest without par value. The Fund
currently seeks to achieve its investment objectives by investing all of its
investable assets in AMR Investment Services Money Market Portfolio (the
"Portfolio"), a registered open-end management investment company with
substantially the same investment objectives and policies as the Fund. The
Portfolio is managed by AMR Investment Services, Inc. ("AMR") a wholly owned
subsidiary of AMR Corporation. The Fund may withdraw its investments from the
Portfolio at any time if the Trust's Board of Trustees (the "Board") determines
that it is in the best interest of the Fund and its shareholders to do so. The
Fund accounts for its investments in the Portfolio as partnership investments,
commonly referred to as a master-feeder arrangement.
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the schedule of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. At December 31, 2001, the
percentage of the Portfolio owned by the Fund was less than 1%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal periods. Actual results could differ from those estimates.
The following represent significant accounting policies of the Fund:
SECURITY VALUATION - The Fund records its investment in the Portfolio at value.
Valuation of securities held in the Portfolio are discussed in the Portfolio's
Notes to Financial Statements, which are included elsewhere in this report.
INVESTMENT INCOME AND EXPENSES - The Fund records daily its pro rata share of
the Portfolio's income, expenses and realized gain and loss. In addition, the
Fund accrues its own expenses. The expenses of the Fund that are directly
identifiable to a specific class are charged to that class. Expenses that are
not readily identifiable to a specific class are allocated based on net assets
of each class.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable federal income tax regulations.
FEDERAL TAXES - The Fund intends to qualify each year as a regulated investment
company and distribute all of its taxable income. In addition, by distributing
in each calendar year substantially all of its net investment income, capital
gains and certain other amounts, if any, the Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
REALIZED GAIN AND LOSS - Security transactions are recorded on trade date.
Realized gain and loss on investments sold are recorded on the basis of
identified cost.
-6-
ORBITEX CASH RESERVES FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
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NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS
ADVISORY FEES
The Fund has entered into an investment advisory agreement with Orbitex
Management, Inc. (the "Advisor"). As long as the Fund invests all of its
investable assets in the Portfolio, investment decisions will be made by AMR.
For its services, the Portfolio pays AMR a fee accrued and paid daily at an
annualized rate of 0.10% of the average daily net assets. In the event the Fund
was to withdraw its investments from the Portfolio, the Advisor would act as
investment advisor to the Fund and the Advisor would be entitled to a fee based
on the Fund's average daily net assets.
The Advisor has agreed to reimburse certain operating expenses to the extent
necessary to limit total operating expenses to 0.24% and 0.60% of the average
daily net assets of Institutional Shares and Investor Shares, respectively.
Expenses reimbursed by the Advisor for the year ended December 31, 2001 amounted
to $38,265.
ADMINISTRATION, FUND ACCOUNTING AND TRANSFER AGENT FEES
Orbitex Fund Services, Inc ("OFS"), formerly American Data Services, Inc., an
affiliate of the Advisor, serves as the administrator of the Fund. For providing
administration services to the Fund, OFS receives a fee accrued daily and
payable monthly, at the annualized rate of 0.02% of the Fund's average daily net
assets.
OFS also acts as the fund accounting agent and transfer agent of the Fund. For
providing fund accounting services, the Fund pays OFS a fixed monthly fee for
average net assets less than $25 million and at an annualized rate of 0.02%
thereafter, plus out-of-pocket expenses. For providing transfer agent services,
the Fund pays OFS a minimum monthly or per account fee plus certain transaction
fees which are allocated by shareholder accounts.
Expenses waived by OFS for the year ended December 31, 2001 amounted to $55,375.
CUSTODIAN
Circle Trust Company ("CTC"), an affiliate of the Adviser, is the Fund's
custodian.
TRUSTEES FEES
The Fund pays no compensation to its Trustees who are employees of the Advisor.
Trustees who are not Advisor employees receive a fee of $2,500 for each regular
meeting of the Board that the Trustee attends. The Trust also reimburses each
such Trustee for travel and other expenses incurred in attending meetings of the
Board.
DISTRIBUTION FEES
The Fund has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1
under the Investment Company Act of 1940. The distributor of the Fund is Orbitex
Funds Distributor, Inc. ("OFD"), an affiliate of the Advisor. Under the Plan and
Agreement, the Fund compensates OFD for distributing the Fund's Investor class
shares. The distribution fee is payable at the annualized rate of 0.25% of the
average net assets of the Investor class shares. No distribution fees are paid
to OFD as distributor for the Institutional class shares.
-7-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Orbitex Cash Reserves Fund
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Orbitex Cash Reserves Fund (the "Fund"; a series of the Orbitex Group of Funds)
at December 31, 2001, the results of its operations for the year then ended, and
the changes in its net assets and the financial highlights for the year then
ended and for the period from June 7, 2000 (commencement of operations) through
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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.
PricewaterhouseCoopers LLP
New York, New York
February 19, 2002
-8-
The Trustees and officers of the Orbitex Group of Funds 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 ▇▇▇ ▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇. Each Trustee oversees 12 funds in the fund complex that
includes the Orbitex Group of Funds Trust and the Orbitex Life Sciences &
Biotechnology Fund, Inc.
POSITION, TERM OF OFFICE
AND LENGTH OF TIME SERVED
NAME, AGE AND ADDRESS WITH THE ORBITEX TRUST PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT DIRECTORSHIPS
--------------------- ------------------------- ---------------------------------------------------------------------
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INTERESTED TRUSTEE
TERM
Lifetime of Trust until
removal, resignation or
retirement
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (47) Trustee, Chairman and Co-Chairman, Chief Executive Officer and Director, Orbitex Financial
President since 1998 (2000-Present) President, Chief Executive Officer and Director, Orbitex
Management, Inc. (1998-2000) (investment management); Consultant, BISYS
Management, Inc. (1996-1998) (mutual fund distributor); Chairman of the
Board and Chief Executive Officer, Concord Financial Group (1987-1996)
(administrator and distributor of funds).
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NON-INTERESTED TRUSTEES
TERM
Lifetime of Trust until
removal, resignation or
retirement
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. (54) Trustee since 1997 Chief Executive Officer, Cross Media Marketing Corp. (1997-Present)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Inc. (1994-1997) (perfume distributor).
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (49) Trustee since 1998 President, ▇▇▇▇▇ Financial Corp. (1995-present) (broker dealer).
▇▇▇▇▇ Financial Corp.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ (52) Trustee since 1998 Chairman & CEO, New Century Care, Inc. (1989-present) (merchant bank);
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Principal, New Century Living, Inc. (1995-present); Director, Chimney Rock
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Vineyard and Chimney Rock Winery; President and Director, Key Mutual Funds
(1989-present).
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-9-
POSITION, TERM OF OFFICE
AND LENGTH OF TIME SERVED
NAME, AGE AND ADDRESS WITH THE ORBITEX TRUST PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT DIRECTORSHIPS
--------------------- ------------------------- ---------------------------------------------------------------------
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OFFICERS
TERM
Lifetime of Trust until
removal, resignation or
retirement
▇▇▇▇ ▇▇▇▇▇▇▇▇ (39) President and Chief President and Chief Investment Officer, Orbitex Management, Inc.
Investment Officer since (2000-present); General Partner, Nebo Management (1999-present) (investment
2000 advisor); Director and Senior Portfolio Manager, ▇▇▇▇▇▇-▇▇▇▇▇▇▇ Financial
Corp. (1992-1999) (investment advisor).
M. Fyzul Khan (30) VP and Secretary since General Counsel, Financial Services Group, Inc. (1998-present); ▇▇▇▇▇▇▇▇,
▇▇▇▇ CIBC Oppenheimer (1997-1998); Law student, ▇▇▇▇▇▇▇ University School of Law
(1994-1997).
▇▇▇▇▇ ▇▇▇▇▇▇ (39) VP and Assistant President, Orbitex Fund Services, Inc. (2001 - present); Chief Operating
Secretary since 1998 Officer, Orbitex Financial Services Group (1998-2001); Manager, Investor
KPMG (1995-1998). Services Consulting,
▇▇▇▇ ▇▇▇▇ (48) VP and Treasurer since Chief Financial Officer, Orbitex Management, Inc. (1999-present); Chief
1999 Financial Officer and Chief Operating Officer, Investment Advisory Network
(1998-1999) (software developer); Chief Financial Officer and Chief
Operations Officer, PMC International, Inc. (1992-1998) (investment
advisor, broker-dealer, and software developer).
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (34) AVP and Assistant Legal Counsel, Orbitex Financial Services Group, Inc. (2001-present);
Secretary since 2000 Compliance Officer, Orbitex Management, Inc. (March 2000-present);
Compliance Analyst, Mutual of New York (2000) (Life Insurance Co.);
Compliance Analyst, Mutual of America (1996-2000) (Life Insurance Co.).
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (50) Assistant Treasurer since Senior Vice President, Orbitex Fund Services, Inc. (1987-present)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 1999 (Financial Services).
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (34) Vice President and Chief Chief Operations Officer, Orbitex Management, Inc. (2000-present); Chief
Operations Officer since Financial Officer, Whitehorse Partners (1999-2000) (investment advisor);
Registered Representative, Nations Financial Group, Inc. (1998-2000)
2000 (broker dealer, investment advisor); Director of Research, Fairfax Capital
Management (1996-2000) (investment management consulting); Registered
Representative, Aegon securities (1996-1998) (broker dealer).
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-10-
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AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 2001
--------------------------------------------------------------------------------
in thousands, except share amounts
Par
Amount Value
---------- ---------
FIXED RATE CERTIFICATES OF DEPOSIT AND BANK NOTES - 5.75%
DOMESTIC BANKS
Bank One, NA, 2.49%, Due 3/28/2002 $ 275,000 $ 275,032
----------
TOTAL DOMESTIC BANKS 275,032
----------
FOREIGN BANKS
Svenska Handelsbanken, 4.50%, Due 3/22/2002 200,000 200,000
----------
TOTAL FOREIGN BANKS 200,000
----------
TOTAL FIXED RATE CERTIFICATES OF DEPOSIT AND BANK NOTES 475,032
----------
VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES - 16.64%
DOMESTIC BANKS
Banco Popular de Puerto Rico, (Note C)
3.62%, Due 10/1/2002 200,000 200,000
2.26%, Due 12/16/2002 300,000 300,000
Bank of America, NA, 2.08%, Due 2/19/2002 70,000 70,013
Branch Banking & Trust Company,
2.11%, Due 5/15/2002 50,000 50,026
2.03%, Due 6/24/2002 32,500 32,527
First Union National Bank,
2.00%, Due 5/10/2002 100,000 100,000
2.00%, Due 5/14/2002 150,000 150,000
2.22%, Due 5/15/2002 100,000 100,046
2.06%, Due 12/20/2002 87,000 87,189
Fleet National Bank, NA,
2.54%, Due 1/22/2002 5,000 5,001
2.09%, Due 3/6/2002 22,000 22,007
2.07%, Due 3/12/2002 10,000 10,003
2.02%, Due 6/17/2002 20,000 20,017
2.06%, Due 6/28/2002 50,000 50,044
National City Bank,
2.17%, Due 2/22/2002 95,000 95,019
2.08%, Due 3/1/2002 15,000 15,002
2.49%, Due 10/10/2002 25,000 25,025
2.10%, Due 11/13/2002 43,000 43,048
----------
TOTAL VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES 1,374,967
----------
VARIABLE RATE FUNDING AGREEMENTS - 15.43% General Electric Capital Assurance
Company, (Note B)
2.30%, Due 2/1/2002 200,000 200,000
2.17%, Due 12/2/2002 200,000 200,000
▇▇▇▇▇▇▇ National Life Insurance Company, 2.05%, Due 8/30/2002 (Note A) 100,000 100,000
Metropolitan Life Insurance Company, (Note B)
2.31%, Due 7/19/2002 200,000 200,000
2.31%, Due 11/22/2002 100,000 100,000
Security Life of Denver, (Note B)
2.01%, Due 3/29/2002 200,000 200,000
2.12%, Due 5/14/2002 100,000 100,000
Travelers Insurance Company, 2.07%, Due 9/11/2002 (Note B) 175,000 175,000
----------
TOTAL VARIABLE RATE FUNDING AGREEMENTS 1,275,000
----------
See accompanying notes
-11-
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AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 (continued)
--------------------------------------------------------------------------------
in thousands, except share amounts
Par
Amount Value
--------- ---------
ASSET-BACKED COMMERCIAL PAPER, 144A (Notes D and E) - 13.15%
Kittyhawk Funding,
2.42%, Due 3/20/2002 $ 150,000 $ 149,214
1.88%, Due 6/3/2002 91,110 90,382
Scaldis Capital, LLC,
2.48%, Due 3/1/2002 68,025 67,749
2.27%, Due 3/20/2002 30,349 30,199
2.47%, Due 3/22/2002 22,277 22,155
2.47%, Due 3/27/2002 60,709 60,355
2.47%, Due 3/28/2002 30,288 30,109
2.25%, Due 4/5/2002 49,998 49,704
2.27%, Due 4/5/2002 15,163 15,073
2.27%, Due 4/12/2002 74,386 73,912
Sigma Financial, Incorporated,
3.56%, Due 3/28/2002 55,000 54,532
3.52%, Due 4/3/2002 30,000 29,730
3.52%, Due 4/15/2002 76,000 75,227
3.52%, Due 4/29/2002 86,000 85,008
Stellar Funding Group, Incorporated,
2.17%, Due 1/18/2002 8,620 8,611
2.15%, Due 1/29/2002 19,703 19,670
2.16%, Due 1/31/2002 5,027 5,018
2.50%, Due 2/28/2002 7,079 7,050
2.50%, Due 3/1/2002 11,820 11,772
2.47%, Due 3/5/2002 8,199 8,164
2.31%, Due 3/6/2002 30,000 29,877
2.47%, Due 3/11/2002 3,198 3,183
2.47%, Due 3/15/2002 11,449 11,392
2.47%, Due 3/19/2002 10,143 10,089
2.47%, Due 3/28/2002 6,076 6,040
2.48%, Due 4/1/2002 12,735 12,656
2.47%, Due 6/24/2002 39,063 38,597
2.47%, Due 6/25/2002 58,231 57,532
Tulip Funding Corporation, 4.07%, Due 1/18/2002 23,884 23,838
----------
TOTAL ASSET-BACKED COMMERCIAL PAPER 1,086,838
----------
COMMERCIAL PAPER, (Note E) - 24.42
Spintab-Swedmortgage AB, 1.86%, Due 4/10/2002 85,000 84,565
Bank of Scotland Treasury,
2.24%, Due 4/5/2002 50,000 49,708
2.24%, Due 4/8/2002 72,000 71,566
2.20%, Due 4/23/2002 100,000 99,316
Credit Suisse First Boston, 144A (Note D), 2.22%, Due 4/22/2002 80,000 79,452
Danske Corporation,
2.46%, Due 3/11/2002 70,000 69,670
2.26%, Due 4/9/2002 100,000 99,386
1.88%, Due 5/16/2002 50,280 49,926
1.88%, Due 5/31/2002 200,000 198,433
Dresdner Bank, AG, 2.23%, Due 4/4/2002 200,000 198,848
General Electric Capital Corporation,
See accompanying notes
-12-
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 (continued)
--------------------------------------------------------------------------------
in thousands, except share amounts
Par
Amount Value
----------- ---------
2.35%, Due 1/31/2002 $ 50,000 $ 49,902
3.56%, Due 3/27/2002 200,000 198,319
3.56%, Due 3/28/2002 200,000 198,299
2.23%, Due 4/16/2002 200,000 198,699
Sao Paolo US Financial Company,
1.89%, Due 4/30/2002 50,000 49,688
1.87%, Due 5/30/2002 75,000 74,420
1.90%, Due 6/3/2002 50,000 49,596
▇▇▇▇▇ Fargo Financial Company, 1.96%, Due 4/29/2002 100,000 99,358
Westdeutsche Landesbank, 1.90%, Due 4/8/2002 100,000 99,488
-------------
TOTAL COMMERCIAL PAPER 2,018,639
-------------
VARIABLE RATE MEDIUM-TERM NOTES - 18.11% American Honda Finance Corporation,
144A, (Note D)
2.03%, Due 5/14/2002 100,000 99,996
2.10%, Due 5/17/2002 125,000 124,998
2.02%, Due 6/10/2002 50,000 49,998
1.93%, Due 6/12/2002 100,000 100,000
2.16%, Due 8/27/2002 75,000 75,000
2.15%, Due 11/20/2002 100,000 100,000
Associates Corporation,
2.23%, Due 2/22/2002 86,000 86,016
2.33%, Due 5/1/2002 20,000 20,009
2.22%, Due 5/17/2002 12,000 12,007
Bank of America Corporation, 2.38%, Due 4/30/2002 45,000 45,028
Chase Manhattan Corporation,
2.68%, Due 1/3/2002 17,000 17,000
2.21%, Due 2/22/2002 30,000 30,006
2.41%, Due 1/30/2003 20,000 20,040
Credit Suisse First Boston, 144A (Note D) , 2.11%, Due 12/11/2002 25,000 25,055
First Security Bank, 2.54%, Due 10/10/2002 34,000 34,039
▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, LP,
2.61%, Due 1/14/2002 15,000 15,001
2.60%, Due 1/14/2002 23,000 23,001
2.55%, Due 1/23/2002 10,000 10,001
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company,
2.45%, Due 1/7/2002 70,000 70,000
2.45%, Due 2/4/2002 125,000 124,999
2.50%, Due 7/24/2002 15,000 15,018
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Company,
2.44%, Due 1/28/2002 176,300 176,325
2.63%, Due 1/16/2003 19,800 19,849
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Holdings,
2.50%, Due 1/24/2002 30,000 30,003
2.10%, Due 9/11/2002 20,000 20,017
Wachovia Bank, 2.07%, Due 5/23/2002 15,000 15,003
▇▇▇▇▇ Fargo & Company,
2.43%, Due 4/26/2002 122,975 123,031
2.27%, Due 10/30/2002 15,000 15,018
-------------
TOTAL VARIABLE RATE MEDIUM-TERM NOTES 1,496,458
-------------
OTHER SHORT-TERM INVESTMENTS - 6.66% Shares
-------------
AIM Liquid Assets 915,587 $ 916
Deutsche Cash Reserve Fund 150,000,000 150,000
Federated Money Market Obligations Trust 200,000,000 200,000
One Group Money Market Institutional Shares 199,878,552 199,879
-------------
TOTAL OTHER SHORT-TERM INVESTMENTS 550,795
-------------
TOTAL INVESTMENTS - 100.16% (Cost $8,277,729) 8,277,729
-------------
LIABILITIES, NET OF OTHER ASSETS - (0.16%) (12,822)
-------------
TOTAL NET ASSETS - 100% $ 8,264,907
=============
See accompanying notes
-13-
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS DECEMBER 31, 2001 (continued)
--------------------------------------------------------------------------------
in thousands, except share amounts
Based on the cost of investments of $8,277,729 for federal income tax purposes
at December 31, 2001, there was no unrealized appreciation or depreciation of
investments.
(A) Obligation is subject to an unconditional put back to the issuer with seven
calendar days notice.
(B) Obligation is subject to an unconditional put back to the issuer with
ninety calendar days notice.
(C) Obligation is subject to a credit quality put back to the issuer with seven
calendar days notice.
(D) 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 $1,741,337 or 21.07% of net
assets.
(E) Rates associated with money market securities represent discount rate at
time of purchase.
ABBREVIATIONS:
AB - Company
AG - Company
LLC - Limited Liability Company
LP - Limited Partnership
NA - National Association
See accompanying notes
-14-
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2001
--------------------------------------------------------------------------------
in thousands
ASSETS:
Investments in securities at value (cost - $8,277,729) ... $8,277,729
Dividends and interest receivable ......................... 23,601
----------
TOTAL ASSETS ...................................................... 8,301,330
----------
LIABILITIES:
Payable for investments purchased ......................... 35,202
Management and investment advisory fees payable (Note 2) .. 1,068
Other liabilities ......................................... 153
----------
TOTAL LIABILITIES ................................................. 36,423
----------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS .......... $8,264,907
==========
See accompanying notes
-15-
--------------------------------------------------------------------------------
AMR Investment Services Trust Money Market Portfolio
Statement of Operations Year Ended December 31, 2001
--------------------------------------------------------------------------------
in thousands
INVESTMENT INCOME:
Interest income .......................................... $404,114
--------
TOTAL INVESTMENT INCOME ............................. 404,114
--------
EXPENSES:
Management and investment advisory fees (Note 2) ......... 9,977
Custodian fees ........................................... 301
Professional fees ........................................ 106
Other expenses ........................................... 264
--------
TOTAL EXPENSES ...................................... 10,648
--------
NET INVESTMENT INCOME ............................................ 393,466
--------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ......................... 1,556
--------
NET GAIN ON INVESTMENTS ............................ 1,556
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $395,022
========
See accompanying notes
-16-
--------------------------------------------------------------------------------
AMR Investment Services Trust Money Market Portfolio
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
in thousands
Year Ended December 31,
-------------------------------
2001 2000
------------- --------------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income ...................................... $ 393,466 $ 278,877
Net realized gain on investments ........................... 1,556 144
------------ ------------
TOTAL INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 395,022 279,021
------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Contributions .............................................. 72,574,660 35,867,580
Withdrawals ................................................ (69,694,620) (34,808,427)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS .. 2,880,040 1,059,153
------------ ------------
Net increase in net assets ......................................... 3,275,062 1,338,174
------------ ------------
Net Assets:
Beginning of period ........................................ 4,989,845 3,651,671
------------ ------------
END OF PERIOD .............................................. $ 8,264,907 $ 4,989,845
============ ============
See accompanying notes
-17-
--------------------------------------------------------------------------------
AMR Investment Services Trust Money Market Portfolio
Financial Highlights
--------------------------------------------------------------------------------
The following ratios have been derived from information provided in the
financial statements.
MONEY MARKET
-------------------------------------------------
TWO MONTHS
YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, OCTOBER 31,
--------------------------------------------------
2001 2000 1999 1999 1998 1997
------ ----- ----- ----- ------ -----
Total Return: .................. 4.30% ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
Ratios to Average Net Assets:
Expenses ................. 0.11% 0.11% 0.11% 0.11% 0.16% 0.16%
Net investment income .... 3.95% 6.40% 5.77% 5.11% 5.56% 5.52%
See accompanying notes
-18-
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 (CONTINUED)
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 which was organized as a trust under the laws of the State of New York
pursuant to a Declaration of Trust dated as of June 27, 1995 and amended on
August 11, 1995. Beneficial interests in the Trust are divided into separate
series, each having distinct investment objectives and policies. These financial
statements relate to the AMR Investment Services Money Market Portfolio, (the
"Portfolio"). The assets of the Portfolio belong only to that Portfolio, and the
liabilities of the 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 Portfolio.
SECURITY VALUATION
Securities of the Portfolio are valued using the amortized cost method. In the
event that a deviation of 1/2 of 1% or more exists between the $1.00 per share
price of the Portfolio, calculated at amortized cost, and the price per share
calculated by reference to market quotations, or if there is any other deviation
which the Board believes would result in a material dilution to shareholders or
purchasers, the Board will promptly consider the appropriate action which should
be initiated.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date of the security purchase or
sale. Interest income is earned from settlement date, recorded on the accrual
basis, and adjusted, if necessary, for amortization of premiums or accretion of
discounts 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 Portfolio will be treated as a partnership for federal income tax purposes.
As such, each investor in the Portfolio will be taxed on its share of the
Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of sub-chapter M of the
Internal Revenue Code.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, securities are acquired by a
Portfolio from a securities dealer or a bank which are subject to resale at a
later date. Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. All collateral is held at the Portfolio's
custodian bank, State Street Bank and Trust Company, or at subcustodian banks.
The collateral is monitored daily by the Portfolio so that the collateral's
market value exceeds the carrying value of the repurchase agreement.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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
NOTE 2-TRANSACTIONS WITH AFFILIATES MANAGEMENT AGREEMENT
The Trust and the Manager are parties to a Management Agreement which obligates
the Manager to provide or oversee the provision of all administrative,
investment advisory and portfolio management services. The Manager serves as the
sole investment adviser to the Portfolio. As compensation for performing the
duties required under the Management Agreement, the Manager receives from the
Portfolio .10% of the average daily net assets of the Portfolio.
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. However, the Trust compensates each trustee with
payments in an amount equal to the trustee's income tax on the value of this
free airline travel. One trustee, as a retiree of American, already receives
flight benefits. This trustee receives an annual retainer of $20,000 plus $1,250
for each Board meeting attended. For the year ended December 31, 2001, the cost
of air transportation was not material to the Portfolio.
-19-
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
AMR Investment Services Money Market Portfolio
We have audited the accompanying statement of assets and liabilities of the AMR
Investment Services Money Market Portfolio, ("the Portfolio") including the
schedule of investments, as of December 31, 2001, and the related statement of
operations, the statement of changes in net assets, and the financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Portfolio's 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 auditing standards generally accepted
in the 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
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of December 31, 2001, by correspondence with the custodian or other
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as 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 the
AMR Investment Services Money Market Portfolio at December 31, 2001, the results
of its operations, the changes in its net assets, and the financial highlights
for each of the periods indicated therein, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
---------------------
Dallas, Texas
February 14, 2002
-20-
The Trustees and officers of the 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 ▇▇▇▇ ▇▇▇▇▇▇
Boulevard, MD 2450, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. Each Trustee oversees twenty-four
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.
POSITION, TERM OF OFFICE
AND LENGTH OF TIME SERVED
NAME, AGE AND ADDRESS WITH THE AMR TRUST PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT DIRECTORSHIPS
--------------------- ------------------------- ---------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
TERM
Lifetime of Trust until
removal, resignation or
retirement*
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇** (54) Trustee since 1987 and President, AMR Investment Services, Inc. (1986-Present); Chairman, American
President since 1986 Airlines Employees Federal Credit Union (1989-Present); Director, Crescent
Real Estate Equities, Inc. (1994-Present); Member, Southern Methodist
University ▇▇▇ School of Business Advisory Board (1999-Present); Director,
Southern Methodist University Endowment Fund Advisory Board (1996-Present);
Member, New York Stock Exchange Pension Manager's Advisory Committee
(1997-1998, 2000-Present); Trustee, American AAdvantage Funds
(1987-Present); Trustee, American AAdvantage Mileage Funds (1995-Present);
Trustee, American AAdvantage Select Funds (1999-Present).
▇▇▇▇ ▇. ▇▇▇▇** (65) Trustee since 1996 Partner, Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP (law firm) (1960-Present);
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Director, Clear Channel Communications (1984-Present); Trustee, CenterPoint
Suite 4100 Properties (1994-Present); Trustee, American AAdvantage Funds
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (1996-Present); Trustee, American AAdvantage Mileage Funds (1996-Present);
Trustee, American AAdvantage Select Funds (1999-Present).
------------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
TERM
Lifetime of Trust until
removal, resignation or
retirement*
▇▇▇ ▇. ▇▇▇▇▇, ▇▇. (41) Trustee since 2001 Partner, ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇ (law firm) (1985-Present); Trustee, American
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ AAdvantage Funds (2001-Present); Trustee, American AAdvantage Mileage Funds
Suite 2500 (2001-Present); Trustee, American AAdvantage Select Funds (2001-Present).
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇ (66) Trustee since 1987 Consultant (1994-Present); ); Trustee, American AAdvantage Funds
(1987-Present); Trustee, American AAdvantage Mileage Funds (1995-Present);
Trustee, American AAdvantage Select Funds (1999-Present).
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (56) Trustee since 2001 President, Southern Methodist University (1995-Present); Director,
225 ▇▇▇▇▇▇▇ Admin. Bldg. ChemFirst (1986-Present); Director, ▇.▇. ▇▇▇▇▇▇ Company, Inc.
Southern Methodist Univ. (1996-Present); Director, California Federal Preferred Capital Corp.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (2001-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;
Member, National Association of Independent Colleges and Universities Board
of Directors; Trustee, American AAdvantage Funds (2001-Present); Trustee,
American AAdvantage Mileage Funds (2001-Present); Trustee, American
AAdvantage Select Funds (2001-Present).
------------------------------------------------------------------------------------------------------------------------------------
-21-
POSITION, TERM OF OFFICE
AND LENGTH OF TIME SERVED
NAME, AGE AND ADDRESS WITH THE AMR TRUST PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS AND CURRENT DIRECTORSHIPS
--------------------- ------------------------- ---------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED TRUSTEES (CONT.)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (46) Trustee since 1996 Managing Partner, Pharos Capital Group, LLC (a private equity firm)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (1998-Present); Trustee, The ▇▇▇▇▇▇▇▇ School (1997-Present); Director,
Suite 1740 Starwood Hotels and Resorts (2001-Present); Member, Council on Foreign
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Relations (1995-Present); Director, Just For the Kids (1995-Present);
Director, L&B Realty Advisors (1998-2000); Trustee, Teachers Retirement
System of Texas (1993-1999); Director, United States Enrichment Corporation
(1993-1998), Director, Starwood Financial Trust (1998-2001); Trustee,
American AAdvantage Funds (1996-Present); Trustee, American AAdvantage
Mileage Funds (1996-Present); Trustee, American AAdvantage Select Funds
(1999-Present).
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS
TERM
One Year
▇▇▇▇▇ ▇. ▇▇▇▇ (39) VP since 1990 Vice President, Trust Investments, AMR Investment Services, Inc.
(1990-Present).
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (48) VP since 1989 Vice President, Fixed Income Investments, AMR Investment Services, Inc.
(1988-Present).
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (38) VP and Assistant Vice President, Legal and Compliance, AMR Investment Services, Inc.
Secretary since 1995 (1995-Present).
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (35) Treasurer since 1995 Vice President, Finance, AMR Investment Services, Inc. (1995-Present).
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (43) VP since 1989 Vice President, Director of Sales, AMR Investment Services, Inc.
(1991-Present).
▇▇▇▇▇▇ ▇. ▇▇▇▇ (49) Secretary since 1998 Partner, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP (law firm).
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* 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. ▇▇▇▇▇ and ▇▇▇▇ are deemed to be "interested persons" of the AMR
Trust, as defined by the 1940 Act. ▇▇. ▇▇▇▇▇ is President of the Manager.
▇▇. ▇▇▇▇'▇ law firm of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇ LLP has provided
legal services within the past two years to one or more of the AMR Trust's
investment advisers.
-22-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The
ORBITEX
Cash Reserves
Fund
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Semi-Annual Report
June 30, 2002
(Unaudited)
--------------------------------------------------------------------------------
ORBITEX
Dear Shareholder:
The past six months proved very volatile for investors and fund managers. The
market and the economy have suffered severe setbacks due not only to the
terrorist attacks in September, but also to the uncertainty of various global
conflicts, a trough in the current earnings cycle and a crisis of confidence in
corporate America caused by the Enron debacle and other events of the past year.
Although the market remains volatile, fundamentals appear to be slowly turning,
and our Investment Committee feels that we are setting up for a superb time to
be investing in the market for the long-term. Fixed income and money market
funds have been a safer place for many investors during this volatile investment
period. While interest rates have remained flat for the last six months,
creating higher prices and yield reductions, the Cash Reserves Money Market Fund
has performed well.
Looking toward the future, we plan to continue to manage the fund in accordance
with its objective in order to meet your expectations. The fund is sub-advised
by AMR, whose wealth of experience reaches the 16-year ▇▇▇▇ this year. Thank you
for entrusting us with your assets and supporting The Orbitex Group of Funds. We
look forward to serving your investment needs for many years to come. If you
have any questions or concerns, please call ▇-▇▇▇-▇▇▇▇▇▇▇. Sincerely,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President-Orbitex Group of Funds
An investment in a money market fund is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
1
ORBITEX CASH RESERVES FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2002 (UNAUDITED)
ASSETS:
Investment in AMR Investment Services Money
Market Portfolio, at cost/value $ 31,465,630
Receivable due from advisor (Note 3) 25,299
Prepaid expenses and other assets 26,492
-----------------
Total Assets 31,517,421
-----------------
LIABILITIES:
Dividends payable 50,739
Payable for trustees' fees (Note 3) 193
Accrued expenses and other liabilities 15,854
-----------------
Total Liabilities 66,786
-----------------
Net Assets $31,450,635
=================
COMPOSITION OF NET ASSETS:
Paid in capital $ 31,450,635
-----------------
Net Assets $31,450,635
=================
Institutional Shares:
(no par value per share) 28,033,740
-----------------
Net Asset Value $1.00
=================
Investor Shares:
(no par value per share) 3,416,895
-----------------
Net Asset Value $1.00
=================
--------------------------------------------------------------------------------
See Notes to FinanciaL Statements
2
ORBITEX CASH RESERVES FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
INVESTMENT INCOME - Allocated From AMR Investment Services Money
Market Portfolio:
Interest income $ 428,194
Net expense (Note 3) (22,153)
---------------
Net Investment Income Allocated From AMR
Investment Services Money Market Portfolio 406,041
---------------
EXPENSES (Note 3):
Transfer agent fee (Institutional Shares) 22,215
Transfer agent fee (Investor Shares) 2,040
Fund accounting fee 19,370
Registration fees 5,343
Distribution fee (Investor Shares) 5,084
Administration fee 4,380
Legal fee 4,011
Custodian fee 3,674
Audit fee 2,674
Printing expense 2,003
Trustees' fees 1,393
Other 2,538
---------------
Total Expenses 74,725
Less: Expenses reimbursed (see note 3) (39,091)
---------------
Net Expenses 35,634
---------------
Net Investment Income 370,407
---------------
Net Increase in Net Assets Resulting From Operations $ 370,407
===============
--------------------------------------------------------------------------------
See Notes to Financial Statements.
3
ORBITEX CASH RESERVES FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months For the Year
Ended Ended
June 30, 2002 December 31, 2001
(Unaudited)
----------------------- -------------------------
OPERATIONS:
Net investment income $ 370,407 $ 1,574,360
Net realized gain - 4,892
----------------------- -------------------------
Increase in Net Assets Resulting From Operations 370,407 1,579,252
----------------------- -------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Institutional Shares (341,141) (1,513,603)
Investor Shares (29,266) (60,757)
From net realized gains:
Institutional Shares - (4,553)
Investor Shares - (339)
----------------------- -------------------------
Decrease in Net Assets From Distributions to Shareholders (370,407) (1,579,252)
----------------------- -------------------------
CAPITAL SHARE TRANSACTIONS (at $1.00 per share):
Institutional Shares:
Sales of Shares 378,675 19,592,068
Reinvestment of distributions 286,995 1,513,368
Redemption of Shares (10,786,575) (9,634,485)
Increase (Decrease) in Net Assets From
----------------------- -------------------------
Institutional Share Transactions (10,120,905) 11,470,951
----------------------- -------------------------
Investor Shares:
Sales of Shares 82,696,204 63,515,396
Reinvestment of distributions 16,692 40,393
Redemption of Shares (83,731,833) (60,221,765)
----------------------- -------------------------
Increase in Net Assets From Investor Share Transactions (1,018,937) 3,334,024
----------------------- -------------------------
Net Increase (Decrease) in Net Assets (11,139,842) 14,804,975
Net Assets, Beginning of Period 42,590,477 27,785,502
----------------------- -------------------------
Net Assets, End of Period $ 31,450,635 $ 42,590,477
======================= =========================
--------------------------------------------------------------------------------
See Notes to Financial Statements.
4
ORBITEX CASH RESERVES FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
-------------------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED ENDED
JUNE 30, 2002 DECEMBER 31, 2001 DECEMBER 31, 2000(1)
(UNAUDITED)
-------------------- --------------------- --------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000
Net investment income from investment operations 0.0089 0.0408 0.0370
Distributions from net investment income (0.0089) (0.0408) (0.0370)
-------------------- --------------------- --------------------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000
==================== ===================== ====================
TOTAL RETURN (3)(4) 1.82% 4.15% 6.59%
RATIO/SUPPLEMENTARY DATA:
Net Assets, at End of Year (000's omitted) $ 28,034 $ 38,155 $ 26,684
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Expenses including reimbursement/waiver (3)(5) 0.24% 0.24% 0.24%
Expenses excluding reimbursement/waiver (3)(5) 0.42% 0.48% 2.08%
Net investment income including reimbursement/waiver (3) 1.77% 4.04% 6.50%
INVESTOR SHARES
------------------------------------------------------------------
FOR THE SIX FOR THE YEAR FOR THE PERIOD
MONTHS ENDED ENDED ENDED
JUNE 30, 2002 DECEMBER 31, 2001 DECEMBER 31, 2000(2)
(UNAUDITED)
-------------------- --------------------- ---------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000
Net investment income from investment operations 0.0071 0.0372 0.0282
Distributions from net investment income (0.0071) (0.0372) (0.0282)
-------------------- --------------------- ---------------------
NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000
==================== ===================== =====================
TOTAL RETURN (3)(4) 1.48% 3.78% 6.22%
RATIO/SUPPLEMENTARY DATA:
Net Assets, at End of Year (000's omitted) $ 3,417 $ 4,436 $ 1,102
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Expenses including reimbursement/waiver (3)(5) 0.60% 0.60% 0.60%
Expenses excluding reimbursement/waiver (3)(5) 0.78% 0.84% 2.68%
Net investment income including reimbursement/waiver (3) 1.43% 3.06% 6.16%
----------
(1) For the period June 7, 2000 (commencement of operations) to December 31,
2000.
(2) For the period July 18, 2000 (commencement of class) to December 31, 2000.
(3) Annualized, for periods less than one year.
(4) Total returns are historical and assume reinvestment of dividends and
capital gain distributions. Had the Advisor and Administrator not absorbed
a portion of the expenses, total returns would have been lower.
(5) Includes the Fund's share of the Portfolio's allocated expenses.
--------------------------------------------------------------------------------
See Notes to Financial Statements.
5
ORBITEX CASH RESERVES FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
The Orbitex Cash Reserves Fund (the "Fund") is a series of the Orbitex Group of
Funds (the "Trust"), a Trust organized in the State of Delaware in December
1996. The Trust is registered under the Investment Company Act of 1940, as
amended, as an open-end investment company. Currently, the Fund consists of four
classes of shares, two of which are active: Institutional Shares and Investor
Shares. The Trust Instrument of the Trust authorizes the Fund to issue an
unlimited number of shares of beneficial interest without par value. The Fund
currently seeks to achieve its investment objectives by investing all of its
investable assets in AMR Investment Services Money Market Portfolio (the
"Portfolio"), a registered open-end management investment company with
substantially the same investment objectives and policies as the Fund. The
Portfolio is managed by AMR Investment Services, Inc. ("AMR") a wholly owned
subsidiary of AMR Corporation. The Fund may withdraw its investments from the
Portfolio at any time if the Trust's Board of Trustees (the "Board") determines
that it is in the best interest of the Fund and its shareholders to do so. The
Fund accounts for its investments in the Portfolio as partnership investments,
commonly referred to as a master-feeder arrangement.
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the schedule of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. At June 30, 2002 the
percentage of the Portfolio owned by the Fund was less than 1%.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles which require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the fiscal periods. Actual results could differ from those estimates.
The following represent significant accounting policies of the Fund:
SECURITY VALUATION - The Fund records its investment in the Portfolio at value.
Valuation of securities held in the Portfolio are discussed in the Portfolio's
Notes to Financial Statements, which are included elsewhere in this report.
INVESTMENT INCOME AND EXPENSES - The Fund records daily its pro rata share of
the Portfolio's income, expenses and realized gain and loss. In addition, the
Fund accrues its own expenses. The expenses of the Fund that are directly
identifiable to a specific class are charged to that class. Expenses that are
not readily identifiable to a specific class are allocated based on net assets
of each class.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders of net investment
income are declared daily and paid monthly. Net capital gain, if any, is
distributed to shareholders at least annually. Distributions are based on
amounts calculated in accordance with applicable federal income tax regulations.
FEDERAL TAXES - The Fund intends to qualify each year as a regulated investment
company and distribute all of its taxable income. In addition, by distributing
in each calendar year substantially all of its net investment income, capital
gains and certain other amounts, if any, the Fund will not be subject to a
federal excise tax. Therefore, no federal income or excise tax provision is
required.
REALIZED GAIN AND LOSS - Security transactions are recorded on trade date.
Realized gain and loss on investments sold are recorded on the basis of
identified cost.
6
ORBITEX CASH RESERVES FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS
ADVISORY FEES
The Fund has entered into an investment advisory agreement with Orbitex
Management, Inc. (the "Advisor"). As long as the Fund invests all of its
investable assets in the Portfolio, investment decisions will be made by AMR.
For its services, the Portfolio pays AMR a fee accrued and paid daily at an
annualized rate of 0.10% of the average daily net assets. In the event the Fund
was to withdraw its investments from the Portfolio, the Advisor would act as
investment advisor to the Fund and the Advisor would be entitled to a fee based
on the Fund's average daily net assets.
The Advisor has agreed to reimburse certain operating expenses to the extent
necessary to limit total operating expenses to 0.24% and 0.60% of the average
daily net assets of Institutional Shares and Investor Shares, respectively.
Expenses reimbursed by the Advisor for the six months ended June 30, 2002
amounted to $39,091.
ADMINISTRATION, FUND ACCOUNTING AND TRANSFER AGENT FEES
Orbitex Fund Services, Inc ("OFS"), formerly American Data Services, Inc., an
affiliate of the Advisor, serves as the administrator of the Fund. For providing
administration services to the Fund, OFS receives a fee accrued daily and
payable monthly, at the annualized rate of 0.02% of the Fund's average daily net
assets.
OFS also acts as the fund accounting agent and transfer agent of the Fund. For
providing fund accounting services, the Fund pays OFS a fixed monthly fee for
average net assets less than $25 million and at an annualized rate of 0.02%
thereafter, plus out-of-pocket expenses. For providing transfer agent services,
the Fund pays OFS a minimum monthly or per account fee plus certain transaction
fees which are allocated by shareholder accounts.
CUSTODIAN
The Bank of New York is the Fund's custodian.
TRUSTEES FEES
The Fund pays no compensation to its Trustees who are employees of the Advisor.
Trustees who are not Advisor employees receive a fee of $2,500 for each regular
meeting of the Board that the Trustee attends. The Trust also reimburses each
such Trustee for travel and other expenses incurred in attending meetings of the
Board.
DISTRIBUTION FEES
The Fund has adopted a Distribution Plan and Agreement pursuant to Rule 12b-1
under the Investment Company Act of 1940. The distributor of the Fund is Orbitex
Funds Distributor, Inc. ("OFD"), an affiliate of the Advisor. Under the Plan and
Agreement, the Fund compensates OFD for distributing the Fund's Investor class
shares. The distribution fee is payable at the annualized rate of 0.25% of the
average net assets of the Investor class shares. No distribution fees are paid
to OFD as distributor for the Institutional class shares.
7
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT SHARE AMOUNTS
PAR
AMOUNT VALUE
------------- --------------
VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES - 16.97% Banco Popular de
Puerto Rico, (Note C)
2.16%, Due 10/1/2002 $ 200,000 $ 200,000
2.01%, Due 12/16/2002 300,000 300,000
Bank One, NA,
2.11%, Due 4/7/2003 25,000 25,033
2.05%, Due 4/24/2003 45,000 45,057
Branch Banking & Trust Company, 1.84%, Due 2/10/2003 175,000 174,979
Fleet National Bank, NA,
2.17%, Due 8/2/2002 25,000 25,007
2.08%, Due 5/22/2003 10,000 10,017
National City Bank,
2.04%, Due 10/10/2002 25,000 25,009
2.00%, Due 11/13/2002 43,000 43,020
1.98%, Due 3/17/2003 48,000 48,044
2.05%, Due 4/17/2003 20,000 20,019
1.94%, Due 6/13/2003 85,000 85,070
Wachovia Bank, NA,
2.03%, Due 12/20/2002 87,000 87,092
2.08%, Due 2/18/2003 45,000 45,062
2.05%, Due 3/19/2003 20,000 20,027
1.97%, Due 6/4/2003 60,000 60,064
-----------------
TOTAL VARIABLE RATE CERTIFICATES OF DEPOSIT AND BANK NOTES 1,213,500
-----------------
PROMISSORY NOTES - 0.90%
▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, LP, 1.94%, Due 9/23/2002 64,000 64,000
-----------------
TOTAL PROMISSORY NOTES 64,000
-----------------
FUNDING AGREEMENTS - 13.57%
VARIABLE RATE
General Electric Capital Assurance Company, (Note B)
1.97%, Due 12/2/2002 200,000 200,000
2.00%, Due 2/3/2003 150,000 150,000
▇▇▇▇▇▇▇ National Life Insurance Company, 1.96%, Due 8/30/2002 (Note A) 100,000 100,000
Metropolitan Life Insurance Company, (Note B)
1.99%, Due 7/19/2002 200,000 200,000
1.98%, Due 11/22/2002 100,000 100,000
Travelers Insurance Company, 1.96%, Due 9/11/2002 (Note B) 175,000 175,000
-----------------
TOTAL VARIABLE RATE 925,000
-----------------
FIXED RATE
Security Life of Denver, 1.98%, Due 9/23/2002 45,000 45,000
-----------------
TOTAL FIXED RATE 45,000
-----------------
TOTAL FUNDING AGREEMENTS 970,000
--------------------------------------------------------------------------------
See accompanying notes
8
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT SHARE AMOUNTS
PAR
AMOUNT VALUE
------------- -----------------
ASSET-BACKED COMMERCIAL PAPER, 144A (Notes D and E) - 23.83% Edison Asset
Securitization,
1.92%, Due 8/16/2002 $150,000 $149,632
1.91%, Due 9/16/2002 300,000 298,774
FCAR Owner Trust, Series I ,
1.88%, Due 9/13/2002 100,000 99,614
1.92%, Due 10/7/2002 50,000 49,739
1.91%, Due 11/6/2002 200,000 198,642
Golden Funding Corporation,
1.90%, Due 7/1/2002 23,760 23,760
1.96%, Due 8/13/2002 58,500 58,363
▇▇▇▇▇▇▇▇, LLC,
1.85%, Due 7/8/2002 32,000 31,988
1.95%, Due 8/9/2002 300,000 299,366
Scaldis Capital, LLC,
1.90%, Due 7/5/2002 24,869 24,864
2.00%, Due 10/15/2002 17,484 17,381
2.00%, Due 11/1/2002 80,191 79,643
1.85%, Due 11/20/2002 30,219 29,998
1.88%, Due 12/9/2002 24,394 24,189
Sigma Financial, Incorporated,
1.87%, Due 10/9/2002 43,582 43,356
1.95%, Due 10/22/2002 10,500 10,436
1.96%, Due 10/24/2002 84,000 83,474
1.87%, Due 10/28/2002 50,000 49,691
1.96%, Due 10/31/2002 59,450 59,055
1.88%, Due 11/7/2002 25,000 24,832
1.99%, Due 11/8/2002 47,350 47,010
-----------------
TOTAL ASSET-BACKED COMMERCIAL PAPER 1,703,807
-----------------
COMMERCIAL PAPER (Note E) - 25.76%
Abbey National, 1.85%, Due 10/1/2002 250,000 248,815
AIG Funding, Incorporated, 1.90%, Due 10/18/2002 40,086 39,855
BNP Paribas Financial, 1.92%, Due 9/19/2002 50,000 49,787
Deutsche Bank Financial, 1.76%, Due 9/30/2002 400,000 398,220
General Electric Capital Corporation,
1.87%, Due 8/16/2002 400,000 399,044
1.94%, Due 9/19/2002 100,000 99,569
Societe Generale North America, Incorporated, 1.85%, Due 9/3/2002 136,500 136,051
Spintab-Swedmortgage AB,
1.88%, Due 9/6/2002 100,000 99,650
1.92%, Due 2/12/2003 72,000 71,995
▇▇▇▇▇ Fargo Financial Company,
1.90%, Due 10/3/2002 50,000 49,752
1.92%, Due 10/21/2002 50,000 49,701
1.92%, Due 10/28/2002 50,000 49,683
1.91%, Due 11/4/2002 50,000 49,666
Westdeutsche Landesbank, 1.92%, Due 9/23/2002, 144A (Note D) 100,000 99,552
-----------------
TOTAL COMMERCIAL PAPER 1,841,340
-----------------
See accompanying notes
9
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS JUNE 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
IN THOUSANDS, EXCEPT SHARE AMOUNTS
PAR
AMOUNT VALUE
------------- ----------------
VARIABLE RATE MEDIUM-TERM NOTES - 18.09% American Honda Finance Corporation,
144A (Note D)
1.97%, Due 1/17/2003 $ 40,000 $ 40,010
1.88%, Due 2/25/2003 70,000 70,000
1.89%, Due 5/13/2003 100,000 100,000
1.87%, Due 5/14/2003 200,000 200,000
1.96%, Due 6/11/2003 10,000 10,009
Associates Corporation of North America, 2.17%, Due 5/8/2003 46,505 46,622
Bank of America Corporation,
1.98%, Due 2/4/2003 35,500 35,521
2.09%, Due 7/7/2003 35,000 35,027
Citigroup, Incorporated, 2.06%, Due 7/17/2003 190,000 190,292
Credit Suisse First Boston,
2.05%, Due 12/6/2002 25,000 25,020
2.00%, Due 12/11/2002, 144A (Note D) 74,250 74,310
2.13%, Due 4/28/2003 25,000 25,044
2.49%, Due 7/18/2003 13,200 13,273
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and Company,
2.05%, Due 1/30/2003 36,700 36,733
2.01%, Due 2/28/2003 20,000 20,020
1.99%, Due 3/14/2003 20,000 20,022
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, 2.09%, Due 7/24/2002 15,000 15,002
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Company,
2.06%, Due 10/15/2002 10,000 10,003
2.15%, Due 1/16/2003 19,800 19,826
2.10%, Due 2/21/2003 15,000 15,023
2.09%, Due 3/6/2003 10,000 10,016
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Holdings,
1.99%, Due 9/11/2002 20,000 20,005
2.13%, Due 1/24/2003 28,000 28,031
2.14%, Due 2/11/2003 41,300 41,368
2.18%, Due 4/28/2003 40,500 40,597
2.20%, Due 6/6/2003 20,000 20,065
2.22%, Due 7/24/2003 17,000 17,059
▇▇▇▇▇ Fargo & Company,
2.09%, Due 10/10/2002 44,000 44,016
1.99%, Due 10/30/2002 45,000 45,018
1.93%, Due 3/31/2003 25,000 25,021
-----------------
TOTAL VARIABLE RATE MEDIUM-TERM NOTES 1,292,953
-----------------
OTHER SHORT-TERM INVESTMENTS - 0.99% SHARES
-------------
AIM Liquid Assets 7,626,905 7,627
One Group Money Market Institutional Shares 63,445,732 63,446
-----------------
TOTAL OTHER SHORT-TERM INVESTMENTS 71,073
-----------------
TOTAL INVESTMENTS - 100.11% (Cost $7,156,673) 7,156,673
-----------------
LIABILITIES, NET OF OTHER ASSETS - (0.11%) (7,766)
-----------------
TOTAL NET ASSETS - 100% 7,148,907
=================
Based on the cost of investments of $7,156,673 for federal income tax purposes
at June 30, 2002, there was no unrealized appreciation or depreciation of
investments.
(A) Obligation is subject to an unconditional put back to the issuer with
seven calendar days notice.
(B) Obligation is subject to an unconditional put back to the issuer with
ninety calendar days notice.
(C) Obligation is subject to a credit quality put back to the issuer with
seven calendar days notice.
(D) 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 $2,297,688 or 32.14% of net
assets.
(E) Rates associated with money market securities represent discount rate at
time of purchase.
ABBREVIATIONS:
AB - Company
LLC - Limited Liability Company
LP - Limited Partnership
NA - National Association
See accompanying notes
10
-------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
IN THOUSANDS
ASSETS:
Investments in securities at value (cost - $7,156,673).....................................$ 7,156,673
Dividends and interest receivable........................................................... 10,169
------------
TOTAL ASSETS........................................................................................ 7,166,842
------------
LIABILITIES:
Payable for investments purchased........................................................... 17,131
Management and investment advisory fees payable (Note 2).................................... 670
Other liabilities........................................................................... 134
------------
TOTAL LIABILITIES................................................................................... 17,935
------------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS........................................... $ 7,148,907
============
See accompanying notes
11
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)
-------------------------------------------------------------------------------
IN THOUSANDS
INVESTMENT INCOME:
Interest income......................................... $ 109,887
-----------
TOTAL INVESTMENT INCOME............................ 109,887
-----------
EXPENSES:
Management and investment advisory fees (Note 2)........ 5,384
Custodian fees.......................................... 170
Professional fees....................................... 41
Other expenses.......................................... 123
-----------
TOTAL EXPENSES..................................... 5,718
-----------
Net investment income........................................... 104,169
-----------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments................. (38)
-----------
NET GAIN (LOSS) ON INVESTMENTS.................... (38)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $ 104,131
===========
See accompanying notes
12
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
in thousands
Six Months Ended Year Ended
June 30, December 31,
2002 2001
(Unaudited)
---------------- -------------
Increase (Decrease) in Net Assets:
Operations:
Net investment income............................................. $ 104,169 $ 393,466
Net realized gain (loss) on investments........................... (38) 1,556
-------------- -------------
Total increase in net assets resulting from operations...... 104,131 395,022
-------------- -------------
Transactions in Investors' Beneficial Interests:
Contributions..................................................... 60,091,638 72,574,660
Withdrawals....................................................... (61,311,769) (69,694,620)
-------------- -------------
Net increase (decrease) in net assets resulting from
transactions in investors' beneficial interests......... (1,220,131) 2,880,040
-------------- -------------
Net increase (decrease) in net assets..................................... (1,116,000) 3,275,062
-------------- -------------
Net Assets:
Beginning of period............................................... 8,264,907 4,989,845
-------------- -------------
End of period..................................................... $ 7,148,907 $ 8,264,907
============== =============
See accompanying notes
13
-------------------------------------------------------------------------------
AMR Investment Services Trust Money Market Portfolio
Financial Highlights
--------------------------------------------------------------------------------
Six Months Two Months
Ended Year Ended December 31, Ended Year Ended October 31,
June 30, ----------------------------- December 31, ---------------------------------------
2002 2001 2000 1999 1999 1998 1997
(Unaudited)
-------------------------- ------------ ------------- ------------ ------------ ----------
Total Return:....................... 0.96% A 4.30% ▇/▇ ▇/▇ ▇/▇ ▇/▇ ▇/▇
Ratios to Average Net Assets:
Expenses...................... 0.11% 0.11% 0.11% 0.11% 0.11% 0.16% 0.16%
Net investment income......... 1.93%. 3.95% 6.40% 5.77% 5.11% 5.56% 5.52%
A - Not annualized.
See accompanying notes
14
--------------------------------------------------------------------------------
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 (UNAUDITED)
--------------------------------------------------------------------------------
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 which was organized as a trust under the laws of the State of New York
pursuant to a Declaration of Trust dated as of June 27, 1995 and amended on
August 11, 1995. Beneficial interests in the Trust are divided into separate
series, each having distinct investment objectives and policies. These financial
statements relate to the AMR Investment Services Money Market Portfolio, (the
"Portfolio"). The assets of the Portfolio belong only to that Portfolio, and the
liabilities of the 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 Portfolio.
SECURITY VALUATION
Securities of the Portfolio are valued using the amortized cost method. In the
event that a deviation of 1/2 of 1% or more exists between the $1.00 per share
price of the Portfolio, calculated at amortized cost, and the price per share
calculated by reference to market quotations, or if there is any other deviation
which the Board believes would result in a material dilution to shareholders or
purchasers, the Board will promptly consider the appropriate action which should
be initiated.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date of the security purchase or
sale. Interest income is earned from settlement date, recorded on the accrual
basis, and adjusted, if necessary, for amortization of premiums or accretion of
discounts 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 Portfolio will be treated as a partnership for federal income tax purposes.
As such, each investor in the Portfolio will be taxed on its share of the
Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of sub-chapter M of the
Internal Revenue Code.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, securities are acquired by a
Portfolio from a securities dealer or a bank which are subject to resale at a
later date. Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. All collateral is held at the Portfolio's
custodian bank, State Street Bank and Trust Company, or at subcustodian banks.
The collateral is monitored daily by the Portfolio so that the collateral's
market value exceeds the carrying value of the repurchase agreement.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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
NOTE 2-TRANSACTIONS WITH AFFILIATES MANAGEMENT AGREEMENT
The Trust and the Manager are parties to a Management Agreement which obligates
the Manager to provide or oversee the provision of all administrative,
investment advisory and portfolio management services. The Manager serves as the
sole investment adviser to the Portfolio. As compensation for performing the
duties required under the Management Agreement, the Manager receives from the
Portfolio .10% of the average daily net assets of the Portfolio.
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. However, the Trust compensates each trustee with
payments in an amount equal to the trustee's income tax on the value of this
free airline travel. One trustee, as a retiree of American, already receives
flight benefits. This trustee receives an annual retainer of $45,000 plus $1,250
for each Board meeting attended. For the six months ended June 30, 2002, the
cost of air transportation was not material to the Portfolio.
15