AMERICAN AADVANTAGE FUNDS, 485APOS, 1995-12-22

AMERICAN AADVANTAGE FUNDS
485APOS, 1995-12-22

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<PAGE> 1

As filed with the Securities and Exchange Commission on December 22, 1995

File No. 33-11387
File No. 811-4984

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 15

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16

AMERICAN AADVANTAGE FUNDS
(Exact name of registrant as specified in charter)

4333 Amon Carter Boulevard
Fort Worth, Texas 76155
(Address of principal executive offices)

Registrant's telephone number, including area code: (817) 967-3509

WILLIAM F. QUINN, PRESIDENT
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
(Name and address of agent for service)

Copies to:

CLIFFORD J. ALEXANDER, ESQ.
ROBERT J. ZUTZ, ESQ.
Kirkpatrick & Lockhart LLP
South Lobby - 9th Floor
1800 M Street, N.W.
Washington, D.C. 20036
Telephone: (202) 778-9000

It is proposed that this filing will become effective 60 days after filing
pursuant to paragraph (a)(1) of Rule 485.

Registrant filed a Notice pursuant to Rule 24f-2 under the Investment Company
Act of 1940 within sixty days of its fiscal year ended October 31, 1995.

Registrant has adopted a Hub and Spoke(R) operating structure. This
Post-Effective Amendment includes a signature page for the hub trust, AMR
Investment Services Trust.

Exhibit Index begins on page _____

<PAGE> 2
AMERICAN AADVANTAGE FUNDS
CONTENTS OF REGISTRATION STATEMENT

This registration document is comprised of the following:

Cover Sheet

Contents of Registration Statement

Cross Reference Sheet

Prospectus for the Institutional Class of the American

AAdvantage Funds

Prospectus for the PlanAhead Class of the American
AAdvantage Funds

Prospectus for the AMR Class:
American AAdvantage Balanced Fund
American AAdvantage Growth and Income Fund
American AAdvantage Limited-Term Income Fund
American AAdvantage International Equity Fund

Prospectus for the Platinum Class:
American AAdvantage Money Market Fund
American AAdvantage Municipal Money Market Fund
American AAdvantage U.S. Treasury Money Market Fund

Statement of Additional Information for the AMR,
PlanAhead and Institutional Classes of the American
AAdvantage Funds

Statement of Additional Information for the Platinum Class:
American AAdvantage Money Market Fund
American AAdvantage Municipal Money Market Fund
American AAdvantage U.S. Treasury Money Market Fund

Part C

Signature Pages

Exhibits

<PAGE> 3
AMERICAN AADVANTAGE FUNDS
INSTITUTIONAL CLASS

FORM N-1A CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
Part A Item No. PROSPECTUS CAPTION
- --------------- ------------------
<S> <C>

1 Cover Page
2 Annual Operating Expenses; Introduction; General Information
3 Financial Highlights; Investment Objectives, Policies and Risks
4 Cover Page; Investment Objectives, Policies and Risks; Investment Restrictions
5 Cover Page; Table of Fees and Expenses; Management and Administration of the
Trust; Investment Advisers
5A Financial Highlights
6 Dividends, Other Distributions & Tax Matters; General Information
7 Purchase, Redemption and Valuation of Shares; Management and Administration of
the Trust; Shareholder Communications
8 Purchase, Redemption and Valuation of Shares
9 Inapplicable
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
- --------------- -----------------------
<S> <C>

10 Cover Page
11 Table of Contents
12 Inapplicable
13 Investment Restrictions; Other Information
14 Trustees and Officers
15 Control Persons and 5% Shareholders
16 Management, Administrative Services and Distribution Fees; Investment Advisory
Agreements
17 Investment Objectives, Policies and Risks (Prospectus); Other Information;
Portfolio Transactions
18 Not Applicable
19 Net Asset Value
20 Tax Information
21 Inapplicable
22 Yield and Total Return Quotations
23 Financial Statements
</TABLE>

PART C. OTHER INFORMATION

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE> 4
AMERICAN AADVANTAGE FUNDS
AMR CLASS

FORM N-1A CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
Part A Item No. PROSPECTUS CAPTION
- --------------- ------------------
<S> <C>

1 Cover Page
2 Table of Fees and Expenses; Introduction
3 Financial Highlights; Investment Objectives, Policies and Risks
4 Cover Page; Investment Objectives, Policies and Risks; Investment Restrictions
5 Cover Page; Table of Fees and Expenses; Management and Administration of the
Trust; Investment Advisers
5A Financial Highlights
6 Dividends, Other Distributions and Tax Matters; General Information
7 Purchase, Redemption and Valuation of Shares; Management and Administration of
the Trust; Shareholder Communications
8 Purchase, Redemption and Valuation of Shares
9 Inapplicable
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
- --------------- -----------------------
<S> <C>

PART C. OTHER INFORMATION

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE> 5
AMERICAN AADVANTAGE FUNDS
PLANAHEAD CLASS

FORM N-1A CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
Part A Item No. PROSPECTUS CAPTION
- --------------- ------------------
<S> <C>

1 Cover Page
2 Table of Fees and Expenses; Introduction; General Information
3 Financial Highlights; Investment Objectives and Policies
4 Cover Page; Investment Objectives and Policies; Investment Restrictions
5 Cover Page; Table of Fees and Expenses; Management and Administration of the
Trust; Investment Advisers
5A Financial Highlights
6 Dividends, Other Distributions and Tax Matters; General Information
7 How to Purchase Shares; Valuation of Shares; Management and Administration of
the Trust; Retirement Accounts; Shareholder Communications
8 How to Redeem Shares
9 Inapplicable
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
- --------------- -----------------------
<S> <C>

PART C. OTHER INFORMATION

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE> 6
AMERICAN AADVANTAGE FUNDS
PLATINUM CLASS

FORM N-1A CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
Part A Item No. PROSPECTUS CAPTION
- --------------- ------------------
<S> <C>

1 Cover Page
2 Table of Fees and Expenses; Introductions; General Information
3 Financial Highlights; Investment Objectives, Policies and Risks
4 Cover Page; Investment Objectives, Policies and Risks; Investment Restrictions
5 Cover Page; Table of Fees and Expenses; Management and Administration of the
Trust
5A Financial Highlights
6 Dividends and Tax Matters; General Information
7 How to Purchase Shares; Management and Administration of the Trust;
Shareholder Communications
8 How to Redeem Shares
9 Inapplicable
</TABLE>

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
- --------------- -----------------------
<S> <C>

10 Cover Page
11 Table of Contents
12 Inapplicable
13 Investment Restrictions; Other Information
14 Trustees and Officers
15 Control Persons and 5% Shareholders
16 Management and Distribution Fees
17 Investment Objectives, Policies and Risks Prospectus); Other Information
18 Not Applicable
19 Net Asset Value
20 Tax Information
21 Inapplicable
22 Yield and Total Return Quotations
23 Financial Statements
</TABLE>

PART C. OTHER INFORMATION

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

<PAGE> 7

THIS PROSPECTUS contains important information about the Institutional Class of
the AMERICAN AADVANTAGE FUNDS ("Trust"), an open-end management investment
company which consists of multiple investment portfolios. This prospectus
pertains only to the seven funds listed on this cover page (individually
referred to as a "Fund" and, collectively, the "Funds"). EACH FUND SEEKS ITS
INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A
CORRESPONDING PORTFOLIO (INDIVIDUALLY REFERRED TO AS A "PORTFOLIO" AND,
COLLECTIVELY, "PORTFOLIOS") OF THE AMR INVESTMENT SERVICES TRUST ("AMR TRUST")
WHICH HAS AN INVESTMENT OBJECTIVE IDENTICAL TO THAT FUND. The investment
experience of each Fund will correspond directly with the investment experience
of each Portfolio. Each Fund consists of multiple classes of shares designed to
meet the needs of different groups of investors. Institutional Class shares are
offered primarily to large institutional investors, investing at least $2
million in the Funds. Investors should read this Prospectus carefully before
making an investment decision and retain it for future reference.

IN ADDITION TO THIS PROSPECTUS, a Statement of Additional Information ("SAI")
dated March, 1996 has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The SAI contains more detailed
information about the Funds. For a free copy of the SAI, call 817-967-3509. For
further information about the Institutional Class or for information on the
other classes of shares, please refer to the appropriate address and phone
number on the back cover of this Prospectus.

AN INVESTMENT IN ANY OF THE MONEY MARKET FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THEY WILL
BE ABLE TO MAINTAIN A STABLE PRICE OF $1.00 PER SHARE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY SUCH STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

[LOGO]

BALANCED FUND

GROWTH AND INCOME FUND

INTERNATIONAL EQUITY FUND

LIMITED-TERM INCOME FUND

MONEY MARKET FUND

MUNICIPAL MONEY MARKET FUND

U.S. TREASURY MONEY MARKET FUND
<PAGE> 8
The AMERICAN AADVANTAGE BALANCED FUND(SM) ("Balanced Fund") seeks income and
capital appreciation by investing all of its investable assets in the Balanced
Portfolio of the AMR Trust ("Balanced Portfolio") which in turn primarily
invests in equity and debt securities (such as stocks and bonds).

The AMERICAN AADVANTAGE GROWTH AND INCOME FUND(SM) ("Growth and Income Fund")
seeks long-term capital appreciation and current income by investing all of its
investable assets in the Growth and Income Portfolio of the AMR Trust ("Growth
and Income Portfolio") which in turn primarily invests in equity securities
(such as stocks).

The AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND(SM) ("International Equity
Fund") seeks long-term capital appreciation by investing all of its investable
assets in the International Equity Portfolio of the AMR Trust ("International
Equity Portfolio") which in turn primarily invests in equity securities of
issuers based outside the United States (such as foreign stocks).

The AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND(SM) ("Limited-Term Income
Fund") seeks income and capital appreciation by investing all of its investable
assets in the Limited-Term Income Portfolio of the AMR Trust ("Limited-Term
Income Portfolio") which in turn primarily invests in debt obligations.

The AMERICAN AADVANTAGE MONEY MARKET FUND(SM) ("Money Market Fund"), AMERICAN
AADVANTAGE MUNICIPAL MONEY MARKET FUND(SM) ("Municipal Money Market Fund") and
AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND(SM) ("U.S. Treasury Money
Market Fund") (collectively, the "Money Market Funds") each seeks current
income, liquidity, and the maintenance of a stable price per share of $1.00 by
investing all of its investable assets in the Money Market Portfolio of the AMR
Trust ("Money Market Portfolio"), the Municipal Money Market Portfolio of the
AMR Trust ("Municipal Money Market Portfolio") and the U.S. Treasury Money
Market Portfolio of the AMR Trust ("U.S. Treasury Money Market Portfolio"),
respectively (collectively the "Money Market Portfolios"), which in turn invest
in high quality, short-term obligations. The Municipal Money Market Portfolio
invests primarily in municipal obligations and the U.S. Treasury Money Market
Portfolio invests exclusively in obligations backed by the full faith and
credit of the U.S. Government and in repurchase agreements that are
collateralized by U.S. Government full faith and credit obligations.

Under a Hub and Spoke(R)(1) operating structure, each Fund seeks its investment
objective by investing all of its investable assets in a corresponding
Portfolio as described above. Each Portfolio's investment objective is
identical to that of its corresponding Fund. Whenever the phrase "all of the
Fund's investable assets" is used, it means that the only investment securities
that will be held by a Fund will be that Fund's interest in its corresponding
Portfolio. AMR Investment Services, Inc. ("Manager") provides investment
management and administrative services to the Portfolios and administrative
services to the Funds. This Hub and Spoke operating structure is different from
that of many other investment companies which directly acquire and manage their
own portfolios of securities. Accordingly, investors should carefully consider
this investment approach. See "Investment Objectives, Policies and Risks --
Additional Information About the Portfolios." A Fund may withdraw its
investment in a corresponding Portfolio at any time if the Trust's Board of
Trustees ("Board") determines that it would be in the best interest of that
Fund and its shareholders to do so. Upon any such withdrawal, that Fund's
assets would be invested in accordance with the investment policies and
restrictions described in this Prospectus and the SAI.

(1) Hub and Spoke is a registered service mark of Signature Financial Group,
Inc.

<TABLE>
<S> <C>
Table of Fees and Expenses . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . .
Investment Objectives, Policies and Risks . . . . .
Investment Restrictions . . . . . . . . . . . . . .
Yields and Total Returns . . . . . . . . . . . . .
Management and Administration of the Trust . . . .

</TABLE>

PROSPECTUS 2
<PAGE> 9
<TABLE>
<S> <C>
Investment Advisers . . . . . . . . . . . . . . . .
Purchase, Redemption and Valuation of Shares . . .
Information Concerning Shares of the Trust . . . .
Dividends, Other Distributions and Tax Matters . .
General Information
Shareholder Communications . . . . . . . . . . . .
</TABLE>

3 PROSPECTUS
<PAGE> 10
TABLE OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

<TABLE>
<CAPTION>
U.S.
GROWTH INTER- LIMITED- MUNICIPAL TREASURY
AND NATIONAL TERM MONEY MONEY MONEY
BALANCED INCOME EQUITY INCOME MARKET MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees(1) 0.28% 0.28% 0.43% 0.20% 0.15% 0.15% 0.15%
12b-1 Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expenses 0.34 0.35 0.40 0.35 0.08 0.21 0.14
---- ---- ---- ---- ---- ---- ----
Total Operating Expenses 0.62% 0.63% 0.83% 0.55% 0.23% 0.36% 0.29%
==== ==== ==== ==== ==== ==== ====
</TABLE>

(1) The "Management Fee" represents those investment advisory fees paid to the
Manager and the investment advisers.

The Board believes that the aggregate per share expenses of each Fund and
its corresponding Portfolio will be approximately equal to the expenses that
the Fund would incur if its assets were invested directly in the type of
securities held by the Portfolio.

EXAMPLES

An Institutional Class investor in each Fund would directly or indirectly
pay on a cumulative basis the following expenses on a $1,000 investment
assuming a 5% annual return:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund $6 $20 $35 $77
Growth and Income Fund 6 20 35 79
International Equity Fund 8 26 46 103
Limited-Term Income Fund 6 18 31 69
Money Market Fund 2 7 13 29
Municipal Money Market Fund 4 12 20 46
U.S. Treasury Money Market Fund 3 9 16 37
</TABLE>

The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses to be incurred directly or
indirectly as a shareholder in the Institutional Class of a Fund. Additional
information may be found under "Management and Administration of the Trust" and
"Investment Advisers."

THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN AND PERFORMANCE MAY BE BETTER OR WORSE THAN THE 5% ANNUAL RETURN
ASSUMED IN THE EXAMPLES.

FINANCIAL HIGHLIGHTS

The financial highlights in the following tables have been derived from
financial statements of the Trust. The information has been audited by Ernst &
Young LLP, independent auditors. Such information should be read in
conjunction with the financial statements and the report of the independent
auditors appearing in the Annual Report incorporated by reference in the SAI,
which contains further information about performance of the Funds and can be
obtained by investors without charge.

PROSPECTUS 4
<PAGE> 11
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

BALANCED FUND -- INSTITUTIONAL CLASS
------------------------------------
PERIOD
YEAR ENDED OCTOBER 31, ENDED
---------------------- OCTOBER 31,
1995(4)(5) 1994(3) 1993 1992 1991 1990(2) 1989 1988 1987(1)
---------- ------- ---- ---- ---- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset
value,
beginning of
period $12.36 $13.23 $11.99 $11.60 $9.87 $11.05 $10.13 $9.08 $10.00
------ ------ ------ ------ ----- ------ ------ ----- ------
Income from
investment
operations:
Net investment
income 0.54 0.57 0.49 0.55 0.58 0.57 0.53 0.56 0.16
Net gains or
(losses) on
securities
(both
realized and
unrealized) 1.71 (0.54) 1.57 0.41 1.79 (1.18) 0.90 0.73 (1.08)
---- ------ ---- ---- ---- ------ ---- ---- ------
Total from
investment
operations 2.25 0.03 2.06 0.96 2.37 (0.61) 1.43 1.29 (0.92)
---- ---- ---- ---- ---- ------ ---- ---- ------
Less
distributions:
Dividends from
net investment
income (0.52) (0.56) (0.52) (0.56) (0.64) (0.51) (0.51) (0.24) --
Distributions
from net
realized
gains on
securities (0.14) (0.34) (0.30) (0.01) -- (0.06) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ -----
Total
distributions (0.66) (0.90) (0.82) (0.57) (0.64) (0.57) (0.51) (0.24) --
------ ------ ------ ------ ------ ------ ------ ------ -----
Net asset value,
end of period $13.95 $12.36 $13.23 $11.99 $11.60 $9.87 $11.05 $10.13 $9.08
====== ====== ====== ====== ====== ===== ====== ====== =====
Total return
(annualized)(6) 19.39% (0.08%) 19.19% 8.75% 25.35% (5.24%) 15.49% 14.63% (31.84%)
====== ======= ====== ===== ====== ======= ====== ====== ========

Ratios/supplemental
data:
Net assets,
end of period
(in thousands) $249,913 $222,873 $532,543 $370,087 $311,906 $233,702 $210,119 $147,581 $118,985
Ratios to
average
net assets
(7)(8)(9):
Expenses 0.63% 0.36% 0.34% 0.35% 0.37% 0.44% 0.47% 0.52% 0.45%
Net
investment
income 4.30% 4.77% 4.91% 5.31% 6.06% 6.50% 6.32% 6.25% 5.59%
Portfolio
turnover rate 73% 48% 83% 80% 55% 62% 78% 77% 17%
</TABLE>

5 PROSPECTUS
<PAGE> 12
(1) The Balanced Fund commenced active operations on July 17, 1987.
(2) Penmark Investments, Inc. was replaced by Independence Investment
Associates, Inc. as an investment adviser to the Fund as of the close
of business on February 28, 1990.
(3) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.
(4) GSB Investment Management, Inc. was added as an investment adviser to
the Balanced Fund on January 1, 1995.
(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment
income per share for the Fund before class expenses.
(6) Total return is calculated assuming an initial investment is made at
the net asset value last calculated on the business day before the
first day of each period reported, reinvestment of all dividends and
capital gains distributions on the payable date, accrual for the
maximum shareholder services fee of .30% (for periods prior to August
1, 1994) and a sale at net asset value on the last day of each period
reported.
(7) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date, expenses
exclude shareholder services fees paid directly by shareholders to the
Manager, which amounted to approximately $.01 per share in each period
on an annualized basis.
(8) The method of determining average net assets was changed from a
monthly average to a daily average starting with the year ended
October 31, 1994.

(9) Annualized.

PROSPECTUS 6
<PAGE> 13
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND--INSTITUTIONAL CLASS
-------------------------------------------
PERIOD
YEAR ENDED OCTOBER 31, ENDED
---------------------- OCTOBER 31,
1995(5) 1994(4) 1993 1992(3) 1991 1990(2) 1989 1988 1987(1)
------- ------- ---- ------- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $14.19 $14.63 $12.79 $12.10 $9.47 $11.59 $9.96 $8.30 $10.00
------ ------ ------ ------ ----- ------ ----- ----- ------
Income from
investment
operations:
Net investment
income 0.41 0.43 0.36 0.39 0.42 0.42 0.42 0.42 0.10
Net gains
(losses) on
securities
(both realized
and unrealized) 2.28 0.08 2.21 0.77 2.70 (1.94) 1.59 1.40 (1.80)
---- ---- ---- ---- ---- ------ ---- ---- ------
Total from
investment
operations 2.69 0.51 2.57 1.16 3.12 (1.52) 2.01 1.82 (1.70)
---- ---- ---- ---- ---- ------ ---- ---- ------
Less
distributions:
Dividends from
net investment
income (0.43) (0.41) (0.37) (0.39) (0.49) (0.43) (0.38) (0.16) --
Distributions
from net
realized gains
on securities (0.54) (0.54) (0.36) (0.08) -- (0.17) -- -- --
------ ------ ------ ------ -- ------ -- -- --
Total
distributions (0.97) (0.95) (0.73) (0.47) (0.49) (0.60) (0.38) (0.16) --
------ ------ ------ ------ ------ ------ ------ ------ --
Net asset value,
end of period $15.91 $14.19 $14.63 $12.79 $12.10 $9.47 $11.59 $9.96 $8.30
====== ====== ====== ====== ====== ===== ====== ===== =====
Total return
(annualized)(6) 20.69% 3.36% 21.49% 10.00% 33.83% (13.52%) 20.94% 22.20% (58.51%)
====== ===== ====== ====== ====== ======== ====== ====== ========
Ratio/supplemental
data:
Net assets,
end of period
(in thousands) $71,608 $22,737 $477,088 $339,739 $264,628 $182,430 $187,869 $140,073 $134,796
Ratios to
average
net assets
(7)(8)(9):
Expenses 0.62% 0.33% 0.34% 0.36% 0.37% 0.45% 0.45% 0.53% 0.43%
Net investment
income 2.84% 3.28% 3.12% 3.57% 4.19% 4.49% 4.40% 4.20% 3.68%
Portfolio
turnover rate 26% 23% 30% 35% 52% 41% 50% 56% 22%
</TABLE>

(1) The Growth and Income Fund commenced active operations on July 17,
1987.
(2) GSB Investment Management, Inc. was added as an investment adviser to
the Growth and Income Fund on April 10, 1990.
(3) The assets of the Growth and Income Fund previously managed by Atlanta
Capital Management were transferred to GSB Investment Management, Inc.
as of the close of business on December 5, 1991.

7 PROSPECTUS
<PAGE> 14
(4) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.
(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment income per share for the Fund
before class expenses.
(6) Total return is calculated assuming an initial investment is made at
the net asset value last calculated on the business day before the
first day of each period reported, reinvestment of all dividends and
capital gains distributions on the payable date, accrual for the
maximum shareholder services fee of .30% (for periods prior to August
1, 1994) and a sale at net asset value on the last day of each period
reported.
(7) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date, expenses
exclude shareholder services fees paid directly by shareholders to the
Manager, which amounted to less than $.01 per share in each period on
an annualized basis.
(8) The method of determining average net assets was changed from a
monthly average to a daily average starting with the year ended
October 31, 1994.

(9) Annualized.

PROSPECTUS 8
<PAGE> 15
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND--INSTITUTIONAL CLASS
----------------------------------------------
PERIOD
YEAR ENDED OCTOBER 31, ENDED
---------------------- OCTOBER 31,
1995(5) 1994(3)(4) 1993(2) 1992 1991(1)
------- ---------- ------- ---- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.87 $12.07 $8.93 $10.13 $10.00
------ ------ ----- ------ ------
Income from investment operations:
Net investment income 0.27 0.32 0.17 0.12 --
Net gains (losses) on securities (both
realized and unrealized) 0.68 1.10 3.09 (1.31) 0.13
---- ---- ---- ------ ----
Total from investment operations 0.95 1.42 3.26 (1.19) 0.13
---- ---- ---- ------ ----
Less distributions:
Dividends from net investment income (0.21) (0.17) (0.12) (0.01) --
Distributions from net realized gains
on securities (0.32) (0.45) -- -- --
------ ------ -- -- --
Total distributions (0.53) (0.62) (0.12) (0.01) --
------ ------ ------ ------ --
Net asset value, end of period $13.29 $12.87 $12.07 $8.93 $10.13
====== ====== ====== ===== ======
Total return (annualized)(6) 7.90% 11.77% 36.56% (12.07%) 5.69%
===== ====== ====== ======== =====
Ratios/supplemental data:
Net assets, end of period (in thousands) $25,757 $23,115 $66,652 $38,837 $10,536
Ratios to average net assets
(annualized)(7)(8)(9):
Expenses 0.85% 0.61% 0.78% 1.17% 1.90%(10)
Net investment income 2.37% 2.74% 2.00% 2.04% 0.38%(10)
Portfolio turnover rate 21% 37% 61% 21% 2%
</TABLE>

(1) The International Equity Fund commenced active operations on August 7,
1991.
(2) HD International Limited was replaced by Hotchkis and Wiley as an
investment adviser to the International Equity Fund as of the close of
business on May 21, 1993.
(3) Morgan Stanley Asset Management Inc. was added as an investment
adviser to the International Equity Fund as of August 1, 1994.
(4) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.
(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment income per share for the Fund
before class expenses.
(6) Total return is calculated assuming an initial investment is made at
the net asset value last calculated on the business day before the
first day of each period reported, reinvestment of all dividends and
capital gains distributions on the payable date, accrual for the
maximum shareholder services fee of .30% (for periods prior to August
1, 1994) and a sale at net asset value on the last day of each period
reported.

(7) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date, expenses
exclude shareholder services fees paid directly by shareholders to the
Manager. Such fees amounted to less than $.04 per share in each period
on an annualized basis and were waived by the Manager for the period
ended October 31, 1991.

(8) The method of determining average net assets was changed from a
monthly average to a daily average starting with the year ended
October 31, 1994.

(9) Annualized.

(10) Estimated based on expected annual expenses and actual average net
assets.

9 PROSPECTUS
<PAGE> 16
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
LIMITED-TERM INCOME FUND--INSTITUTIONAL CLASS
---------------------------------------------
PERIOD
YEAR ENDED OCTOBER 31, ENDED
---------------------- OCTOBER 31,
1995 1994(3) 1993 1992 1991(2) 1990 1989 1988(1)
---- ------- ---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.67 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12 $10.00
----- ------ ------ ------ ----- ----- ------ ------
Income from investment
operations:
Net investment income 0.62 0.52 0.58 0.75 0.83 0.92 0.96 0.64
Net gains or (losses)
on securities (both
realized and
unrealized) 0.15 (0.46) 0.15 0.06 0.31 (0.18) (0.12) 0.05
---- ------ ---- ---- ---- ------ ------ ----
Total from investment
operations 0.77 0.06 0.73 0.81 1.14 0.74 0.84 0.69
---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income (0.62) (0.52) (0.58) (0.75) (0.83) (0.92) (1.02) (0.57)
Distributions from net
realized gains on
securities - (0.10) (0.05) -- -- -- -- --
- ------ ------ -- -- -- -- --
Total distributions 0.62 (0.62) (0.63) (0.75) (0.83) (0.92) (1.02) (0.57)
---- ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period $9.82 $9.67 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12
===== ===== ====== ====== ====== ===== ===== ======
Total return
(annualized)(4) 8.18% 0.42% 7.20% 7.94% 11.87% 7.51% 7.62% 7.41%
===== ===== ===== ===== ====== ===== ===== =====
Ratios/supplemental
data:
Net assets, end of
period
(in thousands) $137,293 $112,141 $238,874 $209,928 $141,629 $83,265 $60,507 $40,855
Ratios to average net
assets(5)(6)(7):
Expenses 0.60% 0.31% 0.26% 0.27% 0.35% 0.48% 0.59% 0.50%
Net investment income 6.36% 5.26% 5.76% 7.40% 8.42% 9.44% 9.77% 8.01%
Portfolio turnover rate 183% 94% 176% 133% 165% 156% 158% 127%
</TABLE>

(1) The Limited-Term Income Fund commenced active operations on December
3, 1987.

(2) AMR Investment Services, Inc. began portfolio management of the
Limited-Term Income Fund on March 1, 1991, replacing Brown Brothers,
Harriman & Co. and Barrow, Hanley, Mewhinney & Strauss, Inc.

(3) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.
(4) Total return is calculated assuming an initial investment is made at
the net asset value last calculated on the business day before the
first day of each period reported, reinvestment of all dividends and
capital gains distributions on the payable date, accrual for the
maximum shareholder services fee of .30% (for periods prior to August
1, 1994) and a sale at net asset value on the last day of each period
reported.

(5) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date, expenses
exclude shareholder services fees paid directly by shareholders to the
Manager. Such fees amounted to less than $.03 per share in each period
on an annualized basis.

(6) The method of determining average net assets was changed from a
monthly average to a daily average starting with the year ended
October 31, 1994.

(7) Annualized.

PROSPECTUS 10
<PAGE> 17
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

MONEY MARKET FUND--INSTITUTIONAL CLASS
-------------------------------------- Period
Ended
YEAR ENDED OCTOBER 31, OCTOBER
----------------------
31,
1995 1994(2) 1993 1992 1991 1990 1989 1988 1987(1)
---- ------- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment income 0.06 0.04 0.03 0.04 0.07 0.08 0.09 0.08 0.01
Less dividends from net
investment income (0.06) (0.04) (0.03) (0.04) (0.07) (0.08) (0.09) (0.08) (0.01)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== =====
Total return
(annualized) 5.96% 3.85% 3.31% 4.41% 7.18% 8.50% 9.45% 7.54% 6.70%
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratios/supplemental data:
Net assets, end of period
(in thousands) $1,206,041 $1,893,144 $2,882,947 $2,223,829 $715,280 $745,405 $385,916 $330,230 $71,660
Ratios to average net
assets
(3)(4)(5):
Expenses 0.23% 0.21% 0.23% 0.26% 0.24% 0.20% 0.22% 0.28% 0.48%
Net investment income 5.79% 3.63% 3.23% 4.06% 6.93% 8.19% 9.11% 7.54% 6.78%
</TABLE>

(1) The Money Market Fund commenced active operations on September 1,
1987.
(2) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.
(3) The method of determining average net assets was changed from a
monthly average to a daily average starting with the year ended
October 31, 1992.
(4) Effective October 1, 1990, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date, expenses
exclude shareholder services fees paid directly by shareholders to the
Manager, which amounted to less than $.01 per share in each period on
an annualized basis.

(5) Annualized.

11 PROSPECTUS
<PAGE> 18
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND-
INSTITUTIONAL CLASS U.S. TREASURY MONEY MARKET FUND-INSTITUTIONAL CLASS
------------------- ---------------------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
----- ----- YEAR ENDED OCTOBER 31, -----
OCTOBER 31, OCTOBER 31, ------------------------------------------ OCTOBER 31,
1995 1994(1) 1995 1994(2) 1993 1992(1)
---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00(2) $1.00 $1.00
----- ----- ----- -------- ----- -----
Net investment income 0.04 0.02 0.06 0.04 0.03 0.02
Less dividends from

net investment income (0.04) (0.02) (0.06) (0.04) (0.03) (0.02)
------ ------ ------ ------ ------ ------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total return
(annualized)(3) 3.75% 2.44% 5.67% 3.70% 3.07% 3.61%
===== ===== ===== ===== ===== =====

Ratios/supplemental
data:
Net assets, end of
period
(in thousands) $7 $9,736 $47,184 $67,607 $136,813 $91,453
Ratios to average net
assets
(4)(5)(6):

Expenses 0.35% 0.30% 0.32% 0.25% 0.23% 0.27%(7)
Net investment income 3.70% 2.38% 5.49% 3.44% 2.96% 3.46%(7)
</TABLE>

(3) Total returns for the Municipal Money Market Fund exclude management
and administrative services fees waived by the Manager. Had the Fund
paid such fees, total returns would have been 2.24% for the period
ended October 31, 1994 and 3.54% for the year ended October 31, 1995.

(4) The method of determining average net assets was changed from a
monthly average to a daily average starting with the period ended
October 31, 1994.

(5) Operating results for the Municipal Money Market Fund exclude
management and administrative services fees waived by the Manager. Had
the Fund paid such fees, the ratio of expenses and net investment
income to average net assets would have been 0.50% and 2.18%,
respectively, for the period ended October 31, 1994 and .55% and
3.50%, respectively, for the year ended October 31, 1995.

(6) Annualized

(7) Estimated based on expected annual expenses and actual average net
assets.

PROSPECTUS 12
<PAGE> 19
INTRODUCTION

The Trust is an open-end, management investment company organized as a
Massachusetts business trust on January 16, 1987. The Funds are separate
investment portfolios of the Trust. Each Fund has a distinctive investment
objective and investment policies. Each Fund will invest all of its investable
assets in a corresponding Portfolio of the AMR Trust which has an identical
investment objective. The Manager provides the Portfolios with business and
asset management services, including the evaluation and monitoring of the
investment advisers, and it provides the Funds with administrative services.
The Balanced Fund, the Growth and Income Fund, the International Equity Fund
and the Limited- Term Income Fund (collectively, the "Variable NAV Funds")
consist of multiple classes of shares, including the "Institutional Class"
which is primarily for large institutional investors investing at least $2
million in the Funds, and the "PlanAhead Class" which is available to all
investors, including smaller institutional investors, investors using
intermediary organizations such as discount brokers or plan sponsors,
individual retirement accounts ("IRAs"), and self-employed individual
retirement plans ("HR-10 Plans" or "Keogh Plans"). The Money Market Funds also
consist of multiple classes of shares, including the Institutional Class, the
PlanAhead Class and the "Platinum Class" which is available to customers of
certain broker-dealers. For further information about the PlanAhead Class, call
(800) 231-4252. For further information about the Platinum Class, call (800)
967-9009.

Although each class of shares is designed to meet the needs of different
categories of investors, all classes of each Fund share the same portfolio of
investments and share a common investment objective. See "Investment
Objectives, Policies and Risks." There is no guarantee that a Fund will achieve
its investment objective. Based on its value, a share of a Fund, regardless of
class, will receive a proportionate share of the investment income and the
gains (losses) earned (or incurred) by the Fund. It also will bear its
proportionate share of expenses that are allocated to the Fund as a whole.
However, certain expenses presently are allocated separately to each class of
shares.

The assets of the Balanced Portfolio, the Growth and Income Portfolio and
the International Equity Portfolio are allocated by the Manager among
investment advisers designated for each of those Portfolios. Investment
decisions for the Limited-Term Income Portfolio and the Money Market Portfolios
are made directly by the Manager. See "Investment Advisers." Each investment
adviser has discretion to purchase and sell portfolio securities in accordance
with the investment objectives, policies and restrictions described in this
Prospectus and in the SAI and by specific investment strategies developed by
the Manager.

Institutional Class shares of each Fund are sold without any sales charges
at their net asset value next determined after an investment is received and
accepted. The Trust reserves the right not to accept any order. Shares will be
redeemed at the next share price calculated after receipt of a redemption
order. See "Purchase, Redemption and Valuation of Shares."

INVESTMENT OBJECTIVES, POLICIES AND RISKS

The investment objective and policies of each Fund and its corresponding
Portfolio are described below. Except as otherwise indicated, the investment
policies of any Fund may be changed at any time by the Board to the extent that
such changes are consistent with the investment objective of the applicable
Fund. However, each Fund's investment objective may not be changed without a
majority vote of that Fund's outstanding shares, which is defined as the lesser
of (a) 67% of the shares of the applicable Fund present or represented if the
holders of more than 50% of the shares are present or represented at the
shareholders' meeting, or (b) more than 50% of the shares of the applicable
Fund (hereinafter, "majority vote"). A Portfolio's investment objective may not
be changed without a majority vote of that Portfolio's interest holders.

Each Fund has a fundamental investment policy which allows it to invest all
of its investable assets in its corresponding Portfolio. All other fundamental
investment policies and the non-fundamental investment policies of each Fund
and its corresponding Portfolio are identical. Therefore, although the
following discusses the investment

13 PROSPECTUS
<PAGE> 20
policies of each Portfolio and the AMR Trust's Board of Trustees ("AMR Trust
Board"), it applies equally to each Fund and the Board.

AMERICAN AADVANTAGE BALANCED FUND -- This Fund's investment objective is to
realize both income and capital appreciation. This Fund seeks its investment
objective by investing all of its investable assets in the Balanced Portfolio,
which invests primarily in equity and debt securities. Although equity
securities (such as stocks) will be purchased primarily for capital
appreciation and debt securities (such as bonds) will be purchased primarily
for income purposes, income and capital appreciation potential will be
considered in connection with all such investments. Excluding collateral for
securities loaned, ordinarily the Portfolio will have a minimum of 30% and a
maximum of 70% of its assets invested in equity securities and a minimum of 30%
and a maximum of 70% of its assets invested in debt securities which, at the
time of purchase, are rated in one of the four highest rating categories by all
nationally recognized statistical rating organizations ("Rating Organizations")
rating that security such as Standard & Poor's or Moody's Investor Services,
Inc. ("Moody's") or, if unrated, are deemed to be of comparable quality by the
applicable investment adviser. Obligations rated in the fourth highest rating
category are limited to 25% of the Portfolio's debt allocation. Obligations
rated in the BBB or Baa categories by any Rating Organization have speculative
characteristics and thus changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. See the SAI for a
description of debt ratings. The Portfolio, at the discretion of the
investment advisers, may retain a security that has been downgraded below the
initial investment criteria. The Portfolio usually invests between 50% and 65%
of its assets in equity securities and between 35% and 50% of its assets in
debt securities. The remainder of the Portfolio's assets may be invested in
cash or cash equivalents, including obligations that are permitted investments
for the Money Market Portfolio and in other investment companies. However, when
its investment advisers deem that market conditions warrant, the Portfolio may,
for temporary defensive purposes, invest up to 100% of its assets in cash, cash
equivalents and investment grade short-term obligations.

The Portfolio's investments in debt securities may include investments in
obligations of the U.S. Government and its agencies and instrumentalities,
including separately traded registered interest and principal securities
("STRIPS") and other zero coupon obligations; corporate bonds, notes and
debentures; non-convertible preferred stocks; mortgage-backed securities;
asset-backed securities; and domestic, Yankeedollar and Eurodollar bank deposit
notes, certificates of deposit, bonds and notes. Such obligations may have a
fixed, variable or floating rate of interest. See the SAI for a further
description of the foregoing securities. The value of the Portfolio's debt
investments will vary in response to interest rate changes as described in
"American AAdvantage Limited-Term Income Fund."

The Portfolio also may engage in dollar rolls or purchase or sell
securities on a "when-issued" and on a "forward commitment" basis. The purchase
or sale of when-issued securities enables an investor to hedge against
anticipated changes in interest rates and prices by locking in an attractive
price or yield. The price of when-issued securities is fixed at the time the
commitment to purchase or sell is made, but delivery and payment for the
when-issued securities take place at a later date, normally one to two months
after the date of purchase. During the period between purchase and settlement,
no payment is made by the purchaser to the issuer and no interest accrues to
the purchaser. Such transactions therefore involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if the
value of the security to be sold increases prior to the settlement date. A sale
of a when- issued security also involves the risk that the other party will be
unable to settle the transaction. Dollar rolls are a type of forward commitment
transaction. Purchases and sales of securities on a "forward commitment" basis
involve a commitment to purchase or sell securities with payment and delivery
to take place at some future date, normally one to two months after the date of
the transaction. As with when-issued securities, these transactions involve
certain risks, but they also enable an investor to hedge against anticipated
changes in interest rates and prices. Forward commitment transactions are
executed for existing obligations, whereas in a when-issued transaction, the
obligations have not yet been issued. When purchasing securities on a
when-issued or forward commitment basis, a segregated account of liquid assets
at least equal to the value of purchase commitments for such securities will be
maintained until the settlement date.

PROSPECTUS 14
<PAGE> 21

The Portfolio's equity investments may consist of common stocks, preferred
stocks and convertible securities, including foreign securities that are
represented by U.S. dollar-denominated American Depository Receipts which are
traded in the United States on exchanges and in the over-the-counter market.
When purchasing equity securities, primary emphasis will be placed on
undervalued securities with above average growth expectations. The Manager
believes that purchasing securities which the investment advisers believe are
undervalued in the market and that have above average growth potential will
outperform other investment styles over the longer term while minimizing
volatility and downside risk. The Manager will recommend that, with respect to
portfolio management of equity assets, the Trust retain only those investment
advisers who, in the Manager's opinion, utilize such an approach.

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.; CAPITAL GUARDIAN TRUST COMPANY;
GSB INVESTMENT MANAGEMENT, INC.; HOTCHKIS AND WILEY; and INDEPENDENCE
INVESTMENT ASSOCIATES, INC. currently manage the assets of the Balanced
Portfolio. See "Investment Advisers."

AMERICAN AADVANTAGE GROWTH AND INCOME FUND -- This Fund's investment objective
is to realize long-term capital appreciation and current income. This Fund
seeks its investment objective by investing all of its investable assets in the
Growth and Income Portfolio, which invests primarily in equity securities.
Excluding collateral for securities loaned, ordinarily at least 80% of the
Portfolio's assets will be invested in equity securities consisting of common
stocks, preferred stocks, securities convertible into common stocks, and
securities having common stock characteristics, such as rights and warrants,
and foreign equity securities that are represented by U.S. dollar-denominated
American Depository Receipts which are traded in the United States on exchanges
and in the over-the-counter market. In order to seek either above average
current income or capital appreciation when interest rates are expected to
decline, the Portfolio may invest in debt securities which, at the time of
purchase, are rated in one of the four highest rating categories by all Rating
Organizations rating that security or, if unrated, are deemed to be of
comparable quality by the applicable investment adviser. Obligations rated in
the fourth highest rating category are limited to 25% of the Portfolio's debt
allocation. See the "American AAdvantage Balanced Fund" for a description of
the risks involved with these obligations. See the SAI for definitions of the
foregoing securities and for a description of debt ratings. The Portfolio may
also invest in other investment companies or in cash and cash equivalents,
including obligations that are permitted investments for the Money Market
Portfolio, in order to maintain liquidity. However, when its investment
advisers deem that market conditions warrant, the Portfolio may, for temporary
defensive purposes, invest up to 100% of its assets in cash, cash equivalents
and investment grade short-term obligations. In addition, the Portfolio may
purchase or sell securities on a "when-issued" and on a "forward commitment"
basis as described in "American AAdvantage Balanced Fund." When purchasing
equity securities, primary emphasis will be placed on undervalued securities
with above average growth expectations.

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND -- This Fund's investment
objective is to realize long-term capital appreciation. This Fund seeks its
investment objective by investing all of its investable assets in the
International Equity Portfolio, which invests primarily in equity securities of
issuers based outside the United States. Ordinarily the Portfolio will invest
at least 65% of its assets in common stocks and securities convertible into
common stocks of issuers in at least three different foreign countries.
However, excluding collateral for securities loaned, the Portfolio generally
invests in excess of 80% of its assets in such securities. The remainder of the
Portfolio's assets will be invested in non-U.S. debt securities which, at the
time of purchase, are rated in one of the three highest rating categories by
any Rating Organization or, if unrated, are deemed to be of comparable quality
by the applicable investment adviser and traded publicly on a world market, or
in cash or cash equivalents, including obligations that are permitted
investments for the Money Market Portfolio or in other investment companies.
However, when its investment advisers deem that market conditions warrant, the
Portfolio may, for temporary defensive purposes, invest up to 100% of its
assets in cash, cash equivalents, other investment companies and investment
grade short-term obligations.

15 PROSPECTUS
<PAGE> 22
The investment advisers select securities based upon a country's economic
outlook, market valuation and potential changes in currency exchange rates.
When purchasing equity securities, primary emphasis will be placed on
undervalued securities with above average growth expectations.

Overseas investing carries potential risks not associated with domestic
investments. Such risks include, but are not limited to: (1) political and
financial instability abroad, including risk of nationalization or
expropriation of assets and the risk of war; (2) less liquidity and greater
volatility of foreign investments; (3) less public information regarding
foreign companies; (4) less government regulation and supervision of foreign
stock exchanges, brokers and listed companies; (5) lack of uniform accounting,
auditing and financial reporting standards; (6) delays in transaction
settlement in some foreign markets; (7) possibility of an imposition of
confiscatory foreign taxes; (8) possible limitation on the removal of
securities or other assets of the Portfolio; (9) restrictions on foreign
investments and repatriation of capital; (10) currency fluctuations; (11) cost
and possible restrictions of currency conversion; (12) withholding taxes on
dividends in foreign countries; and (13) possibly higher commissions, custodial
fees and management costs than in the U.S. market. These risks are often
greater for investments in emerging or developing countries.

The Portfolio will limit its investments to those in countries which have
been recommended by the Manager and which have been approved by the AMR Trust
Board. Countries may be added or deleted with AMR Trust Board approval. In
determining which countries will be approved, the AMR Trust Board will evaluate
the risk factors set forth above and will particularly focus on the ability to
repatriate funds, the size and liquidity aspects of a particular country's
market and the investment climate for foreign investors. The current countries
in which the Portfolio may invest are Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Mexico, Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, and the United Kingdom. The Portfolio normally will invest in
issuers based in at least three different countries outside the United States.

The Portfolio may trade forward foreign currency contracts ("forward
contracts"), which are derivatives, to hedge currency fluctuations of
underlying stock or bond positions, or in other circumstances permitted by the
Commodity Futures Trading Commission ("CFTC"). Forward contracts to sell
foreign currency may be used when the management of the Portfolio believes that
the currency of a particular foreign country may suffer a decline against the
U.S. dollar. Forward contracts are also entered into to set the exchange rate
for a future transaction. In this manner, the Portfolio may protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar or other currency which is being used for the security
purchase and the foreign currency in which the security is denominated during
the period between the date on which the security is purchased or sold and the
date on which payment is made or received. Forward contracts involve certain
risks which include, but are not limited to: (1) imperfect correlation between
the securities hedged and the contracts themselves; and (2) possible decrease
in the total return of the Portfolio. Forward contracts are discussed in
greater detail in the SAI.

The Portfolio also may trade currency futures ("futures") for the same
reasons as for entering into forward contracts as set forth above. Futures are
traded on U.S. and foreign currency exchanges. The use of futures also entails
certain risks which include, but are not limited to: (1) less liquidity due to
daily limits on price fluctuation; (2) imperfect correlation between the
securities hedged and the contracts themselves; (3) possible decrease in the
total return of the Portfolio due to hedging; (4) possible reduction in value
for both the contracts and the securities being hedged; and (5) potential
losses in excess of the amounts invested in the futures contracts themselves.
The Portfolio may not enter into futures contracts if the purchase or sale of
such contract would cause the sum of the Portfolio's initial and any variation
margin deposits to exceed 5% of its total assets. Futures contracts, which are
derivatives, are discussed in greater detail in the SAI.

HOTCHKIS AND WILEY, MORGAN STANLEY ASSET MANAGEMENT INC. and TEMPLETON
INVESTMENT COUNSEL, INC. currently serve as investment advisers to the
International Equity Portfolio. See "Investment Advisers."

PROSPECTUS 16
<PAGE> 23
AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND -- This Fund's investment
objective is to realize income and capital appreciation. As an investment
policy, the Fund primarily seeks income and secondarily seeks capital
appreciation. The Fund seeks its investment objective by investing all of its
investable assets in the Limited-Term Income Portfolio, which invests primarily
in debt obligations. Permissible investments include securities of the U.S.
Government and its agencies and instrumentalities, including STRIPS and other
zero coupon obligations; corporate bonds, notes and debentures; non-convertible
preferred stocks; mortgage-backed securities; asset-backed securities;
domestic, Yankeedollar and Eurodollar certificates of deposit, bank deposit
notes, and bank notes; other investment companies; and cash or cash equivalents
including obligations that are permitted investments for the Money Market
Portfolio. Such obligations may have a fixed, variable or floating rate of
interest. At the time of purchase, all such securities will be rated in one of
the four highest rating categories by all Rating Organizations rating such
obligation or, if unrated, will be deemed to be of comparable quality by the
investment adviser. Obligations rated in the fourth highest rating category are
limited to 25% of the Portfolio's total assets. See "American AAdvantage
Balanced Fund" for a description of the risks involved with these obligations.
See the SAI for definitions of the foregoing securities and for a description
of debt ratings. Principal and/or interest payments for obligations of the U.S.
Government's agencies or instrumentalities may or may not be backed by the full
faith and credit of the U.S. Government.

Investments in Yankeedollar and Eurodollar bonds, notes and certificates of
deposit involve risks that differ from investments in securities of domestic
issuers. See "American AAdvantage Money Market Fund" for a description of these
risks. The Portfolio also may engage in dollar rolls, or purchase or sell
securities on a "when-issued" or "forward commitment" basis as described under
"American AAdvantage Balanced Fund."

The market value of fixed rate securities, and thus the net asset value of
this Portfolio's shares, is expected to vary inversely with movements in
interest rates. The market value of variable and floating rate instruments
should not vary as much due to the periodic adjustments in their interest
rates. An adjustment which increases the interest rate of such securities
should reduce or eliminate declines in market value resulting from a prior
upward movement in interest rates, and an adjustment which decreases the
interest rate of such securities should reduce or eliminate increases in market
value resulting from a prior downward movement in interest rates.

Mortgage-backed securities are securities representing interests in "pools"
of mortgages in which payments of both interest and principal on the securities
are made monthly, in effect, "passing through" monthly payments made by the
individual borrowers on the mortgage loans which underlie the securities (net
of fees paid to the issuer or guarantor of the securities). Early repayment of
principal on mortgage pass-through securities (arising from prepayments of
principal due to sale of the underlying property, refinancing, or foreclosure,
net of fees and costs which may be incurred) may expose the Portfolio to a
lower rate of return upon reinvestment of principal. Also, if a security
subject to prepayment has been purchased at a premium, in the event of
prepayment, the value of the premium would be lost. Like other debt securities,
when interest rates rise, the value of mortgage-related securities generally
will decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not increase as much
as other debt securities.

Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by
the full faith and credit of the U.S. Government (in the case of securities
guaranteed by the Government National Mortgage Association ("GNMA")) or
guaranteed by agencies or instrumentalities of the U.S. Government (in the case
of securities guaranteed by the Federal National Mortgage Association ("FNMA")
or the Federal Home Loan Mortgage Corporation ("FHLMC"), which are supported
only by the discretionary authority of the U.S. Government to purchase the
agency's obligations). Mortgage pass-through securities created by
non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers) may be supported with various credit enhancements
such as pool insurance, guarantees issued by governmental entities, a letter of
credit from a bank or senior/subordinated structures.

17 PROSPECTUS
<PAGE> 24
principal on a CMO are paid, in most cases, monthly. CMOs may be collateralized
by whole mortgage loans but are more typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC or FNMA. CMOs are
structured in multiple classes, with each class bearing a different stated
maturity or interest rate.

The Portfolio is permitted to invest in asset-backed securities, subject to
the Portfolio's rating and quality requirements. Through the use of trusts and
special purpose subsidiaries, various types of assets, primarily home equity
loans, automobile and credit card receivables, and other types of receivables
or other assets as well as purchase contracts, financing leases and sales
agreements entered into by municipalities, are being securitized in
pass-through structures similar to the mortgage pass-through structures
described above. Consistent with the Fund's and the Portfolio's investment
objective, policies and quality standards, the Portfolio may invest in these
and other types of asset-backed securities which may be developed in the
future.

Asset-backed securities involve certain risks that do not exist with
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the benefit of a complete security interest
in the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and federal consumer credit laws, some of which may reduce the ability to
obtain full payment. In the case of automobile receivables, due to various
legal and economic factors, proceeds from repossessed collateral may not always
be sufficient to support payments on the securities. The risks associated with
asset-backed securities are often reduced by the addition of credit
enhancements such as a letter of credit from a bank, excess collateral or a
third-party guarantee.

Although investments will not be restricted by the maturity of the
securities purchased, under normal circumstances, the Portfolio will seek to
maintain a dollar-weighted average maturity of one to five years. However, the
dollar weighted average maturity may temporarily be adjusted outside the one to
five year period if warranted by market conditions. For example, the average
maturity of the Portfolio may be shortened in order to minimize depreciation of
capital if the investment adviser anticipates a rise in interest rates.
Conversely, the average maturity may be lengthened in order to maximize return
if interest rates are expected to decline. In addition, portfolio securities
may be actively traded to realize gains (or losses) and increase yields by
taking advantage of short-term market variations. Because the timing on return
of principal for both asset-backed and mortgage-backed securities is uncertain,
in calculating the average weighted maturity of the Portfolio, the maturity of
these securities may be based on certain industry conventions. The Manager
serves as the sole active investment adviser to the Limited-Term Income Fund
and its corresponding Portfolio.

MONEY MARKET FUNDS -- The investment objectives of the Money Market Funds are
current to seek income, liquidity and the maintenance of a stable $1.00 price
per share. The Money Market Funds seek to achieve these objectives by investing
all of their investable assets in the Money Market Portfolios, which invest in
high quality, U.S. dollar-denominated short- term obligations that have been
determined by the Manager or the AMR Trust Board to present minimal credit
risks. Portfolio investments are valued based on the amortized cost valuation
technique pursuant to Rule 2a-7 under the Investment Company Act of 1940 ("1940
Act"). See the SAI for an explanation of the amortized cost valuation method.
Obligations in which the Money Market Portfolios invest generally have
remaining maturities of 397 days or less, although instruments subject to
repurchase agreements and certain variable and floating rate obligations may
bear longer final maturities. The average dollar-weighted portfolio maturity of
each Money Market Portfolio will not exceed 90 days. The Manager serves as the
sole investment adviser to the Money Market Funds. See "Management and
Administration of the Trust."

PROSPECTUS 18
<PAGE> 25

Portfolio will invest only in issuers or instruments that at the time of
purchase (1) have received the highest short-term rating by at least two
Rating Organizations such as "A-1" by Standard & Poor's and "P-1" by Moody's;
(2) are single rated and have received the highest short-term rating by a
Rating Organization; or (3) are unrated, but are determined to be of comparable
quality by the Manager pursuant to guidelines approved by the AMR Trust Board
and subject to the ratification of the AMR Trust Board. See the SAI for
definitions of the foregoing instruments and rating systems. The Portfolio also
may purchase or sell securities on a "when-issued" or a "forward commitment"
basis as described in "American AAdvantage Balanced Fund."

The Portfolio will invest more than 25% of its assets in obligations issued
by the banking industry. However, for temporary defensive purposes during
periods when the Manager believes that maintaining this concentration may be
inconsistent with the best interest of shareholders, the Portfolio will not
maintain this concentration.

Investments in Eurodollar (U.S. dollar obligations issued outside the
United States by domestic or foreign entities) and Yankeedollar (U.S. dollar
obligations issued inside the United States by foreign entities) obligations
involve additional risks. Most notably, there generally is less publicly
available information about foreign issuers; there may be less governmental
regulation and supervision; foreign issuers may use different accounting and
financial standards; and the adoption of foreign governmental restrictions may
adversely affect the payment of principal and interest on foreign investments.
In addition, not all foreign branches of United States banks are supervised or
examined by regulatory authorities as are United States banks, and such
branches may not be subject to reserve requirements.

Variable amount master demand notes in which the Portfolio may invest are
unsecured demand notes that permit the indebtedness thereunder to vary, and
provide for periodic adjustments in the interest rate. Because master demand
notes are direct lending arrangements between the Portfolio and the issuer,
they are not normally traded. There is no secondary market for the notes;
however, the period of time remaining until payment of principal and accrued
interest can be recovered under a variable amount master demand note generally
shall not exceed seven days. To the extent this period is exceeded, the note in
question would be considered illiquid. Issuers of variable amount master demand
notes must satisfy the same criteria as set forth for other promissory notes
(e.g. commercial paper). The Portfolio will invest in variable amount master
demand notes only when such notes are determined by the Manager, pursuant to
guidelines established by the AMR Trust Board, to be of comparable quality to
rated issuers or instruments eligible for investment by the Portfolio. In
determining average dollar weighted portfolio maturity, a variable amount
master demand note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of the interest rate or
the period of time remaining until the principal amount can be recovered from
the issuer on demand.

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND -- The Fund's corresponding
Portfolio may invest in municipal obligations issued by or on behalf of the
governments of states, territories, or possessions of the United States; the
District of Columbia; and their political subdivisions, agencies and
instrumentalities if the interest these obligations provide is generally exempt
from federal income tax. The Municipal Money Market Portfolio will invest only
in issuers or instruments that at the time of purchase (1) are guaranteed by
the U.S. Government, its agencies, or instrumentalities; (2) are secured by
letters of credit that are irrevocable and issued by banks which qualify as
authorized issuers for the Money Market Portfolio (see "American AAdvantage
Money Market Fund"); (3) are guaranteed by one or more municipal bond insurance
policies that cannot be canceled and issued by third-party guarantors
possessing the highest claims- paying rating from a Rating Organization; (4)
have received one of the two highest short-term ratings from at least two
Rating Organizations; (5) are single rated and have received one of the two
highest short-term ratings from that Rating Organization; (6) have no
short-term rating but the instrument is comparable to the issuer's rated
short-term debt; (7) have no short-term rating (or comparable rating) but have
received one of the top two long-term ratings from all Rating Organizations
rating the issuer or instrument; or (8) are unrated, but are determined to be
of comparable quality by the Manager pursuant to guidelines approved by, and
subject to the oversight of, the AMR Trust Board. The Portfolio may also invest
in other investment companies. Ordinarily at least 80% of the Portfolio's net
assets will be invested in municipal obligations, the interest from which is
exempt from federal income tax. However, should market conditions

19 PROSPECTUS
<PAGE> 26

warrant, the Portfolio may invest up to 20% (or for temporary defensive
purposes, up to 100%) of its assets in obligations subject to federal income
tax which are eligible investments for the Money Market Portfolio.

The Portfolio may invest in certain municipal obligations which have rates
of interest that are adjusted periodically according to formulas intended to
minimize fluctuations in the values of these instruments. These instruments,
commonly known as variable rate demand obligations, are long-term instruments
which allow the purchaser, at its discretion, to redeem securities before their
final maturity at par plus accrued interest upon notice (typically 7 to 30
days).

Municipal obligations may be backed by the full taxing power of a
municipality ("general obligations"), or by the revenues from a specific
project or the credit of a private organization ("revenue obligations"). Some
municipal obligations are collateralized as to payment of principal and
interest by an escrow of U.S. Government or federal agency obligations, while
others are insured by private insurance companies, while still others may be
supported by letters of credit furnished by domestic or foreign banks. The
Portfolio's investments in municipal obligations may include fixed, variable,
or floating rate general obligations and revenue obligations (including
municipal lease obligations and resource recovery obligations); zero coupon and
asset-backed obligations; variable rate auction and residual interest
obligations; tax, revenue, or bond anticipation notes; tax-exempt commercial
paper; and purchase obligations that are subject to restrictions on resale. See
the SAI for a further discussion of the foregoing obligations. The Portfolio
may purchase or sell obligations on a "when-issued" or "forward commitment"
basis, as described under "American AAdvantage Balanced Fund."

The Portfolio may invest more than 25% of the value of its total assets in
municipal obligations which are related in such a way that an economic,
business or political development or change affecting one such security would
also affect the other securities; for example, securities the interest of which
is paid from revenues of similar types of projects, or securities whose issuers
are located in the same state. As a result, the Portfolio may be subject to
greater risk compared to a fund that does not follow this practice. However,
the Manager believes this risk is mitigated because it is anticipated that most
of the Portfolio's assets will be insured or backed by bank letters of credit.
Additionally, the Portfolio may invest more than 25% of the value of its total
assets in industrial development bonds which, although issued by industrial
development authorities, may be backed only by the assets and revenues of the
non-governmental users.

The Portfolio may also invest in municipal obligations that constitute
"private activity obligations." These include obligations that finance student
loans, residential rental projects, and solid waste disposal facilities. To the
extent the Portfolio earns interest income on private activity obligations,
shareholders will be required to treat the portion of the Fund's distributions
attributable to its share of such interest as a "tax preference item" for
purposes of determining their liability for the federal alternative minimum tax
("AMT") and, as a result, may become subject to (or increase their liability
for) the AMT. Shareholders should consult their own tax advisers to determine
whether they may be subject to the AMT. The Portfolio may invest in private
activity obligations without limitation and it is anticipated that a
substantial portion of the Portfolio's assets will be invested in these
obligations. As a result, a substantial portion of the Fund's distributions may
be a tax preference item, which will reduce the net return from the Fund for
taxpayers subject to the AMT. Interest on "qualified" private activity
obligations is exempt from federal income tax.

PROSPECTUS 20
<PAGE> 27

obligations of the U.S. Government, including securities issued by the Agency
for International Development, General Services Administration, GNMA, Rural
Electrification Administration, Small Business Administration, Federal
Financing Bank and others. See the SAI for a further discussion of the
foregoing obligations. The Portfolio may purchase or sell securities on a
"when-issued" or a "forward commitment" basis as described under "American
AAdvantage Balanced Fund."

OTHER INVESTMENT POLICIES -- In addition to the investment policies described
previously, each Portfolio may also lend its securities, enter into fully
collateralized repurchase agreements, and invest in private placement
offerings.

Each Portfolio may lend securities to broker-dealers or other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by any combination of cash, securities of the U.S. Government and its
agencies and instrumentalities and approved bank letters of credit that at all
times equal at least 100% of the market value of the loaned securities. Such
loans will not be made if, as a result, the aggregate amount of all outstanding
securities loans by any Portfolio would exceed 33 1/3 of its total assets. A
Portfolio continues to receive interest on the securities loaned and
simultaneously earns either interest on the investment of the cash collateral
or fee income if the loan is otherwise collateralized. However, a Portfolio
normally pays (including, in some cases, payments to the Manager) lending fees
and related expenses from this interest or fee income. Should the borrower of
the securities fail financially, there is a risk of delay in recovery of the
securities loaned or loss of rights in the collateral. However, the Portfolios
seek to minimize this risk by making loans only to borrowers which are deemed
by the Manager to be of good financial standing and which have been approved by
the AMR Trust Board. For purposes of complying with each Portfolio's investment
policies and restrictions, collateral received in connection with securities
loans will be deemed an asset of a Portfolio to the extent required by law. See
the SAI for further information regarding loan transactions.

A repurchase agreement is an agreement under which securities are acquired
by a Portfolio from a securities dealer or bank subject to resale at an agreed
upon price on a later date. The acquiring Portfolio bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed or prevented from exercising its
rights to dispose of the collateral securities. However, the investment
advisers or the Manager attempt to minimize this risk by entering into
repurchase agreements only with financial institutions which are deemed to be
of good financial standing and which have been approved by the AMR Trust Board.
See the SAI for more information regarding repurchase agreements.

Investments in private placement offerings are made in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 (the "Securities Act"), and resold to qualified
institutional buyers under Rule 144A of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolios, that agree they are purchasing the paper for investment and not
with an intention to distribute to the public. Any resale by the purchaser must
be pursuant to an exempt transaction and may be accomplished in accordance
with Rule 144A. Section 4(2) paper normally is resold to other institutional
investors such as the Portfolios through or with the assistance of the issuer
or dealers that make a market in the Section 4(2) paper, thus providing
liquidity. The Money Market Portfolios will not invest more than 10% (and the
Variable NAV Funds respective Portfolios, no more than 15%) of their
respective net assets in Section 4(2) paper and illiquid securities unless the
applicable investment adviser determines, by continuous reference to the
appropriate trading markets and pursuant to guidelines approved by the AMR
Trust Board, that any Section 4(2) paper held by such Portfolio in excess of
this level is at all times liquid.

Because it is not possible to predict with assurance exactly how this
market for Section 4(2) paper offered and sold under Rule 144A will develop,
the AMR Trust Board and the applicable investment adviser, pursuant to the
guidelines approved by the AMR Trust Board, will carefully monitor the
Portfolios' investments in these securities, focusing on such important
factors, among others, as: valuation, liquidity, and availability of
information. Investments in Section 4(2) paper could have the effect of
reducing a Portfolio's liquidity to the extent that qualified institutional
buyers no longer wish to purchase these restricted securities.

21 PROSPECTUS
<PAGE> 28

BROKERAGE PRACTICES -- Each investment adviser will place its own orders to
execute securities transactions which are designed to implement the applicable
Portfolio's investment objective and policies. In placing such orders, each
investment adviser will seek the best available price and most favorable
execution. The full range and quality of services offered by the executing
broker or dealer is considered when making these determinations. No Portfolio,
other than the Limited-Term Income Portfolio, currently expects its portfolio
turnover rate to exceed 100%. The portfolio turnover rate for the Limited-Term
Income Fund for the fiscal year ended October 31, 1995 was 183%. High portfolio
activity increases a Portfolio's transaction costs, including brokerage
commissions and may result in a greater number of taxable transactions.

The Money Market Portfolios and the Limited-Term Income Portfolio normally
will not incur any brokerage commissions on their transactions because money
market and debt instruments are generally traded on a "net" basis with dealers
acting as principal for their own accounts without a stated commission. The
price of the obligation, however, usually includes a profit to the dealer.
Obligations purchased in underwritten offerings include a fixed amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. No commissions or discounts are paid when securities
are purchased directly from an issuer.

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS -- As previously described,
investors should be aware that each Fund, unlike mutual funds that directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing all of its investable assets in a
corresponding Portfolio of the AMR Trust, which is a separate investment
company. Since a Fund will invest only in its corresponding Portfolio, that
Fund's shareholders will acquire only an indirect interest in the investments
of the Portfolio. Historically, the Manager has sponsored traditionally
structured funds and, therefore, has limited experience with funds that invest
all their assets in a separate portfolio.

The Manager expects, although it cannot guarantee, that the Trust will
achieve economies of scale by investing in the AMR Trust. In addition to
selling their interests to the Funds, the Portfolios may sell their interests
to other non-affiliated investment companies and/or other institutional
investors. All institutional investors in a Portfolio will pay a proportionate
share of the Portfolio's expenses and will invest in that Portfolio on the same
terms and conditions. However, if another investment company invests all of its
assets in a Portfolio, it would not be required to sell its shares at the same
public offering price as a Fund and would be allowed to charge different sales
commissions. Therefore, investors in a Fund may experience different returns
from investors in another investment company that invests exclusively in that
Fund's corresponding Portfolio.

The Fund's investment in a Portfolio may be materially affected by the
actions of large investors in that Portfolio, if any. For example, as with all
open-end investment companies, if a large investor were to redeem its interest
in a Portfolio, that Portfolio's remaining investors could experience higher
pro rata operating expenses, thereby producing lower returns. As a result, that
Portfolio's security holdings may become less diverse, resulting in increased
risk. Institutional investors in a Portfolio that have a greater pro rata
ownership interest in the Portfolio than the Fund could have effective voting
control over the operation of that Portfolio. A change in a Portfolio's
fundamental objective, policies and restrictions, that is not approved by the
shareholders of its corresponding Fund could require that Fund to redeem its
interest in the Portfolio. Any such redemption could result in a distribution
in kind of portfolio securities (as opposed to a cash distribution) by the
Portfolio. Should such a distribution occur, that Fund could incur brokerage
fees or other transaction costs in converting such securities to cash. In
addition, a distribution in kind could result in a less diversified portfolio
of investments for that Fund and could affect adversely its liquidity.

The Portfolios' and their corresponding Funds' investment objectives and
policies are described above. See "Investment Restrictions" for a description
of their investment restrictions. The investment objective of a Fund can be
changed only with shareholder approval. The approval of a Fund and of other
investors in its corresponding Portfolio, if any, is not required to change the
investment objective, policies or limitations of that Portfolio, unless
otherwise specified. Written notice shall be provided to shareholders of a Fund
within thirty days prior to any changes in its corresponding Portfolio's
investment objective. If the investment objective of a Portfolio changes and
the shareholders of its corresponding Fund do not approve a parallel change in
that Fund's investment objective,

PROSPECTUS 22
<PAGE> 29
the Fund would seek an alternative investment vehicle or the Manager and the
investment advisers would actively manage the Funds.

See "Management and Administration of the Trust" for a complete description
of the investment management fee and other expenses associated with a Fund's
investment in its corresponding Portfolio. This Prospectus and the SAI contain
more detailed information about each Fund and its corresponding Portfolio,
including information related to (1) the investment objective, policies and
restrictions of each Fund and its corresponding Portfolio, (2) the Board of
Trustees and officers of the Trust and the AMR Trust, (3) brokerage practices,
(4) the Funds' shares, including the rights and liabilities of its
shareholders, (5) additional performance information, including the method used
to calculate yield and total return, and (6) the determination of the value of
each Fund's shares.

INVESTMENT RESTRICTIONS

The following fundamental investment restrictions and the non-fundamental
investment restrictions are identical for each Fund and its corresponding
Portfolio. Therefore, although the following discusses the investment
restrictions of each Portfolio and the AMR Trust Board, it applies equally to
each Fund and the Board. The following fundamental investment restrictions may
be changed with respect to a particular Fund by the majority vote of that
Fund's outstanding shares or with respect to a Portfolio by the majority vote
of that Portfolio's interest holders. No Portfolio may:

- Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the
U.S. Government, its agencies and instrumentalities, or purchase
more than 10% of the voting securities of any one issuer, with
respect to 75% of a Portfolio's total assets. In addition,
although not a fundamental investment restriction and therefore
subject to change without shareholder vote, the Money Market
Portfolio and the U.S. Treasury Money Market Portfolio apply this
restriction with respect to 100% of their assets.

- Invest more than 25% of its total assets in the securities of
companies primarily engaged in any one industry other than the
U.S. Government, its agencies and instrumentalities or, with
respect to the Money Market Portfolio, the banking industry.
Municipal governments and their agencies and authorities are not
deemed to be industries. Finance companies as a group are not
considered a single industry for purposes of this policy.

The following non-fundamental investment restrictions may be changed with
respect to a particular Fund by a vote of a majority of the Board or with
respect to a Portfolio by a vote of a majority of the AMR Trust Board. No
Portfolio may:

- Invest in securities of an issuer that, together with any
predecessor, has been in operation for less than three years if
more than 5% of the Portfolio's total assets would be invested in
such securities. This limitation does not apply with regard to
collateralized trust securities.

- Invest more than 15% (or, with respect to any Money Market
Portfolio, 10%) of its net assets in illiquid securities,
including time deposits and repurchase agreements that mature in
more than seven days.

The above percentage limits are based upon asset values at the time of the
applicable transaction; accordingly, a subsequent change in asset values will
not affect a transaction that was in compliance with the investment
restrictions at the time such transaction was effected. See the SAI for other
investment limitations.

YIELDS AND TOTAL RETURNS

From time to time each class of the Money Market Funds may advertise their
"current yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
current yield refers to the income generated by an investment over a seven
calendar-day period (which period will be stated

23 PROSPECTUS
<PAGE> 30

in the advertisement). This income is then annualized by assuming the amount of
income generated by the investment during that week is earned each week over a
one-year period, and is shown as a percentage of the investment. The effective
yield is calculated similarly but, when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the current yield because of the compounding effect of this assumed
reinvestment. The Municipal Money Market Fund may also quote "tax equivalent
yields," which show the taxable yields a shareholder would have to earn before
federal income taxes to equal this Fund's tax-exempt yields. The tax equivalent
yield is calculated by dividing the Fund's tax-exempt yield by the result of
one minus a stated federal income tax rate. If only a portion of the Fund's
income was tax-exempt, only that portion is adjusted in the calculation. As
stated earlier, the Fund considers interest on private activity obligations to
be exempt from federal income tax. Each class of a Fund has different expenses
which will impact its performance.

Advertised yields for the Institutional and PlanAhead Classes of the
Variable NAV Funds will be computed by dividing the net investment income per
share earned by the applicable class during the relevant time period by the
maximum offering price per share for that class on the last day of the period.
Total return quotations advertised by the Funds may reflect the average annual
compounded (or aggregate compounded) rate of return during the designated time
period based on a hypothetical initial investment and the redeemable value of
that investment at the end of the period. Additionally, each class of the
Limited-Term Income Fund may advertise a "monthly distribution rate." This rate
is based on an annualized monthly dividend accrual rate per share compared with
the month-end share price of each class of this Fund. The Funds will at times
compare their performance to applicable published indices, and may also
disclose their performance as ranked by certain ranking entities. See the SAI
for more information about the calculation of yields and total returns.

MANAGEMENT AND ADMINISTRATION OF THE TRUST

FUND MANAGEMENT AGREEMENT -- The Board has general supervisory responsibility
over the Trust's affairs. The Manager provides or oversees all administrative,
investment advisory and portfolio management services for the Trust pursuant to
a Management Agreement dated April 3, 1987, as amended October 1, 1995,
together with the Administrative Services Agreement described below. The AMR
Trust and the Manager also entered into a Management Agreement dated October 1,
1995 that obligates the Manager to provide or oversee all administrative,
investment advisory and portfolio management services for the AMR Trust. The
Manager, located at 4333 Amon Carter Boulevard, MD 5645, Fort Worth, Texas
76155, is a wholly-owned subsidiary of AMR Corporation ("AMR"), the parent
company of American Airlines, Inc., and was organized in 1986 to provide
business management, advisory, administrative and asset management consulting
services. The assets of the corresponding Portfolios of the Balanced Fund,
Growth and Income Fund and International Equity Fund are allocated by the
Manager among one or more investment advisers designated for that Fund. See
"Investment Advisers." The Manager serves as the sole investment adviser to the
corresponding Portfolios of the Limited-Term Income Fund and the Money Market
Funds. In addition, with the exception of the International Equity Fund, if so
requested by any investment adviser, the Manager will make the investment
decisions with respect to assets allocated to that investment adviser which the
investment adviser determines should be invested in short-term obligations of
the type permitted for investment by the Money Market Portfolios. As of
December 31, 1995, the Manager had assets under management totaling
approximately $ billion including approximately $ billion under
active management and $ billion as named fiduciary or fiduciary adviser.
Of the total, approximately $ billion of assets are related to AMR.
American Airlines, Inc. is not responsible for investments made in the American
AAdvantage Funds.

The Manager provides the Trusts with office space, office equipment and
personnel necessary to manage and administer the Trusts' operations. This
includes complying with reporting requirements; corresponding with
shareholders; maintaining internal bookkeeping, accounting and auditing
services and records; and supervising the provision of services to the Trusts
by third parties. The Manager also develops the investment programs for each
Portfolio, selects and changes investment advisers (subject to approval by the
AMR Trust Board and appropriate interest holders), allocates assets among
investment advisers, monitors the investment advisers' investment

PROSPECTUS 24
<PAGE> 31
programs and results, and coordinates the investment activities of the
investment advisers to ensure compliance with regulatory restrictions.

The Manager bears the expense of providing the above services and pays the
fees of the investment advisers of the Funds and their Portfolios. As
compensation for paying the investment advisory fees and for providing the
Portfolios with advisory and asset allocation services, the Manager receives
from the AMR Trust an annualized advisory fee that is calculated and accrued
daily, equal to the sum of (1) 0.15% of the net assets of the Money Market
Portfolios, (2) 0.25% of the net assets of the Limited-Term Income Portfolio,
(3) 0.10% of the net assets of the other Portfolios, plus (4) all fees payable
by the Manager to the AMR Trust's investment advisers as described in
"Investment Advisers." The advisory fee is payable quarterly in arrears. To the
extent that a Fund invests all of its investable assets in its corresponding
Portfolio, the Manager will not receive an advisory fee under its Management
Agreement with the Trust. The Manager is compensated through the Administrative
Services Agreement as described below for other services provided.

Each Management Agreement will continue in effect provided that annually
such continuance is specifically approved by a vote of the Board and the AMR
Trust Board, including the affirmative votes of a majority of the independent
Trustees of each Board who are not parties to the Management Agreement or
"interested persons" as defined in the 1940 Act of any such party ("Independent
Trustees"), cast in person at a meeting called for the purpose of considering
such approval, or by the vote of a Fund's shareholders or a Portfolio's
interest holders. A Management Agreement may be terminated with respect to a
Fund or a Portfolio at any time, without penalty, by a majority vote of
outstanding Fund shares or Portfolio interests on sixty (60) days' written
notice to the Manager, or by the Manager, on sixty (60) days' written notice to
the Trust or the AMR Trust. A Management Agreement will automatically terminate
in the event of its "assignment" as defined in the 1940 Act.

The Trust is responsible for the following expenses: audits by independent
auditors; transfer agency, custodian, dividend disbursing agent and shareholder
recordkeeping services; taxes, if any, and the preparation of each Fund's tax
returns; interest; costs of Trustee and shareholder meetings; printing and
mailing prospectuses and reports to existing shareholders; fees for filing
reports with regulatory bodies and the maintenance of the Funds' existence;
legal fees; fees to federal and state authorities for the registration of
shares; fees and expenses of Independent Trustees; insurance and fidelity bond
premiums; and any extraordinary expenses of a nonrecurring nature.

A majority of the Independent Trustees of the Board have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
between the Trust and the AMR Trust, including creating a separate Board of
Trustees of the AMR Trust.

FUND ADVISORY AGREEMENTS -- Each investment adviser has entered into a separate
investment advisory agreement with the Manager to provide investment advisory
services to the Funds and their corresponding Portfolios. To the extent that a
Fund invests all of its investable assets in a corresponding Portfolio,
however, an investment adviser will receive an advisory fee only on behalf of
the Portfolio and not on behalf of its corresponding Fund. Except for the Money
Market Portfolios and the Limited-Term Income Portfolio, the assets of each
Portfolio are allocated among the investment advisers designated for that
Portfolio and described in this Prospectus in "Investment Advisers." All
investment advisers are subject to approval by the AMR Trust Board and interest
holders of the applicable Portfolio. The Manager recommends investment advisers
to the AMR Trust Board based upon its continuing quantitative and qualitative
evaluation of the investment advisers' skill in managing assets using specific
investment styles and strategies. The allocation of assets among investment
advisers may be changed at any time by the Manager. Allocations among advisers
will vary based upon a variety of factors, including the overall investment
performance of each investment adviser, the Portfolio's cash flow needs and
market conditions. The Manager need not allocate assets to each investment
adviser designated for a Portfolio. The investment advisers can be terminated
without penalty to the AMR Trust by the Manager, the AMR Trust Board or the
interest holders of the applicable Portfolio. Short-term investment
performance, by itself, is not a significant factor in selecting or terminating
an investment adviser, and the Manager does not expect to recommend frequent
changes of investment advisers. The Prospectus will be supplemented if
additional investment advisers are retained or the contract with any existing
investment adviser is terminated.

25 PROSPECTUS
<PAGE> 32

Each investment adviser has discretion to purchase and sell securities for
its segment of a Portfolio's assets in accordance with that Portfolio's
objectives, policies and restrictions and the more specific strategies provided
by the Manager. Although the investment advisers are subject to general
supervision by the AMR Trust Board and the Manager, these parties do not
evaluate the investment merits of specific securities transactions. As
compensation for its services, each investment adviser is paid a fee by the
Manager out of the proceeds of the management fee received by the Manager from
the AMR Trust.

ADMINISTRATIVE SERVICES AGREEMENT -- The Manager and the Trust entered into an
Administrative Services Agreement which obligates the Manager to provide the
Funds those administrative and management services (other than investment
advisory services) described in the Management Agreement. As compensation for
these services, the Manager receives an annualized fee of 0.25% of the net
assets of the Institutional Class of the Variable NAV Funds and 0.05% of the
net assets of the Institutional Class of the Money Market Funds. The fee is
payable quarterly in arrears.

ALLOCATION OF FUND EXPENSES -- Expenses of each Fund generally are allocated
equally among the shares of that Fund, regardless of class. However, certain
expenses approved by the Board will be allocated solely to the class to which
they relate.

PRINCIPAL UNDERWRITER -- BROKERS TRANSACTION SERVICES, INC. ("BTS"), 7001
Preston Road, Dallas, Texas 75205, serves as the principal underwriter of the
Trust.

CUSTODIAN AND TRANSFER AGENT -- NATIONSBANK OF TEXAS, N.A., Dallas, Texas,
serves as custodian for the Portfolios and the Funds and as transfer agent for
the Institutional Class. THE CHASE MANHATTAN BANK N.A., New York, New York,
acts as subcustodian for the International Equity Portfolio.

INDEPENDENT AUDITOR -- The independent auditor for the Trust and the AMR Trust
is ERNST & YOUNG LLP, Dallas, Texas.

INVESTMENT ADVISERS

Set forth below is a brief description of the investment advisers for each Fund
and its corresponding Portfolio, except for the Money Market Funds and their
corresponding Portfolios, whose sole investment adviser is the Manager. Except
for the Manager, none of the investment advisers provides any services to the
Funds or the Portfolios except for portfolio investment management and related
recordkeeping services, or has any affiliation with the Trust, the AMR Trust or
the Manager.

William F. Quinn has served as President of the Manager since it was
founded in 1986 and Nancy A. Eckl currently serves as Vice President-Trust
Investments of the Manager. She previously served as Vice President-Finance
and Compliance of the Manager from December 1990 to May 1995. In these
capacities, Mr. Quinn and Ms. Eckl have primary responsibility for the
day-to-day operations of the Balanced Fund, the Growth and Income Fund, the
International Equity Fund and their corresponding Portfolios. These
responsibilities include oversight of the investment advisers, regular review
of each adviser's performance and asset allocations among investment advisers.

Michael W. Fields is responsible for the portfolio management oversight of
the Limited-Term Income Fund and its corresponding Portfolio. Mr. Fields has
been with the Manager since it was founded in 1986 and currently serves as Vice
President-Fixed Income Investments. Benjamin L. Mayer is responsible for the
day-to-day portfolio management of the Limited-Term Income Portfolio. Mr. Mayer
has served as Senior Portfolio Manager of the Manager since May 1995. Prior to
that time, he was a Vice President of Institutional Fixed Income Sales at
Merrill Lynch, Pierce, Fenner & Smith from January 1994 to April 1995 and Vice
President, Regional Senior Strategist from April 1989 to January 1994. Mr.
Mayer has had portfolio management responsibility for the Fund since August
1995.

PROSPECTUS 26
<PAGE> 33

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. ("Barrow"), 3232 McKinney Avenue,
15th Floor, Dallas, Texas 75204, is a professional investment counseling firm
which has been providing investment advisory services since 1979. The firm is
wholly owned by United Asset Management Corporation, a Delaware corporation,
which owns forty- investment management companies, including Barrow. As of
December 31, 1995, Barrow had discretionary investment management authority
with respect to approximately $ billion of assets, including approximately
$ billion of assets of AMR and its subsidiaries and affiliated entities.
Barrow serves as an investment adviser to the Balanced Portfolio, the Growth
and Income Portfolio and the Limited-Term Income Portfolio, although the
Manager does not presently intend to allocate any of the assets in the
Limited-Term Income Portfolio to Barrow. The Manager pays Barrow an annualized
fee equal to .30% on the first $200 million in AMR Trust assets under its
discretionary management, .20% on the next $300 million, .15% on the next $500
million, and .125% on assets over $1 billion.

CAPITAL GUARDIAN TRUST COMPANY ("Capital"), 333 South Hope Street, Los
Angeles, California 90071, is a California state chartered trust company which
was formed in 1968. The firm is a wholly owned subsidiary of The Capital Group,
Inc., a company whose subsidiaries provide investment management and related
financial services. Capital managed approximately $ billion in assets as
of December 31, 1995, which included approximately $ million of assets of
AMR and its subsidiaries and affiliated entities. Capital serves as an
investment adviser to the Balanced Portfolio, the Growth and Income Portfolio
and the Limited-Term Income Portfolio, although the Manager does not presently
intend to allocate any of the assets in the Limited-Term Income Portfolio to
Capital. The Manager pays Capital an annualized fee equal to .50% of the first
$20 million of AMR Trust assets under its discretionary management, .35% of the
next $30 million of assets, and .225% of all excess assets for the Growth and
Income Portfolio and .20% of all excess assets for the Balanced Portfolio.
However, a 5% fee reduction applies to assets between $500 million and $750
million, a 7.5% fee reduction on assets between $750 million and $1 billion and
a 10% fee reduction on assets over $1 billion. The reduction is applied to the
overall effective fee rate for all assets managed by Capital.

GSB INVESTMENT MANAGEMENT, INC. ("GSB"), 301 Commerce Street, Fort Worth,
Texas 76102, is a professional investment management firm which was founded in
1987 by Frank P. Ganucheau, Mark J. Stupfel, and Lyle E. Brumley. GSB is wholly
owned by United Asset Management Corporation, a Delaware corporation, which owns
forty- investment management companies, including GSB. As of December 31, 1995,
GSB managed approximately $ billion of assets, including approximately $
million of assets of AMR and its subsidiaries and affiliated entities. GSB
serves as an investment adviser to the Balanced Portfolio and the Growth and
Income Portfolio. The Manager pays GSB an annualized fee equal to .30% of the
first $100 million in AMR Trust assets under its discretionary management, .25%
of the next $100 million, .20% of the next $100 million, and .15% on all excess
assets.

HOTCHKIS AND WILEY, 800 West Sixth Street, 5th Floor, Los Angeles,
California 90017, is a professional investment counseling firm which was
founded in 1980 by John F. Hotchkis and George Wiley, who are the firm's
founding General Partners. Assets under management as of December 31, 1995 were
approximately $ billion, which included approximately $ million of
assets of AMR and its subsidiaries and affiliated entities. Hotchkis and Wiley
serves as an investment adviser to the Balanced Portfolio, the Growth and
Income Portfolio and the International Equity Portfolio. The advisory contract
provides for the Manager to pay Hotchkis and Wiley an annualized fee equal to
.60% of the first $10 million of assets under its discretionary management,
.50% of the next $140 million of assets, .30% on the next $50 million of assets
and .20% of all excess AMR Trust assets managed by Hotchkis.

INDEPENDENCE INVESTMENT ASSOCIATES, INC. ("IIA"), 53 State Street, Boston,
Massachusetts 02109, is a professional investment counseling firm which was
founded in 1982. The firm is a wholly owned subsidiary of John Hancock Mutual
Life Insurance Company. Assets under management as of December 31, 1995,
including funds managed for its parent company, were approximately $
billion, which included approximately $ million of assets of AMR and its
subsidiaries and affiliated entities. IIA serves as an investment adviser to
the Balanced Portfolio and the Growth and Income Portfolio. The Manager pays
IIA an annualized fee equal to .50%

27 PROSPECTUS
<PAGE> 34

of the first $30 million of AMR Trust assets under its discretionary
management, .25% of the next $70 million of assets, and .20% of all excess
assets.

MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM"), with principal offices at
1221 Avenue of the Americas, New York, New York 10020, is a wholly owned
subsidiary of Morgan Stanley Group Inc. MSAM provides portfolio management and
named fiduciary services to taxable and nontaxable institutions, international
organizations and individuals investing in United States and international
equity and debt securities. As of December 31, 1995, MSAM had assets under
management totaling approximately $ billion, including approximately $
billion under active management and $ billion as named fiduciary or
fiduciary adviser. As of December 31, 1995, MSAM had investment authority over
approximately $ million of assets of AMR and its subsidiaries and
affiliated entities. MSAM serves as an investment adviser to the International
Equity Portfolio. For this service, the Manager pays MSAM an annual fee equal to
.80% of the first $25 million in AMR Trust assets under its discretionary
management, .60% of the next $25 million in assets, .50% of the next $25 million
in assets and .40% on all excess assets.

TEMPLETON INVESTMENT COUNSEL, INC. ("Templeton"), 500 East Broward Blvd.,
Suite 2100, Fort Lauderdale, Florida 33394-3091, is a professional investment
counseling firm which has been providing investment services since 1979.
Templeton is indirectly owned by Franklin Resources, Inc. As of December 31,
1995, Templeton had discretionary investment management authority with respect
to approximately $ billion of assets, including approximately $ million of
assets of AMR and its subsidiaries and affiliated entities. Templeton serves as
an investment adviser to the International Equity Portfolio. For this service,
the Manager pays Templeton an annualized fee equal to .50% of the first $100
million in AMR Trust assets under its discretionary management, .35% of the
next $50 million in assets, .30% of the next $250 million in assets and .25% on
assets over $400 million.

Solely for the purpose of determining the applicable percentage rates when
calculating the fees for each investment adviser other than MSAM, there shall
be included all other assets or trust assets of American Airlines, Inc. also
under management by each respective investment adviser (except assets managed
by Barrow under the HALO Bond Program). For the purpose of determining the
applicable percentage rates when calculating MSAM's fees, all equity account
assets managed by MSAM on behalf of American Airlines, Inc. shall be included.
The inclusion of any such assets will result in lower overall fee rates being
applied to the applicable Portfolio.

PURCHASE, REDEMPTION AND VALUATION OF SHARES

PURCHASING SHARES OF THE TRUST -- Institutional Class shares are offered
without a sales charge to institutions -- including bank trust departments
acting on behalf of their clients (such as employee benefit plans, personal
trusts and other accounts for which the bank acts as agent or fiduciary);
endowment funds and charitable foundations; employee welfare plans which are
tax-exempt under Section 501(c)(9) of the Internal Revenue Code of 1986, as
amended ("Code"); qualified pension and profit sharing plans, and cash or
deferred arrangements under Section 401(k) of the Code; corporations; and
others who make an initial investment of at least $2 million. However, the
Manager may waive this minimum investment requirement. In addition, investors
with less than $2 million currently can invest in the Funds indirectly through
certain institutions which may charge the investor an additional fee for their
services.

Trust shares are sold without a sales charge at the net asset value next
determined after the acceptance of a purchase order. Shares of the Variable NAV
Funds are offered and purchase orders accepted until 4:00 p.m. Eastern time on
each day on which the New York Stock Exchange (the "Exchange") is open for
trading and the custodian/transfer agent is open for business ("Business Day").
Shares of the Money Market Fund are offered and orders accepted until 3:00 p.m.
Eastern time on each day on which the Federal Reserve and the
custodian/transfer agent are open for business ("Money Market Business Day").
Shares are offered and orders are accepted for the Municipal Money Market Fund
until 12:00 p.m. Eastern time and for the U.S. Treasury Money Market Fund
until 12:30 p.m. Eastern time on each Money Market Business Day. The Trust
reserves the right to reject any order for the purchase of shares and to limit
or suspend, without prior notice, the offering of shares.

PROSPECTUS 28
<PAGE> 35
Institutional Class shares may be purchased and redeemed as follows:

BY WIRE -- Purchases may be made by wiring funds. To ensure prompt receipt of a
transmission by wire, the investor should: telephone the transfer agent at
(214) 508-5038 or (800) 658-5811 and specify the Fund whose shares are to be
purchased; provide the name, address, telephone number and account number of
the investor; and identify the amount being wired and by which bank. If the
investor is opening a new account, the transfer agent will provide the investor
with an account number. The investor should instruct its bank to designate the
account number which the transfer agent has assigned to the investor and to
transmit the federal funds to: Federal Reserve Bank, Dallas, for NationsBank of
Texas, N.A. ABA Routing #111-000-025, Corporate Trust Suspense Account No.
0180019810, reference American AAdvantage Funds, attention: Fund Account
Services.

BY DEPOSITING SECURITIES -- Shares of a Fund may be purchased in exchange for
an investor's securities if the securities are acceptable to that Fund's
corresponding Portfolio and satisfy applicable investment objectives and
policies. Investors interested in exchanging securities must first contact the
Manager and acquire instructions regarding submission of a written description
of the securities which the investor wishes to exchange. The investor must
represent that all such securities offered to any Fund are not subject to any
sale restrictions. Within five business days after receipt of the written
description, the Manager will advise the investor whether the securities to be
exchanged are acceptable. There is no charge for this review by the Manager.
Securities accepted by a Fund must have a readily ascertainable value as
evidenced by a listing on the Exchange, American Stock Exchange or Nasdaq.
Securities are valued in the manner described for valuing Portfolio assets in
the section entitled "Valuation of Shares." Acceptance of such orders may occur
on any day during the five-day period afforded the Manager to review the
acceptability of the securities. Upon notice of acceptance of such orders, the
securities must be delivered in fully negotiable form within three days. The
Manager will provide delivery instructions at the time of acceptance. A gain or
loss for federal income tax purposes may be realized by the investor upon the
securities exchange, depending upon the adjusted tax basis and value of the
securities tendered. A Fund will accept securities in this manner only for
purposes of investment by its corresponding Portfolio, and not for resale.

BY MAIL -- Share purchases of any Fund may be made by mail by sending a check
or other negotiable bank draft payable to the applicable Fund to "NationsBank
of Texas, N.A., 11th Floor, Elm Place, P.O. Box 830840, Dallas, Texas
75283-0840, Attn.: American AAdvantage Funds -- Institutional Class." An
additional purchase of shares should be accompanied by the shareholder's
account number. Purchase checks are accepted subject to collection at full face
value in U.S. funds and must be drawn in U.S. dollars on a U.S. bank.

REDEMPTION OF SHARES -- Variable NAV Fund shares may be redeemed on any
Business Day by writing directly to NationsBank of Texas, N.A. at the address
above under "Purchasing Shares of the Trust -- By Mail." Shares of the Money
Market Funds may be redeemed on any Money Market Business Day by writing to the
same address. The redemption price will be the net asset value per share next
determined after receipt by NationsBank of Texas, N.A. of all required
documents in good order. "Good order" means that the request must include a
letter of instruction or stock assignment specifying the number of shares or
dollar amount to be redeemed, signed by an authorized signatory for the owners
of the shares in the exact names in which they appear on the account, and
accompanied by such other supporting legal documents, if required, in the case
of estates, trusts, guardianships, custodians, corporations, IRAs and welfare,
pension and profit-sharing plans. In addition, any share certificates being
redeemed must be returned duly endorsed or accompanied by a stock assignment
with signatures guaranteed by a bank, trust company or member of a recognized
stock exchange.

29 PROSPECTUS
<PAGE> 36

have cleared, which may take up to 15 days. Although the Funds intend to redeem
shares in cash, each Fund reserves the right to pay the redemption price in
whole or in part by a distribution of readily marketable securities held by the
applicable Fund's corresponding Portfolio. See the SAI for further information
concerning redemptions in kind.

FULL REDEMPTIONS -- Unpaid dividends credited to an account up to the date of
redemption of all shares of a Money Market Fund generally will be paid at the
time of redemption.

DISTRIBUTION OF TRUST SHARES -- Shares are distributed through the Funds'
principal underwriter, BTS. BTS is compensated by the Manager, and not the
Trust. The Trust does not incur any direct distribution expenses other than
those related to Platinum Class shares. However, the Trust has adopted a
Distribution Plan in accordance with Rule 12b-1 under the 1940 Act which
authorizes the use of any fees received by the Manager in accordance with the
Administrative Services and Management Agreements and any fees received by the
investment advisers pursuant to their Advisory Agreements with the Manager, to
be used for distribution purposes.

VALUATION OF SHARES -- The net asset value of each share (share price) of the
Variable NAV Funds is determined as of 4:00 p.m. Eastern time on each Business
Day and the net asset value of each share of the Money Market Funds is
determined as of 4:00 p.m. Eastern time on each Money Market Business Day. The
net asset value of shares of the Institutional Class will be determined based
on a pro rata allocation of the value of the Fund's corresponding Portfolio's
investment income, expenses and total capital gains and losses. The allocation
will be based on comparative net asset value at the beginning of the day except
for expenses related solely to one class of shares ("Class Expenses") which
will be borne only by the appropriate class of shares. Because of the Class
Expenses, the net income attributable to and the dividends payable for each
class of shares may be different. Additionally, the Variable NAV Funds may
compute differing share prices as a result of Class Expenses.

Equity securities listed on securities exchanges, including all but United
Kingdom securities of the International Equity Portfolio, are valued at the
last quoted sales price on a designated exchange prior to the close of trading
on the Exchange or, lacking any sales, on the basis of the last current bid
price prior to the close of trading on the Exchange. Securities of the United
Kingdom held in the International Equity Portfolio are priced at the last
jobber price (mid of the bid and offer prices quoted by the leading stock
jobber in the security) prior to close of trading on the Exchange. Trading in
foreign markets is usually completed each day prior to the close of the
Exchange. However, events may occur which affect the values of such securities
and the exchange rates between the time of valuation and the close of the
Exchange. Should events materially affect the value of such securities during
this period, the securities are priced at fair value, as determined in good
faith and pursuant to procedures approved by the Board. Over-the-counter equity
securities are valued on the basis of the last bid price on that date prior to
the close of trading. Debt securities (other than short-term securities) will
normally be valued on the basis of prices provided by a pricing service and may
take into account appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. In some cases, the prices
of debt securities may be determined using quotes obtained from brokers.
Securities for which market quotations are not readily available are valued at
fair value, as determined in good faith and pursuant to procedures approved by
the AMR Trust Board. Assets and liabilities denominated in foreign currencies
and forward currency contracts are translated into U.S. dollar equivalents
based on prevailing market rates. Portfolio obligations held by the Money
Market Portfolios are valued in accordance with the amortized cost method,
which is designed to enable those Portfolios and their corresponding Funds to
maintain a consistent $1.00 per share net asset value. Investment grade
short-term obligations with 60 days or less to maturity held by all other
Portfolios also are valued using the amortized cost method as described in the
SAI.

DIVIDENDS, OTHER DISTRIBUTIONS AND TAX MATTERS

PROSPECTUS 30
<PAGE> 37

Dividends consisting of substantially all of the net investment income of the
Limited-Term Income Fund, which are paid monthly, normally are declared on each
Business Day immediately prior to the determination of the net asset value and
are payable to shareholders of record as of the opening of business on the day
on which declared. A Fund's net investment income attributable to the
Institutional Class will consist of that class's pro rata share of the Fund's
share of dividends and interest (including discount) accrued on the securities
held by its corresponding Portfolio, less applicable expenses of the Fund and
the Portfolio attributable to the Institutional Class. Distributions of a
Fund's share of its corresponding Portfolio's realized net short-term capital
gain, net capital gain (the excess of net long-term capital gain over net
short-term capital loss), and net gains from foreign currency transactions, if
any, normally will be made annually.

All of each Money Market Fund's net investment income and net short-term
capital gain, if any, generally is declared as dividends on each Money Market
Business Day immediately prior to the determination of the net asset value.
Dividends generally will be paid on the first Money Market Business Day of the
following month. Each Money Market Fund's net investment income attributable to
the Institutional Class will consist of that class pro rata share of the
Fund's share of interest accrued and discount earned on its corresponding
Portfolio's securities, less amortization of premium and estimated expenses of
both the Portfolio and the Fund attributable to the Institutional Class. The
Money Market Portfolios do not expect to realize net capital gain and,
therefore, the Money Market Funds do not foresee paying any capital gain
distributions. If any Money Market Fund (either directly or indirectly through
its corresponding Portfolio) incurred or anticipated any unusual expenses, loss
or depreciation that would adversely affect its net asset value or income for a
particular period, the Board would at that time consider whether to adhere to
the dividend policy described above or to revise it in the light of the then
prevailing circumstances.

Unless a shareholder elects otherwise on the account application, all
dividends and other distributions on a Fund's Institutional Class shares will
be automatically declared and paid in additional Institutional Class shares of
that Fund. However, a shareholder may choose to have distributions of net
capital gain paid in shares and dividends paid in cash or to have all such
distributions and dividends paid in cash. An election may be changed at any
time by delivering written notice that is received by the transfer agent at
least ten days prior to the payment date for a dividend or other distribution.

TAX INFORMATION -- Each Fund is treated as a separate corporation for federal
income tax purposes and intends to continue to qualify for treatment as a
regulated investment company under the Code. In each taxable year that a Fund
so qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (generally,
net investment income plus any net short-term capital gain and gains from
certain foreign currency transactions) and net capital gain that it distributes
to its shareholders. However, a Fund will be subject to a nondeductible 4%
excise tax to the extent that it fails to distribute by the end of any calendar
year substantially all of its ordinary income for that calendar year and its
capital gain net income for the one-year period ending on October 31 of that
year, plus certain other amounts. For these and other purposes, dividends and
other distributions declared by a Fund in October, November or December of any
year and payable to shareholders of record on a date in one of those months
will be deemed to have been paid by the Fund and received by the shareholders
on December 31 of that year if they are paid by the Fund during the following
January. Each Portfolio received a ruling from the Internal Revenue Service
that it is classified for federal income tax purposes as a partnership;
accordingly, no Portfolio is subject to federal income tax.

Dividends from a Fund's investment company taxable income will be taxable
to its shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether received in cash or paid in additional Fund shares.
Distributions of a Fund's net capital gain (whether received in cash or paid in
additional Fund shares), when designated as such, generally will be taxable to
its shareholders as long-term capital gain, regardless of how long they have
held their Fund shares. A capital gain distribution from a Fund also may be
offset by capital losses from other sources.

31 PROSPECTUS
<PAGE> 38
satisfies certain requirements, it may elect to flow the tax through to its
shareholders, who in turn may either treat it as a deduction or use it in
calculating a credit against their federal income tax.

A portion of the income dividends paid by the Balanced Fund and Growth and
Income Fund is eligible for the dividends-received deduction allowed to
corporations. The eligible portion may not exceed the respective Fund's
aggregate dividends received from U.S. corporations. However, dividends
received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction may be subject indirectly to the AMT. The
International Equity Fund's dividends will most likely not qualify for the
dividends-received deduction because none of the dividends received by that
Fund are expected to be paid by U.S. corporations.

Distributions by the Municipal Money Market Fund that it designates as
"exempt-interest dividends" generally may be excluded from gross income by its
shareholders. If the Municipal Money Market Portfolio earns taxable income from
any of its investments, the Municipal Money Market Fund's share of income will
be distributed to its shareholders as a taxable dividend. To the extent that
Portfolio invests in private activity obligations, that Fund's shareholders
will be required to treat a portion of its dividends as a "tax preference item"
in determining their liability for the AMT. Exempt-interest dividends also may
be subject to tax under state and local tax laws. Because some states exempt
from tax the interest on their own obligations and obligations of governmental
agencies and municipalities in the state, shareholders will receive tax
information each year regarding the Municipal Money Market Fund's
exempt-interest income by state. Interest on indebtedness incurred or continued
by a shareholder to purchase or carry shares of that Fund is not deductible.

Redemption of Fund shares (other than shares of the Money Market Funds) may
result in taxable gain or loss to the redeeming shareholder, depending upon
whether the fair market value of the redemption proceeds exceeds or is less
than the shareholder's adjusted basis for the redeemed shares. If shares of a
Fund are redeemed at a loss after being held for six months or less, the loss
will be treated as long-term, instead of short-term, capital loss to the extent
of any capital gain distributions received on those shares.

Each Fund notifies its shareholders following the end of each calendar year
of the amounts of dividends and capital gain distributions paid (or deemed
paid) (and for the International Equity Fund, if it satisfies the requirements
and makes the election referred to above, their share of that Fund's share of
any foreign taxes paid by the International Equity Portfolio) that year and of
any portion of those dividends that qualifies for the corporate
dividends-received deduction. The notice sent by the Municipal Money Market
Fund specifies the amounts of exempt-interest dividends (and the portion
thereof, if any, that is a tax preference item for purposes of the AMT) and any
taxable dividends.

Each Fund is required to withhold 31% of all taxable dividends, and, for
all Funds other than the Money Market Funds, capital gain distributions and
redemption proceeds payable to any individuals and certain other non-corporate
shareholders who do not provide the Fund with a correct taxpayer identification
number or (except with respect to redemption proceeds) who otherwise are
subject to back-up withholding.

The foregoing is only a summary of some of the important tax considerations
generally affecting the Funds and their shareholders. Prospective investors are
urged to consult their own tax advisers regarding specific questions as to the
effect of federal, state or local income taxes on any investment in the Trust.
For further tax information, see the SAI.

GENERAL INFORMATION

PROSPECTUS 32
<PAGE> 39
class. Only shares of a particular Fund may vote on matters affecting that
Fund. All shares of the Trust vote on matters affecting the Trust as a whole.
Share voting rights are not cumulative, and shares have no preemptive or
conversion rights. Shares of the Trust are nontransferable.

On most issues subjected to a vote of a Portfolio's interest holders, as
required by the 1940 Act, its corresponding Fund will solicit proxies from its
shareholders and will vote its interest in the Portfolio in proportion to the
votes cast by that Fund's shareholders. Because a Portfolio interest holder's
votes are proportionate to its percentage interests in that Portfolio, one or
more other Portfolio investors could, in certain instances, approve an action
against which a majority of the outstanding voting securities of its
corresponding Fund had voted. This could result in that Fund's redeeming its
investment in its corresponding Portfolio, which could result in increased
expenses for that Fund. Whenever the shareholders of a Fund are called to vote
on matters related to its corresponding Portfolio, the Board shall vote shares
for which they receive no voting instructions in the same proportion as the
shares for which they do receive voting instructions. Any information received
from a Portfolio in the Portfolio's report to shareholders will be provided to
the shareholders of its corresponding Fund.

As a Massachusetts business trust, the Trust is not obligated to conduct
annual shareholder meetings. However, the Trust will hold special shareholder
meetings whenever required to do so under the federal securities laws or the
Trust's Declaration of Trust or By-Laws. Trustees can be removed by a
shareholder vote at special shareholder meetings.

As more fully described in the SAI, the following persons may be deemed to
control certain Funds by virtue of their ownership of more than 25% of the
outstanding shares of a Fund as of December 31, 1995:

<TABLE>
<S> <C>
AMERICAN AADVANTAGE BALANCED FUND
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
AMERICAN AADVANTAGE GROWTH AND INCOME FUND
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
Retirement Advisors of America, Inc. %
AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
</TABLE>

SHAREHOLDER COMMUNICATIONS

Shareholders will receive periodic reports, including annual and semi-annual
reports which will include financial statements showing the results of the
Funds' operations and other information. The financial statements of the Trust
will be audited by Ernst & Young LLP, independent auditor, at least annually.
Shareholder inquiries and requests for information regarding the other
investment companies which also invest in the AMR Trust should be made in
writing to the Funds at P.O. Box 619003, MD 5645, Dallas/Fort Worth Airport,
Texas 75261-9003, or by calling (800) 967-9009.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN SALES
LITERATURE SPECIFICALLY APPROVED BY OFFICERS OF THE TRUST FOR USE IN CONNECTION
WITH THE OFFER OF ANY INSTITUTIONAL CLASS SHARES, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

American AAdvantage Funds is a registered service mark of AMR Corporation.
PlanAhead Class, Platinum Class, American AAdvantage Balanced Fund, American
AAdvantage Growth and Income Fund, American AAdvantage International Equity
Fund, American AAdvantage Limited-Term Income Fund, American AAdvantage Money
Market Fund, American AAdvantage Municipal Money Market Fund, American
AAdvantage U.S. Treasury Money Market Fund are service marks of AMR Investment
Services, Inc.

33 PROSPECTUS
<PAGE> 40
LOGO

- Institutional Class -
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

- PlanAhead Class -sm
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

- Platinum Class -sm
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

PROSPECTUS 34
<PAGE> 41

THIS PROSPECTUS contains important information about the PlanAhead Class of the
AMERICAN AADVANTAGE FUNDS ("Trust"), an open-end management investment company
which consists of the multiple investment portfolios. This prospectus pertains
only to the seven funds listed on this cover page (individually referred to as
a "Fund" and, collectively, the "Funds"). EACH FUND WILL SEEK ITS INVESTMENT
OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A CORRESPONDING
PORTFOLIO (INDIVIDUALLY REFERRED TO AS A "PORTFOLIO" AND, COLLECTIVELY,
"PORTFOLIOS") OF THE AMR INVESTMENT SERVICES TRUST ("AMR TRUST") WHICH HAS AN
INVESTMENT OBJECTIVE IDENTICAL TO THAT FUND. The investment experience of each
Fund will correspond directly with the investment experience of each Portfolio.
Each Fund consists of multiple classes of shares designed to meet the needs of
different groups of investors. PlanAhead Class shares are available to all
investors, including smaller institutional investors, investors using
intermediary organizations such as discount brokers or plan sponsors,
individual retirement accounts, and self-employed individual retirement plans.
Investors should read this Prospectus carefully before making an investment
decision and retain it for future reference.

IN ADDITION TO THIS PROSPECTUS, a Statement of Additional Information ("SAI")
dated March 1, 1996 has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The SAI contains more detailed
information about the Funds. For a free copy of the SAI, call 800-423-7526. For
further information about the PlanAhead Class or for information on the other
classes of shares, please refer to the appropriate address and phone number on
the back cover of this Prospectus.

(LOGO)

BALANCED FUND

GROWTH AND INCOME FUND

INTERNATIONAL EQUITY FUND

LIMITED-TERM INCOME FUND

MONEY MARKET FUND

MUNICIPAL MONEY MARKET FUND

U.S. TREASURY MONEY MARKET FUND
<PAGE> 42

The AMERICAN AADVANTAGE BALANCED FUND(SM) ("Balanced Fund") seeks income and
capital appreciation by investing all of its investable assets in the Balanced
Portfolio of the AMR Trust ("Balanced Portfolio") which in turn primarily
invests in equity and debt securities (such as stocks and bonds).

Under a Hub and Spoke(R)(1) operating structure, each Fund seeks its
investment objective by investing all of its investable assets in a
corresponding Portfolio as described above. Each Portfolio's investment
objective is identical to that of its corresponding Fund. Whenever the phrase
"all of the Fund's investable assets" is used, it means that the only
investment securities that will be held by a Fund will be that Fund's interest
in its corresponding Portfolio. AMR Investment Services, Inc. ("Manager")
provides investment management and administrative services to the Portfolios
and administrative services to the Funds. This Hub and Spoke operating
structure is different from that of many other investment companies which
directly acquire and manage their own portfolios of securities. Accordingly,
investors should carefully consider this investment approach. See "Investment
Objectives, Policies and Risks -- Additional Information About the Portfolios."
A Fund may withdraw its investment in a corresponding Portfolio at any time if
the Trust's Board of Trustees ("Board") determines that it would be in the best
interest of that Fund and its shareholders to do so. Upon any such withdrawal,
that Fund's assets would be invested in accordance with the investment policies
and restrictions described in this Prospectus and the SAI.

Table of Fees and Expenses
Financial Highlights
Introduction
Investment Objectives,
Policies and Risks
Investment Restrictions
Yields and Total Returns
Management and Administration
of the Trust
Investment Advisers
How to Purchase Shares

2 PROSPECTUS
<PAGE> 43
How to Redeem Shares
Retirement Accounts
Exchange Privilege
Distribution of Trust Shares
Valuation of Shares
Dividends, Other
Distributions and Tax Matters
General Information

Shareholder Communications

- ------------------------------------
(1)Hub and Spoke is a registered service mark of Signature Financial Group,
Inc.

PROSPECTUS 3
<PAGE> 44
TABLE OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

<TABLE>
<CAPTION>
U.S.
GROWTH INTER- LIMITED- MUNICIPAL TREASURY
AND NATIONAL TERM MONEY MONEY MONEY
BALANCED INCOME EQUITY INCOME MARKET MARKET MARKET
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees(1) 0.28% 0.28% 0.43% 0.20% 0.15% 0.15% 0.15%
12b-1 Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expenses (after fee waivers)(2) 0.71 0.71 0.80 0.65 0.40 0.53 0.57
---- ---- ---- ---- ---- ---- ----
Total Operating Expenses (after fee
waivers)(3) 0.99% 0.99% 1.23% 0.85% 0.55% 0.68% 0.72%
----- ----- ----- ----- ----- ----- -----
</TABLE>

(1) The "Management Fee" represents those investment advisory fees paid to the
Manager and the investment advisers.

(2) "Other Expenses" before fee waivers are estimated to be 0.75% for the
Balanced Fund and the Growth and Income Fund, 0.78% for the Limited-Term
Income Fund and 0.68% for the Municipal Money Market Fund.

(3) "Total Operating Expenses" before fee waivers are estimated to be 1.03%
for the Balanced Fund and the Growth and Income Fund, 0.98% for the
Limited-Term Income Fund and 0.83% for the Municipal Money Market Fund.

The Board believes that the aggregate per share expenses of each Fund and
its corresponding Portfolio will be approximately equal to the expenses that the
Fund would incur if its assets were invested directly in the type of securities
held by the Portfolio.

EXAMPLES

A PlanAhead Class investor in each Fund would directly or indirectly pay on a
cumulative basis the following expenses on a $1,000 investment assuming a 5%
annual return:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund $10 $32 $55 $121
Growth and Income Fund 10 32 55 121
International Equity Fund 13 39 68 149
Limited-Term Income Fund 9 27 47 105
Money Market Fund 6 18 31 69
Municipal Money Market Fund 7 22 38 85
U.S. Treasury Money Market Fund 7 23 40 89
</TABLE>

The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses to be incurred directly or
indirectly as a shareholder in the PlanAhead Class of a Fund. Additional
information may be found under "Management and Administration of the Trust" and
"Investment Advisers."

FINANCIAL HIGHLIGHTS

4 PROSPECTUS
<PAGE> 45

The financial highlights in the following tables have been derived from
financial statements of the Trust information has been audited by Ernst & Young
LLP, independent auditors. Such information should be read in conjunction with
the financial statements and the report of the independent auditors appearing
in the Annual Report incorporated by reference in the SAI, which contains
further information about performance of the Funds and can be obtained by
investors without charge.

PROSPECTUS 5
<PAGE> 46
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
BALANCED FUND
-------------
PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- -------------------
YEAR PERIOD YEAR ENDED OCTOBER 31 PERIOD
----- ------ --------------------- ------
ENDED ENDED ENDED
----- ----- -----
OCTOBER 31, OCTOBER 31, OCTOBER 31,
------------ ----------- -----------
1995(4)(5) 1994(1)(3) 1994(3) 1993 1992 1991 1990(2) 1989 1988 1987(1)
---------- ---------- ------- ---- ---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.35 $12.35 $13.23 $11.99 $11.60 $9.87 $11.05 $10.13 $9.08 $10.00
------ ------ ------ ------ ------ ----- ------ ------ ----- ------
Income from
investment
operations:
Net investment
income 0.54 0.12 0.57 0.49 0.55 0.58 0.57 0.53 0.56 0.16
Net gains (losses)
on securities (both
realized and
unrealized) 1.67 (0.12) (0.54) 1.57 0.41 1.79 (1.18) 0.90 0.73 (1.08)
---- ------ ------ ---- ---- ---- ------ ---- ---- ------
Total from investment
operations 2.21 0.00 0.03 2.06 0.96 2.37 (0.61) 1.43 1.29 (0.92)
---- ---- ---- ---- ---- ---- ------ ---- ---- ------
Less distributions:
Dividends from net
investment income (0.52) -- (0.56) (0.52) (0.56) (0.64) (0.51) (0.51) (0.24) --
Distributions from
net realized gains on
securities (0.14) -- (0.34) (0.30) (0.01) -- (0.06) -- -- --
----- ------ ------ ------ -- ------ -- -- --
Total distributions (0.66) -- (0.90) (0.82) (0.57) (0.64) (0.57) (0.51) (0.24) --
------ -- ------ ------ ------ ------ ------ ------ ------ --

Net asset value, end
of period $13.90 $12.35 $12.36 $13.23 $11.99 $11.60 $9.87 $11.05 $10.13 $9.08
------ ------ ------ ------ ------ ------ ----- ------ ------ -----
Total return
(annualized)(6) 19.06 (0.16%)(7) (0.08%) 19.19% 8.75% 25.35% (5.24%) 15.49% 14.63% (31.84%)

Ratios/supplemental
data:
Net assets, end of
period (in $5,450 $528 $222,873 $532,543 $370,087 $311,906 $233,702 $210,119 $147,581 $118,985
thousands)
Ratios to average
net assets
(8)(9)(10)(11):
Expenses 0.99% 0.92% 0.36% 0.34% 0.35% 0.37% 0.44% 0.47% 0.52% 0.45%
Net investment
income 3.70% 4.04% 4.77% 4.91% 5.31% 6.06% 6.50% 6.32% 6.25% 5.59%
Portfolio turnover
rate 73% 48% 48% 83% 80% 55% 62% 78% 77% 17%
</TABLE>

(1) The Balanced Fund commenced active operations on July 17, 1987. The
PlanAhead Class commenced active operations on August 1, 1994 and at that
time, existing shares of the Balanced Fund were designated as
Institutional Class shares.

(2) Penmark Investments, Inc. was replaced by Independence Investment
Associates, Inc. as an investment adviser to the Fund as of the close of
business on February 28, 1990.

(3) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

6 PROSPECTUS
<PAGE> 47
(4) GSB Investment Management, Inc. was added as an investment adviser to the
Balanced Fund on January 1, 1995.

(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment income per share for the Fund
before class expenses.

(6) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day
of each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of 0.30% (for periods prior to August 1, 1994) and a sale at
net asset value on the last day of each period reported.

(7) Total return for the period ended October 31, 1994 reflects Institutional
Class returns from November 1, 1993 through July 31, 1994 and returns of
the PlanAhead Class for the period August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return for the PlanAhead Class would
vary from the results shown had it been in operation for the entire year.

(9) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(10) Operating results of the PlanAhead Class exclude fees waived by the
Manager. Had the PlanAhead Class paid such fees during the period, the
ratio of expenses and net investment income to average net assets would
have been 0.99% and 3.96%, respectively, for the period ended October 31,
1994 and 1.09% and 3.60%, respectively, for the year ended October 31,
1995.

(11) Annualized.

PROSPECTUS 7
<PAGE> 48
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
----------------------
PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- --------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
---------- ------------ ---------------------- ------------
OCTOBER 31, OCTOBER, 31 OCTOBER 31,
----------- ----------- -----------
1995(5) 1994(1)(4) 1994(4) 1993 1992(3) 1991 1990(2) 1989 1988 1987(1)
------- ---------- ------- ---- ------- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period $14.17 $13.99 $14.63 $12.79 $12.10 $9.47 $11.59 $9.96 $8.30 $10.00
------ ------ ------ ------ ------ ----- ------ ----- ----- ------
Income from
investment
operations:
Net investment
income 0.40 0.05 0.43 0.36 0.39 0.42 0.42 0.42 0.42 0.10
Net gains
(losses) on
securities
(both realized
and unrealized) 2.22 0.13 0.08 2.21 0.77 2.70 (1.94) 1.59 1.40 (1.80)
---- ---- ---- ---- ---- ---- ------ ---- ---- ------
Total from
investment
operations 2.62 0.18 0.51 2.57 1.16 3.12 (1.52) 2.01 1.82 (1.70)
---- ---- ---- ---- ---- ---- ------ ---- ---- ------
Less
distributions:
Dividends
from net
investment
income (0.44) -- (0.41) (0.37) (0.39) (0.49) (0.43) (0.38) (0.16) --
Distributions
from net
realized
gains on
securities (0.54) -- (0.54) (0.36) (0.08) -- (0.17) -- -- --
------ ------ ------ -- ------ -- -- --
Total
distributions (0.98) -- (0.95) (0.73) (0.47) (0.49) (0.60) (0.38) (0.16) --
------ -- ------ ------ ------ ------ ------ ------ ------ --
Net asset value
end of period $15.81 $14.17 $14.19 $14.63 $12.79 $12.10 $9.47 $11.59 $9.96 $8.30
------ ------ ------ ------ ------ ------ ----- ------ ----- -----
Total return
(annualized)(6) 20.14% 3.21%(7) 3.36% 21.49% 10.00% 33.83% (13.52%) 20.94% 22.20% (58.51%)
- - ------ -------- ----- ------ ------ ------ -------- ------ ------ --------
Ratios/supplement
al data
Net: assets, end $4,821 $56 $22,737 $477,088 $339,739 $264,628 $182,430 $187,869 $140,073 $134,796
of period (in
thousands))
Ratios to
average net
assets
(8)(9)(10)(11):
Expenses 0.99% 0.95% 0.33% 0.34% 0.36% 0.37% 0.45% 0.45% 0.53% 0.43%
Net investment
income 2.23% 1.50% 3.28% 3.12% 3.57% 4.19% 4.49% 4.40% 4.20% 3.68%
Portfolio
turnover rate 26% 23% 23% 30% 35% 52% 41% 50% 56% 22%
</TABLE>

(1) The Growth and Income Fund commenced active operations on July 17, 1987.
The PlanAhead Class commenced active operations on August 1, 1994 and at
that time, existing shares of the Growth and Income Fund were designated
as Institutional Class shares.

8 PROSPECTUS
<PAGE> 49
(2) GSB Investment Management, Inc. was added as an investment adviser to the
Growth and Income Fund on April 10, 1990.

(3) The assets of the Growth and Income Fund previously managed by Atlanta
Capital Management were transferred to GSB Investment Management, Inc. as
of the close of business on December 5, 1991.

(4) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment income per share for the Fund
before class expenses.

(9) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(10) Operating results of the PlanAhead Class exclude fees waived by the
Manager. Had the PlanAhead Class paid such fees during the period, the
ratio of expenses and net investment income to average net assets would
have been 1.05% and 1.40%, respectively, for the period ended October 31,
1994, and 1.08% and 2.14%, respectively, for the year ended October 31,
1995.

(11) Annualized

PROSPECTUS 9
<PAGE> 50
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
-------------------------
PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- -------------------
YEAR ENDED OCTOBER 31,
----------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED ------------ ------------
OCTOBER 31, OCTOBER 31, OCTOBER 31,
----------- ----------- -----------
1995(5) 1994(1)(3)(4) 1994(3)(4) 1993(2) 1992 1991(1)
------- ------------- ---------- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.85 $12.61 $12.07 $8.93 $10.13 $10.00
------ ------ ------ ----- ------ ------
Income from investment
operations:
Net investment income 0.24 0.06 0.32 0.17 0.12 --
Net gains (losses) on
securities (both
realized
and unrealized) 0.64 0.18 1.10 3.09 (1.31) 0.13
---- ---- ---- ---- ------ ----
Total from investment
operations 0.88 0.24 1.42 3.26 (1.19) 0.13
---- ---- ---- ---- ------ ----
Less distributions:
Dividends from net
investment
income (0.21) -- (0.17) (0.12 ) (0.01) --
Distributions from net
realized gains on (0.32) -- (0.45) -- -- --
------ -- ------ -- -- --
securities
Total distributions (0.53) -- (0.62) (0.12 ) (0.01) --
------ -- ------ ------- ------ --
Net asset value, end of $13.20 $12.85 $12.87 $12.07 $8.93 $10.13
------ ------ ------ ------ ----- ------
period
Total return 7.37% 11.60%(7) 11.77% 36.56 % (12.07%) 5.69%
----- --------- ------ ------- -------- -----
(annualized)(6)
Ratios/supplemental data:
Net assets, end of period
(in thousands) $1,456 $375 $23,115 $66,652 $38,837 $10,536
Ratios to average net
assets (8)(9)(10):
Expenses 1.33% 1.25% 0.61% 0.78 % 1.17% 1.90%(11)
Net investment income 2.08% 1.86% 2.74% 2.00 % 2.04% 0.38%(11)
Portfolio turnover rate 21% 37% 37% 61 % 21% 2%
</TABLE>

(1) The International Equity Fund commenced active operations on August 7,
1991. The PlanAhead Class commenced active operations on August 1, 1994
and at that time, existing shares of the International Equity Fund were
designated as Institutional Class shares.

(2) HD International Limited was replaced by Hotchkis and Wiley as an
investment adviser to the International Equity Fund as of the close of
business on May 21, 1993.

(3) Morgan Stanley Asset Management Inc. was added as an investment adviser
to the International Equity Fund as of August 1, 1994.

(4) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.

(5) Net investment income per share was calculated by subtracting class
expenses per share from net investment income per share for the Fund
before class expenses.

(7) Total return for the period ended October 31, 1994 reflects Institutional
Class returns from November 1, 1993 through July 31, 1994 and returns of
the PlanAhead Class for the period August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return for the PlanAhead Class
would vary from the results shown had it been in operation for the entire
year.

(8) Effective August 1, 1994, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager.
Such fees amounted to less than $.04 per share in each period on an
annualized basis and were waived by the Manager for the period ended
October 31, 1991.

(9) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(10) Annualized.

(11) Estimated based on expected annual expenses and actual average net
assets.

10 PROSPECTUS
<PAGE> 51
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
LIMITED-TERM INCOME FUND
------------------------
PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- -------------------
YEAR PERIOD YEAR ENDED OCTOBER 31, PERIOD
------ ------ ---------------------- ------
ENDED ENDED ENDED
----- ----- -----
OCTOBER OCTOBER 31, OCTOBER
--------- ----------- --------
31, 1995 1994(1)(3) 1994(3) 1993 1992 1991(2) 1990 1989 31, 1988(1)
-------- ---------- ------- ---- ---- ------- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.68 $9.78 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12 $10.00
----- ----- ------ ------ ------ ----- ----- ------ ------
Income from
investment operations:
Net investment income 0.59 0.13 0.52 0.58 0.75 0.83 0.92 0.96 0.64
Net gains (losses)
on securities (both
realized and unrealized) 0.14 (0.10) (0.46) 0.15 0.06 0.31 (0.18) (0.12) 0.05
---- ------ ------ ---- ---- ---- ------ ------ ----
Total from investment
operations 0.73 0.03 0.06 0.73 0.81 1.14 0.74 0.84 0.69
---- ---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income (0.59) (0.13) (0.52) (0.58) (0.75) (0.83) (0.92) (1.02) (0.57)
Distributions from
net realized gains on
securities -- -- (0.10) (0.05) -- -- -- -- --
-- -- ------ ------ -- -- -- -- --
Total distributions (0.59) (0.13) (0.62) (0.63) (0.75) (0.83) (0.92) (1.02) (0.57)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $9.82 $9.68 $9.67 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12
----- ----- ----- ------ ------ ------ ----- ----- ------
Total return (4)(5)(10) 7.83% 0.45%(6) 0.42% 7.20% 7.94% 11.87% 7.51% 7.62% 7.41%
----- -------- ----- ----- ----- ------ ----- ----- -----
Ratios/supplemental data:
Net assets, end of
period (in thousands) $1,576 $403 $112,141 $238,874 $209,928 $141,629 $83,265 $60,507 $40,855
Ratios to average
net assets (7)(8)(9)(10):
Expenses 0.83% 0.79% 0.31% 0.26% 0.27% 0.35% 0.48% 0.59% 0.50%
Net investment income 6.16% 5.10% 5.26% 5.76% 7.40% 8.42% 9.44% 9.77% 8.01%
Portfolio turnover rate 183% 94% 94% 176% 133% 165% 156% 158% 127%
</TABLE>
(1) The Limited-Term Income Fund commenced active operations on December 3,
1987. The PlanAhead Class commenced active operations on August 1, 1994
and at that time existing shares of the Limited-Term Income Fund were
designated as Institutional Class shares.

(2) AMR Investment Services, Inc. began portfolio management of the
Limited-Term Income Fund on March 1, 1991 replacing Brown Brothers,
Harriman & Co. and Barrow, Hanley, Mewhinney & Strauss, Inc.

(3) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(4) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day
of each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of 0.30% (for periods prior to August 1, 1994) and a sale at
net asset value on the last day of each period reported.

(5) Total returns for the PlanAhead Class exclude fees waived by the Manager.
Had the class paid such fees, total return for the PlanAhead Class would
have been .41% for the periods ended October 31, 1994 and 7.56% for the
year ended October 31, 1995.

(6) Total return for the period ended October 31, 1994 reflects Institutional
Class returns from November 1, 1993 through July 31, 1994 and returns of
the PlanAhead Class for the period August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return for the PlanAhead Class would
vary from the results shown had it been in operation for the entire year.

(7) Effective August 1, 1994, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager.
Such fees amounted to less than $.03 per share in each period on an
annualized basis.

(8) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(9) Operating results of the PlanAhead Class exclude fees waived by the
Manager. Had the PlanAhead Class paid such fees during the period, the
ratio of expenses and net investment income to average net assets would
have been 1.00% and 4.89%, respectively, for the period ended October 31,
1994, and 1.06% and 5.93%, respectively, for the year ended October 31,
1995.

(10) Annualized.

PROSPECTUS 11
<PAGE> 52
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MONEY MARKET FUND
-----------------

PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- --------------------

YEAR PERIOD YEAR ENDED OCTOBER 31, PERIOD
---- ------ ---------------------- ------
ENDED ENDED ENDED
----- ----- -----
OCTOBER 31, OCTOBER 31, OCTOBER 31,
----------- ----------- -----------
1995 1994(1)(2) 1994(2) 1993 1992 1991 1990 1989 1988 1987(1)
---- ---------- ------- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Net investment
income 0.05 0.01 0.04 0.03 0.04 0.07 0.08 0.09 0.08 0.01
Less dividends
from net
investment
income (0.05) (0.01) (0.04) (0.03) (0.04) (0.07) (0.08) (0.09) (0.08) (0.01)
------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Total return
(annualized) 5.60% 3.73%(3) 3.85% 3.31% 4.41% 7.18% 8.50% 9.45% 7.54% 6.70%
----- --------- ----- ----- ----- ----- ----- ----- ----- -----
Ratios/
supplemental
data:
Net assets, end
of period
(in thousands) $41,989 $25 $1,893,144 $2,882,974 $2,223,829 $715,280 $745,405 $385,916 $330,230 $71,660
Ratios to
average net
assets
(4)(5)(6):
Expenses 0.55% 0.70% 0.21% 0.23% 0.26% 0.24% 0.20% 0.22% 0.28% 0.48%
Net investment
income 5.56% 4.42% 3.63% 3.23% 4.06% 6.93% 8.19% 9.11% 7.54% 6.78%
</TABLE>

(1) The Money Market Fund commenced active operations on September 1, 1987
and on November 1, 1991, the existing shares of the Fund were designated
as Institutional Class shares. The PlanAhead Class commenced active
operations on August 1, 1994.

(2) Average shares outstanding for the period rather than end of period
shares were used to compute net investment income per share.

(3) Total return for the period ended October 31, 1994 reflects Institutional
Class returns from November 1, 1993 through July 31, 1994 and returns of
the PlanAhead Class for the period August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return for the PlanAhead Class
would vary from the results shown had it been in operation for the entire
year.

(4) The method of determining average net assets was changed from a monthly
average to a daily average starting with the year ended October 31, 1992.

(5) Effective October 1, 1990, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to less than $.01 per share in each period on an
annualized basis.

(6) Annualized

12 PROSPECTUS
<PAGE> 53
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND U.S. TREASURY MONEY MARKET FUND
--------------------------- ----------------------------------------------

PLANAHEAD CLASS INSTIT. CLASS PLANAHEAD CLASS INSTITUTIONAL CLASS
--------------- ------------- --------------- -------------------

YEAR PERIOD PERIOD YEAR PERIOD YEAR ENDED OCTOBER 31, PERIOD ENDED
----- ------- ------ ----- ------ ----------------------
ENDED ENDED ENDED ENDED ENDED
----- ----- ----- ----- -----
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
----------- ----------- ----------- ----------- ----------- OCTOBER 31,
1995 1994(1) 1994(1) 1995 1994(1)(2) 1994(2) 1993 1992(1)
---- ------- ------- ---- ---------- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- -----
Net investment
income 0.03 0.01 0.02 0.05 0.01 0.04 0.03 0.02
Less dividends from
net investment
income (0.03) (0.01) (0.02) (0.05) (0.01) (0.04) (0.03) (0.02)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- -----
Total return
(annualized)(3) 3.39% 2.35%(4) 2.44%) 5.19% 3.58%(4) 3.70% 3.07% 3.61%
----- -------- ------ ----- -------- ----- ----- -----
Ratios/supplemental
data:
Net assets, end
of period (in
thousands) $129 $0 $9,736 $530 $0 $67,607 $136,813 $91,453
Ratios to average
net assets (5)(6)(7):
Expenses 0.72% 0.77% 0.30% 0.76% 0.75% 0.25% 0.23% 0.27%(8)
Net investment
income 3.32% 2.49% 2.38% 5.19% 3.94% 3.44% 2.96% 3.46%(8)
</TABLE>

(1) The U.S. Treasury Money Market Fund commenced active operations on March 2,
1992. The PlanAhead Class of the U.S. Treasury Money Market Fund commenced
active operations on August 1, 1994. The Institutional Class of the
Municipal Money Market Fund commenced active operations on November 10,
1993 and the PlanAhead Class commenced active operations on August 1, 1994.

(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(3) Total returns for the Municipal Money Market Fund exclude management and
administrative services fees waived by the Manager. Had the Fund paid such
fees during the period ended October 31, 1994, annualized total returns
would have been 2.15% for the PlanAhead Class, 2.24% for the Institutional
Class and for the year ended October 31, 1995, 3.19% for the PlanAhead
Class.

(4) Total return for the period ended October 31, 1994 reflects Institutional
Class returns from the beginning of the period through July 31, 1994 and
returns of the PlanAhead Class for the period August 1, 1994 (commencement
of operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.

(5) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(6) Annualized.

(7) Operating results for the Municipal Money Market Fund exclude fees waived
by the Manager. Had the Fund paid such fees, the ratio of expenses and net
investment income to average net assets would have been 0.97% and 2.29%,
respectively, for the period ended October 31, 1994, and 0.92% and 3.12%,
respectively, for the year ended October 31, 1995 for the PlanAhead Class,
and 0.50% and 2.18%, respectively, for the Institutional Class for the
period ended October 31, 1994.

(8) Estimated based on expected annual expenses and actual average net assets.

PROSPECTUS 13
<PAGE> 54
INTRODUCTION

The Trust is an open-end, management investment company organized as a
Massachusetts business trust on January 16, 1987. The Funds are separate
investment portfolios of the Trust. Each Fund has a distinctive investment
objective and investment policies. Each Fund will invest all of its investable
assets in a corresponding Portfolio of the AMR Trust which has an identical
investment objective. The Manager provides the Portfolios with business and
asset management services, including the evaluation and monitoring of the
investment advisers, and it provides the Funds with administrative services.
The Balanced Fund, the Growth and Income Fund, the International Equity Fund
and the Limited- Term Income Fund (collectively, the "Variable NAV Funds")
consist of multiple classes of shares, including the "PlanAhead Class" which is
available to all investors, including smaller institutional investors,
investors using intermediary organizations such as discount brokers or plan
sponsors, individual retirement accounts ("IRAs"), and self- employed
individual retirement plans ("HR-10 Plans" or "Keogh Plans") and the
"Institutional Class," which is primarily for large institutional investors
investing at least $2 million in the Funds. The Money Market Funds also consist
of multiple classes of shares, including the PlanAhead Class, the Institutional
Class and the "Platinum Class" which is available to customers of certain
broker-dealers. For further information about the Institutional Class,
including eligibility requirements, and the Platinum Class, call (800)
967-9009.

PlanAhead Class shares are sold without any sales charges at the next share
price calculated after an investment is received and accepted. Shares will be
redeemed at the next share price calculated after receipt of a redemption
order. See "How to Purchase Shares" and "How to Redeem Shares."

INVESTMENT OBJECTIVES, POLICIES AND RISKS

14 PROSPECTUS
<PAGE> 55
policies of each Portfolio and the AMR Trust's Board of Trustees ("AMR Trust
Board"), it applies equally to each Fund and the Board.

The Portfolio also may engage in dollar rolls or purchase or sell
securities on a "when-issued" basis and on a "forward commitment" basis. The
purchase or sale of when-issued securities enables an investor to hedge against
anticipated changes in interest rates and prices by locking in an attractive
price or yield. The price of when-issued securities is fixed at the time the
commitment to purchase or sell is made, but delivery and payment for the
when-issued securities take place at a later date, normally one to two months
after the date of purchase. During the period between purchase and settlement,
no payment is made by the purchaser to the issuer and no interest accrues to
the purchaser. Such transactions therefore involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if the
value of the security to be sold increases prior to the settlement date. A sale
of a when- issued security also involves the risk that the other party will be
unable to settle the transaction. Dollar rolls are a type of forward commitment
transaction. Purchases and sales of securities on a "forward commitment" basis
involve a commitment to purchase or sell securities with payment and delivery
to take place at some future date, normally one to two months after the date of
the transaction. As with when-issued securities, these transactions involve
certain risks, but they also enable an investor to hedge against anticipated
changes in interest rates and prices. Forward commitment transactions are
executed for existing obligations, whereas in a when-issued transaction, the
obligations have not yet been issued. When purchasing securities on a
when-issued or forward commitment basis, a segregated account of liquid assets
at least equal to the value of purchase commitments for such securities will be
maintained until the settlement date.

PROSPECTUS 15
<PAGE> 56

AMERICAN AADVANTAGE GROWTH AND INCOME FUND -- This Fund's investment objective
is to realize long-term capital appreciation and current income. This Fund
seeks its investment objective by investing all of its investable assets in the
Growth and Income Portfolio, which invests primarily in equity securities.
Excluding collateral for securities loaned, ordinarily at least 80% of the
Portfolio's assets will be invested in equity securities consisting of common
stocks, preferred stocks, securities convertible into common stocks, and
securities having common stock characteristics, such as rights and warrants,
and foreign equity securities that are represented by U.S. dollar-denominated
American Depository Receipts which are traded in the United States on exchanges
and in the over-the-counter market. In order to seek either above average
current income or capital appreciation when interest rates are expected to
decline, the Portfolio may invest in debt securities which, at the time of
purchase, are rated in one of the four highest rating categories by all Rating
Organizations rating that security or, if unrated, are deemed to be of
comparable quality by the applicable investment adviser. Obligations rated in
the fourth highest rating category are limited to 25% of the Portfolio's debt
allocation. See "American AAdvantage Balanced Fund" for a description of the
risks involved with these obligations. See the SAI for definitions of the
foregoing securities and for a description of debt ratings. The Portfolio may
also invest in other investment companies or in cash and cash equivalents,
including obligations that are permitted investments for the Money Market
Portfolio, in order to maintain liquidity. However, when its investment
advisers deem that market conditions warrant, the Portfolio may, for temporary
defensive purposes, invest up to 100% of its assets in cash, cash equivalents
and investment grade short-term obligations. In addition, the Portfolio may
purchase or sell securities on a "when-issued" and on a "forward commitment"
basis as described in "American AAdvantage Balanced Fund." When purchasing
equity securities, primary emphasis will be placed on undervalued securities
with above average growth expectations.

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND -- This Fund's investment
objective is to realize long-term capital appreciation. This Fund seeks its
investment objective by investing all of its investable assets in the
International Equity Portfolio, which invests primarily of equity securities of
issuers based outside the United States. Ordinarily the Portfolio will invest at
least 65% of its assets in common stocks and securities convertible into common
stocks of issuers in at least three different foreign countries. However,
excluding collateral for securities loaned, the Portfolio generally invests in
excess of 80% of its assets in such securities. The remainder of the Portfolio's
assets will be invested in non-U.S. debt securities which, at the time of
purchase, are rated in one of the three highest rating categories by any Rating
Organization or, if unrated, are deemed to be of comparable quality by the
applicable investment adviser and traded publicly on a world market, or in cash
or cash equivalents, including obligations that are permitted investments for
the Money Market Portfolio or in other investment companies. However, when its
investment advisers deem that market conditions warrant, the Portfolio may, for
temporary defensive purposes, invest up to 100% of its assets in cash, cash
equivalents, other investment companies and investment grade short-term
obligations.

16 PROSPECTUS
<PAGE> 57
The investment advisers select securities based upon a country's economic
outlook, market valuation and potential changes in currency exchange rates.
When purchasing equity securities, primary emphasis will be placed on
undervalued securities with above average growth expectations.

The Portfolio may trade forward foreign currency contracts ("forward
contracts"), which are derivatives, to hedge currency fluctuations of
underlying stock or bond positions, or in other circumstances permitted by the
Commodity Futures Trading Commission ("CFTC"). Forward contracts to sell
foreign currency may be used when the management of the Portfolio believes that
the currency of a particular foreign country may suffer a decline against the
U.S. dollar. Forward contracts also are entered into to set the exchange rate
for a future transaction. In this manner, the Portfolio may protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar or other currency which is being used for the security
purchase and the foreign currency in which the security is denominated during
the period between the date on which the security is purchased or sold and the
date on which payment is made or received. Forward contracts involve certain
risks which include, but are not limited to: (1) imperfect correlation between
the securities hedged and the contracts themselves; and (2) possible decrease
in the total return of the Portfolio. Forward contracts are discussed in
greater detail in the SAI.

The Portfolio also may trade currency futures ('futures") for the same
reasons as for entering into forward contracts as set forth above. Futures are
traded on U.S. and foreign currency exchanges. The use of futures also entails
certain risks which include, but are not limited to: (1) less liquidity due to
daily limits on price fluctuation; (2) imperfect correlation between the
securities hedged and the contracts themselves; (3) possible decrease in the
total return of the Portfolio due to hedging; (4) possible reduction in value
for both the contracts and the securities being hedged; and (5) potential
losses in excess of the amounts invested in the futures contracts themselves.
The Portfolio may not enter into futures contracts if the purchase or sale of
such contract would cause the sum of the Portfolio's initial and any variation
margin deposits to exceed 5% of its total assets. Futures contracts, which are
derivatives, are discussed in greater detail in the SAI.

PROSPECTUS 17
<PAGE> 58
AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND -- This Fund's investment
objective is to realize income and capital appreciation. As an investment
policy, the Fund primarily seeks income and secondarily seeks capital
appreciation. The Fund seeks its investment objective by investing all of its
investable assets in the Limited-Term Income Portfolio, which invests primarily
in debt obligations. Permissible investments include securities of the U.S.
Government and its agencies and instrumentalities, including STRIPS and other
zero coupon obligations; corporate bonds, notes and debentures; non-convertible
preferred stocks; mortgage-backed securities; asset-backed securities;
domestic, Yankeedollar and Eurodollar certificates of deposit, bank deposit
notes, and bank notes; other investment companies; and cash or cash equivalents
including obligations that are permitted investments for the Money Market
Portfolio. Such obligations may have a fixed, variable or floating rate of
interest. At the time of purchase, all such securities will be rated in one of
the four highest rating categories by all Rating Organizations rating such
obligation or, if unrated, will be deemed to be of comparable quality by the
investment adviser. Obligations rated in the fourth highest rating category are
limited to 25% of the Portfolio's total assets. See "American AAdvantage
Balanced Fund" for a description of the risks involved with these obligations.
See the SAI for definitions of the foregoing securities and for a description
of debt ratings. Principal and/or interest payments for obligations of the U.S.
Government's agencies or instrumentalities may or may not be backed by the full
faith and credit of the U.S. Government.

18 PROSPECTUS
<PAGE> 59
principal on a CMO are paid, in most cases, monthly. CMOs may be collateralized
by whole mortgage loans but are more typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC or FNMA. CMOs are
structured in multiple classes, with each class bearing a different stated
maturity or interest rate.

Although investments will not be restricted by the maturity of the
securities purchased, under normal circumstances, the Portfolio will seek to
maintain a dollar weighted average maturity of one to five years. However, the
dollar- weighted average maturity may temporarily be adjusted outside the one
to five year period if warranted by market conditions. For example, the average
maturity of the Portfolio may be shortened in order to minimize depreciation of
capital if the investment adviser anticipates a rise in interest rates.
Conversely, the average maturity may be lengthened in order to maximize return
if interest rates are expected to decline. In addition, portfolio securities
may be actively traded to realize gains (or losses) and increase yields by
taking advantage of short-term market variations. Because the timing on return
of principal for both asset-backed and mortgage-backed securities is uncertain,
in calculating the average weighted maturity of the Portfolio, the maturity of
these securities may be based on certain industry conventions. The Manager
serves as the sole active investment adviser to the Limited-Term Income Fund
and its corresponding Portfolio.

MONEY MARKET FUNDS -- The investment objectives of the Money Market Funds are
to seek current income, liquidity and the maintenance of a stable $1.00 price
per share. The Money Market Funds seek to achieve these objectives by investing
all of their investable assets in the Money Market Portfolios, which invest in
high quality, U.S. dollar-denominated short-term obligations that have been
determined by the Manager or the AMR Trust Board to present minimal credit
risks. Portfolio investments are valued based on the amortized cost valuation
technique pursuant to Rule 2a-7 under the Investment Company Act of 1940 ("1940
Act"). See the SAI for an explanation of the amortized cost valuation method.
Obligations in which the Money Market Portfolios invest generally have
remaining maturities of 397 days or less, although instruments subject to
repurchase agreements and certain variable and floating rate obligations may
bear longer final maturities. The average dollar-weighted portfolio maturity of
each Money Market Portfolio will not exceed 90 days. The Manager serves as the
sole investment adviser to the Money Market Funds. See "Management and
Administration of the Trust."

PROSPECTUS 19
<PAGE> 60

Portfolio will invest only in issuers or instruments that at the time of
purchase (1) have received the highest short- term rating by at least two
Rating Organizations such as "A-1" by Standard & Poor's and "P-1" by Moody's;
(2) are single rated and have received the highest short-term rating by a
Rating Organization; or (3) are unrated, but are determined to be of comparable
quality by the Manager pursuant to guidelines approved by the AMR Trust Board
and subject to the ratification of the AMR Trust Board. See the SAI for
definitions of the foregoing instruments and rating systems. The Portfolio also
may purchase or sell securities on a "when-issued" or "forward commitment"
basis as described under "American AAdvantage Balanced Fund."

Investments in Eurodollar (U.S. dollar obligations issued outside the
United States by domestic or foreign entities) and Yankeedollar (U.S. dollar
obligations issued inside the United States by foreign entities) obligations
involve additional risks. Most notably, there generally is less publicly
available information about foreign issuers; there may be less governmental
regulation and supervision; foreign issuers may use different accounting and
financial standards; and the adoption of foreign governmental restrictions may
affect adversely the payment of principal and interest on foreign investments.
In addition, not all foreign branches of United States banks are supervised or
examined by regulatory authorities as are United States banks, and such
branches may not be subject to reserve requirements.

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND -- The Fund's corresponding
Portfolio may invest in municipal obligations issued by or on behalf of the
governments of states, territories, or possessions of the United States; the
District of Columbia; and their political subdivisions, agencies and
instrumentalities if the interest these obligations provide is generally exempt
from federal income tax. The Municipal Money Market Portfolio will invest only
in issuers or instruments that at the time of purchase (1) are guaranteed by
the U.S. Government, its agencies, or instrumentalities; (2) are secured by
letters of credit that are irrevocable and issued by banks which qualify as
authorized issuers for the Money Market Portfolio (see "American AAdvantage
Money Market Fund"); (3) are guaranteed by one or more municipal bond insurance
policies that are cannot be canceled and issued by third-party guarantors
possessing the highest claims- paying rating from a Rating Organization; (4)
have received one of the two highest short-term ratings from at least two
Rating Organizations; (5) are single rated and have received one of the two
highest short-term ratings from that Rating Organization; (6) have no
short-term rating but the instrument is comparable to the issuer's rated
short-term debt; (7) have no short-term rating (or comparable rating) but have
received one of the top two long-term ratings from all Rating Organizations
rating the issuer or instrument; or (8) are unrated, but are determined to be
of comparable quality by the Manager pursuant to guidelines approved by, and
subject to the oversight of, the AMR Trust Board. The Portfolio may also invest
in other investment companies. Ordinarily at least 80% of the Portfolio's net
assets will be invested in municipal obligations the interest from which is
exempt from federal income tax. However, should market conditions

20 PROSPECTUS
<PAGE> 61

Municipal obligations may be backed by the full taxing power of a
municipality ("general obligations"), or by the revenues from a specific
project or the credit of a private organization ("revenue obligations"). Some
municipal obligations are collateralized as to payment of principal and
interest by an escrow of U.S. Government or federal agency obligations, while
others are insured by private insurance companies, while still others may be
supported by letters of credit furnished by domestic or foreign banks. The
Portfolio's investments in municipal obligations may include fixed, variable,
or floating rate general obligations and revenue obligations (including
municipal lease obligations and resource recovery obligations); zero coupon and
asset-backed obligations; variable rate auction and residual interest
obligations; tax, revenue, or bond anticipation notes; and tax-exempt
commercial paper; and purchase obligations that are subject to restrictions on
resale. See the SAI for a further discussion of the foregoing obligations. The
Portfolio may purchase or sell obligations on a "when-issued" or "forward
commitment" basis, as described under "American AAdvantage Balanced Fund".

PROSPECTUS 21
<PAGE> 62

obligations of the U.S. Government, including securities issued by the Agency
for International Development, General Services Administration, GNMA, Rural
Electrification Administration, Small Business Administration, Federal
Financing Bank and others. See the SAI for a further discussion of the
foregoing obligations. The Portfolio may purchase or sell securities on a
"when-issued" basis and on a "forward commitment" basis as described under
"American AAdvantage Balanced Fund."

Each Portfolio may lend securities to broker-dealers or other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by any combination of cash, securities of the U.S. Government and its
agencies and instrumentalities and approved bank letters of credit that at all
times equal at least 100% of the market value of the loaned securities. Such
loans will not be made if, as a result, the aggregate amount of all outstanding
securities loans by any Portfolio would exceed 33 1/3% of its total assets. A
Portfolio continues to receive interest on the securities loaned and
simultaneously earns either interest on the investment of the cash collateral
or fee income if the loan is otherwise collateralized. However, a Portfolio
normally pays (including, in some cases, payments to the Manager) lending fees
and related expenses from this interest or fee income. Should the borrower of
the securities fail financially, there is a risk of delay in recovery of the
securities loaned or loss of rights in the collateral. However, the Portfolios
seek to minimize this risk by making loans only to borrowers which are deemed
by the Manager to be of good financial standing and which have been approved by
the AMR Trust Board. For purposes of complying with each Portfolio's investment
policies and restrictions, collateral received in connection with securities
loans will be deemed an asset of a Portfolio to the extent required by law. See
the SAI for further information regarding loan transactions.

Investments in private placement offerings are made in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 (the "Securities Act"), and resold to qualified
institutional buyers under Rule 144A of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolios who agree that they are purchasing the paper for investment and not
with an intention to distribute to the public. Any resale by the purchaser must
be pursuant to an exempt transaction and may be accomplished in accordance with
Rule 144A. Section 4(2) paper normally is resold to other institutional
investors such as the Portfolios through or with the assistance of the issuer
or dealers who make a market in the Section 4(2) paper, thus providing
liquidity. The Money Market Portfolios will not invest more than 10% (and
Variable NAV Funds respective Portfolios, no more than 15%) of their respective
net assets in Section 4(2) paper and illiquid securities unless the applicable
investment adviser determines, by continuous reference to the appropriate
trading markets and pursuant to guidelines approved by the AMR Trust Board,
that any Section 4(2) paper held by such Portfolio in excess of this level is
at all times liquid.

Because it is not possible to predict with assurance exactly how this
market for Section 4(2) offered and sold under Rule 144A will develop, the AMR
Trust Board and the applicable investment adviser, pursuant to the guidelines
approved by the AMR Trust Board, will carefully monitor the Portfolios'
investments in these securities, focusing on such important factors, among
others, as valuation, liquidity, and availability of information. Investments
in Section 4(2) paper could have the effect of reducing a Portfolio's liquidity
to the extent that qualified institutional buyers no longer wish to purchase
these restricted securities.

22 PROSPECTUS
<PAGE> 63

The Manager expects, although it cannot guarantee, that the Trust will
achieve economies of scale be investing in the AMR Trust. In addition to
selling their interests to the Funds, the Portfolios may sell their interests
to other non-affiliated investment companies and/or other institutional
investors. All institutional investors in a Portfolio will pay a proportionate
share of the Portfolio's expenses and will invest in that Portfolio on the same
terms and conditions. However, if another investment company invests all of its
assets in a Portfolio, it would not be required to sell its shares at the same
public offering price as a Fund and would be allowed to charge different sales
commissions. Therefore, investors in a Fund may experience different returns
from investors in another investment company that invests exclusively in that
Fund's corresponding Portfolio.

PROSPECTUS 23
<PAGE> 64
the Fund would seek an alternative investment vehicle or the Manager and the
investment advisers would actively manage the Funds.

See "Management and Administration of the Trust" for a complete description
of the investment management fee and other expenses associated with the Fund's
investment in its corresponding Portfolio. This Prospectus and the SAI contain
more detailed information about each Fund and its corresponding Portfolio,
including information related to (1) the investment objective, policies and
restrictions of each Fund and its corresponding Portfolio, (2) the Board of
Trustees and officers of the Trust and the AMR Trust, (3) brokerage practices,
(4) the Funds' shares, including the rights and liabilities of its
shareholders, (5) additional performance information, including the method used
to calculate yield and total return, and (6) the determination of the value of
each Fund's shares.

INVESTMENT RESTRICTIONS

- Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the U.S.
Government, its agencies and instrumentalities, or purchase more than 10% of
the voting securities of any one issuer, with respect to 75% of a
Portfolio's total assets. In addition, although not a fundamental investment
restriction and therefore subject to change without shareholder vote, the
Money Market Portfolio and the U.S. Treasury Money Market Portfolio apply
this restriction with respect to 100% of their assets.

- Invest more than 25% of its total assets in the securities of companies
primarily engaged in any one industry other than the U.S. Government, its
agencies and instrumentalities or, with respect to the Money Market
Portfolio, the banking industry. Municipal governments and their agencies
and authorities are not deemed to be industries. Finance companies as a
group are not considered a single industry for purposes of this policy.

- Invest in securities of an issuer that, together with any predecessor,
has been in operation for less than three years if more than 5% of the
Portfolio's total assets would be invested in such securities. This
limitation does not apply with regard to collateralized trust securities.

- Invest more than 15% (or, with respect to any Money Market Portfolio,
10%) of its net assets in illiquid securities, including time deposits and
repurchase agreements that mature in more than seven days.

YIELDS AND TOTAL RETURNS

24 PROSPECTUS
<PAGE> 65

investment during that week is earned each week over a one-year period and is
shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by the investment is assumed
to be reinvested. The effective yield will be slightly higher than the current
yield because of the compounding effect of this assumed reinvestment. The
Municipal Money Market Fund may also quote "tax equivalent yields," which show
the taxable yields a shareholder would have to earn before federal income taxes
to equal this Fund's tax-exempt yields. The tax equivalent yield is calculated
by dividing the Fund's tax-exempt yield by the result of one minus a stated
federal income tax rate. If only a portion of the Fund's income was tax-exempt,
only that portion is adjusted in the calculation. As stated earlier, the Fund
considers interest on private activity obligations to be exempt from federal
income tax. Each class of a Fund has different expenses which will impact its
performance.

Advertised yields for the PlanAhead and Institutional Classes of the
Variable NAV Funds will be computed by dividing the net investment income per
share earned by the applicable class during the relevant time period by the
maximum offering price per share for that class on the last day of the period.
Total return quotations advertised by the Funds may reflect the average annual
compounded (or aggregate compounded) rate of return during the designated time
period based on a hypothetical initial investment and the redeemable value of
that investment at the end of the period. Additionally, each class of the
Limited-Term Income Fund may advertise a "monthly distribution rate." This rate
is based on an annualized monthly dividend accrual rate per share compared with
the month-end share price of each class of this Fund. The Funds will at times
compare their performance to applicable published indices, and may also
disclose their performance as ranked by certain ranking entities. See the SAI
for more information about the calculation of yields and total returns.

MANAGEMENT AND ADMINISTRATION OF THE TRUST

FUND MANAGEMENT AGREEMENT -- The Board has general supervisory responsibility
over the Trust's affairs. The Manager provides or oversees all administrative,
investment advisory and portfolio management services for the Trust pursuant to
a Management Agreement dated April 3, 1987, as amended October 1, 1995,
together with the Administrative Services Agreement described below. The AMR
Trust and the Manager also entered into a Management Agreement dated October 1,
1995 that obligates the Manager to provide or oversee all administrative,
investment advisory and portfolio management services for the AMR Trust. The
Manager, located at 4333 Amon Carter Boulevard, MD 5645, Fort Worth, Texas
76155, is a wholly-owned subsidiary of AMR Corporation ("AMR"), the parent
company of American Airlines, Inc., and was organized in 1986 to provide
business management, advisory, administrative and asset management consulting
services. The assets of the corresponding Portfolios of the Balanced Fund,
Growth and Income Fund and International Equity Fund are allocated by the
Manager among one or more investment advisers designated for that Fund. See
"Investment Advisers." The Manager serves as the sole investment adviser to the
corresponding Portfolios of the Limited-Term Income Fund and the Money Market
Funds. In addition, with the exception of the International Equity Fund, if so
requested by any investment adviser, the Manager will make the investment
decisions with respect to assets allocated to that investment adviser which the
investment adviser determines should be invested in short-term obligations of
the type permitted for investment by the Money Market Portfolios. As of
December 31, 1995, the Manager had assets under management totaling
approximately $ billion including approximately $ billion under active
management and $ billion as named fiduciary or fiduciary adviser. Of the total,
approximately $ billion of assets are related to AMR. American Airlines, Inc.
is not responsible for investments made in the Trust.

PROSPECTUS 25
<PAGE> 66

The Manager bears the expense of providing the above services, and pays the
fees of the investment advisers of the Funds and their Portfolios. As
compensation for paying the investment advisory fees and for providing the
Portfolios with advisory and asset allocation services, the Manager receives
from the AMR Trust an annualized advisory fee that is calculated and accrued
daily, equal to the sum of (1) 0.15% of the net assets of the Money Market
Portfolios, (2) 0.25% of the net assets of the Limited-Term Income Portfolio,
(3) 0.10% of the net assets of the other Portfolios, plus (4) all fees payable
by the Manager to the AMR Trust's investment advisers as described in
"Investment Advisers." The advisory fee is payable quarterly in arrears. To the
extent that a Fund invests all of its investable assets in its corresponding
Portfolio, the Manager will not receive an advisory fee under its Management
Agreement with the Trust. The Manager is compensated through the Administrative
Services Agreement as described below for other services provided.

26 PROSPECTUS
<PAGE> 67

Manager. Although the investment advisers are subject to general supervision by
the AMR Trust Board and the Manager, these parties do not evaluate the
investment merits of specific securities transactions. As compensation for its
services, each investment adviser is paid a fee by the Manager out of the
proceeds of the management fee received by the Manager from the AMR Trust.

ADMINISTRATIVE SERVICES AGREEMENT -- The Manager and the Trust entered into an
Administrative Services Agreement which obligates the Manager to provide the
Funds those administrative and management services (other than investment
advisory services) described in the Management Agreement. As compensation for
these services, the Manager receives an annualized fee of 0.25% of the net
assets of the PlanAhead Class of the Variable NAV Funds and 0.05% of the net
assets of the PlanAhead Class of the Money Market Funds. The fee is payable
quarterly in arrears.

SERVICE PLAN -- The PlanAhead Class has adopted a service plan ("Service Plan")
which provides that each PlanAhead Class will pay 0.25% per annum of its
average daily net assets to the Manager (or another entity approved by the
Board) for shareholder servicing such as preparation and distribution of
prospectuses, SAIs and annual reports to current shareholders, compliance with
federal and state securities laws, processing of shareholder transactions and
providing information requested by shareholders. The fee, which is included as
part of a Fund's "Other Expenses" in the Table of Fees and Expenses of this
prospectus, will be payable monthly in arrears without regard to whether the
amount of the fee is more or less than the actual expenses incurred in a
particular month by the entity for the services provided pursuant to the
Service Plan. The primary expenses expected to be incurred under the Service
Plan are transfer agency fees and servicing fees paid to financial
intermediaries such as plan sponsors and discount brokers.

The Service Plan will continue in effect so long as its continuance is
approved at least annually by a majority of the Trustees, including the
affirmative votes of a majority of the Trustees of the Board who are not
parties to the Service Plan or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
considering such approval, or by the vote of shareholders. The Service Plan may
be terminated with respect to a particular PlanAhead Class at any time, without
the payment of any penalty, by a vote of a majority of the Independent Trustees
or by a vote of a majority of the outstanding voting securities of the
applicable Fund's PlanAhead Class.

PRINCIPAL UNDERWRITER -- BROKERS TRANSACTION SERVICES, INC. ("BTS"), 7001
Preston Road, Dallas, Texas, 75205 serves as the principal underwriter of the
Trust.

CUSTODIAN AND TRANSFER AGENT -- The PlanAhead Class transfer agent is GOLDMAN,
SACHS & CO. ("Goldman"). NATIONSBANK OF TEXAS, N.A., Dallas, Texas, serves as
custodian for the Portfolios and the Funds. THE CHASE MANHATTAN BANK N.A., New
York, New York, acts as subcustodian for the International Equity Portfolio and
its corresponding Fund.

INDEPENDENT AUDITOR -- The independent auditor for the Trust and the AMR Trust
is ERNST & YOUNG LLP, Dallas, Texas.

INVESTMENT ADVISERS

PROSPECTUS 27
<PAGE> 68

William F. Quinn has served as President of the Manager since it was
founded in 1986, and Nancy A. Eckl currently serves as Vice President - Trust
Investments of the Manager. She previously served as Vice President - Finance
and Compliance of the Manager from December 1990 to May 1995. In these
capacities, Mr. Quinn and Ms. Eckl have primary responsibility for the
day-to-day operations of the Balanced Fund, the Growth and Income Fund, the
International Equity Fund and their corresponding Portfolios. These
responsibilities include oversight of the investment advisers, regular review
of each adviser's performance and asset allocations among investment advisers.

Michael W. Fields is responsible for the portfolio management oversight of
the Limited-Term Income Fund and its corresponding Portfolio. Mr. Fields has
been with the Manager since it was founded in 1986 and currently serves as Vice
President-Fixed Income Investments. Benjamin L. Mayer is responsible for the
day-to-day portfolio management of the Limited-Term Income Portfolio. Mr.
Mayer has served as Senior Portfolio Manager of the Manager since May 1995.
Prior to that time, he was a Vice President, Institutional Fixed Income Sales
at Merrill, Lynch, Pierce, Fenner & Smith from January 1994 to April 1995 and
Vice President, Regional Senior Strategist from April 1989 to January 1994. Mr.
Mayer has had portfolio management responsibility for the Fund since August
1995.

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. ("Barrow"), 3232 McKinney Avenue,
15th Floor, Dallas, Texas 75204, is a professional investment counseling firm
which has been providing investment advisory services since 1979. The firm is
wholly owned by United Asset Management Corporation, a Delaware corporation,
which owns forty- investment management companies, including Barrow. As of
December 31, 1995, Barrow had discretionary investment management authority
with respect to approximately $ billion of assets, including approximately $
billion of assets of AMR and its subsidiaries and affiliated entities. Barrow
serves as an investment adviser to the Balanced Portfolio, the Growth and
Income Portfolio and the Limited-Term Income Portfolio, although the Manager
does not presently intend to allocate any of the assets in the Limited-Term
Income Portfolio to Barrow. The Manager pays Barrow an annualized fee equal to
.30% on the first $200 million in AMR Trust assets under its discretionary
management, .20% on the next $300 million, .15% on the next $500 million, and
.125% on assets over $1 billion.

CAPITAL GUARDIAN TRUST COMPANY ("Capital"), 333 South Hope Street, Los
Angeles, California 90071, is a California state chartered trust company which
was formed in 1968. The firm is a wholly owned subsidiary of The Capital Group,
Inc., a company whose subsidiaries provide investment management and related
financial services. Capital managed approximately $ billion in assets as of
December 31, 1995, which included approximately $ million of assets of AMR and
its subsidiaries and affiliated entities. Capital serves as an investment
adviser to the Balanced Portfolio, the Growth and Income Portfolio and the
Limited-Term Income Portfolio, although the Manager does not presently intend
to allocate any of the assets in the Limited-Term Income Portfolio to Capital.
The Manager pays Capital an annualized fee equal to .50% of the first $20
million of AMR Trust assets under its discretionary management, .35% of the
next $30 million of assets, and .225% of all excess assets for the Growth and
Income Portfolio and .20% of all excess assets for the Balanced Portfolio.
However, a 5% fee reduction applies to assets between $500 million and $750
million, a 7.5% fee reduction on assets between $750 million and $1 billion and
a 10% fee reduction on assets over $1 billion. The reduction is applied to the
overall effective fee rate for all assets managed by Capital.

GSB INVESTMENT MANAGEMENT, INC. ("GSB"), 301 Commerce Street, Fort Worth,
Texas 76102, is a professional investment management firm which was founded in
1987 by Frank P. Ganucheau, Mark J. Stupfel, and Lyle E. Brumley. GSB is wholly
owned by United Asset Management Corporation, a Delaware corporation, which
owns forty- investment management companies, including GSB. As of December 31,
1995, GSB managed approximately $ billion of assets, including approximately $
million of assets of AMR and its subsidiaries and affiliated entities. GSB
serves as an investment adviser to the Balanced Portfolio and the Growth and
Income Portfolio. The Manager pays GSB an annualized fee equal to .30% of the
first $100 million in AMR Trust assets under its discretionary management, .25%
of the next $100 million, .20% of the next $100 million, and .15% on all excess
assets.

28 PROSPECTUS
<PAGE> 69

HOTCHKIS AND WILEY, 800 West Sixth Street, 5th Floor, Los Angeles,
California 90017, is a professional investment counseling firm which was
founded in 1980 by John F. Hotchkis and George Wiley, who are the firm's
founding General Partners. Assets under management as of December 31, 1995 were
approximately $ billion, which included approximately $ million of assets of
AMR and its subsidiaries and affiliated entities. Hotchkis and Wiley serves as
an investment adviser to the Balanced Portfolio, the Growth and Income
Portfolio and the International Equity Portfolio. The advisory contract
provides for the Manager to pay Hotchkis and Wiley an annualized fee equal to
.60% of the first $10 million of assets under its discretionary management,
.50% of the next $140 million of assets, .30% on the next $50 million of assets
and .20% of all excess AMR Trust assets managed by Hotchkis.

INDEPENDENCE INVESTMENT ASSOCIATES, INC. ("IIA"), 53 State Street, Boston,
Massachusetts 02109, is a professional investment counseling firm which was
founded in 1982. The firm is a wholly owned subsidiary of John Hancock Mutual
Life Insurance Company. Assets under management as of December 31, 1995,
including funds managed for its parent company, were approximately $ billion,
which included approximately $ million of assets of AMR and its subsidiaries
and affiliated entities. IIA serves as an investment adviser to the Balanced
Portfolio and the Growth and Income Portfolio. The Manager pays IIA an
annualized fee equal to .50% of the first $30 million of AMR Trust assets under
its discretionary management, .25% of the next $70 million of assets, and .20%
of all excess assets.

MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM"), with principal offices at
1221 Avenue of the Americas, New York, New York 10020, is a wholly owned
subsidiary of Morgan Stanley Group Inc. MSAM provides portfolio management and
named fiduciary services to taxable and nontaxable institutions, international
organizations and individuals investing in United States and international
equity and debt securities. At December 31, 1995, MSAM had assets under
management totaling approximately $ billion, including approximately $ billion
under active management and $ billion as named fiduciary or fiduciary adviser.
As of December 31, 1995, MSAM had investment authority over approximately $
million of assets of AMR and its subsidiaries and affiliated entities. MSAM
serves as an investment adviser to the International Equity Portfolio. For this
service, the Manager pays MSAM an annual fee equal to .80% of the first $25
million in AMR Trust assets under its discretionary management, .60% of the
next $25 million in assets, .50% of the next $25 million in assets and .40% on
all excess assets.

HOW TO PURCHASE SHARES

Shares are sold on a continuous basis. Purchase orders should be directed to
the transfer agent either by mail, by pre- authorized investment or by wire as
described here and in the chart below. The minimum initial purchase for

PROSPECTUS 29
<PAGE> 70

each Fund is $10,000, except for accounts opened by employees or retirees of
AMR Corporation or one of its subsidiaries ("AMR Related Accounts") for which a
$5,000 minimum applies. The Funds have no obligation to accept purchase
requests or maintain accounts which do not meet minimum purchase requirements.
Accounts opened through financial intermediaries may be subject to lower or
higher minimums. The minimum for subsequent purchases is $250, except for wire
purchases for which a $1,000 minimum applies. The management of the Fund
reserves the right to waive or change the minimum investment requirements.

Shares are purchased at the next share price (see "Valuation of Shares")
calculated after acceptance of a purchase order. Shares of the Variable NAV
Funds are offered and purchase orders are accepted until 4:00 p.m. Eastern
time on each day on which the New York Stock Exchange (the "Exchange") is open
for trading and the custodian and transfer agent are open for business
("Business Day"). Shares of the Money Market Fund are offered and orders are
accepted for until 3:00 p.m. Eastern time on each day on which the Federal
Reserve and the custodian and transfer agent are open for business ("Money
Market Business Day"). Shares are offered and orders are accepted for the
Municipal Money Market Fund until 12:00 p.m. Eastern time and for the U.S.
Treasury Money Market Fund until 12:30 p.m. Eastern time, on each Money Market
Business Day. The Trust reserves the right to reject any order for the purchase
of shares and to limit or suspend, without prior notice, the offering of
shares.

OPENING AN ACCOUNT -- A completed and signed PlanAhead Class application is
required for each new account opened, regardless of the method chosen for
making an initial investment. If assistance is required in filling out the
application, or if extra applications are required, call (800) 231-4252. See
"Retirement Accounts" for information on opening retirement accounts.

HOW TO PURCHASE SHARES

<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
INVESTMENT INVESTMENTS
<S> <C> <C>
Minimum $10,000 ($5,000 for AMR $250 ($1,000 for wire transfers)
Investment Related Accounts). Shares
purchased through financial
intermediaries may have
lower or higher minimums.
-

Investments by Mail Please make check payable to Please make check payable to the
American AAdvantage Funds- applicable American AAdvantage
Mail to: PlanAhead Class-Specific Funds- PlanAhead Class and include
American AAdvantage Fund (Balanced, Growth and your account number on the check.
Funds-- Income, International Mail to the address printed on
PlanAhead Class Equity, Limited-Term Income, your account statement. Include
P.O. Box 4580 Money Market, Municipal either the detachable form from
Chicago, IL 60680-4580 Money Market or U.S. your account statement, the
Treasury Money Market Fund) deposit slips provided with your
and mail with your checkbook (if you have a Money
application. Market account and opted for
checking) or a letter with the
account name and number.

Investments by Not available. Amount is drawn on your bank
Pre-authorized checking account and automatically
Automatic Purchase invested on a specific day each
Call (800) 231-4252 to month.
establish.
Investments by Wire An application must precede $1,000 minimum
Call (800) 231-4252 to initial purchase. Indicate
</TABLE>

30 PROSPECTUS
<PAGE> 71
<TABLE>
<S> <C>
wire funds. "new" for account number.
</TABLE>

Federal funds should be wired to: State Street Bank & Trust Co., ABA Routing
#0110-0002-8; BNF=GSFG/AC-25652520; Attn.: American AAdvantage Funds --
PlanAhead Class - Specific Fund (Balanced, Growth and Income, International
Equity, Limited-Term Income, Money Market, Municipal Money Market or U.S.
Treasury Money Market Fund) together with the account registration and number.
Investors will be responsible for any charges assessed by their bank to handle
wire transfers.

HOW TO REDEEM SHARES

Shares of the Variable NAV Funds may be redeemed by telephone, by
pre-authorized automatic redemption or by mail on any Business Day. Shares of
the Money Market Funds may be redeemed by telephone, by writing a check, by
pre-authorized automatic redemption or by mail on any Money Market Business
Day. Shares will be redeemed at the net asset value next calculated after the
applicable Fund has received and accepted the redemption request. Proceeds from
a redemption of shares purchased by check or pre-authorized automatic purchase
may be withheld until the funds have cleared, which may take up to 15 days.
Although the Funds intend to redeem shares in cash, each Fund reserves the
right to pay the redemption price in whole or in part by a distribution of
readily marketable securities held by the applicable Fund's corresponding
Portfolio. See the SAI for further information concerning redemptions in kind

A shareholder's account will be charged $12 for wire redemptions to cover
transaction costs. Redemption proceeds will generally be sent within one
Business Day or Money Market Business Day, as applicable. However, if making
immediate payment could affect a Fund adversely, it may take up to seven days
to send payment.

A minimum of $5,000 is required in order to maintain an account in a Fund.
Otherwise, a Fund may give a shareholder 60 days' notice to increase the
account balance to this level in order to avoid account closure. If a
shareholder does not increase the account balance to $5,000 within the 60 day
period, the Fund is entitled to close the account and mail the proceeds to the
address of record.

To ensure timely acceptance of a redemption request, please adhere to the
following procedures.

REDEEMING BY TELEPHONE -- Shares may be redeemed by telephone if the
shareholder's account application reflects authorization for that option.
Minimum redemption amounts are $100 for check redemptions and $1,000 for wire
redemptions. Telephone redemptions in any 30 day period shall not exceed
$25,000 without the express written consent of the Trust. In order to redeem by
telephone, investors should call the transfer agent at (800) 231-4252.
Redemption proceeds will only be mailed to the address of record or mailed or
wired to a commercial bank account designated on the account application.

By establishing the telephone redemption service, investors authorize the
Funds or their agent to act upon verbal instructions to redeem shares for any
account for which such service has been authorized. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, the transfer agent
will employ reasonable procedures specified by the Funds to confirm that such
instructions are genuine. For instance, all telephone redemption requests will
be recorded and proceeds of telephone redemption requests will only be sent to
the address or account designated in the application. Neither the Funds, the
Trusts, the Manager, Goldman, or their trustees, directors or officers will be
liable for any unauthorized or fraudulent redemption instructions received by
telephone. If reasonable procedures as described above are not implemented,
these parties may be liable for any loss due to unauthorized or fraudulent
transactions. Due to the volume of calls or other unusual circumstances,
telephone redemptions may be difficult to implement during certain time
periods. This service may be amended or terminated at any time by the transfer
agent or the Trust without prior notice.

REDEEMING BY CHECK -- If an investor elects on the application, shares of the
Money Market Funds may be redeemed through the check writing feature. There is
no limit on the number of checks written per month and no check redemption
fees. Checks must be written in amounts of $100 or more. Check drafts however,
are not

PROSPECTUS 31
<PAGE> 72
returned to shareholders. If copies of drafts are required, a service charge of
$2 per check will be assessed to the shareholder.

PRE-AUTHORIZED AUTOMATIC REDEMPTIONS -- PlanAhead Class shareholders can
arrange to have a pre-authorized amount ($100 or more) redeemed from their
shareholder account and automatically deposited into a bank account on one or
more specified day(s) of each month. For more information regarding
pre-authorized automatic redemptions, contact the transfer agent at (800)
231-4252.

REDEEMING BY MAIL -- Except for certain intermediary accounts, a letter of
instruction may be mailed to Goldman c/o the American AAdvantage Funds --
PlanAhead Class, P.O. Box 4580, Chicago, IL 60680-4580. It should specify the
Fund (Balanced, Growth and Income, International Equity, Limited-Term Income,
Money Market, Municipal Money Market or U.S. Treasury Money Market Fund), the
number of shares or dollar amount to be redeemed, the shareholder's name and
account number. The letter of instruction must be signed by all persons
required to sign for the account, exactly as it is registered. For redemptions
over $25,000, authorization to send redemption proceeds to an address other
than the address of record or to a commercial bank account other than the
account designated on the application, or redemptions on an account whose
address of record has been changed within thirty days, the letter of
instruction must be accompanied by a signature guarantee by a financial
institution satisfying the standards established by Goldman.

FULL REDEMPTIONS -- Unpaid dividends credited to an account up to the date of
redemption of all shares of a Money Market Fund generally will be paid at the
time of redemption.

RETIREMENT ACCOUNTS

Individual retirement accounts, including SEPs and Keoghs, are eligible
investors in the PlanAhead Class. State Street Bank generally serves as
custodian for retirement accounts in the PlanAhead Class. A special retirement
account application is required in order to open this type of account. Each
shareholder is charged an administrative fee of $12.00 per year for each
retirement account regardless of the number of Funds. To receive a retirement
account application, call (800) 645-3792. If you have any questions about
establishing this type of account, call Goldman at (800) 231-4252.

EXCHANGE PRIVILEGE

PlanAhead Class shares which have been registered in a shareholder's name for
at least 15 days may be exchanged into shares of the PlanAhead Class of another
Fund. A minimum exchange of $250 is required into existing accounts. If a
shareholder wishes to establishes a new account in the PlanAhead Class of
another Fund by making an exchange, a $10,000 minimum ($5,000 for AMR Related
Accounts) is required.

Except for certain intermediary accounts, shareholders may exchange shares
by sending the Funds a written request or by calling Goldman at (800) 231-4252.
The exchange will be processed at the next share price calculated after the
request is received in good order by the Funds. In establishing a telephone
exchange service, shareholders authorize the Funds or their agent to act upon
verbal instructions to exchange shares from any account for which such service
is authorized to any identically registered PlanAhead Class account(s). Goldman
will use reasonable procedures specified by the Funds to confirm that such
instructions are genuine such as the recording of all telephone exchange
requests. If reasonable procedures as described above are implemented, neither
the Funds, the Trusts, the Manager, Goldman, nor their trustees, directors or
officers will be liable for any unauthorized or fraudulent instructions.

The general redemption policies apply to redemptions by telephone exchange.
The exchange privilege may be modified or terminated at any time by the Funds.
The Funds reserve the right to limit the number of exchanges an investor may
exercise.

32 PROSPECTUS
<PAGE> 73
DISTRIBUTION OF TRUST SHARES

Shares are distributed through the Funds' principal underwriter, BTS. BTS is
compensated by the Manager, and not the Trust. The Trust does not incur any
direct distribution expenses other than those relating to the Platinum Class.
However, the Trust has adopted a Distribution Plan in accordance with Rule
12b-1 under the 1940 Act which authorizes the use of any fees received by the
Manager in accordance with the Administrative Services and the Management
Agreements and any fees received by the investment advisers pursuant to their
Advisory Agreements with the Manager, to be used for distribution purposes.

VALUATION OF SHARES

The net asset value of each share (share price) of the Variable NAV Funds is
determined as of 4:00 p.m. Eastern time on each Business Day and the net asset
value of each share of the Money Market Funds is determined as of 4:00 p.m.
Eastern time on each Money Market Business Day. The net asset value of shares
of the PlanAhead Class will be determined based on a pro rata allocation of the
value of the Fund's corresponding Portfolio's investment income, expenses and
total capital gains and losses. The allocation will be based on comparative net
asset value at the beginning of the day except for expenses related solely to
one class of shares ("Class Expenses") which will be borne only by the
appropriate class of shares. Because of the Class Expenses, the net income
attributable to and the dividends payable may be different for each class of
shares. Additionally, the Variable NAV Funds may compute differing share prices
as a result of Class Expenses.

Equity securities listed on securities exchanges, including all but United
Kingdom securities of the International Equity Portfolio, are valued at the
last quoted sales price on a designated exchange prior to the close of trading
on the Exchange or, lacking any sales, on the basis of the last current bid
price prior to the close of trading on the Exchange. Securities of the United
Kingdom held in the International Equity Portfolio are priced at the last
jobber price (mid of the bid and offer prices quoted by the leading stock
jobber in the security) prior to close of trading on the Exchange. Trading in
foreign markets is usually completed each day prior to the close of the
Exchange. However, events may occur which affect the values of such securities
and the exchange rates between the time of valuation and the close of the
Exchange. Should events materially affect the value of such securities during
this period, the securities are priced at fair value, as determined in good
faith and pursuant to procedures approved by the AMR Board. Over-the- counter
equity securities are valued on the basis of the last bid price on that date
prior to the close of trading. Debt securities (other than short-term
securities) will normally be valued on the basis of prices provided by a
pricing service and may take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. In some cases, the prices of debt securities may be determined using
quotes obtained from brokers. Securities for which market quotations are not
readily available are valued at fair value, as determined in good faith and
pursuant to procedures approved by the Board. Assets and liabilities
denominated in foreign currencies and forward currency contracts are translated
into U.S. dollar equivalents based on prevailing market rates. Portfolio
obligations held by the Money Market Portfolios are valued in accordance with
the amortized cost method, which is designed to enable those Portfolios and
their corresponding Funds to maintain a consistent $1.00 per share net asset
value. Investment grade short-term obligations with 60 days or less to maturity
held by all other Portfolios also are valued using the amortized cost method as
described in the SAI.

DIVIDENDS, OTHER DISTRIBUTIONS AND TAX MATTERS

Dividends and other distributions paid on each class of a Fund's shares are
calculated at the same time and in the same manner. Dividends from the net
investment income of the Balanced Fund, Growth and Income Fund and
International Equity Fund normally are declared annually. Dividends consisting
of substantially all of the net investment income of the Limited-Term Income
Fund, which are paid monthly, normally are declared on each Business Day
immediately prior to the determination of the net asset value and are payable
to shareholders of record as of the opening of business on the day on which
declared. A Fund's net investment income attributable to the PlanAhead Class
consists of that class's pro rata share of the Fund's share of dividends and
interest (including discount) accrued on its corresponding Portfolio's
securities, less applicable expenses of the Fund and the Portfolio

PROSPECTUS 33
<PAGE> 74

attributable to the PlanAhead Class. Distributions of a Fund's share of its
corresponding Portfolio's realized net short-term capital gain, net capital
gain (the excess of net long-term capital gain over net short-term capital
loss), and net gains from foreign currency transactions, if any, normally is
made annually.

All of each Money Market Fund's net investment income and net short-term
capital gain, if any, generally are declared as dividends on each Money Market
Business Day immediately prior to the determination of the net asset value.
Dividends generally will be paid on the first Money Market Business Day of the
following month. Each Money Market Fund's net investment income attributable to
the PlanAhead Class will consist of that class' pro rata share of the Fund's
share of interest accrued and discount earned on its corresponding Portfolio's
securities less amortization of premium and estimated expenses of both the
Portfolio and the Fund attributable to the PlanAhead Class. The Money Market
Portfolios do not expect to realize net capital gain, and, therefore, the Money
Market Funds do not foresee paying any capital gain distributions. If any Money
Market Fund (either directly or indirectly through its corresponding portfolio)
incurred or anticipated any unusual expenses, loss or depreciation that would
adversely affect its net asset value or income for a particular period, the
Board would at that time consider whether to adhere to the dividend policy
described above or to revise it in the light of the then prevailing
circumstances.

Unless a shareholder elects otherwise on the account application, all
dividends and other distributions on a Fund's PlanAhead Class shares will be
automatically declared and paid in additional PlanAhead Class shares of that
Fund. However, a shareholder may choose to have distributions of net capital
gain paid in shares and dividends paid in cash or to have all such
distributions and dividends paid in cash. An election may be changed at any
time by delivering written notice that is received by the transfer agent at
least ten days prior to the payment date for a dividend or other distribution.

Each Fund is treated as a separate corporation for federal income tax
purposes and intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended. In each
taxable year that a Fund so qualifies, the Fund (but not its shareholders) will
be relieved of federal income tax on that part of its investment company
taxable income (generally, net investment income plus any net short-term
capital gain and gains from certain foreign currency transactions) and net
capital gain that it distributes to its shareholders. However, a Fund will be
subject to a nondeductible 4% excise tax to the extent that it fails to
distribute by the end of any calendar year substantially all of its ordinary
income for that calendar year and its capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts. For these
and other purposes, dividends and other distributions declared by a Fund in
October, November or December of any year and payable to shareholders of record
on a date in one of those months will be deemed to have been paid by the Fund
and received by the shareholders on December 31 of that year if they are paid
by the Fund during the following January. Each Portfolio has received a ruling
from the Internal Revenue Service that it is classified for federal income tax
purposes as a partnership; accordingly, no Portfolio is subject to federal
income tax.

Dividends from a Fund's investment company taxable income will be taxable
to its shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether received in cash or paid in additional Fund shares.
Distributions of a Fund's net capital gain (whether received in cash or paid in
additional Fund shares), when designated as such, generally will be taxable to
its shareholders as long-term capital gain, regardless of how long they have
held their Fund shares. A capital gain distribution from a Fund also may be
offset by capital losses from other sources.

Some foreign countries may impose withholding taxes on certain dividends
payable to the International Equity Portfolio. The International Equity Fund's
share of any such withheld tax may either be treated by that Fund as a
deduction or, if it satisfies certain requirements, it may elect to flow the
tax through to its shareholders, who in turn may either treat it as a deduction
or use it in calculating a credit against their federal income tax.

34 PROSPECTUS
<PAGE> 75
International Equity Fund's dividends will most likely not qualify for the
dividends-received deduction because none of the dividends received by that
Fund are expected to be paid by U.S. corporations.

Distributions by the Municipal Money Market Fund that it designates as
"exempt-interest dividends" generally may be excluded from gross income by its
shareholders. If the Municipal Money Market Portfolio earns taxable income from
any of its investments, the Municipal Money Market Fund's share of income will
be distributed to its shareholders as a taxable dividend. To the extent that
Portfolio invests in certain private activity obligations, that Fund's
shareholders will be required to treat a portion of its dividends as a "tax
preference item" in determining their liability for the AMT. Exempt-interest
dividends also may be subject to state and local tax laws. Because some states
exempt from tax the interest on their own obligations and obligations of
governmental agencies of and municipalities in the state, shareholders will
receive tax information each year regarding the Municipal Money Market Fund's
exempt-interest income by state. Interest on indebtedness incurred or continued
by a shareholder to purchase or carry shares of that Fund is not deductible.

Redemption of Fund shares (other than shares of the Money Market Funds) may
result in taxable gain or loss to the redeeming shareholder, depending upon
whether the fair market value of the redemption proceeds exceeds or is less
than the shareholder's adjusted basis for the redeemed shares. An exchange of
shares of a Fund for shares of any other Fund (see "Exchange Privileges")
generally will have similar tax consequences. If shares of a Fund are sold at a
loss after being held for six months or less, the loss will be treated as
long-term, instead of short-term, capital loss to the extent of any capital
gain distributions received on those shares.

GENERAL INFORMATION

The Trust currently is comprised of eight separate investment portfolios. Each
Fund is comprised of three classes of shares, which can be issued in an
unlimited number. Each share represents an equal proportionate beneficial
interest in that Fund and is entitled to one vote. Only shares of a particular
class may vote on matters affecting that class. Only shares of a particular
Fund may vote on matters affecting that Fund. All shares of the Trust vote on
matters affecting the Trust as a whole. Share voting rights are not cumulative,
and shares have no preemptive or conversion rights. Shares of the Trust are
nontransferable.

PROSPECTUS 35
<PAGE> 76
to the votes cast by that Fund's shareholders. Because a Portfolio interest
holder's votes are proportionate to its percentage interests in that Portfolio,
one or more other Portfolio investors could, in certain instances, approve an
action against which a majority of the outstanding voting securities of its
corresponding Fund had voted. This could result in that Fund's redeeming its
investment in its corresponding Portfolio, which could result in increased
expenses for that Fund. Whenever the shareholders of a Fund are called to vote
on matters related to its corresponding Portfolio, the Board shall vote shares
for which they receive no voting instructions in the same proportion as the
shares for which they do receive voting instructions. Any information received
from a Portfolio in the Portfolio's report to shareholders will be provided to
the shareholders of its corresponding Fund.

<TABLE>
<S> <C>
American AAdvantage Balanced Fund
AMR Corporation and subsidiary companies and Employee Benefit
Trusts thereof %
American AAdvantage Growth and Income Fund
AMR Corporation and subsidiary companies and Employee Benefit
Trusts thereof %
American AAdvantage International Equity Fund
AMR Corporation and subsidiary companies and Employee Benefit
Trusts thereof %
American AAdvantage Limited-Term Income Fund
AMR Corporation and subsidiary companies and Employee Benefit
Trusts thereof %
Retirement Advisors of America, Inc. %
American AAdvantage Municipal Money Market Fund
%
</TABLE>

SHAREHOLDER COMMUNICATIONS

Shareholders will receive periodic reports, including annual and semi-annual
reports which will include financial statements showing the results of the
Funds' operations and other information. The financial statements of the Trust
and the AMR Trust will be audited by Ernst & Young LLP, independent auditors,
at least annually. Shareholder inquiries and requests for information regarding
the other investment companies which also invest in the AMR Trust should be
made in writing to the Funds at P.O. Box 619003, MD5645, Dallas/Fort Worth
Airport, Texas 75261-9003, or by calling (800) 967- 9009.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN SALES
LITERATURE SPECIFICALLY APPROVED BY OFFICERS OF THE TRUST FOR USE IN CONNECTION
WITH THE OFFER OF ANY PLANAHEAD CLASS SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

American AAdvantage Funds is a registered service mark of AMR Corporation.
PlanAhead Class, Platinum Class, American AAdvantage Balanced Fund, American
AAdvantage Growth and Income Fund, American AAdvantage International Equity
Fund, American AAdvantage Limited-Term Income Fund, American AAdvantage Money
Market Fund, American AAdvantage Municipal Money Market Fund and American
AAdvantage U.S. Treasury Money Market Fund are service marks of AMR Investment
Services, Inc.

36 PROSPECTUS
<PAGE> 77
(LOGO)

- PlanAhead Class -sm
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

- Platinum Class -sm
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

- Institutional Class -
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003

(800) 658-5811

PROSPECTUS

PROSPECTUS 37
<PAGE> 78

THIS PROSPECTUS contains important information about the AMR Class of the
American AAdvantage Funds ("Trust"), an open-end management investment
company, which consists of multiple investment portfolios. This prospectus
pertains only to the four funds listed on this cover page (individually
referred to as a "Fund" and, collectively, the "Funds"). EACH FUND SEEKS ITS
INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A
CORRESPONDING PORTFOLIO (INDIVIDUALLY REFERRED TO AS A "PORTFOLIO" AND,
COLLECTIVELY, "PORTFOLIOS") OF THE AMR INVESTMENT SERVICES TRUST ("AMR TRUST")
WHICH HAS AN INVESTMENT OBJECTIVE IDENTICAL TO THAT FUND. The investment
experience of each Fund will correspond directly with the investment experience
of each Portfolio. Each Fund consists of multiple classes of shares designed to
meet the needs of different groups of investors. AMR Class shares are offered
to tax-exempt retirement and benefit plans of AMR Corporation and its
affiliates. Prospective investors in the AMR Class should read this Prospectus
carefully before making an investment decision and retain it for future
reference.

IN ADDITION TO THIS PROSPECTUS, a Statement of Additional Information ("SAI")
dated March 1, 1996 has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. The SAI contains more detailed
information about the Funds. For a free copy of the SAI, call 817-967-3509. For
further information about the AMR Class or for information on the other classes
of shares, please refer to the appropriate address and phone number on the back
cover of this Prospectus.

[LOGO]

BALANCED FUND

GROWTH AND INCOME FUND

INTERNATIONAL EQUITY FUND

LIMITED-TERM INCOME FUND
<PAGE> 79

Under a Hub and Spoke(R)(1) operating structure, each Fund seeks its investment
objective by investing all of its investable assets in a corresponding Portfolio
as described above. Each Portfolio's investment objective is identical to that
of its corresponding Fund. Whenever the phrase "all of the Fund's investable
assets" is used, it means that the only investment securities that will be held
by a Fund will be that Fund's interest in its corresponding Portfolio. AMR
Investment Services, Inc. ("Manager") provides investment management and
administrative services to the Portfolios and administrative services to the
Funds. This Hub and Spoke structure is different from that of many other
investment companies which directly acquire and manage their own portfolios of
securities. Accordingly, investors should carefully consider this investment
approach. See "Investment Objectives, Policies and Risks -- Additional
Information About the Portfolios." A Fund may withdraw its investment in a
corresponding Portfolio at any time if the Trust's Board of Trustees ("Board")
determines that it would be in the best interest of that Fund and its
shareholders to do so. Upon any such withdrawal, that Fund's assets would be
invested in accordance with the investment policies and restrictions described
in this Prospectus and the SAI.

<TABLE>
<S> <C>
Table of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives, Policies and Risks . . . . . . . . . . . . . . . . .
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . .
Yields and Total Returns . . . . . . . . . . . . . . . . . . . . . . . . .
Management and Administration of the Trust . . . . . . . . . . . . . . . .
Investment Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase, Redemption and Valuation of Shares . . . . . . . . . . . . . . .
Dividends, Other Distributions and Tax Matters. . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Communications . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

_______________

(1) Hub and Spoke is a registered service mark of Signature Financial Group,
Inc.

2
<PAGE> 80
TABLE OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

GROWTH AND INTERNATIONAL LIMITED-TERM
BALANCED FUND INCOME FUND EQUITY FUND INCOME FUND
<S> <C> <C> <C> <C>
Management Fees(1) 0.28% 0.28% 0.43% 0.20%
12b-1 Fees 0.00 0.00 0.00 0.00
Other Expenses 0.08 0.08 0.11 0.11
---- ---- ---- ----
Total Operating Expenses 0.36% 0.36% 0.54% 0.31%
==== ==== ==== ====-
</TABLE>

(1) The "Management Fee" represents those investment advisory fees paid to the
Manager and the investment advisers.

The Board believes that the aggregate per share expenses of each Fund and
its corresponding Portfolio will be approximately equal to the expenses that the
Fund would incur if its assets were invested directly in the type of securities
held by the Portfolio.

EXAMPLES

An AMR Class investor in each Fund would directly or indirectly pay on a
cumulative basis the following expenses on a $1,000 investment assuming a 5%
annual return:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Balanced Fund $4 $12 $20 $46
Growth and Income Fund 4 12 20 46
International Equity Fund 6 17 30 68
Limited-Term Income Fund 3 10 17 39
</TABLE>

The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses to be incurred directly or
indirectly as a shareholder in the AMR Class of a Fund. Additional information
may be found under "Management and Administration of the Trust" and "Investment
Advisers."

FINANCIAL HIGHLIGHTS

The financial highlights in the following tables have been derived from
financial statements of the Trust. The information has been audited by Ernst &
Young LLP, independent auditors. Such information should be read in conjunction
with the financial statements and the report of the independent auditors
appearing in the Annual Report incorporated by reference in the SAI, which
contains further information about performance of the Funds and can be obtained
by investors without charge.

3
<PAGE> 81
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
BALANCED FUND
-------------
AMR CLASS INSTITUTIONAL CLASS
--------- -------------------
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
OCTOBER 31, OCTOBER 31, ---------------------- OCTOBER 31,
----------- ----------- -----------
1995(4)(5) 1994(1)(3) 1994(3) 1993 1992 1991 1990(2) 1989 1988 1987(1)
---------- ---------- ------- ---- ---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net asset value, beginning
of period $12.36 $12.35 $13.23 $11.99 $11.60 $ 9.87 $11.05 $10.13 $9.08 $10.00
------ ------ ------ ------ ------ ------ ------ ------ ----- ------
Income from investment
operations:
Net investment income 0.58 0.14 0.57 0.49 0.55 0.58 0.57 0.53 0.56 0.16
Net gains (losses) on
securities (both realized
and unrealized) 1.71 (0.13) (0.54) 1.57 0.41 1.79 (1.18) 0.90 0.73 (1.08)
---- ------ ------ ---- ---- ---- ------ ---- ---- ------
Total from investment
operations 2.29 0.01 0.03 2.06 0.96 2.37 (0.61) 1.43 1.29 (0.92)
---- ---- ---- ---- ---- ---- ------ ---- ---- ------
Less distributions:
Dividends from net
investment income (0.53) -- (0.56) (0.52) (0.56) (0.64) (0.51) (0.51) (0.240) --
Distributions from net
realized gains on
securities (0.14) -- (0.34) (0.30) (0.01) -- (0.06) -- -- --
------ -- ------ ------ ------ -- ------ -- -- --
Total distributions (0.67) -- (0.90) (0.82) (0.57) (0.64) (0.57) (0.51) (0.24) --
------ -- ------ ------ ------ ------ ------ ------ ------ --
Net asset value, end of period $13.98 $ 2.36 $ 12.36 $13.23 $11.99 $11.60 $9.87 $11.05 $10.13 $ 9.08
====== ====== ======== ====== ====== ====== ===== ====== ====== ======
Total return (annualized)(6) 19.77% (0.8)%(7) (0.8)% 19.19% 8.75% 25.35% (5.24)% 15.49% 14.63% (31.84)%
====== ========= ====== ====== ===== ====== ======= ====== ====== ========
Ratios/supplemental data:
Net assets, end of period
(in thousands) $542,619 $393,504 $222,873 $532,543 370,087 $311,906 $233,702 $210,119 $147,581 $118,985
Ratios to average net
assets (8)(9)(10)
Expenses 0.38% 0.36% 0.36% 0.34% 0.35% 0.37% 0.44% 0.47% 0.52% 0.45%
Net investment income 4.54% 4.65% 4.77% 4.91% 5.31% 6.06% 6.50% 6.32% 6..25% 5.59%
Portfolio turnover rate 73% 48% 48% 83% 80% 55% 62% 78% 77% 17%
</TABLE>

(1) The Balanced Fund commenced active operations on July 17, 1987.
The AMR Class commenced active operations on August 1, 1994.
(2) Penmark Investments, Inc. was replaced by Independence Investment
Associates, Inc. as an investment adviser to the Fund as of the
close of business on February 28, 1990.
(3) Average shares outstanding for the period rather than end of
period shares were used to compute net investment income per
share.
(4) GSB Investment Management, Inc. was added as an investment adviser
to the Balanced Fund on January 1, 1995.
(5) Net investment income per share was calculated by subtracting
class expenses per share from net investment
income per share for the Fund before class expenses.
(6) Total return is calculated assuming an initial investment is made
at the net asset value last calculated on the business day before
the first day of each period reported, reinvestment of all
dividends and capital gains distributions on the payable date,
accrual for the maximum shareholder services fee of .30% (for
periods prior to August 1, 1994) and a sale at net asset value on
the last day of each period reported.
(7) Total return for the AMR Class for the period ended October 31,
1994 reflects Institutional Class returns from November 1, 1993
through July 31, 1994 and returns of the AMR Class for the period
August 1, 1994 (commencement of operations) through October 31,
1994. Due to the different expense structures between the classes,
total returns for the AMR Class would vary from the results shown
had it been in operation for the entire year.
(8) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date,
expenses exclude shareholder services fees paid directly by
shareholders to the Manager, which amounted to approximately $.01
per share in each period on an annualized basis.
(9) The method of determining average net assets was changed from a
monthly average to a daily average starting with the periods ended
October 31, 1994.

(10) Annualized.

4
<PAGE> 82
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
GROWTH AND INCOME FUND
----------------------
AMR CLASS INSTITUTIONAL CLASS
--------- -------------------
YEAR ENDED PERIOD ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
OCTOBER 31, OCTOBER 31, ---------------------- OCTOBER 31,
----------- ----------- -----------
1995(5) 1994(1)(4) 1994(4) 1993 1992(3) 1991 1990(2) 1989 1988 1987(1)
------- ---------- ------- ---- ------- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $14.20 $13.99 $14.63 $12.79 $12.10 $ 9.47 $11.59 $9.96 $8.30 $10.00
------ ------ ------ ------ ------ ------ ----- ----- ------
Income from investment
operations:
Net investment income 0.44 0.11 0.43 0.36 0.39 0.42 0.42 0.42 0.42 0.10
Net gains (losses) on
securities (both
realized and unrealized) 2.30 0.10 0.08 2.21 0.77 2.70 (1.94) 1.59 1.40 (1.80)
---- ------ ------ ---- ---- ---- ------ ---- ---- ------
Total from investment operations 2.74 0.21 0.51 2.57 1.16 3.12 (1.52) 2.01 1.82 (1.70)
---- ---- ---- ---- ---- ---- ------ ---- ---- ------
Less distributions:
Dividends from net
investment income (0.45) -- (0.41) (0.37) (0.39) (0.49) (0.43) (0.38) (0.16) --
Distributions from net
realized gains on
securities (0.54) -- (0.54) (0.36) (0.08) -- (0.17) -- -- --
------ -- ------ ------ ------ -- ------ -- -- --
Total distributions (0.99) -- (0.95) (0.73) (0.47) (0.49) (0.60) (0.38) (0.16) --
------ -- ------ ------ ------ ------ ------ ------ ------ --
Net asset value, end of period $15.95 $14.20 $ 14.19 $14.63 $12.79 $12.10 $ 9.47 $11.59 $9.96 $ 8.30
====== ====== ======== ====== ====== ====== ====== ====== ===== ======
Total return (annualized)(6) 21.03% 3.43%(7) 3.36% 21.49% 10.00% 33.83% (13.52)% 20.94% 22.20% (58.51)%
====== ======== ===== ====== ====== ======== ====== ====== ========
Ratios/supplemental data:
Net assets, end of period
(in thousands) $706,884 $505,892 $22,737 $477,088 $339,739 $264,628 $182,430 $187,869 $140,073 $134,796
Ratios to average net
assets (8)(9)(10)
Expenses 0.38% 0.37% 0.33% 0.34% 0.36% 0.37% 0.45% 0.45% 0.53% 0.43%
Net investment income 3.20% 3.18% 3.28% 3.12% 3.57% 4.19% 4.49% 4.40% 4.20% 3.68%
Portfolio turnover rate 26% 23% 23% 30% 35% 52% 41% 50% 56% 22%
</TABLE>

(1) The Growth and Income Fund commenced active operations on July 17,
1987. The AMR Class commenced active operations on August 1, 1994
and at that time existing shares of the Growth and Income Fund
were designated as Institutional Class shares.
(2) GSB Investment Management, Inc. was added as an investment adviser
to the Growth and Income Fund on April 10, 1990.
(3) The assets of the Growth and Income Fund previously managed by
Atlanta Capital Management were transferred to GSB Investment
Management, Inc. as of the close of business on December 5, 1991.
(4) Average shares outstanding for the period rather than end of
period shares were used to compute net investment income per
share.

(5) Net investment income per share was calculated by subtracting
class expenses per share from net investment income per share for
the Fund before class expenses.

(6) Total return is calculated assuming an initial investment is made
at the net asset value last calculated on the business day before
the first day of each period reported, reinvestment of all
dividends and capital gains distributions on the payable date,
accrual for the maximum shareholder services fee of .30% (for
periods prior to August 1, 1994) and a sale at net asset value on
the last day of each period reported.

(7) Total return for the AMR Class for the period ended October 31,
1994 reflects Institutional Class returns from November 1, 1993
through July 31, 1994 and returns of the AMR Class for the period
August 1, 1994 (commencement of operations) through October 31,
1994. Due to the different expense structures between the classes,
total returns for the AMR Class would vary from the results shown
had it been in operation for the entire year.

(8) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date,
expenses exclude shareholder services fees paid directly by
shareholders to the Manager, which amounted to less than $.01 per
share in each period on an annualized basis.
(9) The method of determining average net assets was changed from a
monthly average to a daily average starting with the periods ended
October 31, 1994.

(10) Annualized

5
<PAGE> 83
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
-------------------------
AMR CLASS INSTITUTIONAL CLASS
--------------------------- -------------------------------------- PERIOD
YEAR ENDED PERIOD ENDED ENDED
OCTOBER 31, OCTOBER 31, YEAR ENDED OCTOBER 31, OCTOBER 31,
----------- ------------ ------------------------------------- ----------
1995(5) 1994(1)(3)(4) 1994(3)(4) 1993(2) 1992 1991(1)
------- ------------- ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $12.87 $12.61 $12.07 $8.93 $10.13 $10.00
------ ------ ------ ----- ------ ------
Income from investment
operations:
Net investment income 0.30 0.05 0.32 0.17 0.12 --
Net gains (losses) on securities
(both realized and unrealized) 0.68 0.21 1.10 3.09 (1.31) 0.13
---- ---- ---- ---- ------ ----
Total from investment operations 0.98 0.26 1.42 3.26 (1.19) 0.13
---- ---- ---- ---- ------ ----
Less distributions:
Dividends from net investment
income (0.22) -- (0.17) (0.12) (0.01) --
Distributions from net realized
gains on securities (0.32) -- (0.45) -- -- --
------ -- ------ -- -- --
Total distributions (0.54) -- (0.62) (0.12) (0.01) --
------ -- ------ ------ ------ --
Net asset value, end of period $13.31 $12.87 $12.87 $12.07 $8.93 $10.13
====== ------ ------ ------ ----- ------
Total return (annualized)(6) 8.18% 11.77% 11.77%(7) 36.56% (12.07)% 5.69%
===== ------ --------- ------ -------- -----
Ratios/supplemental data:
Net assets, end of period (in
thousands) $227,939 $165,524 $23,115 $66,652 $38,837 $10,536
Ratios to average net assets
(8)(9)(10):
Expenses 0.60% 0.63% 0.61% 0.78% 1.17% 1.90%(11)
Net investment income 2.65% 1.41% 2.74% 2.00% 2.04% 0.38%(11)
Portfolio turnover rate 21% 37% 37% 61% 21% 2%
</TABLE>

(1) The International Equity Fund commenced active operations on
August 7, 1991. The AMR Class commenced active operations on
August 1, 1994 and at that time existing shares of the
International Equity Fund were designated as Institutional Class
shares.
(2) HD International Limited was replaced by Hotchkis and Wiley as an
investment adviser to the International Equity Fund as of May 21,
1993.
(3) Morgan Stanley Asset Management Inc. was added as an investment
adviser to the International Equity Fund as of August 1, 1994.
(4) Average shares outstanding for the period rather than end of
period shares were used to compute net investment income per
share.
(5) Net investment income per share was calculated by subtracting
class expenses per share from net investment income per share for
the Fund before class expenses.
(6) Total return is calculated assuming an initial investment is made
at the net asset value last calculated on the business day before
the first day of each period reported, reinvestment of all
dividends and capital gains distributions on the payable date,
accrual for the maximum shareholder services fee of .30% (for
periods prior to August 1, 1994) and a sale at net asset value on
the last day of each period reported.
(7) Total return for the AMR Class for the period ended October 31,
1994 reflects Institutional Class returns from November 1, 1993
through July 31, 1994 and returns of the AMR Class for the period
August 1, 1994 (commencement of operations) through October 31,
1994. Due to the different expense structures between the classes,
total returns for the AMR Class would vary from the results shown
had it been in operation for the entire year.

(8) Effective August 1, 1994, expenses include administrative services
fees paid by the Fund to the Manager. Prior to that date,
expenses exclude shareholder services fees paid directly by
shareholders to the Manager. Such fees amounted to less than $.04
per share in each period on an annualized basis and were waived
by the Manager for the period ended October 31, 1991.

(9) The method of determining average net assets was changed from a
monthly average to a daily average starting with the periods ended
October 31, 1994.
(10) Annualized.
(11) Estimated based on expected annual expenses and actual average net
assets.

6
<PAGE> 84
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
LIMITED-TERM INCOME FUND
------------------------
AMR CLASS INSTITUTIONAL CLASS
------------------------ --------------------------------------------------------------------------
YEAR ENDED PERIOD ENDED PERIOD ENDED
----------- ------------ YEAR ENDED OCTOBER 31, -------------
OCTOBER 31, OCTOBER 31, ------------------------------------------------------------ OCTOBER 31,
1995 1994(1)(3) 1994(3) 1993 1992 1991(2) 1990 1989 1988(1)
------- ---------- ------- ------ ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> (C) <C> <C> <C>
Net asset value,
beginning of period $9.68 $9.78 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12 $10.00
Income from investment
operations:
Net investment income 0.64 0.14 0.52 0.58 0.75 0.83 0.92 0.96 0.64
Net gains losses on securities
(both realized and unrealized) 0.13 (0.10) (0.46) 0.15 0.06 0.31 (0.18) (0.12) 0.05
---- ------ ------ ---- ---- ---- ------ ------ ----
Total from investment
operations 0.77 0.04 0.06 0.73 0.81 1.14 0.74 0.84 0.69
---- ---- ---- ---- ---- ---- ---- ---- ----
Less distributions dividends
distributions:
from net investment
income (0.64) (0.14) (0.52) (0.58) (0.75) (0.83) (0.92) (1.02) (0.57)
Distributions from net realized
gains on securities -- -- (0.10) (0.05) -- -- -- -- --
-- -- ------ ------ -- -- -- -- --
Total distributions (0.64) (0.14) (0.62) (0.63) (0.75) (0.83) (0.92) (1.02) (0.57)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $9.81 $9.68 $9.67 $10.23 $10.13 $10.07 $9.76 $9.94 $10.12
----- ----- ----- ------ ------ ------ ----- ----- ------
Total return (annualized)(4) 8.22% 0.59%(5) 0.42% 7.20% 7.94% 11.87% 7.51% 7.62% 7.41%
----- -------- ----- ----- ----- ------ ----- ----- -----
Ratios/supplemental data
net assets end of period
(in thousands) $64,595 $53,445 $112,141 $238,874 $209,928 $141,629 $83,265 $60,507 $40,855
Ratios to average net
assets (6)(7)(8):
Expenses 0.36% 0.33% 0.31% 0.26% 0.27% 0.35% 0.48% 0.59% 0.50%
Net investment income 6.60% 5.77% 5.26% 5.76% 7.40% 8.42% 9.44% 9.77% 8.01%
Portfolio turnover rate 183% 94% 94% 176% 133% 165% 156% 158% 127%
</TABLE>

(1) The Limited-Term Income Fund commenced active operations on December 3,
1987. The AMR Class commenced active operations on August 1, 1994 and at
that time existing shares of the Limited-Term Income Fund were designated
as Institutional Class shares.
(2) AMR Investment Services, Inc. began portfolio management of the
Limited-Term Income Fund on March 1, 1991 replacing Brown Brothers,
Harriman & Co. and Barrow, Hanley, Mewhinney & Strauss, Inc.
(3) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(4) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day of
each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of .30% (for periods prior to August 1, 1994) and a sale at
net asset value on the last day of each period reported.
(5) Total return for the AMR Class for the period ended October 31, 1994
reflects Institutional Class returns from November 1, 1993 through July 31,
1994 and returns of the AMR Class for the period August 1, 1994
(commencement of operations) through October 31, 1994. Due to the different
expense structures between the classes, total returns for the AMR Class
would vary from the results shown had it been in operation for the entire
year.

(6) Effective August 1, 1994, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager.
Such fees amounted to less than $.03 per share in each period on an
annualized basis.

(7) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.

(8) Annualized.

7
<PAGE> 85
INTRODUCTION

The Trust is an open-end, management investment company organized as a
Massachusetts business trust on January 16, 1987. The Funds are four of the
several investment portfolios of the Trust. Each Fund has a distinctive
investment objective and investment policies. Each Fund will invest all of its
investable assets in a corresponding Portfolio of the AMR Trust which has an
identical investment objective. The Manager provides the Portfolios with
business and asset management services, including the evaluation and monitoring
of the investment advisers, and it provides the Funds with administrative
services. Each Fund consists of multiple classes of shares, including the "AMR
Class," for tax-exempt retirement and benefit plans of AMR Corporation and its
affiliates, the "PlanAhead Class" which is available to all investors,
including smaller institutional investors, investors using intermediary
organizations such as discount brokers or plan sponsors, individual retirement
accounts ("IRAs"), and self-employed individual retirement plans ("HR-10 Plans"
or "Keogh Plans"), and the "Institutional Class" which is available to large
institutional investors investing at least $2 million in the Funds. For further
information about the Institutional and PlanAhead Classes, call (800) 967-
9009.

The assets of the Balanced Portfolio, the Growth and Income Portfolio and
the International Equity Portfolio are allocated by the Manager among
investment advisers designated for each of those Portfolios. Investment
decisions for the Limited-Term Income Portfolio are made directly by the
Manager. See "Investment Advisers." Each investment adviser has discretion to
purchase and sell portfolio securities in accordance with the investment
objectives, policies and restrictions described in this Prospectus and in the
SAI and by specific investment strategies developed by the Manager.

AMR Class shares are sold without any sales charges at the next share price
calculated after an investment is received and accepted. Shares will be
redeemed at the next share price calculated after receipt of a redemption
order. See "Purchase, Redemption and Valuation of Shares."

INVESTMENT OBJECTIVES, POLICIES AND RISKS

8
<PAGE> 86

of its assets invested in equity securities and a minimum of 30% and a maximum
of 70% of its assets invested in debt securities which, at the time of
purchase, are rated in one of the four highest rating categories by all
nationally recognized statistical rating organizations ("Rating Organizations")
rating that security such as Standard & Poor's or Moody's Investor Services,
Inc. or, if unrated, are deemed to be of comparable quality by the applicable
investment adviser. Obligations rated in the fourth highest rating category are
limited to 25% of the Portfolio's debt allocation. Obligations rated in the
BBB or Baa categories by any Rating Organization have speculative
characteristics and thus changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. See the SAI for a
description of debt ratings. The Portfolio, at the discretion of the investment
advisers, may retain a security that has been downgraded below the initial
investment criteria. The Portfolio usually invests between 50% and 65% of its
assets in equity securities and between 35% and 50% of its assets in debt
securities. The remainder of the Portfolio's assets may be invested in other
investment companies and in cash or cash equivalents, including
investment-grade short-term obligations. However, when its investment advisers
deem that market conditions warrant, the Portfolio may, for temporary defensive
purposes, invest up to 100% of its assets in cash, cash equivalents and
investment grade short-term obligations.

The Portfolio also may engage in dollar rolls or purchase or sell
securities on a "when-issued" and on a "forward commitment" basis. The purchase
or sale of when-issued securities enables an investor to hedge against
anticipated changes in interest rates and prices by locking in an attractive
price or yield. The price of when-issued securities is fixed at the time the
commitment to purchase or sell is made, but delivery and payment for the
when-issued securities take place at a later date, normally one to two months
after the date of purchase. During the period between purchase and settlement,
no payment is made by the purchaser to the issuer and no interest accrues to
the purchaser. Such transactions therefore involve a risk of loss if the value
of the security to be purchased declines prior to the settlement date or if the
value of the security to be sold increases prior to the settlement date. A sale
of a when- issued security also involves the risk that the other party will be
unable to settle the transaction. Dollar rolls are a type of forward commitment
transaction. Purchases and sales of securities on a "forward commitment" basis
involve a commitment to purchase or sell securities with payment and delivery
to take place at some future date, normally one to two months after the date of
the transaction. As with when-issued securities, these transactions involve
certain risks, but they also enable an investor to hedge against anticipated
changes in interest rates and prices. Forward commitment transactions are
executed for existing obligations, whereas in a when-issued transaction, the
obligations have not yet been issued. When purchasing securities on a
when-issued or on a forward commitment basis, a segregated account of liquid
assets at least equal to the value of purchase commitments for such securities
will be maintained until the settlement date.

The Portfolio's equity investments may consist of common stocks, preferred
stocks and convertible securities, including foreign securities that are
represented by U.S. dollar-denominated American Depository Receipts which are
traded in the United States on exchanges and in the over-the-counter market.
When purchasing equity securities, emphasis will be placed on undervalued
securities with above average growth expectations. The Manager believes that
purchasing securities which the investment advisers believe are undervalued in
the market and that have above average growth potential will outperform other
investment styles over the longer term while minimizing volatility and downside
risk. The Manager will recommend that, with respect to portfolio management of
equity assets, the Trust retain only those investment advisers who, in the
Manager's opinion, utilize such an approach.

9
<PAGE> 87

common stocks, and securities having common stock characteristics, such as
rights and warrants, and foreign equity securities that are represented by U.S.
dollar-denominated American Depository Receipts which are traded in the United
States on exchanges and in the over-the-counter market. In order to seek either
above average current income or capital appreciation when interest rates are
expected to decline, the Portfolio may invest in debt securities which, at the
time of purchase, are rated in one of the four highest rating categories by all
Rating Organizations rating that security or, if unrated, are deemed to be of
comparable quality by the applicable investment adviser. Obligations rated in
the fourth highest rating category are limited to 25% of the Portfolio's debt
allocation. See "American AAdvantage Balanced Fund" for a description of the
risks involved with these obligations. The Portfolio may also invest in other
investment companies or in cash and cash equivalents, including investment
grade short-term obligations, in order to maintain liquidity. See the SAI for
definitions of the foregoing securities and for a description of debt ratings.
However, when its investment advisers deem that market conditions warrant, the
Portfolio may, for temporary defensive purposes, invest up to 100% of its
assets in cash, cash equivalents and investment grade short-term obligations.
In addition, the Portfolio may purchase or sell securities on a "when-issued"
or on a "forward commitment" basis as described in "American AAdvantage
Balanced Fund." When purchasing equity securities, primary emphasis will be
placed on undervalued securities with above average growth expectations.

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND -- This Fund's investment
objective is to realize long-term capital appreciation. This Fund seeks its
investment objective by investing all of its investable assets in the
International Equity Portfolio, which invests primarily in equity securities of
issuers based outside the United States. Ordinarily the Portfolio will invest
at least 65% of its assets in common stocks and securities convertible into
common stocks of issuers in at least three different foreign countries.
However, excluding collateral for securities loaned, the Portfolio generally
invests in excess of 80% of its assets in such securities. The remainder of the
Portfolio's assets will be invested in non-U.S. debt securities which, at the
time of purchase, are rated in one of the three highest rating categories by
any Rating Organization or, if unrated, are deemed to be of comparable quality
by the applicable investment adviser and traded publicly on a world market, or
in cash or cash equivalents, including investment grade short-term obligations
or in other investment companies. However, when its investment advisers deem
that market conditions warrant, the Portfolio may, for temporary defensive
purposes, invest up to 100% of its assets in cash, cash equivalents, other
investment companies and investment grade short-term obligations.

The investment advisers select securities based upon a country's economic
outlook, market valuation and potential changes in currency exchange rates.
When purchasing equity securities, primary emphasis will be placed on
undervalued securities with above average growth expectations.

Overseas investing carries potential risks not associated with domestic
investments. Such risks include but are not limited to: (1) political and
financial instability abroad, including risk of nationalization or
expropriation of assets and the risk of war; (2) less liquidity and greater
volatility of foreign investments; (3) less public information regarding
foreign companies; (4) less government regulation and supervision of foreign
stock exchanges, brokers and listed companies; (5) lack of uniform accounting,
auditing and financial reporting standards; (6) delays in transaction
settlement in some foreign markets; (7) possibility of an imposition of
confiscatory foreign taxes; (8) possible limitation on the removal of
securities or other assets of the Portfolio; (9) restrictions on foreign
investments and repatriation of capital; (10) currency fluctuations; (11) cost
and possible restrictions of currency conversion; (12) withholding taxes on
dividends in foreign countries; and (13) possibly higher commissions, custodial
fees and management costs than in the U.S. market. These risks are often
greater for investments in emerging or developing countries.

10
<PAGE> 88
The Portfolio may trade forward foreign currency contracts ("forward
contracts"), which are derivatives, to hedge currency fluctuations of
underlying stock or bond positions or in other circumstances permitted by the
Commodity Futures Trading Commission ("CFTC"). Forward contracts to sell
foreign currency may be used when the management of the Portfolio believes that
the currency of a particular foreign country may suffer a decline against the
U.S. dollar. Forward contracts are also entered into to set the exchange rate
for a future transaction. In this manner, the Portfolio may protect itself
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar or other currency which is being used for the security
purchase and the foreign currency in which the security is denominated during
the period between the date on which the security is purchased or sold and the
date on which payment is made or received. Forward contracts involve certain
risks which include, but are not limited to: (1) imperfect correlation between
the securities hedged and the contracts themselves; and (2) possible decrease
in the total return of the Portfolio. Forward contracts are discussed in
greater detail in the SAI.

AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND -- This Fund's investment
objective is to realize income and capital appreciation. As an investment
policy, the Fund primarily seeks income and secondarily seeks capital
appreciation. The Fund seeks its investment objective by investing all of its
investable assets in the Limited-Term Income Portfolio, which invests primarily
in debt obligations. Permissible investments include securities of the U.S.
Government and its agencies and instrumentalities, including STRIPS and other
zero coupon obligations; corporate bonds, notes and debentures; non-convertible
preferred stocks; mortgage-backed securities; asset-backed securities;
domestic, Yankeedollar and Eurodollar certificates of deposit, bank deposit
notes, and bank notes; other investment companies; and cash or cash equivalents
including investment grade short-term obligations. Such obligations may have a
fixed, variable or floating rate of interest. At the time of purchase, all such
securities will be rated in one of the four highest rating categories by all
Rating Organizations rating such obligation or, if unrated, will be deemed to
be of comparable quality by the investment adviser. Obligations rated in the
fourth highest rating category are limited to 25% of the Portfolio's total
assets. See "American AAdvantage Balanced Fund" for a description of the risks
involved with these obligations. See the SAI for definitions of the foregoing
securities and for a description of debt ratings. Principal and/or interest
payments for obligations of the U.S. Government's agencies or instrumentalities
may or may not be backed by the full faith and credit of the U.S. Government.

The market value of fixed rate securities, and thus the net asset value of
this Portfolio's shares, is expected to vary inversely with movements in
interest rates. The market value of variable and floating rate instruments will
not vary as much due to the periodic adjustments in their interest rates. An
adjustment which increases the interest rate of such securities should reduce
or eliminate declines in market value resulting from a prior upward movement in
interest rates, and an adjustment which decreases the interest

11
<PAGE> 89
rate of such securities should reduce or eliminate increases in market value
resulting from a prior downward movement in interest rates.

Collateralized mortgage obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a mortgage pass-through, interest and prepaid principal
on a CMO are paid, in most cases, monthly. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC or FNMA. CMOs are structured
in multiple classes, with each class bearing a different stated maturity or
interest rate.

Although investments will not be restricted by the maturity of the
securities purchased, under normal circumstances, the Portfolio will seek to
maintain a dollar weighted average maturity of one to five years. However, the
dollar- weighted average maturity may temporarily be adjusted outside the one
to five year period if warranted by market conditions. For example, the average
maturity of the Portfolio will be shortened in order to minimize depreciation
of capital if the investment adviser anticipates a rise in interest rates.
Conversely, the average maturity will be lengthened in order to maximize return
if interest rates are expected to decline. In addition, portfolio securities
may be actively traded to realize gains (or losses) and increase yields by
taking advantage of short-term market variations. Because the timing on return
of principal for both asset-backed and mortgage-backed securities is uncertain,
in calculating the average weighted maturity of the Portfolio, the maturity of
these securities may be based on certain industry conventions. The Manager
serves as the sole active investment adviser to the Limited-Term Income Fund
and its corresponding Portfolio.

12
<PAGE> 90

Each Portfolio may lend securities to broker-dealers or other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by any combination of cash, securities of the U.S. Government and its
agencies and instrumentalities and approved bank letters of credit that at all
times equal at least 100% of the market value of the loaned securities. Such
loans will not be made if, as a result, the aggregate amount of all outstanding
securities loans by any Portfolio would exceed 33 1/3% of its total assets. A
Portfolio continues to receive interest on the securities loaned and
simultaneously earns either interest on the investment of the cash collateral
or fee income if the loan is otherwise collateralized. However, a Portfolio
normally pays (including, in some cases, payments to the Manager) lending fees
and related expenses from this interest or fee income. Should the borrower of
the securities fail financially, there is a risk of delay in recovery of the
securities loaned or loss of rights in the collateral. However, the Portfolios
seek to minimize this risk by making loans only to borrowers which are deemed
by the Manager to be of good financial standing and which have been approved by
the AMR Trust Board. For purposes of complying with each Portfolio's investment
policies and restrictions, collateral received in connection with securities
loans will be deemed an asset of a Portfolio to the extent required by law. See
the SAI for further information regarding loan transactions.

Investments in private placement offerings are made in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 (the "Securities Act"), and resold to qualified
institutional buyers under Rule 144A of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolios that agree they are purchasing the paper for investment and not with
an intention to distribute to the public. Any resale by the purchaser must be
pursuant to an exempt transaction and may be accomplished in accordance with
Rule 144A. Section 4(2) paper normally is resold to other institutional
investors such as the Portfolios through or with the assistance of the issuer
or dealers that make a market in the Section 4(2) paper, thus providing
liquidity. The Portfolios will not invest more than 15% of their respective net
assets in Section 4(2) paper and illiquid securities unless the applicable
investment adviser determines, by continuous reference to the appropriate
trading markets and pursuant to guidelines approved by the AMR Trust Board,
that any Section 4(2) paper held by such Portfolio in excess of this level is
at all times liquid.

Because it is not possible to predict with assurance exactly how this
market for Section 4(2) paper offered and sold under Rule 144A will develop,
the AMR Trust Board and the applicable investment adviser, pursuant to the
guidelines approved by the AMR Trust Board, will carefully monitor the
Portfolios' investments in these securities, focusing on such important
factors, among others, as valuation, liquidity, and availability of
information. Investments in Section 4(2) paper could have the effect of
reducing a Portfolio's liquidity to the extent that qualified institutional
buyers no longer wish to purchase these restricted securities.

BROKERAGE PRACTICES -- Each investment adviser will place its own orders to
execute securities transactions which are designed to implement the applicable
Portfolio's investment objective and policies. In placing such orders, each
investment adviser will seek the best available price and most favorable
execution. The full range and quality of services offered by the executing
broker or dealer is considered when making these determinations. No Portfolio,
other than the Limited-Term Income Portfolio, currently expects its portfolio
turnover rate to exceed 100%. The portfolio turnover rate for the Limited-Term
Income Fund for the fiscal year ended October 31, 1995 was 183%. High portfolio
activity increases a Portfolio's transaction costs, including brokerage
commissions, and may result in a greater number of taxable transactions.

The Limited-Term Income Portfolio normally will not incur any brokerage
commissions on its transactions because debt instruments are generally traded
on a "net" basis with dealers acting as principal for their own accounts
without a stated commission. The price of the obligation, however, usually
includes a profit to the dealer. Obligations purchased in underwritten
offerings include

13
<PAGE> 91
a fixed amount of compensation to the underwriter, generally referred to as the
underwriter's concession or discount. No commissions or discounts are paid when
securities are purchased directly from an issuer.

The Manager expects, although it cannot guarantee, that the Trust will
achieve economies of scale by investing in the AMR Trust. In addition to
selling their interests to the Funds, the Portfolios may sell their interests
to other nonaffiliated investment companies and/or other institutional
investors. All institutional investors in a Portfolio will pay a proportionate
share of the Portfolio's expenses and will invest in that Portfolio on the same
terms and conditions. However, if another investment company invests all of its
assets in a Portfolio, it would not be required to sell its shares at the same
public offering price as a Fund and would be allowed to charge different sales
commissions. Therefore, investors in a Fund may experience different returns
from investors in another investment company that invests exclusively in that
Fund's corresponding Portfolio.

INVESTMENT RESTRICTIONS

14
<PAGE> 92
- Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the U.S.
Government, its agencies and instrumentalities, or purchase more than 10%
of the voting securities of any one issuer, with respect to 75% of a
Portfolio's total assets.

- Invest in securities of an issuer that, together with any predecessor,
has been in operation for less than three years if more than 5% of the
Portfolio's total assets would be invested in such securities. This
limitation does not apply with regard to collateralized trust securities.

- Invest more than 15% of its net assets in illiquid securities,
including time deposits and repurchase agreements that mature in more than
seven days.

YIELDS AND TOTAL RETURNS

Yields for the AMR Class of the Funds will be computed by dividing the net
investment income earned per AMR Class share during the relevant time period by
the maximum offering price per AMR Class share on the last day of the period.
Total return quotations for the AMR Class of the Funds may reflect the average
annual compounded (or aggregate compounded) rate of return during the
designated time period based on a hypothetical initial investment and the
redeemable value of that investment at the end of the period. Additionally, the
AMR Class of the Limited-Term Income Fund may advertise a "monthly distribution
rate." This rate is based on an annualized monthly dividend accrual rate per
share compared with the month-end share price of the AMR Class of this Fund.
The Funds will at times compare their performance to applicable published
indices, and may also disclose their performance as ranked by certain ranking
entities. Each class of a Fund has different expenses which will impact its
performance. See the SAI for more information about the calculation of yields
and total returns.

MANAGEMENT AND ADMINISTRATION OF THE TRUST

FUND MANAGEMENT AGREEMENT -- The Board has general supervisory responsibility
over the Trust's affairs. The Manager provides or oversees all administrative,
investment advisory and portfolio management services for the Trust pursuant to
a Management Agreement dated April 3, 1987, as amended October 1, 1995,
together with the Administrative Services Agreement described below. The AMR
Trust and the Manager also entered into a Management Agreement dated October 1,
1995 that obligates the Manager to provide or oversee all administrative,
investment advisory and portfolio management services for the AMR Trust. The
Manager, located at 4333 Amon Carter Boulevard, MD 5645, Fort Worth, Texas
76155, is a wholly-owned subsidiary of AMR Corporation ("AMR"), the parent
company of American Airlines, Inc., and was organized in 1986 to provide
business management, advisory, administrative and asset management consulting
services. The assets of the corresponding Portfolios of the Balanced Fund, the
Growth and Income Fund and the International Equity Fund are allocated by the
Manager among one or more investment advisers designated for that Fund. See
"Investment Advisers." The Manager serves as the sole active investment adviser
to the corresponding Portfolio of the Limited-Term Income Fund. In addition,
with the exception of the International Equity Fund, if so requested by any
investment adviser, the Manager will make the investment decisions with respect
to assets allocated to that investment adviser which the investment adviser
determines should be invested in investment grade short-term obligations. As of
December 31, 1995, the Manager had assets under management totaling
approximately $ billion including approximately $ billion under
active management and $ billion as named fiduciary or fiduciary adviser.
Of the total, approximately $ billion of assets are related to AMR.
American Airlines, Inc. is not responsible for investments made in the American
AAdvantage Funds.

15
<PAGE> 93
The Manager provides the Trusts with office space, office equipment and
personnel necessary to manage and administer the Trusts' operations. This
includes complying with reporting requirements; corresponding with
shareholders; maintaining internal bookkeeping, accounting and auditing
services and records; and supervising the provision of services to the Trusts
by third parties. The Manager also develops the investment programs for each
Portfolio, selects and changes investment advisers (subject to approval by the
AMR Trust Board and appropriate interest holders), allocates assets among
investment advisers, monitors the investment advisers' investment programs and
results, and coordinates the investment activities of the investment advisers
to ensure compliance with regulatory restrictions.

The Manager bears the expense of providing the above services and pays the
fees of the investment advisers of the Funds and their Portfolios. As
compensation for paying the investment advisory fees and for providing the
Portfolios with advisory and asset allocation services, the Manager receives
from the AMR Trust an annualized advisory fee that is calculated and accrued
daily, equal to the sum of (1) 0.25% of the net assets of the Limited-Term
Income Portfolio, (2) 0.10% of the net assets of the other Portfolios, plus (3)
all fees payable by the Manager to the AMR Trust's investment advisers as
described in "Investment Advisers." The advisory fee is payable quarterly in
arrears. To the extent that a Fund invests all of its investable assets in its
corresponding Portfolio, the Manager will not receive an advisory fee under its
Management Agreement with the Trust.

Each Management Agreement will continue in effect provided that annually
such continuance is specifically approved by a vote of the Board and the AMR
Trust Board, including the affirmative votes of a majority of the independent
Trustees of each Board who are not parties to the Management Agreement or
"interested persons" as defined in the Investment Company Act of 1940, as
amended ("1940 Act") of any such party ("Independent Trustees"), cast in person
at a meeting called for the purpose of considering such approval, or by the
vote of a Fund's shareholders or a Portfolio's interest holders. A Management
Agreement may be terminated with respect to a Fund or a Portfolio at any time,
without penalty, by a majority vote of outstanding Fund shares or Portfolio
interests on sixty (60) days' written notice to the Manager, or by the Manager,
on sixty (60) days' written notice to the Trust or the AMR Trust. A Management
Agreement will automatically terminate in the event of its "assignment" as
defined in the 1940 Act.

FUND ADVISORY AGREEMENTS -- Each investment adviser has entered into a separate
investment advisory agreement with the Manager to provide investment advisory
services to the Funds and their corresponding Portfolios. To the extent that a
Fund invests all of its investable assets in a corresponding Portfolio,
however, an investment adviser will receive an advisory fee only on behalf of
the Portfolio and not on behalf of its corresponding Fund. Except for the
Limited-Term Income Portfolio, the assets of each Portfolio are allocated among
the investment advisers designated for that Portfolio and described in this
Prospectus in "Investment Advisers." All investment advisers are subject to
approval by the AMR Trust Board and interest holders of the applicable
Portfolio. The Manager recommends investment advisers to the AMR Trust Board
based upon its continuing quantitative and qualitative evaluation of the
investment advisers' skill in managing assets using specific investment styles
and strategies. The allocation of assets among investment advisers may be
changed at any time by the Manager. Allocations among advisers will vary based
upon a variety of factors, including the overall investment performance of each
investment adviser, the Portfolio's cash flow needs and market conditions. The
Manager need not allocate assets to each investment adviser designated for a
Portfolio. The investment advisers can be terminated without penalty to the AMR
Trust by the Manager, the AMR Trust Board or the interest holders of the
applicable Portfolio. Short-term investment performance, by itself, is not a
significant factor in selecting or terminating an investment adviser, and the
Manager does not expect to recommend frequent changes of investment advisers.
The Prospectus will be supplemented if additional investment advisers are
retained or the contract with any existing investment adviser is terminated.

16
<PAGE> 94

Each investment adviser has discretion to purchase and sell securities for
its segment of a Portfolio's assets in accordance with that Portfolio's
objective, policies and restrictions and the more specific strategies provided
by the Manager. Although the investment advisers are subject to general
supervision by the AMR Trust Board and the Manager, these parties do not
evaluate the investment merits of specific securities transactions. As
compensation for its services, each investment adviser is paid a fee by the
Manager out of the proceeds of the management fee received by the Manager from
the AMR Trust.

ADMINISTRATIVE SERVICES AGREEMENT -- The Manager and the Trust entered into an
Administrative Services Agreement which obligates the Manager to provide the
Funds those administrative and management services (other than investment
advisory services) described in the Management Agreement. To the extent that a
Fund invests all of its investable assets in a corresponding Portfolio,
however, the Manager will receive no fee under this Agreement.

PRINCIPAL UNDERWRITER -- BROKERS TRANSACTION SERVICES, INC. ("BTS"), 7001
Preston Road, Dallas, Texas, 75205 serves as the principal underwriter of the
Trust.

CUSTODIAN AND TRANSFER AGENT -- NATIONSBANK OF TEXAS, N.A., Dallas, Texas,
serves as custodian for the Portfolios and the Funds and as transfer agent for
the AMR Class. THE CHASE MANHATTAN BANK N.A., New York, New York, acts as
subcustodian for the International Equity Portfolio and its corresponding Fund.

INDEPENDENT AUDITOR -- The independent auditor for the Trust and the AMR Trust
is ERNST & YOUNG LLP, Dallas, Texas.

INVESTMENT ADVISERS

Set forth below is a brief description of the investment advisers for each Fund
and its corresponding Portfolio. Except for the Manager, none of the investment
advisers provides any services to the Funds or the Portfolios except for
portfolio investment management and related recordkeeping services, or has any
affiliation with the Trust, the AMR Trust or the Manager.

William F. Quinn has served as President of the Manager since it was
founded in 1986 and Nancy A. Eckl currently serves as Vice President - Trust
Investments of the Manager. She previously served as Vice President - Finance
and Compliance of the Manager from December 1990 to May 1995. In these
capacities, Mr. Quinn and Ms. Eckl have primary responsibility for the
day-to-day operations of the Balanced Fund, the Growth and Income Fund, the
International Equity Fund and their corresponding Portfolios. These
responsibilities include oversight of the investment advisers, regular review
of each adviser's performance and asset allocations among investment advisers.

Michael W. Fields is responsible for the portfolio management oversight of
the Limited-Term Income Fund and its corresponding Portfolio. Mr. Fields has
been with the Manager since it was founded in 1986 and currently serves as Vice
President-Fixed Income Investments. Benjamin L. Mayer is responsible for the
day-to-day portfolio management of the Limited-Term Income Portfolio. Mr. Mayer
has served as Senior Portfolio Manager of the Manager since May 1995. Prior to
that time, he was a Vice President, Institutional Fixed Income Sales at
Merrill, Lynch, Pierce, Fenner & Smith from January 1994 to April 1995 and Vice
President, Regional Senior Strategist from April 1989 to January 1994 . Mr.
Mayer has had portfolio management responsibility for the Fund since August
1995.

17
<PAGE> 95

GSB INVESTMENT MANAGEMENT, INC. ("GSB"), 301 Commerce Street, Fort Worth,
Texas 76102, is a professional investment management firm which was founded in
1987 by Frank P. Ganucheau, Mark J. Stupfel, and Lyle E. Brumley. GSB is wholly
owned by United Asset Management Corporation, a Delaware corporation, which
owns forty- investment management companies, including GSB. As of December 31,
1995, GSB managed approximately $ billion of assets, including
approximately $ million of assets of AMR and its subsidiaries and
affiliated entities. GSB serves as an investment adviser to the Balanced
Portfolio and the Growth and Income Portfolio. The Manager pays GSB an
annualized fee equal to .30% of the first $100 million in AMR Trust assets
under its discretionary management, .25% of the next $100 million, .20% of the
next $100 million, and .15% on all excess assets.

MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM"), with principal offices at
1221 Avenue of the Americas, New York, New York 10020, is a wholly owned
subsidiary of Morgan Stanley Group Inc. MSAM provides portfolio management and
named fiduciary services to taxable and nontaxable institutions, international
organizations and individuals investing in United States and international
equity and debt securities. As of December 31, 1995, MSAM had assets under
management totaling approximately $ billion, including approximately $
billion under active management and $ billion as named fiduciary or
fiduciary adviser. As of December 31, 1995, MSAM had investment authority over
approximately $ million of assets of AMR and its subsidiaries and
affiliated entities. MSAM serves as an investment adviser to the International
Equity Portfolio. For this service, the Manager pays MSAM an annual fee equal
to .80% of the first $25 million in AMR Trust assets under its discretionary
management, .60% of the next $25 million in assets, .50% of the next $25
million in assets and .40% on all excess assets.

18
<PAGE> 96

Templeton an annualized fee equal to .50% of the first $100 million in AMR
Trust assets under its discretionary management, .35% of the next $50 million
in assets, .30% of the next $250 million in assets and .25% on assets over $400
million.

PURCHASE, REDEMPTION AND VALUATION OF SHARES

PURCHASING SHARES OF THE TRUST -- AMR Class shares are offered to tax-exempt
retirement and benefit plans of AMR Corporation and its affiliates. Shares are
sold without a sales charge at the next share price calculated after the
acceptance of a purchase order. AMR Class shares are offered and orders
accepted until 4:00 p.m. Eastern time on each day on which the New York Stock
Exchange (the "Exchange") is open for trading and the custodian/transfer agent
is open for business ("Business Day"). The Trust reserves the right to reject
any order for the purchase of shares and to limit or suspend, without prior
notice, the offering of shares.

AMR Class shares may be purchased and redeemed as follows:

BY DEPOSITING SECURITIES -- Shares of a Fund may be purchased in exchange
for an investor's securities if the securities are acceptable to its
corresponding Portfolio and satisfy applicable investment objectives and
policies. Investors interested in exchanging securities must first contact the
Manager and acquire instructions regarding submission of a written description
of the securities which the investor wishes to exchange. The investor must
represent that all such securities offered to any Fund are not subject to any
sale restrictions. Within five business days after receipt of the written
description, the Manager will advise the investor whether the securities to be
exchanged are acceptable. There is no charge for this review by the Manager.
Securities accepted by a Fund must have a readily ascertainable value as
evidenced by a listing on the Exchange, the American Stock Exchange or Nasdaq.
Securities are valued in the manner described for valuing Portfolio assets in
the section entitled "Valuation of Shares." Acceptance of such orders may occur
on any day during the five-day period afforded the Manager to review the
acceptability of the securities. Upon notice of acceptance of such orders, the
securities must be delivered in fully negotiable form within three days. The
Manager will provide delivery instructions at the time of acceptance. A gain or
loss for federal income tax purposes may be realized by the investor upon the
securities exchange, depending upon the adjusted tax basis and value of the
securities tendered. A Fund will accept securities in this manner only for
investment by its corresponding Portfolio, and not for resale.

BY MAIL -- Share purchases of any Fund may be made by mail by sending a
check or other negotiable bank draft payable to the applicable Fund to
"NationsBank of Texas, N.A., 11th Floor, Elm Place, P.O. Box 830840, Dallas,
Texas 75283-0840, Attn.: American AAdvantage Funds -- AMR Class." An additional
purchase of shares should be accompanied by the shareholder's account number.
Purchase checks are accepted subject to collection at full face value in U.S.
funds and must be drawn in U.S. dollars on a U.S. bank.

REDEMPTION OF SHARES -- Fund shares may be redeemed on any Business Day by
writing directly to NationsBank of Texas, N.A. at the address above under
"Purchasing Shares of the Trust -- By Mail." The redemption price will be the
net asset value per share next determined after receipt by NationsBank of
Texas, N.A. of all required documents in good order. "Good order" means that
the request must include a letter of instruction or stock assignment specifying
the number of shares or dollar amount to be redeemed, signed by an authorized
signatory for the owners of the shares in the exact names in which they appear
on the account, and

19
<PAGE> 97
accompanied by such other supporting legal documents, if required, in the case
of estates, trusts, guardianships, custodians, corporations, IRAs and welfare,
pension and profit-sharing plans. In addition, any share certificates being
redeemed must be returned duly endorsed or accompanied by a stock assignment
with signatures guaranteed by a bank, trust company or member of a recognized
stock exchange.

Payment for redeemed shares will be made in cash within seven days after
the receipt of a redemption request in good order. However, the Fund reserves
the right to suspend redemptions or postpone the date of payment (a) for any
periods during which the Exchange is closed (other than for customary weekend
and holiday closings), or when trading on the Exchange is restricted, (b) at
such time as an emergency exists as determined by the Securities and Exchange
Commission so that disposal of a Fund's investments or determination of its net
asset value is not reasonably practicable, or (c) for such other periods as the
Securities and Exchange Commission by order may permit for protection of the
Funds' shareholders. Shares purchased by check may not be redeemed until the
funds have cleared, which may take up to 15 days. Although each Fund intends
to redeem shares in cash, each reserves the right to pay the redemption price
in whole or in part by a distribution of readily marketable securities held by
the applicable Fund's corresponding Portfolio. See the SAI for further
information concerning redemptions in kind.

DISTRIBUTION OF TRUST SHARES -- Shares are distributed through the Funds'
principal underwriter, BTS. BTS is compensated by the Manager, and not the
Trust. The Trust does not incur any direct distribution expenses. However, the
Trust has adopted a Distribution Plan in accordance with Rule 12b-1 under the
1940 Act which authorizes the use of any fees received by the Manager in
accordance with the Administrative Services and the Management Agreements and
any fees received by the investment advisers pursuant to their Advisory
Agreements with the Manager, to be used for distribution purposes.

VALUATION OF SHARES -- The net asset value of each share (share price) of the
Funds is determined as of 4:00 p.m. Eastern Time on each Business Day. The net
asset value of all outstanding shares of all classes will be determined based
on a pro rata allocation of the value of the Fund's corresponding Portfolio's
investment income, expenses and total capital gains and losses. The allocation
will be based on comparative net asset value at the beginning of the day except
for expenses related solely to one class of shares ("Class Expenses") which
will be borne only by the appropriate class of shares. Additionally, the Funds
may compute differing share prices as a result of Class Expenses.

Equity securities listed on securities exchanges, including all but United
Kingdom securities of the International Equity Portfolio, are valued at the
last quoted sales price on a designated exchange prior to the close of trading
on the Exchange or, lacking any sales, on the basis of the last current bid
price prior to the close of trading on the Exchange. Securities of the United
Kingdom held in the International Equity Portfolio are priced at the last
jobber price (mid of the bid and offer prices quoted by the leading stock
jobber in the security) prior to close of trading on the Exchange. Trading in
foreign markets is usually completed each day prior to the close of the
Exchange. However, events may occur which affect the values of such securities
and the exchange rates between the time of valuation and the close of the
Exchange. Should events materially affect the value of such securities during
this period, the securities are priced at fair value, as determined in good
faith and pursuant to procedures approved by the AMR Board. Over-the- counter
equity securities are valued on the basis of the last bid price on that date
prior to the close of trading. Debt securities (other than short-term
securities) will normally be valued on the basis of prices provided by a
pricing service and may take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data. In some cases, the prices of debt securities may be determined using
quotes obtained from brokers. Securities for which market quotations are not
readily available are valued at fair value, as determined in good faith and
pursuant to procedures approved by the Board. Assets and liabilities
denominated in foreign currencies and forward currency contracts are translated
into U.S. dollar equivalents based on prevailing market rates. Investment grade
short-term obligations with 60 days or less to maturity held by the Portfolios
are valued using the amortized cost method as described in the SAI.

DIVIDENDS, OTHER DISTRIBUTIONS AND TAX MATTERS

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS -- Dividends and other distributions
paid on each class of a Fund's shares are calculated at the same time and in
the same manner. Dividends from the net investment income of the Balanced Fund,
Growth and Income Fund and International Equity Fund are normally declared
annually. Dividends consisting of substantially all of the net investment
income of the Limited-Term Income Fund, which are paid monthly, normally are
declared on each Business Day immediately prior to the determination of the net
asset value, and are payable to shareholders of record as of the opening of
business on the day on which declared. A Fund's net investment income
attributable to the AMR Class consists of that class's share of the Fund's
share of

20
<PAGE> 98

dividends and interest (including discount) accrued on its corresponding
Portfolio's securities, less expenses of the Fund and the Portfolio
attributable to the AMR Class. Distributions of a Fund's share of its
corresponding Portfolio's realized net short-term capital gain, net capital
gain (the excess of net long-term capital gain over net short-term capital
loss), and net gains from foreign currency transactions, if any, normally will
be made annually.

Unless a shareholder elects otherwise on the account application, all
dividends and other distributions on a Fund's AMR Class shares will be
automatically declared and paid in additional AMR Class shares of that Fund.
However, a shareholder may choose to have distributions of net capital gain
paid in shares and dividends paid in cash or to have all such distributions and
dividends paid in cash. An election may be changed at any time by delivering
written notice that is received by the transfer agent at least ten days prior
to the payment date for a dividend or other distribution.

TAX INFORMATION -- Each Fund is treated as a separate corporation for federal
income tax purposes and intends to continue to qualify for treatment as a
regulated investment company under the Internal Revenue Code of 1986, as
amended. In each taxable year that a Fund so qualifies, the Fund (but not its
shareholders) will be relieved of federal income tax on that part of its
investment company taxable income (generally, taxable net investment income
plus any net short- term capital gain and gains from certain foreign currency
transactions) and net capital gain that it distributes to its shareholders.
However, a Fund will be subject to a nondeductible 4% excise tax to the extent
that it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that calendar year and its capital gain net income
for the one-year period ending on October 31 of that year, plus certain other
amounts. For these and other purposes, dividends and other distributions
declared by a Fund in October, November or December of any year and payable to
shareholders of record on a date in one of those months will be deemed to have
been paid by the Fund and received by the shareholders on December 31 of that
year if they are paid by the Fund during the following January. Each Portfolio
has received a ruling from the Internal Revenue Service that it is classified
for federal income tax purposes as a partnership; accordingly, no Portfolio is
subject to federal income tax.

Dividends from a Fund's investment company taxable income will be taxable
to its shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether received in cash or paid in additional Fund shares.
Distributions of a Fund's net capital gain (whether received in cash or paid in
additional Fund shares), when designated as such, generally will be taxable to
its shareholders as long-term capital gain, regardless of how long they have
held their Fund shares. A capital gain distribution from a Fund also may be
offset by capital losses from other sources. Some foreign countries may impose
withholding taxes on certain dividends payable to the International Equity
Portfolio.

Redemption of Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the fair market value of the
redemption proceeds exceeds or is less than the shareholder's adjusted basis
for the redeemed shares. If shares of a Fund are redeemed at a loss after being
held for six months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares.

If shares are purchased shortly before the record date for a dividend
(other than an exempt-interest dividend) or other distribution, the investor
will pay full price for the shares and receive some portion of the price back
as a taxable distribution. Each Fund notifies its shareholders following the
end of each calendar year of the amounts of dividends and capital gain
distributions paid (or deemed paid).

Each Fund is required to withhold 31% of all taxable dividends, capital
gain distributions and redemption proceeds payable to any individuals and
certain other non-corporate shareholders who do not provide the Fund with a
correct taxpayer identification number or (except with respect to redemption
proceeds) who otherwise are subject to back-up withholding.

GENERAL INFORMATION

21
<PAGE> 99
matters affecting that class. Only shares of a particular Fund may vote on
matters affecting that Fund. All shares of the Trust vote on matters affecting
the Trust as a whole. Share voting rights are not cumulative, and shares have
no preemptive or conversion rights. Shares of the Trust are nontransferable.

<TABLE>
<S> <C>
American AAdvantage Balanced Fund
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
American AAdvantage Growth and Income Fund
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
American AAdvantage International Equity Fund
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
American AAdvantage Limited-Term Income Fund
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof %
Retirement Advisors of America, Inc. %

</TABLE>

SHAREHOLDER COMMUNICATIONS

Shareholders will receive periodic reports, including annual and
semi-annual reports which will include financial statements showing the results
of the Funds' operations and other information. The financial statements of the
Trust and the AMR Trust will be audited by Ernst & Young LLP, independent
auditor, at least annually. Shareholder inquiries and requests for information
regarding the other investment companies which also invest in the AMR Trust
should be made in writing to the Funds at P.O. Box 619003, MD 5645, Dallas/Fort
Worth Airport, Texas 75261-9003 or by calling (800) 967- 9009.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN SALES
LITERATURE SPECIFICALLY APPROVED BY OFFICERS OF THE TRUST FOR USE IN CONNECTION
WITH THE OFFER OF ANY AMR CLASS SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

22
<PAGE> 100

American AAdvantage Funds is a registered service mark of AMR Corporation. AMR
Class, PlanAhead Class, American AAdvantage Balanced Fund, American AAdvantage
Growth and Income Fund, American AAdvantage International Equity Fund, American
AAdvantage Limited-Term Income Fund, American AAdvantage Money Market Fund,
American AAdvantage Municipal Money Market Fund, American AAdvantage U.S.
Treasury Money Market Fund are service marks of AMR Investment Services, Inc.

23
<PAGE> 101
LOGO

- AMR Class - sm
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

- Institutional Class -
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

- PlanAhead Class -sm
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

PROSPECTUS

24
<PAGE> 102

THIS PROSPECTUS contains important information about the Platinum Class of the
AMERICAN AADVANTAGE FUNDS ("Trust"), an open-end management investment company
which consists of multiple investment portfolios. This Prospectus pertains only
to the three funds listed on this cover page (individually referred to as a
"Fund" and, collectively, the "Funds"). EACH FUND WILL SEEK ITS INVESTMENT
OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A CORRESPONDING
PORTFOLIO (INDIVIDUALLY REFERRED TO AS A "PORTFOLIO" AND, COLLECTIVELY,
"PORTFOLIOS") OF THE AMR INVESTMENT SERVICES TRUST ("AMR TRUST") WHICH HAS AN
INVESTMENT OBJECTIVE IDENTICAL TO THAT FUND. The investment experience of each
Fund will correspond directly with the investment experience of each Portfolio.
Each Fund consists of multiple classes of shares designed to meet the needs of
different groups of investors. Platinum Class shares are offered exclusively to
customers of certain broker-dealers. Individuals should read this Prospectus
carefully before making an investment decision and retain it for future
reference.

IN ADDITION TO THIS PROSPECTUS, a Statement of Additional Information ("SAI")
for the Platinum Class of the Trust dated March 1, 1996 has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
SAI contains more detailed information about the Funds. For a free copy of the
SAI, call (800) 967-9009. For further information on the Platinum Class or the
other classes of shares, please refer to the appropriate address and phone
number on the back cover of this Prospectus.

AN INVESTMENT IN ANY OF THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THEY WILL BE ABLE TO MAINTAIN A
STABLE PRICE OF $1.00 PER SHARE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

1 PROSPECTUS
<PAGE> 103
[LOGO]

MONEY MARKET FUND

MUNICIPAL MONEY MARKET FUND

U.S. TREASURY MONEY MARKET FUND

PROSPECTUS 2
<PAGE> 104

The AMERICAN AADVANTAGE MONEY MARKET FUND(SM) ("Money Market Fund"), AMERICAN
AADVANTAGE MUNICIPAL MONEY MARKET FUND(SM) ("Municipal Money Market Fund") and
AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND(SM) ("U.S. Treasury Money
Market Fund") each seeks current income, liquidity, and the maintenance of a
stable price per share of $1.00 by investing all of its investable assets in
the Money Market Portfolio of the AMR Trust ("Money Market Portfolio"), the
Municipal Money Market Portfolio of the AMR Trust ("Municipal Money Market
Portfolio") and the U.S. Treasury Money Market Portfolio of the AMR Trust
("U.S. Treasury Money Market Portfolio"), respectively (collectively, the
"Portfolios"), which in turn invest in high quality, short-term obligations.
The Municipal Money Market Portfolio invests primarily in municipal obligations
and the U.S. Treasury Money Market Portfolio invests exclusively in obligations
backed by the full faith and credit of the U.S. Government and in repurchase
agreements that are collateralized by U.S. Government full faith and credit
obligations.

Under a Hub and Spoke (1) operating structure, each Fund seeks its
investment objective by investing all of its investable assets in a
corresponding Portfolio as described above. Each Portfolio's investment
objective is identical to that of its corresponding Fund. Whenever the phrase
"all of the Fund's investable assets" is used, it means that the only
investment securities that will be held by a Fund will be that Fund's interest
in its corresponding Portfolio. AMR Investment Services, Inc. ("Manager")
provides investment management and administrative services to the Portfolios
and administrative services to the Funds. This Hub and Spoke operating
structure is different from that of many other investment companies which
directly acquire and manage their own portfolios of securities. Accordingly,
investors should carefully consider this investment approach. See "Investment
Objectives, Policies and Risks -- Additional Information About the Portfolios."
A Fund may withdraw its investment in a corresponding Portfolio at any time if
the Trust's Board of Trustees ("Board") determines that it would be in the best
interest of that Fund and its shareholders to do so. Upon any such withdrawal,
that Fund's assets would be invested in accordance with the investment policies
and restrictions described in this Prospectus and the SAI.

3 PROSPECTUS
<PAGE> 105
Table of Fees and Expenses . .
Financial Highlights . . . . .
Introduction . . . . . . . . .
Investment Objectives,

Policies and Risks . . . . .
Investment Restrictions . . . .
Yields and Total Returns . . .

Management and Administration of
the Trust . . . . . . . . . . .

How to Purchase Shares . . . .
How to Redeem Shares . . . . .
Valuation of Shares . . . . . .
Dividends and Tax Matters . . .
General Information . . . . . .

Shareholder Communications . .

- ---------------
(1) Hub and Spoke is a registered service mark of Signature Financial Group,
Inc.

<PAGE> 106
TABLE OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

<TABLE>
<CAPTION>
MUNICIPAL MONEY U.S. TREASURY
MONEY MARKET FUND MARKET FUND MONEY MARKET FUND
<S> <C> <C> <C>
Management Fees 0.15% 0.15% 0.15%
12b-1 Fees 0.25 0.25 0.25
Other Expenses 0.53 0.65 0.56
==== ==== ====
Total Operating Expenses 0.93% 1.05% 0.96%
===== ===== =====
</TABLE>

EXAMPLES

A Platinum Class investor in each Fund would directly or indirectly pay on
a cumulative basis the following expenses on a $1,000 investment assuming a 5%
annual return:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market Fund 9 30 51 114
Municipal Money Market Fund 11 33 58 128
U.S. Treasury Money Market Fund 10 31 53 118
</TABLE>

The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses expected to be incurred directly
or indirectly as a Platinum Class shareholder in a Fund. Additional information
may be found under "Management and Administration of the Trust."

5 PROSPECTUS
<PAGE> 107
FINANCIAL HIGHLIGHTS

The financial highlights in the following tables have been derived from
financial statements of the Trust. The information has been audited by Ernst &
Young LLP, independent auditor. Because the Platinum Class did not commence
active operations until November 1995, the financial highlights shown below
are those of the Institutional Class of the American AAdvantage Funds. Platinum
Class expenses are higher than Institutional Class expenses, and thus these
expenses may affect performance. Such information should be read in conjunction
with the financial statements and the report of the independent auditors
appearing in the Annual Report incorporated by reference in the SAI, which
contains further information about performance of the Funds and can be obtained
by investors without charge.

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MONEY MARKET FUND--INSTITUTIONAL CLASS
--------------------------------------

PERIOD
YEAR ENDED OCTOBER 31, ENDED
---------------------- OCTOBER 31,
1995 1994(2) 1993 1992 1991 1990 1989 1988 1987(1)
---- ------- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- -----
Net investment
income 0.06 0.04 0.03 0.04 0.07 0.08 0.09 0.08 0.01
Less dividends
from net
investment income (0.06) (0.04) (0.03) (0.04) (0.07) (0.08) (0.09) (0.08) (0.01)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== =====
Total return
(annualized) 5.96% 3.85% 3.31% 4.41% 7.18% 8.50% 9.45% 7.54% 6.70%
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratios/supplemental
data:
Net assets, end of
period
(in thousands) $1,206,04 $1,893,14 $2,882,94 $2,223,82 $715,28 $745,40 $385,91 $330,23 $71,660
Ratios to average net
assets (3)(4)(5):
Expenses 0.23% 0.21% 0.23% 0.26% 0.24% 0.20% 0.22% 0.28% 0.48%
Net investment income 5.79% 3.63% 3.23% 4.06% 6.93% 8.19% 9.11% 7.54% 6.78%
</TABLE>

(1) The Money Market Fund commenced active operations on September 1, 1987.
(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(3) The method ofdetermining average net assets was changed from a monthly
average to a daily average starting with the year ended October 31, 1992.
(4) Effective October 1, 1990, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to less than $.01 per share in each period on an
annualized basis.
(5) Annualized.

PROSPECTUS 6
<PAGE> 108
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET U.S. TREASURY MONEY MARKET FUND-
FUND-INSTITUTIONAL CLASS INSTITUTIONAL CLASS
------------------------ -------------------
PERIOD
PERIOD ENDED ENDED
------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, OCTOBER 31,
----------------------
1995 1994(1) 1995 1994(2) 1993 1992(1)
---- ------- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 (2) $1.00 $1.00
----- ----- ----- --------- ----- -----
Net investment income 0.04 0.02 0.06 0.04 0.03 0.02
Less dividends from
net investment income (0.04) (0.02) (0.06) (0.04 ) (0.03) (0.02)
------ ------ ------ ------- ------ ------
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total return
(annualized)(3) 3.75% 2.44% 5.67% 3.70 % 3.07% 3.61%
===== ===== ===== ====== ===== =====
Ratios/supplemental data:
Net assets, end of period
(in thousands) $7 $9,736 $47,184 $67,607 $136,813 $91,453
Ratios to average net
assets (4)(5)(6):
Expenses 0.35% 0.30% 0.32% 0.25 % 0.23% 0.27%(7)
Net investment income 3.70% 2.38% 5.49% 3.44 % 2.96% 3.46%(7)
</TABLE>

(1) The U.S. Treasury Money Market Fund commenced active operations on March 2,
1992 and the Municipal Money Market Fund commenced active operations on
November 10, 1993.
(2) Average shares outstanding for the period rather than
end of period shares were used to compute net investment income per share.
(3) Total return for the Municipal Money Market Fund excludes management and
administrative services fees waived by the Manager. Had the Fund paid such
fees total returns would have been 2.24% for the period ended October 31,
1994 and 3.54% for the year ended October 31, 1995.
(4) The method of determining average net assets was changed from a monthly
average to a daily average starting with the period ended October 31, 1994.
(5) Operating results for the Municipal Money Market Fund exclude management
and administrative services fees waived by the Manager. Had the Fund paid
such fees, the ratio of expenses and net investment income to average net
assets would have been 0.50% and 2.18%, respectively for the period ended
October 31, 1994 and 0.55% and 3.50%, respectively, for the year ended
October 31, 1995.
(6) Annualized.
(7) Estimated based on expected annual expenses and actual average net assets.

7 PROSPECTUS
<PAGE> 109
INTRODUCTION

The Trust is an open-end, management investment company organized as a
Massachusetts business trust on January 16, 1987. The Funds are three of the
several investment portfolios of the Trust. Each Fund each has a distinctive
investment objective and investment policies. Each Fund will invest all of its
investable assets in a corresponding Portfolio of the AMR Trust which has an
identical investment objective. Each Fund has multiple classes, including: the
"Platinum Class" for customers of certain broker-dealers; the "Institutional
Class" primarily for large institutional investors investing at least $2
million in the Funds; and the "PlanAhead Class" for all investors including
smaller institutional investors, investors using intermediary organizations
such as discount brokers or plan sponsors, individual retirement accounts and
self-employed individual retirement plans. This Prospectus relates only to the
Platinum Class. For further information about the other classes, call (800)
967-9009.

Although each class of shares is designed to meet the needs of different
categories of investors, all classes of each Fund share the same portfolio of
investments and share a common investment objective. See "Investment
Objectives, Policies and Risks." There is no guarantee that a Fund will achieve
its investment objective. Based on its value, a share of a Fund, regardless of
class, will receive a proportionate share of the investment income and the
gains (or losses) earned (or incurred) by the Fund. It also will bear its
proportionate share of expenses that are allocated to the Fund as a whole.
However, certain expenses presently are allocated separately to each class of
shares.

The Manager provides the Funds and their corresponding Portfolios with
investment advisory services. Investment decisions for the Portfolios are made
by the Manager in accordance with the investment objectives, policies and
restrictions described in this Prospectus and in the SAI.

Platinum Class shares are sold without any sales charges at the next share
price calculated after an investment is received and accepted. Shares will be
redeemed at the next share price calculated after receipt of a redemption
order. See "How to Purchase Shares" and "How to Redeem Shares."

INVESTMENT OBJECTIVES, POLICIES AND RISKS

The investment objectives and policies of each Fund and its corresponding
Portfolio are described below. Except as otherwise indicated, the investment
policies of any Fund may be changed at any time by the Board to the extent that
such changes are consistent with the investment objective of the applicable
Fund. However, each Fund's investment objective may not be changed without a
majority vote of that Fund's outstanding shares, which is defined as the lesser
of (a) 67% of the shares of the applicable Fund present or represented if the
holders of more than 50% of the shares are present or represented at the
shareholders' meeting, or (b) more than 50% of the shares of the applicable
Fund (hereinafter, "majority vote"). A Portfolio's investment objective may not
be changed without a majority vote of that Portfolio's interest holders.

INVESTMENT OBJECTIVES OF THE FUNDS -- The investment objectives of the Funds
are to seek current income, liquidity and the maintenance of a stable $1.00
price per share. The Funds seek to achieve these objectives by investing all of
their investable assets in their corresponding Portfolios, which invest in high
quality, U.S. dollar-denominated short-term obligations that have been
determined by the Manager or the AMR Trust Board to present minimal credit
risks. Portfolio investments are valued based on the amortized cost valuation
technique pursuant to Rule 2a-7 under the Investment Company Act of 1940 ("1940
Act"). See the SAI for an explanation of the amortized cost valuation method.
Obligations in which the Portfolios invest generally have remaining maturities
of

PROSPECTUS 8
<PAGE> 110

397 days or less, although instruments subject to repurchase agreements and
certain variable and floating rate obligations may bear longer final
maturities. The average dollar-weighted portfolio maturity of each Portfolio
will not exceed 90 days.

AMERICAN AADVANTAGE MONEY MARKET FUND -- The Fund's corresponding Portfolio may
invest in obligations permitted to be purchased under Rule 2a-7 of the 1940 Act
including, but not limited to, (1) obligations of the U.S. Government or its
agencies or instrumentalities; (2) loan participation interests, medium-term
notes, funding agreements and asset-backed securities; (3) domestic,
Yankeedollar and Eurodollar certificates of deposit, time deposits, bankers'
acceptances, commercial paper, bearer deposit notes and other promissory notes
including floating or variable rate obligations issued by U.S. or foreign bank
holding companies and their bank subsidiaries, branches and agencies; and (4)
repurchase agreements involving the obligations listed above. The Money Market
Portfolio will invest only in issuers or instruments that at the time of
purchase (1) have received the highest short-term rating by at least two
nationally recognized statistical rating organizations ("Rating Organizations")
such as "A-1" by Standard & Poor's and "P-1" by Moody's Investor Services,
Inc.; (2) are single rated and have received the highest short-term rating by a
Rating Organization; or (3) are unrated, but are determined to be of comparable
quality by the Manager pursuant to guidelines approved by the AMR Trust Board
and subject to the ratification of the AMR Trust Board. See the SAI for
definitions of the foregoing instruments and rating systems.

Variable amount master demand notes in which the Portfolio may invest are
unsecured demand notes that permit the indebtedness thereunder to vary, and
provide for periodic adjustments in the interest rate. Because master demand
notes are direct lending arrangements between the Portfolio and the issuer,
they are not normally traded. There is no secondary market for the notes;
however, the period of time remaining until payment of principal and accrued
interest can be recovered under a variable amount master demand note generally
shall not exceed seven days. To the extent this period is exceeded, the note in
question would be considered illiquid. Issuers of variable amount master demand
notes must satisfy the same criteria as set forth for other promissory notes
(e.g. commercial paper). The Portfolio will invest in variable amount master
demand notes only when such notes are determined by the Manager, pursuant to
guidelines established by the AMR Trust Board, to be of comparable quality to
rated issuers or instruments eligible for investment by the Portfolio. In
determining average dollar-weighted portfolio maturity, a variable amount
master demand note will be deemed to have a maturity equal to the longer of the
period of time remaining until the next readjustment of the interest rate or
the period of time remaining until the principal amount can be recovered from
the issuer on demand.

9 PROSPECTUS
<PAGE> 111

a when-issued security also involves the risk that the other party will be
unable to settle the transaction. Dollar rolls are a type of forward commitment
transaction. Purchases and sales of securities on a "forward commitment" basis
involve a commitment to purchase or sell securities with payment and delivery
to take place at some future date, normally one to two months after the date of
the transaction. As with when-issued securities, these transactions involve
certain risks, but they also enable an investor to hedge against anticipated
changes in interest rates and prices. Forward commitment transactions are
executed for existing obligations, whereas in a when-issued transaction, the
obligations have not yet been issued. When purchasing securities on a
when-issued or forward commitment basis, a segregated account of liquid assets
at least equal to the value of purchase commitments for such securities will be
maintained until the settlement date.

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND -- The Fund's corresponding
Portfolio may invest in municipal obligations issued by or on behalf of the
governments of states, territories, or possessions of the United States; the
District of Columbia; and their political subdivisions, agencies and
instrumentalities if the interest these obligations provide is generally exempt
from federal income tax. The Municipal Money Market Portfolio will invest only
in issuers or instruments that at the time of purchase (1) are guaranteed by
the U.S. Government, its agencies, or instrumentalities; (2) are secured by
letters of credit that are irrevocable and issued by banks which qualify as
authorized issuers for the Money Market Portfolio (see "American AAdvantage
Money Market Fund"); (3) are guaranteed by one or more municipal bond insurance
policies that cannot be canceled and issued by third-party guarantors
possessing the highest claims- paying rating from a Rating Organization; (4)
have received one of the two highest short-term ratings from at least two
Rating Organizations; (5) are single rated and have received one of the two
highest short-term ratings from that Rating Organization; (6) have no
short-term rating but the instrument is comparable to the issuer's rated
short-term debt; (7) have no short-term rating (or comparable rating) but have
received one of the top two long-term ratings from all Rating Organizations
rating the issuer or instrument; or (8) are unrated, but are determined to be
of comparable quality by the Manager pursuant to guidelines approved by, and
subject to the oversight of, the AMR Trust Board. The Portfolio may also invest
in other investment companies. Ordinarily at least 80% of the Portfolio's net
assets will be invested in municipal obligations the interest from which is
exempt from federal income tax. However, should market conditions warrant, the
Portfolio may invest up to 20% (or for temporary defensive purposes, up to
100%) of its assets in obligations subject to federal income tax which are
eligible investments for the Money Market Portfolio.

Municipal obligations may be backed by the full taxing power of a
municipality ("general obligations"), or by the revenues from a specific
project or the credit of a private organization ("revenue obligations"). Some
municipal obligations are collateralized as to payment of principal and
interest by an escrow of U.S. Government or federal agency obligations, while
others are insured by private insurance companies, while still others may be
supported by letters of credit furnished by domestic or foreign banks. The
Portfolio's investments in municipal obligations may include fixed, variable,
or floating rate general obligations and revenue obligations (including
municipal lease obligations and resource recovery obligations); zero coupon and
asset-backed obligations; variable rate auction and residual interest
obligations; tax, revenue, or bond anticipation notes; and tax-exempt
commercial paper; and purchase obligations that are subject to restrictions on
resale. See the SAI for a further discussion of the foregoing obligations. In
addition, the Portfolio may purchase or sell securities on a "when-issued" and
on a "forward commitment" basis as described in "American AAdvantage Money
Market Fund."

PROSPECTUS 10
<PAGE> 112

to greater risk compared to a fund that does not follow this practice. However,
this risk is mitigated because it is anticipated that most of the Portfolio's
assets will be insured or backed by bank letters of credit. Additionally, the
Portfolio may invest more than 25% of the value of its total assets in
industrial development bonds which, although issued by industrial development
authorities, may be backed only by the assets and revenues of the
non-governmental users.

AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND -- The Fund's corresponding
Portfolio will invest exclusively in obligations backed by the full faith and
credit of the U.S. Government and repurchase agreements which are
collateralized by U.S. Government full faith and credit obligations.
Counterparties for repurchase agreements must be approved by the AMR Trust
Board. For this purpose, U.S. Government Agency mortgage-backed securities
collateralized exclusively by full faith and credit Government National
Mortgage Association ("GNMA") mortgages are considered eligible. Ordinarily at
least 65% of the Portfolio's assets will be invested in direct U.S. Treasury
obligations. Such obligations may include separately traded registered interest
and principal securities ("STRIPS") issued by the U.S. Treasury which
represent either future interest or principal payments. STRIPS are issued at a
discount to their "face value", and may exhibit greater price volatility that
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. The Fund may also invest in other full
faith and credit obligations of the U.S. Government including securities issued
by the Agency for International Development, General Services Administration,
GNMA, Rural Electrification Administration, Small Business Administration,
Federal Financing Bank and others. See the SAI for a further discussion of the
foregoing obligations. In addition, the Portfolio may purchase or sell
securities on a "when-issued" and on a "forward commitment" basis as described
in "American AAdvantage Money Market Fund.

Each Portfolio may lend securities to broker-dealers or other institutional
investors pursuant to agreements requiring that the loans be continuously
secured by any combination of cash, securities of the U.S. Government and its
agencies and instrumentalities and approved bank letters of credit that at all
times equal at least 100% of the market value of the loaned securities. Such
loans will not be made if, as a result, the aggregate amount of all outstanding
securities loans by any Portfolio would exceed 33 1/3% of its total assets. A
Portfolio continues to receive interest on the securities loaned and
simultaneously earns either interest on the investment of the cash collateral
or fee income if the loan is otherwise collateralized. However, a Portfolio
normally pays (including, in some cases, payments to the Manager) lending fees
and related expenses from this interest or fee income. Should the borrower of
the securities fail financially, there is a risk of delay in recovery of the
securities loaned or loss of rights in the collateral. However, the Portfolios
seek to minimize this risk by making loans only to borrowers which are deemed
by the Manager to be of good financial standing and which have been approved by
the AMR Trust Board. For purposes of complying with each Portfolio's investment
policies and restrictions, collateral received in connection with securities
loans will be deemed an asset of a Portfolio to the extent required by law. See
the SAI for further information regarding loan transactions.

11 PROSPECTUS
<PAGE> 113

A repurchase agreement is an agreement under which securities are acquired
by a Portfolio from a securities dealer or bank subject to resale at an agreed
upon price on a later date. The acquiring Portfolio bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed or prevented from exercising its
rights to dispose of the collateral securities. However, the Manager attempt to
minimize this risk by entering into repurchase agreements only with financial
institutions which are deemed to be of good financial standing and which have
been approved by the AMR Trust Board. See the SAI for more information
regarding repurchase agreements.

Investments in private placement offerings are made in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933 (the "Securities Act"), and resold to qualified
institutional buyers under Rule 144A of the Securities Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolios, that agree they are purchasing the paper for investment and not
with an intention to distribute to the public. Any resale by the purchaser must
be pursuant to an exempt transaction and may be accomplished in accordance with
Rule 144A. Section 4(2) paper normally is resold to other institutional
investors such as the Portfolios through or with the assistance of the issuer
or dealers that make a market in the Section 4(2) paper, thus providing
liquidity. The Portfolios will not invest more than 10% of their respective net
assets in Section 4(2) paper and illiquid securities unless the Manager
determines, by continuous reference to the appropriate trading markets and
pursuant to guidelines approved by the AMR Trust Board, that any Section 4(2)
paper held by such Portfolio in excess of this level is at all times liquid.

Because it is not possible to predict with assurance exactly how this
market for Section 4(2) paper offered and sold under Rule 144A will develop,
the AMR Trust Board and the Manager, pursuant to the guidelines approved by the
AMR Trust Board, will carefully monitor the Portfolios' investments in these
securities, focusing on such important factors, among others, as: valuation,
liquidity, and availability of information. Investments in Section 4(2) paper
could have the effect of reducing a Portfolio's liquidity to the extent that
qualified institutional buyers no longer wish to purchase these restricted
securities.

BROKERAGE PRACTICES -- The Portfolios normally will not incur any brokerage
commissions on their transactions because money market instruments are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission. The price of the obligation, however,
usually includes a profit to the dealer. Obligations purchased in underwritten
offerings include a fixed amount of compensation to the underwriter, generally
referred to as the underwriter's concession or discount. No commissions or
discounts are paid when securities are purchased directly from an issuer.

PROSPECTUS 12
<PAGE> 114

INVESTMENT RESTRICTIONS

- Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the U.S.
Government, its agencies and instrumentalities, or purchase more than
10% of the voting securities of any one issuer, with respect to 75% of a
Portfolio's total assets. In addition, although not a fundamental
investment restriction and therefore subject to change without
shareholder vote, the Money Market Portfolio and the U.S. Treasury Money
Market Portfolio apply this restriction with respect to 100% of their
assets.

- Invest more than 25% of its total assets in the securities of
companies primarily engaged in any one industry other than the U.S.
Government, its agencies and instrumentalities or, with respect to the
Money Market Portfolio, the banking industry. Municipal governments and
their agencies and authorities are not deemed to be industries. Finance
companies as a group are not considered a single industry for purposes
of this policy.

13 PROSPECTUS
<PAGE> 115
The following non-fundamental investment restrictions may be changed with
respect to a particular Fund by a vote of a majority of the Board or with
respect to a Portfolio by a vote of a majority of the AMR Trust Board. No
Portfolio may:

- Invest in securities of an issuer that, together with any
predecessor, has been in operation for less than three years if more
than 5% of the Portfolio's total assets would be invested in such
securities. This limitation does not apply with regard to collateralized
trust securities.

- Invest more than 10% of its net assets in illiquid securities,
including time deposits and repurchase agreements that mature in more
than seven days.

YIELDS AND TOTAL RETURNS

From time to time each class of the Funds may advertise their "current yield"
and "effective yield." Both yield figures are based on historical earnings and
are not intended to indicate future performance. The current yield refers to
the income generated by an investment over a seven calendar-day period (which
period will be stated in the advertisement). This income is then annualized by
assuming the amount of income generated by the investment during that week is
earned each week over a one-year period, and is shown as a percentage of the
investment. The effective yield is calculated similarly but, when annualized,
the income earned by the investment is assumed to be reinvested. The effective
yield will be slightly higher than the current yield because of the compounding
effect of this assumed reinvestment. The Municipal Money Market Fund may also
quote "tax equivalent yields," which show the taxable yields a shareholder
would have to earn before federal income taxes to equal this Fund's tax-exempt
yields. The tax equivalent yield is calculated by dividing the Fund's
tax-exempt yield by the result of one minus a stated federal income tax rate.
If only a portion of the Fund's income was tax-exempt, only that portion is
adjusted in the calculation. As stated earlier, the Fund considers interest on
private activity obligations to be exempt from federal income tax. Total return
quotations advertised by the Funds may reflect the average annual compounded
(or aggregate compounded) rate of return during the designated time period
based on a hypothetical initial investment and the redeemable value of that
investment at the end of the period. The Funds will at times compare their
performance to applicable published indices, and may also disclose their
performance as ranked by certain ranking entities. Each class of a Fund has
different expenses which will impact its performance. See the SAI for more
information about the calculation of yields and total returns.

MANAGEMENT AND ADMINISTRATION OF THE TRUST

PROSPECTUS 14
<PAGE> 116
The Manager provides the Trusts with office space, office equipment and
personnel necessary to manage and administer the Trusts' operations. This
includes complying with reporting requirements; corresponding with
shareholders; maintaining internal bookkeeping, accounting and auditing
services and records; and supervising the provision of services to the Trusts
by third parties. The Manager also develops the investment programs for each
Portfolio.

The Manager bears the expense of providing the above seervices. As
compensation for providing the Portfolios with advisory services, the Manager
receives from the AMR Trust an annualized advisory fee that is calculated and
accrued daily, equal to 0.15% of the net assets of the Portfolios. To the
extent that a Fund invests all of its investable assets in its corresponding
Portfolio, the Manager receives no advisory fee from the Trust. The fees
received by the Manager from the AMR Trust ("Management Fees") are payable
quarterly in arrears.

ADMINISTRATIVE SERVICES PLAN -- The Manager and the Trust entered into an
Administrative Services Plan which obligates the Manager to provide the
Platinum Class with administrative services either directly or through the
various broker- dealers that offer Platinum Class shares. These services
include, but not limited to, the payment of fees for record maintenance,
forwarding shareholder communications to the shareholders and aggregating and
processing orders for the purchase and redemption of Platinum Class shares. As
compensation for these services, the Manager receives an annualized fee of up
to 0.50% of the net assets of the Platinum Class of the Funds. The fee is
payable quarterly in arrears.

DISTRIBUTION PLAN -- The Platinum Class distribution plan (the "Plan") was
adopted pursuant to Rule 12b-1 under the 1940 Act and provides that it will
continue in effect so long as its continuance is approved at least annually by
a majority of the Trustees, including the affirmative votes of a majority of
the Independent Trustees of the Board, cast in person at a meeting called for
the purpose of considering such approval, or by the vote of shareholders of the
Platinum Class. The Plan may be terminated with respect to a particular
Platinum Class at any time, without the payment of any penalty, by a vote of a
majority of the Independent Trustees of the Board or by a vote of a majority of
the outstanding voting securities of that class.

The Plan provides that each Platinum Class will pay 0.25% per annum of its
average daily net assets to the Manager (or another entity approved by the
Board) for distribution-related services. The fee will be payable quarterly in
arrears without regard to whether the amount of the fee is more or less than
the actual expenses incurred in a particular quarter by the entity for the
services provided pursuant to the Plan. The Plan authorizes AMR, or any other
entity approved by the Board, to spend 12b-1 fees on any activities or expenses
intended to result in the sale or servicing of Platinum Class shares including

15 PROSPECTUS
<PAGE> 117

but not limited to, advertising, expenses of various broker-dealers relating to
selling efforts, transfer agency fees and the preparation and distribution of
advertising material and sales literature.

PRINCIPAL UNDERWRITER -- BROKERS TRANSACTION SERVICES, INC. ("BTS"), 7001
Preston Road, Dallas, Texas, 75205 serves as the principal underwriter of the
Trust.

CUSTODIAN AND TRANSFER AGENT -- NATIONSBANK OF TEXAS, N.A., Dallas, Texas,
serves as custodian for the Portfolios and the Funds and as transfer agent for
the Platinum Class.

INDEPENDENT AUDITOR -- The independent auditor for the Trust and the AMR Trust
is ERNST & YOUNG LLP, Dallas, Texas.

HOW TO PURCHASE SHARES

Platinum Class shares are sold at net asset value through selected financial
services firms ("firms"). The Platinum Class has established a minimum initial
investment of $1,000 and $100 for subsequent investments, but these minimums
may be changed at any time at the Trust's discretion.

Orders for purchase of Platinum Class shares received by wire transfer in
the form of federal funds will be effected at the next determined net asset
value. Shares are offered and orders are accepted for the Money Market Fund
until 3:00 p.m. Eastern time on each day on which the Federal Reserve and the
custodian/transfer agent are open for business ("Business Day"). Shares are
offered and orders are accepted for the U.S. Treasury Money Market Fund until
12:30 p.m. Eastern time and for the Municipal Money Market Fund until 12:00
p.m. Eastern time on each Business Day. These purchases will receive that day's
dividend. Orders for purchase accompanied by a check or other negotiable bank
draft will be accepted and effected as of 3:00 p.m. Eastern time on the next
Business Day following receipt and such shares will receive the dividend for
the Business Day following the day the purchase is effected. If an order is
accompanied by a check drawn on a foreign bank, funds must normally be
collected from such check before shares will be purchased. The Trust reserves
the right to reject any order for the purchase of shares and to limit or
suspend, without prior notice, the offering of shares.

Firms provide varying arrangements for their clients with respect to the
purchase and redemption of Platinum Class shares and the confirmation thereof
and may arrange with their clients for other investment or administrative
services. Such firms are responsible for the prompt transmission of purchase
and redemption orders. Some firms may establish higher or lower minimum
investment requirements than set forth above. Such firms may independently
establish and charge additional amounts to their clients for their services,
which charges would reduce their clients' yield or return. Firms also may hold
Platinum Class shares in nominee or street name as agent for and on behalf of
their clients. In such instances, the transfer agent will have no information
with respect to or control over the accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information about their
accounts only from their firm. Certain of these firms may receive compensation
from the Manager for recordkeeping and other expenses relating to these nominee
accounts. In addition, certain privileges with respect to the purchase and
redemption of shares (such as check writing) may not be available through such
firms or may only be available subject to certain conditions or limitations.
Some firms may participate in a program allowing them access to their clients'
accounts for servicing, including, without limitation, transfers of
registration and dividend payee changes, and may perform functions such as
generation of confirmation statements and disbursements of cash dividends.

HOW TO REDEEM SHARES

PROSPECTUS 16
<PAGE> 118

Shareholders should contact the firm through which their shares were purchased
for redemption instructions. Shares of a Fund may be redeemed by telephone, by
writing a check, by pre-authorized automatic redemption or by mail on any
Business Day. Shares will be redeemed at the net asset value next calculated
after the applicable Fund has received and accepted the redemption request.
Proceeds from a redemption of shares purchased by check or pre-authorized
automatic purchase may be withheld until the funds have cleared, which may take
up to 15 days. Although the Funds intend to redeem shares in cash, each Fund
reserves the right to pay the redemption price in whole or in part by a
distribution of readily marketable securities held by the applicable Fund's
corresponding Portfolio. See the SAI for further information concerning
redemptions in kind.

Firms may charge a fee for wire redemptions to cover transaction costs.
Redemption proceeds will generally be sent within one Business Day, as
applicable. However, if making immediate payment could adversely affect a Fund,
it may take up to seven days to send payment.

To ensure acceptance of a redemption request, be sure to adhere to the
following procedures.

REDEEMING BY CHECK -- Upon request, shareholders will be provided with drafts
to be drawn on a Fund ("Redemption Checks"). Redemption Checks may be made
payable to the order of any person for an amount not less than $250 and not
more than $5 million. When a Redemption Check is presented for payment, a
sufficient number of full and fractional shares in the shareholder's account
will be redeemed at the next determined net asset value to cover the amount of
the Redemption Check. This will enable the shareholder to continue earning
dividends until the Fund receives the Redemption Check. A shareholder wishing
to use this method of redemption must complete and file an account application
which is available from the Funds or firm through which shares were purchased.
Redemption Checks should not be used to close an account since the account
normally includes accrued but unpaid dividends. The Funds reserve the right to
terminate or modify this privilege at any time. This privilege may not be
available through some firms that distribute shares of the Funds. In addition,
firms may impose minimum balance requirements in order to obtain this feature.
Firms also may impose fees on investors for this privilege or, if approved by
the Funds, establish variations on minimum check amounts.

Unless one signer is authorized on the account application, Redemption
Checks must be signed by all shareholders. Any change in the signature
authorization must be made by written notice to the firm. Shares purchased by
check or through an Automated Clearing House ("ACH") transaction may not be
redeemed by Redemption Check until the shares have been on the Fund's books for
at least 15 days. The Funds reserve the right to terminate or modify this
privilege at any time.

The Funds may refuse to honor Redemption Checks whenever the right of
redemption has been suspended or postponed, or whenever the account is
otherwise impaired. A $15 service fee will be charged when a Redemption Check
is presented to redeem Fund shares in excess of the value of that Fund account
or for an amount less than $250 or when a Redemption Check is presented that
would require redemption of shares that were purchased by check or ACH
transaction within 15 days. A fee of $12 will be charged when "stop payment"
of a Redemption Check is requested. Firms may charge different service fees.

PRE-AUTHORIZED AUTOMATIC REDEMPTIONS -- Shareholders purchasing through some
firms can arrange to have a pre-authorized amount ($100 or more) redeemed from
their shareholder account and automatically deposited into a bank account on
one or more specified day(s) of each month. For more information regarding
pre-authorized automatic redemptions, contact your firm.

FULL REDEMPTIONS -- Unpaid dividends credited to an account up to the date of
redemption of all shares of a Fund generally will be paid at the time of
redemption.

VALUATION OF SHARES

The net asset value of each share (share price) of the Funds is determined
as of 4:00 p.m. Eastern time on each Business Day. The net asset value of all
outstanding shares of all classes will be determined based on a pro rata

17 PROSPECTUS
<PAGE> 119

allocation of the Fund's corresponding Portfolio's investment income, expenses
and total capital gains and losses. The allocation will be based on
comparative net asset value at the beginning of the day except for expenses
related solely to one class of shares ("Class Expenses") which will be borne
only by the appropriate class of shares. Because of Class Expenses, the net
income attributable to and the dividends payable may be different for each
class of shares.

Obligations held by the Portfolios are valued in accordance with the
amortized cost method, which is designed to enable those Portfolios and their
corresponding Funds to maintain a consistent $1.00 per share net asset value.
The amortized cost method is described in the SAI.

DIVIDENDS AND TAX MATTERS

Dividends paid on each class of a Fund's shares are calculated at the same time
and in the same manner. All of each Fund's net investment income and net
short-term capital gain, if any, generally will be declared as dividends on
each Business Day immediately prior to the determination of the net asset
value. Dividends generally are paid on the first Business Day of the following
month. A Fund's net investment income attributable to the Platinum Class
consists of that class' pro rata share of the Fund's share of interest accrued
and discount earned on its corresponding Portfolio's securities, less
amortization of premium, and the estimated expenses of both the Portfolio and
the Fund attributable to the Platinum Class. The Portfolios do not expect to
realize net capital gain, therefore the Funds do not foresee paying any capital
gain distributions. If any Fund (either directly or indirectly through its
corresponding Portfolio) incurred or anticipated any unusual expenses, loss or
depreciation that would adversely affect its net asset value or income for a
particular period, the Board would at that time consider whether to adhere to
the dividend policy described above or to revise it in the light of the then
prevailing circumstances.

Unless a shareholder elects otherwise on the account application, all
dividends on a Fund's Platinum Class shares will be automatically declared and
paid in additional Platinum Class shares of that Fund. However, a shareholder
may choose to have dividends paid in cash. An election may be changed at any
time by delivering written notice to your firm at least ten days prior to the
payment date for a dividend.

Each Fund is treated as a separate corporation for federal income tax
purposes and intends to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended. In each
taxable year that a Fund so qualifies, the Fund (but not its shareholders) will
be relieved of federal income tax on that part of its investment company
taxable income (generally, taxable net investment income plus any net
short-term capital gain) that it distributed to its shareholders. However, a
Fund will be subject to a nondeductible 4% excise tax to the extent that it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts. For these
and other purposes, dividend declared by a Fund in December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 of that year if they are paid by the Fund during the following
January. Each Portfolio has received a ruling from the Internal Revenue
Service that it is classified for federal income tax purposes as a partnership;
accordingly, no Portfolio is subject to federal income tax.

Dividends from a Fund's investment company taxable income will be taxable
to its shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether received in cash or paid in additional Platinum Class shares.
Distributions by the Municipal Money Market Fund that it designates as
"exempt-interest dividends" generally may be excluded from gross income by its
shareholders. If the Municipal Money Market Portfolio earns taxable income from
any of its investments, the Municipal Money Market Fund's share of that income
will be distributed to its shareholders as a taxable dividend. To the extent
that Portfolio invests in certain private activity obligations, that Fund's
shareholders will be required to treat a portion of its dividends as a "tax
preference item" in determining their liability for the AMT. Exempt-interest
dividends also may be subject to tax under state and local tax laws. Because
some states exempt from tax the interest on their own obligations and
obligations of governmental agencies of and municipalities in the state,
shareholders will receive tax information each year regarding the Municipal
Money Market Fund's exempt-interest income by state. Interest on indebtedness
incurred or continued by a shareholder to purchase or carry shares of that Fund
is not deductible.

PROSPECTUS 18
<PAGE> 120
Each Fund notifies its shareholders following the end of each calendar year
of the amounts of dividends paid (or deemed paid) that year. The notice sent by
the Municipal Money Market Fund specifies the amounts of exempt-interest
dividends (and the portion thereof, if any, that is a tax preference item for
purposes of the AMT) and any taxable dividends. Each Fund is required to
withhold 31% of all taxable dividends payable to any individuals and certain
other non-corporate shareholders who do not provide the Fund with a correct
taxpayer identification number or who otherwise are subject to back-up
withholding.

GENERAL INFORMATION

On most issues subjected to a vote of a Portfolio's interest holders, as
required by the 1940 Act, its corresponding Fund will solicit proxies from its
shareholders and will vote its interest in the Portfolio in proportion to the
votes cast by the Fund's shareholders. Because a Portfolio interest holder's
votes are proportionate to its percentage interests in that Portfolio, one or
more other Portfolio investors could, in certain instances, approve an action
against which a majority of the outstanding voting securities of its
corresponding Fund had voted. This could result in that Fund's redeeming its
investment in its corresponding Portfolio, which could result in increased
expenses for that Fund. Whenever the shareholders of a Fund are called to vote
on matters related to its corresponding Portfolio, the Board shall vote shares
for which they receive no voting instructions in the same proportion as the
shares for which they do receive voting instructions. Any information received
from a Portfolio in the Portfolio's report to shareholders will be provided to
the shareholders of its corresponding Fund.

As more fully described in the SAI, the following persons may be deemed to
control a Fund by virtue of their ownership of more than 25% of the outstanding
shares of the Fund as of December 31, 1995:

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND

SHAREHOLDER COMMUNICATIONS

Shareholders will receive periodic reports, including annual and semi-annual
reports which will include financial statements showing the results of the
Funds' operations and other information. The financial statements of the Trust
and the AMR Trust will be audited by Ernst & Young LLP, independent auditors,
at least annually. Shareholder inquiries and requests for information regarding
the other investment companies which also invest in the AMR Trust should be
made by contacting your firm or by calling (800) 967-9009 or by writing to the
Funds at P.O. Box 619003, MD 5645, Dallas/Fort Worth Airport, Texas 75261-9003.

19 PROSPECTUS
<PAGE> 121
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN SALES
LITERATURE SPECIFICALLY APPROVED BY OFFICERS OF THE TRUST FOR USE IN CONNECTION
WITH THE OFFER OF ANY FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFERING MAY NOT LAWFULLY
BE MADE.

American AAdvantage Funds is a registered service mark of AMR Corporation.
Platinum Class, PlanAhead Class, American AAdvantage Money Market Fund,
American AAdvantage Municipal Money Market Fund and American AAdvantage U.S.
Treasury Money Market Fund are service marks of AMR Investment Services, Inc.

PROSPECTUS 20
<PAGE> 122
[LOGO]

--Platinum Class(sm)--
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

--Institutional Class--
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(800) 967-9009

--PlanAhead Class(sm)--
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

21 PROSPECTUS
<PAGE> 123
STATEMENT OF ADDITIONAL INFORMATION

AMERICAN AADVANTAGE FUNDS(R)

AMR CLASS(SM)
INSTITUTIONAL CLASS
PLANAHEAD CLASS(SM)

MARCH 1, 1996

The American AAdvantage Balanced Fund(sm) (the "Balanced Fund"), American
AAdvantage Growth and Income Fund(sm), formerly the American AAdvantage Equity
Fund (the "Growth and Income Fund"), American AAdvantage International Equity
Fund(sm) (the "International Equity Fund"), American AAdvantage Limited-Term
Income Fund(sm), formerly the American AAdvantage Fixed Income Fund (the
"Limited-Term Income Fund"), American AAdvantage Money Market Fund(sm) (the
"Money Market Fund"), American AAdvantage Municipal Money Market Fund(sm) (the
"Municipal Money Market Fund") and American AAdvantage U.S. Treasury Money
Market Fund(sm) (the "U.S. Treasury Money Market Fund"), (individually, a
"Fund" and collectively, the "Funds") are seven separate investment portfolios
of the American AAdvantage Funds (the "Trust") a no- load, open-end,
diversified management investment company. Each Fund constitutes a separate
investment portfolio with a distinct investment objective, and distinct purpose
and strategy. Each Fund consists of multiple classes of shares designed to
meet the needs of different groups of investors. This Statement of Additional
Information relates to the AMR, Institutional and PlanAhead Classes of the
Trust.

Each Fund will seek its investment objective by investing all of its
investable assets in a corresponding portfolio (individually, a "Portfolio"
and, collectively, the "Portfolios") of the AMR Investment Services Trust ("AMR
Trust") that has a similar name and an identical investment objective to the
investing Fund.

This Statement of Additional Information should be read in conjunction
with an AMR Class, Institutional Class or PlanAhead Class prospectus dated
March 1, 1996, (individually, a "Prospectus"), copies of which may be obtained
without charge by calling (800) 423-7526 for a PlanAhead Class Prospectus or
(817) 967-3509 for an Institutional or AMR Class Prospectus.

This Statement of Additional Information is not a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by a current Prospectus.

INVESTMENT RESTRICTIONS

Each Fund has the following fundamental investment policy that enables it
to invest in a corresponding Portfolio of the AMR Trust:

Notwithstanding any other limitation, the Fund may invest all of
its investable assets in an open-end management investment company
with substantially the same investment objectives, policies and
limitations as the Fund. For this purpose, "all of the Fund's
investable assets" means that the only investment securities that
will be held by the Fund will be the Fund's interest in the
investment company.

All other fundamental investment policies and the non-fundamental
policies of each Fund and its corresponding Portfolio are identical.
Therefore, although the following discusses the investment policies of each
Portfolio and the AMR Trust's Board of Trustees ("AMR Trust Board"), it applies
equally to each Fund and the Trust's Board of Trustees ("Board").

In addition to the investment limitations noted in the Prospectus, the
following seven restrictions have been adopted by each Portfolio and may be
changed with respect to any Portfolio only by the majority vote of that
Portfolio's outstanding interests, which as used herein means the lesser of (a)
67% of the interests of the Portfolio present at the meeting if the holders of
more than 50% of the interests are present and represented at the interest
holders' meeting or (b) more than 50% of the interests of the Portfolio.
Whenever a Fund is

1
<PAGE> 124
requested to vote on a change in the investment restrictions of its
corresponding Portfolio, that Fund will hold a meeting of its shareholders and
will cast its votes as instructed by its shareholders.

No Portfolio may:

1. Purchase or sell real estate or real estate limited partnership
interests, provided, however, that the Portfolio may invest in securities
secured by real estate or interests therein or issued by companies which
invest in real estate or interests therein when consistent with the other
policies and limitations described in the Prospectus.

2. Purchase or sell commodities (including direct interests and/or
leases in oil, gas or minerals) or commodities contracts, except with
respect to forward foreign currency exchange contracts, foreign currency
futures contracts and "when-issued" securities when consistent with the
other policies and limitations described in the Prospectus.

3. Engage in the business of underwriting securities issued by others,
except to the extent that, in connection with the disposition of
securities, the Portfolio may be deemed an underwriter under federal
securities law.

4. Make loans to any person or firm, provided, however, that the
making of a loan shall not be construed to include (i) the acquisition
for investment of bonds, debentures, notes or other evidences of
indebtedness of any corporation or government which are publicly
distributed or (ii) the entry into repurchase agreements and further
provided, however, that each Portfolio may lend its portfolio securities
to broker-dealers or other institutional investors in accordance with the
guidelines stated in the Prospectus.

5. Purchase from or sell portfolio securities to its officers,
Trustees or other "interested persons" of the Trust, as defined in the
Investment Company Act of 1940 ("1940 Act"), including its investment
advisers and their affiliates, except as permitted by the 1940 Act and
exemptive rules or orders thereunder.

6. Issue senior securities except that the Portfolio may engage in
when-issued securities and forward commitment transactions and the
International Equity Portfolio may engage in currency futures and forward
currency contracts.

7. Borrow money, except from banks or through reverse repurchase
agreements for temporary purposes in an aggregate amount not to exceed
10% of the value of its total assets at the time of borrowing. In
addition, although not a fundamental policy, the Portfolios intend to
repay any money borrowed before any additional portfolio securities are
purchased. See "Other Information" for a further description regarding
reverse repurchase agreements.

The corresponding Portfolio of the Money Market Fund (the "Money Market
Portfolio"), as a fundamental policy, is restricted from purchasing the
securities of other investment companies except in connection with a merger,
consolidation, acquisition of assets or other reorganization approved by the
Portfolio's interest holders.

The following non-fundamental investment restrictions apply to each
Portfolio and may be changed with respect to a Portfolio by a majority vote of
the AMR Trust Board. No Portfolio may:

1. Purchase securities on margin, effect short sales (except that the
Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities) or purchase or sell call
options or engage in the writing of such options.

2. Purchase or retain the securities of an issuer if, to the AMR
Trust's knowledge, one or more of the trustees or officers of the AMR
Trust, or the investment adviser responsible for the investment of the
AMR Trust's assets or its directors or officers, individually own
beneficially more than 1/2 of 1% of the securities of such issuer and
together own beneficially more than 5% of such securities.

All Portfolios, other than the Money Market Portfolio, may invest up
to 10% of their total assets in the securities of other investment companies to
the extent permitted by law. A Portfolio may incur duplicate advisory or
management fees when investing in another mutual fund.

2
<PAGE> 125
In addition, no Portfolio may invest in warrants, except as permitted by
its investment policies as described in the Prospectus, provided that no such
Portfolio shall invest more than 5% of its net assets, valued at the lower of
cost or market, in warrants or more than 2% of its net assets in warrants which
are not listed on the New York or American Stock Exchanges.

TRUSTEES AND OFFICERS

The Board provides broad supervision over the Trust's affairs. AMR
Investment Services, Inc. (the "Manager") is responsible for the management of
Trust assets, and the Trust's officers are responsible for the Trust's
operations. 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 4333
Amon Carter Boulevard, MD 5645, Fort Worth, Texas 76155.

<TABLE>
<CAPTION>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------- ----------------------------------------
<S> <C> <C>
William F. Quinn* (48) Trustee and President, AMR Investment Services, Inc. (November 1986-
President Present); Chairman, American Airlines Employees Federal
Credit Union (October 1989-Present); Trustee, American
Performance Funds (September 1990-July 1994); Director,
Crescent Real Estate Equities, Inc. (April 1994 - Present);
Trustee, American AAdvantage Mileage Funds (1995 -
Present).

David G. Fox (72) Trustee Director, Capstead Mortgage Company (1985-1994); Director,
5949 Sherry Lane Southwestern Medical Foundation (1984-Present); Trustee,
Suite 1220, LB 125 Shelter Ministries of Dallas (1993-Present); Member, Dallas
Dallas, Texas 75225-6521 Citizens Council (1967- Present); President, Dallas County
Historical Foundation (1987-1993); Chairman of the Board,
Sensible Metropolitan Area Rapid Transit (1987-1994);
Chairman of the Board, State Fair of Texas (April 1988-
April 1993); Owner, David G. Fox Investments (1985-
Present); Trustee, American AAdvantage Mileage Funds (1995
- Present).

John S. Justin (79) Trustee Chairman and Chief Executive Officer, Justin Industries,
2821 West Seventh Street Inc. (a diversified holding company) (1969-Present);
Fort Worth, Texas 76107 Executive Board Member, Blue Cross/Blue Shield of Texas
(1985-Present); Board Member, Zale Lipshy Hospital (June
1993-Present); Trustee, Texas Christian University (1980-
Present); Director and Executive Board Member, Moncrief
Radiation Center (1985-Present); Director, Texas New Mexico
Enterprises (1984-1993); Director, Texas New Mexico Power
Company (1979-1993); Trustee, American AAdvantage Mileage
Funds (1995 - Present).

Stephen D. O'Sullivan* (60) Trustee Consultant (July 1994-Present); Vice President and
Controller (April 1985-June 1994), American Airlines, Inc.;
Trustee, American AAdvantage Mileage Funds (1995 -
Present).
</TABLE>

3
<PAGE> 126

<TABLE>
<CAPTION>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ------------- ----------------------------------------
<S> <C> <C>
Roger T. Staubach (54) Trustee Chairman of the Board and Chief Executive Officer (1982-
6750 LBJ Freeway present) and President (1983-1991) of The Staubach
Dallas, TX 75240 Company (a commercial real estate company); Director,
Halliburton Company (1991-present); Director, First USA,
Inc. (1993-present); Director, Brinker International
(1993-present); Director, Columbus Realty Trust (1994-
present); Member of the Advisory Board, The Salvation
Army; Member of the Advisory Board, Dallas International
Sports Commission; Member of the Advisory Board,
Hartford Whalers Hockey Club; Trustee, Institute for
Aerobics Research; Member of Executive Council,
Daytop/Dallas; former quarterback of the Dallas Cowboys
professional football team; Trustee, American AAdvantage
Mileage Funds (1995 - Present).

Nancy A. Eckl (33) Vice President Vice President (December 1990-Present), AMR Investment
Services, Inc.

Michael W. Fields (42) Vice President Vice President, AMR Investment Services, Inc. (August
1988-Present).

Janice S. Goldshmid (36) Vice President and Senior Compliance Analyst, AMR Investment Services, Inc.
Assistant Secretary (December 1990-Present);

Barry Y. Greenberg (32) Vice President and Director, Legal and Compliance, AMR Investment Services,
Assistant Secretary Inc. (July 1995-Present); Branch Chief (May 1992-June
1995) and Staff Attorney (August 1988-May 1992),
Securities and Exchange Commission.

Rebecca L. Harris (28) Treasurer Director of Finance (May 1995-Present), Controller
(November 1991-April 1995), AMR Investment Services,
Inc.; Financial Analyst, Sabre Travel Information
Network (December 1990-October 1991).

John B. Roberson (37) Vice President Vice President (June 1991-Present), Assistant Vice
President (August 1988-May 1991), AMR Investment
Services, Inc.

Clifford J. Alexander (52) Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)

Robert J. Zutz (43) Assistant Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)
</TABLE>

* Messrs. Quinn and O'Sullivan, by virtue of their current or former
positions, are deemed to be "interested persons" of the Trust as defined by the
1940 Act.

All Trustees and officers as a group own less than 1% of the outstanding
shares of any of the Funds.

The Trust compensates each Independent Trustee with payments in an amount
equal to the Trustees' income tax on the value of free airline travel for the
Trustee and his spouse on American Airlines, Inc. The direct aggregate and
total remuneration paid to all Trustees on behalf of the Trust for the fiscal
year ended October 31, 1995 is shown below.

4
<PAGE> 127

Aggregate Pension or Retirement Total Compensation
Compensation Benefits Accrued as Estimated Annual From American
From the Part of the AAdvantage Benefits AAdvantage Fund
Name of Trustee Trust Trust's Expenses Upon Retirement Complex
--------------- ----- ---------------- --------------- -------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0
David G. Fox $27,510 $0 $0 $27,510
John S. Justin $14,475 $0 $0 $14,475
Stephen D. O'Sullivan $0 $0 $0 $0
Roger T. Staubach $0 $0 $0 $0
</TABLE>

MANAGEMENT, ADMINISTRATIVE SERVICES AND DISTRIBUTION FEES

As described more fully in the Prospectus, the Manager is paid a
management fee as compensation for paying investment advisory fees and for
providing the Trust and the AMR Trust with advisory and asset allocation
services. Management fees for the fiscal years ended October 31 were
approximately as follows: 1993, $7,827,000 of which approximately $2,280,000
was paid by the Manager to the other investment advisers; 1994, $6,950,000 of
which approximately $2,965,000 was paid by the Manager to the other investment
advisers; and 1995 $ of which approximately $ was paid by the Manager to
the other investment advisers. Management fees in the amount of approximately
$214,000 and $ were waived by the Manager during the fiscal years ended
October 31, 1994 and 1995, respectively.

Prior to August 1, 1994, shareholders of the Balanced, Growth and Income,
International Equity and Limited-Term Income Funds ("Variable NAV Funds") were
required to enter into a Shareholder Services Agreement with the Manager which
obligated the Manager to provide or oversee on behalf of the shareholder's
account certain administrative and management services (other than investment
advisory services). Shareholder services fees for the fiscal year ended
October 31, 1993 were approximately $1,244,000. Effective August 1, 1994,
shareholder services agreements were eliminated and replaced by an
administrative services fee paid by each of the Variable NAV Funds to the
Manager. Shareholder services fees for the nine months ended July 31, 1994
were approximately $1,292,000.

In addition to the management fee, the Manager is paid an administrative
services fee for providing administrative and management services (other than
investment advisory services) to the Funds. Administrative services fees for
the fiscal years ended October 31 were approximately as follows: 1993,
$1,544,000; 1994, $1,473,000; and 1995, $ . Administrative service fees in
the amount of approximately $14,000 and $__ were waived by the Manager during
the fiscal years ended October 31, 1994 and 1995, respectively.

On September 1, 1995, Brokers Transaction Services, Inc. ("BTS"), became
distributor of the Funds' shares, and as such began receiving an annualized fee
of $50,000 from the Manager for distributing the shares of the Trust and the
American AAdvantage Mileage Funds. Prior to this date, the Trust was
self-distributed.

APPROACH TO STOCK SELECTION

Investment advisers to the corresponding Portfolios of the Balanced,
Growth and Income and International Equity Funds will select equity securities
which, in their opinion, have above average growth potential and are also
selling at a discount to the market. This approach focuses on the purchase of
a diverse group of stocks below their perceived economic value. Each of the
investment advisers determines the growth prospects of firms based upon a
combination of internal and external research using fundamental economic cycle
analysis and considering changing economic trends. The determination of value
is based upon the analysis of several characteristics of the issuer and its
equity securities including price to earnings ratio, price to book value ratio,
assets carried below market value, financial strength and dividend yield.

REDEMPTIONS IN KIND

5
<PAGE> 128

Although each Fund intends to redeem shares in cash, each reserves the
right to pay the redemption price in whole or in part by a distribution of
readily marketable securities held by the applicable Fund's corresponding
Portfolio. However, shareholders always will be entitled to redeem shares for
cash up to the lesser of $250,000 or 1% of the applicable Fund's net asset
value during any 90-day period. Redemption in kind is not as liquid as a cash
redemption. In addition, if redemption is made in kind, shareholders who
receive securities and sell them could receive less than the redemption value
of their securities and could incur certain transactions costs.

EXPENSE LIMITATIONS

Subject to certain state law expense limits, the Trust pays all of its
expenses (including its share of the Portfolios' expenses) other than those
expressly assumed by the Manager. The most restrictive state expense limit
currently imposed is 2.5% of a Fund's first $30 million in assets, 2.0% of the
next $70 million in assets and 1.5% of all excess assets. If a Fund's expenses
exceed any applicable state expense limits, the Manager would have to bear such
excess expenses in order for the Trust to continue selling its shares in that
state. Any excess expenses assumed by the Manager can be reimbursed monthly
whenever a Fund's expenses are below applicable expense limits.

INVESTMENT ADVISORY AGREEMENTS

Separate Investment Advisory Agreements between the investment advisers
of the corresponding Portfolios of the Balanced, Growth and Income,
International Equity and Limited-Term Income Funds and the AMR Trust, as
described in the Prospectus, were approved and became effective as of October
1, 1995. Prior to that date, these Funds had entered into Investment Advisory
Agreements with the same investment advisors. On October 1, 1995, each Fund
Investment Advisory Agreement was amended to provide that to the extent a Fund
invests all of its investable assets in its corresponding Portfolio, the
adviser will not receive an advisory fee under that Agreement.

Each such Agreement will automatically terminate if assigned, and may be
terminated without penalty at any time by the Manager, by a vote of a majority
of the Trustees or by a vote of a majority of the outstanding voting securities
of the applicable Fund on no less than thirty (30) days' nor more than sixty
(60) days' written notice to the investment adviser, or by the investment
adviser upon sixty (60) days' written notice to the Trust. The Investment
Advisory Agreements will continue in effect provided that annually such
continuance is specifically approved by a vote of the Trustees, including the
affirmative votes of a majority of the Trustees who are not parties to the
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of considering such
approval, or by the vote of shareholders.

PORTFOLIO SECURITIES TRANSACTIONS

The Investment Advisory Agreements provide, in substance, that in
executing portfolio transactions and selecting brokers or dealers, the
principal objective of each investment adviser is to seek the best net price
and execution available. It is expected that securities ordinarily will be
purchased in the primary markets, and that in assessing the best net price and
execution available, each investment adviser shall consider all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis.

In selecting brokers or dealers to execute particular transactions,
investment advisers are authorized to consider "brokerage and research
services" (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934), provision of statistical quotations (including the
quotations necessary to determine a Portfolio's net asset value), the sale of
Trust shares by such broker-dealer or the servicing of Trust shareholders by
such broker-dealer, and other information provided to the applicable Portfolio,
to the Manager and/or to the investment advisers (or their affiliates),
provided, however, that the investment adviser determines that it has received
the best net price and execution available. The investment advisers are also
authorized to cause a Portfolio to pay a commission to a broker or dealer who
provides such brokerage and research services for

6
<PAGE> 129

executing a portfolio transaction which is in excess of the amount of the
commission another broker or dealer would have charged for effecting that
transaction. The Trustees, the Manager or the investment advisers, as
appropriate, must determine in good faith, however, that such commission was
reasonable in relation to the value of the brokerage and research services
provided viewed in terms of that particular transaction or in terms of all the
accounts over which the Manager or the investment adviser exercises investment
discretion.

For the years ended October 31, 1993, October 31, 1994, and October 31,
1995; the following brokerage commissions were paid by theFunds.

<TABLE>
<CAPTION>
Fund 1993 1994 1995
<S> <C> <C> <C>
Balanced $284,089 $228,250 $388,253
Growth and Income $416,448 $300,096 $590,364
International Equity $115,463 $391,301 $422,670
Limited-Term Income $0 $0 $0
Money Market Funds $0 $0 $0
</TABLE>

For the years ended October 31, 1994 and October 31, 1995, the portfolio
turnover rates for the Funds were as follows:

<TABLE>
<CAPTION>
Fund 1994 1995
<S> <C> <C>
Balanced Fund 48% 73%
Growth and Income Fund 23% 26%
International Equity Fund 37% 21%
Limited-Term Income Fund 94% 183%
</TABLE>

High portfolio turnover can increase the Fund's transaction costs and generate
additional capital gains or losses.

The fees of the investment advisers are not reduced by reason of receipt
of such brokerage and research services. No investment adviser provides any
services to the Trust except portfolio investment management and related
recordkeeping services. However, with disclosure to and pursuant to written
guidelines approved by the Trustees, an investment adviser of a Portfolio or
its affiliated broker-dealer may execute portfolio transactions and receive
usual and customary brokerage commissions (within the meaning of Rule 17e-1
under the 1940 Act) for doing so. . During the fiscal year ended October 31,
1993, the Balanced Fund and the Growth and Income Fund paid $1,150 and $750,
respectively, in brokerage commissions to Sutro & Company, an affiliate of
Independence Investment Associates, an investment adviser to the Balanced Fund
and the Growth and Income Fund. The percentages of total commissions of the
Balanced and Growth and Income Funds paid to Sutro in 1993 were 0.4% and 0.2%,
respectively. The transactions represented 0.2% of the Balanced Fund's and
0.1% of the Growth and Income Fund's total dollar value of portfolio
transactions for the fiscal year ended October 31, 1993. The Funds did not
execute any portfolio transactions in fiscal year 1994 with affiliated brokers.
During the fiscal year ended October 31, 1995, the International Equity Fund
paid $18,937 in brokerage commissions to Morgan Stanley, Inc., an affiliate of
Morgan Stanley Asset Management, an investment adviser to the International
Equity Fund, and the Balanced Fund paid $18 in brokerage commissions to Sutro &
Company. The percentage of total commission of the International Equity Fund
paid to Morgan Stanley in 1995 was 4% representing % of the International
Equity Fund's total dollar value of transactions. The percentage of total
commission of the Balanced Fund paid to Sutro & Company in 1995 was 0.005%
representing % of the Balanced Fund's total dollar value of transactions.

NET ASSET VALUE

It is the policy of the Money Market Fund, Municipal Money Market Fund
and U.S. Treasury Money Market Fund (collectively the "Money Market Funds") to
attempt to maintain a constant price per share of $1.00. There can be no
assurance that a $1.00 net asset value per share will be maintained. The
portfolio instruments held by the Money Market Funds' corresponding Portfolios
are valued based on the amortized cost valuation technique pursuant to Rule
2a-7 under the 1940 Act. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, even though the portfolio security may increase or decrease in market
value. Such market fluctuations are generally in response to changes in
interest rates. Use of the amortized cost valuation method requires the
corresponding Portfolios of the Money Market Funds to purchase instruments
having remaining maturities of 397 days or less, to maintain a dollar weighted

7
<PAGE> 130
average portfolio maturity of 90 days or less, and to invest only in securities
determined by the Trustees to be of high quality with minimal credit risks.

TAX INFORMATION

TAXATION OF THE FUNDS

To qualify as a regulated investment company ("RIC") under the Internal
Revenue Code of 1986, as amended ("Code"), each Fund (each of which is treated
as a separate corporation for these purposes) must, among other requirements:

o Derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities or (in the
case of the International Equity Fund) foreign currencies, or
certain other income, including gains from futures or forward
contracts ("Income Requirement");

o Derive less than 30% of its gross income each taxable year from the
sale or other disposition of securities, or (in the case of the
International Equity Fund) foreign currencies (or futures or forward
contracts thereon) that are not directly related to the Fund's
principal business of investing in securities (or futures with
respect thereto), that are held for less than three months
("Short-Short Limitation");

o Diversify its investments in securities within certain statutory
limits; and

o Distribute annually to its shareholders at least 90% of its
investment company taxable income (generally, taxable net investment
income plus net short-term capital gain) plus, in the case of the
Municipal Money Market Fund, net interest income excludable from
gross income under section 103(a) of the Code ("Distribution
Requirement").

The Funds have received a ruling from the Internal Revenue Service
("IRS") that each Fund, as an investor in its corresponding Portfolio, is
deemed to own a proportionate share of the Portfolio's assets and to earn the
income on that share for purposes of determining whether the Fund satisfies all
the requirements described above to qualify as a RIC.

See the next section for a discussion of the tax consequences to the
Balanced, Growth and Income and International Equity Funds of investments in
passive foreign investment companies ("PFICs") by the Balanced, Growth and
Income and International Equity Portfolios (collectively "Equity Portfolios"),
respectively, and, in the case of the International Equity Fund, of engaging in
hedging transactions by the International Equity Portfolio.

TAXATION OF THE PORTFOLIOS

The Portfolios have received a ruling from the IRS to the effect that,
among other things, each Portfolio is treated as a separate partnership for
federal income tax purposes and is not a "publicly traded partnership." As a
result, each Portfolio is not subject to federal income tax; instead, each
investor in a Portfolio, such as a Fund, is required to take into account in
determining its federal income tax liability its share of the Portfolio's
income, gains, losses, deductions, credits and tax preference items, without
regard to whether it has received any cash distributions from the Portfolio.

Because the ruling from the IRS provides, as noted above, that each Fund
is deemed to own a proportionate share of its corresponding Portfolio's assets
and income for purposes of determining whether the Fund satisfies the
requirements to qualify as a RIC, each Portfolio intends to conduct its
operations so that its corresponding Fund will be able to satisfy all those
requirements.

8
<PAGE> 131
unrealized receivables held by the Portfolio and (3) loss will be recognized if
a liquidation distribution consists solely of cash and/or unrealized
receivables. A Fund's basis for its interest in its corresponding Portfolio
generally will equal the amount of cash and the basis of any property the Fund
invests in the Portfolio, increased by the Fund's share of the Portfolio's net
income and gains and decreased by (a) the amount of cash and the basis of any
property the Portfolio distributes to the Fund and (b) the Fund's share of the
Portfolio's losses.

A Portfolio may acquire zero coupon or other securities issued with
original issue discount. As an investor in a Portfolio that holds those
securities, a Fund would have to include in its income its share of the
original issue discount that accrues on the securities during the taxable year,
even if the Portfolio (and, hence, the Fund) receives no corresponding payment
on the securities during the year. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any
original issue discount, to satisfy the Distribution Requirement and avoid
imposition of the 4% excise tax described in the Prospectus, a Fund may be
required in a particular year to distribute as a dividend an amount that is
greater than the total amount of cash it actually receives. Those
distributions would be made from the Fund's cash assets, if any, or the
proceeds of redemption of a portion of the Fund's interest in its corresponding
Portfolio (which redemption proceeds would be paid from the Portfolio's cash
assets or the proceeds of sales of portfolio securities, if necessary). The
Portfolio might realize capital gains or losses from any such sales, which
would increase or decrease the Fund's investment company taxable income and/or
net capital gain (the excess of net long-term capital gain over net short-term
capital loss). In addition, any such gains might be realized on the
disposition of securities held for less than three months. Because of the
Short-Short Limitation applicable to the Fund, any such gains would reduce the
Portfolio's ability to sell other securities (or, in the case of the
International Equity Portfolio, certain futures or forward contracts) held for
less than three months that it might wish to sell in the ordinary course of its
portfolio management.

If an Equity Portfolio acquires stock in a foreign corporation that is a
PFIC and holds the stock beyond the end of the year of acquisition, its
corresponding Fund will be subject to federal income tax on the Fund's share of
a portion of any "excess distribution" received by the Portfolio on the stock
or of any gain realized by the Portfolio from disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. A Fund
may avoid this tax and interest if its corresponding Portfolio elects to treat
the PFIC as a "qualified electing fund"; however, the requirements for that
election are difficult to satisfy. The Equity Portfolios currently do not
intend to acquire securities that are considered PFICs.

Hedging strategies, such as entering into forward contracts and selling
and purchasing futures contracts, involve complex rules that will determine for
federal income tax purposes the character and timing of recognition of gains
and losses the International Equity Portfolio realizes in connection therewith.
The International Equity Fund's share of the corresponding Portfolio's (1)
income from foreign currencies (except certain gains that may be excluded by
future regulations) and (2) income from transactions in futures and forward
contracts derived with respect to its business of investing in securities or
foreign currencies will qualify as allowable income for the Fund under the
Income Requirement. Income from the Portfolio's disposition of foreign
currencies, and futures and forward contracts on foreign currencies, that are
not directly related to its principal business of investing in securities (or
futures with respect thereto) also will be subject to the Short-Short
Limitation for the Fund if they are held for less than three months.

For purposes of determining whether the International Equity Fund
satisfies the Short-Short Limitation, if the International Equity Portfolio
satisfies certain requirements, an increase in value of a position that is part
of a designated hedge will be offset by any decrease in value (whether realized
or not) of the contra hedging position during the period of the hedge. Thus,
only the net gain (if any) will be included in gross income for purposes of
that limitation.

Dividends and interest received by the International Equity Portfolio may
be subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions that would reduce the yield on its securities. Tax
treaties between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains on investments by foreign investors.

TAXATION OF THE FUNDS' SHAREHOLDERS

A portion of the dividends from a Fund's investment company taxable
income, whether received in cash or paid in additional Fund shares, may be
eligible for the dividends-received deduction allowed to corporations.

9
<PAGE> 132

The eligible portion may not exceed the aggregate dividends received by the
Fund (directly or through its corresponding Portfolio) from U.S. corporations.
However, dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
alternative minimum tax. No dividends paid by the Money Market Funds, the
International Equity Fund or the Limited-Term Income Fund are expected to be
eligible for this deduction.

Distributions by the Municipal Money Market Fund of the amount by which
income on tax-exempt securities exceeds certain amounts disallowed as
deductions, designated by it as "exempt-interest dividends," generally may be
excluded from gross income by its shareholders. Dividends paid by the Fund
will qualify as exempt-interest dividends if, at the close of each quarter of
its taxable year, at least 50% of the value of its total assets (including its
share of the Municipal Money Market Portfolio's assets) consists of securities
the interest on which is excludable from gross income under section 103(a) of
the Code. The Fund intends to continue to satisfy this requirement. The
aggregate dividends excludable from shareholders' gross income may not exceed
the Fund's net tax-exempt income. The shareholders' treatment of dividends
from the Fund under local and state income tax laws may differ from the
treatment thereof under the Code.

Exempt-interest dividends received by a corporate shareholder may be
indirectly subject to the alternative minimum tax. In addition, entities or
persons who are "substantial users" (or persons related to "substantial users")
of facilities financed by private activity bonds ("PABs") or industrial
development bonds ("IDBs") should consult their tax advisers before purchasing
shares of the Municipal Money Market Fund because, for users of certain of
these facilities, the interest on those bonds is not exempt from federal income
tax. For these purposes, the term "substantial user" is defined generally to
include a "non-exempt person" who regularly uses in trade or business a part of
a facility financed from the proceeds of PABs or IDBs.

Up to 85% of social security and railroad retirement benefits may be
included in taxable income for recipients whose adjusted gross income
(including income from tax-exempt sources such as the Municipal Money Market
Fund) plus 50% of their benefits exceeds certain base amounts. Exempt-interest
dividends from the Fund still are tax-exempt to the extent described above;
they are only included in the calculation of whether a recipient's income
exceeds the established amounts.

If more than 50% of the value of the International Equity Fund's total
assets (including its share of the International Equity Portfolio's total
assets) at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible to, and may, file an election with the
Internal Revenue Service that will enable the Fund's shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to the Fund's
share of any foreign and U.S. possessions income taxes paid by the Portfolio.
If the Fund makes this election, the Fund will treat those taxes as dividends
paid to its shareholders and each shareholder will be required to (1) include
in gross income, and treat as paid by him, his proportionate share of those
taxes, (2) treat his share of those taxes and of any dividend paid by the Fund
that represents income from foreign or U.S. possessions sources as his own
income from those sources and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information
in calculating the foreign tax credit against his federal income tax. If the
election is made, the Fund will report to its shareholders shortly after each
taxable year their respective shares of its income (including its share of the
Portfolio's income) from foreign and U.S. possessions sources and its share of
the taxes paid by the Portfolio to foreign countries and U.S. possessions.

The foregoing is only a summary of some of the important federal tax
considerations affecting the Funds and their shareholders and is not intended
as a substitute for careful tax planning. Accordingly, prospective investors
are advised to consult their own tax advisers for more detailed information
regarding the above and for information regarding federal, state, local and
foreign taxes.

YIELD AND TOTAL RETURN QUOTATIONS

A quotation of yield on shares of each class of the Money Market Funds
may appear from time to time in advertisements and in communications to
shareholders and others. Quotations of yields are indicative of yields for the
limited historical period used but not for the future. Yield will vary as
interest rates and other conditions change. Yield also depends on the quality,
length of maturity and type of instruments invested in by the corresponding
Portfolios of the Money Market Funds, and the applicable class's operating
expenses. A comparison of the quoted yields offered for various investments is
valid only if yields are calculated in the same

10
<PAGE> 133
manner. In addition, other similar investment companies may have more or less
risk due to differences in the quality or maturity of securities held.

The yields of the Money Market Funds may be calculated in one of two
ways:

(1) Current Yield--the net average annualized return without compounding
accrued interest income. For a 7-day current yield, this is computed by
dividing the net change in value over a 7 calendar-day period of a
hypothetical account having one share at the beginning of a 7
calendar-day period by the value of the account at the beginning of this
period to determine the "base period return." The quotient is multiplied
by 365 divided by 7 and stated to two decimal places. A daily current
yield is calculated by multiplying the net change in value over one day
by 365 and stating it to two decimal places. Capital changes, such as
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation, are excluded in calculating the net change
in value of an account, but this calculation includes the aggregate fees
and other expenses that are charged to all shareholder accounts in a
class of a Fund. In determining the net change in value of a
hypothetical account, this value is adjusted to reflect the value of any
additional shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional
shares.

(2) Effective Yield--the net average annualized return as computed by
compounding accrued interest income. In determining the 7-day effective
yield, a class of a Fund will compute the "base period return" in the
same manner used to compute the "current yield" over a 7 calendar-day
period as described above. One is then added to the base period return
and the sum is raised to the 365/7 power. One is subtracted from the
result, according to the following formula:

[365/7]
EFFECTIVE YIELD = [ (BASE PERIOD RETURN + 1) ] - 1

Based on these formulas, the current and effective yields were as follows
for the periods and Funds indicated:

<TABLE>
<CAPTION>
Current yield for the Effective yield for the
Current daily yield as 7 day period ended 7 day period ended
of October 31, 1995 October 31, 1995 October 31, 1995
------------------- ---------------- ----------------
<S> <C> <C> <C>
Institutional Class
-------------------
Money Market Fund 5.76% 5.74% 5.90%
Municipal Money Market Fund 3.84% 3.83% 3.90%
U.S. Treasury Money Market Fund 5.52% 5.54% 5.70%

PlanAhead Class
---------------
Money Market Fund 5.47% 5.45% 5.59%
Municipal Money Market Fund 3.50% 3.49% 3.55%
U.S. Treasury Money Market Fund 5.06% 5.08% 5.21%
</TABLE>

The Municipal Money Market Fund also may advertise a tax equivalent
current and effective yield. The tax equivalent yields are calculated as
follows:

CURRENT YIELD/(1-APPLICABLE TAX RATE) = CURRENT TAX EQUIVALENT YIELD

EFFECTIVE YIELD/(1-APPLICABLE TAX RATE) = EFFECTIVE TAX EQUIVALENT YIELD

Based on these formulas, the current and effective tax equivalent yields for
the Municipal Money Market Fund for the seven day periods ending October 31,
1995 were:

<TABLE>
<CAPTION>
Current Effective
Class Tax Equivalent Yield Tax Equivalent Yield
----- -------------------- --------------------
<S> <C> <C>
Institutional (based on a 35.0% corporate tax rate) 5.89% 6.00%
PlanAhead (based on a 39.6% personal tax rate) 5.78% 5.88%
</TABLE>

The advertised yields for each class of the Variable NAV Funds are
computed by dividing the net investment income per share earned during a 30-day
(or one month) period less the aggregate fees that are charged to all
shareholder accounts of the class in proportion to the 30-day (or one month)
period and the

11
<PAGE> 134
weighted average size of an account in that class of a Fund by the maximum
offering price per share of the class on the last day of the period, according
to the following formula:

6
YIELD = 2{(a-b)+1} -1
---
cd

where, with respect to a particular class of a Fund, "a" is the dividends and
interest earned during the period; "b" is the sum of the expenses accrued for
the period (net of reimbursement, if any) and the aggregate fees that are
charged to all shareholder accounts in proportion to the 30-day (or one month)
period and the weighted average size of an account in the class; "c" is the
average daily number of class shares outstanding during the period that were
entitled to receive dividends; and "d" is the maximum offering price per class
share on the last day of the period. Based on this formula, the estimated
30-day yield for the period ended October 31, 1995 for the Limited-Term Income
Fund was 6.46%, 6.20% and 5.90%, for the AMR, Institutional and PlanAhead
Classes, respectively.

Each class of the Limited-Term Income Fund may also advertise a
monthly distribution rate. The distribution rate gives the return of the class
based solely on the dividend payout to that class if someone was entitled to
the dividends for an entire month. A monthly distribution rate is calculated
from the following formula:

MONTHLY DISTRIBUTION RATE = A/P*(365/n)

where, with respect to a particular class of shares, "A" is the dividend
accrual per share during the month, "P" is the share price at the end of the
month and "n" is the number of days in the month. Based on this formula, the
monthly dividend rate for the AMR, Institutional and PlanAhead Classes of the
Limited-Term Income Fund for the month of October 1995 was %, % and
%, respectively. The "monthly dividend rate" is a non-standardized performance
calculation and when used in an advertisement will be accompanied by the
appropriate standardized SEC calculations.

The advertised total return for a class of a Fund would be calculated by
equating an initial amount invested in a class of a Fund to the ending
redeemable value, according to the following formula:

n
P(1 + T) = ERV

where "P" is a hypothetical initial payment of $1,000; "T" is the average
annual total return for the class; "n" is the number of years involved; and
"ERV" is the ending redeemable value of a hypothetical $1,000 payment made in
the class at the beginning of the investment period covered.

Based on this formula, annualized total returns were as follows for the
periods and Funds indicated:

<TABLE>
<CAPTION>
For the period from the
For the one-year For the five-year period commencement of active
period ended ended operations through
October 31, 1995(1) October 31, 1995(1)(2) October 31, 1995(1)(3)
------------------- ---------------------- ----------------------
<S> <C> <C> <C>
AMR Class
---------
Balanced Fund 19.77% 14.23% 10.06%
Growth and Income Fund 21.03% 17.49% 11.00%
International Equity Fund 8.18% N/A 9.55%
Limited-Term Income Fund 8.22% 7.10% 7.25%
Institutional Class
-------------------
Balanced Fund 19.39% 14.15% 10.02%
Growth and Income Fund 20.69% 17.41% 10.95%
International Equity Fund 7.90% N/A 9.48%
Limited-Term Income Fund 8.18% 7.06% 7.22%
Money Market Fund 5.96% 4.93% 6.27%
Municipal Money Market Fund (4) 3.75% N/A 3.10%
U.S. Treasury Money Market Fund 5.67% N/A 4.05%
PlanAhead Class
---------------
</TABLE>

12
<PAGE> 135

<TABLE>
<S> <C> <C> <C>
Balanced Fund (5) 19.06% 14.07% 9.97%
Growth and Income Fund 20.14% 17.27% 10.87%
International Equity Fund 7.37% N/A 9.31%
Limited-Term Income Fund (5) 7.83% 6.99% 7.18%
Money Market Fund 5.60% 4.84% 6.21%
Municipal Money Market Fund (4) 3.39% N/A 2.88%
U.S. Treasury Money Market Fund 5.19% N/A 3.89%
</TABLE>

(1) The Institutional Class is the initial class for each Fund. The AMR
Class and PlanAhead Class were not in existence prior to August 1, 1994.
Total returns for the PlanAhead and AMR Classes for the periods ended
October 31, 1995 reflect Institutional Class returns from the date of
commencement of operations of each of these Funds through July 31, 1994
and returns of the applicable class for the period August 1, 1994
(commencement of operations of the new classes) through October 31, 1995.
Due to the different expense structures between the classes, total returns
would vary from the results shown had the classes been in operation for
the entire periods.

(2) The International Equity Fund, Municipal Money Market Fund and U.S.
Treasury Money Market Fund had not commenced active operations as of
November 1, 1990.

(3) The Institutional Class of the Balanced Fund and the Growth and
Income Fund commenced active operations on July 17, 1987; the Money Market
Fund on September 1, 1987, the Limited-Term Income Fund on December 3,
1987, the International Equity Fund on August 7, 1991, the U.S. Treasury
Money Market Fund on March 2, 1992 and the Municipal Money Market Fund on
November 10, 1993. The PlanAhead and AMR Classes of all the Funds
commenced active operations on August 1, 1994.

(4) Management and Administrative Services fees have been waived for the
Municipal Money Market Fund since its inception. Performance prior to fee
waivers for the periods shown are:

<TABLE>
<CAPTION>
For the period from the
commencement of active
For the one-year period ended operations through
Municipal Money Market Fund October 31, 1995 October 31, 1995
---------------- ----------------
<S> <C> <C>
Institutional Class 3.54% 2.89%
PlanAhead Class 3.19% 2.67%
</TABLE>

(5) A portion of the Service Plan Fees of the PlanAhead Class have been
waived for the Balanced and Limited-Term Income Funds since August 1,
1994. Returns prior to waivers for the Limited-Term Income Fund were
7.56%, 6.93% and 7.14% for the one, five and since inception periods and
were 18.98% before waivers for the Balanced Fund for the one year period.

Each class of a Fund may also use "aggregate" total return figures for
various periods which represent the cumulative change in value of an investment
in a class of a Fund for the specific period. Such total returns reflect
changes in share prices of a class of a Fund and assume reinvestment of
dividends and distributions.

Each Fund may give total returns from inception using the date when the
current managers began active management as the inception date. However,
returns using the actual inception date of the Fund will also be provided.

In reports or other communications to shareholders or in advertising
material, each class of a Fund may from time to time compare its performance
with that of other mutual funds in rankings prepared by Lipper Analytical
Services, Inc., Morningstar, Inc., IBC/Donoghue, Inc. and other similar
independent services which monitor the performance of mutual funds or
publications such as the "New York Times", "Barrons" and the "Wall Street
Journal." Each class of a Fund may also compare its performance with various
indices prepared by independent services such as Standard & Poor's, Morgan
Stanley or Lehman Brothers.

Advertisements for the Funds may mention that the Funds offer a variety
of investment options. They may also compare the Funds to federally insured
investments such as bank certificates of deposit and credit union deposits,
including the long-term effects of inflation on these types of investments.
Advertisements may also compare the historical rate of return of different
types of investments.

13
<PAGE> 136

From time to time, the Manager may use contests as a means of promoting
the American AAdvantage Funds. Prizes may include free air travel and/or hotel
accommodations. Listings for certain of the Funds may be found in newspapers
under the heading AMR AADVANT.

DESCRIPTION OF THE TRUST

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable for its obligations.
However, the Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and provides for
indemnification and reimbursement of expenses out of Trust property for any
shareholder held personally liable for the obligations of the Trust. The
Declaration of Trust also provides that the Trust may maintain appropriate
insurance (for example, fidelity bonding) for the protection of the Trust, its
shareholders, Trustees, officers, employees and agents to cover possible tort
and other liabilities. Thus, the risk of a shareholder incurring financial
loss due to shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations. The Trust has not engaged in any other business.

The Trust was originally created to manage money for large institutional
investors, including pension and 401(k) plans for American Airlines, Inc. The
PlanAhead Class was later created to give individuals and other smaller
investors an opportunity to invest in the American AAdvantage Funds. As a
result, shareholders of the PlanAhead Class benefit from the economies of scale
generated by being part of a larger pool of assets.

The corresponding Portfolios of the Balanced, Growth and Income and
International Equity Funds utilize a multi- manager approach designed to reduce
volatility by diversifying assets over multiple investment management firms.
Each adviser is carefully chosen by the Manager through a rigorous screening
process.

CONTROL PERSONS AND 5% SHAREHOLDERS

The following persons may be deemed to control certain Funds by virtue of
their ownership of more than 25% of the outstanding shares of a Fund as of
January 31, 1996:

<TABLE>
<S> <C>
American AAdvantage Balanced Fund
- ---------------------------------
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof . . . . . . . . . . . . . . . %
4333 Amon Carter Boulevard
Fort Worth, Texas 76155

American AAdvantage Growth and Income Fund
- ------------------------------------------
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof . . . . . . . . . . . . . . . %
4333 Amon Carter Boulevard
Fort Worth, Texas 76155

American AAdvantage International Equity Fund
- ---------------------------------------------
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof . . . . . . . . . . . . . . . %
4333 Amon Carter Boulevard
Fort Worth, Texas 76155

American AAdvantage Limited-Term Income Fund
- --------------------------------------------
AMR Corporation and subsidiary companies and Employee Benefit Trusts thereof . . . . . . . . . . . . . . . %
4333 Amon Carter Boulevard
Fort Worth, Texas 76155

Retirement Advisors of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %
5005 LBJ Freeway, Suite 1350
Dallas, Texas 75244

American AAdvantage Municipal Money Market Fund
- -----------------------------------------------
</TABLE>

14
<PAGE> 137

AMR Corporation and subsidiary companies and Employee Benefit Trusts
thereof own 100% of the shares of the AMR Class of the Balanced Fund, the
Growth and Income Fund, the International Equity Fund and the Limited-Term
Income Fund.

In addition, the following persons own more than 5% of the outstanding
shares of a Fund or Class as of January 31, 1996:

<TABLE>
<CAPTION>
Total Institutional PlanAhead
Fund Class Class
----- ------------- ---------
<S> <C> <C> <C>
American AAdvantage Balanced Fund
---------------------------------
Chancellor Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
EPR Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
NA Bank & Co.
P.O. Box 2180
Tulsa, Oklahoma
Retirement Advisors of America
5005 LBJ Freeway, Suite 1350
Dallas, Texas 75244
</TABLE>

<TABLE>
<CAPTION>
Total Institutional PlanAhead
Fund Class Class
----- ------------- ---------
<S> <C> <C> <C>
American AAdvantage Balanced Fund(cont.)
----------------------------------------
Sky Chefs Master Trust
601 Ryan Plaza Drive
Arlington, Texas 76011
Technical Products Group Inc. Retirement & Savings Plan
2929 Allen Parkway, Suite 2500
Houston, Texas 77019

American AAdvantage Growth and Income Fund
------------------------------------------
Chancellor Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
Crowe & Dunlevy Profit sharing and Thrift Plan
20 N. Broadway, Suite 1800
Oklahoma City, Oklahoma 73102-8203
Retirement Advisors of America
5005 LBJ Freeway, Suite 1350
Dallas, Texas 75244
Technical Products Group Inc. Retirement & Savings Plan
2929 Allen Parkway, Suite 2500
Houston, Texas 77019

American AAdvantage International Equity Fund
---------------------------------------------
Chancellor Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
Crowe & Dunlevy Profit Sharing and Thrift Plan
20 N. Broadway, Suite 1800
Oklahoma City, Oklahoma 73102-8203
EPR Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
John May
</TABLE>

15
<PAGE> 138
P.O. Box 584
Gleneden Beach, Oregon 97388-0584
Retirement Advisors of America
5005 LBJ Freeway, Suite 1350
Dallas, Texas 75244

American AAdvantage Limited-Term Income Fund
--------------------------------------------
Berg Electronics Inc. Savings Plan
4 New York Plaza - EBS 4th. Floor
New York, New York 10004-2413
Chancellor Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
Crowe & Dunlevy Profit Sharing and Thrift Plan
20 N. Broadway, Suite 1800
Oklahoma City, Oklahoma 73102-8203

<TABLE>
<CAPTION>
Total Institutional PlanAhead
Fund Class Class
----- ------------- ---------
<S> <C> <C> <C>
American AAdvantage Limited-Term Income Fund(cont.)
---------------------------------------------------
EPR Limited Partnership
5005 LBJ Freeway, Suite 630
Dallas, Texas 75244-6136
Peter C. Maffei IRA
P.O. Box 5900
Denver, Colorado 80217-5900
Retirement Advisors of America
5005 LBJ Freeway, Suite 1350
Dallas, Texas 75244
Technical Products Group Inc. Retirement and Savings Plan
2929 Allen Parkway, Suite 2500
Houston, Texas 77019
Wachovia Bank of North Carolina
P.O. Box 3002
Winston-Salem, North Carolina 27102

American AAdvantage Money Market Fund
-------------------------------------
Alliance Airport Authority
Bank One, Texas, NA (Corporate Trust Department)
500 Throckmorton
Fort Worth, Texas 76113-2604
City of Chicago International Airport Revenue Bonds
Harris Trust and Savings Bank(Indenture Trust Division)
P.O. Box 755
Chicago, Illinois 60690
Dallas/Fort Worth International Airport Revenue Bonds
NationsBank Trust Department (Securities Lending Assets)
P.O. Box 83222, BC 492-16
Dallas, Texas 75283
Psychiatric Consultants of San Diego Inc. Retirement Trust
8558 El Paseo Grande
La Jolla, California 92037-3015
Tulsa Municipal Airport Trust
Bank of Oklahoma Trust Administration
P.O. Box 3200
Tulsa, Oklahoma 74192

American AAdvantage Municipal Money Market Fund
-----------------------------------------------
</TABLE>

16
<PAGE> 139
ADS Planning Inc. Profit Sharing Plan
27653 Flaming Arrow Drive
Rancho Palos Verdes, California 90275-3928
B&J Plumbing Inc. Defined Benefit Pension Plan
10754 National Blvd.
Los Angeles, California 90064-4234

<TABLE>
<CAPTION>
Total Institutional PlanAhead
Fund Class Class
----- ------------- ---------
<S> <C> <C> <C>
American AAdvantage Municipal Money Market Fund(cont.)
------------------------------------------------------
Kenneth M. and Renee K. Chamblee
417 River Valley
Arlington, Texas 76006-3646

American AAdvantage U.S. Treasury Money Market Fund
---------------------------------------------------
All Saints Hospital
1400 8th Avenue
Fort Worth, Texas 76104
British American Insurance Company
P.O. Box 1590
Dallas, Texas 75221-1590
Jerry J. Fielding, IRA
471 Meridian Street
Crystal Lake, Illinois 60014-5415
Grapevine Industrial Development Corp
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
Lone Star Airport Improvement Authority
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
NationsBank Trust Department (Trust Assets)
P.O. Box 83222, BC 492-16
Dallas, Texas 75283
Radnor, Inc.
550 Roberts Road
Bryn Mawr, Pennsylvania 19010-1137
Joseph R. Thomas, IRA
2898 NW 24th Court
Boca Raton, Florida 33431-6201
Wenonah Holdings Inc.
500 E. Mantua Avenue
Wenonah, New Jersey 08090-2015
</TABLE>

OTHER INFORMATION

American Depository Receipts (ADRs), European Depository Receipts
(EDRs)-ADRs are depository receipts for foreign issuers in registered form
traded in U.S. securities markets, whereas, EDRs are in bearer form and traded
in European securities markets. These securities are not denominated in the
same currency as the securities into which they may be converted. Investing in
ADRs and EDRs involves greater risks than are normally present in domestic
investments. There is generally less publicly available information about
foreign companies and there may be less governmental regulation and supervision
of foreign stock exchanges, brokers and listed companies. In addition, such
companies may use different accounting and financial standards (and certain
currencies may become unavailable for transfer from a foreign currency),
resulting in a Fund's possible

17
<PAGE> 140
inability to convert proceeds realized upon the sale of portfolio securities of
the affected foreign companies immediately into U.S. currency.

Bank Deposit Notes-Bank deposit notes are obligations of a bank, rather
than bank holding company corporate debt. The only structural difference
between bank deposit notes and certificates of deposit is that interest on bank
deposit notes is calculated on a 30/360 basis as are corporate notes/bonds.
Similar to certificates of deposit, deposit notes represent bank level
investments and, therefore, are senior to all holding company corporate debt.

Bankers' Acceptances-Bankers' acceptances are short-term credit
instruments used to finance the import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at maturity.

Cash Equivalents-Cash equivalents include certificates of deposit, bearer
deposit notes, bankers' acceptances, government obligations, commercial paper,
short-term corporate debt securities and repurchase agreements.

Certificates of Deposit-Certificates of deposit are issued against funds
deposited in an eligible bank (including its domestic and foreign branches,
subsidiaries and agencies), are for a definite period of time, earn a specified
rate of return and are normally negotiable.

Commercial Paper-Commercial paper refers to promissory notes representing
an unsecured debt of a corporation or finance company with a fixed maturity of
no more than 270 days.

Debentures-Debentures are unsecured debt securities. The holder of a
debenture is protected only by the general creditworthiness of the issuer.

Forward Foreign Currency Exchange Contracts-A forward foreign currency
exchange contract ("forward contract") is a contract to purchase or sell a
currency at a future date. The two parties to the contract set the number of
days and the price. Forward contracts are used as a hedge against movements in
future foreign exchange rates. The corresponding Portfolio of the
International Equity Fund may enter into forward contracts to purchase or sell
foreign currencies for a fixed amount of U.S. dollars or other foreign
currency.

Forward contracts may serve as long hedges -- for example, the Portfolio
may purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Portfolio intends to acquire.
Forward contracts may also serve as short hedges -- for example, the Portfolio
may sell a forward contract to lock in the U.S. dollar equivalent of the
proceeds from the anticipated sale of a security denominated in a foreign
currency or from the anticipated dividend or interest payments denominated in a
foreign currency. The Manager may seek to hedge against changes in the value
of a particular currency by using forward contracts on another foreign currency
or basket of currencies, the value of which the Manager believes will bear a
positive correlation to the value of the currency being hedged.

The cost to the Portfolio of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. When
the Portfolio enters into a forward contract, it relies on the contra party to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the contra party to do so would result in the loss of any
expected benefit of the transaction.

Buyers and sellers of forward contracts can enter into offsetting closing
transactions by selling or purchasing, respectively, an instrument identical to
the instrument purchased or sold. Secondary markets generally do not exist for
forward contracts, with the result that closing transactions generally can be
made for forward contracts only by negotiating directly with the contra party.
Thus, there can be no assurance that the Portfolio will in fact be able to
close out a forward contract at a favorable price prior to maturity. In
addition, in the event of insolvency of the contra party, the Portfolio might
be unable to close out a forward contract at any time prior to maturity. In
either event, the Portfolio would continue to be subject to market risk with
respect to the position, and would continue to be required to maintain a
position in the securities or currencies that are the subject of the hedge or
to maintain cash or securities in a segregated account.

18
<PAGE> 141
The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value of
such securities, measured in the foreign currency, will change after the
forward contract has been established. Thus, the Portfolio might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.

Current Securities and Exchange Commission policy requires that cash or
high grade liquid debt securities be set aside in a sufficient amount to cover
any cross hedging or other currency exchange contract that is deemed to be
speculative. These assets will be maintained in a segregated account and
marked to market daily.

Full Faith and Credit Obligations of the U.S. Government-Securities
issued or guaranteed by the U.S. Treasury, backed by the full taxing power of
the U.S. Government or the right of the issuer to borrow from the U.S.
Treasury.

Futures Contracts-Futures contracts obligate a purchaser to take delivery
of a specific amount of an obligation underlying the futures contract at a
specified time in the future for a specified price. Likewise, the seller
incurs an obligation to deliver the specified amount of the underlying
obligation. Futures are traded on both U.S. and foreign commodities exchanges.
Only currency futures will be permitted in the corresponding Portfolio of the
International Equity Fund. Futures contracts will be traded for the same
purposes as entering into forward contracts.

The purchase of futures can serve as a long hedge, and the sale of
futures can serve as a short hedge.

No price is paid upon entering into a futures contract. Instead, at the
inception of a futures contract the Portfolio is required to deposit "initial
margin" consisting of cash or U.S. Government Securities in an amount generally
equal to 10% or less of the contract value. Margin must also be deposited when
writing a call or put option on a futures contract, in accordance with
applicable exchange rules. Unlike margin in securities transactions, initial
margin on futures contracts does not represent a borrowing, but rather is in
the nature of a performance bond or good- faith deposit that is returned to the
Portfolio at the termination of the transaction if all contractual obligations
have been satisfied. Under certain circumstances, such as periods of high
volatility, the Portfolio may be required by a futures exchange to increase the
level of its initial margin payment.

Subsequent "variation margin" payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
"marking-to-market." Variation margin does not involve borrowing, but rather
represents a daily settlement of the Portfolio's obligations to or from a
futures broker. When the Portfolio purchases or sells a futures contract, it
is subject to daily variation margin calls that could be substantial in the
event of adverse price movements. If the Portfolio has insufficient cash to
meet daily variation margin requirements, it might need to sell securities at a
time when such sales are disadvantageous.

Purchasers and sellers of futures contracts thereon can enter into
offsetting closing transactions, by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Positions in futures
contracts may be closed only on a futures exchange or board of trade that
provides a secondary market. The Portfolio intends to enter into futures
contracts only on exchanges or boards of trade where there appears to be a
liquid secondary market. However, there can be no assurance that such a market
will exist for a particular contract at a particular time. In such event, it
may not be possible to close a futures contract.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract can vary from the previous
day's settlement price; once that limit is reached, no trades may be made that
day at a price beyond the limit. Daily price limits do not limit potential
losses because prices could move to the daily limit for several consecutive
days with little or no trading, thereby preventing liquidation of unfavorable
positions.

If the Portfolio were unable to liquidate a futures contract due to the
absence of a liquid secondary market or the imposition of price limits, it
could incur substantial losses. The Portfolio would continue to be subject to
market risk with respect to the position. In addition, the Portfolio would
continue to be required to make daily variation margin payments and might be
required to maintain the position being hedged by the futures contract or
option thereon or to maintain cash or securities in a segregated account.

19
<PAGE> 142

To the extent that the Portfolio enters into futures contracts, traded on
an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
in each case other than for bona fide hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) will not exceed 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and unrealized losses
on any contracts that the Portfolio has entered into. This policy does not
limit to 5% the percentage of the Portfolio's assets that are at risk in
futures contracts and options on futures contracts.

Futures contracts require the segregation of initial margin valued at a
certain percentage of the contract and possibly adding "variation margin"
should the price of the contract move in an unfavorable direction. As with
forward contracts, the segregated assets must be either cash or high grade
liquid debt securities.

General Obligation Bonds-General obligation bonds are secured by the
pledge of the issuer's full faith, credit, and usually, taxing power. The
taxing power may be an unlimited ad valorem tax or a limited tax, usually on
real estate and personal property. Most states do not tax real estate, but
leave that power to local units of government.

Loan Participation Interests-Loan participation interests represent
interests in bank loans made to corporations. The contractual arrangement with
the bank transfers the cash stream of the underlying bank loan to the
participating investor. Because the issuing bank does not guarantee the
participations, they are subject to the credit risks generally associated with
the underlying corporate borrower. In addition, because it may be necessary
under the terms of the loan participation for the investor to assert through
the issuing bank such rights as may exist against the underlying corporate
borrower, in the event the underlying corporate borrower fails to pay principal
and interest when due, the investor may be subject to delays, expenses and
risks that are greater than those that would have been involved if the investor
had purchased a direct obligation (such as commercial paper) of such borrower.
Moreover, under the terms of the loan participation, the investor may be
regarded as a creditor of the issuing bank (rather than of the underlying
corporate borrower), so that the issuer may also be subject to the risk that
the issuing bank may become insolvent. Further, in the event of the bankruptcy
or insolvency of the corporate borrower, the loan participation may be subject
to certain defenses that can be asserted by such borrower as a result of
improper conduct by the issuing bank. The secondary market, if any, for these
loan participations is extremely limited and any such participations purchased
by the investor are regarded as illiquid.

Loan Transactions-Loan transactions involve the lending of securities to
a broker-dealer or institutional investor for its use in connection with short
sales, arbitrages or other security transactions. The purpose of a qualified
loan transaction is to afford a lender the opportunity to continue to earn
income on the securities loaned and at the same time earn fee income or income
on the collateral held by it.

Securities loans will be made in accordance with the following
conditions: (1) the Portfolio must receive at least 100% collateral in the
form of cash or cash equivalents, securities of the U.S. Government and its
agencies and instrumentalities, and approved bank letters of credit; (2) the
borrower must increase the collateral whenever the market value of the loaned
securities (determined on a daily basis) rises above the level of collateral;
(3) the Portfolio must be able to terminate the loan after notice, at any time;
(4) the Portfolio must receive reasonable interest on the loan or a flat fee
from the borrower, as well as amounts equivalent to any dividends, interest or
other distributions on the securities loaned, and any increase in market value
of the loaned securities; (5) the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (6) voting rights on the securities
loaned may pass to the borrower, provided, however, that if a material event
affecting the investment occurs, the AMR Trust Board must be able to terminate
the loan and vote proxies or enter into an alternative arrangement with the
borrower to enable the AMR Trust Board to vote proxies.

While there may be delays in recovery of loaned securities or even a loss
of rights in collateral supplied should the borrower fail financially, loans
will be made only to firms deemed by the AMR Trust Board to be of good
financial standing and will not be made unless the consideration to be earned
from such loans would justify the risk. Such loan transactions are referred to
in this Statement of Additional Information as "qualified" loan transactions.

The cash collateral so acquired through qualified loan transactions may
be invested only in those categories of high quality liquid securities
previously authorized by the AMR Trust Board.

20
<PAGE> 143
Mortgage-Backed Securities-Mortgage-backed securities consist of both
collateralized mortgage obligations and mortgage pass-through certificates .

Collateralized Mortgage Obligations ("CMOs")-CMOs and interests in
real estate mortgage investment conduits ("REMICs") are debt securities
collateralized by mortgages, or mortgage pass-through securities. CMOs divide
the cash flow generated from the underlying mortgages or mortgage pass-through
securities into different groups referred to as "tranches," which are then
retired sequentially over time in order of priority. The principal
governmental issuers of such securities are the Federal National Mortgage
Association ("FNMA"), a government sponsored corporation owned entirely by
private stockholders and the Federal Home Loan Mortgage Corporation ("FHLMC"),
a corporate instrumentality of the United States created pursuant to an act of
Congress which is owned entirely by Federal Home Loan Banks. The issuers of
CMOs are structured as trusts or corporations established for the purpose of
issuing such CMOs and often have no assets other than those underlying the
securities and any credit support provided. A REMIC is a mortgage securities
vehicle that holds residential or commercial mortgages and issues securities
representing interests in those mortgages. A REMIC may be formed as a
corporation, partnership, or segregated pool of assets. The REMIC itself is
generally exempt from federal income tax, but the income from the mortgages is
reported by investors. For investment purposes, interests in REMIC securities
are virtually indistinguishable from CMOs.

Mortgage Pass-Through Certificates-Mortgage pass-through
certificates are issued by governmental, government- related and private
organizations which are basked by pools of mortgage loans.

(1) Government National Mortgage Association ("GNMA") Mortgage
Pass-Through Certificates ("Ginnie Maes")-GNMA is a wholly-owned U.S.
Government corporation within the Department of Housing and Urban Development.
Ginnie Maes represent an undivided interest in a pool of mortgages that are
insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veterans Administration. Ginnie Maes
entitle the holder to receive all payments (including prepayments) of principal
and interest owed by the individual mortgagors, net of fees paid to GNMA and to
the issuer which assembles the mortgage pool and passes through the monthly
mortgage payments to the certificate holders (typically, a mortgage banking
firm), regardless of whether the individual mortgagor actually makes the
payment. Because payments are made to certificate holders regardless of
whether payments are actually received on the underlying mortgages, Ginnie Maes
are of the "modified pass-through" mortgage certificate type. The GNMA is
authorized to guarantee the timely payment of principal and interest on the
Ginnie Maes. The GNMA guarantee is backed by the full faith and credit of the
United States, and the GNMA has unlimited authority to borrow funds from the
U.S. Treasury to make payments under the guarantee. The market for Ginnie Maes
is highly liquid because of the size of the market and the active participation
in the secondary market of security dealers and a variety of investors.

(2) FHLMC Mortgage Participation Certificates ("Freddie Macs")-Freddie
Macs represent interests in groups of specified first lien residential
conventional mortgages underwritten and owned by the FHLMC. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC guarantees either ultimate collection or timely payment of
all principal payments on the underlying mortgage loans. In cases where the
FHLMC has not guaranteed timely payment of principal, the FHLMC may remit the
amount due because of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable. Freddie Macs are not guaranteed by the United
States or by any of the Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. The
secondary market for Freddie Macs is highly liquid because of the size of the
market and the active participation in the secondary market of the FHLMC,
security dealers and a variety of investors.

(3) FNMA Guaranteed Mortgage Pass-Through Certificates ("Fannie
Maes")-Fannie Maes represent an undivided interest in a pool of conventional
mortgage loans secured by first mortgages or deeds of trust, on one family or
two to four family, residential properties. The FNMA is obligated to
distribute scheduled monthly installments of principal and interest on the
mortgages in the pool, whether or not received, plus full principal of any
foreclosed or otherwise liquidated mortgages. The obligation of the FNMA under
its guarantee is solely its obligation and is not backed by, nor entitled to,
the full faith and credit of the United States.

21
<PAGE> 144
no direct or indirect government guarantees of payments in such pools.
However, timely payment of interest and principal of these pools is often
partially supported by various enhancements such as over-collateralization and
senior/subordination structures and by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities, private insurers or
the mortgage poolers. Although the market for such securities is becoming
increasingly liquid, securities issued by certain private organizations may not
be readily marketable.

Municipal Lease Obligations ("MLOs")-MLOs are issued by state and local
governments and authorities to acquire land and a wide variety of equipment and
facilities. These obligations typically are not fully backed by the
municipality's credit and thus interest may become taxable if the lease is
assigned. If funds are not appropriated for the following year's lease
payments, a lease may terminate with the possibility of default on the lease
obligation. With respect to MLOs purchased by the corresponding Portfolios of
the Municipal Money Market Fund, the AMR Trust Board has established the
following guidelines for determining the liquidity of the MLOs in its
portfolio, and, subject to review by the AMR Trust Board, has delegated that
responsibility to the investment adviser: (1) the frequency of trades and
quotes for the security; (2) the number of dealers willing to purchase or sell
the security and the number of other potential buyers; (3) the willingness of
dealers to undertake to make a market in the security; (4) the nature of the
marketplace trades; (5) the likelihood that the marketability of the obligation
will be maintained through the time the security is held by the Portfolio; (6)
the credit quality of the issuer and the lessee; (7) the essentiality to the
lessee of the property covered by the lease and (8) for unrated MLOs, the MLOs'
credit status analyzed according to the factors reviewed by rating agencies.

Private Activity Obligations-Private activity obligations are issued to
finance, among other things, privately operated housing facilities, pollution
control facilities, convention or trade show facilities, mass transit, airport,
port or parking facilities and certain facilities for water supply, gas,
electricity or sewage or solid waste disposal. Private activity obligations
are also issued to privately held or publicly owned corporations in the
financing of commercial or industrial facilities. The principal and interest
on these obligations may be payable from the general revenues of the users of
such facilities. Shareholders, depending on their individual tax status, may
be subject to the federal alternative minimum tax on the portion of a
distribution attributable to these obligations. Interest on private activity
obligations will be considered exempt from federal income taxes; however,
shareholders should consult their own tax advisers to determine whether they
may be subject to the federal alternative minimum tax.

Ratings of Long-Term Obligations-The Portfolio utilizes ratings provided
by the following nationally recognized statistical rating organizations
("Rating Organizations") in order to determine eligibility of long-term
obligations.

The four highest Moody's Investors Service, Inc. ("Moody's") ratings for
long-term obligations (or issuers thereof) are Aaa, Aa, A and Baa. Obligations
rated Aaa are judged by Moody's to be of the best quality. Obligations rated
Aa are judged to be of high quality by all standards. Together with the Aaa
group, such debt comprises what is generally known as high-grade debt. Moody's
states that debt rated Aa is rated lower than Aaa debt because margins of
protection or other elements make long-term risks appear somewhat larger than
for Aaa debt. Obligations which are rated A by Moody's possess many favorable
investment attributes and are considered "upper medium-grade obligations."
Obligations which are rated Baa by Moody's are considered to be medium grade
obligations, i.e., they are neither highly protected or poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Moody's also supplies numerical
indicators 1, 2, and 3 to rating categories. The modifier 1 indicates that the
security is in the higher end of its rating category; the modifier 2 indicates
a mid-range ranking; and modifier 3 indicates a ranking toward the lower end of
the category.

The four highest Standard & Poor's ratings for long-term obligations are
AAA, AA, A and BBB. Obligations rated AAA have the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is extremely
strong. Obligations rated AA have a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in a small
degree. Obligations rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions. Obligations rated BBB by
Standard & Poor's are regarded as having adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

22
<PAGE> 145
Duff & Phelps' four highest ratings for long-term obligations are AAA,
AA, A and BBB. Obligations rated AAA have the highest credit quality with risk
factors being negligible. Obligations rated AA are of high credit quality and
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions. Obligations rated A have average but
adequate protection factors. However, risk factors are more variable and
greater in periods of economic stress. Obligations rated BBB have below
average protection factors with considerable variability in risk during
economic cycles, but are still considered sufficient for prudent investment.

Thomson BankWatch ("Bankwatch") long-term debt ratings apply to specific
issues of long-term debt and preferred stock. They specifically assess the
likelihood of an untimely repayment of principal or interest over the term to
maturity of the rated instrument. BankWatch's four highest ratings for
long-term obligations are AAA, AA, A and BBB. Obligations rated AAA indicate
that the ability to repay principal and interest on a timely basis is very
high. Obligations rated AA indicate a superior ability to repay principal and
interest on a timely basis, with limited incremental risk compared to issues
rated in the highest category. Obligations rated A indicate the ability to
repay principal and interest is strong. Issues rated A could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings. BBB is the lowest investment grade category
and indicates an acceptable capacity to repay principal and interest. Issues
rated BBB are, however, more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.

Fitch Investors Service, Inc. ("Fitch") investment grade bond ratings
provide a guide to investors in determining the credit risk associated with a
particular security. The ratings represent Fitch's assessment of the issuer's
ability to meet the obligations of a specific debt issue or class of debt in a
timely manner. Obligations rated AAA are considered to be investment grade and
of the highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonable foreseeable events. Bonds rated AA are considered to be investment
grade and of very high credit quality. The obligor's ability to pay interest
and repay principal is very strong, although not quite as strong as bonds rated
AAA. Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

IBCA's four highest long term obligation ratings are AAA, AA, A and BBB.
Obligations rated AAA are those for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially. AA
obligations have a very low expectation of investment risk. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic, or financial conditions may increase investment risk albeit
not very significantly. Obligations rated A have a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic, or financial conditions
may lead to increased investment risk. Obligations rated BBB have a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic, or
financial conditions are more likely to lead to increased investment risk than
for obligations in other categories.

Standard & Poor's, Duff & Phelps and Fitch apply indicators "+","-," and
no character to indicate relative standing within the major rating categories.

Ratings of Municipal Obligations-Moody's ratings for state and municipal
short-term obligations are designated Moody's Investment Grade or "MIG" with
variable rate demand obligations being designated as "VMIG." A VMIG rating may
also be assigned to commercial paper programs which are characterized as having
variable short-term maturities but having neither a variable rate nor demand
feature. Factors used in determination of ratings include liquidity of the
borrower and short-term cyclical elements.

Standard & Poor's uses SP-1, SP-2, and SP-3 to rate short-term municipal
obligations. A rating of SP-1 denotes a very strong or strong capacity to pay
principal and interest.

23
<PAGE> 146
Ratings of Short-term Obligations-The rating P-1 is the highest
short-term rating assigned by Moody's. Among the factors considered by Moody's
in assigning ratings are the following: (1) evaluations of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.

Short-term obligations (or issuers thereof) rated A-1 by Standard &
Poor's have the following characteristics. Liquidity ratios are adequate to
meet cash requirements. The issuer has access to at least two additional
channels of borrowing. Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
well established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's short-term
obligation is rated A-1, A-2, or A-3.

IBCA's short-term rating of A1 indicates obligations supported by the
highest capacity for timely repayment. Where issues possess particularly
strong credit features, a rating of A1+ is assigned. Obligations rated A2 are
supported by a good capacity for timely repayment.

The distinguishing feature of Duff & Phelps Credit Ratings' short-term
rating is the refinement of the traditional 1 category. The majority of
short-term debt issuers carry the highest rating, yet quality differences exist
within that tier. Obligations rated D-1+ indicate the highest certainty of
timely payment. Safety is just below risk-free U.S. Treasury obligations.
Obligations rated D-1 have a very high certainty of timely payment. Risk
factors are minor. Obligations rated D-1- have a high certainty of timely
payment. Risk factors are very small. Obligations rated D-2 have good
certainty of timely payment. Liquidity factors and company fundamentals are
sound. Although ongoing funding needs may enlarge total financing
requirements, access to capital markets is good. Risk factors are small.

Thomson BankWatch short-term ratings are intended to assess the
likelihood of an untimely or incomplete payment of principal or interest.
Obligations rated TBW-1 indicate a very high likelihood that principal and
interest will be paid on a timely basis. While the degree of safety regarding
timely payment of principal and interest is strong for an obligation rated
TBW-2, the relative degree of safety is not as high as for issues rated TBW-1.

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes. A rating of F-1+ indicates exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment. Obligations rated F-1 have very
strong credit quality. Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues rated F-1+. Issues
assigned a rating of F-2 indicate good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F- 1+ and F-1 ratings.

Repurchase Agreements-A repurchase agreement, which provides a means to
earn income on funds for periods as short as overnight, is an arrangement under
which the purchaser (e.g.., a Portfolio) purchases securities and the seller
agrees, at the time of sale, to repurchase the securities at a specified time
and price. The repurchase price will be higher than the purchase price, the
difference being income to the purchaser, or the purchase and repurchase prices
may be the same, with interest at a stated rate due to the purchaser together
with the repurchase price on repurchase. In either case, the income to the
purchaser is unrelated to the interest rate on the securities subject to the
repurchase agreement.

Each Portfolio may enter into repurchase agreements with any bank or
registered broker-dealer who, in the opinion of the AMR Trust Board, presents a
minimum risk of bankruptcy during the term of the agreement based upon
guidelines that periodically are reviewed by the AMR Trust Board. Each
Portfolio may enter into repurchase agreements as a short- term investment of
its idle cash in order to earn income. The securities will be held by a
custodian (or agent) approved by the AMR Trust Board during the term of the
agreement. However, if the market value of the securities subject to the
repurchase agreement becomes less than the repurchase price

24
<PAGE> 147

(including interest), the Portfolio will direct the seller of the securities to
deliver additional securities so that the market value of all securities
subject to the repurchase agreement will equal or exceed the repurchase price.

In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the securities before the repurchase of the
securities under a repurchase agreement, a Portfolio may encounter a delay and
incur costs before being able to sell the security being held as collateral.
Delays may involve loss of interest or decline in price of the securities.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the seller may fail to repurchase the securities, in which case a
Portfolio may incur a loss if the proceeds to the Portfolio from the sale of
the securities to a third party are less than the repurchase price.

Reverse Repurchase Agreements-The Portfolios may borrow funds for
temporary purposes by entering into reverse repurchase agreements. Pursuant to
such agreements, a Portfolio would sell portfolio securities to financial
institutions such as banks and broker/dealers and agree to repurchase them at a
mutually agreed-upon date and price. The Portfolios intend to enter into
reverse repurchase agreements only to avoid selling securities to meet
redemptions during market conditions deemed unfavorable by the investment
adviser possessing investment authority. At the time a Portfolio enters into a
reverse repurchase agreement, it will place in a segregated custodial account
assets such as liquid high quality debt securities having a value not less than
100% of the repurchase price (including accrued interest), and will
subsequently monitor the account to ensure that such required value is
maintained. Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Portfolio may decline below the price at
which such Portfolio is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by an investment company
under the 1940 Act.

Resource Recovery Obligations-Resource recovery obligations are a type of
municipal revenue obligation issued to build facilities such as solid waste
incinerators or waste-to-energy plants. Usually, a private corporation will be
involved and the revenue cash flow will be supported by fees or units paid by
municipalities for use of the facilities. The viability of a resource recovery
project, environmental protection regulations and project operator tax
incentives may affect the value and credit quality of these obligations.

Revenue Obligations-Revenue obligations are backed by the revenue cash
flow of a project or facility.

Rights and Warrants-Rights are short-term warrants issued in conjunction
with new stock issues. Warrants are options to purchase an issuer's securities
at a stated price during a stated term. There is no specific limit on the
percentage of assets a Portfolio may invest in rights and warrants, although
the ability of some of the Portfolios to so invest is limited by their
investment objectives or policies.

Separately Traded Registered Interest and Principal Securities and Zero
Coupon Obligations-Separately traded registered interest and principal
securities or "STRIPS" and zero coupon obligations are securities that do not
make regular interest payments. Instead they are sold at a discount from their
face value. Each Portfolio will take into account as income a portion of the
difference between these obligations' purchase prices and their face values.
Because they do not pay coupon income, the prices of STRIPS and zero coupon
obligations can be very volatile when interest rates change. STRIPS are zero
coupon bonds issued by the U.S. Treasury.

Tax, Revenue or Bond Anticipation Notes-Tax, revenue or bond anticipation
notes are issued by municipalities in expectation of future tax or other
revenues which are payable from these specific taxes or revenues. Bond
anticipation notes usually provide interim financing in advance of an issue of
bonds or notes, the proceeds of which are used to repay the anticipation notes.
Tax-exempt commercial paper is issued by municipalities to help finance
short-term capital or operating needs in anticipation of future tax or other
revenue.

U.S. Government Securities-U.S. Government securities are issued or
guaranteed by the U.S. Government and include U.S. Treasury obligations (see
definition below) and securities issued by U.S. agencies and instrumentalities.

U. S. Government agencies or instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, GNMA, General Services Administration, Central Bank
for Cooperatives, Federal Home Loan Banks, FHLMC, Federal Intermediate Credit
Banks, Federal Land Banks, Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board, Inter-American Development

25
<PAGE> 148

Bank, Asian-American Development Bank, Agency for International Development,
Student Loan Marketing Association and International Bank of Reconstruction and
Development.

Obligations of U.S. Government agencies and instrumentalities may or may
not be supported by the full faith and credit of the United States. Some are
backed by the right of the issuer to borrow from the Treasury; others are
supported by discretionary authority of the U.S. Government to purchase the
agencies' obligations; while still others, such as the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. In the
case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able to
assert a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.

U.S. Treasury Obligations-U.S. Treasury obligations include bills, notes
and bonds issued by the U.S. Treasury and Separately Traded Registered Interest
and Principal component parts of such obligations known as STRIPS.

Variable or Floating Rate Obligations-A variable rate obligation is one
whose terms provide for the adjustment of its interest rate on set dates and
which, upon such adjustment, can reasonably be expected to have a market value
that approximates its par value. A floating rate obligation is one whose terms
provide for the adjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a
market value that approximates its par value. Variable or floating rate
obligations may be secured by bank letters of credit.

Pursuant to Rule 2a-7 under the 1940 Act, variable or floating rate
obligations with stated maturities of more than 397 days may be deemed to have
shorter maturities as follows:

(1) An obligation that is issued or guaranteed by the United States
Government or any agency thereof which has a variable rate of interest
readjusted no less frequently than every 762 days will be deemed by a Portfolio
to have a maturity equal to the period remaining until the next readjustment of
the interest rate.

(2) A variable rate obligation, the principal amount of which is
scheduled on the face of the instrument to be paid in 397 days or less, will be
deemed by a Portfolio to have a maturity equal to the period remaining until
the next readjustment of the interest rate.

(3) A variable rate obligation that is subject to a demand feature will
be deemed by a Portfolio to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.

(4) A floating rate obligation that is subject to a demand feature will
be deemed by a Portfolio to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.

As used above, an obligation is "subject to a demand feature" when a
Portfolio is entitled to receive the principal amount of the obligation either
at any time on no more than 30 days' notice or at specified intervals not
exceeding one year and upon no more than 30 days' notice.

Variable Rate Auction and Residual Interest Obligations-Variable rate
auction and residual interest obligations are created when an issuer or dealer
separates the principal portion of a long-term, fixed-rate municipal bond into
two long-term, variable-rate instruments. The interest rate on one portion
reflects short-term interest rates, while the interest rate on the other
portion is typically higher than the rate available on the original fixed-rate
bond.

FINANCIAL STATEMENTS

The American AAdvantage Funds' Annual Report to shareholders for the
fiscal year ended October 31, 1995, is supplied with the Statement of
Additional Information, and the financial statements and accompanying notes
appearing therein are incorporated by reference in this Statement of Additional
Information.

26
<PAGE> 149
TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management, Administrative Services and Distribution Fees . . . . . . . . . . . . . . . . . . . . . .

Approach to Stock Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expense Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment Advisory Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Portfolio Securities Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yield and Total Return Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Description of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Control Persons and 5% Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

27
<PAGE> 150
STATEMENT OF ADDITIONAL INFORMATION

AMERICAN AADVANTAGE FUNDS

-- PLATINUM CLASS(sm) --

MARCH 1, 1996

The American AAdvantage Money Market Fund(sm) (the "Money Market Fund"),
the American AAdvantage Municipal Money Market Fund(sm) (the "Municipal Money
Market Fund"), and the American AAdvantage U.S. Treasury Money Market Fund(sm)
(the "U.S. Treasury Money Market Fund") (individually, a "Fund" and,
collectively, the "Funds") are three separate investment portfolios of the
American AAdvantage Funds (the "Trust"). The Trust is an open-end, diversified
management investment company. Each Fund constitutes a separate investment
portfolio with a distinct investment objective, and distinct purposes and
strategies. Each Fund consists of multiple classes of shares designed to meet
the needs of different groups of investors. This Statement of Additional
Information relates only to the Platinum Class of the Funds.

Each Fund seeks its investment objective by investing all of its
investable assets in a corresponding portfolio (individually, a "Portfolio"
and, collectively, the "Portfolios") of the AMR Investment Services Trust ("AMR
Trust") that has a similar name and an identical investment objective to the
investing Fund.

This Statement of Additional Information should be read in conjunction
with the Platinum Class prospectus dated March 1, 1996 ("Prospectus"), a copy
of which may be obtained without charge by calling (800) 967-9009

This Statement of Additional Information is not a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by a current Prospectus.

INVESTMENT RESTRICTIONS

Each Fund has the following fundamental investment policy that enables it
to invest in a corresponding Portfolio of the AMR Trust:

No Portfolio may:

1. Purchase or sell real estate or real estate limited partnership
interests, provided, however, that the Portfolio may invest in securities
secured by real estate or interests
<PAGE> 151
therein or issued by companies which invest in real estate or interests
therein when consistent with the other policies and limitations described
in the Prospectus.

3. Engage in the business of underwriting securities issued by others
except to the extent that, in connection with the disposition of
securities, the Portfolio may be deemed an underwriter under federal
securities law.

4. Make loans to any person or firm, provided, however, that the
making of a loan shall not be construed to include (i) the acquisition
for investment of bonds, debentures, notes or other evidences of
indebtedness of any corporation or government which are publicly
distributed or (ii) the entry into repurchase agreements and further
provided, however, that each Portfolio may lend its investment securities
to broker-dealers or other institutional investors in accordance with the
guidelines stated in the Prospectus.

5. Purchase from or sell portfolio securities to its officers,
Trustees or other "interested persons" of the AMR Trust, as defined in
the Investment Company Act of 1940 ("1940 Act"), including its investment
advisers and their affiliates, except as permitted by the 1940 Act and
exemptive rules or orders thereunder.

6. Issue senior securities except that the Portfolio may engage in
when-issued securities and forward commitment transactions.

The following non-fundamental investment restrictions apply to each
Portfolio and may be changed with respect to a Portfolio by a majority vote of
the AMR Trust Board. No Portfolio may:

TRUSTEES AND OFFICERS

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<PAGE> 152
The Board provides broad supervision over the Trust's affairs. AMR
Investment Services, Inc. (the "Manager") is responsible for the management of
Trust assets, and the Trust's officers are responsible for the Trust's
operations. 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 4333
Amon Carter Boulevard, MD 5645, Fort Worth, Texas 76155.

<TABLE>
<CAPTION>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ------------- ----------------------------------------
<S> <C> <C>
William F. Quinn* (48) Trustee and President, AMR Investment Services, Inc. (November
President 1986-Present); Chairman, American Airlines
Employees Federal Credit Union (October 1989-
Present); Trustee, American Performance Funds
(September 1990-July 1994); Director, Crescent
Real Estate Equities, Inc. (April 1994 - Present);
Trustee, American AAdvantage Mileage Funds (1995 -
Present).

David G. Fox (72) Trustee Director, Capstead Mortgage Company (1985-1994);
5949 Sherry Lane Director, Southwestern Medical Foundation (1984-
Suite 1220, LB 125 Present); Trustee, Shelter Ministries of Dallas
Dallas, Texas 75225-6521 (1993-Present); Member, Dallas Citizens Council
(1967- Present); President, Dallas County
Historical Foundation (1987-1993); Chairman of the
Board, Sensible Metropolitan Area Rapid Transit
(1987-1994); Chairman of the Board, State Fair of
Texas (April 1988-April 1993); Owner, David G. Fox
Investments (1985-Present); Trustee, American
AAdvantage Mileage Funds (1995 - Present).

John S. Justin (79) Trustee Chairman and Chief Executive Officer, Justin
2821 West Seventh Street Industries, Inc. (a diversified holding company)
Fort Worth, Texas 76107 (1969-Present); Executive Board Member, Blue
Cross/Blue Shield of Texas (1985-Present); Board
Member, Zale Lipshy Hospital (June 1993-Present);
Trustee, Texas Christian University (1980-
Present); Director and Executive Board Member,
Moncrief Radiation Center (1985-Present);
Director, Texas New Mexico Enterprises (1984-
1993); Director, Texas New Mexico Power Company
(1979-1993); Trustee, American AAdvantage Mileage
Funds (1995 - Present).

Stephen D. O'Sullivan* (60) Trustee Consultant (July 1994-Present); Vice President and
Controller (April 1985-June 1994), American
Airlines, Inc.; Trustee, American AAdvantage
Mileage Funds (1995 - Present).
</TABLE>

3
<PAGE> 153

<TABLE>
<CAPTION>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ------------- ----------------------------------------
<S> <C> <C>
Roger T. Staubach (54) Trustee Chairman of the Board and Chief Executive Officer
6750 LBJ Freeway (1982-present) and President (1983-1991) of The
Dallas, TX 75240 Staubach Company (a commercial real estate
company); Director, Halliburton Company (1991-
present); Director, First USA, Inc. (1993-
present); Director, Brinker International (1993-
present); Director, Columbus Realty Trust (1994-
present); Member of the Advisory Board, The
Salvation Army; Member of the Advisory Board,
Dallas International Sports Commission; Member of
the Advisory Board, Hartford Whalers Hockey Club;
Trustee, Institute for Aerobics Research; Member
of Executive Council, Daytop/Dallas; former
quarterback of the Dallas Cowboys professional
football team; Trustee, American AAdvantage
Mileage Funds (1995 - Present).

Nancy A. Eckl (33) Vice President Vice President (December 1990-Present), AMR
Investment Services, Inc.

Michael W. Fields (42) Vice President Vice President, AMR Investment Services, Inc.
(August 1988-Present).

Janice S. Goldshmid (36) Vice President and Senior Compliance Analyst, AMR Investment
Assistant Services, Inc. (December 1990-Present).
Secretary

Barry Y. Greenberg (32) Vice President and Director, Legal and Compliance, AMR Investment
Assistant Services, Inc. (July 1995-Present); Branch Chief
Secretary (May 1992-June 1995) and Staff Attorney (August
1988-May 1992), Securities and Exchange Commission
Fort Worth Branch Office.

Rebecca L. Harris (29) Treasurer Director of Finance (May 1995-Present), Controller
(November 1991-April 1995), AMR Investment
Services, Inc.; Financial Analyst, Sabre Travel
Information Network (December 1990-October 1991).

John B. Roberson (37) Vice President Vice President (June 1991-Present), Assistant Vice
President (August 1988-May 1991), AMR Investment
Services, Inc.

Clifford J. Alexander (52) Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)

Robert J. Zutz (43) Assistant Partner, Kirkpatrick & Lockhart LLP (law firm)
Secretary
</TABLE>

* Messrs. Quinn and O'Sullivan, by virtue of their current or former
positions, are deemed to be "interested persons" of the Trust and the AMR
Trust as defined by the 1940 Act.

All Trustees and officers as a group own less than 1% of the outstanding
shares of any of the Funds.

The Trust compensates each Independent Trustee with payments in an amount
equal to the Trustees' income tax on the value of free airline travel for
him and his spouse on American

4
<PAGE> 154

Airlines, Inc. The direct aggregate and total remuneration paid to all
Trustees on behalf of the Trust for the fiscal year ended October 31, 1995
is shown below.

<TABLE>
<CAPTION>
Estimated
Aggregate Pension or Retirement Annual Total
Compensation Benefits Accrued as Benefits Compensation
From the Part of the AAdvantage Upon From AAdvantage
Name of Trustee Trust Trust's Expenses Retirement Fund Complex
--------------- ----- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0
David G. Fox $27,511 $0 $0 $27,511
John S. Justin $14,475 $0 $0 $14,475
Stephen D. O'Sullivan $0 $0 $0 $0
Roger T. Staubach/ $0 $0 $0 $0
</TABLE>

MANAGEMENT, ADMINISTRATIVE SERVICES AND DISTRIBUTION FEES

As described more fully in the Prospectus, the Manager is paid a
management fee as compensation for paying investment advisory fees and for
providing the Trust and the AMR Trust with advisory and asset allocation
services. Management fees for the fiscal years ended October 31 were
approximately as follows: 1993, $7,827,000 of which approximately $2,280,000
was paid by the Manager to the other investment advisers; 1994, $6,950,000 of
which approximately $2,965,000 was paid by the Manager to the other investment
advisers; and 1995, $ of which approximately $ was paid by the Manager to
the other investment advisers. Management fees in the amount of approximately
$214,000 and $ were waived by the Manager during the fiscal years ended October
31, 1994 and 1995, respectively. These amounts include payments to portfolios
of the Trust other than the Funds.

In addition to the management fee, the Manager is paid an administrative
services fee for providing administrative and management services (other than
investment advisory services) to the Trust. Administrative services fees for
the fiscal years ended October 31 were approximately as follows: 1993,
$1,544,000; 1994, $1,473,000 and 1995, $ . Administrative service fees in
the amount of approximately $14,000 and $ were waived by the Manager during the
fiscal years ended October 31, 1994 and 1995, respectively. These amounts
include payments to portfolios of the Trust other than the Funds.

Brokers Transaction Services, Inc., as distributor of the Funds, receives
an annualized fee of $50,000 from the Manager for distributing the shares of
the Trust and the American AAdvantage Mileage Funds.

REDEMPTIONS IN KIND

EXPENSE LIMITATIONS

5
<PAGE> 155
most restrictive state expense limit currently imposed is 2.5% of a Fund's
first $30 million in assets, 2.0% of the next $70 million in assets and 1.5% of
all excess assets. If a Fund's expenses exceed any applicable state expense
limits, the Manager would have to bear such excess expenses in order for the
Trust to continue selling its shares in that state. Any excess expenses
assumed by the Manager can be reimbursed monthly whenever a Fund's expenses are
below applicable expense limits.

NET ASSET VALUE

It is the policy of the Funds to attempt to maintain a constant price per
share of $1.00. There can be no assurance that a $1.00 net asset value per
share will be maintained. These Funds' corresponding Portfolios' investment
securities are valued based on the amortized cost valuation technique pursuant
to Rule 2a-7 under the 1940 Act. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, even though the portfolio security may increase or
decrease in market value. Such market fluctuations are generally in response
to changes in interest rates. Use of the amortized cost valuation method
requires the Portfolios to purchase instruments having remaining maturities of
397 days or less, to maintain a dollar weighted average portfolio maturity of
90 days or less, and to invest only in securities determined by the AMR Trust
Board to be of high quality with minimal credit risks.

TAX INFORMATION

TAXATION OF THE FUNDS

To qualify for treatment as a regulated investment company ("RIC") under
the Internal Revenue Code of 1986, as amended ("Code"), each Fund (each of
which is treated as a separate corporation for these purposes) must, among
other requirements:

o Derive less than 30% of its gross income each taxable year from the
sale or other disposition of securities that are not directly
related to the Fund's principal business of investing in securities,
that are held for less than three months ("Short-Short Limitation");

o Diversify its investments in securities within certain statutory
limits; and

TAXATION OF THE PORTFOLIOS

The Portfolios have received a ruling from the IRS to the effect that,
among other things, each Portfolio is treated as a separate partnership for
federal income tax purposes and is not a "publicly traded partnership." As a
result, no Portfolio is subject to federal income tax; instead, each investor
in a Portfolio, such as a Fund, is required to take into account in determining
its federal income tax liability its share of the Portfolio's income, gains,
losses, deductions, credits

6
<PAGE> 156

and tax preference items, without regard to whether it has received any cash
distributions from the Portfolio.

Distributions to a Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) will not result in
the Fund's recognition of any gain or loss for federal income tax purposes,
except that (1) gain will be recognized to the extent any cash that is
distributed exceeds the Fund's basis for its interest in the Portfolio before
the distribution, (2) income or gain will be recognized if the distribution is
in liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio and
(3) loss will be recognized if a liquidation distribution consists solely of
cash and/or unrealized receivables. A Fund's basis for its interest in its
corresponding Portfolio generally will equal the amount of cash and the basis
of any property the Fund invests in the Portfolio, increased by the Fund's
share of the Portfolio's net income and gains and decreased by (a) the amount
of cash and the basis of any property the Portfolio distributes to the Fund and
(b) the Fund's share of the Portfolio's losses.

The Municipal Money Market Fund's corresponding Portfolio may acquire
zero coupon or other securities issued with original issue discount. As an
investor in the Portfolio that holds those securities, the Municipal Money
Market Fund would have to include in its income its share of the original issue
discount that accrues on the securities during the taxable year, even if the
Portfolio (and, hence, the Fund) receives no corresponding payment on the
securities during the year. Because each Fund annually must distribute
substantially all of its investment company taxable income, including any
original issue discount, to satisfy the Distribution Requirement and avoid
imposition of the 4% excise tax described in the Prospectus, the Municipal
Money Market Fund may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. Those distributions would be made from the Fund's cash assets, if
any, or the proceeds of redemption of a portion of the Municipal Money Market
Fund's interest in its corresponding Portfolio (which redemption proceeds would
be paid from the Portfolio's cash assets or the proceeds of sales of portfolio
securities, if necessary). The Portfolio might realize capital gains or losses
from any such sales, which would increase or decrease the Municipal Money
Market Fund's investment company taxable income and/or net capital gain (the
excess of net long-term capital gain over net short-term capital loss). In
addition, any such gains might be realized on the disposition of securities
held for less than three months. Because of the Short-Short Limitation
applicable to the Fund, any such gains would reduce the Portfolio's ability to
sell other securities held for less than three months that it might wish to
sell in the ordinary course of its portfolio management.

TAXATION OF THE FUNDS' SHAREHOLDERS

7
<PAGE> 157
of the Municipal Money Market Fund because, for users of certain of these
facilities, the interest on those bonds is not exempt from federal income tax.
For these purposes, the term "substantial user" is defined generally to include
a "non- exempt person" who regularly uses in trade or business a part of a
facility financed from the proceeds of PABs or IDBs.

YIELD AND TOTAL RETURN QUOTATIONS

The Platinum Class of the Funds commenced operations on November 7, 1995
For purposes of advertising performance, and in accordance with Securities and
Exchange Commission staff interpretations, the Funds have adopted the
performance of the Institutional Class of the Funds for periods prior to the
inception date. The performance figures for the Platinum Class will be lower,
however, because the performance figures for the Institutional Class do not
reflect the 12b-1 fees, Administrative Services Plan fees or other class
expenses that will be borne by the Platinum Class.

A quotation of yield on shares of the Funds may appear from time to time
in advertisements and in communications to shareholders and others. Quotations
of yields are indicative of yields for the limited historical period used but
not for the future. Yield will vary as interest rates and other conditions
change. Yield also depends on the quality, length of maturity and type of
instruments invested in by the Funds, and the applicable Fund's operating
expenses. A comparison of the quoted yields offered for various investments is
valid only if yields are calculated in the same manner. In addition, other
similar investment companies may have more or less risk due to differences in
the quality or maturity of securities held.

The yields of the Funds may be calculated in one of two ways:

(1) Current Yield--the net average annualized return without compounding
accrued interest income. For a 7-day current yield, this is computed by
dividing the net change in value over a 7 calendar-day period of a
hypothetical account having one share at the beginning of a 7
calendar-day period by the value of the account at the beginning of this
period to determine the "base period return". The quotient is multiplied
by 365 divided by 7 and stated to two decimal places. A daily current
yield is calculated by multiplying the net change in value over one day
by 365 and stating it to two decimal places. Capital changes, such as
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation, are excluded in calculating the net change
in value of an account, but this calculation includes the aggregate fees
and other expenses that are charged to all shareholder accounts in a
Fund. In determining the net change in value of a hypothetical account,
this value is adjusted to reflect the value of any additional shares
purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares.

(2) Effective Yield--the net average annualized return as computed by
compounding accrued interest income. In determining the 7-day effective
yield, a Fund will compute the "base period return" in the same manner
used to compute the "current yield" over a 7 calendar-day period as
described above. One is then added to the base period return and the sum
is raised to the 365/7 power. One is subtracted from the result,
according to the following formula:

8
<PAGE> 158
[365/7]
EFFECTIVE YIELD = [ (BASE PERIOD RETURN + 1) ] - 1

The current and effective yields for the Institutional Class of the Funds
are as follows:

<TABLE>
<CAPTION>
Current daily Current yield for Effective yield for
yield as of the seven-day the seven-day
October 31, period ended period ended
1995 October 31, 1995 October 31, 1995
---- ---------------- ----------------
<S> <C> <C> <C>
Institutional Class
-------------------
Money Market Fund 5.76% 5.74% 5.90%
Municipal Money Market Fund 3.84% 3.83% 3.90%
U.S. Treasury Money Market Fund 5.52% 5.54% 5.70%
</TABLE>

The Municipal Money Market Fund may also advertise a tax-equivalent
current and effective yield. The tax- equivalent yields are calculated as
follows:

CURRENT YIELD/(1 - APPLICABLE TAX RATE) = CURRENT TAX-EQUIVALENT YIELD

EFFECTIVE YIELD/(1 - APPLICABLE TAX RATE) = EFFECTIVE TAX-EQUIVALENT YIELD

Based on these formulas, the current and effective tax-equivalent yields for
the Institutional Class of the Municipal Money Market Fund for the seven day
periods ending October 31, 1995 were 5.89% and 6.00%, respectively (based upon
a 39.6% personal tax rate).

The advertised total return for a class of a Fund would be calculated by
equating an initial amount invested in a class of a Fund to the ending
redeemable value, according to the following formula:

n
P(1 + T) = ERV

where "P" is a hypothetical initial payment of $1,000; "T" is the average
annual total return for the Fund; "n" is the number of years involved; and
"ERV" is the ending redeemable value of a hypothetical $1,000 payment made in
the Fund at the beginning of the investment period covered.

Based on this formula, annualized total returns for the Institutional
Class were as follows for the periods indicated:

<TABLE>
<CAPTION>
For the period from
the commencement of
For the one-year For the five-year active operations
period ended period ended through
October 31, 1995 October 31, 1995 (2) October 31, 1995 (1)
---------------- -------------------- --------------------
<S> <C> <C> <C>
Institutional Class
-------------------
Money Market Fund 5.96% 4.93% 6.27%
Municipal Money Market Fund (3) 3.75% N/A 3.10%
U.S. Treasury Money Market Fund 5.67% N/A 4.05%
</TABLE>

(1) Inception dates are as follows: Money Market Fund, September 1,
1987; Municipal Money Market Fund, November 10, 1993; and U.S. Treasury
Money Market Fund, March 2, 1992.

(2) The Municipal Money Market Fund and U.S. Treasury Money Market Fund
had not commenced active operations as of November 1, 1990.

(3) Management and Administrative Services fees have been waived for the
Municipal Money Market Fund since its inception. Performance prior to fee
waivers for the periods shown are

9
<PAGE> 159

<TABLE>
<S> <C> <C>
Institutional Class 3.54% 2.89%
</TABLE>

Each Fund also may use "aggregate" total return figures for various periods
which represent the cumulative change in value of an investment in a Fund for
the specific period. Such total returns reflect changes in share prices of a
Fund and assume reinvestment of dividends and distributions.

In reports or other communications to shareholders or in advertising
material, each Fund may from time to time compare its performance with that of
other mutual funds in rankings prepared by Lipper Analytical Services, Inc.,
IBC/Donoghue, Inc. and other similar independent services which monitor the
performance of mutual funds or publications such as the "New York Times" and
the "Wall Street Journal." Advertisements for the Funds may mention that the
Funds offer a variety of investment options. They may also compare the Funds
to federally insured investments such as bank certificates of deposit and
credit union deposits, including the long-term effects of inflation on these
types of investments. Advertisements may also compare the historical rate of
return of different types of investments.

DESCRIPTION OF THE TRUST

The Trust, organized on January 16, 1987, is an entity of the type commonly
known as a "Massachusetts business trust". Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for its obligations. However, the Trust's Declaration of
Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust and provides for indemnification and reimbursement of
expenses out of Trust property for any shareholder held personally liable for
the obligations of the Trust. The Declaration of Trust also provides that the
Trust may maintain appropriate insurance (for example, fidelity bonding) for
the protection of the Trust, its shareholders, Trustees, officers, employees
and agents to cover possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss due to shareholder liability is limited to
circumstances in which both inadequate insurance existed and the Trust itself
was unable to meet its obligations. The Trust has not engaged in any other
business.

CONTROL PERSONS AND 5% SHAREHOLDERS

The following persons may be deemed to control certain Funds by virtue of
their ownership of more than 25% of the outstanding shares of a Fund as of
November 30, 1995:

American AAdvantage Municipal Money Market Fund

In addition, the following persons own more than 5% of the outstanding
shares of a Fund as of January 31, 1996:

<TABLE>
<CAPTION>
Total
Fund
-----
<S> <C>
American AAdvantage Money Market Fund
-------------------------------------
Alliance Airport Authority %
Bank One, Texas, NA (Corporate Trust Department)
500 Throckmorton
Fort Worth, Texas 76113-2604
City of Chicago International Airport Revenue Bonds %
Harris Trust and Savings Bank(Indenture Trust Division)
P.O. Box 755
Chicago, Illinois 60690
Dallas/Fort Worth International Airport Revenue Bonds %
AmeriTrust, Texas, NA
P.O. Box 2320
Dallas, Texas 75221-2320
NationsBank Trust Department(Securities Lending Assets) %
P.O. Box 83222, BC 492-16
Dallas, Texas 75283
</TABLE>

10
<PAGE> 160

American AAdvantage Municipal Money Market Fund
-----------------------------------------------
ADS Planning Inc. Profit Sharing Plan
27653 Flaming Arrow Drive
Rancho Palos Verdes, California 90275-3928
B&J Plumbing Inc. Defined Benefit Pension Plan
10754 National Blvd.
Los Angeles, California 90064-4234
Kenneth M. and Renee K. Chamblee
417 River Valley
Arlington, Texas 76006-3646

American AAdvantage U.S. Treasury Money Market Fund
---------------------------------------------------
All Saints Hospital %
1400 8th Avenue
Fort Worth, Texas 76104
</TABLE>

<TABLE>
<CAPTION>
Total
Fund
-----
<S> <C>
American AAdvantage U.S. Treasury Money Market Fund(cont.)
----------------------------------------------------------
British American Insurance Company %
P.O. Box 1590
Dallas, Texas 75221-1590
Jerry J. Fielding, IRA
471 Meridian Street
Crystal Lake, Illinois 60014-5415
Grapevine Industrial Development Corp %
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
Lone Star Airport Improvement Authority %
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
NationsBank Trust Department (Trust Assets) %
P.O. Box 83222, BC 492-16
Dallas, Texas 75283
Radnor, Inc.
550 Roberts Road
Bryn Mawr, Pennsylvania 19010-1137
Joseph R. Thomas, IRA
2898 NW 24th Court
Boca Raton, Florida 33431-6201
Wenonah Holdings Inc.
500 E. Mantua Avenue
Wenonah, New Jersey 08090-2015
</TABLE>

OTHER INFORMATION

11
<PAGE> 161
Cash Equivalents-Cash equivalents include certificates of deposit, bearer
deposit notes, bankers' acceptances, government obligations, commercial paper,
short-term corporate debt securities and repurchase agreements.

Commercial Paper-Commercial paper refers to promissory notes representing
an unsecured debt of a corporation or finance company with a fixed maturity of
no more than 270 days.

While there may be delays in recovery of loaned securities or even a loss
of rights in collateral supplied should the borrower fail financially, loans
will be made only to firms deemed

12
<PAGE> 162
by the AMR Trust Board to be of good financial standing and will not be made
unless the consideration to be earned from such loans would justify the risk.
Such loan transactions are referred to in this Statement of Additional
Information as "qualified" loan transactions.

The cash collateral so acquired through qualified loan transactions may
be invested only in those categories of high quality liquid securities
previously authorized by the AMR Trust Board.

Mortgage-Backed Securities-Mortgage-backed securities consist of both
collateralized mortgage obligations and mortgage pass-through certificates .

Collateralized Mortgage Obligations ("CMOs")-CMOs and interests in
real estate mortgage investment conduits ("REMICs") are debt securities
collateralized by mortgages, or mortgage pass-through securities. CMOs divide
the cash flow generated from the underlying mortgages or mortgage pass-through
securities into different groups referred to as "tranches," which are then
retired sequentially over time in order of priority. The principal
governmental issuers of such securities are the Federal National Mortgage
Association ("FNMA"), a government sponsored corporation owned entirely by
private stockholders and the Federal Home Loan Mortgage Corporation ("FHLMC"),
a corporate instrumentality of the United States created pursuant to an act of
Congress which is owned entirely by Federal Home Loan Banks. The issuers of
CMOs are structured as trusts or corporations established for the purpose of
issuing such CMOs and often have no assets other than those underlying the
securities and any credit support provided. A REMIC is a mortgage securities
vehicle, that holds residential or commercial mortgages and issues securities
representing interests in those mortgages. A REMIC may be formed as a
corporation, partnership, or segregated pool of assets. The REMIC itself is
generally exempt from federal income tax, but the income from the mortgages is
reported by investors. For investment purposes, interests in REMIC securities
are virtually indistinguishable from CMOs.

Mortgage Pass-Through Certificates-Mortgage pass-through
certificates are issued by governmental, government- related and private
organizations which are backed by pools of mortgage loans.

13
<PAGE> 163
Freddie Macs is highly liquid because of the size of the market and the active
participation in the secondary market of the FHLMC, security dealers and a
variety of investors.

(4) Mortgage-Related Securities Issued by Private Organizations-Pools
created by non-governmental issuers generally offer a higher rate of interest
than government and government-related pools because there are no direct or
indirect government guarantees of payments in such pools. However, timely
payment of interest and principal of these pools is often partially supported
by various enhancements such as over-collateralization and senior/subordination
structures and by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance. The insurance and
guarantees are issued by government entities, private insurers or the mortgage
poolers. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily
marketable.

Municipal Lease Obligations-Municipal lease obligations are issued by
state and local governments and authorities to acquire land and a wide variety
of equipment and facilities. These obligations typically are not fully backed
by the municipality's credit and thus interest may become taxable if the lease
is assigned. If funds are not appropriated for the following year's lease
payments, a lease may terminate with the possibility of default on the lease
obligation. With respect to municipal lease obligations ("MLOs") purchased by
the corresponding Portfolio of the Municipal Money Market Fund, the Board has
established the following guidelines for determining the liquidity of the MLOs
in its portfolio, and, subject to review by the AMR Trust Board, has delegated
that responsibility to the investment adviser: (1) the frequency of trades and
quotes for the security; (2) the number of dealers willing to purchase or sell
the security and the number of other potential buyers; (3) the willingness of
dealers to undertake to make a market in the security; (4) the nature of the
marketplace trades; (5) the likelihood that the marketability of the obligation
will be maintained through the time the security is held by the Portfolio; (6)
the credit quality of the issuer and the lessee; (7) the essentiality to the
lessee of the property covered by the lease and (8) for unrated MLOs, the MLOs'
credit status analyzed according to the factors reviewed by rating agencies.

The two highest Moody's Investors Service, Inc. ("Moody's") ratings for
long-term obligations (or issuers thereof) are Aaa and Aa. Obligations rated
Aaa are judged by Moody's to be of the best quality. Obligations rated Aa are
judged to be of high quality by all standards. Together with the Aaa group,
such debt comprises what is generally known as high-grade debt. Moody's states
that debt rated Aa is rated lower than Aaa debt because margins of protection
or other elements make long-term risks appear somewhat larger than for Aaa
debt. Moody's also

14
<PAGE> 164
supplies numerical indicators 1, 2, and 3 to rating categories. The modifier 1
indicates that the security is in the higher end of its rating category; the
modifier 2 indicates a mid-range ranking; and modifier 3 indicates a ranking
toward the lower end of the category.

The two highest Standard & Poor's ratings for long-term obligations are
AAA and AA. Obligations rated AAA have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.
Obligations rated AA have a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in a small degree.

Duff & Phelps' two highest ratings for long-term obligations are AAA and
AA. Obligations rated AAA have the highest credit quality with risk factors
being negligible. Obligations rated AA are of high credit quality and strong
protection factors. Risk is modest but may vary slightly from time to time
because of economic conditions.

IBCA's two highest long-term obligation ratings are AAA and AA.
Obligations rated AAA are those for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially. AA
obligations have a very low expectation of investment risk. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic, or financial conditions may increase investment risk albeit
not very significantly.

Standard & Poor's, Duff & Phelps and Fitch apply indicators "+","-," and
no character to indicate relative standing within the major rating categories.

Standard & Poor's uses SP-1, SP-2, and SP-3 to rate short-term municipal
obligations. A rating of SP-1 denotes a very strong or strong capacity to pay
principal and interest.

Ratings of Short-term Obligations-The rating P-1 is the highest
short-term rating assigned by Moody's. Among the factors considered by Moody's
in assigning ratings are the following: (1) evaluations of the management of
the issuer; (2) economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the

15
<PAGE> 165
issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.

Repurchase Agreements-A repurchase agreement, which provides a means to
earn income on funds for periods as short as overnight, is an arrangement under
which the purchaser (e.g., a Portfolio) purchases securities and the seller
agrees, at the time of sale, to repurchase the securities at a specified time
and price. The repurchase price will be higher than the purchase price, the
difference being income to the purchaser, or the purchase and repurchase prices
may be the same, with interest at a stated rate due to the purchaser together
with the repurchase price on repurchase. In either case, the income to the
purchaser is unrelated to the interest rate on the securities subject to the
repurchase agreement.

16
<PAGE> 166
In the event of the commencement of bankruptcy or insolvency proceedings
with respect to the seller of the securities before the repurchase of the
securities under a repurchase agreement, a Portfolio may encounter a delay and
incur costs before being able to sell the security being held as collateral.
Delays may involve loss of interest or decline in price of the securities.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the seller may fail to repurchase the securities, in which case a
Portfolio may incur a loss if the proceeds to the Portfolio from the sale of
the securities to a third party are less than the repurchase price.

Reverse Repurchase Agreements-The Portfolios may borrow funds for
temporary purposes by entering into reverse repurchase agreements. Pursuant to
such agreements, a Portfolio would sell portfolio securities to financial
institutions such as banks and broker dealers and agree to repurchase them at a
mutually agreed-upon date and price. The Portfolios intend to enter into
reverse repurchase agreements only to avoid selling securities to meet
redemptions during market conditions deemed unfavorable by the investment
adviser possessing investment authority. At the time a Portfolio enters into a
reverse repurchase agreement, it will place in a segregated custodial account
assets such as liquid high quality debt securities having a value not less than
100% of the repurchase price (including accrued interest), and will
subsequently monitor the account to ensure that such required value is
maintained. Reverse repurchase agreements involve the risk that the market
value of the securities sold by a Portfolio may decline below the price at
which such Portfolio is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by an investment company
under the 1940 Act.

Revenue Obligations-Revenue obligations are backed by the revenue cash
flow of a project or facility.

Separately Traded Registered Interest and Principal Securities and Zero
Coupon Obligations-Separately traded registered interest and principal
securities or "STRIPS" and zero coupon obligations are securities that do not
make regular interest payments. Instead they are sold at a discount from their
face value. Each Portfolio will take into account as income a portion of the
difference between these obligations' purchase prices and their face values.
STRIPS are zero coupon bonds issued by the U.S. Treasury.

17
<PAGE> 167

Pursuant to Rule 2a-7 under the 1940 Act, variable or floating rate
obligations with stated maturities of more than 397 days may be deemed to have
shorter maturities as follows:

FINANCIAL STATEMENTS

The American AAdvantage Funds' Annual Report to shareholders for the
fiscal year ended October 31, 1995 is supplied with the Statement of Additional
Information, and the financial statements and accompanying notes appearing
therein are incorporated by reference in this Statement of Additional
Information.

18
<PAGE> 168

TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management, Administrative Services and Distribution Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expense Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yield and Total Return Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Description of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Control Persons and 5% Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

19
<PAGE> 169

DEAR FELLOW SHAREHOLDER:
- --------------------------------------------------------------------------------

We are pleased to report to you on the performance of the American
AAdvantage Funds and provide you with an Annual Report for the fiscal year ended
October 31, 1995. It was a very good year for the Funds as six out of seven of
the portfolios exceeded their respective benchmarks by healthy margins. Only the
Limited-Term Income Fund underperformed its benchmark as it was conservatively
managed to minimize the risk of principal volatility.

American AAdvantage Balanced Fund

The Balanced Fund posted strong gains during the twelve months ended
October 31, 1995 as interest rates declined significantly and the stock market
advanced to new highs. The Fund's total return for the one-year period was
19.77% for the AMR Class, 19.39% for the Institutional Class, 19.08% for the
Mileage Class and 19.06% for the PlanAhead Class. Each Class easily outpaced the
Lipper Balanced Index return of 17.37%.

Portfolio managers continued their discipline of purchasing stocks that are
perceived to be undervalued in the market but which offer better than average
growth expectations. Although this investment approach led to an underweighting
in technology issues such as computer and semiconductor stocks, it also resulted
in a heavy overweighting in financial stocks such as banks and insurance
companies, the second best performing sector for the period. Since the weighted
average maturities of the Fund's bond component tracked the maturity of the
Lehman Brothers Government/Corporate Index closely, bond returns were in line
with those of the index.

American AAdvantage Growth and Income Fund

The Growth and Income Fund also performed quite well over the past fiscal
year. The Fund's total return for the one year period was 21.03% for the AMR
Class, 20.69% for the Institutional Class, 20.36% for the Mileage Class and
20.14% for the PlanAhead Class. Performance surpassed the Lipper Growth & Income
Index return of 19.96%. Since the Growth and Income Fund utilized the same stock
selection approach as the Balanced Fund, its sector weightings also reflected a
heavy overweighting in the finance sector and an underweighting in technology.

American AAdvantage International Equity Fund

The International Equity Fund enjoyed outstanding results versus its peer
group for the twelve months ended October 31, 1995. The Fund's total return for
the one year period was 8.18% for the AMR Class, 7.90% for the Institutional
Class, 7.35% for the Mileage Class and 7.37% for the PlanAhead Class compared to
a 0.61% return for the Lipper International Index.

The Fund's managers select securities based upon a country's economic
outlook, market valuation and potential changes in currency exchange rates. In
addition, they use the same investment approach used by the domestic managers
when selecting stocks. As a result, the Fund significantly underweighted
Japanese securities (relative to many other managers and the Morgan Stanley
Capital International Europe, Australia and Far East ("EAFE") Index), due to the
perceived overvaluation of that market and limited growth prospects. This proved
to be a successful strategy, as the Japanese market posted the second lowest
return of all EAFE countries during the period. Instead, managers primarily
overweighted

1
<PAGE> 170

the Scandinavian, Dutch and Swiss markets which posted some of the highest of
all EAFE country returns.

American AAdvantage Limited-Term Income Fund

The cautious nature of the Limited-Term Income Fund in terms of shorter
duration and higher credit quality -- that served shareholders so well during
the devastating fixed income market of 1994 -- caused the Fund's Institutional
Class to underperform the Linked Lipper Short-Term Investment Grade Debt Funds'
Average total return by 47 basis points during the twelve month period ended
October 31, 1995. However, the Limited-Term Income Fund's total return for the
twelve months ended October 31, 1995 of 8.22% for the AMR Class, 8.18% for the
Institutional Class and 7.83% for the Mileage and PlanAhead Classes were 763,
776 and 738 basis points, respectively, higher than the same period in 1994. On
a longer-term basis, for the three and five year periods ended October 31, 1995,
the Fund continued to outperform the Linked Lipper Short-Term Investment Grade
Debt Average total return, while investing in above average credit quality
obligations with below average net asset value volatility. On October 31, 1995,
the Fund's duration was 2.4 years.

Money Market Funds

American AAdvantage Money Market Fund

For the twelve months ended October 31, 1995, the Institutional Class of
the Money Market Fund had a total return of 5.96%. Lipper Analytical Services
ranked the Institutional Class as the 11th best performing Institutional Money
Market Fund out of its universe of 132 such funds during this time period. For
the five years ended October 31, 1995, the Institutional Class maintained its
Lipper ranking as the best performing Institutional Money Market Fund in the
country.

Similarly, during the twelve months ended October 31, 1995, the Mileage and
PlanAhead Classes outperformed their benchmark, the Lipper Money Market
Instrument Funds' Average by achieving total returns of 5.61% and 5.60%,
respectively. Both the Mileage and PlanAhead Classes' performance were ranked in
the top 15th percentile by Lipper in their category during this period out of
their universe of 250 funds.

On February 1, 1995, the Federal Reserve increased the fed funds rate by 50
basis points. The Fund achieved its healthy performance during this period of
rising money market interest rates by investing in LIBOR-based variable rate
obligations and maintaining a weighted average days to maturity of less than 45
days. On February 1, 1995, the Fund's weighted average days to maturity was just
32 days. Shortly thereafter, during the second quarter of 1995, the economy
started to exhibit signs of a slowdown. As a result, a shift in portfolio
strategy was implemented, which included lengthening the Fund's weighted average
days to maturity. This reversal in portfolio strategy proved to be very timely
because on July 6, 1995, for the first time in almost three years, the Federal
Reserve lowered the fed funds rate by 25 basis points. On July 6, 1995, the
Fund's weighted average days to maturity was 71 days. On October 31, 1995, the
Fund's weighted average days to maturity was 50 days, which is 19 days longer
than October 31, 1994.

In addition, the Fund's performance benefited by investing in obligations
of issuers whose credit quality was determined to be improving and were
subsequently upgraded by a nationally recognized

2
<PAGE> 171

statistical rating organization. These issuers included: Caterpillar Financial
Services; IBM Credit Corporation; K.O.P. Bank; General Motors Acceptance
Corporation and First National Bank of Boston.

American AAdvantage Municipal Money Market Fund

The Institutional Class of the Municipal Money Market Fund achieved a total
return of 3.75% for the twelve months ended October 31, 1995. Lipper Analytical
Services ranked the Institutional Class as the 13th best performing
Institutional Tax-Exempt Money Market Fund out of its universe of 67 such funds
during this period. Likewise, the Mileage and PlanAhead Classes outperformed
their retail benchmark, the Lipper Tax-Exempt Money Market Funds' Average, with
total returns of 3.40% and 3.39%, respectively. Since its inception, the
Municipal Money Market Fund has invested exclusively in high credit worthy
municipal issuers that have been further credit enhanced either by a bank letter
of credit or bond insurance.

American AAdvantage U.S. Treasury Money Market Fund

For the twelve months ended October 31, 1995, the Institutional Class of
the U.S. Treasury Money Market Fund had a total return of 5.67% and was the 19th
best performing Institutional U.S. Treasury Money Market Fund in the Lipper
universe of 86 institutional treasury funds. During the same one year period,
the Mileage and PlanAhead Classes also performed well as both classes
outperformed their retail benchmark, the Lipper U.S. Treasury Money Funds'
Average, with total returns of 5.30% and 5.19%, respectively. Due to the Fund's
policy of investing exclusively in U.S. Treasury obligations, the Fund continued
to be rated by Standard and Poor's in its highest money market funds' rating
category, "AAAm", and meets the National Association of Insurance Commissioners
(NAIC) eligibility standards. On October 31, 1995, the Fund's weighted average
days to maturity was 21 days.

Domestic Economic Overview

Last year, our outlook focused on slower economic growth and continued
modest inflation for 1995 as the economy started to feel the full impact of
seven consecutive tightenings by the Federal Reserve. While many questioned the
Fed's ability to engineer a "soft landing", it appears as if the Fed achieved
its goal. Economic growth slowed, while inflation remained contained. Interest
rates fell dramatically and many companies reported record earnings. All these
factors were reflected in the financial markets as the stock market set record
after record, while the bond market produced double digit returns.

As we write this year's overview, Congress and the White House continue to
debate how to reduce and subsequently eliminate the federal budget deficit by
the year 2002. The ramifications for the financial markets have produced rosy
scenarios for 1996 and the rest of the century. We believe the Federal Reserve
will be more inclined to lower interest rates to keep the economy from slipping
into a recession. Lower interest rates are one of the driving forces behind
continued advances in the stock and bond markets. In conclusion, given a
meaningful budget deficit reduction package, we expect lower interest rates,
moderate economic growth and continued low inflation.

Foreign Economic Overview

Although investing overseas in 1994 allowed US investors to benefit from
the universal decline in the value of the US Dollar, 1995's decline was not as
widespread. The US Dollar declined by greater than

3
<PAGE> 172

10% versus some of the Scandinavian countries and to a lesser extent versus
Germany; however, against the UK Sterling and the Japanese Yen, the US Dollar
was actually flat for the year. Many foreign markets had to contend with
sluggish economic growth and other difficulties in 1995. In the UK, the focus
was on the political fortunes of John Major; in Japan, the banking crisis was
much worse than first reported; in Germany, the Bundesbank was very reluctant to
lower interest rates, and in France and Italy, attention focused on the
conditions associated with the European Monetary Union.

We are cautiously optimistic for foreign markets in 1996. Although
investors should not expect to benefit from continued US Dollar weakness,
falling interest rates in many foreign markets should improve economic growth
and simultaneously lower rampant unemployment. Inflation should remain contained
as unemployment is being lowered from a high base. Specifically, optimism is
improving in Japan. The Yen is weakening, interest rates are being lowered and
investors are anticipating a package of measures to stimulate the economy. In
Europe, despite the fact that most stocks are reasonably priced, with economic
growth expected to increase over the next couple of years, earnings growth
should support modestly higher stock prices.

We thank you for your continuing support and trust, and we will continue to
strive to exceed your expectations in 1996.

Sincerely,

/s/ WILLIAM F. QUINN
William F. Quinn
President
American AAdvantage Funds

4
<PAGE> 173
LOGO

[BALANCED FUND GRAPH]

<TABLE>
<CAPTION>
Jul-87 Oct-87 Oct-88 Oct-89 Oct-90 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class $ 10,000 $9,076 $10,404 $ 12,015 $ 11,386 $ 14,271 $ 16,621 $ 18,500 $ 18,485 $ 22,069
Mileage Class** $ 10,000 $9,076 $10,404 $ 12,015 $ 11,386 $ 14,271 $ 16,621 $ 18,500 $ 18,470 $ 21,894
PlanAhead Class** $ 10,000 $9,076 $10,404 $ 12,015 $ 11,385 $ 14,271 $ 16,621 $ 18,500 $ 18,470 $ 21,991
AMR Class** $ 10,000 $9,076 $10,404 $ 12,015 $ 11,385 $ 14,271 $ 16,621 $ 18,500 $ 18,485 $ 22,139
S&P 500 $ 10,000 $8,082 $9,275 $ 11,719 $ 10,841 $ 14,476 $ 15,917 $ 18,290 $ 19,009 $ 24,021
SLGC $ 10,000 $10,084 $11,156 $ 12,510 $ 13,199 $ 15,227 $ 16,828 $ 19,126 $ 18,239 $ 21,186
Lipper Balanced
Index $ 10,000 $8,624 $9,758 $ 11,408 $ 10,974 $ 14,066 $ 15,299 $ 17,690 $ 17,563 $ 20,613
</TABLE>

* Fund inception was 7/17/87. Changes in value for indices have a starting date
of 7/15/87.
** Fund performance represents the total returns achieved by the Institutional
Class from the inception date of the Fund up to the inception date of the
Mileage, PlanAhead and AMR Classes and the returns of the Mileage, PlanAhead
and AMR Classes since inception of the Classes. Expenses of the Mileage and
PlanAhead Classes are higher than those of the Institutional Class.
Therefore, total returns shown are higher than they would have been had the
Mileage and PlanAhead Classes been in place since inception of the Fund.
Expenses of the AMR Class are lower than those of the Institutional Class.
Therefore, total returns shown may be lower than they would have been had the
AMR Class been in place since inception of the Fund. Inception of the
Mileage, PlanAhead and AMR Classes was 8/1/94.

5
<PAGE> 174

LOGO

[GROWTH AND INCOME FUND GRAPH]
<TABLE>
<CAPTION>
Jul-87 Oct-87 Oct-88 Oct-89 Oct-90 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class $ 10,000 $8,301 $ 10,144 $ 12,269 $ 10,610 $ 14,200 $ 15,619 $ 18,976 $ 19,613 $ 23,670
Mileage Class** $ 10,000 $8,301 $ 10,144 $ 12,269 $ 10,610 $ 14,200 $ 15,619 $ 18.976 $ 19,685 $ 23,572
PlanAhead Class** $ 10,000 $8,301 $ 10,144 $ 12,269 $ 10,610 $ 14,200 $ 15,619 $ 18,976 $ 19,685 $ 23,530
AMR Class** $ 10,000 $8,301 $ 10,144 $ 12,269 $ 10,610 $ 14,200 $ 15,519 $ 18,976 $ 19,626 $ 23,764
S&P 500 $ 10,000 $8,082 $9,275 $ 11,719 $ 10,841 $ 14,476 $ 15,917 $ 18,290 $ 19,009 $ 24,021
Lipper Growth &
Income Index $ 10,000 $8,227 $9,723 $ 11,750 $ 10,392 $ 13,876 $ 15,111 $ 18,057 $ 18,627 $ 22,345
</TABLE>

6
<PAGE> 175

LOGO
[INTERNATIONAL EQUITY FUND GRAPH]
<TABLE>
<CAPTION>
Aug-91 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95
<S> <C> <C> <C> <C> <C> <C>
Institutional Class $10,000 $10,133 $8,910 $12,168 $13,601 $14,676
Mileage Class** $10,000 $10,133 $8,910 $12,168 $13,580 $14,579
PlanAhead Class** $10,000 $10,133 $8,910 $12,168 $13,580 $14,581
AMR Class** $10,000 $10,133 $8,910 $12,168 $13,601 $14,714
EAFE Index $10,000 $10,676 $9,286 $12,804 $14,132 $14,124
Lipper International Index $10,000 $10,309 $9,790 $13,125 $14,636 $14,547
</TABLE>

* Fund inception was 8/7/91. Changes in value for indices have a starting date
of 8/7/91.
** Fund performance represents the total returns achieved by the Institutional
Class from the inception date of the Fund up to the inception date of the
Mileage, PlanAhead and AMR Classes and the returns of the Mileage, PlanAhead
and AMR Classes since inception of the Classes. Expenses of the Mileage and
PlanAhead Classes are higher than those of the Institutional Class.
Therefore, total returns shown are higher than they would have been had the
Mileage and PlanAhead Classes been in place since inception of the Fund.
Expenses of the AMR Class are lower than those of the Institutional Class.
Therefore, total returns shown may be lower than they would have been had the
AMR Class been in place since inception of the Fund. Inception of the
Mileage, PlanAhead and AMR Classes was 8/1/94.

7
<PAGE> 176

LOGO

[LIMITED-TERM INCOME FUND GRAPH]
<TABLE>
<CAPTION>
Nov-87 Oct-88 Oct-89 Oct-90 Oct-91 Oct-92 Oct-93 Oct-94 Oct-95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Institutional Class $ 10,000 $ 10,670 $ 11,482 $ 12,345 $ 13,810 $ 14,906 $ 15,979 $ 16,047 $ 17,359
Mileage Class** $ 10,000 $ 10,670 $ 11,482 $ 12,345 $ 13,810 $ 14,906 $ 15,979 $ 16,051 $ 17,308
PlanAhead Class** $ 10,000 $ 10,670 $ 11,482 $ 12,345 $ 13,810 $ 14,906 $ 15,979 $ 16,051 $ 17,308
AMR Class** $ 10,000 $ 10,670 $ 11,482 $ 12,345 $ 13,810 $ 14,906 $ 15,979 $ 16,073 $ 17,396
Lipper Short Term Investment
Grd DF Avg. $ 10,000 $ 10,720 $ 11,730 $ 12,520 $ 13,959 $ 15,118 $ 16,204 $ 16,154 $ 17,610
Shearson Lehman G/C 1-5 Year
Index $ 10,000 $ 10,675 $ 11,723 $ 12,715 $ 14,310 $ 16,622 $ 16,833 $ 16,795 $ 18,545
</TABLE>

* Fund inception was 12/3/87. Changes in value for indices have a starting date
of 12/3/87.
** Fund performance represents the total returns achieved by the Institutional
Class from the inception date of the Fund up to the inception date of the
Mileage, PlanAhead and AMR Classes and the returns of the Mileage, PlanAhead
and AMR Classes since inception of the Classes. Expenses of the Mileage and
PlanAhead Classes are higher than those of the Institutional Class.
Therefore, total returns shown are higher than they would have been had the
Mileage and PlanAhead Classes been in place since inception of the Fund.
Expenses of the AMR Class are lower than those of the Institutional Class.
Therefore, total returns shown may be lower than they would have been had the
AMR Class been in place since inception of the Fund. Inception of the
Mileage, PlanAhead and AMR Classes was 8/1/94.

8
<PAGE> 177

RESULTS OF SHAREHOLDER MEETING:

A special meeting of shareholders of the American AAdvantage Funds was held
on August 3, 1995. The following matters were voted on at the meeting.

(1) The shareholders of the American AAdvantage Funds, on behalf of each
Fund approved the following fundamental investment policy:

Notwithstanding any other limitation, the Fund may invest all of its
investable assets in an open-end management investment company with
substantially the same investment objectives, policies and limitations as
the Fund. For this purpose, "all of the Fund's investable assets" means
that the only investment securities that will be held by the Fund will be
the Fund's interest in the investment company.

<TABLE>
<CAPTION>
VOTED: FOR AGAINST ABSTAIN NON-VOTING
- --------------------------------------------- ----------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
American AAdvantage Funds:
Balanced Fund.............................. 55,210,182.721 29,484.897 0.000 1,825,194.323
Growth and Income Fund..................... 44,764,740.335 9,578.477 0.000 1,384,584.376
International Equity Fund.................. 18,147,056.341 1,707.643 0.000 244,525.320
Limited-Term Income Fund................... 12,275,104.756 28,043.570 0.000 3,156,423.915
Money Market Fund.......................... 1,038,118,971.310 10,140,313.00 1,005,505.610 511,343,317.900
Municipal Money Market Fund................ 10,773,119.720 0.000 37,810.150 7,466,885.130
U.S. Treasury Money Market Fund............ 34,702,633.060 198,616.81 23,454.760 20,063,924.830
</TABLE>

(2) The shareholders of the American AAdvantage Funds, on behalf of each
Fund approved an amended Management Agreement between the Trust and AMR
Investment Services, Inc.

<TABLE>
<CAPTION>
VOTED: FOR AGAINST ABSTAIN NON-VOTING
- --------------------------------------------- ----------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
American AAdvantage Funds:
Balanced Fund.............................. 55,238,809.985 0.000 857.633 1,825,194.323
Growth and Income Fund..................... 44,771,354.618 1,215.234 1,748.960 170,565.610
International Equity Fund.................. 18,147,052.740 1,711.274 0.000 244,525.290
Limited-Term Income Fund................... 12,301,072.557 0.000 2,075.766 3,156,423.918
Money Market Fund.......................... 1,047,303,548.450 736,056.81 1,225,184.66 511,643,317.900
Municipal Money Market Fund................ 10,741,870.320 31,249.40 37,810.51 7,466,884.770
U.S. Treasury Money Market Fund............ 34,698,214.870 187,874.55 38,615.21 20,063,924.830
</TABLE>

(3) The shareholders of the Trust elected the following nominees to the
Board of Trustees: William F. Quinn, David G. Fox, John S. Justin, Stephen D.
O'Sullivan and Roger T. Staubach.

<TABLE>
<CAPTION>
WITHHOLD
VOTED: FOR AUTHORITY NON-VOTING
- ------------------------------------------------------------ ----------------- -------------- ----------------
<S> <C> <C> <C>
American AAdvantage Funds Nominees:
William F. Quinn.......................................... 1,211,941,618.108 13,524,705.079 545,484,855.767
David G. Fox.............................................. 1,211,941,618.108 13,524,705.079 545,484,855.767
John S. Justin............................................ 1,211,941,618.108 13,524,705.079 545,484,855.767
Stephen D. O'Sullivan..................................... 1,211,941,618.108 13,524,705.079 545,484,855.767
Roger T. Staubach......................................... 1,211,941,618.108 13,524,705.079 545,484,855.767
</TABLE>

(4) The shareholders of the International Equity Fund approved an amended
investment advisory agreement with Hotchkis and Wiley.

<TABLE>
<CAPTION>
VOTED: FOR AGAINST ABSTAIN NON-VOTING
- ------------------------------------------------------------- -------------- ----------- ------- ------------
<S> <C> <C> <C> <C>
American AAdvantage International Equity Fund................ 18,131,233.682 17,530.332 0.000 244,525.290
</TABLE>

9
<PAGE> 178

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Shareholders and Board of Trustees
American AAdvantage Balanced Fund
American AAdvantage Growth and Income Fund
American AAdvantage International Equity Fund
American AAdvantage Limited-Term Income Fund
American AAdvantage Money Market Fund
American AAdvantage Municipal Money Market Fund
American AAdvantage U.S. Treasury Money Market Fund

We have audited the accompanying statements of assets and liabilities of the
American AAdvantage Balanced Fund, the American AAdvantage Growth and Income
Fund, the American AAdvantage International Equity Fund, the American AAdvantage
Limited-Term Income Fund, the American AAdvantage Money Market Fund, the
American AAdvantage Municipal Money Market Fund, and the American AAdvantage
U.S. Treasury Money Market Fund (collectively, the "Funds") (seven separate
portfolios comprising the American AAdvantage Funds), including the schedules of
investments as of October 31, 1995, 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 generally accepted auditing
standards. 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 securities owned as of
October 31, 1995 by correspondence with the custodians and brokers. 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 each
of the respective American AAdvantage Funds at October 31, 1995, 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 generally accepted
accounting principles.

/s/ ERNST & YOUNG LLP

Dallas, Texas
December 19, 1995

10
<PAGE> 179

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
U.S. GOVERNMENT & AGENCY
OBLIGATIONS - 23.38%
U.S. Treasury Notes, 4.75%,
Due 2-15-1997................. $ 3,000 $ 2,967
U.S. Treasury Notes, 5.625%,
Due 6-30-1997................. 3,300 3,301
U.S. Treasury Notes, 7.375%,
Due 11-15-1997................ 2,010 2,075
U.S. Treasury Notes, 6.00%,
Due 12-31-1997................ 1,300 1,310
U.S. Treasury Notes, 6.125%,
Due 5-15-1998................. 6,690 6,759
U.S. Treasury Notes, 9.00%,
Due 5-15-1998................. 1,000 1,078
U.S. Treasury Notes, 5.125%,
Due 6-30-1998................. 1,000 986
U.S. Treasury Notes, 9.25%,
Due 8-15-1998................. 2,000 2,180
U.S. Treasury Notes, 8.875%,
Due 2-15-1999................. 2,000 2,185
U.S. Treasury Notes, 7.00%,
Due 4-15-1999................. 1,800 1,870
U.S. Treasury Notes, 6.75%,
Due 6-30-1999................. 5,000 5,161
U.S. Treasury Notes, 6.375%,
Due 7-15-1999................. 1,500 1,530
U.S. Treasury Notes, 7.125%,
Due 9-30-1999................. 7,190 7,525
U.S. Treasury Notes, 7.875%,
Due 11-15-1999................ 1,500 1,611
U.S. Treasury Notes, 7.75%,
Due 1-31-2000................. 2,000 2,144
U.S. Treasury Notes, 5.50%,
Due 4-15-2000................. 1,500 1,485
U.S. Treasury Notes, 5.875%,
Due 6-30-2000................. 2,090 2,095
U.S. Treasury Notes, 6.125%,
Due 7-31-2000................. 5,090 5,152
U.S. Treasury Notes, 8.50%,
Due 11-15-2000................ 3,500 3,905
U.S. Treasury Notes, 8.00%,
Due 5-15-2001................. 2,100 2,312
U.S. Treasury Notes, 7.50%,
Due 11-15-2001................ 5,750 6,221
U.S. Treasury Notes, 7.50%,
Due 5-15-2002................. 3,000 3,259
U.S. Treasury Notes, 6.375%,
Due 8-15-2002................. 4,995 5,120
U.S. Treasury Notes, 6.25%,
Due 2-15-2003................. 1,500 1,526

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
U.S. Treasury Notes, 5.75%,
Due 8-15-2003................. $ 2,000 $ 1,971
U.S. Treasury Notes, 7.25%,
Due 5-15-2004................. 1,500 1,623
U.S. Treasury Notes, 7.875%,
Due 11-15-2004................ 1,500 1,691
U.S. Treasury Notes, 6.50%,
Due 8-15-2005................. 2,000 2,071
U.S. Treasury Bonds, 7.25%,
Due 8-15-2004................. 2,500 2,707
U.S. Treasury Bonds, 11.625%,
Due 11-15-2004................ 10,620 14,685
U.S. Treasury Bonds, 7.50%,
Due 2-15-2005................. 6,635 7,319
U.S. Treasury Bonds, 13.875%,
Due 5-15-2011................. 1,230 1,955
U.S. Treasury Bonds, 10.375%,
Due 11-15-2012................ 1,500 2,015
U.S. Treasury Bonds, 8.75%,
Due 5-15-2017................. 3,180 4,038
U.S. Treasury Bonds, 8.875%,
Due 8-15-2017................. 1,750 2,250
U.S. Treasury Bonds, 8.875%,
Due 2-15-2019................. 1,250 1,616
U.S. Treasury Bonds, 8.125%,
Due 8-15-2019................. 6,450 7,762
U.S. Treasury Bonds, 8.125%,
Due 8-15-2021................. 2,585 3,133
U.S. Treasury Bonds, 7.50%,
Due 11-15-2024................ 4,150 4,749
U.S. Treasury Coupon Strips,
Due 11-15-2008................ 796 351
U.S. Treasury Coupon Strips,
Due 5-15-2011................. 4,000 1,481
U.S. Treasury Coupon Strips,
Due 8-15-2018................. 4,000 897
U.S. Treasury Coupon Strips,
Due 8-15-2019................. 11,500 2,409
U.S. Treasury Coupon Strips,
Due 11-15-2019................ 6,000 1,236
U.S. Treasury Principal Strips,
Due 2-15-2019................. 5,300 1,155
Federal Home Loan Mortgage
Corporation, 7.71%,
Due 6-21-2004................. 1,999 2,096
Federal Home Loan Mortgage
Corporation, 6.50%,
Due 10-15-2006................ 1,499 1,490
</TABLE>

See accompanying notes

11
<PAGE> 180

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Federal Home Loan Mortgage
Corporation, 7.00%,
Due 4-15-2019................. $ 999 $ 1,006
Federal National Mortgage
Association, 6.36%,
Due 8-16-2000................. 2,089 2,118
Federal National Mortgage
Association, 6.00%,
Due 1-1-2009.................. 1,135 1,107
Federal National Mortgage
Association, 6.00%,
Due 2-1-2009.................. 1,952 1,903
Federal National Mortgage
Association, 6.50%,
Due 5-15-2014................. 400 400
Federal National Mortgage
Association, ARM, 6.43%,
Due 7-1-2018.................. 1,769 1,776
Federal National Mortgage
Association, 6.75%,
Due 10-25-2018................ 500 501
Federal National Mortgage
Association, 10.45%,
Due 4-25-2019................. 290 315
Federal National Mortgage
Association, 8.00%,
Due 10-1-2023................. 4,965 5,094
Federal National Mortgage
Association, ARM, 5.50%,
Due 12-1-2023................. 1,546 1,558
Federal National Mortgage
Association, ARM, 6.37%,
Due 1-1-2024.................. 1,768 1,780
Federal National Mortgage
Association, 8.00%,
Due 10-1-2024................. 3,229 3,313
Federal National Mortgage
Association, 8.00%,
Due 3-1-2025.................. 1,789 1,835
Federal National Mortgage
Association, ARM, 7.29%,
Due 4-1-2025.................. 468 482
Federal National Mortgage
Association, 8.50%,
Due 6-1-2025.................. 988 1,025
Government National Mortgage
Association, 10.50%,
Due 9-15-1998................. 17 19
Government National Mortgage
Association, 9.00%,
Due 10-15-2016................ 1,101 1,157

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Government National Mortgage
Association, 9.00%,
Due 12-15-2017................ $ 901 $ 951
Government National Mortgage
Association, 9.00%,
Due 2-15-2020................. 935 983
Government National Mortgage
Association, 8.50%,
Due 3-15-2020................. 351 366
Government National Mortgage
Association, 9.00%,
Due 2-15-2021................. 399 420
Government National Mortgage
Association, 8.50%,
Due 2-15-2022................. 752 783
Government National Mortgage
Association, 8.00%,
Due 3-1-2022.................. 949 978
Government National Mortgage
Association, 9.00%,
Due 7-15-2022................. 464 488
Government National Mortgage
Association, 8.50%,
Due 1-15-2023................. 264 275
Government National Mortgage
Association, 8.00%,
Due 2-1-2023.................. 2,909 2,996
Government National Mortgage
Association, 8.00%,
Due 3-15-2023................. 701 722
Government National Mortgage
Association, 7.50%,
Due 4-15-2023................. 872 884
Government National Mortgage
Association, 8.00%,
Due 5-15-2023................. 2,478 2,552
Government National Mortgage
Association, 8.50%,
Due 6-15-2024................. 949 989
Government National Mortgage
Association, 8.50%,
Due 12-15-2024................ 1,528 1,592
Government National Mortgage
Association, 8.50%,
Due 6-15-2025................. 997 1,039
Government National Mortgage
Association, 8.50%,
Due 7-1-2025.................. 940 979
--------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS........ 186,843
--------
</TABLE>

See accompanying notes

12
<PAGE> 181

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
ASSET-BACKED SECURITIES - 1.83%
American Express Master Trust,
1992-1 A, 6.05%,
Due 6-15-1998................. $ 2,250 $ 2,256
Banc One Auto Trust,
1995-A A5, 7.05%,
Due 8-15-1998................. 390 398
Carco Auto Loan Master Trust,
1994-2 A, 7.875%,
Due 7-15-1999................. 600 618
First Chicago Master Trust II,
1992-E A, 6.25%,
Due 8-15-1999................. 750 754
Ford Credit Grantor Trust,
1994-A A, 6.35%,
Due 5-15-1999................. 502 505
General Electric Railcar Trust,
1992-1 A, 7.75%,
Due 6-1-2004.................. 644 685
Olympic Automobile Receivables
Trust, 1993-C A, 4.50%,
Due 2-15-2000................. 351 345
Premier Auto Trust,
1994-4 A5, 6.65%,
Due 11-2-1998................. 2,000 2,021
Prime Credit Card Master Trust,
1992-1 A1, 7.05%,
Due 2-15-2001................. 1,010 1,034
Signet Credit Card Master Trust,
1994-4 A, 6.80%,
Due 12-15-2000................ 1,800 1,830
Standard Credit Card Trust,
1991-6 A, 7.875%,
Due 1-7-2000.................. 1,500 1,570
UCFC Home Equity,
1994-C1 A2, 7.275%,
Due 6-10-2007................. 612 620
Western Financial Grantor Trust,
1993-2 A2, 4.70%,
Due 10-1-1998................. 1,183 1,168
Western Financial Grantor Trust,
1994-3 A2, 6.65%,
Due 12-1-1999................. 837 845
--------
TOTAL ASSET-BACKED
SECURITIES................ 14,649
--------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 0.96%
Citicorp Mortgage Securities,
Incorporated, 9.50%,
Due 8-1-2002.................. 776 794

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Citicorp Mortgage Securities,
Incorporated, 9.50%,
Due 8-25-2005................. $ 68 $ 68
Citicorp Mortgage Securities,
Incorporated, 8.50%,
Due 4-25-2017................. 811 818
Citicorp Mortgage Securities,
Incorporated, 10.00%,
Due 5-25-2017................. 171 170
Citicorp Mortgage Securities,
Incorporated, 9.00%,
Due 4-1-2018.................. 871 900
DLJ Mortgage Acceptance
Corporation, FRN, 4.56%,
Due 3-25-2024................. 760 733
General Electric Capital
Mortgage Services,
Incorporated,
1992-4 A A4, 8.00%,
Due 4-25-2022................. 777 792
Green Tree Financial
Corporation, 1993-3 A5, 5.75%,
Due 10-15-2018................ 990 963
Green Tree Financial
Corporation, 1994-5 A2, 7.30%,
Due 11-15-2019................ 690 709
Green Tree Financial
Corporation, 1995-8 A4, 6.60%,
Due 12-15-2026................ 1,400 1,393
Residential Funding Corporation,
1993 S28 A4, 6.35%,
Due 8-25-2023................. 300 295
--------
TOTAL NON-AGENCY
MORTGAGE-BACKED
OBLIGATIONS............... 7,635
--------
CORPORATE BONDS - 9.59%
FINANCIAL - 3.81%
American General Financial,
7.25%, Due 5-15-2005.......... 410 427
Associates Corporation of North
America, 6.375%,
Due 8-15-1998................. 2,000 2,016
Associates Corporation of North
America, 7.50%,
Due 5-15-1999................. 80 83
BankAmerica Corporation, 7.50%,
Due 3-15-1997................. 960 979
Banponce, 7.30%,
Due 6-5-2002.................. 640 659
Capital One Bank Note, 8.125%,
Due 3-1-2000.................. 1,000 1,061
</TABLE>

See accompanying notes

13
<PAGE> 182

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Chemical Banking Corporation,
7.625%, Due 1-15-2003......... $ 200 $ 212
Chemical Banking Corporation,
FRN, 7.30%, Due 6-15-2000..... 2,300 2,307
Chrysler Financial Corporation,
MTN, 7.89%, Due 2-10-1997..... 1,750 1,786
Chrysler Financial Corporation,
MTN, 6.50%, Due 8-3-1998...... 550 553
Fleet Mortgage Group,
Incorporated, 6.125%,
Due 8-15-1997................. 930 931
Ford Motor Credit Company,
9.25%, Due 6-15-1998.......... 1,000 1,076
Ford Motor Credit Company,
8.20%, Due 2-15-2002.......... 1,470 1,599
Ford Motor Credit Company,
8.00%, Due 6-15-2002.......... 500 540
General Motors Acceptance
Corporation, 7.375%,
Due 4-25-2000................. 2,000 2,075
General Motors Acceptance
Corporation, 6.75%,
Due 6-17-2002................. 1,140 1,149
General Motors Acceptance
Corporation, 6.625%,
Due 10-1-2002................. 1,000 1,001
Health & Rehab, FRN, 6.9875%,
Due 7-13-1999................. 1,000 995
Lehman Brothers, Incorporated,
7.00%, Due 5-15-1997.......... 1,000 1,010
Lehman Brothers, Incorporated,
5.04%, Due 12-15-2003......... 1,000 1,007
Merrill Lynch & Company,
Incorporated, 8.25%,
Due 11-15-1999................ 500 534
Morgan Stanley, 7.50%,
Due 2-1-2024.................. 600 577
NationsBank Corporation, 6.75%,
Due 8-15-2000................. 1,030 1,046
NationsBank Corporation, 7.625%,
Due 4-15-2005................. 1,000 1,062
Salomon Brothers, Incorporated,
7.05%, Due 1-15-1998.......... 800 802
Salomon Brothers, Incorporated,
7.00%, Due 1-20-1998.......... 390 392
Salomon Brothers, Incorporated,
MTN, 5.53%, Due 1-30-1998..... 1,500 1,457
Salomon Brothers, Incorporated,
6.04%, Due 7-9-1998........... 625 611
Smith Barney Holdings, 6.00%,
Due 3-15-1997................. 1,000 1,000

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
St. Paul Companies, 9.375%,
Due 6-15-1997................. $ 600 $ 631
Westpac Banking Corporation,
7.875%, Due 10-15-2002........ 800 855
--------
TOTAL FINANCIAL............. 30,433
--------
INDUSTRIAL - 2.57%
Atlantic Richfield Corporation,
8.75%, Due 3-1-2032........... 400 481
The Boeing Company, 8.625%,
Due 11-15-2031................ 420 498
E.I. Du Pont De Nemours &
Company, 8.45%,
Due 10-15-1996................ 200 205
Heinz (H. J.) Company, 5.50%,
Due 9-15-1997................. 520 517
International Business Machines,
Incorporated, 6.375%,
Due 11-1-1997................. 750 757
Legrand, 8.50%,
Due 2-15-2025................. 610 699
Loews Corporation, 7.00%,
Due 10-20-2023................ 550 515
The May Department Store
Company, 10.625%,
Due 11-1-2010................. 530 722
The May Department Store
Company, 9.75%,
Due 2-15-2021................. 400 513
McDermott, 8.75%,
Due 5-19-2023................. 1,000 1,022
News America Holdings, 9.25%,
Due 2-1-2013.................. 370 414
Occidential Petroleum
Corporation, 8.50%, Due
9-15-2004..................... 2,000 2,138
Pepsico Incorporated, 7.00%,
Due 11-15-1996................ 550 557
Philip Morris Companies,
Incorporated, 8.875%,
Due 7-1-1996.................. 520 529
Philip Morris Companies,
Incorporated, 9.25%,
Due 12-1-1997................. 3,500 3,719
Philip Morris Companies,
Incorporated, 8.25%,
Due 10-15-2003................ 640 698
Philip Morris Companies,
Incorporated, 8.375%,
Due 1-15-2017................. 625 640
RJR Nabisco, 8.75%,
Due 8-15-2005................. 2,750 2,750
</TABLE>

See accompanying notes

14
<PAGE> 183

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Sears Roebuck, 9.375%,
Due 11-1-2011................. $ 635 $ 777
Telecommunications,
Incorporated, 9.80%, Due
2-1-2012...................... 320 371
Torchmark Corporation, 7.875%,
Due 5-15-2023................. 510 527
Valasis Communications, 9.55%,
Due 12-1-2003................. 390 408
Xerox Corporation, 7.15%,
Due 8-1-2004.................. 1,000 1,035
--------
TOTAL INDUSTRIAL............ 20,492
--------
UTILITY - 1.23%
Baltimore Gas & Electric, FRN,
6.375%, Due 4-15-1999......... 2,500 2,502
General Telephone Southwest,
Incorporated, 8.50%,
Due 11-15-2031................ 600 695
National Rural, FRN, 6.0675%,
Due 2-27-1998................. 1,500 1,497
Pacific Bell Telephone, 8.70%,
Due 6-15-2001................. 630 701
Southern California Edison
Company, 5.90%,
Due 1-15-1997................. 2,500 2,493
Southern California Edison
Company, 5.60%,
Due 12-15-1998................ 2,000 1,961
--------
TOTAL UTILITY............... 9,849
--------
FOREIGN BONDS - 1.98%
ABN-AMRO, 7.27%,
Due 5-31-2005................. 690 716
ANZ Banking, 6.25%,
Due 2-1-2004.................. 590 572
Hydro-Quebec, 9.40%,
Due 2-1-2021.................. 1,800 2,187
Hydro-Quebec, 8.875%,
Due 3-1-2026.................. 1,200 1,391
Korea Development Bank, 5.875%,
Due 12-1-1998................. 100 99
Korea Development Bank, 6.25%,
Due 5-1-2000.................. 640 637
Province of Newfoundland,
9.875%, Due 6-1-2020.......... 250 317
Province of Quebec, 8.80%,
Due 4-15-2003................. 620 694
Republic of Italy, 6.875%,
Due 9-27-2023................. 1,500 1,382

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Skandinaviska Enskilda Banken,
6.875%, Due 2-15-2009......... $ 1,000 $ 982
Svenska Handelsbanken, 8.35%,
Due 7-15-2004................. 580 634
Swedish Bank FRN, 7.71875%,
Due 10-29-2049................ 2,500 2,550
Swedish Export Credit, 9.875%,
Due 3-15-1998................. 2,410 2,665
Swiss Bank Corporation, 7.50%,
Due 7-15-2025................. 950 989
--------
TOTAL FOREIGN BONDS......... 15,815
--------
TOTAL CORPORATE BONDS....... 76,589
--------
Shares
--------
PREFERRED STOCK - 0.44%
ConAgra Convertible E........... 55,000 2,159
National Semiconductor
Convertible A................. 13,000 1,138
RJR Nabisco, Convertible PERC... 29,300 183
Teledyne, Incorporated E........ 360 5
--------
TOTAL PREFERRED STOCK....... 3,485
--------
COMMON STOCK - 60.00%
FOREIGN STOCKS - 1.80%
Arthur Guinness & Sons, ADR..... 24,700 988
Exel Limited.................... 50,000 2,675
Hanson PLC, ADR................. 56,100 870
Moore Corporation Limited....... 120,000 2,295
Royal Dutch Petroleum Company,
New York Registry............. 30,000 3,686
Schlumberger Limited............ 30,000 1,868
The Seagram Company Limited..... 20,800 749
Volvo AB, ADR................... 55,000 1,244
--------
TOTAL FOREIGN STOCKS........ 14,375
--------
CONSUMER STAPLES -- 12.63%
DEPARTMENT AND MAIL ORDER - 1.70%
K Mart Corporation.............. 253,600 2,061
The May Department Store
Company....................... 91,800 3,603
J.C. Penney Company,
Incorporated.................. 130,475 5,496
Sears Roebuck & Company......... 40,000 1,360
</TABLE>

See accompanying notes

15
<PAGE> 184

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Woolworth Corporation........... 70,000 $ 1,024
--------
TOTAL DEPARTMENT AND MAIL
ORDER..................... 13,544
--------
DISTILLERS AND BREWERS - 0.76%
Anheuser-Busch Companies,
Incorporated.................. 76,300 5,036
Brown-Foreman, Incorporated..... 26,700 1,018
--------
TOTAL DISTILLERS AND
BREWERS................... 6,054
--------
DRUGS AND HOSPITAL SUPPLY - 4.13%
Allergan, Incorporated.......... 62,400 1,833
American Home Products
Corporation................... 60,800 5,388
Baxter International,
Incorporated.................. 175,300 6,771
Bristol-Myers Squibb Company.... 50,500 3,851
Eli Lilly & Company............. 37,915 3,664
Guidant Corporation............. 25,196 806
Merck & Company, Incorporated... 105,000 6,038
Upjohn Company.................. 46,500 2,360
Warner Lambert.................. 27,100 2,307
--------
TOTAL DRUGS AND HOSPITAL
SUPPLY.................... 33,018
--------
FOOD PROCESSING - 0.11%
Nabisco Holdings Corporation,
Class A....................... 32,900 884
--------
LEISURE - 0.36%
Brunswick Corporation........... 71,600 1,396
Hasbro, Incorporated............ 30,800 939
King World Productions,
Incorporated (non-income
producing).................... 16,500 575
--------
TOTAL LEISURE............... 2,910
--------
PHOTOGRAPHY - 1.05%
Eastman Kodak Company........... 133,900 8,385
--------
PUBLISHING - 0.67%
A.H. Belo, Incorporated, Class
A............................. 24,400 845
R.R. Donnelley & Sons Company... 30,000 1,095
Dun & Bradstreet Corporation.... 45,000 2,689
New York Times Company.......... 24,700 685
--------
TOTAL PUBLISHING............ 5,314
--------
RETAIL - OTHER - 0.34%
Giant Foods, Incorporated....... 40,000 1,285
Melville Corporation............ 45,000 1,440
--------
TOTAL RETAIL - OTHER........ 2,725
--------
TOBACCO - 3.51%
American Brands, Incorporated... 60,000 2,573

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Philip Morris Companies,
Incorporated.................. 180,300 $ 15,235
RJR Nabisco Holdings............ 123,640 3,802
UST, Incorporated............... 214,000 6,420
--------
TOTAL TOBACCO............... 28,030
--------
TOTAL CONSUMER STAPLES...... 100,864
--------
INTEREST SENSITIVE - 22.39%
BANKS - 7.32%
BankAmerica Corporation......... 117,000 6,728
Bank of Boston Corporation...... 35,000 1,558
Bankers Trust Company New York.. 19,400 1,237
Chase Manhattan Corporation..... 132,100 7,530
Chemical Banking Corporation.... 136,712 7,775
Crestar Financial Corporation... 15,000 855
First Chicago NBD............... 68,100 4,622
First Interstate Bancorp........ 31,000 3,999
First of America Bank
Corporation................... 50,000 2,131
First Security Corporation...... 40,000 1,310
Fleet Financial Group,
Incorporated.................. 150,000 5,813
J.P. Morgan & Company,
Incorporated.................. 53,000 4,088
NationsBank Corporation......... 52,700 3,465
Norwest Corporation............. 214,800 6,337
Wells Fargo and Company......... 5,000 1,051
--------
TOTAL BANKS................. 58,499
--------
BUILDING AND MATERIALS - 0.41%
PPG Industries, Incorporated.... 45,000 1,913
Vulcan Materials Company........ 24,700 1,374
--------
TOTAL BUILDING AND
MATERIALS................. 3,287
--------
FINANCE - 0.62%
Beneficial Corporation.......... 44,000 2,156
Household International,
Incorporated.................. 50,000 2,813
--------
TOTAL FINANCE............... 4,969
--------
INSURANCE - LIFE AND MULTI-LINE - 2.35%
Aetna Life & Casualty Company... 69,000 4,856
American General Corporation.... 60,000 1,973
Aon, Incorporated............... 145,000 5,963
Lincoln National Corporation.... 45,000 2,008
Old Republic International
Corporation................... 34,800 996
</TABLE>

See accompanying notes

16
<PAGE> 185

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Travelers Corporation........... 59,669 $ 3,013
--------
TOTAL INSURANCE - LIFE AND
MULTI-LINE................ 18,809
--------
INSURANCE - PROPERTY AND CASUALTY - 2.52%
Ace Limited (non-income
producing).................... 100 3
Allstate Corporation............ 282,257 10,373
Safeco Corporation.............. 45,000 2,888
St. Paul Companies.............. 135,600 6,882
--------
TOTAL INSURANCE - PROPERTY
AND CASUALTY.............. 20,146
--------
SAVINGS AND LOAN - 1.22%
Great Western Financial
Corporation................... 308,300 6,975
H.F. Ahmanson & Company......... 110,000 2,750
--------
TOTAL SAVINGS AND LOAN...... 9,725
--------
UTILITIES - ELECTRIC - 2.84%
Centerior Energy................ 343,600 3,436
CMS Energy Corporation.......... 60,000 1,658
Detroit Edison Company.......... 39,000 1,316
Entergy Corporation............. 207,300 5,908
Illinova Corporation............ 60,000 1,703
Niagara Mohawk Power
Corporation................... 70,000 753
Public Service Enterprise Group,
Incorporated.................. 40,000 1,175
Unicom Corporation.............. 206,400 6,760
--------
TOTAL UTILITIES -
ELECTRIC.................. 22,709
--------
UTILITIES - NATURAL GAS - 1.04%
Columbia Gas Systems,
Incorporated.................. 500 19
Panhandle Eastern Corporation... 263,100 6,643
Peoples Energy Corporation...... 58,000 1,668
--------
TOTAL UTILITIES - NATURAL
GAS....................... 8,330
--------
UTILITIES - TELEPHONE - 2.28%
AT&T Corporation................ 69,000 4,416
Pacific Telesis Group,
Incorporated.................. 270,200 8,207
SBC Communications,
Incorporated.................. 30,000 1,676
US West, Incorporated........... 82,000 3,905
--------
TOTAL UTILITIES -
TELEPHONE................. 18,204
--------
MISCELLANEOUS - INTEREST SENSITIVE - 1.79%
American Express Company........ 234,600 9,531

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Federal Home Loan Mortgage
Corporation................... 14,800 $ 1,025
Federal National Mortgage
Association................... 29,875 3,133
Fund American Enterprises,
Incorporated (non-income
producing).................... 8,800 607
--------
TOTAL MISCELLANEOUS -
INTEREST SENSITIVE........ 14,296
--------
TOTAL INTEREST SENSITIVE.... 178,974
--------
CONSUMER CYCLICALS - 3.69%
AUTOMOBILE AND TRUCK - 3.23%
Dana Corporation................ 200,500 5,138
Eaton Corporation............... 118,000 6,048
Ford Motor Company.............. 258,436 7,430
General Motors Corporation...... 164,800 7,210
--------
TOTAL AUTOMOBILE AND
TRUCK..................... 25,826
--------
ELECTRICAL HOUSEHOLD
EQUIPMENT - 0.21%
Newell Company.................. 24,600 593
Whirlpool Corporation........... 20,000 1,060
--------
TOTAL ELECTRICAL HOUSEHOLD
EQUIPMENT................. 1,653
--------
TIRE AND RUBBER - 0.25%
Cooper Tire and Rubber Company.. 70,000 1,619
Goodyear Tire & Rubber Company.. 9,000 342
--------
TOTAL TIRE AND RUBBER....... 1,961
--------
TOTAL CONSUMER CYCLICALS.... 29,440
--------
INTERMEDIATE GOODS AND
SERVICES - 11.35%
CHEMICALS - 1.51%
E.I. Du Pont De Nemours &
Company....................... 60,000 3,743
Eastman Chemical Company........ 37,100 2,207
FMC Corporation (non-income
producing).................... 14,000 1,003
Monsanto Company................ 30,000 3,143
Olin Corporation................ 30,000 1,939
--------
TOTAL CHEMICALS............. 12,035
--------
FOREST PRODUCTS - 1.50%
International Paper Company..... 60,000 2,220
James River Corporation of
Virginia...................... 40,000 1,285
Union Camp Corporation.......... 40,000 2,035
Weyerhaeuser Company............ 146,900 6,482
--------
TOTAL FOREST PRODUCTS....... 12,022
--------
</TABLE>

See accompanying notes

17
<PAGE> 186

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
METALS - ALUMINUM - 0.54%
Aluminum Company of America..... 70,000 $ 3,570
Reynolds Metals Company......... 15,000 756
--------
TOTAL METALS - ALUMINUM..... 4,326
--------
NATURAL GAS
TRANSMISSION - 0.06%
Coastal Corporation............. 14,000 453
--------
OIL - 4.46%
Amoco Corporation............... 60,000 3,833
Atlantic Richfield
Corporation................... 10,000 1,068
Chevron Corporation............. 67,000 3,132
Exxon Corporation............... 77,600 5,927
Louisiana Land and Exploration
Company....................... 25,400 899
Mobil Corporation............... 20,000 2,015
Phillips Petroleum Company...... 227,200 7,327
Tenneco, Incorporated........... 136,000 5,967
Texaco, Incorporated............ 33,600 2,289
Ultramar Corporation............ 70,000 1,706
USX-Marathon Group.............. 50,000 888
Union Texas Petroleum Holdings,
Incorporated.................. 33,200 598
--------
TOTAL OIL................... 35,649
--------
OIL SERVICE - 0.28%
Baker Hughes, Incorporated...... 80,000 1,570
Ensco International (non-income
producing).................... 40,300 680
--------
TOTAL OIL SERVICE........... 2,250
--------
TRANSPORTATION - 1.33%
Conrail, Incorporated........... 55,000 3,781
CSX Corporation................. 12,000 1,005
Norfolk Southern Corporation.... 25,000 1,931
Ryder Systems, Incorporated..... 50,000 1,206
Union Pacific Corporation....... 32,500 2,125
Yellow Corporation.............. 45,000 591
--------
TOTAL TRANSPORTATION........ 10,639
--------
MISCELLANEOUS - INTERMEDIATE
GOODS & SERVICES - 1.67%
Corning, Incorporated........... 30,000 784
Dresser Industries.............. 146,700 3,044
GATX Corporation................ 40,000 1,900
Mapco, Incorporated............. 14,400 742

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Phelps Dodge Corporation........ 108,100 $ 6,851
--------
TOTAL MISCELLANEOUS -
INTERMEDIATE GOODS &
SERVICES.................. 13,321
--------
TOTAL INTERMEDIATE GOODS &
SERVICES.................. 90,695
--------
CAPITAL GOODS - 8.14%
AEROSPACE - 3.94%
The Boeing Company.............. 59,900 3,931
Coltec Industries, Incorporated
(non-income producing)........ 55,100 599
Lockheed Martin Corporation..... 113,749 7,749
Northrop Corporation............ 43,000 2,462
Raytheon Company................ 218,000 9,510
Rockwell International
Corporation................... 45,000 2,003
Thiokol Corporation............. 18,100 627
United Technologies
Corporation................... 52,000 4,615
--------
TOTAL AEROSPACE............. 31,496
--------
CONGLOMERATES - 1.14%
Harsco Corporation.............. 39,000 2,057
Minnesota Mining and
Manufacturing Company......... 35,000 1,991
Teledyne, Incorporated.......... 12,000 299
Textron, Incorporated........... 69,300 4,764
--------
TOTAL CONGLOMERATES......... 9,111
--------
ELECTRICAL EQUIPMENT - 0.80%
General Electric Corporation.... 25,000 1,581
Honeywell, Incorporated......... 40,300 1,693
Sunbeam Corporation............. 58,000 870
Westinghouse Electric
Corporation................... 157,400 2,223
--------
TOTAL ELECTRICAL
EQUIPMENT................. 6,367
--------
MACHINERY - 0.36%
Cummins Engine, Incorporated.... 27,300 959
Deere and Company............... 14,000 1,251
Tecumseh Products Company....... 14,800 696
--------
TOTAL MACHINERY............. 2,906
--------
NEWSPAPERS-PUBLISHING &
PRINTING - 0.12%
Gannett Company................. 17,800 968
--------
OFFICE EQUIPMENT - 1.78%
Apple Computer.................. 28,400 1,031
International Business Machines
Corporation................... 15,000 1,459
Pitney Bowes, Incorporated...... 53,000 2,312
</TABLE>

See accompanying notes

18
<PAGE> 187

AMERICAN AADVANTAGE BALANCED FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Xerox Corporation............... 72,600 $ 9,420
--------
TOTAL OFFICE EQUIPMENT...... 14,222
--------
TOTAL CAPITAL GOODS......... 65,070
--------
TOTAL COMMON STOCK.......... 479,418
--------
Par
Amount
--------
SHORT-TERM INVESTMENTS (NOTE A) - 3.01%
Abbey National Bank, ETD,
5.73%, Due 12-8-1995.......... $ 10,000 10,000
Bank Brussells Lambert, CTD,
5.9375%, Due 11-1-1995........ 9,054 9,054

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Sanwa Bank,YCD, 5.70%,
Due 12-5-95................... $ 5,000 $ 5,000
--------
TOTAL SHORT-TERM
INVESTMENTS............... 24,054
--------
TOTAL INVESTMENTS - 99.21%
(COST - $684,123)............. 792,673
--------
OTHER ASSETS, NET OF
LIABILITIES - 0.79%........... 6,340
--------
TOTAL NET ASSETS - 100%......... $799,013
========
</TABLE>

- ------------

Based on the cost of investments of $684,480 for federal income tax purposes at
October 31, 1995, the aggregate gross unrealized appreciation was $117,558, the
unrealized depreciation was $9,365, and the net unrealized appreciation of
investments was $108,193.

(A) Rates associated with short-term investments represent yield to maturity.

ABBREVIATIONS:

AB - Company
ADR - American Depository Receipt
ARM Adjustable Rate Mortgage
CTD - Cayman Time Deposit
ETD - Eurodollar Time Deposit
FRN - Floating Rate Note
MTN - Medium Term Note
PERC - Preferred Equity Redemption Certificate
PLC - Public Limited Corporation
YCD - Yankee Certificate of Deposit

See accompanying notes

19
<PAGE> 188

AMERICAN AADVANTAGE GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
PREFERRED STOCK - 0.53%
ConAgra Convertible E........... 55,000 $ 2,158
National Semiconductor
Convertible A................. 20,000 1,749
RJR Nabisco, Convertible PERC... 35,500 221
Teledyne, Incorporated E........ 4,224 60
--------
TOTAL PREFERRED STOCK....... 4,188
--------
COMMON STOCK - 93.35%
FOREIGN STOCKS - 2.92%
Arthur Guinness & Sons, ADR..... 112,400 4,495
Exel Limited.................... 50,000 2,674
Hanson PLC, ADR................. 278,700 4,319
Moore Corporation Limited....... 145,000 2,772
Royal Dutch Petroleum Company,
New York Registry............. 32,000 3,931
Schlumberger Limited............ 30,000 1,867
The Seagram Company Limited..... 30,700 1,104
Volvo AB, ADR................... 80,000 1,810
--------
TOTAL FOREIGN STOCKS........ 22,972
--------
CONSUMER STAPLES - 21.64%
DEPARTMENT AND MAIL ORDER - 2.62%
K Mart Corporation.............. 338,100 2,747
The May Department Store
Company....................... 106,000 4,161
J.C. Penney Company,
Incorporated.................. 245,500 10,342
Sears Roebuck & Company......... 60,000 2,040
Woolworth Corporation........... 90,000 1,316
--------
TOTAL DEPARTMENT AND MAIL
ORDER..................... 20,606
--------
DISTILLERS AND BREWERS - 0.87%
Anheuser-Busch Companies,
Incorporated.................. 103,300 6,818
--------
DRUGS AND HOSPITAL SUPPLY - 6.36%
Allergan, Incorporated.......... 46,400 1,363
American Home Products
Corporation................... 124,600 11,043
Baxter International,
Incorporated.................. 246,700 9,529
Bristol-Myers Squibb Company.... 131,100 9,996
Eli Lilly & Company............. 39,834 3,849
Guidant Corporation............. 30,063 962
Merck & Company, Incorporated... 105,000 6,038
Upjohn Company.................. 51,000 2,588
Warner Lambert.................. 54,600 4,648
--------
TOTAL DRUGS AND HOSPITAL
SUPPLY.................... 50,016
--------

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
FOOD PROCESSING - 0.37%
Nabisco Holdings Corporation,
Class A....................... 108,450 $ 2,915
--------
LEISURE - 1.21%
Brunswick Corporation........... 92,200 1,798
Hasbro, Incorporated............ 142,900 4,358
King World Productions,
Incorporated (non-income
producing).................... 95,500 3,331
--------
TOTAL LEISURE............... 9,487
--------
PHOTOGRAPHY - 1.67%
Eastman Kodak Company........... 210,000 13,151
--------
PUBLISHING - 1.99%
A.H. Belo, Incorporated, Class
A............................. 122,200 4,231
R.R. Donnelley & Sons Company... 75,000 2,738
Dun & Bradstreet Corporation.... 70,000 4,183
New York Times Company.......... 161,700 4,487
--------
TOTAL PUBLISHING............ 15,639
--------
RETAIL - OTHER - 0.57%
Giant Foods Inc................. 80,000 2,570
Melville Corporation............ 60,000 1,920
--------
TOTAL RETAIL - OTHER........ 4,490
--------
TOBACCO - 5.82%
American Brands, Incorporated... 55,000 2,358
Philip Morris Companies,
Incorporated.................. 288,300 24,361
RJR Nabisco Holdings............ 314,520 9,671
UST, Incorporated............... 312,100 9,363
--------
TOTAL TOBACCO............... 45,753
--------
MISCELLANEOUS - CONSUMER STAPLES - 0.16%
Gibson Greetings,
Incorporated.................. 90,550 1,256
--------
TOTAL CONSUMER STAPLES...... 170,131
--------
INTEREST SENSITIVE - 31.63%
BANKS - 9.89%
BankAmerica Corporation......... 113,000 6,498
Bank of Boston Corporation...... 60,000 2,670
Bankers Trust Company New York.. 102,500 6,534
Chase Manhattan Corporation..... 187,000 10,659
Chemical Banking Corporation.... 186,234 10,592
Crestar Financial Corporation... 30,000 1,710
First Chicago Corporation....... 91,500 6,211
First Interstate Bancorp........ 36,000 4,644
First of America Bank
Corporation................... 51,000 2,174
First Security Corporation...... 65,000 2,129
</TABLE>

See accompanying notes

20
<PAGE> 189

AMERICAN AADVANTAGE GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Fleet Financial Group,
Incorporated.................. 242,800 $ 9,409
J.P. Morgan & Company,
Incorporated.................. 115,900 8,939
NationsBank Corporation......... 68,000 4,471
Wells Fargo and Company......... 5,000 1,051
--------
TOTAL BANKS................. 77,691
--------
BUILDING AND MATERIALS - 0.60%
PPG Industries, Incorporated.... 45,000 1,913
Vulcan Materials Company........ 50,000 2,781
--------
TOTAL BUILDING AND
MATERIALS................. 4,694
--------
FINANCE - 0.59%
Beneficial Corporation.......... 40,000 1,960
Household International,
Incorporated.................. 48,000 2,700
--------
TOTAL FINANCE............... 4,660
--------
INSURANCE - LIFE AND MULTI-LINE - 3.63%
Aetna Life & Casualty Company... 112,350 7,907
American General Corporation.... 75,000 2,466
Aon, Incorporated............... 180,600 7,427
Lincoln National Corporation.... 50,000 2,231
Old Republic International
Corporation................... 156,600 4,483
Travelers Corporation........... 78,896 3,984
--------
TOTAL INSURANCE - LIFE AND
MULTI-LINE................ 28,498
--------
INSURANCE - PROPERTY AND CASUALTY - 3.28%
Ace Limited (non-income
producing).................... 100 3
Allstate Corporation............ 379,780 13,957
Safeco Corporation.............. 55,000 3,530
St. Paul Companies.............. 163,400 8,293
--------
TOTAL INSURANCE - PROPERTY
AND CASUALTY.............. 25,783
--------
SAVINGS AND LOAN - 1.46%
Great Western Financial
Corporation................... 367,200 8,308
H.F. Ahmanson & Company......... 125,000 3,125
--------
TOTAL SAVINGS AND LOAN...... 11,433
--------
UTILITIES - ELECTRIC - 4.19%
Centerior Energy................ 479,100 4,791
CMS Energy Corporation.......... 60,000 1,658
Detroit Edison Company.......... 50,000 1,688

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Entergy Corporation............. 298,300 $ 8,502
Illinova Corporation............ 70,000 1,986
New York State Electric & Gas
Corporation................... 70,000 1,768
Niagara Mohawk Power
Corporation................... 90,000 968
Peco Energy Company............. 55,000 1,609
Public Service Enterprise Group,
Incorporated.................. 70,700 2,077
Unicom Corporation.............. 240,400 7,873
--------
TOTAL UTILITIES -
ELECTRIC.................. 32,920
--------
UTILITIES - NATURAL GAS - 1.33%
Columbia Gas Systems Inc........ 700 27
Panhandle Eastern Corporation... 339,300 8,567
Peoples Energy Corporation...... 65,000 1,869
--------
TOTAL UTILITIES - NATURAL
GAS....................... 10,463
--------
UTILITIES - TELEPHONE - 3.34%
AT&T Corporation................ 115,600 7,398
Pacific Telesis Group,
Incorporated.................. 408,300 12,402
SBC Communications Inc.......... 30,000 1,676
US West, Incorporated........... 100,000 4,763
--------
TOTAL UTILITIES -
TELEPHONE................. 26,239
--------
MISCELLANEOUS - INTEREST SENSITIVE - 3.32%
American Express Company........ 299,000 12,147
Federal Home Loan Mortgage
Corporation................... 67,000 4,640
Federal National Mortgage
Association................... 63,700 6,681
Fund American Enterprises,
Incorporated (non-income
producing).................... 38,375 2,648
--------
TOTAL MISCELLANEOUS -
INTEREST SENSITIVE........ 26,116
--------
TOTAL INTEREST SENSITIVE.... 248,497
--------
CONSUMER CYCLICALS - 5.63%
AUTOMOBILE AND TRUCK - 4.92%
Dana Corporation................ 303,300 7,772
Eaton Corporation............... 178,600 9,153
Ford Motor Company.............. 371,436 10,679
General Motors Corporation...... 252,700 11,056
--------
</TABLE>

See accompanying notes

21
<PAGE> 190

AMERICAN AADVANTAGE GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
TOTAL AUTOMOBILE AND
TRUCK..................... $ 38,660
--------
ELECTRICAL HOUSEHOLD EQUIPMENT - 0.37%
Newell Company.................. 53,000 1,279
Whirlpool Corporation........... 30,000 1,590
--------
TOTAL ELECTRICAL HOUSEHOLD
EQUIPMENT................. 2,869
--------
TIRE AND RUBBER - 0.34%
Cooper Tire and Rubber Company.. 75,000 1,734
Goodyear Tire & Rubber Company.. 25,000 950
--------
TOTAL TIRE AND RUBBER....... 2,684
--------
TOTAL CONSUMER CYCLICALS.... 44,213
--------
INTERMEDIATE GOODS & SERVICES - 18.02%
CHEMICALS - 2.01%
E.I. Du Pont De Nemours &
Company....................... 55,000 3,431
Eastman Chemical Company........ 51,775 3,081
FMC Corporation (non-income
producing).................... 68,800 4,928
Monsanto Company................ 23,000 2,409
Olin Corporation................ 30,000 1,939
--------
TOTAL CHEMICALS............. 15,788
--------
FOREST PRODUCTS - 1.97%
International Paper Company..... 70,000 2,590
James River Corporation of
Virginia...................... 55,000 1,767
Union Camp Corporation.......... 50,000 2,544
Weyerhaeuser Company............ 194,700 8,591
--------
TOTAL FOREST PRODUCTS....... 15,492
--------
METALS - ALUMINUM - 0.76%
Aluminum Company of America..... 97,000 4,947
Reynolds Metals Company......... 20,000 1,008
--------
TOTAL METALS - ALUMINUM..... 5,955
--------
NATURAL GAS TRANSMISSION - 0.46%
Coastal Corporation............. 111,200 3,600
--------
OIL - 8.23%
Amoco Corporation............... 111,500 7,122
Atlantic Richfield
Corporation................... 30,000 3,203
Chevron Corporation............. 120,000 5,610
Exxon Corporation............... 127,100 9,707
Louisiana Land and Exploration
Company....................... 116,925 4,136

<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Mobil Corporation............... 31,500 $ 3,174
Phillips Petroleum Company...... 314,400 10,139
Tenneco, Incorporated........... 184,200 8,082
Texaco, Incorporated............ 110,000 7,494
Ultramar Corporation............ 90,000 2,194
USX-Marathon Group.............. 50,000 888
Union Texas Petroleum Holdings,
Incorporated.................. 164,000 2,952
--------
TOTAL OIL................... 64,701
--------
OIL SERVICE - 0.76%
Baker Hughes, Incorporated...... 158,400 3,109
Ensco International (non-income
producing).................... 167,400 2,825
--------
TOTAL OIL SERVICE........... 5,934
--------
TRANSPORTATION - 1.63%
Conrail, Incorporated........... 55,000 3,781
CSX Corporation................. 13,000 1,089
Norfolk Southern Corporation.... 20,000 1,545
Ryder Systems, Incorporated..... 82,000 1,978
Union Pacific Corporation....... 55,000 3,596
Yellow Corporation.............. 60,000 788
--------
TOTAL TRANSPORTATION........ 12,777
--------
MISCELLANEOUS - INTERMEDIATE GOODS &
SERVICES - 2.20%
Corning, Incorporated........... 40,000 1,045
Dresser Industries.............. 189,800 3,938
GATX Corporation................ 45,000 2,138
Mapco, Incorporated............. 38,100 1,962
Phelps Dodge Corporation........ 128,800 8,163
--------
TOTAL MISCELLANEOUS -
INTERMEDIATE GOODS &
SERVICES.................. 17,246
--------
TOTAL INTERMEDIATE GOODS &
SERVICES.................. 141,493
--------
CAPITAL GOODS - 13.49%
AEROSPACE - 6.47%
The Boeing Company.............. 93,900 6,162
Coltec Industries, Incorporated
(non-income producing)........ 248,500 2,702
Lockheed Martin Corporation..... 197,394 13,447
Northrop Corporation............ 40,600 2,324
Raytheon Company................ 350,600 15,295
Rockwell International
Corporation................... 45,000 2,003
Thiokol Corporation............. 103,700 3,591
United Technologies
Corporation................... 60,000 5,325
--------
TOTAL AEROSPACE............. 50,849
--------
</TABLE>

See accompanying notes

22
<PAGE> 191

--------
TOTAL CAPITAL GOODS......... $105,946
--------
TOTAL COMMON STOCK.......... 733,252
--------

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
SHORT-TERM INVESTMENTS (NOTE A) - 6.33%
Abbey National Bank, ETD, 5.73%,
Due 12-08-1995................ $ 10,000 $ 10,000
Bank Brussells Lambert, CTD,
5.9375%,
Due 11-01-1995................ 24,714 24,714
Sanwa Bank, YCD, 5.65%,
Due 12-06-1995................ 14,993 14,993
--------
TOTAL SHORT-TERM
INVESTMENTS............... 49,707
--------
TOTAL INVESTMENTS - 100.21%
(COST $648,080)............... 787,147
--------
LIABILITIES, NET OF OTHER
ASSETS - (0.21%).............. (1,633)
--------
TOTAL NET ASSETS - 100%......... $785,514
========
</TABLE>

- ------------

Based on the cost of investments of $648,606 for federal income tax purposes at
October 31, 1995, the aggregate gross unrealized appreciation was $153,658, the
unrealized depreciation was $15,117, and the net unrealized appreciation of
investments was $138,541.

(A) Rates associated with short-term investments represent yield to maturity.

ABBREVIATIONS:

AB - Company
ADR - American Depository Receipt
CTD - Cayman Time Deposit
ETD - Eurodollar Time Deposit
PERC - Preferred Equity Redemption Certificate
PLC - Public Limited Corporation
YCD - Yankee Certificate of Deposit

See accompanying notes

23
<PAGE> 192

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
AUSTRALIA COMMON STOCK - 6.94%
Australia & New Zealand Banking
Group ORD $1.00.............. 776,077 $ 3,247
Brambles Industries, Limited... 350,000 3,717
Burns, Philip & Co., Limited... 400,000 895
CSR, Limited................... 265,000 845
GIO Australia Holdings,
Limited...................... 493,226 1,043
News Corporation, Limited...... 210,000 1,057
News Corporation Preferred
Rights....................... 105,000 479
Pacific Dunlop, Limited........ 401,000 970
Pioneer International,
Limited...................... 860,000 2,107
QBE Insurance Group, Limited... 421,724 1,861
Westpac Banking Corporation.... 386,000 1,583
--------
TOTAL AUSTRALIA COMMON
STOCK.................... 17,804
--------
AUSTRIA COMMON STOCK - 0.93%
EVN Energie-Versorgung
Niederoesterreich AG......... 3,300 403
Mayr-Melnhof Karton AG......... 12,000 700
VA Technologie AG.............. 11,000 1,274
--------
TOTAL AUSTRIA COMMON
STOCK.................... 2,377
--------
BELGIUM COMMON STOCK - 0.91%
Arbed, SA (non-income
producing)................... 3,000 298
G.I.B. Holdings, Limited,
NPV.......................... 13,450 525
Groupe Bruxelles Lambert, SA... 11,550 1,487
Groupe Bruxelles Lambert,
NPV.......................... 209 27
--------
TOTAL BELGIUM COMMON
STOCK.................... 2,337
--------
CANADA COMMON STOCK - 2.82%
Bank of Nova Scotia............ 62,439 1,340
Canadian Imperial Bank of
Commerce..................... 60,000 1,606
IMASCO, Limited................ 75,000 1,338
Newbridge Networks Corporation
(non-income producing)....... 40,000 1,223
Noranda, Incorporated.......... 62,500 1,249
Wascana Energy, Incorporated
(non-income producing)....... 60,000 474
--------
TOTAL CANADA COMMON
STOCK.................... 7,230
--------
DENMARK COMMON STOCK - 0.65%
Novo Nordisk AS, "B"........... 7,000 890
Unidanmark AS, "A"............. 17,000 781
--------
TOTAL DENMARK COMMON
STOCK.................... 1,671
--------

<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
FINLAND COMMON STOCK - 1.70%
Enso-Gutzeit OY................ 170,000 $ 1,333
Huhtamaki Group I Free......... 18,300 543
Metsa-Serla OY................. 20,000 744
Repola OY...................... 90,000 1,742
--------
TOTAL FINLAND COMMON
STOCK.................... 4,362
--------
FRANCE COMMON STOCK - 6.92%
Alcatel Alsthom CG ORD......... 26,081 2,226
Banque Nationale De Paris...... 13,250 545
Bongrain SA.................... 1,450 767
Credit Lyonnais-CDI (non-income
producing)................... 10,000 515
ECCO SA........................ 3,750 581
Elf Aquitaine SA............... 54,676 3,721
Fianciere Paribas.............. 2,300 127
La France SA................... 8,000 1,063
Lafarge Coppee................. 30,000 1,987
PSA Peugeot.................... 6,200 807
Rhone-Poulenc "A".............. 50,000 1,089
Saint Gobain................... 7,000 834
Thomson CSF.................... 19,500 406
Total Petroleum Company B...... 43,954 2,715
Valeo SA FRF20................. 8,200 370
--------
TOTAL FRANCE COMMON
STOCK.................... 17,753
--------
GERMANY - 7.60%
PREFERRED STOCK - 1.60%
Herlitz AG..................... 4,947 869
RWE AG......................... 4,600 1,305
Spar Handels - AG.............. 1,700 367
Volkswagen AG.................. 6,800 1,550
--------
TOTAL GERMANY PREFERRED
STOCK.................... 4,091
--------
COMMON STOCK - 6.00%
BASF AG........................ 6,620 1,462
BAYER AG....................... 12,150 3,209
Commerzbank AG................. 4,000 924
Deutsche Bank AG............... 30,000 1,353
Karstadt AG.................... 3,780 1,637
Mannesmann AG.................. 5,400 1,772
Muenchener Rueckversicherung
Aktiengesellschaft........... 300 530
Muenchener Rueckversicherung
Aktiengesellschaft
AG - Reg................... 37 77
Muenchener Rueckversicherung
Aktiengesellschaft
Warrants................... 37 4
Varta AG (non-income
producing)................... 1,520 310
Veba AG........................ 77,500 3,172
Volkswagen AG.................. 3,000 943
--------
</TABLE>

See accompanying notes

24
<PAGE> 193

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
TOTAL GERMANY COMMON
STOCK.................... $ 15,393
--------
TOTAL GERMANY.............. 19,484
--------
HONG KONG COMMON STOCK - 5.39%
Amoy Properties................ 196,000 189
Cheung Kong Holdings,
Limited...................... 235,000 1,325
Dickson Concepts
(International), Limited..... 1,750,000 1,268
Hang Lung Development Company,
Limited...................... 710,000 1,180
HSBC Holdings, PLC............. 133,700 1,945
Hutchison Whampoa, Limited..... 200,000 1,102
National Mutual of Asia,
Limited...................... 1,700,000 1,308
New World Development Company,
Limited...................... 450,000 1,752
Oriental Press Group,
Limited...................... 3,005,000 1,234
Peregrine Investments Holdings,
Limited...................... 550,000 701
South China Morning Post
(Holdings), Limited.......... 1,100,000 640
Sun Hung Kai Properties,
Limited...................... 110,100 879
Swire Pacific, Limited "A"..... 40,000 300
--------
TOTAL HONG KONG COMMON
STOCK.................... 13,823
--------
IRELAND COMMON STOCK - 0.74%
Bank of Ireland Group.......... 279,300 1,898
--------
TOTAL IRELAND COMMON
STOCK.................... 1,898
--------
ITALY - 2.20%
PREFERRED STOCK - 0.15%
Concessioni E Costruzioni
Autostrade................... 350,000 376
--------
ITALY COMMON STOCK - 2.05%
Danieli Group Risp............. 473,960 1,308
Sasib, SPA..................... 231,000 572
STET Risp (non convertible).... 490,000 1,068
STET Societa Finanziaria
Telefonica................... 550,000 1,558
Telecom Italia, SPA............ 500,000 759
--------
TOTAL ITALY COMMON STOCK... 5,265
--------
TOTAL ITALY................ 5,641
--------
JAPAN COMMON STOCK - 12.83%
Aisin Seiki Company, Limited... 56,000 734
Canon, Incorporated............ 70,000 1,198
Chudenko Corporation........... 9,000 328
Daibiru Corporation............ 77,000 783
Daicel Chemical................ 75,000 394
Daikin Industries.............. 34,000 271

<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
Dainippon Ink & Chemical....... 57,000 $ 243
Daiwa House Industry Company,
Limited...................... 103,000 1,541
East Japan Railway Company..... 160 756
Fuji Photo Film................ 183,000 4,528
Hitachi Koki Co., Limited...... 20,000 178
Hitachi, Limited............... 120,000 1,232
KAO Corporation................ 110,000 1,334
Kirin Brewery Company,
Limited...................... 73,000 735
Matsushita Electric Industrial
Company...................... 110,000 1,560
Nichicon Corporation........... 72,000 972
Nichido Fire & Marine
Insurance.................... 140,000 1,047
Nintendo Company, Limited...... 32,000 2,354
Nippon Sanso K K............... 10,000 45
Nippon Telegraph & Telephone
Corporation.................. 101 829
Promise Co. Ltd................ 21,000 828
Ryosan Company................. 12,000 333
Sekisui Chemical Company,
Limited...................... 127,000 1,652
Sony Corporation............... 41,800 1,881
Stanley Electric Company,
Limited...................... 57,000 350
Sumitomo Marine & Fire......... 53,000 379
Sumitomo Rubber Industries..... 135,000 1,076
Suzuki Motor Corporation,
Limited...................... 167,000 1,682
TDK Corporation................ 20,000 1,031
Toyo Seikan Kaisha............. 40,000 1,146
Toyota Motor Corporation....... 65,000 1,208
Yamato Kogyo Company, Limited.. 26,000 206
Yurtec Corporation............. 3,200 58
--------
TOTAL JAPAN COMMON STOCK... 32,892
--------
MALAYSIA COMMON STOCK - 0.64%
Kedah Cement Holdings BHD...... 350,000 545
Malaysian International
Shipping Corporation BHD..... 226,666 597
Sime Darby BHD................. 196,000 490
--------
TOTAL MALAYSIA COMMON
STOCK.................... 1,632
--------
NETHERLANDS COMMON STOCK - 8.66%
ABN AMRO Holdings NV........... 71,837 3,014
Aegon NV....................... 45,000 1,706
Akzo Nobel NV ORD.............. 19,550 2,223
Fortis AMEV NV................. 29,460 1,848
Hollandsche Beton Groep NV..... 11,428 1,721
Internationale Nederlanden
Groep NV..................... 91,766 5,465
Koninklijke Bijenkorf Beheer... 11,000 780
Nedlloyd Groep NV.............. 12,000 305
Philips Electronics............ 65,000 2,509
Royal PTT Nederland NV......... 38,000 1,335
</TABLE>

See accompanying notes

25
<PAGE> 194

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
Unilever NV.................... 10,000 $ 1,308
--------
TOTAL NETHERLANDS COMMON
STOCK.................... 22,214
--------
</TABLE>

<TABLE>
<CAPTION>
Par
Amount
----------
<S> <C> <C>
NEW ZEALAND - 1.25%
BONDS - 0.02%
Brierley Investments, Limited
Subordinated Convertible,
9.00%, Due 6-30-1998........ $ 63 45
--------
TOTAL NEW ZEALAND BONDS... 45
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
----------
<S> <C> <C>
COMMON STOCK - 1.23%
Brierley Investments,
Limited..................... 1,400,000 1,090
Fisher & Paykel, Limited...... 11,300 37
Fletcher Challenge, Limited... 765,000 2,025
--------
TOTAL NEW ZEALAND COMMON
STOCK................... 3,152
--------
TOTAL NEW ZEALAND......... 3,197
--------
NORWAY COMMON STOCK - 3.11%
Den Norske Bank, Series A
Free........................ 236,000 648
Hafslund Nycomed, Series B
Free........................ 99,500 2,779
Kvaerner Industries AS........ 20,789 874
Norsk Hydro AS................ 40,000 1,593
Saga Petroleum, Series B
Free........................ 100,000 1,204
Unitor AS..................... 70,000 865
--------
TOTAL NORWAY COMMON
STOCK................... 7,963
--------
SINGAPORE COMMON STOCK - 0.79%
Hong Kong Land (SGD).......... 250,000 450
Neptune Orient Lines.......... 300,000 329
Sembawang Corporation......... 258,000 1,249
--------
TOTAL SINGAPORE COMMON
STOCK................... 2,028
--------
SPAIN COMMON STOCK - 4.20%
Banco Espana Credito SA....... 7,000 47
Banco Popular Espanol......... 5,500 872
Banco Santander SA............ 35,300 1,536
Iberdrola SA.................. 300,357 2,260
Repsol SA..................... 31,000 924
Telefonica de Espana SA....... 359,000 4,522
Uralita (non-income
producing).................. 59,250 596
--------
TOTAL SPAIN COMMON
STOCK................... 10,757
--------

<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
SWEDEN COMMON STOCK - 4.06%
Assidomaen AB................. 48,000 $ 1,120
Astra AB, "B" Free............ 48,000 1,734
Celsius Industrier AB, "B".... 112,000 2,116
Electrolux AB................. 30,000 1,282
Esselte AB, "A" Free.......... 2,000 30
Esselte AB, "B" Free.......... 17,000 249
Foreningsbanken AB (non-income
producing).................. 400,000 945
Scribona AB, "B" Free......... 27,900 477
Skandinaviska Enskilda
Banken A.................... 130,000 877
SKF AB, "B" Free.............. 40,000 759
Svedala Industries, "A"
Free........................ 32,000 812
--------
TOTAL SWEDEN COMMON
STOCK................... 10,401
--------
SWITZERLAND COMMON STOCK - 8.73%
BBC Brown Boveri & CIE Series
A........................... 1,300 1,506
Bucher Holdings AG............ 1,100 692
Ciba-Geigy AG................. 6,225 5,384
Forbo Holding AG-R............ 1,040 438
Gerbrueder Sulzer AG.......... 710 453
Nestle Limited................ 3,750 3,926
SGS Surveillance Holding SA... 4,200 1,441
Sig Schweiz Industries HG
AG.......................... 700 1,515
SMH AG........................ 2,000 1,246
Societe Generale Surveillance
LTD......................... 240 453
Sulzer, AG.................... 3,450 2,064
Swiss Reinsurance Company..... 2,333 2,550
Zuerich Versicherung.......... 2,500 715
--------
TOTAL SWITZERLAND COMMON
STOCK................... 22,383
--------
UNITED KINGDOM COMMON STOCK - 10.88%
Albert Fisher Group, PLC...... 1,452,500 1,169
Argyll Group, PLC............. 309,677 1,573
Associated British Foods
Group....................... 36,000 400
Barclays, PLC................. 27,900 327
Barratt Developments PLC...... 280,000 857
BAT Industries, PLC........... 216,000 1,769
Burton Group, PLC............. 900,000 1,434
Commercial Union, PLC......... 110,000 1,064
GKN, PLC...................... 60,000 764
Govett & Company, Limited..... 130,000 498
Grand Metropolitan, PLC....... 135,229 935
Hanson, PLC................... 346,000 1,058
Hillsdown Holdings, PLC....... 526,961 1,397
Kwik Save Group, PLC.......... 118,100 1,293
National Power Ord 50P........ 50,000 389
National Westminster Bank,
PLC......................... 175,000 1,745
PowerGen, PLC (Partial)....... 310,000 1,262
</TABLE>

See accompanying notes

26
<PAGE> 195

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Shares Value
---------- --------
(dollars in thousands)
<S> <C> <C>
Reckitt & Colman, PLC......... 94,357 $ 1,002
Rolls Royce................... 155,000 377
Royal Insurance Holdings,
PLC......................... 76,000 469
Salvesen, (Christian), PLC.... 260,000 993
Shell Transportation and
Trading, PLC................ 45,000 526
Sun Alliance Group, PLC....... 150,000 895
Tate & Lyle, PLC.............. 49,500 351
Tesco, PLC.................... 340,173 1,610
Thames Water Group, PLC....... 64,800 539
Unilever, PLC................. 80,000 1,551
Welsh Water, PLC.............. 75,000 891
WPP Group, PLC................ 307,500 747
--------
TOTAL UNITED KINGDOM
COMMON STOCK............ 27,885
--------
FOREIGN SECURITIES DENOMINATED IN U.S. DOLLARS - 2.25%
Dairy Farm International...... 908,000 745
GP Batteries International
Limited..................... 137,000 334
Jardine Matheson Holdings..... 386,600 2,358
Jardine Strategic............. 632,000 1,700
Telefonos De Mexico ADR....... 23,500 646
--------
TOTAL FOREIGN SECURITIES
DENOMINATED IN U.S.
DOLLARS................. 5,783
--------
UNITED STATES - 4.70%
</TABLE>

<TABLE>
<CAPTION>
Par Amount Value
---------- --------
(dollars in thousands)
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS (NOTE A) - 4.70%
U. S. Treasury Bill, 5.28%,
Due 11-2-1995............... $ 2,257 $ 2,256
U. S. Treasury Bill, 5.29%,
Due 11-9-1995............... 2,054 2,051
U. S. Treasury Bill, 5.18%,
Due 11-16-1995.............. 459 458
U. S. Treasury Bill, 5.30%,
Due 11-24-1995.............. 142 142
U. S. Treasury Bill, 5.17%,
Due 11-30-1995.............. 565 563
U. S. Treasury Bill, 5.21%,
Due 12-7-1995............... 3,186 3,169
U. S. Treasury Bill, 5.13%,
Due 12-14-1995.............. 1,689 1,678
U. S. Treasury Bill, 5.18%,
Due 12-21-1995.............. 330 328
U. S. Treasury Bill, 5.19%,
Due 12-28-1995.............. 32 32
U. S. Treasury Bill, 5.29%,
Due 1-11-1996............... 1,398 1,383
--------
TOTAL UNITED STATES
GOVERNMENT OBLIGA-
TIONS................... 12,060
--------
TOTAL INVESTMENTS -
98.90% (COST - $230,014).... 253,575
--------
OTHER ASSETS, NET OF
LIABILITIES - 1.10%......... 2,832
--------
TOTAL NET ASSETS - 100%....... $256,407
=========
</TABLE>

- ------------

Based on the cost of investments of $230,156 for federal income tax purposes at
October 31,1995, the aggregate gross unrealized appreciation was $33,704, the
aggregate gross unrealized depreciation was $10,285, and the net unrealized
appreciation of investments was $23,419.

(A) Rates associated with United States Government Bonds represent yield to
maturity from time of purchase.

ABBREVIATIONS:

AB - Company (Sweden)
ADR American Depository Receipt
AG - Company (Austria, Germany, Switzerland)
AS - Company (Denmark, Norway)
BHD - Berhard (Malaysia)
CDI - Certificate of Investment (France)
CG - Company General (France)
HG - Holding (Switzerland)
NPV - No Par Value (Belgium)
NV - Company (Netherlands)
ORD - Ordinary (Netherlands, France, Australia)
OY - Company (Sweden)
PLC - Public Limited Corporation (UK, Hong Kong)
SA - Company (Switzerland, Spain, Mexico, France, Belgium)
SGD - Singapore Registered (Hong Kong)
SPA - Company (Italy)

See accompanying notes

27
<PAGE> 196

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
INDUSTRY DIVERSIFICATION
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Basic Industry................................................................... 25.46%
Capital Goods.................................................................... 12.19
Consumer Goods & Services........................................................ 23.91
Energy........................................................................... 4.86
Financing, Insurance & Real Estate............................................... 22.69
Transportation................................................................... 0.89
Utilities........................................................................ 4.19
Short Term Investments........................................................... 5.46
Other Assets/Liabilities......................................................... 0.35
--------
NET ASSETS............................................................. 100.00%
========

</TABLE>
28
<PAGE> 197

AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND

SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 22.76%
Federal Home Loan Mortgage
Corporation, MH-1 A REMIC,
10.15%, Due 4-15-2006......... $ 268 $ 276
Federal Home Loan Mortgage
Corporation, ARM #877362,
6.125%, Due 7-1-2025.......... 9,600 9,775
Federal National Mortgage
Association, 1992-203 EB,
6.25%, Due 6-25-2005.......... 5,000 5,000
Federal National Mortgage
Association, 93 135 Z, 5.85%,
Due 7-25-2005................. 18,245 17,858
Federal National Mortgage
Association, 1995-W1 A1,
8.40%, Due 4-25-2025.......... 5,495 5,564
Federal National Mortgage
Association, ARM #80891,
6.787%, Due 1-1-2019.......... 4,399 4,528
Federal National Mortgage
Association, ARM #95321,
6.3425%, Due 4-1-2030......... 3,321 3,445
--------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS............... 46,446
--------
ASSET-BACKED SECURITIES - 9.21%
Household Finance Credit Card
Trust, 1991 1 B, 8.125%, Due
10-15-1997.................... 7,500 7,556
Standard Credit Card Master
Trust, 1991 1 B, 9.00%, Due
8-7-1997...................... 11,000 11,234
--------
TOTAL ASSET-BACKED
SECURITIES................ 18,790
--------
CORPORATE OBLIGATIONS - 45.54%
BANK NOTES - 10.48%
Capital One, 8.125%, Due
2-27-1998..................... 5,000 5,199
Capital One, 8.125%, Due
3-1-2000...................... 5,000 5,305
Southtrust Bank of Alabama,
7.69%, Due 5-15-2025, Puttable
5-15-2005..................... 10,000 10,869
--------
TOTAL BANK NOTES............ 21,373
--------
BANK HOLDING COMPANIES - 12.49%
BanPonce Corporation, MTN,
6.71%, Due 5-16-1997.......... 7,000 7,049
Midlantic Corporation, 9.25%,
Due 9-1-1999.................. 9,551 10,393

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Regions Financial Corporation,
7.75%, Due 9-15-2024, Puttable
9-15-2004..................... $ 7,500 $ 8,050
--------
TOTAL BANK HOLDING
COMPANIES................. 25,492
--------
PERSONAL CREDIT - 12.58%
Chrysler Financial Corporation,
12.75%, Due 11-01-1999........ 8,000 9,703
Ford Motor Credit Company,
6.25%, Due 2-26-1998.......... 5,000 5,029
Household Financial Corporation,
8.95%, Due 9-15-1999.......... 10,000 10,929
--------
TOTAL PERSONAL CREDIT....... 25,661
--------
SECURITIES FIRMS - 9.99%
Bear Stearns Companies,
Incorporated, 6.92%, Due
3-9-1999...................... 10,000 9,915
Lehman Brothers Holding, VR MTN,
5.71%, Due 1-12-1999.......... 5,500 5,443
Lehman Brothers, MTN, 6.90%, Due
7-15-1999..................... 5,000 5,038
--------
TOTAL SECURITIES FIRMS...... 20,396
--------
TOTAL CORPORATE
OBLIGATIONS............... 92,922
--------
NON-AGENCY MORTGAGE BACKED OBLIGATIONS - 15.67%
Collateralized Mortgage
Obligation Trust, 56 A, 9.00%,
Due 5-1-2014.................. 293 302
Residential Funding Securities
Corporation, 6.7125%, Due
6-25-2025..................... 7,020 7,018
Resolution Trust Corporation,
1992-MH3 B1, 7.25%, Due
12-15-2011.................... 9,610 9,695
Resolution Trust Corporation,
1992-7 A3, 6.97312%, Due
3-25-2022..................... 3,510 3,580
Resolution Trust Corporation,
1992-6 A3, 6.3616%, Due
1-25-2026..................... 3,403 3,499
Resolution Trust Corporation,
1992-1 A1, 6.3860%, Due
5-25-2028..................... 3,910 3,989
Resolution Trust Corporation,
1992-4 A2, 6.2696%, Due
7-25-2028..................... 3,810 3,892
--------
TOTAL NON-AGENCY MORTGAGE
BACKED OBLIGATIONS........ 31,975
--------
FOREIGN SOVEREIGN OBLIGATION - 2.75%
Quebec, Province of, 8.625%, Due
1-19-2005..................... 5,000 5,606
</TABLE>

See accompanying notes

29
<PAGE> 198

AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
--------
REPURCHASE AGREEMENT (NOTE A) - 3.59%
Lehman Brothers, Inc., REPO,
5.86%, Dated 10-31-1995, Due
11-1-1995, with a maturing
value of 7,354,
(Collateralized by $7,354 U.S.
Treasury Note, 6.625%, Due
3-31-1997, market
value - $7,499)............... $ 7,331 $ 7,331
--------

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
TOTAL INVESTMENTS - 99.52% (COST
$203,007)..................... $203,070
--------
OTHER ASSETS, NET OF
LIABILITIES - 0.48%........... 976
--------
TOTAL NET ASSETS - 100%......... $204,046
========
</TABLE>

- ---------------

Based on the cost of investments of $203,007 for federal income tax purposes at
October 31, 1995, the aggregate gross unrealized appreciation was $568, the
unrealized depreciation was $505, and the net unrealized appreciation of
investments was $63.

(A) Rates associated with short-term investments represent yield to maturity.

ABBREVIATIONS:

ARM - Adustable Rate Mortgage
MTN - Medium Term Note
REMIC - Real Estate Mortgage Investment Conduit
REPO - Repurchase Agreement
VR - Variable Rate

See accompanying notes

30
<PAGE> 199

AMERICAN AADVANTAGE MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
EURODOLLAR TIME DEPOSITS
(NOTE A) - 7.87%
Bank Brussells Lambert,
5.9375%, Due 11-1-1995...... $ 60,167 $ 60,167
Bank of Ireland, 5.9375%,
Due 11-1-1995............... 46,000 46,000
----------
TOTAL EURODOLLAR TIME
DEPOSITS................ 106,167
----------
CERTIFICATES OF DEPOSIT
(NOTE A) - 14.02%
YANKEE DOLLAR, FOREIGN
BANKS - 11.79%
Banca CRT, S.P.A., Variable
Rate, 5.8125%,
Due 12-20-1995.............. 90,000 90,000
Postipankki Bank, Limited, New
York, Variable Rate Demand,
5.875%, Due 9-5-1996
(Note C).................... 69,000 69,000
----------
TOTAL YANKEE CERTIFICATES
OF DEPOSIT.............. 159,000
----------
DOMESTIC BANK - 2.23%
Banco Popular de Puerto Rico,
Variable Rate, 6.0625%,
Due 4-1-1996 (Note B)....... 30,000 30,000
----------
TOTAL CERTIFICATES OF
DEPOSIT................. 189,000
----------
BANKERS' ACCEPTANCES
(NOTE A) - 8.51%
Bank of Tokyo, Los Angeles,
5.98%, Due 11-6-1995........ 7,000 6,994
Bank of Tokyo, New York,
6.20%, Due 2-1-1996......... 25,000 24,610
Bank of Tokyo, New York,
6.13%, Due 2-7-1996......... 10,000 9,836
Bank of Tokyo, New York,
5.86%, Due 2-15-1996........ 6,000 5,899
Bank of Tokyo, New York,
5.86%, Due 2-16-1996........ 8,500 8,355
Bank of Tokyo, New York,
5.87%, Due 3-18-1996........ 6,000 5,869
Industrial Bank of Japan,
Los Angeles, 6.11%,
Due 2-20-1996............... 36,200 35,533
Sanwa Bank, Limited, New York,
6.16%, Due 2-12-1996........ 18,000 17,689
----------
TOTAL BANKERS'
ACCEPTANCES............. 114,785
----------

<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
COMMERCIAL PAPER
(NOTE A) - 8.82%
Caterpillar Financial Services
Corporation, 5.96%, Due
11-17-1995.................. $ 20,000 $ 19,948
Caterpillar Financial Services
Corporation, 5.97%, Due
11-21-1995.................. 50,000 49,839
Chrysler Financial
Corporation, 5.74%, Due
2-27-1996................... 50,000 49,099
----------
TOTAL COMMERCIAL PAPER.... 118,886
----------
VARIABLE RATE MEDIUM-TERM NOTES
(NOTE A) - 34.33%
American Honda Finance
Corporation, 5.9375%,
Due 1-26-1996............... 75,000 74,996
BanPonce Corporation, 6.0625%,
Due 2-16-1996 (Note B)...... 27,000 27,000
BanPonce Corporation, 6.0625%,
Due 2-28-1996 (Note B)...... 25,000 25,000
Barnett Banks, Incorporated,
5.9375%, Due 1-26-1996...... 100,000 100,000
Bear Stearns Companies,
Incorporated, 5.99%,
Due 2-5-1996................ 25,000 25,000
FINOVA Capital Corporation,
6.125%, Due 2-15-1996....... 32,275 32,289
General Electric Capital
Corporation, 5.953125%,
Due 10-3-1996............... 20,000 20,012
General Motors Acceptance
Corporation, 6.0625%,
Due 12-22-1995.............. 44,500 44,504
General Motors Acceptance
Corporation, 6.125%,
Due 5-6-1996................ 10,000 10,008
Key Corporation, 5.8625%,
Due 12-21-1995.............. 52,000 52,000
Norwest Corporation, 5.8625%,
Due 9-18-1996............... 25,000 25,024
Wells Fargo & Company,
5.7925%, Due 1-19-1996...... 27,000 26,999
----------
TOTAL VARIABLE RATE
MEDIUM - TERM NOTES..... 462,832
----------
BANK NOTES (NOTE A) - 16.47%
First National Bank of Boston,
5.75%, Due 12-4-1995........ 40,000 40,000
First National Bank of Boston,
Variable Rate, 5.905%,
Due 1-22-1996............... 35,000 35,000
Old Kent Bank & Trust Company,
Grand Rapids, Variable Rate,
5.9375%, Due 1-16-1996...... 37,000 37,000
</TABLE>

See accompanying notes

31
<PAGE> 200

<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
PROMISSORY NOTE
(NOTE A) - 5.19%
Goldman Sachs Group L.P.,
5.875%, Due 1-12-1996....... $ 70,000 $ 70,000
----------
TOTAL INVESTMENTS - 99.88%
(COST $1,346,670)........... 1,346,670
----------
OTHER ASSETS, NET OF
LIABILITIES - 0.12%......... 1,645
----------
TOTAL NET
ASSETS - 100%............... $1,348,315
==========
</TABLE>

- ---------------

Based on the cost of investments of $1,346,670 for federal income tax purposes
at October 31, 1995, there was no unrealized appreciation or depreciation of
investments.

(A) Rates associated with money market securities represent yield to maturity or
yield to next reset date.

(B) Obligation is subject to a same day credit quality put back to issuer.

ABBREVIATION:

L.P. -- Limited Partnership

See accompanying notes

32
<PAGE> 201

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
MUNICIPAL BONDS (NOTE A) - 83.59%
ALABAMA - 3.07%
Phenix City Industrial
Development Board (Mead Coated
Board Project) Series 1993A,
3.90%, Due 6-1-2028, LOC
Toronto Dominion Bank, VRDO... $ 600 $ 600
-------
TOTAL ALABAMA............... 600
-------
CALIFORNIA - 3.58%
Irvine Ranch Calif. Water
District Series 1993, 3.90%,
Due 4-1-2033, LOC Bank Of
America, VRDO................. 700 700
-------
TOTAL CALIFORNIA............ 700
-------
FLORIDA - 1.02%
Dade County, Florida Capital
Asset Acquisition, Series
1990, 4.15%, Due 10-1-2010,
LOC Sanwa Bank, VRDO.......... 200 200
-------
TOTAL FLORIDA............... 200
-------
GEORGIA - 15.34%
Development Authority of
Cartersville (Sekisui Jushi
America, Inc. Project) Series
1992, 4.95%, Due 6-1-2012, LOC
Sanwa Bank, Limited, VRDO..... 900 900
Gainesville Redevelopment
Authority Series 1986, (Hotel
of Gainesville Assoc. Project)
4.95%, Due 12-1-2007, LOC
SunTrust Bank, Atlanta,
VRDO.......................... 900 900
Thomaston-Upson County
Industrial Development Revenue
Authority (Yamaha Music
Manufacturing, Inc.), 5.10%,
Due 8-1-2018, LOC Bank of
Tokyo, VRDO................... 1,200 1,200
-------
TOTAL GEORGIA............... 3,000
-------
INDIANA - 7.66%
Indianapolis Indiana Resource
Recovery Revenue Bonds (Ogden
Martin Systems of
Indianapolis, Inc. Project)
4.20%, Due 12-1-2016, LOC
Swiss Bank, VRDO.............. 900 900
Seymour Economic Development
Revenue Bonds (Kobelco Metal
Powder of America, Inc.,
Project) 5.10%, Due
12-15-1997, LOC Industrial
Bank of Japan, VRDO........... 600 600
-------
TOTAL INDIANA............... 1,500
-------

<CAPTION>
Par
Amount Value
------ -------
(dollars in thousands)
<S> <C> <C>
KENTUCKY - 3.58%
Bowling Green Industrial
Building Revenue Bonds (TWN
Fastener, Inc. Project) Series
1988, 4.45%, Due 3-1-2008, LOC
Industrial Bank of Japan,
VRDO.......................... $ 700 $ 700
-------
TOTAL KENTUCKY.............. 700
-------
LOUISIANA - 5.67%
Louisiana Public Facilities
Authority Revenue Bonds Series
1985A, 4.30%, Due 12-1-2005,
LOC Sumitomo Bank, Limited,
VRDO.......................... 1,110 1,110
-------
TOTAL LOUISIANA............. 1,110
-------
MICHIGAN - 2.04%
Delta County, Michigan Economic
Development Authority (Mead -
Escanaba Paper Company
Project) Series 1985C, 4.00%,
Due 12-1-2023, LOC Bank of
Nova Scotia, VRDO............. 400 400
-------
TOTAL MICHIGAN.............. 400
-------
NEBRASKA - 4.60%
Lancaster County (Sun-Husker
Foods, Incorporated Project)
Series 1989, 4.45%, Due
8-15-2009, LOC Bank of Tokyo,
VRDO.......................... 900 900
-------
TOTAL NEBRASKA.............. 900
-------
NEVADA - 6.64%
Clark County Industrial
Development Revenue Bond,
(Nevada Power Company Project)
Series 1985, 4.70%, Due
12-1-2015, LOC Fuji Bank,
Limited, VRDO................. 1,300 1,300
-------
TOTAL NEVADA................ 1,300
-------
NEW YORK - 3.58%
The City of New York General
Obligation Series 1994 B-2(1),
4.05%, Due 8-15-2020, LOC
Dai-Ichi Kangyo Bank, VRDO.... 400 400
New York State Environmental
Facilities Corporation (Equity
of Huntington, Inc. Project)
Series 1989, 4.10%, Due
11-1-2014, LOC Union Bank of
Switzerland, VRDO............. 300 300
-------
TOTAL NEW YORK.............. 700
-------
</TABLE>

See accompanying notes

33
<PAGE> 202

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
------ --------
(dollars in thousands)
<S> <C> <C>
PENNSYLVANIA - 7.66%
Gettysburg Area Industrial
Development Authority,
(Dal-Tile Corporation) Series
1987B, 4.10%, Due 3-1-2004,
LOC Credit Suisse, VRDO....... $ 800 $ 800
Northumberland County Industrial
Development Authority (Foster
Wheeler Mt. Carmel, Inc.
Project) Series 1987A, 4.05%,
Due 2-1-2010, LOC Union Bank
of Switzerland, VRDO.......... 100 100
Northumberland County Industrial
Development Authority (Foster
Wheeler Mt. Carmel, Inc.
Project) Series 1987B, 4.05%,
Due 2-1-2010, LOC Union Bank
of Switzerland, VRDO.......... 600 600
-------
TOTAL PENNSYLVANIA.......... 1,500
-------
TENNESSEE - 2.55%
Blount County Industrial
Development Revenue Bonds
(Advanced Crystal Technology,
Inc. Project) Series 1988,
4.45%, Due 8-1-2008, LOC
Industrial Bank of Japan,
VRDO.......................... 500 500
-------
TOTAL TENNESSEE............. 500
-------
TEXAS - 3.07%
Harris County Industrial
Development Revenue Bonds
(Zeon Chemicals Project)
Series 1989, 4.45%, Due
2-1-2009, LOC Industrial Bank
of Japan, VRDO................ 600 600
-------
TOTAL TEXAS................. 600
-------
VIRGINIA - 3.83%
Alexandria Virginia Industrial
Development Authority, 4.20%,
Due 12-1-2016, LOC Swiss Bank,
VRDO.......................... 750 750
-------
TOTAL VIRGINIA.............. 750
-------
WASHINGTON - 7.66%
Port Angeles Industrial
Development Corporation
(Daishowa America Project)
Series 1992, 4.45%, Due
8-1-2007, LOC Industrial Bank
of Japan, VRDO................ 200 200
Port Everett Revenue Bonds
Series 1986, 4.45%, Due
12-1-2006, LOC Sumitomo Bank,
Limited, VRDO................. 1,300 1,300
-------
TOTAL WASHINGTON............ 1,500
-------

<CAPTION>
Par
Amount Value
------ -------
(dollars in thousands)
<S> <C> <C>
WEST VIRGINIA - 1.02%
West Virginia State Hospital
(St. Joseph's Hospital
Project), 4.15%, Due
10-1-2010, LOC Mitsubishi
Bank, Limited,
VRDO.......................... $ 200 $ 200
-------
TOTAL WEST VIRGINIA......... 200
-------
WYOMING - 1.02%
Platte County (Tri-State
Generation and Transmission
Association, Inc. Project)
Series 1984A, 4.10%, Due
7-1-2014, LOC Societe
Generale, VRDO................ 200 200
-------
TOTAL WYOMING............... 200
-------
TOTAL MUNICIPAL BONDS....... 16,360
-------
MUNICIPAL COMMERCIAL PAPER
(NOTE A) - 9.96%
INDIANA - 6.13%
Indiana Development Finance
Authority (Pure Air on the
Lake Partnership) Series
1990A, 3.75%, Due 12-5-1995,
LOC Fuji Bank, Limited........ 600 600
Indiana Development Finance
Authority (Pure Air on the
Lake Partnership) Series
1990A, 3.65%, Due 11-21-1995,
LOC Fuji Bank, Limited........ 600 600
-------
TOTAL INDIANA............... 1,200
-------
PENNSYLVANIA - 3.83%
Carbon County Industrial
Development Authority (Panther
Creek Project) Series 1991A,
3.65%, Due 12-5-1995, LOC
National Westminster.......... 750 750
-------
TOTAL PENNSYLVANIA.......... 750
-------
TOTAL MUNICIPAL COMMERCIAL
PAPER..................... 1,950
-------
OTHER INVESTMENTS - 6.52%
Lehman Municipal Money Market
Fund.......................... 936 936
Provident Institutional
Municipal Cash Fund........... 341 341
-------
TOTAL OTHER INVESTMENTS..... 1,277
-------
TOTAL INVESTMENTS - 100.07%
(COST - $19,587).............. 19,587
-------
LIABILITIES, NET OF OTHER
ASSETS - (0.07%).............. (13)
-------
TOTAL NET ASSETS - 100%......... $19,574
=======
</TABLE>

See accompanying notes

34
<PAGE> 203

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------

- ---------------

Based on the cost of investments of $19,587 for federal income tax purposes at
October 31, 1995, there was no unrealized appreciation or depreciation of
investments.

(A) Rates associated with money market securities represent yield to maturity or
yield to next reset date.

ABBREVIATIONS:

LOC - Letter of Credit
VRDO - Variable Rate Demand Obligation, which is subject to an unconditional put
which requires no more than 7 days notification.

See accompanying notes

35
<PAGE> 204

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36
<PAGE> 205

AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
REPURCHASE AGREEMENTS (NOTE A) - 78.93%
CS First Boston Corp., 5.625%,
Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,995 U.S.
Treasury Notes, 7.50%, due
1-31-1996, aggregate market
value - $2,041)............... $ 2,000 $ 2,001
Dean Witter Reynolds, Inc.
5.65%, Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,820 U.S.
Treasury Notes, 7.50%, due
11-15-2016, aggregate market
value - $2,107)............... 2,000 2,000
Fuji Securities, Inc., 5.80%,
Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,995 U.S.
Treasury Notes, 6.875%, due
3-31-1997, aggregate market
value - $2,039)............... 2,000 2,000
Goldman Sachs & Co., 5.70%,
Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,325 U.S.
Treasury Notes, 13.75%, due
8-15-2004, aggregate market
value - $2,049)............... 2,000 2,000
J.P. Morgan Securities, Inc.,
5.85% Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,382 U.S.
Treasury Notes, 12.00%, due
5-15-2005, aggregate market
value - $2,041)............... 2,000 2,000
Lehman Brothers, Inc., 5.86%,
Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $12,665.
(Collateralized by $7,910 U.S.
Treasury Notes, 9.375%, due
4-15-1996, and $4,725, 6.75%,
due 2-28-1997, aggregate
market value - $12,916)....... 12,663 12,663

<CAPTION>
Par
Amount Value
-------- --------
(dollars in thousands)
<S> <C> <C>
Merrill Lynch Government
Securities, Inc., 5.70%, Dated
10-31-1995, Due 11-1-1995 with
a maturing value of $2,000.
(Collateralized by $2,000 U.S.
Treasury Notes, 9.375%, due
4-15-1996, aggregate market
value - $2,041)............... $ 2,000 $ 2,000
Morgan Stanley & Co., Inc.,
5.70%, Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $2,000.
(Collateralized by $1,670 U.S.
Treasury Notes, 8.125%, due
8-15-2021, aggregate market
value - $2,043)............... 2,000 2,000
Nomura Securities International,
Inc., 5.85%, Dated 10-31-1995,
Due 11-1-1995 with a maturing
value of $2,000.
(Collateralized by $2,065 U.S.
Treasury Notes, 5.00%, due
1-31-1999, aggregate market
value - $2,045)............... 2,000 2,000
Sanwa Securities Co. L.P.,
5.85%, Dated 10-31-1995, Due
11-1-1995 with a maturing
value of $12,502.
(Collateralized by $11,433
U.S. Treasury Notes, 7.50%,
due 11-15-2001, aggregate
market value - $12,749)....... 12,500 12,500
Smith Barney, Inc., 5.70%, Dated
10-31-1995, Due 11-1-1995 with
a maturing value of $2,000.
(Collateralized by $2,100 U.S.
Treasury Notes, 4.75%, due
10-31-1998, aggregate market
value - $2,044)............... 2,000 2,000
--------
TOTAL REPURCHASE
AGREEMENTS................ 43,164
--------
UNITED STATES TREASURY
BILLS - 21.65%
U.S. Treasury Bill, 5.31%, Due
2-1-1996...................... 12,000 11,837
--------
TOTAL INVESTMENTS - 100.58%
(COST - $55,001).............. 55,001
--------
LIABILITIES, NET OF OTHER
ASSETS - (0.58%).............. (315)
--------
TOTAL NET ASSETS - 100%......... $ 54,686
========
</TABLE>

- ---------------

Based on the cost of investments of $55,001 for federal income tax purposes at
October 31, 1995, there was no unrealized appreciation or depreciation of
investments.

(A) Rates associated with money market securities represent yield to maturity.

ABBREVIATIONS:
L.P. - Limited Partnership

See accompanying notes

37
<PAGE> 206

AMERICAN AADVANTAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
International Limited-Term
Growth and Equity Income
Balanced Fund Income Fund Fund Fund
------------- ----------- ----------- ------------
(in thousands, except share and
per share amounts)
<S> <C> <C> <C> <C>
ASSETS:
Cash, including foreign currency..................... $ - $ - $ 5,908 $ -
Investments in securities at value (cost -- $684,123;
$648,080; $230,014; $203,007, respectively)*....... 792,673 787,147 253,575 203,070
Dividends and interest receivable.................... 6,237 1,933 674 2,849
Reclaims receivable.................................. - - 262 -
Receivable for investments sold...................... 5,327 4,675 2,181 -
Other................................................ 65 5 6 7
---------- ---------- ---------- ----------
TOTAL ASSETS..................................... 804,302 793,760 262,606 205,926
LIABILITIES:
Payable for investments purchased.................... 3,757 7,107 3,258 -
Payable for fund shares redeemed..................... 681 405 1,730 688
Unrealized depreciation on foreign currency
contracts.......................................... - - 558 -
Dividends payable.................................... - - - 1,083
Management, administrative services and investment
advisory fees payable (Note 2)..................... 726 672 439 72
Other liabilities.................................... 125 62 214 37
---------- ---------- ---------- ----------
TOTAL LIABILITIES................................ 5,289 8,246 6,199 1,880
---------- ---------- ---------- ----------
NET ASSETS....................................... $ 799,013 $ 785,514 $ 256,407 $ 204,046
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in-capital...................................... $ 639,074 $ 601,519 $ 223,999 $ 208,932
Accumulated undistributed income:
Net investment income.............................. 26,077 16,460 5,440 53
Net realized gain (loss) on investments............ 25,312 28,468 3,936 (5,002)
Unrealized appreciation of investments............. 108,550 139,067 23,032 63
---------- ---------- ---------- ----------
NET ASSETS....................................... $ 799,013 $ 785,514 $ 256,407 $ 204,046
========== ========== ========== ==========
Shares outstanding (no par value):
Institutional Class.................................. 17,916,479 4,500,035 1,938,710 13,983,274
========== ========== ========== ==========
Mileage Class........................................ 74,118 138,890 95,106 59,324
========== ========== ========== ==========
PlanAhead Class...................................... 392,248 304,869 110,324 160,449
========== ========== ========== ==========
AMR Class............................................ 38,819,317 44,324,555 17,122,537 6,581,389
========== ========== ========== ==========
Net Asset Value per share:
Institutional Class.................................. $ 13.95 $ 15.91 $ 13.29 $ 9.82
========== ========== ========== ==========
Mileage Class........................................ $ 13.90 $ 15.84 $ 13.20 $ 9.82
========== ========== ========== ==========
PlanAhead Class...................................... $ 13.90 $ 15.81 $ 13.20 $ 9.82
========== ========== ========== ==========
AMR Class............................................ $ 13.98 $ 15.95 $ 13.31 $ 9.81
========== ========== ========== ==========
</TABLE>

* Includes repurchase agreement of $7,331 for the Limited-Term Income Fund.

See accompanying notes

38
<PAGE> 207

AMERICAN AADVANTAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
U.S.
Municipal Treasury
Money Money Money
Market Fund Market Fund Market Fund
-------------- ----------- -----------
(in thousands, except share and
per share amounts)
<S> <C> <C> <C>
ASSETS:
Cash............................................................... $ - $ - $ -
Investments in securities at value (cost - $1,346,670; $19,587;
$55,001, respectively)*.......................................... 1,346,670 19,587 55,001
Interest receivable................................................ 8,205 86 7
Other.............................................................. 96 2 26
-------------- ----------- -----------
TOTAL ASSETS................................................... 1,354,971 19,675 55,034
LIABILITIES:
Dividends payable.................................................. 6,223 55 251
Management, administrative services and investment advisory fees
payable (Note 2)................................................. 222 - 33
Other liabilities.................................................. 211 46 64
-------------- ----------- -----------
TOTAL LIABILITIES.............................................. 6,656 101 348
-------------- ----------- -----------
NET ASSETS..................................................... $ 1,348,315 $ 19,574 $ 54,686
============== =========== ===========
NET ASSETS CONSIST OF:
Paid-in-capital.................................................... $ 1,348,315 $ 19,574 $ 54,686
============== =========== ===========
Shares outstanding (no par value):
Institutional Class................................................ 1,206,040,567 6,862 47,184,076
============== =========== ===========
Mileage Class...................................................... 100,285,687 19,438,365 6,972,071
============== =========== ===========
PlanAhead Class.................................................... 41,988,619 128,591 529,773
============== =========== ===========
Net Asset Value per share:
Institutional Class................................................ $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
Mileage Class...................................................... $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
PlanAhead Class.................................................... $ 1.00 $ 1.00 $ 1.00
============== =========== ===========
</TABLE>

*Includes repurchase agreements of $43,164 for the U.S. Treasury Money Market
Fund.

See accompanying notes

39
<PAGE> 208

(This page intentionally left blank)

40
<PAGE> 209

AMERICAN AADVANTAGE FUNDS
STATEMENTS OF OPERATIONS
Year Ended October 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Municipal U.S. Treasury
Growth and International Limited-Term Money Money Money
Balanced Income Equity Income Market Market Market
Fund Fund Fund Fund Fund Fund Fund
--------- ----------- -------------- ------------- -------- ---------- --------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income............ $ 20,163 $ 2,797 $ 974 $11,177 $ 95,523 $805 $3,947
Dividend income (net of
foreign taxes of $758 in
International Equity
Fund).................... 14,620 20,137 6,449 - - - -
Income derived from
securities lending,
net...................... 11 2 2 8 - - -
-------- ---------- ----------- ---------- -------- ----- -------
TOTAL INVESTMENT
INCOME............... 34,794 22,936 7,425 11,185 95,523 805 3,947
-------- ---------- ----------- ---------- -------- ----- -------
EXPENSES:
Management and investment
advisory fees (Note 2)... 2,011 1,850 942 322 2,376 30 107
Administrative service
fees:
Institutional Class...... 702 132 71 299 745 3 32
Mileage Class............ 2 4 4 2 39 7 4
PlanAhead Class.......... 6 5 3 2 8 - -
AMR Class................ 235 297 101 30 - - -
Custodian fees............. 143 114 246 70 173 2 8
Transfer agent fees:
Mileage Class............ 1 3 3 1 69 13 8
PlanAhead Class.......... 5 3 2 1 11 - -
Professional fees.......... 69 60 45 39 134 19 41
Registration fees and
expenses................. 66 64 22 38 64 46 30
Distribution
fees -- Mileage Class.... 2 3 3 1 194 36 11
Service fees -- PlanAhead
Class.................... 5 4 2 2 41 - -
Other...................... 28 23 11 22 79 7 6
-------- ---------- ----------- ---------- -------- ----- -------
3,275 2,562 1,455 829 3,933 163 247
-------- ---------- ----------- ---------- -------- ----- -------
Less fees waived (Note
2)....................... 3 3 - 3 - 40 -
-------- ---------- ----------- ---------- -------- ----- -------
NET EXPENSES........... 3,272 2,559 1,455 826 3,933 123 247
-------- ---------- ----------- ---------- -------- ----- -------
NET INVESTMENT
INCOME............... 31,522 20,377 5,970 10,359 91,590 682 3,700
-------- ---------- ----------- ---------- -------- ----- -------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments.............. 25,895 28,115 4,785 (1,552) 19 - 8
Net realized translation
loss on assets and
liabilities denominated
in foreign currencies.... - - (474) - - - -
Unrealized appreciation of
investments.............. 71,067 75,331 6,509 3,688 - - -
Unrealized translation gain
on assets and liabilities
denominated in foreign
currencies............... - - 3,513 - - - -
-------- ---------- ----------- ---------- -------- ----- -------
NET GAIN (LOSS) ON
INVESTMENTS.......... 96,962 103,446 14,333 2,136 19 - 8
-------- ---------- ----------- ---------- -------- ----- -------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $128,484 $ 123,823 $ 20,303 $12,495 $ 91,609 $682 $3,708
======== ========== =========== ========== ======== ===== =======
</TABLE>

See accompanying notes

41
<PAGE> 210

AMERICAN AADVANTAGE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended October 31,
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Growth and Income International Limited-Term
Balanced Fund Fund Equity Fund Income Fund
------------------- ------------------- ------------------- -------------------
1995 1994 1995 1994 1995 1994 1995 1994
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(in thousands)
OPERATIONS:
Net investment income.......... $ 31,522 $ 26,753 $ 20,377 $ 16,186 $ 5,970 $ 3,189 $ 10,359 $ 11,205
Net realized gain (loss) on
investments (including effect
of translation of assets and
liabilities denominated in a
foreign currency)............ 25,895 5,036 28,115 20,401 4,311 4,750 (1,552) (3,501)
Net unrealized appreciation
(depreciation) of investments
(including effect of
translation of assets and
liabilities denominated in
foreign currencies).......... 71,067 (31,362) 75,331 (18,803) 10,022 5,249 3,688 (6,059)
-------- -------- -------- -------- -------- -------- -------- --------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... 128,484 427 123,823 17,784 20,303 13,188 12,495 1,645
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Institutional Class.......... (9,177) (22,815) (702) (13,695) (376) (1,077) (6,340) (10,404)
Mileage Class................ (5) - (14) - (14) - (33) (2)
PlanAhead Class.............. (23) - (4) - (10) - (42) (1)
AMR Class.................... (17,086) - (16,041) - (3,145) - (3,944) (799)
Net realized gain on
investments:
Institutional Class.......... (2,507) (13,851) (881) (17,683) (563) (2,763) - (2,308)
Mileage Class................ (1) - (18) - (20) - - -
PlanAhead Class.............. (6) - (5) - (15) - - -
AMR Class.................... (4,561) - (19,500) - (4,435) - - -
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS................. (33,366) (36,666) (37,165) (31,378) (8,578) (3,840) (10,359) (13,514)
-------- -------- -------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of
shares....................... 170,104 539,310 188,748 576,309 89,320 269,165 137,613 175,810
Dividends reinvested........... 33,152 36,351 36,862 31,075 8,233 3,472 9,154 13,043
Cost of shares redeemed........ (116,305) (455,021) (55,588) (542,044) (42,092) (159,416) (110,995) (249,720)
-------- -------- -------- -------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS................. 86,951 120,640 170,022 65,340 55,461 113,221 35,772 (60,867)
-------- -------- -------- -------- -------- -------- -------- --------
INCREASE (DECREASE) IN NET
ASSETS....................... 182,069 84,401 256,680 51,746 67,186 122,569 37,908 (72,736)
NET ASSETS:
Beginning of year.............. 616,944 532,543 528,834 477,088 189,221 66,652 166,138 238,874
-------- -------- -------- -------- -------- -------- -------- --------
END OF YEAR*................... $799,013 $616,944 $785,514 $528,834 $256,407 $189,221 $204,046 $166,138
======== ======== ======== ======== ======== ======== ======== ========
*Includes undistributed net
investment income of......... $ 26,077 $ 22,193 $ 16,460 $ 12,844 $ 5,440 $ 3,015 $ 53 $ 53
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>

See accompanying notes

42
<PAGE> 211

AMERICAN AADVANTAGE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Period Ended October 31,
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Money Market Municipal Money U.S. Treasury Money
Fund Market Fund Market Fund
----------------------------- ----------------------- -----------------------
1995 1994 1995 1994 1995 1994
------------ ------------ --------- --------- --------- ---------
(Note 1)
(in thousands)
<S> <C> <C> <C> <C> <C> <C>

OPERATIONS:
Net investment income..... $ 91,590 $ 71,736 $ 682 $ 651 $ 3,700 $ 4,016
Net realized gain on
investments............. 19 1 - - 8 17
------------ ------------ --------- --------- --------- ---------
Increase in net assets
resulting from
operations.............. 91,609 71,737 682 651 3,708 4,033
------------ ------------ --------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income:
Institutional Class..... (86,432) (70,068) (194) (485) (3,301) (3,883)
Mileage Class........... (4,257) (1,668) (483) (166) (390) (133)
PlanAhead Class......... (901) - (5) - (9) -
Net realized gain on
investments:
Institutional Class..... (18) (1) - - (7) (16)
Mileage Class........... (1) - - - (1) (1)
PlanAhead Class......... - - - - - -
------------ ------------ --------- --------- --------- ---------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS............ (91,609) (71,737) (682) (651) (3,708) (4,033)
------------ ------------ --------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of
shares.................. 12,531,768 15,659,543 189,500 257,892 389,427 345,440
Dividends reinvested...... 54,680 27,886 668 595 2,823 2,962
Cost of shares redeemed... (13,189,189) (16,649,945) (191,043) (238,038) (411,339) (411,440)
------------ ------------ --------- --------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL
SHARE TRANSACTIONS...... (602,741) (962,516) (875) 20,449 (19,089) (63,038)
------------ ------------ --------- --------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS.................. (602,741) (962,516) (875) 20,449 (19,089) (63,038)
NET ASSETS:
Beginning of period....... 1,951,056 2,913,572 20,449 - 73,775 136,813
------------ ------------ --------- --------- --------- ---------
END OF PERIOD............. $ 1,348,315 $ 1,951,056 $ 19,574 $ 20,449 $ 54,686 $ 73,775
============ ============ ========= ========= ========= =========
</TABLE>

See accompanying notes

43
<PAGE> 212

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
- --------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

American AAdvantage Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a no-load, open-end, management investment company with seven
separate funds: the American AAdvantage Balanced Fund, the American AAdvantage
Growth and Income Fund, the American AAdvantage International Equity Fund, the
American AAdvantage Limited-Term Income Fund, the American AAdvantage Money
Market Fund, the American AAdvantage Municipal Money Market Fund and the
American AAdvantage U.S. Treasury Money Market Fund (collectively, the "Funds").
The Municipal Money Market Fund commenced active operations on November 10,
1993. The Trust commenced sales of a second class of shares of the Funds,
designated as "Mileage Class" shares, on November 1, 1991 for the Money Market
Fund, November 1, 1993 for the U.S. Treasury Money Market Fund, November 10,
1993 for the Municipal Money Market Fund and on August 1, 1994 for the Balanced,
Growth and Income, International Equity and Limited-Term Income Funds (the
"Variable NAV Funds"). At the same time, the existing shares of each Fund were
redesignated as "Institutional Class" shares. On August 1, 1994, the Trust
commenced sales of a third class of shares of the Funds, designated as
"PlanAhead Class" shares and a fourth class of shares of the Variable NAV Funds,
designated as "AMR Class" shares. Differences between the Classes include the
services offered to and the expenses borne by each class and certain voting
rights. Investment income, net capital gains (losses), and all expenses incurred
by the Funds are allocated based on relative net assets of each class, except
for 12b-1 fees, service fees and certain other fees and expenses related solely
to one class of shares. The Mileage Class is the only class of shares which has
a 12b-1 distribution fee, and the PlanAhead Class is the only class of shares
with a service fee.

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.

Security Valuation

Equity securities that are primarily traded on domestic securities
exchanges are valued at the last quoted sales price on a designated exchange
prior to the close of trading on the New York Stock Exchange (the "Exchange")
or, lacking any current sales, on the basis of the last current bid price prior
to the close of trading on the Exchange. Securities that are primarily traded on
foreign securities exchanges are generally valued at the preceding closing
values of such securities on their respective exchanges where primarily traded.
However, events may occur which affect the values of such securities and the
exchange rates between the time of valuation and the close of the Exchange.
Should events materially affect the value of such securities during this period,
the securities are priced at fair value, as determined in good faith and
pursuant to procedures approved by the Board of Trustees (the "Board").
Over-the-counter equity securities are valued on the basis of the last bid price
on that date prior to the close of trading. Debt securities (other than
short-term securities) normally will be valued on the basis of prices provided
by a pricing service and may take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality, coupon
rate, maturity, type of issue, trading

44
<PAGE> 213

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

characteristics and other market data. In some cases, the prices of debt
securities may be determined using quotes obtained from brokers. Securities for
which market quotations are not readily available are valued at fair value, as
determined in good faith and pursuant to procedures approved by the Board.
Investment grade short-term obligations with 60 days or less to maturity and
securities of the Money Market, Municipal Money Market and U.S. Treasury Money
Market Funds (the "Money Market Funds") 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 Money Market Funds, 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. The cost of securities sold is determined by the specific
identification method. Dividend income is recorded on the ex-dividend date
except certain dividends from foreign securities which are recorded as soon as
the information is available to the Funds. 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.

Valuation of Shares

The price per share is calculated separately for each class of each Fund on
each day on which shares are offered for sale and orders accepted or upon
receipt of a redemption request. With respect to a class of a Fund, price per
share is computed by dividing the value of the Class's pro rata allocation of
the Fund's investments and other assets, less liabilities, by the number of
Class shares outstanding.

Federal Income and Excise Taxes

It is the policy of each of the Funds to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all net investment income as well as any net realized
capital gains on the sale of investments. Therefore, no federal income or excise
tax provision is required.

Dividends and Distributions

Dividends from net investment income of the Balanced, Growth and Income,
and International Equity Funds, normally will be declared and paid annually. The
Limited-Term Income Fund generally declares dividends from net investment income
daily, payable monthly. Distributions, if any, of net realized capital gains
normally will be paid annually after the close of the fiscal year in which
realized.

The Money Market Funds generally declare dividends daily from net
investment income and net short-term capital gain, if any, payable monthly.

Dividends are determined in accordance with income tax principles which may
treat certain transactions differently than generally accepted accounting
principles.

45
<PAGE> 214

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

Expenses

Expenses directly attributable to a Fund are charged to that Fund's
operations. Expenses applicable to more than one investment portfolio of the
Trust are allocated among the Trust's portfolios, usually on the basis of
relative net assets. Each share of each Fund, regardless of class, bears equally
those expenses that are allocated to the Fund as a whole.

Currency Translation

All assets and liabilities initially expressed in foreign currency values
are converted into U.S. dollar values at the bid price of such currencies
against U.S. dollars as last quoted by a recognized dealer. Income and expenses
and purchases and sales of investments are translated into U.S. dollars at the
rate of exchange prevailing on the respective dates of such transactions. The
Funds include that portion of the results of operations resulting from changes
in foreign exchange rates with net realized and unrealized gain on investments,
as appropriate.

Forward Foreign Currency Contracts

The International Equity Fund may enter into forward foreign currency
contracts to hedge the exchange rate risk on investment transactions or to hedge
the value of portfolio securities denominated in foreign currencies. Forward
foreign currency contracts are valued at the forward exchange rate prevailing on
the day of valuation.

Repurchase Agreements

Under the terms of a repurchase agreement, securities are acquired by a
Fund from a securities dealer or a bank which are subject to resale at a later
date. Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. All collateral is held through the Funds'
custodian bank and is monitored daily by each Fund so that the collateral's
market value exceeds the carrying value of the repurchase agreement.

2. MANAGEMENT, ADMINISTRATIVE SERVICES, INVESTMENT ADVISORY AND SHAREHOLDER
SERVICES AGREEMENTS

The Trust and the Manager are parties to a Management Agreement which,
together with the Administrative Services and Shareholder Services Agreements
described below, obligate the Manager to provide or oversee the provision of all
administrative, investment advisory and portfolio management services.
Investment assets of the Balanced, Growth and Income, and International Equity
Funds are managed by multiple investment advisers which have entered into
separate investment advisory agreements with the Manager. The Manager serves as
the sole investment adviser to the Limited-Term Income Fund, and each of the
Money Market Funds. As compensation for performing investment advisory services
for the Funds, the Manager receives from the Funds an annualized fee equal to
.20% of the net asset value of the Limited-Term Income Fund, .15% of the net
asset value of each of the Money Market Funds, and .05% of the net asset value
of the Balanced, Growth and Income, and International Equity Funds. In addition,
the Manager is reimbursed by the Funds for fees paid to investment advisers
hired by

46
<PAGE> 215

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

the Manager to direct investment activities of the Balanced, Growth and Income
and International Equity Funds.

Prior to August 1, 1994, shareholders of the Variable NAV Funds had to
enter into a Shareholder Services Agreement with the Manager under which the
Manager agreed to provide or oversee administrative and management services.
Under the agreement, the Manager received from each shareholder a fee at an
annual rate of up to .30% of that shareholder's net assets invested in the
Funds. Shareholder services fees charged could vary based on the size of a
shareholder's investment. Under this agreement shareholder services fees were
charged directly to shareholders and were not an expense of the Funds and,
therefore, are not included in the Funds' Statements of Operations. The
Shareholder Services Agreements were terminated on July 31, 1994 and replaced by
an Administrative Services Agreement.

The Manager and the Trust entered into an Administrative Services Agreement
effective October 1, 1990 for the Money Market Fund, March 2, 1992 for the U.S.
Treasury Money Market Fund, November 10, 1993 for the Municipal Money Market
Fund, and August 1, 1994 for the Variable NAV Funds which obligates the Manager
to provide or oversee administrative and management services to the Funds. As
compensation for performing the duties required under the Administrative
Services Agreement, the Manager receives from each of the Money Market Funds and
the AMR Class of the Variable NAV Funds an annualized fee of .05% of net assets.
The Manager receives an annualized fee of .30% of the net assets of the
Institutional, Mileage, and PlanAhead Classes of the Variable NAV Funds. During
the year ended October 31, 1995, the Manager waived management and
administrative services fees totaling $40,000 for the Municipal Money Market
Fund.

The Trust has adopted a "defensive" Distribution Plan in accordance with
Rule 12b-1 under the Investment Company Act of 1940, pursuant to which no fees
may be charged to the Funds for distribution purposes. However, the plan
authorizes the fees received by the Manager and the investment advisers hired by
the Manager to be used for distribution purposes. Under this plan, the Trust
does not intend to compensate the Manager or any other party, either directly or
indirectly, for the distribution of Trust shares. Each Mileage Class has adopted
a separate distribution plan pursuant to Rule 12b-1 which provides that each
Mileage Class will pay an annual fee of .25% of its average daily net assets to
the Manager as compensation for distribution assistance. The fee will be payable
without regard to whether the amount of the fee is more or less than the actual
expenses incurred in a particular month by the Manager for distribution
assistance. During the year ended October 31, 1995, the Manager waived fees
related to the Mileage Class of the Balanced, Growth and Income and Limited-Term
Income Funds. The amounts waived were immaterial to each Fund.

3. TRANSACTIONS WITH AFFILIATES

Certain officers or trustees of the Trust are also officers of the Manager
or American. The Trust makes no direct payments to its officers. Unaffiliated
trustees are provided unlimited air transportation. For the year ended October
31, 1995, the cost of air transportation was not material to any of the Funds.
At October 31, 1995, AMR Corporation and subsidiary companies and Employee
Benefit Trusts thereof owned 100% of AMR Class shares of the Variable NAV Funds,
11% of the Institutional Class shares of the Money Market Fund and 6% of the
Institutional Class shares of the Municipal Money Market Fund.

47
<PAGE> 216

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

Trustees and officers of the trust as a group owned 1% of the Institutional
Class of the Growth and Income Fund at October 31, 1995.

4. INVESTMENT TRANSACTIONS

Investment transactions for the year ended October 31, 1995 (excluding
short-term investments) are as follows (in thousands):

<TABLE>
<CAPTION>
Balanced Growth and International Limited-Term
Fund Income Fund Equity Fund Income Fund
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Purchases....................................................... $583,674 $ 297,926 $96,399 $310,634
Proceeds from sales............................................. 491,584 151,983 43,167 252,182
</TABLE>

5. CAPITAL SHARE TRANSACTIONS

Variable NAV Funds

The tables below summarize the activity in capital shares for each Class of
the Variable NAV Funds (in thousands):

<TABLE>
<CAPTION>
Year ended October 31, 1995 Institutional Class Mileage Class PlanAhead Class AMR Class
- ---------------------------------------- ------------------- --------------- ----------------- -----------------
Balanced Fund Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------- ------- --------- ------ ------ ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............................. 3,917 $ 50,397 88 $1,108 383 $ 5,102 8,920 $113,497
Reinvestment of dividends............... 999 11,470 1 6 3 29 1,886 21,647
Shares redeemed......................... (5,037) (64,582) (18) (239) (36) (487) (3,812) (50,997)
------- --------- ----- ------ ------ -------- ------ --------
Net increase (decrease) in shares
outstanding........................... (121) $ (2,715) 71 $ 875 350 $ 4,644 6,994 $ 84,147
======= ========= ===== ====== ===== ======== ====== ========
Growth and Income Fund
- ----------------------------------------
Shares sold............................. 3,606 $ 53,296 160 $2,274 1,175 $17,502 7,953 $115,676
Reinvestment of dividends............... 101 1,282 2 31 1 8 2,788 35,541
Shares redeemed......................... (810) (12,073) (33) (506) (875) (12,839) (2,052) (30,170)
------- --------- ----- ------ ------ -------- ------ --------
Net increase in shares outstanding...... 2,897 $ 42,505 129 $1,799 301 $ 4,671 8,689 $121,047
======= ========= ===== ====== ===== ======== ====== ========
International Equity Fund
- ----------------------------------------
Shares sold............................. 941 $ 11,924 135 $1,678 339 $ 4,275 5,802 $ 71,443
Reinvestment of dividends............... 51 599 3 33 2 21 644 7,580
Shares redeemed......................... (850) (10,686) (59) (759) (260) (3,288) (2,181) (27,359)
------- --------- ----- ------ ----- -------- ------ --------
Net increase in shares outstanding...... 142 $ 1,837 79 $ 952 81 $ 1,008 4,265 $ 51,664
======= ========= ===== ====== ===== ======== ====== ========
Limited-Term Income Fund
- ----------------------------------------
Shares sold............................. 11,246 $ 109,868 103 $ 999 155 $ 1,517 2,596 $ 25,229
Reinvestment of dividends............... 542 5,265 3 29 3 27 395 3,833
Shares redeemed......................... (9,396) (91,138) (62) (605) (39) (381) (1,934) (18,871)
------- --------- ----- ------ ----- -------- ------ --------
Net increase in shares outstanding...... 2,392 $ 23,995 44 $ 423 119 $ 1,163 1,057 $ 10,191
======= ========= ===== ====== ===== ======== ====== ========
</TABLE>

48
<PAGE> 217

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year ended October 31, 1994 Institutional Class Mileage Class PlanAhead Class AMR Class
- ---------------------------------------- ------------------- --------------- ----------------- -----------------
Balanced Fund Shares Amount Shares Amount Shares Amount Shares Amount
- ---------------------------------------- ------- --------- ------ ------ ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............................. 11,589 $ 143,142 3 $ 39 43 $ 524 32,030 $395,605
Reinvestment of dividends............... 2,922 36,351 0 0 0 0 0 0
Shares redeemed......................... (36,722) (452,498) 0 0 0 0 (204) (2,523)
------- --------- ----- ----- ----- -------- ------ --------
Net increase (decrease) in shares
outstanding........................... (22,211) $(273,005) 3 $ 39 43 $ 524 31,826 $393,082
======= ========= ===== ===== ===== ======== ====== ========
Growth and Income Fund
- ----------------------------------------
Shares sold............................. 5,057 $ 70,406 10 $ 148 4 $ 54 36,133 $505,701
Reinvestment of dividends............... 2,226 31,075 0 0 0 0 0 0
Shares redeemed......................... (38,282) (534,986) 0 0 0 0 (497) (7,058)
------- --------- ----- ----- ----- -------- ------ --------
Net increase (decrease) in shares
outstanding........................... (30,999) $(433,505) 10 $ 148 4 $ 54 35,636 $498,643
======= ========= ===== ===== ===== ======== ====== ========
International Equity Fund
- ----------------------------------------
Shares sold............................. 8,545 $ 104,872 16 $ 206 29 $ 370 12,967 $163,717
Reinvestment of dividends............... 283 3,472 0 0 0 0 0 0
Shares redeemed......................... (12,555) (158,038) 0 0 0 0 (109) (1,378)
------- --------- ----- ----- ----- -------- ------ --------
Net increase (decrease) in shares
outstanding........................... (3,727) $ (49,694) 16 $ 206 29 $ 370 12,858 $162,339
======= ========= ===== ===== ===== ======== ====== ========
Limited-Term Income Fund
- ----------------------------------------
Shares sold............................. 11,682 $ 116,153 15 $ 150 134 $ 1,303 5,952 $ 58,204
Reinvestment of dividends............... 1,256 12,486 0 1 0 0 57 556
Shares redeemed......................... (24,701) (244,102) 0 0 (92) (899) (485) (4.719)
------- --------- ----- ----- ----- -------- ------ --------
Net increase (decrease) in shares
outstanding........................... (11,763) $(115,463) 15 $ 151 42 $ 404 5,524 $ 54,041
======= ========= ===== ===== ===== ======== ====== ========
</TABLE>

Money Market Funds

The tables below summarize the activity in capital shares for each class of
the Money Market Funds (in thousands). Each share is valued at $1.00:

<TABLE>
<CAPTION>
Institutional Class Mileage Class PlanAhead Class
-------------------------- -------------------- ------------------
Period ended Period ended Period ended
Money Market Fund 10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94
- ------------------------------------------ ----------- ----------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold............................... 12,106,153 15,486,169 297,557 173,349 128,058 25
Reinvestment of dividends................. 50,158 26,446 3,863 1,440 659 0
Shares redeemed........................... (12,843,415) (16,502,417) (259,020) (147,528) (86,754) 0
----------- ----------- -------- -------- ------- -----
Net increase (decrease) in shares
outstanding............................. (687,104) (989,802) 42,400 27,261 41,963 25
=========== =========== ======== ======== ======= =====
</TABLE>

49
<PAGE> 218

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class Mileage Class PlanAhead Class
-------------------------- -------------------- -------------------
Period ended Period ended Period ended
Municipal Money Market Fund 10/31/95 10/31/94 10/31/95 10/31/94 10/31/95 10/31/94
- ----------------------------------------- ----------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.............................. 146,600 234,665 42,208 23,227 692 0
Reinvestment of dividends................ 223 456 440 139 5 0
Shares redeemed.......................... (156,552) (225,385) (33,923) (12,653) (568) 0
----------- ----------- -------- -------- -------- -----
Net increase (decrease) in shares
outstanding............................ (9,729) 9,736 8,725 10,713 129 0
=========== =========== ======== ======== ========= =====
U.S. Treasury Money Market Fund
- -----------------------------------------
Shares sold.............................. 371,049 324,942 16,404 20,498 1,974 0
Reinvestment of dividends................ 2,455 2,858 362 104 6 0
Shares redeemed.......................... (393,927) (397,005) (15,962) (14,435) (1,450) 0
----------- ----------- -------- -------- -------- -----
Net increase (decrease) in shares
outstanding............................ (20,423) (69,205) 804 6,167 530 0
=========== =========== ======== ======== ======== =====
</TABLE>

6. COMMITMENTS

In order to protect against a decline in the value of particular foreign
currencies against the U.S. dollar, the International Equity Fund has entered
into forward contracts to deliver foreign currency in exchange for U.S. dollars
as described below. The Fund bears the market risk that arises from changes in
foreign exchange rates, and accordingly, the unrealized gain (loss) on these
contracts is reflected in the accompanying financial statements. The Fund also
bears the credit risk if the counterparty fails to perform under the contract.
At October 31, 1995, the Fund had outstanding forward foreign currency contracts
as follows:

Contracts to Sell Settlement Unrealized
- ------------------------------------------------------------------------- Date Value Gain (Loss)
(amounts in thousands) ---------- ------- -----------
<S> <C> <C> <C> <C>
3,000 CHF............................................................ 11/14/95 $ 2,648 ($266)
9,450 FRF............................................................ 11/20/95 1,936 (160)
310,000 ESP............................................................ 12/1/95 2,536 (26)
1,800 DEM............................................................ 8/9/96 1,297 (4)
8,000 FRF............................................................ 10/11/96 1,635 (40)
303,456 JPY............................................................ 10/11/96 3,145 55
5,300 DEM............................................................ 3/1/96 3,791 (117)
------- -------
Total contracts to sell
(Receivable amount $16,430)............................................. $16,988 $(558)
======= =======
</TABLE>

7. SECURITIES LENDING

The Funds participate in a securities lending program under which
securities are loaned to selected institutional investors for a fee. All such
loans require collateralization with securities of the U.S. Government and its
agencies that at all times equal at least 100% of the market value of the loaned
securities plus accrued interest. At October 31, 1995, securities with a market
value of approximately $11,029,100, $9,408,500 and $3,641,100 were loaned by the
Balanced, Growth and Income and International Equity Funds, respectively. The
collateral for these loans totaled $11,226,200, $9,600,200 and $3,824,200,
respectively.

50
<PAGE> 219

AMERICAN AADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Continued)
- --------------------------------------------------------------------------------

8. SUBSEQUENT EVENT

Each Fund's Board of Trustees and shareholders approved, effective November
1, 1995, a change in the operating structure of each Fund to a Hub and Spoke(R)
structure. Under this new structure, the investable assets of each Fund (Spoke)
were transferred to a corresponding portfolio of the AMR Investment Services
Trust (Hub), a newly formed open-end management investment company, with
identical investment advisers and investment objectives as the existing Funds.

51
<PAGE> 220

AMERICAN AADVANTAGE BALANCED FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class
------------------------------------------------------------------
Year Ended October 31,
------------------------------------------------------------------
1991 1992 1993 1994(1) 1995(3)(4)
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 9.87 $ 11.60 $ 11.99 $ 13.23 $ 12.36
-------- -------- -------- -------- ---------
Income from investment operations:
Net investment income......................... 0.58 0.55 0.49 0.57 0.54
Net gains (losses) on securities (both
realized and unrealized).................... 1.79 0.41 1.57 (0.54) 1.71
-------- -------- -------- -------- ---------
Total from investment operations................ 2.37 0.96 2.06 0.03 2.25
-------- -------- -------- -------- ---------
Less distributions:
Dividends from net investment income.......... (0.64) (0.56) (0.52) (0.56) (0.52)
Distributions from net realized gains on
securities.................................. -- (0.01) (0.30) (0.34) (0.14)
-------- -------- -------- -------- ---------
Total distributions............................. (0.64) (0.57) (0.82) (0.90) (0.66)
-------- -------- -------- -------- ---------
Net asset value, end of period.................. $ 11.60 $ 11.99 $ 13.23 $ 12.36 $ 13.95
======== ======== ======== ======== =========
Total return (annualized)(5)(6)(7).............. 25.35% 8.75% 19.19% (0.08)% 19.39%
======== ======== ======== ======== =========
Ratios/supplemental data:
Net assets, end of period (in thousands)...... $311,906 $370,087 $532,543 $222,873 $249,913
Ratios to average net assets
(annualized)(8)(9)(10):
Expenses.................................... 0.37% 0.35% 0.34% 0.36% 0.63%
Net investment income....................... 6.06% 5.31% 4.91% 4.77% 4.30%
Portfolio turnover rate....................... 55% 80% 83% 48% 73%
</TABLE>

- ---------------
(1) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(2) The Mileage, PlanAhead and AMR Classes commenced active operations on
August 1, 1994.
(3) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment income
per share.
(4) GSB Investment Management, Inc. was added as an investment adviser to the
Balanced Fund as of January 1, 1995.
(5) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day of
each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of .30% (for periods prior to August 1, 1994) and a sale at
the net asset value on the last day of each period reported.
(6) Total returns for the Mileage, PlanAhead and AMR Classes for the periods
ended October 31, 1994 reflect Institutional Class returns from November 1,
1993 through July 31, 1994 and returns of the applicable class for the
period August 1, 1994 (commencement of operations of the new classes)
through October 31, 1994. Due to the different expense structures between
the classes, total returns would vary from the results shown had the
classes been in operation for the entire year.
(7) Total returns for the Mileage and PlanAhead Classes for the period ended
October 31, 1994 and for the year ended October 31, 1995 exclude fees
waived by the Manager. The effect on total returns was immaterial in each
period.
(8) Effective August 1, 1994, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to approximately $.01 per share in each period on an
annualized basis.
(9) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.
(10) Operating results of the Mileage and PlanAhead Classes exclude fees waived
by the Manager. Had the Mileage Class paid such fees, the ratio of expenses
and net investment income to average net assets would have been 1.05% and
3.58%, respectively, for the period ended October 31, 1994, and 1.10% and
3.64%, respectively, for the year ended October 31, 1995. Had the PlanAhead
Class paid such fees the ratios would have been .99% and 3.96%,
respectively, for the period ended October 31, 1994, and 1.09% and 3.60%,
respectively, for the year ended October 31, 1995.

52
<PAGE> 221

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Mileage Class PlanAhead Class AMR Class
- --------------------------- --------------------------- ----------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1994(1)(2) 1995(3)(4) 1994(1)(2) 1995(3)(4) 1994(1)(2) 1995(3)(4)
- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$12.35 $ 12.35 $12.35 $ 12.35 $ 12.35 $ 12.36
- --------- --------- --------- --------- ---------- ----------
0.11 0.53 0.12 0.54 0.14 0.58
(0.11) 1.68 (0.12) 1.67 (0.13) 1.71
- --------- --------- --------- --------- ---------- ----------
0.00 2.21 0.00 2.21 0.01 2.29
- --------- --------- --------- --------- ---------- ----------
-- (0.52) -- (0.52) -- (0.53)
-- (0.14) -- (0.14) -- (0.14)
- --------- --------- --------- --------- ---------- ----------
-- (0.66) -- (0.66) -- (0.67)
- --------- --------- --------- --------- ---------- ----------
$12.35 $ 13.90 $12.35 $ 13.90 $ 12.36 $ 13.98
========= ========= ========= ========= ========== ==========
(0.16)% 19.08% (0.16)% 19.06% (0.08)% 19.77%
========= ========= ========= ========= ========== ==========
$ 39 $ 1,031 $ 528 $ 5,450 $393,504 $ 542,619
0.96% 0.99% 0.92% 0.99% 0.36% 0.38%
3.67% 3.75% 4.04% 3.70% 4.65% 4.54%
48% 73% 48% 73% 48% 73%
</TABLE>

53
<PAGE> 222

AMERICAN AADVANTAGE GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class
----------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------
1991 1992(1) 1993 1994(2) 1995(3)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.47 $ 12.10 $ 12.79 $ 14.63 $ 14.19
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income................................. 0.42 0.39 0.36 0.43 0.41
Net gains on securities (both realized and
unrealized)......................................... 2.70 0.77 2.21 0.08 2.28
-------- -------- -------- -------- -------
Total from investment operations........................ 3.12 1.16 2.57 0.51 2.69
-------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income.................. (0.49) (0.39) (0.37) (0.41) (0.43)
Distributions from net realized gains on securities... - (0.08) (0.36) (0.54) (0.54)
-------- -------- -------- -------- -------
Total distributions..................................... (0.49) (0.47) (0.73) (0.95) (0.97)
-------- -------- -------- -------- -------
Net asset value, end of period.......................... $ 12.10 $ 12.79 $ 14.63 $ 14.19 $ 15.91
======== ======== ======== ======== =======
Total return (annualized) (5)(6)(7)..................... 33.83% 10.00% 21.49% 3.36% 20.69%
======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (in thousands).............. $264,628 $339,739 $477,088 $ 22,737 $71,608
Ratios to average net assets (annualized) (8)(9)(10):
Expenses............................................ 0.37% 0.36% 0.34% 0.33% 0.62%
Net investment income............................... 4.19% 3.57% 3.12% 3.28% 2.84%
Portfolio turnover rate............................... 52% 35% 30% 23% 26%
</TABLE>

- ---------------
(1) The assets of the Growth and Income Fund previously managed by Atlanta
Capital Management were transferred to GSB Investment Management , Inc. as
of the close of business on December 5, 1991.
(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(3) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment income
per share.
(4) The Mileage, PlanAhead and AMR Classes commenced active operations on
August 1, 1994.
(5) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day of
each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of .30% (for periods prior to August 1, 1994) and a sale at
the net asset value on the last day of each period reported.
(6) Total returns for the Mileage, PlanAhead and AMR Classes for the periods
ended October 31, 1994 reflect Institutional Class returns from November 1,
1993 through July 31, 1994 and returns of the applicable class for the
period August 1, 1994 (commencement of operations of the new classes)
through October 31, 1994. Due to the different expense structures between
the classes, total returns would vary from the results shown had the
classes been in operation for the entire year.
(7) Total returns for the Mileage and PlanAhead Classes exclude fees waived by
the Manager. The effect on total returns was immaterial for the Mileage
Class for the period ended October 31, 1994 and was immaterial for the
PlanAhead Class for the period ended October 31, 1994 and for the year
ended October 31, 1995. Had the Mileage Class paid such fees during the
year ended October 31, 1995, annualized total returns would have been
20.28%.
(8) Effective August 1, 1994, expenses include administrative services fees
paid by the fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to less than $.01 per share in each period on an annualized
basis.
(9) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.
(10) Operating results of the Mileage and PlanAhead Classes exclude fees waived
by the Manager. Had the Mileage Class paid such fees, the ratio of expenses
and net investment income to average net assets would have been 1.06% and
1.99%, respectively, for the period ended October 31, 1994, and 1.10% and
2.34%, respectively, for the year ended October 31, 1995. Had the PlanAhead
Class paid such fees the ratios would have been 1.05% and 1.40%,
respectively, for the period ended October 31, 1994, and 1.08% and 2.14%,
respectively, for the year ended October 31, 1995.

54
<PAGE> 223

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Mileage Class PlanAhead Class AMR Class
- -------------------------- -------------------------- ---------------------------

Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1994(2)(4) 1995(3) 1994(2)(4) 1995(3) 1994(2)(4) 1995(3)
- ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
$13.99 $14.17 $13.99 $14.17 $ 13.99 $ 14.20
- --------- -------- --------- -------- ---------- ---------
0.07 0.38 0.05 0.40 0.11 0.44
0.11 2.26 0.13 2.22 0.10 2.30
- --------- -------- --------- -------- ---------- ---------
0.18 2.64 0.18 2.62 0.21 2.74
- --------- -------- --------- -------- ---------- ---------
- (0.43) - (0.44) - (0.45)
- (0.54) - (0.54) - (0.54)
- --------- -------- --------- -------- ---------- ---------
- (0.97) - (0.98) - (0.99)
- --------- -------- --------- -------- ---------- ---------
$14.17 $15.84 $14.17 $15.81 $ 14.20 $ 15.95
========= ======== ========= ======== ========== =========
3.21% 20.36% 3.21% 20.14% 3.43% 21.03%
========= ======== ========= ======== ========== =========
$ 149 $2,201 $ 56 $4,821 $505,892 $706,884
0.96% 0.99% 0.95% 0.99% 0.37% 0.38%
2.09% 2.45% 1.50% 2.23% 3.18% 3.20%
23% 26% 23% 26% 23% 26%
</TABLE>

55
<PAGE> 224

AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class
-----------------------------------------------------------------
Period Ended Year Ended October 31,
October 31, ---------------------------------------------
1991(1) 1992 1993(2) 1994(3)(4) 1995(6)
------------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 10.00 $ 10.13 $ 8.93 $ 12.07 $ 12.87
---------- ------- ------- --------- -------
Income from investment operations:
Net investment income........................... - 0.12 0.17 0.32 0.27
Net gains (losses) on securities (both realized
and unrealized)............................... 0.13 (1.31) 3.09 1.10 0.68
---------- ------- ------- --------- -------
Total from investment operations.................. 0.13 (1.19) 3.26 1.42 0.95
---------- ------- ------- --------- -------
Less distributions:
Dividends from net investment income............ - (0.01) (0.12) (0.17) (0.21)
Distributions from net realized gains on
securities.................................... - - - (0.45) (0.32)
---------- ------- ------- --------- -------
Total distributions............................... - (0.01) (0.12) (0.62) (0.53)
---------- ------- ------- --------- -------
Net asset value, end of period.................... $ 10.13 $ 8.93 $ 12.07 $ 12.87 $ 13.29
========== ======= ======= ========= =======
Total return (annualized)(7)(8)................... 5.69% (12.07)% 36.56% 11.77% 7.90%
========== ======= ======= ========= =======
Ratios/supplemental data:
Net assets, end of period (in thousands)........ $10,536 $38,837 $66,652 $ 23,115 $25,757
Ratios to average net assets
(annualized)(9)(10):
Expenses...................................... 1.90%(11) 1.17% 0.78% 0.61% 0.85%
Net investment income......................... 0.38%(11) 2.04% 2.00% 2.74% 2.37%
Portfolio turnover rate......................... 2% 21% 61% 37% 21%
</TABLE>

- ---------------

(1) The Institutional Class of the International Equity Fund commenced active
operations on August 7, 1991.
(2) HD International Limited was replaced by Hotchkis and Wiley as an
investment adviser to the International Equity Fund as of the close of
business on May 21, 1993.
(3) Morgan Stanley Asset Management Inc. was added as an investment adviser to
the International Equity Fund as of August 1, 1994.
(4) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(5) The Mileage, PlanAhead and AMR Classes commenced active operations on
August 1, 1994.
(6) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment income
per share.
(7) Total return is calculated assuming an initial investment is made at the
net asset value last calculated on the business day before the first day of
each period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of .30% (for periods prior to August 1, 1994) and a sale at
the net asset value on the last day of each period reported.
(8) Total returns for the Mileage, PlanAhead and AMR Classes for the periods
ended October 31, 1994 reflect Institutional Class returns from November 1,
1993 through July 31, 1994 and returns of the applicable class for the
period August 1, 1994 (commencement of operations of the new classes)
through October 31, 1994. Due to the different expense structures between
the classes, total returns would vary from the results shown had the
classes been in operation for the entire year.
(9) Effective August 1, 1994, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager.
Such fees amounted to less than $.04 per share in each period on an
annualized basis and were waived by the Manager for the period ended
October 31, 1991.
(10) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31,
1994.
(11) Estimated based on expected annual expenses and actual average net assets.

56
<PAGE> 225

- --------------------------------------------------------------------------------

Mileage Class PlanAhead Class AMR Class
- ---------------------------- ---------------------------- -----------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1994(3)(4)(5) 1995(6) 1994(3)(4)(5) 1995(6) 1994(3)(4)(5) 1995(6)
- ------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
$ 12.61 $ 12.85 $ 12.61 $ 12.85 $ 12.61 $ 12.87
- ---------- --------- ---------- --------- ----------- ----------
0.03 0.22 0.06 0.24 0.05 0.30
0.21 0.66 0.18 0.64 0.21 0.68
- ---------- --------- ---------- --------- ----------- ----------
0.24 0.88 0.24 0.88 0.26 0.98
- ---------- --------- ---------- --------- ----------- ----------
- (0.21) - (0.21) - (0.22)
- (0.32) - (0.32) - (0.32)
- ---------- --------- ---------- --------- ----------- ----------
- (0.53) - (0.53) - (0.54)
- ---------- --------- ---------- --------- ----------- ----------
$ 12.85 $ 13.20 $ 12.85 $ 13.20 $ 12.87 $ 13.31
========== ========= ========== ========= =========== ==========
11.60% 7.35% 11.60% 7.37% 11.77% 8.18%
========== ========= ========== ========= =========== ==========
$ 207 $ 1,255 $ 375 $ 1,456 $ 165,524 $ 227,939
1.31% 1.33% 1.25% 1.33% 0.63% 0.60%
0.88% 1.99% 1.86% 2.08% 1.41% 2.65%
37% 21% 37% 21% 37% 21%
</TABLE>

57
<PAGE> 226

AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class
----------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------
1991(1) 1992 1993 1994(2) 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 9.76 $ 10.07 $ 10.13 $ 10.23 $ 9.67
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income........................... 0.83 0.75 0.58 0.52 0.62
Net gains (losses) on securities (both realized
and unrealized)............................... 0.31 0.06 0.15 (0.46) 0.15
-------- -------- -------- -------- --------
Total from investment operations.................. 1.14 0.81 0.73 0.06 0.77
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income............ (0.83) (0.75) (0.58) (0.52) (0.62)
Distributions from net realized gains on
securities.................................... - - (0.05) (0.10) -
-------- -------- -------- -------- --------
Total distributions............................... (0.83) (0.75) (0.63) (0.62) (0.62)
-------- -------- -------- -------- --------
Net asset value, end of period.................... $ 10.07 $ 10.13 $ 10.23 $ 9.67 $ 9.82
======== ======== ======== ======== ========
Total return (annualized)(4)(5)(6)................ 11.87% 7.94% 7.20% 0.42% 8.18%
======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (in thousands)........ $141,629 $209,928 $238,874 $112,141 $137,293
Ratios to average net assets
(annualized)(7)(8)(9):
Expenses...................................... 0.35% 0.27% 0.26% 0.31% 0.60%
Net investment income......................... 8.42% 7.40% 5.76% 5.26% 6.36%
Portfolio turnover rate......................... 165% 133% 176% 94% 183%
</TABLE>

- ---------------
(1) AMR Investment Services, Inc. began portfolio management of the Limited-Term
Income Fund on March 1, 1991 replacing Brown Brothers, Harriman & Co. and
Barrow, Hanley, Mewhinney & Strauss, Inc.
(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(3) The Mileage, PlanAhead and AMR Classes commenced active operations on August
1, 1994.
(4) Total return is calculated assuming an initial investment is made at the net
asset value last calculated on the business day before the first day of each
period reported, reinvestment of all dividends and capital gains
distributions on the payable date, accrual for the maximum shareholder
services fee of .30% (for periods prior to August 1, 1994) and a sale at the
net asset value on the last day of each period reported.
(5) Total returns for the Mileage, PlanAhead and AMR Classes for the periods
ended October 31, 1994 reflect Institutional Class returns from November 1,
1993 through July 31, 1994 and returns of the applicable class for the
period August 1, 1994 (commencement of operations of the new classes)
through October 31, 1994. Due to the different expense structures between
the classes, total returns would vary from the results shown had the classes
been in operation for the entire year.
(6) Total returns for the Mileage and PlanAhead Classes exclude fees waived by
the Manager. Had the Fund paid such fees, total return for each class would
have been .41% for the period ended October 31, 1994, and 7.55% and 7.56%
for the year ended October 31, 1995 for the Mileage Class and PlanAhead
Class, respectively.
(7) Effective August 1, 1994, expenses include administrative services fees paid
by the Fund to the Manager. Prior to that date, expenses exclude shareholder
services fees paid directly by shareholders to the Manager. Such fees
amounted to less than $.03 per share in each period on an annualized basis.
(8) The method of determining average net assets was changed from a monthly
average to a daily average starting with the periods ended October 31, 1994.
(9) Operating results of the Mileage and PlanAhead Classes exclude fees waived
by the Manager. Had the Mileage Class paid such fees, the ratio of expenses
and net investment income to average net assets would have been 1.02% and
5.01%, respectively, for the period ended October 31, 1994, and 1.07% and
5.86%, respectively, for the year ended October 31, 1995. Had the PlanAhead
Class paid such fees the ratios would have been 1.00% and 4.89%,
respectively, for the period ended October 31, 1994, and 1.06% and 5.93%,
respectively, for the year ended October 31, 1995.

58
<PAGE> 227

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Mileage Class PlanAhead Class AMR Class
- --------------------------- --------------------------- ----------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1994(2)(3) 1995 1994(2)(3) 1995 1994(2)(3) 1995
- ------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ 9.78 $ 9.68 $ 9.78 $ 9.68 $ 9.78 $ 9.68
- --------- --------- --------- --------- ---------- ---------
0.13 0.59 0.13 0.59 0.14 0.64
(0.10) 0.14 (0.10) 0.14 (0.10) 0.13
- --------- --------- --------- --------- ---------- ---------
0.03 0.73 0.03 0.73 0.04 0.77
- --------- --------- --------- --------- ---------- ---------
(0.13) (0.59) (0.13) (0.59) (0.14) (0.64)
- - - - - -
- --------- --------- --------- --------- ---------- ---------
(0.13) (0.59) (0.13) (0.59) (0.14) (0.64)
- --------- --------- --------- --------- ---------- ---------
$ 9.68 $ 9.82 $ 9.68 $ 9.82 $ 9.68 $ 9.81
========= ========= ========= ========= ========== =========
0.45% 7.83% 0.45% 7.83% 0.59% 8.22%
========= ========= ========= ========= ========== =========
$ 149 $ 582 $ 403 $ 1,576 $ 53,445 $64,595
0.82% 0.83% 0.79% 0.83% 0.33% 0.36%
5.21% 6.10% 5.10% 6.16% 5.77% 6.60%
94% 183% 94% 183% 94% 183%
</TABLE>

59
<PAGE> 228

AMERICAN AADVANTAGE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

- ---------------
(1) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.
(2) The PlanAhead Class commenced active operations on August 1, 1994.
(3) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 1, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.
(4) Effective October 1, 1990, expenses include administrative services fees
paid by the Fund to the Manager. Prior to that date, expenses exclude
shareholder services fees paid directly by shareholders to the Manager,
which amounted to less than $.01 per share in each period on an annualized
basis.
(5) The method of determining average net assets was changed from a monthly
average to a daily average starting with the year ended October 31, 1992.

60
<PAGE> 229

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Mileage Class
- ----------------------------------------- PlanAhead Class
----------------------------
Year Ended October 31, Period Ended Year Ended
- ----------------------------------------- October 31, October 31,
1992 1993 1994(1) 1995 1994(1)(2) 1995
- ------- ------- ------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------- ------- ------- -------- --------- ---------
0.04 0.03 0.04 0.05 0.01 0.05
(0.04) (0.03) (0.04) (0.05) (0.01) (0.05)
- ------- ------- ------- -------- --------- ---------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ========= =========
4.15% 3.05% 3.56% 5.61% 3.73%(3) 5.60%
======= ======= ======= ======== ========= =========
$15,952 $30,625 $57,886 $100,286 $ 25 $41,989
0.51% 0.48% 0.50 % 0.57% 0.70% 0.55%
3.76% 2.99% 3.58 % 5.48% 4.42% 5.56%
</TABLE>

61
<PAGE> 230

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class Mileage Class PlanAhead Class
-------------------------- -------------------------- --------------------------
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
October 31, October 31, October 31, October 31, October 31, October 31,
1994(1) 1995 1994(1) 1995 1994(1) 1995
------------ ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 1.00 $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ----- ------- ------- ------ ------
Net investment income............ 0.02 0.04 0.02 0.03 0.01 0.03
Less dividends from net
investment income.............. (0.02) (0.04) (0.02) (0.03) (0.01) (0.03)
------ ----- ------- ------- ------ ------
Net asset value, end of period..... $ 1.00 $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ===== ======= ======= ====== ======
Total return (annualized)(2)(3).... 2.44% 3.75% 2.16% 3.40% 2.35% 3.39%
====== ===== ======= ======= ====== ======
Ratios/supplemental data:
Net assets, end of period (in
thousands)..................... $9,736 $ 7 $10,713 $19,438 $ 0 $ 129
Ratios to average net assets
(annualized)(4):
Expenses....................... 0.30% 0.35% 0.63% 0.71% 0.77% 0.72%
Net investment income.......... 2.38% 3.70% 2.23% 3.33% 2.49% 3.32%
</TABLE>

- ---------------
(1) The Institutional Class and Mileage Class commenced active operations on
November 10, 1993. The PlanAhead Class commenced active operations on August
1, 1994.
(2) Total returns for each class of the Municipal Money Market Fund exclude
management and administrative services fees waived by the Manager. Had the
Fund paid such fees during the period ended October 31, 1994 and during the
year ended October 31, 1995, annualized total returns would have been 2.24%
and 3.54%, respectively for the Institutional Class, 1.95% and 3.19%,
respectively, for the Mileage Class and 2.15% and 3.19%, respectively, for
the PlanAhead Class.
(3) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 10, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.
(4) Operating results of each class of the Municipal Money Market Fund exclude
fees waived by the Manager. Had the Fund paid such fees, the ratio of
expenses and net investment income to average net assets for the
Institutional Class would have been .50% and 2.18%, respectively, for the
period ended October 31, 1994, and .55% and 3.50%, respectively, for the
year ended October 31, 1995. The ratios for the Mileage Class would have
been .83% and 2.03%, respectively, for the period ended October 31, 1994,
and .91% and 3.13%, respectively, for the year ended October 31, 1995. The
ratios for the PlanAhead Class would have been .97% and 2.29%, respectively
for the period ended October 31, 1994, and .92% and 3.12%, respectively, for
the year ended October 31, 1995.

62
<PAGE> 231

AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Class Mileage Class PlanAhead Class
---------------------------------------------- ------------------------- --------------------------
Period Period Period
Ended Year Ended October 31, Ended Year Ended Ended Year Ended
October 31, ------------------------------ October 31, October 31, October 31, October 31,
1992(1) 1993 1994(2) 1995 1994(2) 1995 1994(1)(2) 1995
----------- -------- ------- ------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00
Net investment
income............... 0.02 0.03 0.04 0.06 0.03 0.05 0.01 0.05
Less dividends from net
investment income.... (0.02) (0.03) (0.04) (0.06) (0.03) (0.05) (0.01) (0.05)
--------- -------- ------- ------- --------- --------- -------- ---------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00
========= ======== ======= ======= ========= ========= ======== ========
Total return
(annualized)........... 3.61% 3.07% 3.70% 5.67% 3.42% 5.30% 3.58%(3) 5.19%
========= ======== ======= ======= ========= ========= ======== ========
Ratios/supplemental data:
Net assets, end of
period (in
thousands)........... $ 91,453 $136,813 $67,607 $47,184 $ 6,167 $ 6,972 $ 0 $ 530
Ratios to average net
assets
(annualized)(5):
Expenses............... 0.27%(4) 0.23% 0.25% 0.32% 0.57% 0.71% 0.75% 0.76%
Net investment
income............... 3.46%(4) 2.96% 3.44% 5.49% 3.84% 5.14% 3.94% 5.19%
</TABLE>

- ---------------

(1) The Institutional Class commenced active operations on March 2, 1992. The
PlanAhead Class commenced active operations on August 1, 1994.

(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(3) Total return for the PlanAhead Class for the period ended October 31, 1994
reflects Institutional Class returns from November 1, 1993 through July 31,
1994 and returns of the PlanAhead Class from August 1, 1994 (commencement of
operations) through October 31, 1994. Due to the different expense
structures between the classes, total return would vary from the results
shown had the PlanAhead Class been in operation for the entire year.

(4) Estimated based on expected annual expenses and actual average net assets.

(5) The method of determining average net assets was changed from a monthly
average to a daily average starting with the period ended October 31, 1994.

63
<PAGE> 232
[AMERICAN
AADVANTAGE FUNDS
LOGO]

-INSTITUTIONAL CLASS-
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(817) 967-3509

-MILEAGE CLASS-(R)
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

-PLANAHEAD CLASS-(SM)
P.O. Box 4580
Chicago, Illinois 60680-4580
(800) 231-4252

-AMR CLASS-(SM)
P.O Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
(817) 967-3509

[LOGO]
[AADVANTAGE
FUNDS
LOGO]

BALANCED FUND

GROWTH AND INCOME FUND

INTERNATIONAL EQUITY FUND

LIMITED-TERM INCOME FUND

MONEY MARKET FUND

MUNICIPAL MONEY MARKET FUND

U.S. TREASURY MONEY MARKET FUND

<PAGE> 233

AMERICAN AADVANTAGE FUNDS

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements included as a part of this
Registration Statement:

Included in Part A of the Registration Statement:

Financial Highlights - Balanced Fund and Growth and
Income Fund: for the period July 17, 1987
(commencement of operations) to October 31, 1987, for
each of the eight years in the period ended October
31, 1995. International Equity Fund: for the period
from August 7, 1991 (commencement of operations) to
October 31, 1991, for each of the four years in the
period ended October 31, 1995. Limited-Term Income
Fund: for the period from December 3, 1987
(commencement of operations) to October 31, 1988, for
each of the seven years in the period ended October
31, 1995. Money Market Fund: for the period from
September 1, 1987 (commencement of operations) to
October 31, 1987, for each of the eight years in the
period ended October 31, 1995. Municipal Money
Market Fund: for the period from November 10, 1993
(commencement of operations) to October 31, 1994, for
the year ended October 31, 1995. U.S. Treasury Money
Market Fund: for the period from March 2, 1992
(commencement of operations) to October 31, 1992, for
each of the three years in the period ended October
31, 1995.

For all Funds: Audited highlights for the year ended
October 31, 1995.

Included in Part B of the Registration Statement:

Schedules of Investments - October 31, 1995.
Statements of Assets and Liabilities - October 31,
1995
Statements of Changes in Net Assets for the
years ended October 31, 1994 and October 31, 1995.
Statements of Operations - for the year ended October
31, 1995.
Notes to Financial Statements.
Report of Ernst & Young LLP, Independent Auditors,
dated December 19, 1995.

(b) Exhibits:

(1) Declaration of Trust(i)

(2) Bylaws(i)

(3) Voting trust agreement -- none

(4) Specimen security -- none

(5) (a) Fund Management Agreement(iv), (ix),
(x) & (filed herewith)
(b) Fund Advisory Agreements (iii), (iv),

C-1
<PAGE> 234
(v) & (ix)
(c) Administrative Services Agreement
for the PlanAhead, AMR and
Institutional Classes (iv), (ix) &
(x)

(6) Distribution Agreement (x)

(7) Bonus, profit sharing or pension plans -- none

(8) Custodian Agreement (ii) & (filed herewith)

(9) (a) Transfer Agency and Service Agreement
NationsBank Texas, N.A.(ii) & (filed
herewith)
(b) Transfer Agency and Registrar
Agreement with Goldman, Sachs & Co.
(vi),(ix) & (filed herewith)
(c) Service Plan Agreement for the
PlanAhead Class of the American
AAdvantage Funds (ix)
(d) Administrative Services Plan for the
Platinum Class (x)

(10) Opinion and consent of counsel(xii)

(11) Consent of Independent Auditors (filed
herewith)

(12) Financial statements omitted from prospectus
-- none

(13) Letter of investment intent(ii)

(14) Prototype retirement plan -- none

(15) (a) Plan pursuant to Rule 12b-1 for the
Institutional, PlanAhead and AMR Classes(ii)
(b) Plan pursuant to Rule 12b-1 for the
Platinum Class (x)

(16) Schedule for Computation of Performance
Quotations(filed herewith)

(17) Electronic Filers -- (filed herewith as
Exhibit 27)

(18) Amended and Restated Plan pursuant to Rule
18f-3 (xi)

(i) Incorporated by reference to the initial registration
statement of the American AAdvantage Funds ("Trust") on Form
N-1A as filed with the Securities and Exchange Commission
("SEC") on January 16, 1987.
(ii) Incorporated by reference to Pre-Effective Amendment No. 1 to
the registration statement of the Trust on Form N-1A as filed
with the SEC on March 31, 1987.
(iii) Incorporated by reference to Post-Effective Amendment ("PEA")
No. 1 to the registration statement of the Trust on Form N-1A
as filed with the SEC on December 30, 1987.
(iv) Incorporated by reference to PEA No. 4 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 31, 1990.
(v) Incorporated by reference to PEA No. 5 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
July 29, 1991.
(vi) Incorporated by reference to PEA No. 8 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
August 30, 1993.

C-2
<PAGE> 235
(vii) Incorporated by reference to PEA No. 9 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 23, 1993.
(viii) Incorporated by reference to PEA No. 10 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
June 1, 1994.
(ix) Incorporated by reference to PEA No. 11 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 28, 1994.
(x) Incorporated by reference to PEA No. 13 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
August 22, 1995.
(xi) Incorporated by reference to PEA No. 14 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
September 11, 1995.
(xii) Incorporated by reference to the legal opinion contained in
the Trust's 24f-2 notice filed with the SEC on
December 8, 1995.

Item 25. Persons Controlled by or under
Common Control with Registrant

See "Control Persons and 5% Shareholders" in the Statement of
Additional Information dated March 1, 1996.

Item 26. Number of Holders of Securities

<TABLE>
<CAPTION>
=====================================================================================================================
Number of Record Holders as of November 30, 1995
---------------------------------------------------------------------------------------------------------------------
Inst'l PlanAhead AMR Platinum
Fund Class Class Class Class
---- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Balanced Fund 25 119 1 -
Growth and Income Fund 30 163 1 -
Limited-Term Income Fund 23 81 1 -
International Equity Fund 23 34 1 -
Money Market Fund 165 421 - 2
Municipal Money Market Fund 3 12 - 2
U.S. Treasury Money Market Fund 11 18 - 2
=====================================================================================================================
</TABLE>

Short-Term Income Fund 1

Item 27. Indemnification

Article XI, Section 2 of the Declaration of Trust of the Trust
provides that:

(a) Subject to the exceptions and limitations contained in
paragraph (b) below:

(i) every person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate portfolios to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
a Trustee or officer and against amounts paid or incurred by him in the
settlement thereof;

(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or thereafter,
and the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered
Person:

C-3
<PAGE> 236
(i) who shall have been adjudicated by a court or body
before which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office or (B)
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or

(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office (A) by the court or other body approving
the settlement; (B) by at least a majority of those Trustees who are neither
interested persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees, or by independent counsel.

(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law.

(d) Expenses in connection with the preparation and presentation
of a defense to any claim, action, suit, or proceeding of the character
described in paragraph (a) of this Section 2 may be paid by the applicable
Portfolio from time to time prior to final disposition thereof upon receipt of
an undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust if it is ultimately determined that he is not
entitled to indemnification under this Section 2; provided, however, that:

(i) such Covered Person shall have provided appropriate
security for such undertaking;

(ii) the Trust is insured against losses arising out of
any such advance payments; or

(iii) either a majority of the Trustees who are neither
interested persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will
be found entitled to indemnification under this Section 2.

According to Article XII, Section 1 of the Declaration of Trust, the
Trust is a trust, not a partnership. Trustees are not liable personally to any
person extending credit to, contracting with or having any claim against the
Trust, a particular Portfolio or the Trustees. A Trustee, however, is not
protected from liability due to willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.

Article XII, Section 2 provides that, subject to the provisions of
Section 1 of Article XII and to Article XI, the Trustees are not liable for
errors of judgment or mistakes of fact or law, or for any act or omission in
accordance with advice of counsel or other experts or for failing to follow
such advice.

C-4
<PAGE> 237
Item 28. I. Business and Other Connections of Investment Manager

AMR Investment Services, Inc., 4333 Amon Carter Boulevard, MD 5645,
Fort Worth, Texas 76155, offers investment management and administrative
services. Information as to the officers and directors of the Manager is
included in its current Form ADV filed with the SEC and is incorporated by
reference herein.

II. Business and Other Connections of Investment Advisers

The investment advisers listed below provide investment advisory
services to the Trust.

Barrow, Hanley, Mewhinney & Strauss, 200 Crescent Court, 19th Floor,
Dallas, Texas 75201.

GSB Investment Management, Inc., 301 Commerce Street, Suite 1501, Fort
Worth, Texas 76102.

Hotchkis and Wiley, 800 West Sixth Street, 5th Floor, Los Angeles,
California 90017.

Independence Investment Associates, Inc., 53 State Street, Boston,
Massachusetts 02109.

Morgan Stanley Asset Management Inc., 1221 Avenue of the Americas,
21st Floor, New York, New York 10020.

Templeton Investment Counsel, Inc. 500 East Broward Blvd., Ft.
Lauderdale, Florida 33394.

Information as to the officers and directors of each of the above
investment advisers is included in that adviser's current Form ADV filed with
the SEC and is incorporated by reference herein.

Capital Guardian Trust Company also provides investment advisory
services to the Trust. The following list sets forth information as to any
fiduciary or other business, vocation or employment of a substantial nature in
which each director of Capital Guardian Trust Company is, or at any time during
the past two fiscal years has been, engaged for his or her own account or in
the capacity of director, officer, employee, partner or trustee. Unless
otherwise indicated, the address of each person listed below is 333 S. Hope
Street, Los Angeles, California 90071.

<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL PRINCIPAL OCCUPATION
BUSINESS ADDRESS DURING PAST TWO YEARS
---------------------------- ---------------------
<S> <C>
Richard C. Barker Chairman of the Board, Chairman of the Investment Committee, Member
Chairman of the Board of the Executive Committee and Portfolio Manager, Capital Guardian
& Portfolio Manager Trust Company; Chairman of the Board and Director, Capital
4 Embarcadero Center International Limited; Director, The Capital Group Companies, Inc.
Suite 1800 and Capital Group International, Inc.
San Francisco, CA 94111
</TABLE>

C-5
<PAGE> 238
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL PRINCIPAL OCCUPATION
BUSINESS ADDRESS DURING PAST TWO YEARS
---------------------------- ---------------------
<S> <C>
David I. Fisher Chairman of the Board, The Capital Group Companies, Inc.; Vice
Vice Chairman of the Board and Portfolio Chairman of the Board, Member of the Executive Committee and
Manager Portfolio Manager, Capital Guardian Trust Company; President,
11100 Santa Monica Blvd. Director and Portfolio Manager, Capital Group International, Inc.
15th. Floor and Capital International Inc.; Chairman of the Board, Capital
Los Angeles, CA 90025 International S.A.; Vice Chairman of the Board, Capital
International Limited and Capital International K.K.; Director,
Capital Group Research, Inc., Capital Research Company and Capital
Research International.

Robert Ronus President, Director, Portfolio Manager and Member of the Executive
President, Director Committee, Capital Guardian Trust Company; Chairman of the Board,
& Portfolio Manager Capital Research International; Senior Vice President, Capital
International S.A. and Capital International Limited.

John H. Seiter Executive Vice President - Client Relations and Marketing, Director
Executive Vice President - Client Relations and Member of the Executive Committee, Capital Guardian Trust
and Marketing Company; Vice President, The Capital Group Companies, Inc., Senior
& Director Vice President, Capital Group International, Inc.

Eugene P. Stein Executive Vice President, Director, Chairman of the Executive
Executive Vice President, Director & Committee, Chairman of the Equity Subcommittee and Portfolio
Portfolio Manager Manager, Capital Guardian Trust Company; Director, Capital Guardian
Research Company.

Michael D. Beckman Senior Vice President, Treasurer and Director, Capital Guardian
Senior Vice President, Trust Company; Director, Capital Guardian Trust Company.
Treasurer & Director
135 South State College Blvd.
Brea, CA 92621

William H. Hurt Chairman of the Board, Capital Guardian Trust Company, a Nevada
Senior Vice President, Director Corporation; Senior Vice President, Director and Portfolio Manager,
& Portfolio Manager Capital Guardian Trust Company; Chairman of the Board, Capital
Strategy Research, Inc.; Director, The Capital Group Companies, Inc.

Nancy J. Kyle Senior Vice President - International, Director and Portfolio
Senior Vice President-International, Director Manager, Capital Guardian Trust Company.
& Portfolio Manager
630 Fifth Avenue - 36th Floor
New York, NY 10111
</TABLE>

C-6
<PAGE> 239
<TABLE>
<CAPTION>
NAME, POSITION AND PRINCIPAL PRINCIPAL OCCUPATION
BUSINESS ADDRESS DURING PAST TWO YEARS
---------------------------- ---------------------
<S> <C>
John McIlwraith Senior Vice President - International, Director and Portfolio
Senior Vice President - International, Manager, Capital Guardian Trust Company; Senior Vice President and
Director & Portfolio Manager Director, Capital International Limited.
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111

James R. Mulally Senior Vice President, Director, Portfolio Manager and Chairman of
Senior Vice President, Director & Portfolio the Fixed-Income Subcommittee, Capital Guardian Trust Company;
Manager Director, Capital Guardian Research Company; Vice President, Capital
11100 Santa Monica Blvd. Research Company; Senior Vice President, Capital International
15th. Floor Limited.
Los Angeles, CA 90025

Theodore R. Samuels Senior Vice President, Director and Portfolio Manager, Capital
Senior Vice President, Director & Portfolio Guardian Trust Company; Director, Capital Guardian Research Company
Manager

Douglas M. Urban Senior Vice President, Director and Portfolio Manager, Capital
Senior Vice President, Guardian Trust Company.
Director & Portfolio Manager
Four Embarcadero Center
Suite 1800
San Francisco, CA 94111

Edus H. Warren, Jr. Senior Partner, The Capital Group Companies, Inc.; Senior Vice
Senior Vice President, President, Director and Portfolio Manager, Capital Guardian Trust
Director & Portfolio Manager Company; Vice Chairman of the Board, Capital Guardian Research
Promenade Two, 25th. Floor Company.
1230 Peachtree Street, NE
Atlanta, GA 30309
</TABLE>

Item 29. Principal Underwriter

(a) BTS is the principal underwriter for the Trust.

(b) The directors and officers of the Trust's principal
underwriter are:

<TABLE>
<CAPTION>
Positions & Offices Position
Name with Underwriter with Registrant
- ---- ------------------- ---------------
<S> <C> <C>
Don A. Buckholz Chairman, Director and Chief None
Executive Officer

Raymond E. Wooldridge Chief Operating Officer, None
Director and President

William D. Felder Director, Executive Vice None
President

Sue H. Peden Vice President None
</TABLE>

C-7
<PAGE> 240
Item 30. Location of Accounts and Records

The books and other documents required by Rule 31a-1 under the
Investment Company Act of 1940 are maintained in the physical possession of the
Trust's custodian, sub-custodian, Manager, transfer agent or investment
advisers.

Item 31. Management Services

All substantive provisions of any management-related service contract
are discussed in Part A or Part B.

Item 32. Undertakings

Registrant hereby undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months
from the effective date of Registrant's 1933 Act Registration Statement.

Registrant hereby undertakes, if requested by the holders of at least
10% of the Registrant's outstanding shares, to call a meeting of shareholders
for the purpose of voting upon the question of removal of a trustee or trustees
and to assist in communications with other shareholders in accordance with
Section 16(c) of the 1940 Act, as though Section 16(c) applied.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of its latest annual report to
Shareholders, upon request and without charge.

Registrant hereby undertakes to carry out all indemnification
provisions of its Declaration of Trust in accordance with Investment Company
Act Release No. 11330 (September 4, 1980) and successor releases.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended ("1933 Act"), may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the provisions under Item
27 herein, or otherwise, the Registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the 1933
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933
Act and will be governed by the final adjudication.

C-8
<PAGE> 241
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C>
1. Declaration of Trust(i)

2. Bylaws(i)

3. Voting trust agreement -- none

4. Specimen security -- none

5. (a) Fund Management Agreement(iv), (ix), (x) &
(filed herewith)
(b) Fund Advisory Agreements(iii), (iv), (v),
(viii) & (ix)
(c) Administrative Services Agreement for the AMR,
Institutional and PlanAhead Classes (iv), (ix) & (x)

6. Distribution Agreement -- (x)

7. Bonus, profit sharing or pension plans -- none

8. Custodian Agreement(ii) & (filed herewith)

9. (a) Transfer Agency and Service Agreement with
NationsBank Texas, N.A.(ii) & (filed herewith)
(b) Transfer Agency and Registrar Agreement with
Goldman, Sachs & Co.(vi),(ix) & (filed herewith)
(c) Service Plan Agreement for the PlanAhead
Class of the American AAdvantage Funds(ix)
(d) Administrative Services Plan for the
Platinum Class (x)

10. Opinion and consent of counsel (xii)

11. Consent of Independent Auditors -- (filed herewith)

12. Financial statements omitted from prospectus -- none

13. Letter of investment intent(ii)

14. Prototype retirement plan -- none

15. (a) Plan pursuant to Rule 12b-1 for the Institutional,
PlanAhead and AMR Classes(ii)
(b) Plan pursuant to Rule 12b-1 for the Platinum Class(x)

16. Schedule for Computation of Performance Quotations(filed herewith)

17. Electronic Filers -- (filed herewith as Exhibit 27)

18. Amended and Restated Plan pursuant to Rule 18f-3 (xi)

</TABLE>

C-9
<PAGE> 242
(ii) Incorporated by reference to Pre-Effective Amendment No. 1 to
the registration statement of the Trust on Form N-1A as filed
with the SEC on March 31, 1987.
(iii) Incorporated by reference to Post-Effective Amendment ("PEA")
No. 1 to the registration statement of the Trust on Form N-1A
as filed with the SEC on December 30, 1987.
(iv) Incorporated by reference to PEA No. 4 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 31, 1990.
(v) Incorporated by reference to PEA No. 5 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
July 29, 1991.
(vi) Incorporated by reference to PEA No. 8 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
August 30, 1993.
(vii) Incorporated by reference to PEA No. 9 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 23, 1993.
(viii) Incorporated by reference to PEA No. 10 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
June 1, 1994.
(ix) Incorporated by reference to PEA No. 11 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 28, 1994.
(x) Incorporated by reference to PEA No. 13 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
August 22, 1995.
(xi) Incorporated by reference to PEA No. 14 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
September 11, 1995.
(xii) Incorporated by reference to the legal opinion contained in
the Trust's 24f-2 notice filed with the SEC on December 8,
1995.

C-10
<PAGE> 243
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 15 to its Registration Statement
on Form N- 1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth and the State of Texas on December 22,
1995.

AMERICAN AADVANTAGE FUNDS

By: /s/ WILLIAM F. QUINN
--------------------------
William F. Quinn
President
Attest:

/s/ Rebecca L. Harris
- -----------------------------
Rebecca L. Harris
Treasurer

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 15 to the Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William F. Quinn President and December 22, 1995
- ----------------------------- Trustee
William F. Quinn

David G. Fox* Trustee December 22, 1995
- -----------------------------
David G. Fox

John S. Justin* Trustee December 22, 1995
- -----------------------------
John S. Justin

Stephen D. O'Sullivan* Trustee December 22, 1995
- -----------------------------
Stephen D. O'Sullivan

Roger T. Staubach* Trustee December 22, 1995
- -----------------------------
Roger T. Staubach
</TABLE>

*By /s/ William F. Quinn
----------------------------------
William F. Quinn, Attorney-In-Fact

C-11
<PAGE> 244
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, AMR Investment
Services Trust has duly caused this Post-Effective Amendment No. 15 to the
Registration Statement for the American AAdvantage Funds on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Fort Worth and the State of Texas on December 22, 1995.

AMR Investment Services Trust

By: /s/ WILLIAM F. QUINN
-------------------------------
William F. Quinn
President
Attest:

/s/ Rebecca L. Harris
- -----------------------------
Rebecca L. Harris
Treasurer

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 15 to the Registration Statement for
the American AAdvantage Funds has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William F. Quinn President and December 22, 1995
- ----------------------------- Trustee
William F. Quinn

David G. Fox* Trustee December 22, 1995
- -----------------------------
David G. Fox

John S. Justin* Trustee December 22, 1995
- -----------------------------
John S. Justin

Stephen D. O'Sullivan* Trustee December 22, 1995
- -----------------------------
Stephen D. O'Sullivan

Roger T. Staubach* Trustee December 22, 1995
- -----------------------------
Roger T. Staubach
</TABLE>

*By /s/ William F. Quinn
----------------------------------
William F. Quinn, Attorney-In-Fact

C-12

<PAGE> 1
EXHIBIT 5(a)

Amended
Schedule A
to the Management Agreement
between
AMR Investment Services, Inc.
and American AAdvantage Funds

As compensation pursuant to section 6 of the Management Agreement between AMR
Investment Services, Inc. and the American AAdvantage Funds ("Trust"), the
Trust shall pay to AMR Investment Services, Inc. an annualized fee equal to the
sum of (i) 0.15% of the net assets of the American AAdvantage Money Market
Fund, the American AAdvantage Municipal Money Market Fund, and the American
AAdvantage U.S. Treasury Money Market Fund; (ii)0.20% of the net assets of the
American AAdvantage Limited-Term Income Fund; (iii) 0.05% of the net assets of
the American AAdvantage Balanced Fund, the American AAdvantage Growth and
Income Fund, and the American AAdvantage International Equity Fund, and (iv)
0.10% of the net assets of the American AAdvantage Short-Term Income Fund, plus
all fees payable by the Manager with respect to such Funds pursuant to any
Investment Advisory Agreement entered into pursuant to Paragraph 2(B)(d) of
said Management Agreement. The above described compensation shall be
calculated and accrued daily and be payable monthly.

Effective: December 1, 1995

<PAGE> 1
EXHIBIT 8

November 1, 1995

FEE SCHEDULE

Custodian Contract
between
American AAdvantage Funds
and
NationsBank of Texas, N.A.

Compensation for all duties to be performed:

$26,000 per year

<PAGE> 1
EXHIBIT 9(a)

November 1, 1995

FEE SCHEDULE

Registrar,
Transfer Agency and Service Agreement
between the
American AAdvantage Funds
and
NationsBank of Texas, N.A.

American AAdvantage Funds - Institutional Class

$115,000 per year

American AAdvantage Funds - AMR Class

$5,500 per year

<PAGE> 1
Exhibit 9(b)

November 1, 1995

FEE SCHEDULE

Transfer Agency Agreement
between
American AAdvantage Funds
AMR Investment Services, Inc.
and
Goldman, Sachs & Co.

American AAdvantage Funds-Mileage Class and PlanAhead Class
For the period September 1, 1995 - October 31, 1995:

Monthly Fee (September) $9,333.33
Monthly Fee (October) $10,500.00
Per Account Charges $0*
+ Out of Pocket Fees billed at cost

American AAdvantage Funds-PlanAhead Class
For the period November 1, 1995-May 1, 1996:

Monthly Fee $3,888.89
Per Account Charges $0*
+ Out of Pocket Fees billed at cost

The "Monthly Fee" will increase $388.89 per month until a total of $5,833.33
has been paid.

*If the total number of open accounts exceeds 4,000 prior to May 1, 1996, an
additional annual charge of $20 per open account and $5 per closed account will
be added.

American AAdvantage Funds-PlanAhead Class
Beginning May 1, 1996:

Monthly Fee $5,833.33
Annual Per Account Charges
Open Accounts $20
Closed Accounts $5
+ Out of Pocket Fees billed at cost

<PAGE> 1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights," "Management and Administration of the Trust-- Independent Auditor,"
and "Shareholder Communications," and to the incorporation by reference of our
report dated December 19, 1995, in this registration statement (Form N-1A File
No. 33-11387) of the American AAdvantage Funds.

ERNST & YOUNG LLP

Dallas, Texas
December 19, 1995

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 648,080
<INVESTMENTS-AT-VALUE> 787,147
<RECEIVABLES> 6,608
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 793,760
<PAYABLE-FOR-SECURITIES> 7,107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,139
<TOTAL-LIABILITIES> 8,246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601,519
<SHARES-COMMON-STOCK> 4,500
<SHARES-COMMON-PRIOR> 1,603
<ACCUMULATED-NII-CURRENT> 16,460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,468
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,067
<NET-ASSETS> 785,514
<DIVIDEND-INCOME> 20,137
<INTEREST-INCOME> 2,797
<OTHER-INCOME> 2
<EXPENSES-NET> 2,559
<NET-INVESTMENT-INCOME> 20,377
<REALIZED-GAINS-CURRENT> 28,115
<APPREC-INCREASE-CURRENT> 75,331
<NET-CHANGE-FROM-OPS> 123,823
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 702
<DISTRIBUTIONS-OF-GAINS> 881
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,606
<NUMBER-OF-SHARES-REDEEMED> 810
<SHARES-REINVESTED> 101
<NET-CHANGE-IN-ASSETS> 256,880
<ACCUMULATED-NII-PRIOR> 12,844
<ACCUMULATED-GAINS-PRIOR> 20,757
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,562
<AVERAGE-NET-ASSETS> 642,198
<PER-SHARE-NAV-BEGIN> 14.19<F1>
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 2.28
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.91
<EXPENSE-RATIO> 0.62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 648,080
<INVESTMENTS-AT-VALUE> 787,147
<RECEIVABLES> 6,608
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 793,760
<PAYABLE-FOR-SECURITIES> 7,107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,139
<TOTAL-LIABILITIES> 8,246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601,519
<SHARES-COMMON-STOCK> 139
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 16,460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,468
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,067
<NET-ASSETS> 785,514
<DIVIDEND-INCOME> 20,137
<INTEREST-INCOME> 2,797
<OTHER-INCOME> 2
<EXPENSES-NET> 2,559
<NET-INVESTMENT-INCOME> 20,377
<REALIZED-GAINS-CURRENT> 28,115
<APPREC-INCREASE-CURRENT> 75,331
<NET-CHANGE-FROM-OPS> 123,823
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14
<DISTRIBUTIONS-OF-GAINS> 18
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 160
<NUMBER-OF-SHARES-REDEEMED> 33
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 256,880
<ACCUMULATED-NII-PRIOR> 12,844
<ACCUMULATED-GAINS-PRIOR> 20,757
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,562
<AVERAGE-NET-ASSETS> 642,198
<PER-SHARE-NAV-BEGIN> 14.17<F1>
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 2.26
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.84
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 013
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 648,080
<INVESTMENTS-AT-VALUE> 787,147
<RECEIVABLES> 6,608
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 793,760
<PAYABLE-FOR-SECURITIES> 7,107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,139
<TOTAL-LIABILITIES> 8,246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601,519
<SHARES-COMMON-STOCK> 305
<SHARES-COMMON-PRIOR> 4
<ACCUMULATED-NII-CURRENT> 16,460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,468
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,067
<NET-ASSETS> 785,514
<DIVIDEND-INCOME> 20,137
<INTEREST-INCOME> 2,797
<OTHER-INCOME> 2
<EXPENSES-NET> 2,559
<NET-INVESTMENT-INCOME> 20,377
<REALIZED-GAINS-CURRENT> 28,115
<APPREC-INCREASE-CURRENT> 75,331
<NET-CHANGE-FROM-OPS> 123,823
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4
<DISTRIBUTIONS-OF-GAINS> 5
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,175
<NUMBER-OF-SHARES-REDEEMED> 875
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 256,880
<ACCUMULATED-NII-PRIOR> 12,844
<ACCUMULATED-GAINS-PRIOR> 20,757
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,562
<AVERAGE-NET-ASSETS> 642,198
<PER-SHARE-NAV-BEGIN> 14.17<F1>
<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 2.22
<PER-SHARE-DIVIDEND> 0.44
<PER-SHARE-DISTRIBUTIONS> 0.54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.81
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 014
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 648,080
<INVESTMENTS-AT-VALUE> 787,147
<RECEIVABLES> 6,608
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 793,760
<PAYABLE-FOR-SECURITIES> 7,107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,139
<TOTAL-LIABILITIES> 8,246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 601,519
<SHARES-COMMON-STOCK> 44,325
<SHARES-COMMON-PRIOR> 35,636
<ACCUMULATED-NII-CURRENT> 16,460
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 28,468
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 139,067
<NET-ASSETS> 785,514
<DIVIDEND-INCOME> 20,137
<INTEREST-INCOME> 2,797
<OTHER-INCOME> 2
<EXPENSES-NET> 2,559
<NET-INVESTMENT-INCOME> 20,377
<REALIZED-GAINS-CURRENT> 28,115
<APPREC-INCREASE-CURRENT> 75,331
<NET-CHANGE-FROM-OPS> 123,823
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,041
<DISTRIBUTIONS-OF-GAINS> 19,500
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,953
<NUMBER-OF-SHARES-REDEEMED> 2,052
<SHARES-REINVESTED> 2,788
<NET-CHANGE-IN-ASSETS> 256,880
<ACCUMULATED-NII-PRIOR> 12,844
<ACCUMULATED-GAINS-PRIOR> 20,757
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,562
<AVERAGE-NET-ASSETS> 642,198
<PER-SHARE-NAV-BEGIN> 14.20<F1>
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 2.30
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0.54
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 15.95
<EXPENSE-RATIO> 0.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AMR Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS Of OPERATION, STATEMENTS OF ASSETS AND
LIABILITIES, FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> AMERICAN AADVANTAGE BALANCED FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 684,123
<INVESTMENTS-AT-VALUE> 792,673
<RECEIVABLES> 11,564
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 804,302
<PAYABLE-FOR-SECURITIES> 3,757
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,532
<TOTAL-LIABILITIES> 5,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,074
<SHARES-COMMON-STOCK> 17,916
<SHARES-COMMON-PRIOR> 18,037
<ACCUMULATED-NII-CURRENT> 26,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,312
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 108,550
<NET-ASSETS> 799,013
<DIVIDEND-INCOME> 14,620
<INTEREST-INCOME> 20,163
<OTHER-INCOME> 11
<EXPENSES-NET> 3,272
<NET-INVESTMENT-INCOME> 31,522
<REALIZED-GAINS-CURRENT> 25,895
<APPREC-INCREASE-CURRENT> 71,067
<NET-CHANGE-FROM-OPS> 128,484
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,177
<DISTRIBUTIONS-OF-GAINS> 2,507
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,917
<NUMBER-OF-SHARES-REDEEMED> 5,037
<SHARES-REINVESTED> 999
<NET-CHANGE-IN-ASSETS> 182,069
<ACCUMULATED-NII-PRIOR> 20,846
<ACCUMULATED-GAINS-PRIOR> 6,492
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,011
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,275
<AVERAGE-NET-ASSETS> 705,733
<PER-SHARE-NAV-BEGIN> 12.36<F1>
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> 0.52
<PER-SHARE-DISTRIBUTIONS> 0.14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.95
<EXPENSE-RATIO> 0.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND
LIABILITIES, FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> AMERICAN AADVANTAGE BALANCED FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 684,123
<INVESTMENTS-AT-VALUE> 792,673
<RECEIVABLES> 11,564
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 804,302
<PAYABLE-FOR-SECURITIES> 3,757
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,532
<TOTAL-LIABILITIES> 5,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,074
<SHARES-COMMON-STOCK> 74
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 26,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,312
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 108,550
<NET-ASSETS> 799,013
<DIVIDEND-INCOME> 14,620
<INTEREST-INCOME> 20,163
<OTHER-INCOME> 11
<EXPENSES-NET> 3,272
<NET-INVESTMENT-INCOME> 31,522
<REALIZED-GAINS-CURRENT> 25,895
<APPREC-INCREASE-CURRENT> 71,067
<NET-CHANGE-FROM-OPS> 128,484
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 88
<NUMBER-OF-SHARES-REDEEMED> 18
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 182,069
<ACCUMULATED-NII-PRIOR> 20,846
<ACCUMULATED-GAINS-PRIOR> 6,492
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,011
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,275
<AVERAGE-NET-ASSETS> 705,733
<PER-SHARE-NAV-BEGIN> 12.35<F1>
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> 1.68
<PER-SHARE-DIVIDEND> 0.52
<PER-SHARE-DISTRIBUTIONS> 0.14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.90
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND
LIABILITIES, FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 023
<NAME> AMERICAN AADVANTAGE BALANCED FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 684,123
<INVESTMENTS-AT-VALUE> 792,673
<RECEIVABLES> 11,564
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 804,302
<PAYABLE-FOR-SECURITIES> 3,757
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,532
<TOTAL-LIABILITIES> 5,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,074
<SHARES-COMMON-STOCK> 392
<SHARES-COMMON-PRIOR> 43
<ACCUMULATED-NII-CURRENT> 26,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,312
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 108,550
<NET-ASSETS> 799,013
<DIVIDEND-INCOME> 14,620
<INTEREST-INCOME> 20,163
<OTHER-INCOME> 11
<EXPENSES-NET> 3,272
<NET-INVESTMENT-INCOME> 31,522
<REALIZED-GAINS-CURRENT> 25,895
<APPREC-INCREASE-CURRENT> 71,067
<NET-CHANGE-FROM-OPS> 128,484
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23
<DISTRIBUTIONS-OF-GAINS> 6
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 383
<NUMBER-OF-SHARES-REDEEMED> 36
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 182,069
<ACCUMULATED-NII-PRIOR> 20,846
<ACCUMULATED-GAINS-PRIOR> 6,492
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,011
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,275
<AVERAGE-NET-ASSETS> 705,733
<PER-SHARE-NAV-BEGIN> 12.35<F1>
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 1.67
<PER-SHARE-DIVIDEND> 0.52
<PER-SHARE-DISTRIBUTIONS> 0.14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.90
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND
LIABILITIES, FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 024
<NAME> AMERICAN AADVANTAGE BALANCED FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 684,123
<INVESTMENTS-AT-VALUE> 792,673
<RECEIVABLES> 11,564
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 804,302
<PAYABLE-FOR-SECURITIES> 3,757
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,532
<TOTAL-LIABILITIES> 5,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 639,074
<SHARES-COMMON-STOCK> 38,819
<SHARES-COMMON-PRIOR> 31,825
<ACCUMULATED-NII-CURRENT> 26,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,312
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 108,550
<NET-ASSETS> 799,013
<DIVIDEND-INCOME> 14,620
<INTEREST-INCOME> 20,163
<OTHER-INCOME> 11
<EXPENSES-NET> 3,272
<NET-INVESTMENT-INCOME> 31,522
<REALIZED-GAINS-CURRENT> 25,895
<APPREC-INCREASE-CURRENT> 71,067
<NET-CHANGE-FROM-OPS> 128,484
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17,086
<DISTRIBUTIONS-OF-GAINS> 4,561
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,920
<NUMBER-OF-SHARES-REDEEMED> 3,812
<SHARES-REINVESTED> 1,886
<NET-CHANGE-IN-ASSETS> 182,069
<ACCUMULATED-NII-PRIOR> 20,846
<ACCUMULATED-GAINS-PRIOR> 6,492
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,011
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,275
<AVERAGE-NET-ASSETS> 705,733
<PER-SHARE-NAV-BEGIN> 12.36<F1>
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> 0.53
<PER-SHARE-DISTRIBUTIONS> 0.14
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.98
<EXPENSE-RATIO> 0.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AMR Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS, AND CHANGES IN NET ASSETS
</LEGEND>
<SERIES>
<NUMBER> 031
<NAME> AMERICAN AADVANTAGE MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,346,670
<INVESTMENTS-AT-VALUE> 1,346,670
<RECEIVABLES> 8,205
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,354,971
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,656
<TOTAL-LIABILITIES> 6,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,348,315
<SHARES-COMMON-STOCK> 100,286
<SHARES-COMMON-PRIOR> 57,886
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,348,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 95,523
<OTHER-INCOME> 0
<EXPENSES-NET> 3,933
<NET-INVESTMENT-INCOME> 91,590
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91,609
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,257
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 297,557
<NUMBER-OF-SHARES-REDEEMED> 259,020
<SHARES-REINVESTED> 3,863
<NET-CHANGE-IN-ASSETS> (802,741)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,376
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,933
<AVERAGE-NET-ASSETS> 1,585,529
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS, AND CHANGES IN NET ASSETS
</LEGEND>
<SERIES>
<NUMBER> 032
<NAME> AMERICAN AADVANTAGE MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,346,670
<INVESTMENTS-AT-VALUE> 1,346,670
<RECEIVABLES> 8,205
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,354,971
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,656
<TOTAL-LIABILITIES> 6,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,348,315
<SHARES-COMMON-STOCK> 41,989
<SHARES-COMMON-PRIOR> 25
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,348,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 95,523
<OTHER-INCOME> 0
<EXPENSES-NET> 3,933
<NET-INVESTMENT-INCOME> 91,590
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91,609
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 901
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 128,058
<NUMBER-OF-SHARES-REDEEMED> 86,754
<SHARES-REINVESTED> 659
<NET-CHANGE-IN-ASSETS> (802,741)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,376
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,933
<AVERAGE-NET-ASSETS> 1,585,529
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS, AND CHANGES IN NET ASSETS
</LEGEND>
<SERIES>
<NUMBER> 033
<NAME> AMERICAN AADVANTAGE MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,346,670
<INVESTMENTS-AT-VALUE> 1,346,670
<RECEIVABLES> 8,205
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,354,971
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,656
<TOTAL-LIABILITIES> 6,656
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,348,315
<SHARES-COMMON-STOCK> 1,206,041
<SHARES-COMMON-PRIOR> 1,893,144
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,348,315
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 95,523
<OTHER-INCOME> 0
<EXPENSES-NET> 3,933
<NET-INVESTMENT-INCOME> 91,590
<REALIZED-GAINS-CURRENT> 19
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91,609
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 86,432
<DISTRIBUTIONS-OF-GAINS> 18
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,106,153
<NUMBER-OF-SHARES-REDEEMED> 12,843,415
<SHARES-REINVESTED> 50,158
<NET-CHANGE-IN-ASSETS> (802,741)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,376
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,933
<AVERAGE-NET-ASSETS> 1,585,529
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 041
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 203,007
<INVESTMENTS-AT-VALUE> 203,070
<RECEIVABLES> 2,849
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,926
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,880
<TOTAL-LIABILITIES> 1,880
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 208,932
<SHARES-COMMON-STOCK> 17,916
<SHARES-COMMON-PRIOR> 11,591
<ACCUMULATED-NII-CURRENT> 53
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,002)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63
<NET-ASSETS> 204,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,177
<OTHER-INCOME> 8
<EXPENSES-NET> 826
<NET-INVESTMENT-INCOME> 10,359
<REALIZED-GAINS-CURRENT> (1,552)
<APPREC-INCREASE-CURRENT> 3,688
<NET-CHANGE-FROM-OPS> 12,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,340
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,246
<NUMBER-OF-SHARES-REDEEMED> 9,396
<SHARES-REINVESTED> 542
<NET-CHANGE-IN-ASSETS> 37,908
<ACCUMULATED-NII-PRIOR> 53
<ACCUMULATED-GAINS-PRIOR> (3,450)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 322
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 829
<AVERAGE-NET-ASSETS> 161,932
<PER-SHARE-NAV-BEGIN> 9.67<F1>
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> 0.15
<PER-SHARE-DIVIDEND> 0.62
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.82
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class.
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 042
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 203,007
<INVESTMENTS-AT-VALUE> 203,070
<RECEIVABLES> 2,849
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,926
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,880
<TOTAL-LIABILITIES> 1,880
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 208,932
<SHARES-COMMON-STOCK> 59
<SHARES-COMMON-PRIOR> 15
<ACCUMULATED-NII-CURRENT> 53
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,002)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63
<NET-ASSETS> 204,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,177
<OTHER-INCOME> 8
<EXPENSES-NET> 826
<NET-INVESTMENT-INCOME> 10,359
<REALIZED-GAINS-CURRENT> (1,552)
<APPREC-INCREASE-CURRENT> 3,688
<NET-CHANGE-FROM-OPS> 12,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 33
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 103
<NUMBER-OF-SHARES-REDEEMED> 62
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 37,908
<ACCUMULATED-NII-PRIOR> 53
<ACCUMULATED-GAINS-PRIOR> (3,450)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 322
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 829
<AVERAGE-NET-ASSETS> 161,932
<PER-SHARE-NAV-BEGIN> 9.68<F1>
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.14
<PER-SHARE-DIVIDEND> 0.59
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.82
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class
Per share amounts are by Class
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 043
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 203,007
<INVESTMENTS-AT-VALUE> 203,007
<RECEIVABLES> 2,849
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,926
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,880
<TOTAL-LIABILITIES> 1,880
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 208,932
<SHARES-COMMON-STOCK> 160
<SHARES-COMMON-PRIOR> 42
<ACCUMULATED-NII-CURRENT> 53
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,002)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63
<NET-ASSETS> 204,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,177
<OTHER-INCOME> 8
<EXPENSES-NET> 826
<NET-INVESTMENT-INCOME> 10,359
<REALIZED-GAINS-CURRENT> (1,552)
<APPREC-INCREASE-CURRENT> 3,688
<NET-CHANGE-FROM-OPS> 12,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 155
<NUMBER-OF-SHARES-REDEEMED> 39
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 37,908
<ACCUMULATED-NII-PRIOR> 53
<ACCUMULATED-GAINS-PRIOR> (3,450)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 322
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 829
<AVERAGE-NET-ASSETS> 161,932
<PER-SHARE-NAV-BEGIN> 9.68<F1>
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.14
<PER-SHARE-DIVIDEND> 0.59
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.82
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class.
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 044
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 203,007
<INVESTMENTS-AT-VALUE> 203,070
<RECEIVABLES> 2,849
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,926
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,880
<TOTAL-LIABILITIES> 1,880
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 208,932
<SHARES-COMMON-STOCK> 6,581
<SHARES-COMMON-PRIOR> 5,524
<ACCUMULATED-NII-CURRENT> 53
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,002)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 63
<NET-ASSETS> 204,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,177
<OTHER-INCOME> 8
<EXPENSES-NET> 826
<NET-INVESTMENT-INCOME> 10,359
<REALIZED-GAINS-CURRENT> (1,552)
<APPREC-INCREASE-CURRENT> 3,688
<NET-CHANGE-FROM-OPS> 12,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,944
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,596
<NUMBER-OF-SHARES-REDEEMED> 1,934
<SHARES-REINVESTED> 395
<NET-CHANGE-IN-ASSETS> 37,908
<ACCUMULATED-NII-PRIOR> 53
<ACCUMULATED-GAINS-PRIOR> (3,450)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 322
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 829
<AVERAGE-NET-ASSETS> 161,932
<PER-SHARE-NAV-BEGIN> 9.68<F1>
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> 0.13
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.81
<EXPENSE-RATIO> 0.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AMR Class.
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 051
<NAME> AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 230,014
<INVESTMENTS-AT-VALUE> 253,575
<RECEIVABLES> 3,117
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 262,606
<PAYABLE-FOR-SECURITIES> 3,258
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,941
<TOTAL-LIABILITIES> 6,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 223,999
<SHARES-COMMON-STOCK> 17,123
<SHARES-COMMON-PRIOR> 12,858
<ACCUMULATED-NII-CURRENT> 5,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,936
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,032
<NET-ASSETS> 256,407
<DIVIDEND-INCOME> 6,449
<INTEREST-INCOME> 974
<OTHER-INCOME> 2
<EXPENSES-NET> 1,455
<NET-INVESTMENT-INCOME> 5,970
<REALIZED-GAINS-CURRENT> 4,311
<APPREC-INCREASE-CURRENT> 10,022
<NET-CHANGE-FROM-OPS> 20,303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,145
<DISTRIBUTIONS-OF-GAINS> 4,435
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,802
<NUMBER-OF-SHARES-REDEEMED> 2,181
<SHARES-REINVESTED> 644
<NET-CHANGE-IN-ASSETS> 67,186
<ACCUMULATED-NII-PRIOR> 3,015
<ACCUMULATED-GAINS-PRIOR> 4,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 942
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,455
<AVERAGE-NET-ASSETS> 227,419<F1>
<PER-SHARE-NAV-BEGIN> 12.87
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 0.68
<PER-SHARE-DIVIDEND> 0.22
<PER-SHARE-DISTRIBUTIONS> 0.32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.31
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AMR Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 052
<NAME> AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 230,014
<INVESTMENTS-AT-VALUE> 253,575
<RECEIVABLES> 3,117
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 262,606
<PAYABLE-FOR-SECURITIES> 3,258
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,941
<TOTAL-LIABILITIES> 6,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 223,999
<SHARES-COMMON-STOCK> 110
<SHARES-COMMON-PRIOR> 29
<ACCUMULATED-NII-CURRENT> 5,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,936
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,032
<NET-ASSETS> 256,407
<DIVIDEND-INCOME> 6,449
<INTEREST-INCOME> 974
<OTHER-INCOME> 2
<EXPENSES-NET> 1,455
<NET-INVESTMENT-INCOME> 5,970
<REALIZED-GAINS-CURRENT> 4,311
<APPREC-INCREASE-CURRENT> 10,022
<NET-CHANGE-FROM-OPS> 20,303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10
<DISTRIBUTIONS-OF-GAINS> 15
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 339
<NUMBER-OF-SHARES-REDEEMED> 260
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 67,186
<ACCUMULATED-NII-PRIOR> 3,015
<ACCUMULATED-GAINS-PRIOR> 4,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 942
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,455
<AVERAGE-NET-ASSETS> 227,419<F1>
<PER-SHARE-NAV-BEGIN> 12.85
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 0.64
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.20
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTEDD FROM AMERICAN
AAVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 053
<NAME> AMERICAN ADVANTAGE INTERNATIONAL EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 230,014
<INVESTMENTS-AT-VALUE> 253,575
<RECEIVABLES> 3,117
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 262,606
<PAYABLE-FOR-SECURITIES> 3,258
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,941
<TOTAL-LIABILITIES> 6,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 223,999
<SHARES-COMMON-STOCK> 95
<SHARES-COMMON-PRIOR> 16
<ACCUMULATED-NII-CURRENT> 5,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,936
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,032
<NET-ASSETS> 256,407
<DIVIDEND-INCOME> 6,449
<INTEREST-INCOME> 974
<OTHER-INCOME> 2
<EXPENSES-NET> 1,455
<NET-INVESTMENT-INCOME> 5,970
<REALIZED-GAINS-CURRENT> 4,311
<APPREC-INCREASE-CURRENT> 10,022
<NET-CHANGE-FROM-OPS> 20,303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14
<DISTRIBUTIONS-OF-GAINS> 20
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135
<NUMBER-OF-SHARES-REDEEMED> 59
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 67,186
<ACCUMULATED-NII-PRIOR> 3,015
<ACCUMULATED-GAINS-PRIOR> 4,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 942
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,455
<AVERAGE-NET-ASSETS> 227,419<F1>
<PER-SHARE-NAV-BEGIN> 12.85
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> 0.66
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.20
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTEDD FROM AMERICAN
AAVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995
</LEGEND>
<SERIES>
<NUMBER> 054
<NAME> AMERICAN ADVANTAGE INTERNATIONAL EQUITY FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 230,014
<INVESTMENTS-AT-VALUE> 253,575
<RECEIVABLES> 3,117
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 262,606
<PAYABLE-FOR-SECURITIES> 3,258
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,941
<TOTAL-LIABILITIES> 6,199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 223,999
<SHARES-COMMON-STOCK> 1,939
<SHARES-COMMON-PRIOR> 1,797
<ACCUMULATED-NII-CURRENT> 5,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,936
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23,032
<NET-ASSETS> 256,407
<DIVIDEND-INCOME> 6,449
<INTEREST-INCOME> 974
<OTHER-INCOME> 2
<EXPENSES-NET> 1,455
<NET-INVESTMENT-INCOME> 5,970
<REALIZED-GAINS-CURRENT> 4,311
<APPREC-INCREASE-CURRENT> 10,022
<NET-CHANGE-FROM-OPS> 20,303
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 376
<DISTRIBUTIONS-OF-GAINS> 563
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 941
<NUMBER-OF-SHARES-REDEEMED> 850
<SHARES-REINVESTED> 51
<NET-CHANGE-IN-ASSETS> 67,186
<ACCUMULATED-NII-PRIOR> 3,015
<ACCUMULATED-GAINS-PRIOR> 4,658
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 942
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,455
<AVERAGE-NET-ASSETS> 227,419<F1>
<PER-SHARE-NAV-BEGIN> 12.87
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 0.68
<PER-SHARE-DIVIDEND> 0.21
<PER-SHARE-DISTRIBUTIONS> 0.32
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.29
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class.
Per share amounts are by class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 071
<NAME> AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 55,001
<INVESTMENTS-AT-VALUE> 55,001
<RECEIVABLES> 7
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 348
<TOTAL-LIABILITIES> 348
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,686
<SHARES-COMMON-STOCK> 530
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 54,686
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,947
<OTHER-INCOME> 0
<EXPENSES-NET> 247
<NET-INVESTMENT-INCOME> 3,700
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,974
<NUMBER-OF-SHARES-REDEEMED> 1,450
<SHARES-REINVESTED> 6
<NET-CHANGE-IN-ASSETS> (19,089)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 247
<AVERAGE-NET-ASSETS> 67,811
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>PlanAhead Class
Per share amounts are by Class
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 072
<NAME> AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 55,001
<INVESTMENTS-AT-VALUE> 55,001
<RECEIVABLES> 7
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 348
<TOTAL-LIABILITIES> 348
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,686
<SHARES-COMMON-STOCK> 6,972
<SHARES-COMMON-PRIOR> 6,167
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 54,686
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,947
<OTHER-INCOME> 0
<EXPENSES-NET> 247
<NET-INVESTMENT-INCOME> 3,700
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 390
<DISTRIBUTIONS-OF-GAINS> 1
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,404
<NUMBER-OF-SHARES-REDEEMED> 15,962
<SHARES-REINVESTED> 362
<NET-CHANGE-IN-ASSETS> (19,089)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 247
<AVERAGE-NET-ASSETS> 67,811
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class
Per share amounts are by Class
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 073
<NAME> AMERICAN AADVANTAGE U.S. TREASURY MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 55,001
<INVESTMENTS-AT-VALUE> 55,001
<RECEIVABLES> 7
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 55,034
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 348
<TOTAL-LIABILITIES> 348
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,686
<SHARES-COMMON-STOCK> 47,184
<SHARES-COMMON-PRIOR> 67,607
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 54,686
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,947
<OTHER-INCOME> 0
<EXPENSES-NET> 247
<NET-INVESTMENT-INCOME> 3,700
<REALIZED-GAINS-CURRENT> 8
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,708
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,301
<DISTRIBUTIONS-OF-GAINS> 7
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 371,049
<NUMBER-OF-SHARES-REDEEMED> 393,927
<SHARES-REINVESTED> 2,455
<NET-CHANGE-IN-ASSETS> (19,089)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 247
<AVERAGE-NET-ASSETS> 67,811
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class
Per share amounts are by Class
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 081
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,587
<INVESTMENTS-AT-VALUE> 19,587
<RECEIVABLES> 86
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,675
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101
<TOTAL-LIABILITIES> 101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,574
<SHARES-COMMON-STOCK> 7
<SHARES-COMMON-PRIOR> 9,736
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 19,574
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 805
<OTHER-INCOME> 0
<EXPENSES-NET> 123
<NET-INVESTMENT-INCOME> 682
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 194
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 146,600
<NUMBER-OF-SHARES-REDEEMED> 156,552
<SHARES-REINVESTED> 223
<NET-CHANGE-IN-ASSETS> (875)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163
<AVERAGE-NET-ASSETS> 19,870
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Institutional Class
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 082
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,587
<INVESTMENTS-AT-VALUE> 19,587
<RECEIVABLES> 86
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,675
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101
<TOTAL-LIABILITIES> 101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,574
<SHARES-COMMON-STOCK> 19,438
<SHARES-COMMON-PRIOR> 10,713
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 19,574
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 805
<OTHER-INCOME> 0
<EXPENSES-NET> 123
<NET-INVESTMENT-INCOME> 682
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 483
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,208
<NUMBER-OF-SHARES-REDEEMED> 33,923
<SHARES-REINVESTED> 440
<NET-CHANGE-IN-ASSETS> (875)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163
<AVERAGE-NET-ASSETS> 19,870
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Mileage Class.
Per share amounts are by Class.
</FN>

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND LIABILITIES,
FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1995.
</LEGEND>
<SERIES>
<NUMBER> 083
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 19,587
<INVESTMENTS-AT-VALUE> 19,587
<RECEIVABLES> 86
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,675
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101
<TOTAL-LIABILITIES> 101
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,574
<SHARES-COMMON-STOCK> 129
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 19,574
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 805
<OTHER-INCOME> 0
<EXPENSES-NET> 123
<NET-INVESTMENT-INCOME> 682
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 692
<NUMBER-OF-SHARES-REDEEMED> 568
<SHARES-REINVESTED> 5
<NET-CHANGE-IN-ASSETS> (875)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 30
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 163
<AVERAGE-NET-ASSETS> 19,870
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Plan Ahead Class
Per share amounts are by Class
</FN>

</TABLE>