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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant[x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
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AMERICAN AADVANTAGE FUNDS
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AMERICAN AADVANTAGE FUNDS
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
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4) Proposed maximum aggregate value of transaction:
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1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SCHEDULE 14A INFORMATION
AMERICAN AADVANTAGE BALANCED FUND
AMERICAN AADVANTAGE GROWTH AND INCOME FUND
AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND
Each a series of the AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE BALANCED MILEAGE FUND
AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND
AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND
Each a series of the AMERICAN AADVANTAGE MILEAGE FUNDS
February 16, 1996
Dear Shareholder:
The above Funds will be holding a combined special meeting of
shareholders on March 14, 1996. A notice of the meeting, proxy statement
and proxy card(s) are enclosed.
The proxy statement explains each proposal in detail. Please
read it carefully. The proposals are summarized as follows:
. Shareholders of the Balanced Fund, the Growth and Income
Fund, the Balanced Mileage Fund, the Growth and Income
Mileage Fund and their corresponding portfolios will be
asked to approve new Investment Advisory Agreements
between AMR Investment Services, Inc. ("Manager") and
Brandywine Asset Management and between the Manager and
Boatmen's Trust Company.
. Shareholders of the International Equity Fund, the
International Equity Mileage Fund and their corresponding
portfolio will be asked to approve a new Investment
Advisory Agreement between the Manager and Rowe
Price-Fleming.
Approving these additional advisers will increase the
Funds' flexibility to add or replace an existing adviser,
should the need arise in the future.
. You will be asked to approve a proposal to permit the
Manager to hire new subadvisers or modify the subadvisory
agreements of the Funds and their corresponding
portfolios without shareholder approval.
The Funds currently seek their investment objectives by
investing all of their investable assets in corresponding
portfolios of the AMR Investment Services Trust -- the
Balanced, the Growth and Income and the International
Equity Portfolios ("Portfolios") -- which have investment
objectives identical to the corresponding Funds.
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Each Fund and its Portfolio uses a multi-manager approach
to portfolio investing, which means that its assets are
allocated to several portfolio managers to provide
diversification and to reduce the possible impact of any
one adviser's sub-par performance on the performance of
the Fund or Portfolio. Pending approval by the
Securities and Exchange Commission and by the
shareholders of the Funds and the Portfolios, this
proposal would permit each Fund and Portfolio to hire new
subadvisers and modify subadvisory agreements without the
prior approval of shareholders. By eliminating
shareholder approval in these matters, the Funds and the
Portfolios would have greater flexibility in choosing
managers and they would save the potentially considerable
expense and effort involved in holding shareholder
meetings and soliciting proxies.
The shareholders also will be asked to authorize the Funds to
vote at the meeting of Portfolio investors and to obtain voting
instructions with respect thereto. The Funds will cast their votes on the
matters discussed in the enclosed Proxy Statement in the same proportion
as the votes cast by the Funds' shareholders at the meeting.
Please vote promptly by signing, dating and returning your Proxy
Card(s). Should you have any questions about the proposals, please do not
hesitate to contact us. Thank you for your cooperation and support.
Sincerely,
William F. Quinn
President
<PAGE>
If you own shares in more than one Trust, you will receive more than one
proxy card. Please be certain to vote each proxy card you receive.
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTICE OF COMBINED SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF:
AMERICAN AADVANTAGE BALANCED FUND ("Balanced Fund")
AMERICAN AADVANTAGE GROWTH AND INCOME FUND ("Growth/Income Fund")
AMERICAN AADVANTAGE INTERNATIONAL EQUITY FUND ("International Fund")
Each a series of the AMERICAN AADVANTAGE FUNDS ("AAdvantage Trust")
AMERICAN AADVANTAGE BALANCED MILEAGE FUND ("Balanced Mileage Fund")
AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND ("Growth/Income Mileage
Fund")
AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND ("International
Mileage Fund")
Each a series of the AMERICAN AADVANTAGE MILEAGE FUNDS ("Mileage Trust")
A combined special meeting of the shareholders of the above-
referenced funds ("Funds") will be held on March 14, 1996 at 9:00 a.m.
Central time at the offices of AMR Investment Services, Inc. ("Manager"),
4333 Amon Carter Boulevard, Fort Worth, Texas 76155, Room 6E1D-36, for the
purposes set forth below.
Under a Hub and Spoke(Registered Trademark)1 operating
structure, each of the Funds seeks its investment objective by investing
all of its investable assets in a corresponding portfolio of the AMR
Investment Services Trust ("AMR Trust"). As a result, you will be asked
to vote twice on each of the following proposals, once to approve that
proposal of behalf of the Funds and once to approve that proposal on
behalf of the AMR Trust.
(1) To authorize the AAdvantage Trust and the Mileage Trust, on
behalf of the Funds, to vote at a meeting of the Balanced, the Growth and
Income and the International Equity Portfolios ("Portfolios") of the AMR
Trust:
(a) To approve or disapprove a new Investment Advisory Agreement
between the Manager and Brandywine Asset Management for the
Balanced and the Growth and Income Portfolios of the AMR Trust
(Balanced Fund, Growth/Income Fund, Balanced Mileage Fund and
Growth/Income Mileage Fund only);
(b) To approve or disapprove a new Investment Advisory Agreement
between the Manager and Boatmen's Trust Company for the Balanced
1 "Hub and Spoke" is a registered service mark of Signature
Financial Group, Inc.
<PAGE>
and the Growth and Income Portfolios of the AMR Trust (Balanced
Fund, Growth/Income Fund, Balanced Mileage Fund and Growth/Income
Mileage Fund only);
(c) To approve or disapprove a new Investment Advisory Agreement
between the Manager and Rowe Price-Fleming for the International
Equity Portfolio of the AMR Trust (International Fund and
International Mileage Fund only); and
(d) To approve or disapprove a proposal to permit the Manager to
hire new subadvisers or modify the subadvisory agreements of the
Portfolios without interest holder approval (Each Fund);
(2) To approve or disapprove a new Investment Advisory Agreement between
the Manager and Brandywine Asset Management on behalf of the Balanced and
the Growth/Income Funds of the AAdvantage Trust and the Mileage Trust
(Balanced Fund, Growth/Income Fund, Balanced Mileage Fund and
Growth/Income Mileage Fund only);
(3) To approve or disapprove a new Investment Advisory Agreement between
the Manager and Boatmen's Trust Company on behalf of the Balanced and the
Growth/Income Funds of the AAdvantage Trust and the Mileage Trust
(Balanced Fund, Growth/Income Fund, Balanced Mileage Fund and
Growth/Income Mileage Fund only);
(4) To approve or disapprove a new Investment Advisory Agreement between
the Manager and Rowe Price-Fleming on behalf of the International Fund of
the AAdvantage Trust and the Mileage Trust (International Fund and
International Mileage Fund only);
(5) To approve or disapprove a proposal to permit the Manager to hire new
subadvisers or modify the subadvisory agreements of the Funds without
shareholder approval (Each Fund); and
(6) To transact such other business as may properly come before the
meeting or any adjournments thereof.
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You will be entitled to vote at the meeting and any adjournments
thereof if you owned shares of the Funds at the close of business on
January 31, 1996. If you attend the meeting, you may vote your shares in
person. IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED FORM(S) IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
By the order of the Board of Trustees,
CLIFFORD J. ALEXANDER
Secretary
February 16, 1996
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed
proxy form, date and sign the form, and return the form in the
envelope provided. If you sign, date and return the proxy form but
give no voting instructions, your shares will be voted "FOR" all
proposals noticed above. In order to avoid additional expense to
the Funds of further solicitation, management requests your
cooperation in mailing in your proxy form promptly. Unless proxies
are signed by the appropriate persons, they will not be voted.
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AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
________________
PROXY STATEMENT
Combined Special Meeting of Shareholders
To Be Held on March 14, 1996
________________
This document is a proxy statement for the American AAdvantage
Balanced Fund ("Balanced Fund"), the American AAdvantage Growth and Income
Fund ("Growth/Income Fund") and the American AAdvantage International
Equity Fund ("International Fund"), which constitute three of the eight
separate investment portfolios of the American AAdvantage Funds
("AAdvantage Trust"), as well as the American AAdvantage Balanced Mileage
Fund ("Balanced Mileage Fund"), the American AAdvantage Growth and Income
Mileage Fund ("Growth/Income Mileage Fund"), and the American AAdvantage
International Equity Fund ("International Mileage Fund"), which constitute
three of the seven separate investment portfolios of the American
AAdvantage Mileage Funds ("Mileage Trust"). Each of these funds are
referred to herein collectively as the "Funds," or singularly as a "Fund."
This proxy statement is furnished in connection with the solicitation of
proxies made by, and on behalf of, the Board of Trustees of the AAdvantage
Trust ("AAdvantage Board") and the Board of Trustees of the Mileage Trust
("Mileage Board") to be used at the Combined Special Meeting of
Shareholders of the Funds and at any adjournments thereof ("Meeting"), to
be held at 9:00 a.m. on Thursday, March 14, 1996, at the offices of AMR
Investment Services, Inc. ("Manager"). The Manager serves as manager and
administrator to the Funds. Brokers Transaction Services, Inc., located
at 7001 Preston Road, Dallas, Texas 75205, serves as underwriter to the
AAdvantage Trust and the Mileage Trust. The purpose of the Meeting is set
forth in the accompanying Notice.
The Funds currently seek their investment objectives by investing
all of their investable assets in corresponding portfolios of the AMR
Investment Services Trust ("AMR Trust") -- the Balanced, the Growth and
Income and the International Equity Portfolios ("Portfolios") -- which
have investment objectives identical to the corresponding Funds. At a
meeting of interest holders of the Portfolios, each Fund will vote its
interest in its corresponding portfolio of the AMR Trust in proportion to
the votes cast by that Fund's shareholders at the Meeting. Each Fund will
vote shares for which they receive no voting instructions in the same
proportion as the shares for which they do receive voting instructions.
Because a Fund's votes are proportionate to its percentage interest in its
corresponding Portfolio, the majority of a Portfolio's interest holders
could approve an action against which a majority of the outstanding voting
securities of its corresponding Fund had voted.
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This proxy statement and the accompanying proxy will be mailed to
shareholders on or about February 16, 1996. The solicitation of proxies
will be made by mail, but also may include telephone or oral
communications by employees of the Manager, who will not receive any
compensation for such solicitation. Boston Financial Data Services, Inc.
has been retained by the Manager solely for the purpose of mailing proxy
materials to shareholders and tabulating voting results at a cost of
approximately $4,000. All expenses incurred in connection with preparing
these proxy materials will be borne pro rata by the AAdvantage Trust, the
Mileage Trust and the AMR Trust based upon relative net assets.
A majority of each Fund's shares of beneficial interest outstanding
on January 31, 1996 ("Record Date"), represented in person or by proxy,
constitutes a quorum and a quorum must be present for the transaction of
business with respect to a Fund. If a quorum is present at the meeting
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares
represented at the meeting in person or by proxy. If a quorum is present,
the persons named as proxies will vote those proxies which they are
entitled to vote FOR any such proposal in favor of such an adjournment,
and will vote those proxies required to be voted AGAINST any such proposal
against such adjournment. A shareholder vote may be taken on one or more
of the proposals in this proxy statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
Abstentions and broker non-votes will be counted as shares present
for purposes of determining whether a quorum is present but will not be
voted for or against any adjournment. Abstentions and broker non-votes
will not be counted, however, as votes cast for purposes of determining
whether sufficient votes have been received to approve a proposal.
Accordingly, abstentions and broker non-votes effectively will be a vote
against adjournment or against the proposal where the required vote is a
percentage of the shares present.
The proxies named in the enclosed proxy card will vote in
accordance with your directions as indicated thereon if your proxy card is
received and has been properly executed. If you give no voting
instructions, your shares will by voted in favor of the proposals
described in this proxy statement. The proxy card may be revoked by
giving another proxy, by letter or telegram revoking your proxy if
received by the applicable Fund prior to the meeting or by appearing and
voting at the meeting.
As of the Record Date, there were issued and outstanding the
following number of shares of each Fund: Balanced Fund, ______;
Growth/Income Fund, ______; International Fund, ______; Balanced Mileage
Fund, _______; Growth/Income Mileage Fund, ______; and International
Mileage Fund, ______. For a list of shareholders who owned of record 5%
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or more of the shares of a Fund or of the AAdvantage Trust or the Mileage
Trust as of the Record Date, see Appendix A.
Shareholders of record at the close of business on the Record Date
will be entitled to vote at the Meeting. Each full share of the Funds is
entitled to one vote and each fractional share is entitled to a
proportionate share of one vote. YOU MAY OBTAIN A COPY OF THE AADVANTAGE
TRUST'S MOST RECENT ANNUAL REPORT TO SHAREHOLDERS, FREE OF CHARGE, BY
WRITING TO THE MANAGER AT 4333 AMON CARTER BOULEVARD, MD 5645, FORT WORTH,
TEXAS 76155, OR BY CALLING 1-800-423-7526.
Approval of the proposals outlined below with respect to a Fund
requires the affirmative vote of the holders of a majority of the
outstanding voting securities of that Fund entitled to vote on the
particular proposal, as such term is defined in the Investment Company Act
of 1940, as amended ("1940 Act"). For that purpose, a vote of the holders
of a "majority of the outstanding voting securities" of a Fund means the
lesser of either (1) the vote of 67% or more of the shares of such Fund
present at the meeting if the holders of more than 50% of the outstanding
Fund shares are present or represented by proxy, or (2) the vote of the
holders of more than 50% of the outstanding shares of such Fund. Approval
and implementation of the Proposals with respect to any Fund is not
conditioned upon approval of these proposals by the shareholders of any
other Fund. Summarized below are the proposals the shareholders of each
Fund are being asked to consider:
<TABLE>
<CAPTION>
Fund Proposal
---- --------
<S> <C>
Balanced Fund 1. To approve a new Subadvisory Agreement
Balanced Mileage Fund between the Manager and Brandywine Asset
(collectively, the "Balanced Funds") Management.
2. To approve a new Subadvisory Agreement
between the Manager and Boatmen's Trust
Company.
Growth/Income Fund 3. To permit the Manager to hire new subadvisers
Growth/Income Mileage Fund or to modify Subadvisory Agreements without
(collectively, the "Growth/Income Funds") shareholder approval.
International Fund 1. To approve a new Subadvisory Agreement
International Mileage Fund between the Manager and Rowe Price-Fleming.
(collectively, the "International Funds") 2. To permit the Manager to hire new subadvisers
or to modify subadvisory agreements without
shareholder approval.
</TABLE>
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PROPOSALS 1(a) and 2: APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE MANAGER AND BRANDYWINE ASSET MANAGEMENT.
[For consideration by shareholders of the Balanced Funds and the
Growth/Income Funds only.]
PROPOSALS 1(b) and 3: APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE MANAGER AND BOATMEN'S TRUST COMPANY. [For
consideration by shareholders of the Balanced Funds and the Growth/Income
Funds only.]
The Balanced Funds and the Growth/Income Funds invest all of their
investable assets in the Balanced Portfolio and the Growth and Income
Portfolio ("Growth/Income Portfolio"), respectively, of the AMR Trust.
The investment performance of the Balanced and the Growth/Income Funds
directly corresponds with the investment performance of the Balanced and
the Growth/Income Portfolios.
Assets of the Balanced and the Growth/Income Funds currently are
allocated by the Manager among five investment advisers: Barrow Hanley
Mewhinney and Strauss, Capital Guardian Trust Company, GSB Investment
Management, Inc., Hotchkis and Wiley and Independence Investment
Associates (collectively, the "Advisers"). The Funds' assets are
allocated in this manner to provide diversification and to reduce the
possible impact of any one Adviser's sub-par performance on the
performance of a Fund. These Funds propose to add two additional
advisers: Brandywine Asset Management ("Brandywine") and Boatmen's Trust
Company ("Boatmen's"). Approving these additional advisers will give
these Funds the flexibility to add or replace an Adviser, should the need
arise in the future. The Manager currently does not intend to allocate
any of the Portfolios' assets to Boatmen's.
Each Adviser has discretion to purchase and sell securities for the
segment of portfolio assets allocated to it in accordance with each Fund's
investment objectives, policies and restrictions and the more specific
strategies provided by the Manager. Although the Advisers are subject to
general supervision by the Trustees and officers of the Trusts and the
Manager, these parties do not evaluate the investment merits of specific
securities transactions. The allocation of assets among the Advisers can
be changed at any time by the Manager. Allocations will vary based upon a
variety of factors, including the overall investment performance of each
Adviser, cash flow needs and market conditions. As compensation for its
services, each Adviser is paid a fee by the Manager out of the proceeds of
the Manager's management fee.
Consideration by the Boards
At a meeting held on February 15, 1996, the AAdvantage Board, the
Mileage Board and the Board of Trustees of the AMR Trust ("AMR Board")
(collectively, the "Boards"), including those Trustees who are not parties
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to any such agreements or "interested persons", as such term is defined in
the 1940 Act, of any such party ("Independent Trustees") of each Trust,
evaluated the Manager's proposal to add Brandywine and Boatmen's as
subadvisers to the Funds. The Boards then approved, subject to the
required shareholder approvals described herein, (1) a new investment
advisory agreement between the Manager and Brandywine (the "Brandywine
Agreement") and (2) a new investment advisory agreement between the
Manager and Boatmen's ("Boatmen's Agreement"), on behalf of each of the
Balanced Funds, the Growth/Income Funds and the Balanced and Growth/Income
Portfolios. The Boards also approved a proposal to present these new
agreements to shareholders for their approval.
In approving the new Brandywine and Boatmen's Agreements, the
Boards analyzed the factors they deemed relevant, including the nature,
quality and scope of services provided by Brandywine and Boatmen's to
investment companies comparable to the Funds. The Boards reviewed the
ability of Brandywine and Boatmen's to provide services to the Funds, as
well as their personnel, operations, financial condition or any other
factor which would affect positively or negatively the provision of those
services. The Boards examined the performance of Brandywine and Boatmen's
with respect to compliance and regulatory matters. The Boards reviewed
Brandywine's and Boatmen's investment performance with respect to accounts
deemed comparable to the Balanced and the Growth/Income Funds. The Boards
also considered other factors it deemed relevant to Brandywine's and
Boatmen's performance as investment advisers.
Brandywine Asset Management
Brandywine, with its principal office at _____________, is a
professional investment counseling firm founded in ______. As of December
31, 1995, Brandywine had assets under management totaling approximately
$___ billion. For a list of investment companies similar to the Balanced
and the Growth/Income funds advised by Brandywine, including its rate of
compensation, see Appendix B.
For its services to the Balanced and Growth/Income Portfolios, the
Manager will pay Brandywine an annualized fee equal to .225% and .25%,
respectively, of the average daily net assets of each Portfolio actually
allocated to Brandywine for management. The substitution of Brandywine
for one of the Advisers to these Portfolios will not change the
Portfolios' or the Funds' current expense ratio.
Fees paid or accrued to the Advisers by the Manager on behalf of
the Balanced and the Growth/Income Funds of the AAdvantage Trust for the
fiscal year ended October 31, 1995 were $_______ and $________,
respectively. If the Brandywine Agreement had been in effect during this
period, assuming that Brandywine was substituted for one of the existing
Advisers, the Manager would have paid $________ and $________,
respectively, to the remaining Advisers and Brandywine on behalf of the
Balanced and the Growth/Income Funds of the AAdvantage Trust. These
calculations assume that Brandywine and the remaining Advisers managed
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<PAGE>
equal portions of the Funds assets, and that the Advisers received the
current blended advisory rate while Brandywine received the fee set forth
above. The difference in these amounts is approximately __% and __%,
respectively. The Mileage Trust did not begin active operations until
November 1, 1995.
To the extent that the assets of the Balanced Funds and the
Growth/Income Funds are invested in a corresponding Portfolio of the AMR
Trust, Brandywine will not receive a fee under its Agreements with the
Manager on behalf of either the AAdvantage Trust or the Mileage Trust. If
the Funds no longer invest their assets in a Portfolio, the Manager, on
behalf of the applicable Funds, will pay Brandywine an annualized fee at
the same rates as set forth above with respect to any assets that
Brandywine manages directly at the Fund level.
The names, addresses and principal occupations of the principal
executive officer and each director or general partner of Brandywine are
as follows: [ ]
Boatmen's Trust Company
Boatmen's, with its principal office at _____________, is a
professional investment counseling firm founded in ______. As of December
31, 1995, Boatmen's had assets under management totaling approximately
$___ billion. For a list of similar investment companies advised by
Boatmen's, including its rate of compensation, see Appendix B.
For its services to the Balanced Portfolio and the Growth/Income
Portfolio, the Manager will pay Boatmen's an annualized fee equal to .25%
of the average daily net assets of each Portfolio actually allocated to
Boatmen's for management. The substitution of Boatmen's for one of the
Advisers to these Portfolios will not change the Portfolios' or the Funds'
current expense ratio.
As noted above, fees paid or accrued to the Advisers by the Manager
on behalf of the Balanced and the Growth/Income Funds of the AAdvantage
Trust for the fiscal year ended October 31, 1995 were $_______ and
$______, respectively. If the Boatmen's Agreement had been in effect
during this period, assuming that Boatmen's was substituted for one of the
existing Advisers, the Manager would have paid the remaining Advisers and
Boatmen's $________ and $________ on behalf of the Balanced and the
Growth/Income Funds of the AAdvantage Trust, respectively. These
calculations assume that Boatmen's and the remaining Advisers managed
equal portions of the Funds' assets, and that the Advisers received the
current blended advisory rate while Boatmen's received the fee set forth
above. The difference in these amounts is approximately __% and __%,
respectively. The Mileage Trust did not begin active operations until
November 1, 1995.
To the extent that the assets of the Balanced Funds and the
Growth/Income Funds are invested in a corresponding portfolio of the AMR
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<PAGE>
Trust, Boatmen's will not receive a fee under its Agreements with the
Manager on behalf of either the AAdvantage Trust or the Mileage Trust. If
the Funds no longer invest their assets in the Portfolios, the Manager, on
behalf of the applicable Funds, will pay Boatmen's an annualized fee at
the same rate as set forth above with respect to any assets that Boatmen's
manages directly at the Fund level.
The names, addresses and principal occupations of the principal
executive officer and each director or general partner of Boatmen's are as
follows: [ ]
Terms of the New Advisory Agreements
Each new Agreement, if approved by shareholders, will become
effective on or about March ___, 1996 and will continue in effect for an
initial term of two years and thereafter from year to year, subject to
approval annually by the Boards, including a majority of the Independent
Trustees of each Board, or by the vote of the holders of a majority of the
outstanding shares of the a Fund, or by the holders of a majority of the
outstanding interests of a Portfolio, as applicable.
Because a Fund's votes are proportionate to its percentage interest
in its corresponding Portfolio, the majority of a Portfolio's interest
holders could approve an action against which a majority of the
outstanding voting securities of its corresponding Fund had voted. Thus,
if a majority of interest holders of a Portfolio approve the new
Agreements, but a Fund investing in the Portfolio does not, the Agreements
will go into effect for the Portfolio and therefore for that Fund.
However, should a Fund which has not approved the new Agreement withdraw
its investment in the corresponding Portfolio, after withdrawal it will
allocate its assets only to the Advisers approved by shareholders of that
Fund.
The Agreements do not protect Brandywine or Boatmen's against any
liability to the Funds, the Portfolios or to their shareholders/interest
holders to which they might otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties or the reckless disregard of their obligations under the proposed
Agreements. The Agreements automatically terminate upon assignment, and
may be terminated without penalty at any time by the Manager, upon not
less than thirty days nor more than sixty days' written notice, by vote of
a majority of the Boards or by vote of the holders of a majority of the
outstanding shares of the Funds or by a majority of the interest holders
of the Portfolios, as applicable. Brandywine and Boatmen's also may
terminate their Agreement without penalty upon sixty days' written notice
to the AMR Trust.
THE BOARDS OF TRUSTEES RECOMMEND THAT YOU VOTE "FOR"
PROPOSALS 1(a), 1(b), 2 AND 3.
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<PAGE>
PROPOSALS 1(c) and 4: APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY AGREEMENT BETWEEN THE MANAGER AND ROWE PRICE-FLEMING. [For
consideration by shareholders of the International Funds only.]
The International Funds invest all of their investable assets in
the International Equity Portfolio ("International Portfolio") of the AMR
Trust. The investment performance of the International Funds directly
corresponds with the investment performance of the International
Portfolio.
Assets of the International Portfolio currently are allocated by
the Manager between three investment advisers: Hotchkis and Wiley, Morgan
Stanley Asset Management Inc. and Templeton Investment Counsel
(collectively, the "International Advisers"). The International
Portfolio's assets are allocated in this manner to provide diversification
and to reduce the possible impact of any one adviser's sub-par performance
on the performance of the Portfolio. The International Funds propose to
add a fourth adviser, Rowe Price-Fleming ("Fleming"), to give the Funds
the flexibility to add or replace an existing International Adviser,
should the need arise in the future. The Manager does not currently intend
to allocate any assets of the International Portfolio to Fleming.
Each International Adviser has discretion to purchase and sell
securities for its segment of the International Portfolio's assets in
accordance with the Portfolio s objectives, policies and restrictions and
the more specific strategies provided by the Manager. Although the
International Advisers are subject to general supervision by the Trustees
and the officers of the Trusts and the Manager, these parties do not
evaluate the investment merits of specific securities transactions. The
allocation of assets among the International Advisers can be changed at
any time by the Manager. Allocations will vary based upon a variety of
factors, including the overall investment performance of each adviser, the
International Portfolio's cash flow needs and market conditions. As
compensation for its services, each International Adviser is paid a fee by
the Manager out of the proceeds of the Manager's management fee.
Consideration by the Boards
At a meeting held on February 15, 1996, the Boards, including the
Independent Trustees of each Trust, approved, subject to the required
shareholder approval described herein, a new investment advisory agreement
between the Manager and Fleming (the "Fleming Agreement") on behalf of
each of the International Funds and the International Portfolio. The
Boards also adopted a proposal to present the Fleming Agreement to
shareholders for their approval.
In approving the Fleming Agreement, the Boards analyzed the factors
they deemed relevant, including the nature, quality and scope of services
provided by Fleming to investment companies comparable to the
International Portfolio. The Boards reviewed the ability of Fleming to
provide its services to the International Portfolio, as well as its
- 8 -
<PAGE>
personnel, operation, financial condition or any other factor which would
affect positively or negatively the providing of those services. The
Boards also examined the performance of Fleming with respect to compliance
and regulatory matters. The Boards also reviewed Fleming's investment
performance with respect to accounts deemed comparable to the
International Portfolio. The Boards considered other factors it deemed
relevant to Fleming's performance as an investment adviser.
Rowe Price-Fleming
Fleming, with its principal office at _____________, is a
professional investment counseling firm founded in ______. As of December
31, 1995, Fleming had assets under management totaling approximately $___
billion. For a list of investment companies similar to the International
Portfolio advised by Fleming, including Fleming's rate of compensation,
see Appendix B.
For its services to the International Portfolio, the Manager will
pay Fleming an annualized fee equal to 0.50% of the first $500 million in
assets and 0.40% thereafter of the Portfolio's average daily net assets
actually allocated to Fleming, if such assets are greater than $200
million. If assets managed by Fleming are less than $200 million, the
Manager will pay Fleming an annualized fee equal to 0.75% of the first $20
million, 0.60% of the next $30 million and 0.50% on amounts over $50
million. When asset levels are between $184 million and $200 million,
Fleming pays a sliding credit to adjust for the difference between the two
fee schedules. Solely for the purpose of determining the applicable
percentage rates when calculating Fleming's fees, there are included any
other assets or trust assets of American Airlines, Inc. which also are
under management by Fleming. The inclusion of such assets can result in
lower overall fee rates being applied to the International Portfolio and
therefore to the Funds.
The following tables reflect the anticipated effect of these
proposals on the operating expenses of the International Funds, based on
the expenses of the International Funds and the International Portfolio as
of October 31, 1995. Current "Management Fees" include the actual amount
of fees paid by the International Portfolio and the Funds during the past
fiscal year. Proposed "Management Fees" restate such information using
the fee schedule that would have been applicable if the Fleming Agreement
had been in effect during the past fiscal year, assuming that each of the
International Advisers and Fleming managed equal portions of the Funds'
assets and assuming that the International Advisers received the current
blended advisory rate while Brandywine received the fee set forth above.
<TABLE>
<CAPTION>
Actual Expenses
International Fund International
Mileage Fund
-------------------------------------------------------------------
- 9 -
<PAGE>
Institutional Class PlanAhead Class AMR Class
------------------- --------------- ---------
<S> <C> <C> <C> <C>
Management Fees 0.43% 0.43% 0.43% 0.43%
12b-1 Fees 0.00 0.00 0.00 0.00(1)
Other Expenses 0.40 0.80 0.11 1.04(2)
==== ==== ==== =======
Total Operating Expenses 0.83% 1.23% 0.54% 1.47%(3)
----- ----- ----- --------
Pro Forma Expenses
International Fund International
Mileage Fund
-------------------------------------------------------------------
Institutional Class PlanAhead Class AMR Class
------------------- --------------- ---------
<S> <C> <C> <C> <C>
Management Fees 0.46% 0.46% 0.46% 0.46%
12b-1 Fees 0.00 0.00 0.00 0.00(1)
Other Expenses 0.40 0.80 0.11 1.04(2)
==== ==== ==== =======
Total Operating Expenses 0.86% 1.26% 0.57% 1.50%(3)
----- ----- ----- --------
</TABLE>
(1) Absent fee waivers, "12b-1 Fees" for the International Mileage Fund
would be 0.25%.
(2) "Other Expenses" before fee waivers and reimbursements are
estimated to be 1.13% for the International Fund.
(3) "Total Operating Expenses" before fee waivers and reimbursements
are estimated to be 1.61% and 1.64%, respectively, for the International
Mileage Fund.
The following illustrates the expenses on a $1,000 investment under the
existing and proposed expenses and fees listed above, assuming (1) a 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
Existing Fee Proposed Fee
------------ ------------
1 Year 3 Years 5 Years 10 Yrs. 1 Year 3 Years 5 Years 10 Yrs.
------ ----- ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Fund
Institutional Class $8 $26 $46 $103 $9 $27 $48 $106
PlanAhead Class 13 39 68 149 13 40 69 152
AMR Class 6 17 30 68 6 18 32 71
- 10 -
<PAGE>
International Mileage
Fund 15 46 80 176 15 47 82 179
</TABLE>
The assumption in this example of a 5% annual return is required by
regulations of the Securities and Exchange Commission ("SEC"). THE
INFORMATION IN THE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES OR RETURNS MAY BE
GREATER OR LESS THAN THOSE SHOWN.
Fees paid or accrued to the International Advisers by the Manager
on behalf of the International Fund of the AAdvantage Trust for the fiscal
year ended October 31, 1995 were $_______. Ifthe Fleming Agreement had
been in effect during this period, assuming that each of the International
Advisers and Fleming managed equal portions of the International Fund's
assets and also assuming that the International Advisers received the
current blended advisory rate while Fleming received the fee set forth
above, the Manager would have paid the International Advisers and Fleming
$____________ on behalf of the International Fund of the AAdvantage Trust.
The difference in these amounts is approximately __%. The Mileage Trust
did not begin active operations until November 1, 1995.
To the extent that the assets of the International Funds are
invested in the International Portfolio, Fleming will not receive a fee
under its Agreements with the Manager on behalf of either the AAdvantage
Trust or the Mileage Trust. If the International Funds no longer invest
their assets in the International Portfolio, the Manager will pay Fleming
an annualized fee as set forth above with respect to any assets that
Fleming manages directly at the Fund level.
The names, addresses and principal occupations of the principal
executive officer and each director or general partner of Fleming are as
follows: [ ]
Terms of the Fleming Agreement
The Fleming Agreement, if approved by shareholders, will become
effective on or about March __, 1996 and will continue in effect for an
initial term of two years and thereafter from year to year, subject to
approval annually by the Boards, including approval by a majority of the
Independent Trustees of each Board, or by a vote of a majority of the
outstanding shares of each of the International Funds, or by the holders
of a majority of the outstanding interests of the International Portfolio,
as applicable.
Because each International Fund's votes are proportionate to its
percentage interest in the International Portfolio, the majority of the
Portfolio's interest holders could approve an action against which a
majority of the outstanding voting securities of one of the Funds had
voted. Thus, if a majority of interest holders of the International
- 11 -
<PAGE>
Portfolio approve the new Fleming Agreement, but an International Fund
does not, the Agreement will go into effect for the Portfolio and
therefore for that Fund. However, should a Fund which has not approved
the new Fleming Agreement withdraw its investment in the International
Portfolio, after withdrawal it will allocate its assets only to the
International Advisers approved by shareholders of that Fund.
The Fleming Agreement does not protect Fleming against any
liability to the International Funds, the International Portfolio or to
its shareholders/interest holders to which it might otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or the reckless disregard of its obligations
under the proposed agreement. The Fleming Agreement automatically
terminates upon its assignment, and may be terminated without penalty at
any time by the Manager, upon not less than thirty days nor more than
sixty days' written notice, by vote of a majority of the Trustees of the
Boards or by vote of a majority of the outstanding securities of each
International Fund or by a majority of the interest holders of the
International Portfolio. Fleming also may terminate the agreement without
penalty upon sixty days' written notice.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS 1(c) AND 4.
PROPOSALS 1(d) and 5: APPROVAL OR DISAPPROVAL OF A PROPOSAL TO PERMIT THE
MANAGER TO HIRE SUBADVISERS OR MODIFY SUBADVISORY AGREEMENTS WITHOUT
SHAREHOLDER APPROVAL. [For consideration by shareholders of all Funds.]
Section 15(a) of the 1940 Act and Rule 18f-2 thereunder require
that the shareholders of a Fund and interest holders of a Portfolio
approve that Fund's or Portfolio's subadvisory agreements and any
amendments thereto. The Funds and the Portfolios have filed an exemptive
application with the SEC requesting an order exempting them from these
provisions ("SEC Order"). This SEC Order would permit the Funds and
Portfolios, which utilize a multi-manager approach to portfolio investing,
to hire new subadvisers, rehire existing subadvisers whose agreements have
been assigned (and, thus, automatically terminated) and modify subadvisory
agreements without the prior approval of shareholders. By eliminating
shareholder approval in these matters, the Funds would have greater
flexibility in choosing managers and they would save the considerable
expenses involved in holding shareholder meetings and soliciting proxies.
The exemptive application was authorized for filing by the Boards,
including the Independent Trustees of each Board, on November 15, 1995 and
was filed with the SEC on January 29, 1996. In their exemptive
application, the Funds and the Portfolios agreed to be subject to the
following conditions:
- 12 -
<PAGE>
(1) The SEC Order will apply solely to the subadvisory agreements
between the Manager and the subadvisers and not to the Management
Agreement between the Manager and the Funds or the Portfolios.
(2) Before a Fund or Portfolio may rely on the SEC Order, its
implementation must be approved by a majority of the Fund's
outstanding voting securities or by a majority of the Portfolio's
interest holders. With respect to new mutual funds organized by the
Manager, proper disclosure regarding the SEC Order will be made in
the new funds' prospectuses.
(3) Any Fund relying upon the SEC Order will disclose in its prospectus
the existence, substance and effect of the Order.
(4) The Manager will continue to provide management and administrative
services to the Funds and Portfolios, and, subject to review and
approval of the Boards will: (a) set the Funds' and the Portfolios'
overall investment strategies; (b) select subadvisers; (c) allocate
portfolio assets among subadvisers; (d) monitor and evaluate the
investment performance of the subadvisers, including their
compliance with the investment objective, policies and restrictions
of the Funds and the Portfolios; and (e) manage short-term
investments of the Funds or Portfolios except that the
International Advisers, and not the Manager, will manage short-term
investments for the International Funds and the International
Portfolio.
(5) A majority of the Boards will be Independent Trustees, and the
nomination of new or additional Independent Trustees will be left
to the discretion of the then existing Independent Trustees.
(6) No Trust will enter into any subadvisory agreement with a
subadviser that is an "affiliated person," as defined in Section
2(a)(3) of the 1940 Act, of the Funds, the Portfolios, or the
Manager, other than by reason of serving as a subadviser to one or
more of the Funds or the Portfolios, without such agreement
(including the compensation to be paid thereunder) being approved
by the shareholders of the applicable Fund and/or Portfolio.
(7) No trustee or officer of a Trust or the Manager will own directly
or indirectly (other than through a pooled investment vehicle that
is not controlled by any such trustee or officer) any interest in a
subadviser except for: (a) ownership of interests in the Manager or
any entity that controls, or is controlled by, or under common
control with, the Manager; or (b) ownership of less than 1% of the
outstanding securities of any class or equity or debt securities of
any publicly traded company that either a subadviser controls, is
controlled by, or is under common control with, a subadviser.
(8) Within 90 days of the hiring of any new subadviser or the
implementation of any proposed material change in a subadvisory
- 13 -
<PAGE>
agreement, the affected Fund and Portfolio will furnish their
shareholders all information about the new subadviser or
subadvisory agreement that would be included in a proxy statement.
Such information will include any change in such disclosure caused
by the addition of a new subadviser or any proposed material change
in a Fund's or Portfolio's subadvisory agreement. The Fund and
Portfolio will meet this condition by providing shareholders,
within 90 days of the hiring of a subadviser or the implementation
of any material change to the terms of a subadvisory agreement,
with an information statement meeting the requirements of the
federal proxy rules.
Thus, in accordance with condition (2), shareholder and interest
holder approval of this proposed new arrangement is being sought. Even if
shareholders of the Funds or interest holders of the Portfolios approve
reliance on the SEC Order, this proposal will not be implemented unless
the SEC Order is granted. There is no assurance that such an Order will
be granted. In addition, the SEC Order could be granted subject to
different conditions than those set forth above. If the SEC Order is
granted, any new subadvisers added to the Funds and Portfolios or any
change in a subadvisory agreement will still require Trustee approval. In
order to approve new subadvisers, the Boards will analyze the factors they
deem relevant, including the nature, quality and scope of services
provided by a subadviser to investment companies comparable to the Funds.
The Boards will review the ability of the subadviser to provide its
services to the Funds, as well as its personnel, operation, financial
condition or any other factor which would affect the provision of those
services. The Boards will examine the performance of the subadviser with
respect to compliance and regulatory matters over the past fiscal year.
The Boards will review the subadviser's investment performance with
respect to accounts deemed comparable. Finally, the Boards will consider
other factors deemed relevant to the subadviser's performance as an
investment adviser. The Boards believe that this review process provides
adequate shareholder protection in the selection of subadvisers.
Because the Funds' votes are proportionate to their percentage
interest in their corresponding Portfolio, the majority of a Portfolio's
interest holders could approve an action against which a majority of the
outstanding voting securities of one of the Funds had voted. Thus, if a
majority of interest holders of a Portfolio approve reliance upon the SEC
Order, but a Fund investing in the Portfolio does not, the Portfolio may
rely upon the SEC Order, thereby affecting the management of the
underlying Fund. However, should a Fund that has not approved reliance
upon the SEC Order withdraw its investment in its corresponding Portfolio,
after withdrawal that Fund will allocate its assets only among the
subadvisers whose most recent investment advisory agreement has been
approved by its shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" PROPOSALS 1(d) AND 5.
- 14 -
<PAGE>
PORTFOLIO INFORMATION
For the fiscal year ended October 31, 1995, the International Fund
paid brokerage commissions of $18,937 to Morgan Stanley, Inc., an
affiliate of Morgan Stanley Asset Management, an adviser to the
International Funds. During that same period, the Balanced Fund paid $18
in brokerage commissions to Sutro & Company, an affiliate of Independence
Investment Advisers, an adviser to the Balanced Fund. These amounts
represented 4% of the International Fund's and 0.005% of the Balanced
Fund's aggregate brokerage commissions paid during the most recent fiscal
year.
SHAREHOLDER PROPOSALS
As a general matter, the Trusts do not hold annual or other regular
meetings of shareholders. Shareholders wishing to submit proposals for
inclusion in a proxy statement for a subsequent shareholders' meeting
should send their written proposals to the Trusts at 4333 Amon Carter
Boulevard, MD 5645, Fort Worth, Texas 76155. In addition, each of the
AAdvantage Trust and the Mileage Trust is required to convene a special
shareholders' meeting upon written request for such a meeting by their
respective shareholders owning at least ten percent of their outstanding
shares.
OTHER BUSINESS
Management knows of no business to be presented to the meeting
other than the matters set forth in this proxy statement, but should any
other matter requiring a vote of shareholders arise, the proxies will vote
thereon according to their best judgment and in the best interests of the
Funds.
By order of the Board of Trustees,
CLIFFORD J. ALEXANDER
Secretary
February 16, 1996
It is important that you execute and return
your Proxy Card(s) promptly.
- 15 -
<PAGE>
APPENDIX A
[5% Shareholders]
<PAGE>
APPENDIX B
[List of investment companies with investment objectives similar to
the Funds advised by Brandywine, Boatmen's and Fleming, including their
assets and the subadviser's rate of compensation (note fee waivers, if
any).]
- 17 -
<PAGE>
PROXY
AMERICAN AADVANTAGE FUNDS
American AAdvantage Balanced Fund
American AAdvantage Growth and Income Fund
American AAdvantage International Equity Fund
Combined Special Meeting of Shareholders
March 14, 1996
The undersigned hereby appoints as proxies William F. Quinn,
Barry Y. Greenberg and Janice B. Schwarz, each with the power of
substitution, and hereby authorizes each of them to represent and to vote,
as designated below, all the shares of each of the above-referenced funds
("Funds") held of record by the undersigned on January 31, 1996, at the
meeting of shareholders to be held on March 14, 1996, or any adjournment
thereof, with discretionary power to vote upon such other business as may
properly come before the meeting. Unless indicated to the contrary, this
proxy shall be deemed to grant authority to vote "FOR" the proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby acknowledges receipt of the Proxy
Statement prepared on behalf of the Board of Trustees with respect to the
matter designated below.
If you are a shareholder in the PlanAhead Class, please date and sign this
proxy and return it in the enclosed postage-paid envelope to Boston
Financial Data Services, Inc. at Proxy Services, P.O. Box 9261, Boston, MA
02205-8524 for the PlanAhead Class.
If you are a shareholder in the Institutional or AMR Class, please date
and sign this proxy and return it in the enclosed postage-paid envelope to
Janice B. Schwarz of AMR Investment Services, Inc., at P.O. Box 619003,
DFW Airport, Texas 75261-9003
Please indicate your vote by an "X" in the appropriate box below.
1. To authorize the American AAdvantage Funds, on behalf of the
Funds, to vote at a meeting of the Balanced, the Growth and Income and the
International Equity Portfolios ("Portfolios") of the AMR Investment
Services Trust ("AMR Trust") to:
(a) Approve a new Investment Advisory Agreement between the
Manager and Brandywine Asset Management for the Balanced
Portfolio and the Growth and Income Portfolio of the AMR Trust
(American AAdvantage Balanced Fund and American AAdvantage
Growth and Income Fund only).
<PAGE>
FOR ______ AGAINST _______ ABSTAIN ______
(b) Approve a new Investment Advisory Agreement between the
Manager and Boatmen's Trust Company for the Balanced Portfolio
and the Growth and Income Portfolio of the AMR Trust (American
AAdvantage Balanced Fund and American AAdvantage Growth and
Income Fund only).
FOR _______ AGAINST _______ ABSTAIN ______
(c) Approve a new Investment Advisory Agreement between the
Manager and Rowe Price-Fleming for the International Equity
Portfolio of the AMR Trust (American AAdvantage International
Equity Fund only).
FOR _______ AGAINST _______ ABSTAIN ______
(d) Approve a proposal to permit the Manager to hire new
subadvisers or modify the subadvisory agreements of the
Portfolios of the AMR Trust without interest holder approval
(Each Fund);
FOR _______ AGAINST _______ ABSTAIN ______
2. Approve a new Investment Advisory Agreement between the Manager and
Brandywine Asset Management on behalf of the American AAdvantage Balanced
Fund and the American AAdvantage Growth and Income Fund (American
AAdvantage Balanced Fund and American AAdvantage Growth and Income Fund
only).
FOR _______ AGAINST _______ ABSTAIN ______
3. Approve a new Investment Advisory Agreement between the Manager and
Boatmen's Trust Company on behalf of the American AAdvantage Balanced Fund
and the American AAdvantage Growth and Income Fund (American AAdvantage
Balanced Fund and American AAdvantage Growth and Income Fund only).
FOR _______ AGAINST _______ ABSTAIN ______
4. Approve a new Investment Advisory Agreement between the Manager and
Rowe Price-Fleming on behalf of the American AAdvantage International
Equity Fund (American AAdvantage International Equity Fund only);
FOR _______ AGAINST _______ ABSTAIN ______
5. Approve a proposal to permit the Manager to hire new subadvisers or
modify the subadvisory agreements of the American AAdvantage Balanced
- 2 -
<PAGE>
Fund, the American AAdvantage Growth and Income Fund and the American
AAdvantage International Equity Fund without shareholder approval (Each
Fund).
FOR _______ AGAINST _______ ABSTAIN ______
___________________________ ____________________________
Signature Title
____________________________ ____________________________
Signature (if held jointly) Dated
- 3 -
<PAGE>
