AMERICAN AADVANTAGE FUNDS
Institutional Class
Supplement dated July 16, 1996
to the Prospectus dated March 1, 1996
1) The AMR Trust Board has approved the addition of South Korea as an
eligible country in which the International Equity Portfolio may invest.
2) The first complete paragraph on page 19 under "American AAdvantage
Limited-Term Income Fund" is replaced by the following:
Although investments will not be restricted by either maturity or
duration of the securities purchased, under normal circumstances, the
Portfolio will seek to maintain a dollar weighted average duration of
one to three years. Because the timing on return of principal for both
asset-backed and mortgage-backed securities is uncertain, in calculating
the average weighted duration of the Portfolio, the duration 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.
3) The first paragraph under "Fund Advisory Agreements" on page 30 is
supplemented as follows:
At meetings held on March 26, 1996, the shareholders of the Balanced,
Growth and Income and International Equity Funds and the interest
holders of their respective Portfolios approved the adoption of a new
policy. This policy permits the Manager to enter into new or modified
advisory agreements with existing or new investment advisers without
approval of Trust Shareholders or AMR Trust interest holders, but
subject to approval of the Board and the AMR Trust Board. On June 25,
1996, the Securities and Exchange Commission issued an exemptive order
which permits the adoption of this policy, subject to compliance with
certain conditions. Accordingly, the Manager intends to rely upon this
policy in connection with future decisions to enter into new or modified
advisory agreements with existing or new investment advisers.
4)The applicable disclosures on pages 32-35 are supplemented as follows:
Brandywine Asset Management, Inc., ("Brandywine") and Boatmen's Trust
Company ("Boatmen's") have been approved as additional advisers to the
Balanced Portfolio and the Growth and Income Portfolio and Rowe Price-
Fleming International, Inc. ("Fleming") has been approved as an
additional adviser to the International Equity Fund. The Manager does
not currently intend to allocate assets to Boatmen's or Fleming.
Effective April 1, 1996, the Manager allocated the assets of the
Balanced Portfolio and the Growth and Income Portfolio that were
previously managed by Capital Guardian Trust Company to Brandywine and
the other advisers to those Portfolios.
5)The fee schedule for Brandywine on page 32 is as follows:
The Manager pays Brandywine an annualized fee equal to .225% of assets
in the Balanced Portfolio and .25% of assets in the Growth and Income
Portfolio of the first $500 million of assets under its discretionary
management; .225% of the next $100 million on all assets and .20% on all
excess assets of these portfolios.
