AMERICAN AADVANTAGE MILEAGE FUNDS
Supplement dated November 25, 1996
to the Prospectus dated May 1, 1996
1) The second paragraph on page 30 should be replaced by:
Hotchkis and Wiley, 800 West Sixth Street, Los Angeles, California,
90017, is a professional investment counseling firm which was founded
in 1980 by John F. Hotchkis and George Wiley. Hotchkis and Wiley
became a division of Merrill Lynch Capital Management Group, a wholly
owned subsidiary of Merrill Lynch & Co., Inc. on November 12, 1996.
Assets under management as of December 31, 1995 were approximately
$9.0 billion, which included approximately $988 million of assets of
AMR and its subsidiaries and affiliated entities. Hotchkis and Wiley
serves as an investment adviser to the Balanced Portfolio, Growth and
Income Portfolio and International Equity Portfolio. The Manager pays
Hotchkis and Wiley an annualized fee equal to .60% of the first $10
million of AMR Trust assets under its discretionary management, .50%
of the next $140 million of assets, .30% of the next $50 million of
assets, .20% of the next $800 million of assets and .15% of all excess
assets.
2) The Mileage Trust Board has approved a change to the dividend
policy of the Limited-Term Income Fund. Effective October 1, 1996,
dividends from the Limited-Term Income Fund will be payable to
shareholders of record as of the close of business on the day on which
they are declared.
3) The AMR Trust Board has approved the addition of South Korea as an
eligible country in which the International Equity Portfolio may invest.
4) The last paragraph on page 15 under "American AAdvantage Limited-
Term Income Mileage 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.
5) The first paragraph under "Fund Advisory Agreements" on page 26 is
supplemented as follows:
At meetings held on March 26, and April 16, 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 Mileage Trust shareholders or
AMR Trust interest holders, but subject to approval of the Mileage
Trust 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.
