<PAGE> 1
As filed with the Securities and Exchange Commission on May 1, 1996
Registration No. 811-4984
No. 33-11387
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 16
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17
AMERICAN AADVANTAGE FUNDS
(Exact name of registrant as specified in charter)
4333 Amon Carter Boulevard, MD 5645
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, MD 5645
Fort Worth, Texas 76155
(Name and address of agent for service)
Copies to:
CLIFFORD J. ALEXANDER, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
It is proposed that this filing will become effective on May 1, 1996 pursuant
to paragraph (b)(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 (Registered Trademark) operating
structure. This Post-Effective Amendment includes a signature page for AMR
Investment Services Trust, the hub trust.
Page 1 of __ Pages
Exhibit Index Begins on Page __
<PAGE> 2
AMERICAN AADVANTAGE FUNDS - PLATINUM CLASS
American AAdvantage Money Market Fund
American AAdvantage Municipal Money Market Fund
American AAdvantage U.S. Treasury Money Market Fund
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Prospectus for the Platinum Class of the American AAdvantage
Money Market, Municipal Money Market and U.S. Treasury Money
Market Funds and the American AAdvantage Money Market Mileage
Fund
Statement of Additional Information for the Platinum Class of
the American AAdvantage Money Market, Municipal Money Market
and U.S. Treasury Money Market Funds and the American
AAdvantage Money Market Mileage Fund
Part C
Signature Pages
Exhibits
<PAGE> 3
AMERICAN AADVANTAGE FUNDS
- PLATINUM CLASS -
American AAdvantage Money Market Fund
American AAdvantage Municipal Money Market Fund
American AAdvantage U.S. Treasury Money Market Fund
FORM N-1A CROSS-REFERENCE SHEET
Part A Item No. PROSPECTUS CAPTION
1 Cover Page
2 Table of Fees and Expenses
3 Financial Highlights
4 Cover Page; Introduction; Investment Objective, Policies and
Risks; Investment Restrictions; Yields and Total Returns;
General Information; Shareholder Communications
5 Management and Administration of the Trusts
5A Not Applicable
6 Valuation of Shares; Dividends, Other Distributions and Tax
Matters; General Information; AAdvantage Miles
7 How to Purchase Shares
8 How to Redeem Shares
9 Not Applicable
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
10 Cover Page
11 Table of Contents
12 Cover Page; Description of the Trusts; Other Information
13 Investment Restrictions; Other Information
14 Trustees and Officers
15 Not Applicable
16 Management, Administrative Services and Distribution Fees
17 Investment Objective, Policies and Risk Factors -- Brokerage
Practices (Prospectus)
18 Other Information
19 Net Asset Value
20 Tax Information
21 Not Applicable
22 Yield and Total Return Quotations
23 Not Applicable
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
THIS PROSPECTUS contains important information about the Platinum Class of the
AMERICAN AADVANTAGE FUNDS ("AAdvantage Trust") and the AMERICAN AADVANTAGE
MILEAGE FUNDS ("Mileage Trust"), each 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 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 dated May 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- 973-7977. For further information on the Funds, refer to the address and
phone number on the back cover.
AN INVESTMENT IN 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.
PROSPECTUS
MAY 1, 1996
[AMERICAN LOGO]
--Platinum Class--(SM)
American
AAdvantage
Funds(R)
MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
AMERICAN AADVANTAGE
MILEAGE FUNDS(SM)
MONEY MARKET MILEAGE FUND
Available through
[SOUTHWEST SECURITIES LOGO]
<PAGE> 5
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, "AAdvantage Funds") and the AMERICAN AADVANTAGE
MONEY MARKET MILEAGE FUND(SM) ("Mileage Fund") each seeks current income,
liquidity, and the maintenance of a stable price per share of $1.00. The Money
Market Fund and the Mileage Fund seek their investment objective by investing
all of their investable assets in the Money Market Portfolio of the AMR Trust
("Money Market Portfolio"), the Municipal Money Market Fund seeks its investment
objective by investing all of its investable assets in the Municipal Money
Market Portfolio of the AMR Trust ("Municipal Money Market Portfolio") and the
U.S. Treasury Money Market Fund seeks its investment objective by investing all
of its investable assets in the U.S. Treasury Money Market Portfolio of the AMR
Trust ("U.S. Treasury Money Market Portfolio"), (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(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." An
AAdvantage Fund or the Mileage Fund may withdraw its investment in a
corresponding Portfolio at any time if the applicable 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... 3
FINANCIAL HIGHLIGHTS......... 4
INTRODUCTION................. 7
INVESTMENT OBJECTIVES,
POLICIES AND RISKS......... 8
INVESTMENT RESTRICTIONS...... 16
YIELDS AND TOTAL RETURNS..... 17
MANAGEMENT AND ADMINISTRATION
OF THE TRUSTS.............. 17
AADVANTAGE(R) MILES.......... 20
HOW TO PURCHASE SHARES....... 21
HOW TO REDEEM SHARES......... 22
VALUATION OF SHARES.......... 24
DIVIDENDS AND TAX MATTERS.... 24
GENERAL INFORMATION.......... 26
SHAREHOLDER COMMUNICATIONS... 27
</TABLE>
- ---------------
1 "Hub and Spoke" is a registered service mark of Signature Financial Group,
Inc.
PROSPECTUS
2
<PAGE> 6
TABLE OF FEES AND EXPENSES
Annual Operating Expenses (as a percentage of average net assets):
<TABLE>
<CAPTION>
MUNICIPAL U.S. TREASURY MONEY
MONEY MONEY MONEY MARKET
MARKET MARKET MARKET MILEAGE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
Management Fees 0.15% 0.15% 0.15% 0.15%
12b-1 Fees 0.25% 0.25% 0.25% 0.25%(1)
Other Expenses 0.53% 0.65% 0.56% 0.65%
---- ---- ---- ----
Total Operating Expenses 0.93% 1.05% 0.96% 1.05%
==== ==== ==== ====
</TABLE>
(1) The Mileage Trust anticipates that a portion of the "12b-1 Fees" charged for
the current fiscal year will be used to pay for AAdvantage miles. See
"AAdvantage Miles."
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 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
Money Market Mileage Fund 11 33 58 128
</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 Trusts."
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.
PROSPECTUS
3
<PAGE> 7
FINANCIAL HIGHLIGHTS
The financial highlights in the following tables for the AAdvantage Funds have
been derived from financial statements of the AAdvantage Trust. The information
has been audited by Ernst & Young LLP, independent auditor. Because the Platinum
Class of the AAdvantage Trust did not commence active operations until November
1995, the financial highlights shown below are those of the Institutional Class
of the AAdvantage Trust. 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 auditor appearing in the Annual Report of the AAdvantage Trust
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) $1,206,041 $1,893,144 $2,882,947 $2,223,829 $715,280 $745,405 $385,916 $330,230 $ 71,660
Ratios to
average net
assets
(annualized)(3)(4):
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.
PROSPECTUS
4
<PAGE> 8
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET
FUND-INSTITUTIONAL CLASS U.S. TREASURY MONEY MARKET FUND-
--------------------------- INSTITUTIONAL CLASS
PERIOD ------------------------------------------------------
ENDED YEAR ENDED OCTOBER 31, PERIOD ENDED
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 $ 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) 3.75% 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
(annualized)(3)(4):
Expenses 0.35% 0.30% 0.32% 0.25 % 0.23% 0.27%(5)
Net investment income 3.70% 2.38% 5.49% 3.44 % 2.96% 3.46%(5)
</TABLE>
(1) The Municipal Money Market Fund commenced active operations on November 10,
1993 and the U.S. Treasury Market Fund commenced active operations on March
2, 1992.
(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 period ended October 31, 1994.
(4) 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.
(5) Estimated based on expected annual expenses and actual average net assets.
PROSPECTUS
5
<PAGE> 9
The financial highlights in the following table have been derived from
unaudited financial statements of the Mileage Fund. Such information should be
read in conjunction with the unaudited financial statements incorporated in the
SAI, which contains further information about the Mileage Fund and can be
obtained by investors without charge.
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
MONEY MARKET
MILEAGE
FUND-PLATINUM
CLASS(1)
-------------------
PERIOD ENDED
FEBRUARY 29, 1996
-------------------
<S> <C>
Net asset value, beginning of period $ 1.00
-------
Net investment income 0.00
Less dividends from net investment income (0.00)
Net asset value, end of period $ 1.00
=======
Total return (annualized) 5.00%
=======
Ratios/supplemental data:
Net assets, end of period (in thousands) $ 5,646
Ratios to average net assets (annualized):
Expenses 1.05%
Net investment income 4.39%
</TABLE>
(1) The Platinum Class of the Money Market Mileage Fund commenced active
operations on January 29, 1996.
PROSPECTUS
6
<PAGE> 10
INTRODUCTION
The AAdvantage Trust and the Mileage Trust are open-end, management investment
companies, organized as Massachusetts business trusts on January 16, 1987 and
February 22, 1995, respectively. The AAdvantage Funds are three of the several
investment portfolios of the AAdvantage Trust and the Mileage Fund is a separate
investment portfolio of the Mileage Trust. Each Fund has the same investment
objective but may have different investment policies. Each Fund invests all of
its investable assets in a corresponding Portfolio of the AMR Trust with an
identical investment objective. Each AAdvantage Fund has multiple classes,
including: the "Platinum Class" for customers of certain broker-dealers; the
"Institutional Class", primarily for 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. The Money Market Mileage Fund
currently consists of two classes of shares: the "Platinum Class", as described
above; and the "Mileage Class", which is available directly to individuals and
certain grantor trusts. This Prospectus relates only to the Platinum Class. For
further information about the other classes, or to obtain a prospectus free of
charge, call (800) 967-9009 or write to P.O. Box 619003, MD 5645, Dallas/Ft.
Worth Airport, Texas 75261.
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 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 and administrative 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."
PROSPECTUS
7
<PAGE> 11
Each shareholder in the Mileage Fund will receive American Airlines(R)
AAdvantage(R) travel awards program ("AAdvantage") miles.(2) AAdvantage miles
will be posted monthly to each shareholder's AAdvantage account at an annual
rate of one mile for every $10 invested in the Fund. The Manager reserves the
right to discontinue the posting of AAdvantage miles or to change the mileage
calculation at any time upon notice to shareholders. See "AAdvantage Miles."
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 applicable 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 policies of each Portfolio and the AMR Trust's Board of
Trustees ("AMR Trust Board"), it applies equally to each Fund and the applicable
Board.
INVESTMENT OBJECTIVE OF THE FUNDS -- The investment objective of each of the
Funds is to seek current income, liquidity and the maintenance of a stable $1.00
price per share. The Funds seek to achieve this objective 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 397 days or less, although instruments subject to repurchase
- ---------------
(2) American Airlines and AAdvantage are registered trademarks of American
Airlines, Inc. American Airlines may find it necessary to change AAdvantage
program rules, regulations, travel awards and special offers at any time.
PROSPECTUS
8
<PAGE> 12
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 AND AMERICAN AADVANTAGE MONEY MARKET
MILEAGE FUND -- The Funds' 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.
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 interests 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
PROSPECTUS
9
<PAGE> 13
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.
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.
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
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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.
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; and tax-exempt commercial paper. 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 and
American AAdvantage Money Market Mileage Fund."
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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, 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.
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. 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. Counterparties for repurchase agreements must be approved
by the AMR Trust Board. 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 than 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, the
General Services Administration, GNMA, the Rural Electrification Administration,
the Small Business Administration, the Federal Financing Bank and
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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 and American AAdvantage Money Market Mileage 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 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.
Private placement investments include investments issued 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)
securities"). Section 4(2) securities are restricted as to disposition under the
federal securities laws, and generally are sold to institutional investors such
as the Portfolios, that agree they are purchasing
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the securities 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) securities
normally are 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) securities, thus providing liquidity. The Portfolios will not
invest more than 10% of their respective net assets in Section 4(2) securities
and other 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) securities held by such Portfolio
in excess of this level are at all times liquid.
Because it is not possible to predict with assurance exactly how this market
for Section 4(2) securities 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)
securities 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.
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 AAdvantage Trust
and the Mileage 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
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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 material 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, the Fund would seek an alternative investment
vehicle or the Manager would actively manage the Fund.
See "Management and Administration of the Trusts" 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 AAdvantage Trust, the MileageTrust and the AMR
Trust, (3) brokerage practices, (4) the Funds' shares, including the rights and
liabilities of its shareholders, (5) additional
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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 its respective 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 its respective 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.
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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 Funds may advertise its "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 TRUSTS
FUND MANAGEMENT AGREEMENT -- The AAdvantage Trust's Board and the Mileage
Trust's Board have general supervisory responsibility over their respective
affairs. The Manager provides or oversees all administrative, investment
advisory and portfolio management services for the AAdvantage Trust pursuant to
a Management Agreement, dated April 3, 1987, as amended on October 1, 1995,
together with the Administrative Services Plan described below. The Manager
provides or oversees all administrative, investment advisory and portfolio
management services for the Mileage Trust pursuant
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to a Management Agreement, dated October 1, 1995. The AMR Trust and the Manager
also entered into a Management Agreement dated, October 1, 1995, which 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 Manager serves as
the sole investment adviser to the Portfolios. As of December 31, 1995, the
Manager had assets under management totaling approximately $13.7 billion,
including approximately $4.5 billion under active management and $9.2 billion as
named fiduciary or fiduciary adviser. Of the total, approximately $10.1 billion
of assets are related to AMR. American Airlines, Inc. is not responsible for
investments made in the American AAdvantage Funds or the American AAdvantage
Mileage 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.
The Manager bears the expense of providing the above services. 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 AAdvantage Trust or the Mileage
Trust. The fees received by the Manager from the AMR Trust ("Management Fees")
are payable quarterly in arrears.
Each Management Agreement will continue in effect provided that annually
such continuance is specifically approved by a vote of the applicable 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 AAdvantage Trust, the Mileage
Trust or the AMR Trust. A Management Agreement will automatically terminate in
the event of its "assignment" as defined in the 1940 Act.
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The AAdvantage Trust and the Mileage Trust are each 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 each Board has adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
between the AAdvantage Trust or the Mileage Trust and the AMR Trust, including
creating a separate Board of Trustees of the AMR Trust.
ADMINISTRATIVE SERVICES PLAN -- The Manager has entered into separate
Administrative Services Plans with the AAdvantage Trust and the Mileage Trust
which obligate 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 are 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% and 0.55% of the net assets of
the Platinum Class of the AAdvantage Funds and the Mileage Fund, respectively.
The fee is payable quarterly in arrears.
DISTRIBUTION PLAN -- The AAdvantage Trust and the Mileage Trust have each
adopted a Platinum Class distribution plan (the "Plans") pursuant to Rule 12b-1
under the 1940 Act which will continue in effect so long as approved at least
annually by a majority of the applicable Board's Trustees, including the
affirmative votes of a majority of the Independent Trustees of the applicable
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 Plans may be
terminated with respect to a particular Platinum Class at any time, without
payment of any penalty, by a vote of a majority of the Independent Trustees of
the applicable Board or by a vote of a majority of the outstanding voting
securities of that class.
The Plans provide 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
applicable 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 Plans. The Plans authorize AMR, or any
other entity approved by the applicable Board, to spend 12b-1 fees on any
activities or expenses intended to result in
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the sale or servicing of Platinum Class shares including 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. In addition, the Mileage Fund's Plan authorizes
expenses incurred in connection with participation in the American Airlines
AAdvantage Travel Awards Program.
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 applicable 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
AAdvantage Trust and the Mileage 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 AAdvantage Trust, the
Mileage Trust and the AMR Trust is ERNST & YOUNG LLP, Dallas, Texas.
AADVANTAGE(R) MILES
The AAdvantage program offers the opportunity to obtain free upgrades and travel
awards on American Airlines and AAdvantage airline participants, as well as
upgrades and discounts on car rentals and hotel accommodations. For more
information about the AAdvantage program, call American Airlines at (800)
433-7300.
AAdvantage miles will be posted monthly in arrears to each shareholder's
AAdvantage account based on the shareholder's average daily account balance
during the previous month. Miles are posted at an annual rate of one mile per
$10 maintained in the Mileage Fund. Mileage is calculated on the average daily
balance and posted monthly. The average daily balance is calculated by adding
each day's balance and dividing by the number of days in the month. For example,
the average daily balance on a $50,000 account funded on the 16th day of a month
having 30 days (and maintained at that balance through the end of the month)
would be $25,000. Mileage received for that month would be 208 miles. If the
same balance were maintained through the next month, the average daily balance
would be $50,000, and the mileage would be 417 miles that month and every month
the $50,000 investment was maintained in the Mileage Fund. These miles appear on
subsequent AAdvantage program statements.
In the case of Trust Accounts, AAdvantage miles will be posted only in a
trustee's individual name, and not in the name of the Trust Account. Before
investing in a Fund,
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trustees of the Trust Accounts should consult their own legal and tax advisers
as to the tax effect of this arrangement and whether this arrangement is
consistent with their legal duties as trustees. American Airlines has informed
the Funds that in administering an AAdvantage member's AAdvantage account, it
shall not be required to distinguish between AAdvantage miles accumulated by the
individual in his/her capacity as trustee to a Trust Account from AAdvantage
miles accumulated in an individual capacity or from other sources.
The Manager reserves the right to discontinue the posting of AAdvantage
miles or to change the mileage calculation at any time upon notice to
shareholders. See also "Dividends and Tax Matters."
American Airlines may find it necessary to change AAdvantage program rules,
regulations, travel awards and special offers at any time. This means that
American Airlines may initiate changes impacting, for example, participant
affiliations, rules for earning mileage credit, mileage levels and rules for the
use of travel awards, continued availability of travel awards, blackout dates
and limited seating for travel awards, and the features of special offers.
American Airlines reserves the right to end the AAdvantage program with six
months' notice. AAdvantage travel awards, mileage accrual and special offers are
subject to governmental regulations.
HOW TO PURCHASE SHARES
Platinum Class shares are sold on a continuous basis at net asset value through
selected financial services firms ("firms"). The Platinum Class has established
a minimum initial investment of $1,000 and $100 minimum for subsequent
investments, but these minimums may be changed at any time at the AAdvantage
Trust's or the Mileage 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 and
the Mileage Fund until 3:00 p.m. Eastern time Monday through Friday, excluding
the following business holidays: New Year's Day, Martin Luther King's Birthday,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day ("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
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normally be collected from such check before shares will be purchased. The
AAdvantage Trust and the Mileage Trust reserve 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
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.
PROSPECTUS
22
<PAGE> 26
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.
PROSPECTUS
23
<PAGE> 27
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 Platinum
Class Shares of the Funds will be determined based on a pro rata 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.
PROSPECTUS
24
<PAGE> 28
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
calendar year and its net capital gain for the one-year period ending on October
31 of that year, plus certain other amounts. For these and other purposes,
dividends declared by a Fund in December of any year and payable to shareholders
of record on a date in that month 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.
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. The Manager expects that the
Mileage Fund also will notify its shareholders that their taxable dividends for
each year include a nominal amount reflecting the value of AAdvantage Miles
credited to their accounts, which are deemed by the Internal Revenue Service to
constitute taxable distributions by the Fund. 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
PROSPECTUS
25
<PAGE> 29
with a correct taxpayer identification number or 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
AAdvantage Trust or the Mileage Trust or any tax consequences as a result of the
receipt of AAdvantage miles. For further tax information, see the SAI.
GENERAL INFORMATION
The AAdvantage Trust currently is comprised of eight separate investment
portfolios and the Mileage Trust currently is comprised of seven separate
investment portfolios. Each AAdvantage Fund is comprised of three classes of
shares. The Mileage Fund is comprised of two classes of shares. Shares of each
AAdvantage Fund and each Mileage Fund can be issued in an unlimited number. Each
AAdvantage Fund and Mileage Fund 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 a Trust
vote on matters affecting that Trust as a whole. Share voting rights are not
cumulative, and shares have no preemptive or conversion rights. Shares of the
AAdvantage Trust and the Mileage 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 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 Massachusetts business trusts, the AAdvantage Trust and the Mileage Trust
are not obligated to conduct annual shareholder meetings. However, the Trusts
will hold special shareholder meetings whenever required to do so under the
federal securities
PROSPECTUS
26
<PAGE> 30
laws or their Declarations of Trust or By-Laws. Trustees of either Trust can be
removed by a shareholder vote at special shareholder meetings.
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
AAdvantage Trust, the Mileage 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 by contacting your firm or by calling
(800) 388-3344 or by writing to the Funds at P.O. Box 619003, MD 5645,
Dallas/Fort Worth Airport, Texas 75261-9003.
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 AADVANTAGE TRUST AND THE
MILEAGE 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 and American
AAdvantage Mileage Funds is a service mark of AMR Corporation. Mileage Class and
American AAdvantage Money Market Fund are registered service marks and Platinum
Class, PlanAhead Class, American AAdvantage Money Market Mileage 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
27
<PAGE> 31
AMERICAN
AADVANTAGE FUNDS(R)
-- Platinum Class --(SM)
AMERICAN AADVANTAGE
MILEAGE FUNDS(SM)
-- Platinum Class --
P.O. Box 619003
Dallas/Fort Worth Airport, Texas
75261-9003
Available through
[LOGO]
SOUTHWEST SECURITIES
MEMBER: NEW YORK STOCK EXCHANGE
1201 Elm Street, Suite 3500
Dallas, Texas
75270
(800) 973-7977
<PAGE> 32
STATEMENT OF ADDITIONAL INFORMATION
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
-- PLATINUM CLASS(SM) --
MAY 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") are three separate investment
portfolios of the American AAdvantage Funds (the "AAdvantage Trust"). The
American AAdvantage Money Market Mileage Fund (the "Mileage Fund") is a
separate investment portfolio of the American AAdvantage Mileage Funds (the
"Mileage Trust") (individually, a "Fund" and, collectively, the "Funds"). The
AAdvantage Trust and the Mileage Trust (collectively the "Trusts") are
open-end, diversified management investment companies. Each Fund consists of
multiple classes of shares designed to meet the needs of different groups of
investors. This Statement of Additional Information ("SAI") 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 SAI should be read in conjunction with the Platinum Class
prospectus dated May 1, 1996 ("Prospectus"), a copy of which may be obtained
without charge by calling (800) 973-7977.
This SAI 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 AAdvantage Trust's Board of Trustees ("AAdvantage
Board") and the Mileage Trust's Board of Trustees ("Mileage Trust Board"), as
applicable.
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 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:
<PAGE> 33
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 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 and forward commitment transactions.
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 Money Market Portfolio of the AMR Trust (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.
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
AMR Trust assets and the administration of each Trust's
2
<PAGE> 34
assets, and each Trust's officers are responsible for the respective Trust's
operations. The Trustees and officers of the Trusts and the AMR Trust are
listed below, together with their principal occupations during the past five
years. Unless otherwise indicated, the address of each person listed below is
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).
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).
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).
Stephen D. O'Sullivan* (60) Trustee Consultant (July 1994-Present); Vice President and
Controller (April 1985-June 1994), American
Airlines, Inc.
</TABLE>
3
<PAGE> 35
<TABLE>
<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.
Nancy A. Eckl (33) Vice President Vice President, AMR Investment Services, Inc.
(December 1990-Present).
Michael W. Fields (42) Vice President Vice President, AMR Investment Services, Inc.
(August 1988-Present).
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.
Janice B. Schwarz (36) Assistant Senior Compliance Analyst, AMR Investment
Secretary Services, Inc. (December 1990-Present).
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.
As compensation for their service to the Trusts, the Independent
Trustees and their spouses receive free air travel from American Airlines,
Inc., an affiliate of the Manager and reimbursement for expenses incurred in
attending Board meetings. The Trusts do not pay for these travel arrangements.
However, the Trusts compensate each independent Trustee with payments in an
amount equal to the Trustees' income tax on the
4
<PAGE> 36
value of this free airline travel. These amounts are reflected in the following
table for the fiscal year ended October 31, 1995.
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Estimated
Compensation Benefits Accrued as Annual Total Compensation
From the Part of the Benefits Upon From AAdvantage
Name of Trustee AAdvantage Trust Trusts' Expenses Retirement Funds 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(1) $0 $0 $0 $0
</TABLE>
Because the mileage trust did not begin active operations until November 1,
1995, it did not incur any trustee expenses for the fiscal year ended October
31, 1995.
MANAGEMENT, ADMINISTRATIVE SERVICES AND DISTRIBUTION FEES
As described more fully in the Prospectus, the Manager is paid a
management fee as compensation for its administrative services, for paying
investment advisory fees and for providing the Portfolios with advisory and
asset allocation services. Management fees for the AAdvantage Trust 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, $7,603,000 of
which approximately $3,985,000 was paid by the Manager to the other investment
advisers. Management fees in the amount of approximately $214,000 and $29,000
were waived by the Manager during the fiscal years ended October 31, 1994 and
1995, respectively. These amounts include payments by other mutual funds in
the AAdvantage 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 AAdvantage Trust.
Administrative services fees for the AAdvantage Trust for the fiscal years
ended October 31 were approximately as follows: 1993, $1,544,000; 1994,
$1,473,000 and 1995, $2,731,000. Administrative service fees in the amount of
approximately $14,000 and $9,000 were waived by the Manager during the fiscal
years ended October 31, 1994 and 1995, respectively. These amounts include
payments other mutual funds in the AAdvantage Trust other than the Funds.
For the fiscal year ended October 31, 1995, the Mileage Trust did not
pay any management or administrative services fees because it did not commence
active operations until November 1, 1995.
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 Trusts.
REDEMPTIONS IN KIND
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.
__________________________________
(1) Mr. Staubach became a Trustee in May 1995 and did not receive tax
reimbursement payments during fiscal year 1995 for his travel during that
year.
5
<PAGE> 37
EXPENSE LIMITATIONS
Subject to certain state law expense limits, each 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 applicable 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. The portfolio instruments held by each Fund's
corresponding Portfolio 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 Funds' corresponding 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 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
certain other income ;
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
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.
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
6
<PAGE> 38
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.
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
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
Municipal Money Market 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 Municipal Money Market Fund
intends to continue to satisfy this requirement. The aggregate dividends
excludable from shareholders' gross income may not exceed the Municipal Money
Market Fund's net tax-exempt income. The shareholders' treatment of dividends
from the Municipal Money Market 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.
7
<PAGE> 39
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 Municipal Money Market 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.
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
The Platinum Class of the AAdvantage Trust commenced operations on
November 7, 1995 and the Platinum Class of the Mileage Trust commenced
operations on January 29, 1996. For purposes of advertising performance, and
in accordance with Securities and Exchange Commission staff interpretations,
the Funds in the AAdvantage Trust have adopted the performance of the
Institutional Class of the Funds in the AAdvantage Trust for periods prior to
the inception date. The Mileage Fund has adopted the performance of the
American AAdvantage Money Market Mileage Fund - Mileage Class for periods prior
to the inception date. The performance figures for the Platinum Class will be
lower, because the performance figures for the other classes (except for the
Mileage Fund) 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:
EFFECTIVE YIELD = [ (BASE PERIOD RETURN + 1)365/7 ] - 1
The current and effective yields for the Funds are as follows:
8
<PAGE> 40
<TABLE>
<CAPTION>
Current daily Current yield for Effective yield for
yield as of the seven-day the seven-day
February 29, period ended period ended
1996 February 29, 1996 February 29, 1996
<S> <C> <C> <C>
Platinum Class
--------------
Money Market Fund 4.70% 4.65% 4.76%
Municipal Money Market Fund 2.69% 2.70% 2.74%
U.S. Treasury Money Market Fund 4.54% 4.45% 4.55%
Mileage Fund 4.54% 4.49% 4.59%
</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 Municipal Money Market Fund for the seven day period ending February 29,
1996 were 4.47% and 4.54%, 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 were as follows for
the periods indicated:
<TABLE>
<CAPTION>
For the one- For the period from
year period For the five-year the commencement of
ended period ended active operations
February 29, February 29, through February 29,
1996(1) 1996(1)(2) 1996(1)
<S> <C> <C> <C>
Platinum Class
--------------
Money Market Fund 5.77% 4.74% 6.22%
Municipal Money Market Fund 3.58% N/A 3.09%
U.S. Treasury Money Mkt. Fund 5.48% N/A 4.11%
Mileage Fund 5.57% 4.52% 6.09%
</TABLE>
(1) Performance of the Funds in the AAdvantage Trust represent the
total returns achieved by the Institutional Class from the inception
date of each Fund up to the inception date of the Platinum Class and
the returns of the Platinum Class since the inception date of the
Class (11/7/95). Performance of the Mileage Fund represents the total
returns achieved by the American AAdvantage Money Market Fund -
Institutional Class (9/1/87-10/31/91); the American AAdvantage Money
Market Fund - Mileage Class (11/1/91-10/31/95); the American
AAdvantage Money Market Mileage Fund - Mileage Class (11/1/95-1/28/96)
and the American AAdvantage Money Market Mileage Fund - Platinum Class
since 1/29/96. Due to different expense ratios, total returns shown
may be higher than they would have been had the Platinum Class been in
place since the inception of the Fund. Inception dates are as
follows: American AAdvantage Money Market Fund - Institutional Class
September 1, 1987; American AAdvantage Municipal Money Market Fund -
Institutional Class, November 10, 1993; and American AAdvantage U.S.
Treasury Money Market Fund - Institutional Class, March 2, 1992.
(2) The American AAdvantage Municipal Money Market Fund and U.S.
Treasury Money Market Fund had not commenced active operations as of
March 1, 1991.
9
<PAGE> 41
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. Information concerning
broker-dealers who sell the Funds may also appear in advertisements for the
Funds, including their ranking as established by various publications compared
to other broker-dealers.
DESCRIPTION OF THE TRUSTS
The AAdvantage Trust, organized on January 16, 1987, and the Mileage
Trust, organized on February 22, 1995, (originally named American AAdvantage
Funds II), are entities 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,
each 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 Trusts
also provide that the Trusts 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 own more than 5% of the outstanding shares of a
Fund as of March 31, 1996:
<TABLE>
<CAPTION>
Total Fund
----------
<S> <C>
American AAdvantage Money Market Fund
-------------------------------------
NationsBank Trust Department (Securities Lending Assets) 13%
P.O. Box 83222, BC 492-16
</TABLE>
10
<PAGE> 42
<TABLE>
<S> <C>
American AAdvantage Money Market Fund
-------------------------------------
Dallas, Texas 75283
City of Chicago International Airport Revenue Bonds 7%
Harris Trust and Savings Bank (Indenture Trust Division)
P.O. Box 755
Chicago, Illinois 60690
Alliance Airport Authority 6%
Bank One, Texas, NA (Corporate Trust Department)
500 Throckmorton
Fort Worth, Texas 76113-2604
Dallas/Fort Worth International Airport Revenue Bonds 6%
AmeriTrust Texas, N.A. (Corporate Trust Department)
P.O. Box 2320
Dallas, TX 75221-2320
American AAdvantage U.S. Treasury Money Market Fund
---------------------------------------------------
Lone Star Airport Improvement Authority 8%
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
Grapevine Industrial Development Corp 7%
First National Bank of Chicago
One First National Place
Chicago, Illinois 60670
Hare & Co. 7%
Bank of New York
One Wall Street
New York, NY 10286
All Saints Hospital 6%
1400 8th Avenue
Fort Worth, Texas 76104
</TABLE>
OTHER INFORMATION
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.
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.
11
<PAGE> 43
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.
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.
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
12
<PAGE> 44
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.
(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.
(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
13
<PAGE> 45
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 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 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.
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 two highest ratings
for long-term obligations are AAA and AA. 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.
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.
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
14
<PAGE> 46
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.
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.
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 or A-2.
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.
15
<PAGE> 47
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 (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.
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.
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.
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<PAGE> 48
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 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.
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<PAGE> 49
FINANCIAL STATEMENTS
The American AAdvantage Funds' Annual Report to shareholders for the
fiscal year ended October 31, 1995, as audited by Ernst & Young, LLP, is
supplied with the SAI, and the financial statements and accompanying notes
appearing therein are incorporated by reference in this SAI. The Mileage
Trust's audited financial statements as of September 13, 1995, which have been
audited by Ernst & Young LLP and the unaudited financial statements of the
American AAdvantage Money Market Mileage Fund for the period ended February 29,
1996 are attached to this SAI.
18
<PAGE> 50
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 Trusts . . . . . . . . . . . . . . . . . . . . . . . .
Control Persons and 5% Shareholders . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
19
<PAGE> 51
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> 52
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
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<PAGE> 53
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> 54
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> 55
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> 56
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>
* 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.
6
<PAGE> 57
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> 58
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> 59
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> 60
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> 61
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> 62
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> 63
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> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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> 71
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> 72
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> 73
AMERICAN AADVANTAGE GROWTH AND INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
-------- --------
(dollars in thousands)
<S> <C> <C>
CONGLOMERATES - 2.69%
Harsco Corporation.............. 45,000 $ 2,374
Minnesota Mining and
Manufacturing Company......... 70,000 3,981
Teledyne, Incorporated.......... 140,850 3,504
Textron, Incorporated........... 163,700 11,254
--------
TOTAL CONGLOMERATES......... 21,113
--------
ELECTRICAL EQUIPMENT - 1.23%
General Electric Corporation.... 34,300 2,169
Honeywell, Incorporated......... 46,000 1,932
Sunbeam Corporation............. 200,000 3,000
Westinghouse Electric
Corporation................... 180,700 2,552
--------
TOTAL ELECTRICAL
EQUIPMENT................. 9,653
--------
MACHINERY - 0.78%
Cummins Engine, Incorporated.... 29,600 1,040
Deere and Company............... 30,000 2,681
Tecumseh Products Company....... 50,900 2,392
--------
TOTAL MACHINERY............. 6,113
--------
OFFICE EQUIPMENT - 2.32%
Apple Computer.................. 39,900 1,449
International Business Machines
Corporation................... 15,000 1,459
Pitney Bowes, Incorporated...... 80,000 3,490
Xerox Corporation............... 91,100 11,820
--------
TOTAL OFFICE
EQUIPMENT................. 18,218
--------
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> 74
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> 75
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> 76
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> 77
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
--------
</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
OBLIGATIONS............. 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> 78
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> 79
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> 80
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> 81
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> 82
AMERICAN AADVANTAGE MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Old Kent Bank & Trust Company,
Grand Rapids, Variable Rate,
5.9375%,
Due 4-4-1996................ $ 20,000 $ 20,000
Shawmutt Bank, Connecticut,
Variable Rate, 5.9375%,
Due 11-21-1995.............. 90,000 90,000
----------
TOTAL BANK NOTES.......... 222,000
----------
MASTER NOTE (NOTE A) - 4.67%
Lehman Brothers Holdings Inc.,
Variable Rate Demand,
6.025%, Due 5-31-1996 (Note
C).......................... 63,000 63,000
----------
<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.
(C) Obligation is subject to an unconditional put back to the issuer with seven
calendar days notice.
ABBREVIATION:
L.P. -- Limited Partnership
See accompanying notes
32
<PAGE> 83
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> 84
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> 85
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> 86
(This page intentionally left blank)
36
<PAGE> 87
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> 88
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> 89
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> 90
(This page intentionally left blank)
40
<PAGE> 91
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> 92
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> 93
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> 94
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> 95
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> 96
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> 97
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> 98
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> 99
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> 100
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:
<TABLE>
<CAPTION>
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> 101
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> 102
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> 103
- --------------------------------------------------------------------------------
<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> 104
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> 105
- --------------------------------------------------------------------------------
<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> 106
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> 107
- --------------------------------------------------------------------------------
<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(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> 108
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> 109
- --------------------------------------------------------------------------------
<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> 110
AMERICAN AADVANTAGE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Institutional Class
----------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------
1991 1992 1993 1994(1) 1995
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ---------- ---------- ---------- ----------
Net investment income............................ 0.07 0.04 0.03 0.04 0.06
Less dividends from net investment income........ (0.07) (0.04) (0.03) (0.04) (0.06)
-------- ---------- ---------- ---------- ----------
Net asset value, end of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========== ========== ========== ==========
Total return (annualized).......................... 7.18% 4.41% 3.31% 3.85% 5.96%
======== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period
(in thousands)................................. $715,280 $2,223,829 $2,882,947 $1,893,144 $1,206,041
Ratios to average net assets (annualized)(4)(5):
Expenses....................................... 0.24% 0.26% 0.23% 0.21% 0.23%
Net investment income.......................... 6.93% 4.06% 3.23% 3.63% 5.79%
</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 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> 111
- --------------------------------------------------------------------------------
<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> 112
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> 113
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> 114
[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> 115
AMERICAN AADVANTAGE MILEAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets:
Investment in Portfolio, at value............ $ 1,843,281 $ 4,320,336 $ 2,079,787 $ 1,565,395
Receivable for expense
reimbursement (Note 2)..................... 12,818 13,782 11,536 11,055
Deferred organization costs.................. 8,849 8,849 8,849 8,849
------------ ------------ ------------ ------------
Total assets................................... 1,864,948 4,342,967 2,100,172 1,585,299
------------ ------------ ------------ ------------
Liabilities:
Accrued organization costs................... 9,521 9,520 9,514 9,520
Dividends payable............................ - - - 7,687
Management fees payable (Note 2)............. 1,125 2,643 1,327 956
Other liabilities............................ 13,844 17,331 14,314 11,536
------------ ------------ ------------ ------------
Total liabilities.............................. 24,490 29,494 25,155 29,699
------------ ------------ ------------ ------------
Net Assets:
Applicable to 123,217, 244,849,
144,923 and 159,128 shares of
beneficial interest outstanding (no par
value), respectively...................... $ 1,840,458 $ 4,313,473 $ 2,075,017 $ 1,555,600
============ ============ ============ ============
Net asset value, offering and redemption
price per share.............................. $ 14.94 $ 17.62 $ 14.32 $ 9.78
============ ============ ============ ============
Analysis of Net Assets:
Paid in capital.............................. 1,757,616 4,010,807 1,940,842 1,567,867
Accumulated undistributed income:
Net investment income ..................... 8,805 12,338 (6,951) -
Net realized gain on investments........... 24,827 58,073 14,418 10,137
Unrealized appreciation
of investments........................... 49,210 232,255 126,708 (22,404)
------------ ------------ ------------ ------------
Net assets..................................... $ 1,840,458 $ 4,313,473 $ 2,075,017 $ 1,555,600
============ ============ ============ ============
</TABLE>
See accompanying notes
<PAGE> 116
AMERICAN AADVANTAGE MILEAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Municipal U.S. Treasury
Market Money Market Money Market
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investment in Portfolio, at value............ $104,539,745 $ 24,446,792 $ 7,082,401
Receivable for expense
reimbursement (Note 2)..................... 18,289 9,194 14,327
Deferred organization costs.................. 8,849 8,849 8,849
------------ ------------ ------------
Total assets................................... 104,566,883 24,464,835 7,105,577
------------ ------------ ------------
LIABILITIES:
Accrued organization costs................... 9,504 9,520 9,520
Payable for fund shares redeemed............. - - -
Dividends payable............................ 384,200 51,572 27,576
Management and administrative
services fees payable (Note 2)............ 9,350 3,610 1,161
Other liabilities............................ 159,361 41,749 21,578
------------ ------------ ------------
Total liabilities.............................. 562,415 106,451 59,835
------------ ------------ ------------
NET ASSETS:
Applicable to 104,004,468, 24,358,384
and 7,045,742 shares of beneficial
interest outstanding (no par
value), respectively...................... $104,004,468 $ 24,358,384 $ 7,045,742
============ ============ ============
Net asset value, offering and redemption
price per share.............................. $ 1.00 $ 1.00
============ ============
MILEAGE CLASS:
Net asset value, offering and redemption
price per share (98,358,115 shares
outstanding)................................. $ 1.00 N/A N/A
============
PLATINUM CLASS:
Net asset value, offering and redemption
price per share (5,646,353 shares
outstanding)................................. $ 1.00 N/A N/A
============
ANALYSIS OF NET ASSETS:
Paid in capital.............................. $104,004,468 $ 24,358,384 $ 7,045,742
============ ============ ============
</TABLE>
See accompanying notes
<PAGE> 117
AMERICAN AADVANTAGE MILEAGE FUNDS
STATEMENTS OF OPERATIONS
PERIOD FROM NOVEMBER 1, 1995 THROUGH FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment Income Allocated from Portfolio:
Allocated interest income.......................... $ 12,043 $ 3,585 $ 1,897 $ 26,940
Allocated dividend income (net of foreign
taxes of $798 in International Equity Fund)..... 9,661 34,337 6,807 -
Allocated income from securities lending,
net............................................. 20 21 115 4
Allocated Portfolio expenses (net of
reimbursement of $5,921 for the Municipal
Money Market Fund).............................. (1,631) (3,598) (3,024) (1,163)
------------ ------------ ------------ ------------
Total investment income.............................. 20,093 34,345 5,795 25,781
------------ ------------ ------------ ------------
Fund Expenses:
Management fees (Note 2)........................... 1,125 2,643 1,327 956
Administrative service fees - Platinum Class
(Note 2)........................................ - - - -
Transfer agent fees................................ 1,506 1,750 1,566 1,404
Transfer agent fees - Mileage Class................ - - - -
Professional fees.................................. 2,119 2,174 2,137 2,087
Registration fees and expenses..................... 8,868 10,445 9,037 6,903
Distribution fees.................................. 1,125 2,643 1,327 956
Distribution fees - Mileage Class.................. - - - -
Distribution fees - Platinum Class................. - - - -
Other.............................................. 898 991 912 858
------------ ------------ ------------ ------------
Total fund expenses.......................... 15,641 20,646 16,306 13,164
------------ ------------ ------------ ------------
Less reimbursement of expenses (Note 2)............ 12,818 13,782 11,536 11,055
------------ ------------ ------------ ------------
Net fund expenses.................................... 2,823 6,864 4,770 2,109
------------ ------------ ------------ ------------
Net investment income................................ 17,270 27,481 1,025 23,672
------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) from Portfolio:
Net realized gain on investments and
foreign currency transactions................... 24,827 58,073 14,418 10,137
Net unrealized appreciation (depreciation) of
investments and foreign currency
translations.................................... 49,210 232,255 126,708 (22,404)
------------ ------------ ------------ ------------
Net gain (loss) on investments....................... 74,037 290,328 141,126 (12,267)
------------ ------------ ------------ ------------
Increase in net assets resulting from
operations......................................... $ 91,307 $ 317,809 $ 142,151 $ 11,405
============ ============ ============ ============
<CAPTION>
Municipal U.S. Treasury
Money Money Money
Market Market Market
Fund Fund Fund
------------ ------------ -------------
<S> <C> <C> <C>
Investment Income Allocated from Portfolio:
Allocated interest income.......................... $ 2,166,972 $ 282,806 $ 130,971
Allocated dividend income (net of foreign
taxes of $798 in International Equity Fund)..... - - -
Allocated income from securities lending,
net............................................. - - -
Allocated Portfolio expenses (net of
reimbursement of $5,921 for the Municipal
Money Market Fund).............................. (63,193) (10,546) (5,315)
------------ ------------ -------------
Total investment income.............................. 2,103,779 272,260 125,656
------------ ------------ -------------
Fund Expenses:
Management fees (Note 2)........................... 7,708 3,610 1,161
Administrative service fees - Platinum Class
(Note 2)........................................ 1,642 - -
Transfer agent fees................................ - 5,895 2,870
Transfer agent fees - Mileage Class................ 30,607 - -
Professional fees.................................. 10,845 3,446 2,535
Registration fees and expenses..................... 25,711 12,718 9,678
Distribution fees.................................. - 18,051 5,804
Distribution fees - Mileage Class.................. 82,960 - -
Distribution fees - Platinum Class................. 746 - -
Other.............................................. 8,777 2,311 1,363
------------ ------------ -------------
Total fund expenses.......................... 168,996 46,031 23,411
------------ ------------ -------------
Less reimbursement of expenses (Note 2)............ 18,289 9,194 14,327
------------ ------------ -------------
Net fund expenses.................................... 150,707 36,837 9,084
------------ ------------ -------------
Net investment income................................ 1,953,072 235,423 116,572
------------ ------------ -------------
Realized and Unrealized Gain (Loss) from Portfolio:
Net realized gain on investments and
foreign currency transactions................... 1,843 - 1,535
Net unrealized appreciation (depreciation) of
investments and foreign currency
translations.................................... - - -
------------ ------------ -------------
Net gain (loss) on investments....................... 1,843 - 1,535
------------ ------------ -------------
Increase in net assets resulting from
operations......................................... $ 1,954,915 $ 235,423 $ 118,107
============ ============ =============
</TABLE>
See acompanying notes
<PAGE> 118
AMERICAN AADVANTAGE MILEAGE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM NOVEMBER 1, 1995 THROUGH FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 17,270 $ 27,481 $ 1,025 $ 23,672
Net realized gain on investments
and foreign currency transactions
allocated from Portfolio....................... 24,827 58,073 14,418 10,137
Net unrealized appreciation
(depreciation) of investments and
foreign currency translations allocated
from Portfolio................................. 49,210 232,255 126,708 (22,404)
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations.................................... 91,307 317,809 142,151 11,405
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................. (8,465) (15,143) (7,976) (23,672)
Net investment income - Mileage Class............. - - - -
Net investment income - Platinum Class............ - - - -
------------ ------------ ------------ ------------
Total distributions to shareholders.................. (8,465) (15,143) (7,976) (23,672)
------------ ------------ ------------ ------------
Capital Share Transactions:
Proceeds from sales of shares..................... 1,817,157 4,128,314 2,233,114 1,633,429
Reinvestment of dividends and distributions....... 7,794 14,246 7,432 15,893
Cost of shares redeemed........................... (68,335) (132,753) (300,704) (82,455)
------------ ------------ ------------ ------------
Net increase in net assets
from capital share transactions.................... 1,756,616 4,009,807 1,939,842 1,566,867
------------ ------------ ------------ ------------
Total increase in net assets......................... 1,839,458 4,312,473 2,074,017 1,554,600
NET ASSETS:
Beginning of period............................... 1,000 1,000 1,000 1,000
------------ ------------ ------------ ------------
End of period *................................... $ 1,840,458 $ 4,313,473 $ 2,075,017 $ 1,555,600
============ ============ ============ ============
* Includes undistributed net investment
income of..................................... $ 8,805 $ 12,338 $ (6,951) $ -
============ ============ ============ ============
<CAPTION>
Municipal U.S. Treasury
Money Money Money
Market Market Market
Fund Fund Fund
------------ ------------ -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 1,953,072 $ 235,423 $ 116,572
Net realized gain on investments
and foreign currency transactions
allocated from Portfolio....................... 1,843 - 1,535
Net unrealized appreciation
(depreciation) of investments and
foreign currency translations allocated
from Portfolio................................. - - -
------------ ------------ -------------
Net increase in net assets resulting
from operations.................................... 1,954,915 235,423 118,107
------------ ------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................. - (235,423) (118,107)
Net investment income - Mileage Class............. (1,941,668) - -
Net investment income - Platinum Class............ (13,247) - -
------------ ------------ -------------
Total distributions to shareholders.................. (1,954,915) (235,423) (118,107)
------------ ------------ -------------
Capital Share Transactions:
Proceeds from sales of shares..................... 135,650,850 27,567,889 8,867,767
Reinvestment of dividends and distributions....... 1,500,197 203,057 105,890
Cost of shares redeemed........................... (33,240,579) (3,413,562) (1,928,915)
------------ ------------ -------------
Net increase in net assets
from capital share transactions.................... 103,910,468 24,357,384 7,044,742
------------ ------------ -------------
Total increase in net assets......................... 103,910,468 24,357,384 7,044,742
NET ASSETS:
Beginning of period............................... 94,000 1,000 1,000
------------ ------------ -------------
End of period *................................... $104,004,468 $ 24,358,384 $ 7,045,742
============ ============ =============
* Includes undistributed net investment
income of..................................... $ - $ - $ -
============ ============ =============
</TABLE>
See accompanying notes
<PAGE> 119
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American AAdvantage Mileage Funds (the "Trust") is organized as a
Massachusetts business trust under a Declaration of Trust dated February 14,
1995 and is registered under the Investment Company Act of 1940 (the "Act"), as
amended, as a no-load, open-end, management investment company. On July 19,
1995, the Trust's Board of Trustees (the "Board") created seven separate series
as follows: American AAdvantage Balanced Mileage Fund, American AAdvantage
Growth and Income Mileage Fund, American AAdvantage International Equity
Mileage Fund, American AAdvantage Limited-Term Income Mileage Fund, American
AAdvantage Money Market Mileage Fund, American AAdvantage Municipal Money
Market Mileage Fund and American AAdvantage U.S. Treasury Money Market Mileage
Fund (each a "Fund" and collectively the "Funds"). The Funds commenced active
operations on November 1, 1995. The Money Market Mileage Fund commenced sales
of a second class of shares designated as "Platinum Class" on January 29, 1996.
At the same time, the existing shares of the Money Market Mileage Fund were
redesignated as "Mileage Class" shares.
Each Fund invests all of its investable assets in the corresponding
portfolio of the AMR Investment Services Trust, an open-end diversified
management investment company, as follows:
<TABLE>
<CAPTION>
American AAdvantage: -) invests assets in -) AMR Investment Services Trust:
- -------------------- ------------------------------
<S> <C>
Balanced Mileage Fund Balanced Portfolio
Growth and Income Mileage Fund Growth and Income Portfolio
International Equity Mileage Fund International Equity Portfolio
Limited-Term Income Mileage Fund Limited-Term Income Portfolio
Money Market Mileage Fund Money Market Portfolio
Municipal Money Market Mileage Fund Municipal Money Market Portfolio
U.S. Treasury Money Market Mileage Fund U.S. Treasury Money Market Portfolio
</TABLE>
Each AMR Investment Services Portfolio has the same investment
objectives as its corresponding Fund. The value of such investment reflects
each Fund's proportionate interest in the net assets of the corresponding
portfolio (0.22%, 0.46%, 0.69%, 0.87%, 6.27%, 34.92% and 5.46% at February 29,
1996 of the AMR Investment Services Trust Balanced, Growth and Income,
International Equity, Limited-Term Income, Money Market, Municipal Money
Market, and U.S. Treasury Money Market Portfolios (each a "Portfolio" and
collectively the "Portfolios", respectively). The financial statements of the
Portfolios are included elsewhere in this report and should be read in
conjunction with the Funds' financial statements.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services.
The following is a summary of the significant accounting policies
followed by the Funds.
Valuation of Investments
Valuation of securities by the Portfolios is discussed in Note 1 of
the Portfolios' Notes to Financial Statements which are included elsewhere in
this report.
Investment Income and Dividends to Shareholders
Each Fund records its share of net investment income, and realized and
unrealized gain and loss in the Portfolio each day. All net investment income
and realized and unrealized gain and loss of each Portfolio are allocated pro
rata among the corresponding Fund and other investors in each Portfolio at the
time of such determination. Dividends from net investment income of the
Balanced, Growth and Income, and International Equity Mileage Funds normally
will be declared and paid annually. The Limited-Term Income Mileage Fund
<PAGE> 120
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
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, Municipal Money Market and U.S. Treasury Money
Market Mileage Funds (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.
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.
Deferred Organization Expenses
Expenses incurred by a Portfolio in connection with its organization
are being amortized on a straight-line basis over a five-year period.
Expenses
Expenses directly attributable to a Fund are charged to that Fund's
operations. Expenses directly attributable to a Class of shares are charged to
that Class. Expenses incurred by the Trust with respect to any two or more of
the Funds are allocated in proportion to the net assets of each Fund, except
where allocations of direct expenses to each Fund can otherwise be made fairly.
Each share of each Fund, regardless of class, bears equally those expenses
that are allocated to the Fund as a whole.
Valuation of Shares
The price per share is calculated separately for each Fund on each day
on which shares are offered for sale and orders accepted or upon receipt of a
redemption request. Net asset value per share is computed by dividing the
value of a Fund's total assets (which includes the value of the Fund's
investment in its corresponding Portfolio), less liabilities, by the number of
Fund shares outstanding. With respect to a class of the Money Market Mileage
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.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Manager and the Trust entered into a Management Agreement which
obligates the Manager to provide or oversee administrative and management
services to the Funds. As compensation for performing the duties required
under the Management Agreement, the Manager receives an annualized fee of .25%
of the average daily net assets of the Balanced, Growth and Income,
International Equity, and Limited-Term Income Mileage Funds and .05% of the net
assets of each of the Money Market Funds.
<PAGE> 121
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
Administrative Services Plan
The Trust has adopted an Administrative Services Plan with respect to
the Platinum Class of the Money Market Mileage Fund. As compensation for
providing administrative services, the Manager receives an annual fee of .55%
of the average daily net assets of the Money Market Mileage Fund - Platinum
Class.
Distribution Plan
The Trust has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Act. A separate plan has been adopted by the Mileage
Class and Platinum Class of the Money Market Mileage Fund. Under the Plan, as
compensation for distribution assistance, the Manager receives an annual fee of
.25% of the average daily net assets of each Class or Fund. 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 period ended February 29, 1996, the
Manager waived distribution fees totaling $1,125, $2,643, $1,327, $956, $9,194
and $5,804 for the Balanced, Growth and Income, International Equity,
Limited-Term Income, Municipal Money Market and U.S. Treasury Money Market
Mileage Funds, respectively. During the same period, the Manager waived
$18,021 and $268 for the Money Market Mileage Fund - Mileage Class and the
Money Market Mileage Fund - Platinum Class, respectively.
Other
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
period ended February 29, 1996, the cost of air transportation was not material
to any of the Funds. At February 29, 1996, Trustees and officers of the trust
as a group owned 2% and 1% of the International Equity and Money Market Mileage
Funds, respectively.
Reimbursement of Expenses
For the period ending February 29, 1996, the Manager will reimburse
expenses totaling $11,693, $11,139, $10,209, $10,099 and $8,523 for the
Balanced, Growth and Income, International Equity, Limited-Term Income and U.S.
Treasury Money Market Mileage Funds, respectively.
3. CAPITAL SHARE TRANSACTIONS
The tables below summarizes the activity in capital shares for the
period ended February 29, 1996.
<TABLE>
<CAPTION>
Balanced Growth and Income International Equity Limited-Term Income
Mileage Fund Mileage Fund Mileage Fund Mileage Fund
------------ ------------ ------------ ------------
Shares Amount Shares Amount Shares Amount Shares Amount
------- ---------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 127,292 $1,817,157 251,791 $4,128,314 166,060 $2,233,114 165,849 $1,633,429
Reinvestment of 535 7,794 846 14,246 540 7,432 1,605 15,893
Shares redeemed (4,660) (68,335) (7,838) (132,753) (21,727) (300,704) (8,376) (82,455)
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net increase (decrease)
shares outstanding 123,167 $1,756,616 244,799 $4,009,807 144,873 $1,939,842 159,078 $1,566,867
======= ========== ======= ========== ======= ========== ======= ==========
</TABLE>
<PAGE> 122
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
The tables below summarizes the activity in capital shares for the
period ended February 29, 1996 for each of the Money Market Mileage Funds.
Each shares is valued at $1.00.
<TABLE>
<CAPTION>
Money Market Municipal
Mileage Fund Money U.S. Treasury
------------------------------ Market Money Market
Mileage Class Platinum Class Mileage Fund Mileage Fund
------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold 129,761,719 5,889,131 27,567,889 8,867,767
reinvestment of 1,498,927 1,270 203,057 105,890
Shares redeemed (32,996,531) (244,048) (3,413,562) (1,928,915)
----------- --------- ---------- ----------
Net increase (decrease)
shares outstanding 98,264,115 5,646,353 24,357,384 7,044,742
=========== ========= ========== ==========
</TABLE>
<PAGE> 123
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Par
Amount Value
----------- ------------
(dollars in thousands)
<S> <C> <C>
U.S..GOVERNMENT & AGENCY OBLIGATIONS - 22.96%
Federal Home Loan Mortgage Corporation,
7.71%, Due 6/21/2004 ................................ $ 1,999 $ 2,076
Federal Home Loan Mortgage Corporation,
7.5%, Due 12/1/2025 .................................. 5,190 5,244
Federal Home Loan Mortgage Corporation,
6.50%, Due 10/15/2006 ................................ 1,499 1,497
Federal Home Loan Mortgage Corporation,
7.00%, Due 4/15/2019 ................................ 999 1,005
Federal National Mortgage Association,
7.0%, Due 12/1/2025 .................................. 2,484 2,456
Federal National Mortgage Association, MTN
6.36%, Due 8/16/2000 ................................ 2,090 2,123
Federal National Mortgage Association,
6.0%, Due 11/1/2008 .................................. 995 966
Federal National Mortgage Association,
6.50%, Due 5/15/2014 ................................ 400 400
Federal National Mortgage Association,
ARM, 6.366%, Due 7/1/2018 ............................ 1,759 1,773
Federal National Mortgage Association,
6.75%, Due 10/25/2018 ................................ 500 500
Federal National Mortgage Association,
10.45%, Due 4/25/2019 ................................ 262 283
Federal National Mortgage Association,
8.0%, Due 4/1/2023 .................................. 1,500 1,538
Federal National Mortgage Association,
8.00%, Due 10/1/2023 ................................ 4,777 4,902
Federal National Mortgage Association,
ARM, 7.50%, Due 12/1/2023 ............................ 1,369 1,385
Federal National Mortgage Association,
ARM, 7.345%, Due 1/1/2024 ............................ 1,710 1,729
Federal National Mortgage Association,
8.00%, Due 10/1/2024 ................................ 3,036 3,115
Federal National Mortgage Association,
8%, Due 3/1/2025 .................................... 1,653 1,697
Federal National Mortgage Association,
ARM, 7.277%, Due 4/1/2025 ............................ 427 438
Government National Mortgage Association,
10.50%, Due 9/15/1998 ................................ 15 16
Government National Mortgage Association,
9.00%, Due 10/15/2016 ................................ 1,040 1,096
Government National Mortgage Association,
8.50%, Due 3/15/2020 ................................ 350 365
Government National Mortgage Association,
8.50%, Due 2/15/2022 ................................ 716 747
Government National Mortgage Association,
8.00%, Due 3/1/2022 .................................. 923 951
</TABLE>
See accompanying notes
<PAGE> 124
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Par
Amount Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
Government National Mortgage Association,
8.50%, Due 1/15/2023 ............................ $ 223 $ 233
Government National Mortgage Association,
8.00%, Due 2/1/2023 .............................. 2,833 2,917
Government National Mortgage Association,
8.00%, Due 3/15/2023 ............................ 690 710
Government National Mortgage Association,
7.50%, Due 4/15/2023 ............................ 851 861
Government National Mortgage Association,
8.00%, Due 5/15/2023 ............................ 685 706
Government National Mortgage Association,
8.00%, Due 5/15/2023 ............................ 1,706 1,757
U.S. Treasury Bond,
8.75%, Due 8/15/2020 ............................ 4,300 5,383
U.S. Treasury Bonds,
11.625%, Due 11/15/2004 .......................... 11,370 15,552
U.S. Treasury Bonds,
7.50%, Due 2/15/2005 ............................ 3,345 3,652
U.S. Treasury Bonds,
13.875%, Due 5/15/2011 .......................... 1,230 1,927
U.S. Treasury Bonds,
10.375%, Due 11/15/2012 .......................... 1,500 1,986
U.S. Treasury Bonds,
8.75%, Due 5/15/2017 ............................ 4,905 6,085
U.S. Treasury Bonds,
8.125%, Due 8/15/2019 ............................ 7,250 8,521
U.S. Treasury Bonds,
8.125%, Due 8/15/2021 ............................ 2,675 3,152
U.S. Treasury Coupon Strips,
Due 11/15/2008 .................................. 796 350
U.S. Treasury Coupon Strips,
Due 5/15/2011 .................................... 4,000 1,464
U.S. Treasury Coupon Strips,
Due 8/15/2018 .................................... 4,000 862
U.S. Treasury Coupon Strips,
Due 8/15/2019 .................................... 11,500 2,316
U.S. Treasury Coupon Strips,
Due 11/15/2019 .................................. 6,000 1,188
U.S. Treasury Notes,
5.625%, Due 6/30/1997 ............................ 800 804
U.S. Treasury Notes,
5.50%, Due 7/31/1997 ............................ 3,300 3,310
U.S. Treasury Notes,
7.375%, Due 11/15/1997 .......................... 1,000 1,031
U.S. Treasury Notes,
5.625%, Due 1/31/1998 ............................ 1,400 1,404
U.S. Treasury Notes,
6.125%, Due 5/15/1998 ............................ 5,330 5,407
</TABLE>
See accompanying notes
<PAGE> 125
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Par
Amount Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
U.S. Treasury Notes,
5.125%, Due 6/30/1998 ............................ $ 1,000 $ 993
U.S. Treasury Notes,
5.125%, Due 11/30/1998 .......................... 1,650 1,632
U.S. Treasury Notes,
5.875%, Due 3/31/1999 ............................ 2,750 2,771
U.S. Treasury Notes,
7.00%, Due 4/15/1999 ............................ 1,800 1,871
U.S. Treasury Notes,
6.75%, Due 6/30/1999 ............................ 5,000 5,169
U.S. Treasury Notes,
6.375%, Due 7/15/1999 ............................ 1,500 1,534
U.S. Treasury Notes,
7.125%, Due 9/30/1999 ............................ 5,670 5,938
U.S. Treasury Notes,
7.75%, Due 1/31/2000 ............................ 2,000 2,141
U.S. Treasury Notes,
5.50%, Due 4/15/2000 ............................ 1,500 1,491
U.S. Treasury Notes,
6.125%, Due 7/31/2000 ............................ 4,820 4,888
U.S. Treasury Notes,
6.125%, Due 9/30/2000 ............................ 4,590 4,655
U.S. Treasury Notes,
8.50%, Due 11/15/2000 ............................ 5,500 6,114
U.S. Treasury Notes,
5.625%, Due 11/30/2000 .......................... 3,000 2,982
U.S. Treasury Notes,
7.50%, Due 11/15/2001 ............................ 3,000 3,230
U.S. Treasury Notes,
6.375%, Due 8/15/2002 ............................ 9,000 9,217
U.S. Treasury Notes,
6.25%, Due 2/15/2003 ............................ 7,600 7,714
U.S. Treasury Notes,
5.75%, Due 8/15/2003 ............................ 2,000 1,968
U.S. Treasury Notes,
5.875%, Due 2/15/2004 ............................ 2,000 1,977
U.S. Treasury Notes,
7.25%, Due 5/15/2004 ............................ 1,500 1,610
U.S. Treasury Notes,
7.875%, Due 11/15/2004 .......................... 1,500 1,673
U.S. Treasury Notes,
6.50%, Due 5/15/2005 ............................ 6,000 6,144
U.S. Treasury Notes,
6.50%, Due 8/15/2005 ............................ 2,000 2,047
U.S. Treasury Notes,
5.875%, Due 11/15/2005 .......................... 1,000 981
U.S. Treasury Notes,
8.875%, Due 2/15/2019 ............................ 1,250 1,577
</TABLE>
See accompanying notes
<PAGE> 126
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Par
Amount Value
----------- -------------
(dollars in thousands)
<S> <C> <C>
U.S. Treasury Notes,
7.875%, Due 2/15/2021 ............................. $ 1,000 $ 1,147
U.S. Treasury Notes,
6.25%, Due 8/15/2023 ............................. 2,950 2,809
U.S. Treasury Notes,
7.50%, Due 11/15/2024 ............................. 4,150 4,622
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS ....... 196,775
-----------
ASSET-BACKED SECURITIES - 2.89%
American Express Master Trust 1992-1 A,
6.05%, Due 6/15/1998 ............................. 2,250 2,263
AT&T Universal Card Master Trust, 1995-2 A, 5.95%,
Due 10/17/2002 ................................... 990 987
Banc One Auto Trust, 1995-A A5,
7.05%, Due 8/15/1998 ............................. 390 398
Chemical Master Credit Card Trust, 5.55%,
Due 9/15/2003 ..................................... 810 793
Chemical Master Credit Card Trust, 6.23%,
Due 10/15/2005 ................................... 990 987
Citibank Credit Card Master Trust I, 0%
Coupon, Due 2/7/2003 ............................. 1,410 1,044
ContiMortgage Home Equity Loan Trust, 7.96%,
Due 9/15/2009 ..................................... 2,500 2,578
First Chicago Master Trust II, 1992-E A,
6.25%, Due 8/15/1999 ............................. 750 755
General Electric Railcar Trust,
7.75%, Due 6/1/2004 ............................... 643 680
Green Tree Financial Corporation, 6.0%,
Due 2/15/2000 ..................................... 500 501
Green Tree Financial Corporation, 1993-3 A5,
5.75%, Due 10/15/2018 ............................. 990 965
Green Tree Financial Corporation, 1994-5 A2,
7.3%, Due 11/15/2019 ............................. 690 709
Green Tree Financial Corporation, 1995-8 A4,
6.60%, Due 12/15/2002 ............................. 1,400 1,403
Olympic Automobile Receivables Trust, 1993-C A,
4.50%, Due 2/15/2000 ............................. 286 282
Premier Auto Trust, 1994-4 A5,
6.65%, Due 11/2/1998 ............................. 2,000 2,025
Prime Credit Card Master Trust, 1992-1 A1,
7.05%, Due 2/15/2001 ............................. 1,010 1,035
Sears Credit Account Master Trust, 1995-5 A, 6.05%,
Due 1/15/2008 ..................................... 720 707
Signet Credit Card Master Trust,
1994-4 A, 6.80%, Due 12/15/2000 ................... 1,800 1,831
Standard Credit Card Master Trust,
1991-6 A, 7.875%, Due 1/7/2000 ................... 1,500 1,570
Standard Credit Card Master Trust, 5.9%,
Due 2/7/2001 ..................................... 1,000 1,000
UCFC Home Equity, 1994-C1 A2,
7.275%, Due 6/10/2007 ............................. 539 546
</TABLE>
See accompanying notes
<PAGE> 127
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Par
Amount Value
----------- -------------
(dollars in thousands)
<S> <C> <C>
Western Financial Grantor Trust, 1993-2 A2,
4.70%, Due 10/1/1998 $ 988 $ 981
Western Financial Grantor Trust, 1994-3 A2,
6.65%, Due 12/1/1999 734 743
-------------
TOTAL ASSET-BACKED SECURITIES ................... 24,783
-------------
NON-AGENCY MORTGAGE BACKED OBLIGATIONS - 0.64%
Citicorp Mortgage Securities, Incorporated,
9.50%, Due 8/1/2002 ............................... 720 737
Citicorp Mortgage Securities, Incorporated,
9.50%, Due 8/25/2005 ............................. 19 19
Citicorp Mortgage Securities, Incorporated,
8.50%, Due 4/25/2017 ............................. 740 745
Citicorp Mortgage Securities, Incorporated,
10.00%, Due 5/25/2017 ............................. 22 22
Citicorp Mortgage Securities, Incorporated,
9.00%, Due 4/1/2018 ............................... 798 823
DLJ Mortgage Acceptance Corporation,
4.56029%, Due 3/25/2024 ........................... 680 659
General Electric Capital Mortgage Services,
Incorporated, 1992-4 A A4, 8.00%, Due 4/25/2022 ... 738 751
INMC 1995-W A2, 7.25%, Due 2/25/2026 ............... 1,500 1,437
Residential Funding Corporation, 1993- S28 A4,
6.35%, Due 8/25/2023 ............................. 300 296
-------------
TOTAL NON-AGENCY MORTGAGE BACKED OBLIGATIONS ..... 5,489
-------------
CORPORATE BONDS - 9.92%
FINANCIAL - 4.35%
American General Financial,
7.25%, Due 5/15/2005 ............................. 410 421
Associates Corporation Of North America,
7.50%, Due 5/15/1999 ............................. 80 84
Associates Corporation Of North America,
6.375%, Due 8/15/1998 ............................. 2,900 2,931
BankAmerica Corporation,
7.50%, Due 3/15/1997 ............................. 960 978
BankAmerica Corporation, 9.75%, Due 7/1/2000 ....... 600 679
BanPonce, 7.3%, Due 6/5/2002 ....................... 640 658
Chemical Banking Corporation,
7.625%, Due 1/15/2003 ............................. 200 211
Chemical Banking Corporation, FRN,
6.2125%, Due 6/15/2000 ........................... 2,300 2,307
Chemical Banking Corporation, 8.625%,
Due 5/1/2002 ..................................... 700 775
</TABLE>
See accompanying notes
<PAGE> 128
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Par
Amount Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
Chemical New York Corporation, 9.75%, Due
6/15/99 .......................................... $ 900 $ 996
Citicorp Mortgage Securities, Incorporated, 9.5%,
Due 3/25/2005 .................................... 1,201 1,201
Countrywide Funding Corporation, 6.05%,
Due 3/1/2001 .................................... 1,200 1,180
Fleet Mortgage Group, Incorporated,
6.125%, Due 8/15/1997 ............................ 930 935
Ford Motor Credit Company,
9.25%, Due 6/15/1998 ............................ 1,000 1,070
Ford Motor Credit Company,
8.20%, Due 2/15/2002 ............................ 1,510 1,638
Ford Motor Credit Company,
8.00%, Due 6/15/2002 ............................ 500 537
Ford Motor Credit, 6.125%, Due 1/9/2006 ............ 1,000 949
General Motors Acceptance Corporation,
7.375%, Due 4/25/2000 ............................ 2,000 2,077
General Motors Acceptance Corporation,
6.75%, Due 6/17/2002 ............................ 1,140 1,149
Health & Rehab, FRN,
6.9875%, Due 7/13/1999 .......................... 1,000 997
IBM Corporation, 7.0%, Due 10/30/2025 .............. 760 728
Lehman Brothers Holding, Incorporated, 6.625%,
Due 2/15/2000 .................................... 570 572
Lehman Brothers, Incorporated, 5.04%,
Due 12/15/2003 .................................. 1,000 993
Lehman Brothers, Incorporated, 6.125%,
Due 2/1/2001 .................................... 1,000 983
Lehman Brothers, Incorporated, 7.00%,
Due 5/15/1997 .................................... 1,000 1,013
National Bank Of Detroit, 7.125%, Due 5/15/2007 .... 700 715
NationsBank Corporation,
7.625%, Due 4/27/2005 ............................ 1,000 1,054
PNC Funding Corporation, 6.125%, Due 9/1/2003 ...... 1,000 967
Salomon Incorporated,
7.05%, Due 1/15/1998 ............................ 800 809
Salomon Incorporated,
7.00%, Due 1/20/1998 ............................ 390 393
Salomon Incorporated,
5.53%, Due 1/30/1998 ............................ 1,500 1,476
Salomon Incorporated,
6.04%, Due 7/9/1998 .............................. 625 619
Salomon Incorporated,
6.70%, Due 12/1/1998 ............................ 390 390
</TABLE>
See accompanying notes
<PAGE> 129
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Par
Amount Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
Salomon Incorporated,
5.395%, Due 4/5/1999 .............................. $ 500 $ 489
Security Capital Pacific, 7.9%, Due 2/15/96 .......... 1,000 999
Smith Barney Holdings,
6.00%, Due 3/15/1997 .............................. 1,000 1,004
Society National Bank, 7.25%, Due 6/1/2005 .......... 800 823
St. Paul Companies,
9.375%, Due 6/15/1997 .............................. 600 627
Westpac Banking Corporation,
7.875%, Due 10/15/2002 ............................ 800 851
---------------
TOTAL FINANCIAL ................................ 37,278
---------------
INDUSTRIAL - 2.60%
Atlantic Richfield Corporation, 8.5%, Due 4/1/2012 .. 870 972
Atlantic Richfield Corporation, 8.75%, Due 3/1/2032 .. 610 717
The Boeing Company,
8.625%, Due 11/15/2031 ............................ 620 736
BP America Incorporated, 9.875%, Due 3/15/2004 ...... 650 785
Columbia/HCA Health, 7.69%, Due 6/15/2025 ............ 730 750
E.I. Du Pont De Nemours & Company,
8.45%, Due 10/15/1996 .............................. 200 204
Heinz (H. J.) Company,
5.50%, Due 9/15/1997 .............................. 520 519
International Business Machines, Incorporated,
6.375%, Due 11/1/1997 .............................. 750 758
Legrand,
8.50%, Due 2/15/2025 .............................. 820 917
The May Department Store Company,
9.75%, Due 2/15/2021 .............................. 400 508
McDermott,
8.75%, Due 5/19/2023 .............................. 1,000 1,004
News America Holdings,
9.25%, Due 2/1/2013 ................................ 370 409
News America Holdings, 9.25%, Due 2/1/2013 .......... 340 380
Occidential Petroleum Corporation,
8.50%, Due 9/15/2004 .............................. 2,000 2,140
Pepsico Incorporated,
7.00%, Due 11/15/1996 .............................. 550 556
Philip Morris Companies, Incorporated,
8.875%, Due 7/1/1996 .............................. 520 525
Philip Morris Companies, Incorporated,
9.25%, Due 12/1/1997 .............................. 1,500 1,585
Philip Morris Companies, Incorporated,
8.25%, Due 10/15/2003 .............................. 640 697
Philip Morris Companies, Incorporated,
8.375%, Due 1/15/2017 .............................. 625 655
Pohang Iron & Steel, 7.375%, Due 05/15/2005 .......... 750 763
</TABLE>
See accompanying notes
<PAGE> 130
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Par
Amount Value
----------- ------------
(dollars in thousands)
<S> <C> <C>
RJR Nabisco,
8.75%, Due 8/15/2005 ................................. $ 2,750 $ 2,712
Sears Roebuck,
9.375%, Due 11/1/2011 ................................. 635 763
Telecomunications, Incorporated,
9.80%, Due 2/1/2012 ................................... 320 369
Texaco Cap, MTN, 6.19%, Due 7/9/2003 ................... 750 730
Torchmark Corporation,
7.875%, Due 5/15/2023 ................................. 510 512
WMX Technologies, 6.22%, Due 4/30/2004 ................. 590 629
Xerox Corporation,
7.15%, Due 8/1/2004 ................................... 1,000 1,034
------------
TOTAL INDUSTRIAL ................................... 22,329
------------
UTILITY - 0.98%
Baltimore Gas & Electric, FRN,
5.775%, Due 4/15/1999 ................................. 2,500 2,495
Consolidated Edison New York, FRN,
5.81641%, Due 07/01/99 ............................... 1,450 1,448
General Telephone Southwest, Incorporated,
8.50%, Due 11/15/2031 ................................. 600 654
National Rural, FRN, 5.38%,
Due 2/27/1998 ......................................... 1,500 1,500
Pacific Bell Telephone,
8.70%, Due 6/15/2001 ................................. 670 743
Southern California Edison Company, 8.25%, Due 2/1/2000.. 1,425 1,520
------------
TOTAL UTILITY ..................................... 8,360
------------
FOREIGN BONDS - 1.99%
ABN-AMRO, 7.27%, Due 5/31/2005 ......................... 690 713
ANZ Banking, 6.25%, Due 2/1/2004 ....................... 770 739
Hanson Overseas, 7.375%, Due 1/15/2003 ................. 380 391
Hanson Overseas, 7.375%, Due 1/15/2003 ................. 220 226
Hydro-Quebec, 7.375%, Due 2/1/2003 ..................... 400 416
Hydro-Quebec, 9.40%, Due 2/1/2021 ....................... 1,800 2,140
Hydro-Quebec, 8.875%, Due 3/1/2026 ..................... 1,200 1,359
Korea Development Bank, 5.875%, Due 12/1/1998 ........... 100 99
Korea Development Bank, 6.25%, Due 5/1/2000 ............. 770 766
Province of Newfoundland, 9.875%, Due 6/1/2020 ......... 250 312
Province Of Quebec, 8.8%, Due 4/15/2003 ................. 670 750
Republic Of Italy, 6.875%, Due 9/27/2023 ............... 2,350 2,153
Svenska Handelsbanken, 8.35%, Due 7/15/2004 ............. 740 809
SwedBank FRN, 7.719%, Due 10/29/2049 ................... 2,500 2,552
Swedish Export Credit, 9.875%, Due 3/15/2038 ........... 2,410 2,648
Swiss Bank Corporation, 7.50%, Due 7/15/2025 ........... 950 964
------------
TOTAL FOREIGN BONDS ............................... 17,037
------------
TOTAL CORPORATE BONDS ............................... 85,004
------------
</TABLE>
See accompanying notes
<PAGE> 131
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
PREFERRED STOCK - 0.02%
RJR Nabisco, Convertible PERC ..................... 29,300 $ 201
Teledyne, Incorporated Class E ................... 600 9
---------------
TOTAL PREFERRED STOCK ......................... 210
---------------
COMMON STOCK - 62.27%
FOREIGN STOCKS - 2.50%
Arthur Guinness & Sons, ADR ....................... 24,700 868
British Petroleum PLC, ADR ....................... 9,000 903
Ciba-Geigy AG ..................................... 30,000 1,340
Exel Limited ..................................... 50,000 3,488
Hanson PLC, ADR ................................... 69,300 1,022
Moore Corporation Limited ......................... 120,000 2,355
Northern Telecom Limited ......................... 35,000 1,663
Phillips Gloeilamper ............................. 40,000 1,655
Royal Dutch Petroleum Company, New York Registry 30,000 4,133
Schlumberger Limited ............................. 20,000 1,458
The Seagram Company Limited ....................... 20,800 715
Volvo AB, ADR ..................................... 85,000 1,806
---------------
TOTAL FOREIGN STOCKS ......................... 21,406
---------------
CONSUMER STAPLES - 11.68%
DEPARTMENT AND MAIL ORDER - 1.50%
J.C. Penney Company, Incorporated ................. 55,875 2,654
K Mart Corporation ............................... 323,100 2,262
Sears Roebuck & Company ........................... 45,000 2,042
The May Department Store Company ................. 108,800 5,073
Woolworth Corporation ............................. 70,000 840
---------------
TOTAL DEPARTMENT AND MAIL ORDER ........... 12,871
---------------
DISTILLERS AND BREWERS - 0.72%
Anheuser-Busch Companies, Incorporated ........... 76,300 5,141
Brown-Foreman, Incorporated ....................... 26,700 1,045
---------------
TOTAL DISTILLERS AND BREWERS 6,186
---------------
DRUGS AND HOSPITAL SUPPLY - 2.91%
American Home Products Corporation ............... 60,800 5,989
Baxter International, Incorporated ............... 176,900 8,093
Bristol-Myers Squibb Company ..................... 40,500 3,448
Horizon / CMS Healthcare Corporation ............. 18,800 447
Merck & Company, Incorporated ..................... 64,000 4,240
Warner Lambert, Incorporated ..................... 27,100 2,680
---------------
TOTAL DRUGS AND HOSPITAL SUPPLY ........... 24,897
---------------
</TABLE>
See accompanying notes
<PAGE> 132
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
FOOD PROCESSING - 0.20%
Archer Daniels Midland Company ................. 90,000 $ 1,733
---------------
TOTAL FOOD PROCESSING ................... 1,733
---------------
FOODS - 0.26%
ConAgra, Inc ................................... 24,975 1,052
Nabisco Holdings Corporation, Class A ........... 32,900 1,156
---------------
TOTAL FOODS ............................. 2,208
---------------
LEISURE - 0.27%
Hasbro, Incorporated ........................... 35,200 1,214
King World Productions, Incorporated
(non-income producing) ....................... 25,700 1,076
---------------
TOTAL LEISURE ........................... 2,290
---------------
PHOTOGRAPHY - 1.16%
Eastman Kodak Company ........................... 138,900 9,931
---------------
TOTAL PHOTOGRAPHY ....................... 9,931
---------------
PUBLISHING - 0.63%
A.H. Belo, Incorporated, Class A ............... 35,800 1,253
R.R. Donnelley & Sons Company ................... 30,000 1,080
Dun & Bradstreet Corporation ................... 45,000 2,846
New York Times Company ......................... 8,700 239
---------------
TOTAL PUBLISHING ......................... 5,418
---------------
RETAIL - OTHER - 0.26%
Giant Foods, Incorporated ....................... 55,000 1,808
Melville Corporation ........................... 13,000 414
---------------
TOTAL RETAIL - OTHER ..................... 2,222
---------------
TOBACCO - 3.77%
American Brands, Incorporated ................... 60,000 2,723
Philip Morris Companies, Incorporated ........... 180,300 17,850
RJR Nabisco Holdings ........................... 123,640 4,157
UST, Incorporated ............................... 214,000 7,597
---------------
TOTAL TOBACCO ........................... 32,327
---------------
TOTAL CONSUMER STAPLES ..................... 100,083
---------------
INTEREST SENSITIVE - 22.67%
BANKS - 7.30%
BankAmerica Corporation ......................... 112,000 7,980
Bank of Boston Corporation ..................... 35,000 1,702
Bankers Trust Company New York ................. 19,400 1,254
Chase Manhattan Corporation ..................... 102,100 7,606
</TABLE>
See accompanying notes
<PAGE> 133
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
Chemical Banking Corporation ...................... 136,712 $ 9,792
Crestar Financial Corporation ...................... 15,000 878
First Chicago NBD .................................. 108,781 4,718
First Interstate Bancorp .......................... 11,000 1,797
First of America Bank Corporation .................. 50,000 2,188
First Security Corporation ........................ 60,000 1,613
First Union Corporation ............................ 20,000 1,210
Fleet Financial Group, Incorporated ................ 150,000 6,169
J.P. Morgan & Company, Incorporated ................ 33,000 2,702
NationsBank Corporation ............................ 52,700 3,887
Norwest Corporation ................................ 214,800 7,840
Wells Fargo and Company ............................ 5,000 1,233
---------------
TOTAL BANKS ................................ 62,569
---------------
BUILDING AND MATERIALS - 0.40%
PPG Industries, Incorporated ...................... 45,000 2,087
Vulcan Materials Company .......................... 24,700 1,340
---------------
TOTAL BUILDING AND MATERIALS ................ 3,427
---------------
FINANCE - 0.55%
Beneficial Corporation ............................ 40,000 2,080
Household International, Incorporated .............. 40,000 2,690
---------------
TOTAL FINANCE .............................. 4,770
---------------
INSURANCE - LIFE AND MULTI-LINE - 2.60%
Aetna Life & Casualty Company ...................... 75,600 5,717
American General Corporation ...................... 60,000 2,183
Aon, Incorporated .................................. 129,300 6,724
Lincoln National Corporation ...................... 45,000 2,475
Old Republic International Corporation ............ 34,800 1,192
Travelers Corporation .............................. 59,669 3,990
---------------
TOTAL INSURANCE - LIFE AND MULTI-LINE ...... 22,281
---------------
INSURANCE - PROPERTY AND CASUALTY - 2.77%
Ace Limited ........................................ 15,000 701
Allstate Corporation .............................. 282,257 12,102
Safeco Corporation ................................ 90,000 3,263
St. Paul Companies ................................ 135,600 7,678
---------------
TOTAL INSURANCE - PROPERTY AND CASUALTY .... 23,744
---------------
SAVINGS AND LOAN - 1.07%
Great Western Financial Corporation ................ 290,400 6,643
H.F. Ahmanson & Company ............................ 110,000 2,503
---------------
TOTAL SAVINGS AND LOAN ...................... 9,146
---------------
UTILITIES - ELECTRIC - 2.35%
Centerior Energy Corporation ...................... 31,800 266
Central And Southwest Corporation .................. 38,300 1,063
</TABLE>
See accompanying notes
<PAGE> 134
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
CMS Energy Corporation ......................... 60,000 $ 1,823
DTE Energy Company ............................. 39,000 1,389
Edison International ........................... 80,000 1,400
Entergy Corporation ............................. 165,000 4,682
Illinova Corporation ........................... 60,000 1,710
Public Service Enterprise Group, Incorporated ... 45,000 1,266
Unicom Corporation ............................. 203,800 6,522
---------------
TOTAL UTILITIES - ELECTRIC ............... 20,121
---------------
UTILITIES - NATURAL GAS - 1.18%
Columbia Gas Systems, Incorporated ............. 19,000 831
Panhandle Eastern Corporation ................... 263,100 7,531
Peoples Energy Corporation ..................... 58,000 1,784
---------------
TOTAL UTILITIES - NATURAL GAS ........... 10,146
---------------
UTILITIES - TELEPHONE - 2.53%
AT&T Corporation ............................... 30,000 1,909
Pacific Telesis Group, Incorporated ............. 360,000 10,170
SBC Communications ............................. 30,000 1,646
Telephone & Data Systems, Incorporated ......... 17,400 803
US West Media Group ............................. 98,000 2,046
US West, Incorporated ........................... 157,200 5,148
---------------
TOTAL UTILITIES - TELEPHONE ............. 21,722
---------------
MISCELLANEOUS - INTEREST SENSITIVE - 1.92%
American Express Company ....................... 234,600 10,792
Federal Home Loan Mortgage Corporation ......... 14,800 1,221
Federal National Mortgage Association ........... 118,000 3,732
Fund American Enterprises, Incorporated ......... 8,800 678
---------------
TOTAL MISCELLANEOUS - INTEREST SENSITIVE . 16,423
---------------
TOTAL INTEREST SENSITIVE ................... 194,349
---------------
CONSUMER CYCLICALS - 4.55%
AUTOMOBILE AND TRUCK - 4.03%
Dana Corporation ............................... 223,600 6,764
Eaton Corporation ............................... 133,500 7,726
Ford Motor Company ............................. 290,435 9,076
General Motors Corporation ..................... 191,300 9,804
TRW, Incorporated ............................... 13,200 1,143
---------------
TOTAL AUTOMOBILE AND TRUCK ............... 34,513
---------------
ELECTRICAL HOUSEHOLD EQUIPMENT - 0.26%
Newell Company ................................. 41,600 1,154
Whirlpool Corporation ........................... 20,000 1,113
---------------
TOTAL ELECTRICAL HOUSEHOLD EQUIPMENT ..... 2,267
---------------
</TABLE>
See accompanying notes
<PAGE> 135
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
TIRE AND RUBBER - 0.26%
Cooper Tire And Rubber Company .................. 70,000 $ 1,776
Goodyear Tire & Rubber Comany .................... 9,000 428
---------------
TOTAL TIRE AND RUBBER .................... 2,204
---------------
TOTAL CONSUMER CYCLICALS .................... 38,984
---------------
INTERMEDIATE GOODS & SERVICES - 11.73%
CHEMICALS - 1.37%
Dow Chemical .................................... 30,000 2,408
E.I. Du Pont de Nemours & Company ................ 41,000 3,137
Eastman Chemical Company ........................ 37,100 2,671
FMC Corporation (non-income producing) .......... 14,000 1,022
Olin Corporation ................................ 30,000 2,483
---------------
TOTAL CHEMICALS .......................... 11,721
---------------
FOREST PRODUCTS - 0.93%
Georgia Pacific Corporation ...................... 15,000 947
International Paper Company ...................... 60,000 2,138
James River Corporation of Virginia .............. 43,000 1,134
Union Camp Corporation .......................... 40,000 1,865
Weyerhaeuser Company ............................ 45,000 1,907
---------------
TOTAL FOREST PRODUCTS .................... 7,991
---------------
METALS - ALUMINUM - 0.55%
Aluminum Company Of America ...................... 70,000 3,973
Reynolds Metals Company .......................... 15,000 774
---------------
TOTAL METALS - ALUMINUM .................. 4,747
---------------
NATURAL GAS TRANSMISSION - 0.06%
Coastal Corporation .............................. 14,000 515
---------------
TOTAL NATURAL GAS TRANSMISSION ............ 515
---------------
OIL - 5.50%
Amoco Corporation ................................ 70,600 4,907
Ashland, Incorporated ............................ 24,000 879
Atlantic Richfield Corporation .................. 4,000 438
Chevron Corporation .............................. 80,000 4,450
Exxon Corporation ................................ 95,600 7,600
Louisiana Land and Exploration Company .......... 25,400 1,060
Mobil Corporation ................................ 20,000 2,193
Phillips Petroleum Company ...................... 260,800 9,128
Tenneco, Incorporated ............................ 177,400 9,912
Texaco, Incorporated ............................ 33,600 2,680
USX-Marathon Group .............................. 50,000 925
</TABLE>
See accompanying notes
<PAGE> 136
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Shares Value
----------- ----------
(dollars in thousands)
<S> <C> <C>
Ultramar Corporation ........................................ 70,000 $ 2,004
Union Texas Petroleum Holdings, Incorporated ................ 47,700 942
----------
TOTAL OIL ............................................ 47,118
----------
OIL SERVICE - 0.52%
Baker Hughes, Incorporated .................................. 131,100 3,458
Ensco International (non-income producing) .................. 40,300 972
----------
TOTAL OIL SERVICE .................................... 4,430
----------
TRANSPORTATION - 1.25%
CSX Corporation .............................................. 24,000 1,077
Conrail, Incorporated ........................................ 55,000 3,967
Norfolk Southern Corporation ................................ 25,000 2,038
Ryder Systems, Incorporated .................................. 60,000 1,508
Union Pacific Corporation .................................... 32,500 2,145
----------
TOTAL TRANSPORTATION .................................. 10,735
----------
MISCELLANEOUS - INTERMEDIATE GOODS & SERVICES - 1.55%
Dresser Industries, .......................................... 146,700 4,126
GATX Corporation ............................................ 40,000 1,795
Mapco, Incorporated .......................................... 16,900 921
Phelps Dodge Corporation .................................... 105,900 6,473
----------
TOTAL MISCELLANEOUS - INTERMEDIATE GOODS & SERVICES .. 13,315
----------
TOTAL INTERMEDIATE GOODS & SERVICES .................... 100,572
----------
CAPITAL GOODS - 9.14%
AEROSPACE - 4.15%
The Boeing Company .......................................... 34,900 2,831
Coltec Industries, Incorporated (non-income producing) ...... 73,700 1,013
Lockheed Martin Corporation .................................. 113,499 8,654
Northrop Corporation ........................................ 30,000 1,853
Raytheon Company ............................................ 245,600 12,311
Rockwell International Corporation .......................... 45,000 2,565
Thiokol Corporation .......................................... 18,100 742
United Technologies Corporation .............................. 52,000 5,590
----------
TOTAL AEROSPACE ...................................... 35,559
----------
CONGLOMERATES - 1.17%
Harsco Corporation .......................................... 39,000 2,574
Minnesota Mining and Manufacturing Company .................. 9,000 586
Teledyne, Incorporated ...................................... 12,000 338
Textron, Incorporated ........................................ 83,200 6,552
----------
TOTAL CONGLOMERATES .................................. 10,050
----------
</TABLE>
See accompanying notes
<PAGE> 137
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Shares Value
----------- ---------------
(dollars in thousands)
<S> <C> <C>
ELECTRICAL EQUIPMENT - 1.17%
General Electric Corporation ................... 25,000 $ 1,888
Honeywell, Incorporated ......................... 40,300 2,136
ITT Industries, Incorporated ................... 80,300 2,108
Sunbeam-Oster Company ........................... 58,000 935
Westinghouse Electric Corporation ............... 157,400 2,912
---------------
TOTAL ELECTRICAL EQUIPMENT ............... 9,979
---------------
ELECTRONICS - INDUSTRIAL - 0.29%
National Semiconductor Corporation ............. 45,854 716
Seneormatic Electric Corporation ............... 85,000 1,774
---------------
TOTAL ELECTRONICS - INDUSTRIAL ........... 2,490
---------------
MACHINERY - 0.38%
Deere and Company ............................... 42,000 1,643
Parker Hannifin Corporation ..................... 16,900 594
Tecumseh Products Company ....................... 17,900 1,011
---------------
TOTAL MACHINERY ......................... 3,248
---------------
NEWSPAPERS-PUBLISHING & PRINTING - 0.14%
Gannett Company ................................. 17,800 1,210
---------------
TOTAL NEWSPAPERS-PUBLISHING & PRINTING ..... 1,210
---------------
OFFICE EQUIPMENT - 1.84%
Avery Denison Corporation ....................... 11,700 630
International Business Machines Corporation ..... 26,400 3,237
Pitney Bowes, Incorporated ..................... 58,000 2,799
Xerox Corporation ............................... 70,000 9,118
---------------
TOTAL OFFICE EQUIPMENT ................... 15,784
---------------
TOTAL CAPITAL GOODS ....................... 78,320
---------------
TOTAL COMMON STOCK ........................... 533,714
---------------
</TABLE>
<TABLE>
<CAPTION>
Par
Amount
------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (NOTE A) - 3.12%
Bank of Tokyo New York, 5.250%,
Due 7/15/1996 ................................. $ 7,813 7,813
Bank of Tokyo New York, 5.260%,
Due 5/17/1996 ................................. 5,815 5,815
Bank Brussels Lambert Eurodollar, 5.625%,
Due 3/1/1996 ................................. 13,107 13,107
---------------
TOTAL SHORT-TERM INVESTMENTS ................. 26,735
---------------
</TABLE>
See accompanying notes
<PAGE> 138
AMR INVESTMENT SERVICES TRUST BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Value
---------------
(dollars in thousands)
<S> <C>
TOTAL INVESTMENTS (COST $724,733) - 101.82% ........ $ 872,710
LIABILITIES, NET OF OTHER ASSETS - (1.82%) ........ (15,565)
---------------
TOTAL NET ASSETS - 100% ............................ $ 857,145
===============
</TABLE>
Based on the cost of investments of $725,090 for federal income tax purposes at
February 29, 1996, the aggregate gross unrealized appreciation was $155,459,
the aggregate gross unrealized depreciation was $7,839, and the net unrealized
appreciation of investments was $147,620.
(A) Rates associated with short-term investments represent yield to maturity.
ABBREVIATIONS:
ADR - American Depository Receipt
AG - Company
ARM - Adjustable Rate Mortgage
FRN - Floating Rate Note
MTN - Medium Term Note
PERC - Preferred Equity Redemption Certificate
See accompanying notes
<PAGE> 139
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
PREFERRED STOCK - 0.04%
RJR Nabisco, Convertible PERC.......................... 35,500 $ 243
Teledyne, Incorporated Series E........................ 7,040 105
----------
TOTAL PREFERRED STOCK............................... 348
----------
COMMON STOCK - 94.11%
FOREIGN STOCKS - 4.13%
Arthur Guinness & Sons, ADR............................ 141,100 4,956
British Petroleum PLC, ADR............................. 13,000 1,304
Ciba-Geigy AG.......................................... 45,000 2,010
Exel Limited........................................... 75,000 5,230
Hanson PLC, ADR........................................ 404,500 5,965
Moore Corporation Limited.............................. 170,000 3,335
Northern Telecom Limited............................... 55,000 2,612
Phillips Gloeilamper................................... 55,000 2,275
Royal Dutch Petroleum Company, New York Registry....... 37,000 5,096
Schlumberger Limited................................... 30,000 2,185
Seagram Limited........................................ 30,700 1,055
Volvo AB, ADR.......................................... 126,000 2,678
----------
TOTAL FOREIGN STOCKS.............................. 38,701
----------
CONSUMER STAPLES - 20.27%
DEPARTMENT AND MAIL ORDER - 2.31%
J.C. Penney Company, Incorporated...................... 162,600 7,724
K Mart Corporation..................................... 459,900 3,219
Sears Roebuck & Company................................ 60,000 2,723
The May Department Store Company....................... 149,000 6,947
Woolworth Corporation.................................. 90,000 1,080
----------
TOTAL DEPARTMENT AND MAIL ORDER................. 21,693
----------
DISTILLERS AND BREWERS - 1.22%
Anheuser-Busch Companies, Incorporated................. 115,000 7,748
Brown-Foreman, Incorporated............................ 93,600 3,662
----------
TOTAL DISTILLERS AND BREWERS.................... 11,410
----------
DRUGS AND HOSPITAL SUPPLY - 4.86%
American Home Products Corporation..................... 119,600 11,781
Baxter International, Incorporated..................... 231,700 10,600
Bristol-Myers Squibb Company........................... 111,100 9,457
Horizon / CMS Healthcare Corporation................... 109,300 2,596
</TABLE>
See accompanying notes
<PAGE> 140
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Merck & Company, Incorporated.......................... 86,000 $ 5,698
Warner Lambert, Incorporated........................... 54,600 5,399
----------
TOTAL DRUGS AND HOSPITAL SUPPLY................. 45,531
----------
FOOD PROCESSING - 0.28%
Archer Daniels Midland Company......................... 135,000 2,599
----------
TOTAL FOOD PROCESSING........................... 2,599
----------
FOODS - 0.65%
ConAgra, Incorporated.................................. 34,975 1,473
Nabisco Holdings Corporation, Class A.................. 133,000 4,672
----------
TOTAL FOODS..................................... 6,145
----------
LEISURE - 1.28%
Hasbro, Incorporated................................... 188,400 6,500
King World Productions, Incorporated
(Non-Income Producing)............................... 130,300 5,456
----------
TOTAL LEISURE................................... 11,956
----------
PHOTOGRAPHY - 1.60%
Eastman Kodak Company.................................. 210,000 15,015
----------
TOTAL PHOTOGRAPHY............................... 15,015
----------
PUBLISHING - 1.64%
A.H. Belo, Incorporated, Class A....................... 168,600 5,901
Dun & Bradstreet Corporation........................... 70,000 4,428
New York Times Company................................. 113,200 3,113
R.R. Donnelley & Sons Company.......................... 55,000 1,980
----------
TOTAL PUBLISHING................................ 15,422
----------
RETAIL - OTHER - 0.38%
Giant Food............................................. 80,000 2,630
Melville Corporation................................... 28,900 921
----------
TOTAL RETAIL - OTHER............................ 3,551
----------
TOBACCO - 5.91%
American Brands, Incorporated.......................... 55,000 2,496
Philip Morris Companies, Incorporated.................. 313,300 31,017
RJR Nabisco Holdings................................... 314,520 10,576
UST, Incorporated...................................... 317,600 11,275
----------
TOTAL TOBACCO................................... 55,364
----------
</TABLE>
See accompanying notes
<PAGE> 141
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
MISCELLANEOUS - CONSUMER STAPLES - 0.14%
Gibson Greetings, Incorporated......................... 90,550 $ 1,302
----------
TOTAL MISCELLANEOUS - CONSUMER STAPLES.......... 1,302
----------
TOTAL CONSUMER STAPLES............................ 189,988
----------
INTEREST SENSITIVE - 30.73%
BANKS - 9.42%
Bank America Corporation............................... 150,000 10,688
Bank of Boston Corporation............................. 60,000 2,918
Bankers Trust Company New York......................... 102,500 6,624
Chase Manhattan Corporation............................ 137,000 10,207
Chemical Banking Corporation........................... 204,234 14,628
Crestar Financial Corporation.......................... 30,000 1,755
First Chicago NBD...................................... 168,465 7,307
First Interstate Bancorp............................... 16,000 2,614
First of America Bank Corporation...................... 60,000 2,625
First Security Corporation............................. 97,500 2,620
First Union Corporation................................ 30,000 1,815
Fleet Financial Group, Incorporated.................... 232,800 9,574
J.P. Morgan & Company, Incorporated.................... 85,900 7,033
NationsBank Corporation................................ 90,000 6,638
Wells Fargo & Company.................................. 5,000 1,233
----------
TOTAL BANKS..................................... 88,279
----------
BUILDING AND MATERIALS - 0.51%
PPG Industries, Incorporated........................... 45,000 2,087
Vulcan Materials Company............................... 50,000 2,713
----------
TOTAL BUILDING AND MATERIALS.................... 4,800
----------
FINANCE - 0.60%
Beneficial Corporation................................. 50,000 2,600
Household International, Incorporated.................. 45,000 3,026
----------
TOTAL FINANCE................................... 5,626
----------
INSURANCE - LIFE AND MULTI-LINE - 3.61%
Aetna Life & Casualty Company.......................... 122,700 9,279
American General Corporation........................... 75,000 2,728
Aon, Incorporated...................................... 161,400 8,393
Lincoln National Corporation........................... 50,000 2,750
Old Republic International Corporation................. 156,600 5,364
Travelers Corporation.................................. 78,896 5,276
----------
TOTAL INSURANCE - LIFE AND MULTI-LINE........... 33,790
----------
</TABLE>
See accompanying notes
<PAGE> 142
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
INSURANCE - PROPERTY AND CASUALTY - 3.39%
Ace, Limited........................................... 20,000 $ 935
Allstate Corporation................................... 363,580 15,588
Safeco Corporation..................................... 110,000 3,988
St. Paul Companies..................................... 198,800 11,257
----------
TOTAL INSURANCE - PROPERTY AND CASUALTY......... 31,768
----------
SAVINGS AND LOAN - 1.20%
Great Western Financial Corporation.................... 367,200 8,400
H.F. Ahmanson & Company................................ 125,000 2,844
----------
TOTAL SAVINGS AND LOAN.......................... 11,244
----------
UTILITIES - ELECTRIC - 3.51%
Centerior Energy Corporation........................... 60,400 506
Central And Southwest Corporation...................... 57,200 1,587
CMS Energy Corporation................................. 90,000 2,734
DTE Energy Company..................................... 70,000 2,494
Edison International................................... 140,000 2,450
Entergy Corporation.................................... 250,600 7,111
Illinova Corporation................................... 70,000 1,995
New York State Electric & Gas Corporation.............. 70,000 1,654
Peco Energy Company.................................... 85,000 2,401
Public Service Enterprise Group, Incorporated.......... 80,700 2,270
Unicom Corporation..................................... 240,400 7,693
----------
TOTAL UTILITIES - ELECTRIC...................... 32,895
----------
UTILITIES - NATURAL GAS - 1.56%
Columbia Gas Systems................................... 31,500 1,378
Panhandle Eastern Corporation.......................... 393,300 11,258
Peoples Energy Corporation............................. 65,000 1,999
----------
TOTAL UTILITIES - NATURAL GAS................... 14,635
----------
UTILITIES - TELEPHONE - 3.62%
AT&T Corporation....................................... 65,000 4,136
Pacific Telesis Group, Incorporated.................... 516,400 14,588
SBC Communications..................................... 30,000 1,646
Telephone & Data Systems, Incorporated................. 25,300 1,167
US West Media Group.................................... 143,100 2,987
US West, Incorporated.................................. 287,900 9,429
----------
TOTAL UTILITIES - TELEPHONE..................... 33,953
----------
MISCELLANEOUS - INTEREST SENSITIVE - 3.31%
American Express Company............................... 325,300 14,964
Federal Home Loan Mortgage Corporation................. 65,000 5,363
Federal National Mortgage Association.................. 243,400 7,698
</TABLE>
See accompanying notes
<PAGE> 143
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Fund American Enterprises, Incorporated................ 38,375 $ 2,955
----------
TOTAL MISCELLANEOUS - INTEREST SENSITIVE........ 30,980
----------
TOTAL INTEREST SENSITIVE.......................... 287,970
----------
CONSUMER CYCLICALS - 6.14%
AUTOMOBILE AND TRUCK - 5.32%
Dana Corporation....................................... 326,500 9,877
Eaton Corporation...................................... 189,400 10,962
Ford Motor Company..................................... 425,935 13,310
General Motors Corporation............................. 272,700 13,976
TRW, Incorporated...................................... 20,400 1,767
----------
TOTAL AUTOMOBILE AND TRUCK...................... 49,892
----------
ELECTRICAL HOUSEHOLD EQUIPMENT - 0.49%
Newell Company......................................... 65,000 1,804
Whirlpool Corporation.................................. 50,000 2,781
----------
TOTAL ELECTRICAL HOUSEHOLD EQUIPMENT............ 4,585
----------
TIRE AND RUBBER - 0.33%
Cooper Tire And Rubber Company......................... 75,000 1,903
Goodyear Tire & Rubber Comany.......................... 25,000 1,188
----------
TOTAL TIRE AND RUBBER........................... 3,091
----------
TOTAL CONSUMER CYCLICALS.......................... 57,568
----------
INTERMEDIATE GOODS & SERVICES - 18.40%
CHEMICALS - 1.92%
Dow Chemical........................................... 40,000 3,210
E.I. Du Pont De Nemours & Company...................... 47,000 3,596
Eastman Chemical Company............................... 51,775 3,728
FMC Corporation (Non-Income Producing)................. 68,800 5,022
Olin Corporation....................................... 30,000 2,483
----------
TOTAL CHEMICALS................................. 18,039
----------
FOREST PRODUCTS - 1.21%
Georgia-Pacific Corporation............................ 35,000 2,209
International Paper Company............................ 70,000 2,494
James River Corporation................................ 67,100 1,770
Union Camp Corporation................................. 50,000 2,331
Weyerhaeuser Company................................... 60,000 2,543
----------
TOTAL FOREST PRODUCTS........................... 11,347
----------
</TABLE>
See accompanying notes
<PAGE> 144
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
METALS - ALUMINUM - 0.73%
Aluminum Company Of America............................ 97,000 $ 5,505
Reynolds Metals Company................................ 25,000 1,291
----------
TOTAL METALS - ALUMINUM......................... 6,796
----------
NATURAL GAS TRANSMISSION - 0.44%
Coastal Corporation.................................... 111,200 4,087
----------
TOTAL NATURAL GAS TRANSMISSION.................. 4,087
----------
OIL - 9.49%
Amoco Corporation...................................... 105,300 7,318
Ashland, Incorporated.................................. 113,000 4,139
Atlantic Richfield Corporation......................... 33,000 3,614
Chevron Corporation.................................... 130,000 7,231
Exxon Corporation...................................... 127,100 10,104
Louisiana Land and Exploration Company................. 131,325 5,483
Mobil Corporation...................................... 31,500 3,453
Phillips Petroleum Company............................. 399,300 13,976
Tenneco Incorporated................................... 277,000 15,477
Texaco, Incorporated................................... 110,000 8,773
USX-Marathon Group..................................... 150,000 2,775
Ultramar Corporation................................... 100,000 2,863
Union Texas Petroleum Holdings, Incorporated........... 187,800 3,709
----------
TOTAL OIL....................................... 88,915
----------
OIL SERVICE - 0.95%
Baker Hughes, Incorporated............................. 185,200 4,885
Ensco International (non-income producing)............. 167,400 4,039
----------
TOTAL OIL SERVICE............................... 8,924
----------
TRANSPORTATION - 1.39%
CSX Corporation........................................ 26,000 1,167
Conrail, Incorporated.................................. 55,000 3,967
Norfolk Southern Corporation........................... 30,000 2,445
Ryder Systems, Incorporated............................ 100,000 2,513
Union Pacific Corporation.............................. 45,000 2,970
----------
TOTAL TRANSPORTATION............................ 13,062
----------
MISCELLANEOUS - INTERMEDIATE GOODS & Services - 2.27%
Dresser Industries,Incorporated........................ 189,800 5,338
GATX Corporation....................................... 45,000 2,019
Mapco, Incorporated.................................... 93,700 5,107
Phelps Dodge Corporation............................... 143,500 8,771
----------
TOTAL MISCELLANEOUS - INTERMEDIATE GOODS & SERVI 21,235
----------
</TABLE>
See accompanying notes
<PAGE> 145
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
TOTAL INTERMEDIATE GOODS & SERVICES............... $ 172,405
----------
CAPITAL GOODS - 14.44%
AEROSPACE - 6.57%
Coltec Industries, Incorporated (non-income producing). 313,600 4,312
Lockheed Martin Corporation............................ 194,794 14,853
Northrop Corporation................................... 35,000 2,161
Raytheon Company....................................... 377,900 18,942
Rockwell International Corporation..................... 60,000 3,420
The Boeing Company..................................... 88,900 7,212
Thiokol Corporation.................................... 103,700 4,252
United Technologies Corporation........................ 60,000 6,450
----------
TOTAL AEROSPACE................................. 61,602
----------
CONGLOMERATES - 2.34%
Harsco Corporation..................................... 55,000 3,630
Minnesota Mining And Manufacturing Company............. 14,000 912
Teledyne, Incorporated................................. 140,850 3,961
Textron, Incorporated.................................. 170,900 13,458
----------
TOTAL CONGLOMERATES............................. 21,961
----------
ELECTRICAL EQUIPMENT - 1.70%
General Electric Corporation........................... 34,300 2,590
Honeywell, Incorporated................................ 46,000 2,438
ITT Industries, Incorporated........................... 164,200 4,310
Sunbeam-Oster Company.................................. 200,000 3,225
Westinghouse Electric Corporation...................... 180,700 3,343
----------
TOTAL ELECTRICAL EQUIPMENT...................... 15,906
----------
ELECTRONICS - INDUSTRIAL - 0.40%
National Semiconductor Corporation..................... 70,546 1,102
Seneormatic Electric Corporation....................... 125,000 2,609
----------
TOTAL ELECTRONICS - INDUSTRIAL.................. 3,711
----------
MACHINERY - 1.03%
Deere & Company........................................ 90,000 3,521
Parker Hannifin Corporation............................ 23,700 832
Tecumseh Products Company.............................. 94,400 5,334
----------
TOTAL MACHINERY................................. 9,687
----------
OFFICE EQUIPMENT - 2.40%
Avery Denison Corporation.............................. 16,300 878
International Business Machines Corporation............ 32,400 3,973
Pitney Bowes, Incorporated............................. 80,000 3,860
</TABLE>
See accompanying notes
<PAGE> 146
AMR INVESTMENT SERVICES TRUST GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1995
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Shares Value
-------- ----------
(dollars in thousands)
<S> <C> <C>
Xerox Corporation...................................... 106,000 $ 13,807
----------
TOTAL OFFICE EQUIPMENT.......................... 22,518
----------
TOTAL CAPITAL GOODS............................... 135,385
----------
TOTAL COMMON STOCK.................................. 882,017
----------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (Note A) - 5.52% Par
Amount
----------
<S> <C> <C>
Bank of Tokyo, New York, BA, 5.25%,
Due 7/15/1996........................................ $ 7,000 6,864
Bank of Tokyo, New York, BA, 5.76%,
Due 4/15/1996........................................ 5,000 4,965
Bank of Tokyo, New York, BA, 5.75%,
Due 4/29/1996........................................ 12,800 12,682
Bank of Tokyo, New York, BA, 5.69%,
Due 5/06/1996........................................ 10,000 9,898
Bank of Brussels Lambert, Eurodollar TD, 5.625%,
Due 3/01/1996........................................ 17,359 17,359
----------
TOTAL SHORT-TERM INVESTMENTS........................ 51,768
----------
TOTAL INVESTMENTS - 99.67% (Cost $722,851)............. 934,133
----------
OTHER ASSETS, NET OF LIABILITIES - .33%................ 3,061
----------
TOTAL NET ASSETS - 100%................................ $ 937,194
==========
</TABLE>
Based on the cost of investments of $723,377 for federal income tax purposes at
February 29, 1996, the aggregate gross unrealized appreciation was $220,630,
the unrealized depreciation was $9,874, and the net unrealized appreciation of
investments was $210,756.
(A) Rates associated with short-term investments represent yield to maturity.
ABBREVIATIONS:
ADR - American Depository Receipt
AB - Company
AG - Company
BA - Bankers Acceptance
PERC - Preferred Equity Redemption Certificate
PLC - Public Limited Corporation
TD - Time Deposit
See accompanying notes
<PAGE> 147
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
AUSTRALIA COMMON STOCK - 6.74%
Australia & New Zealand Banking Group ............ 776,077 $ 3,816
Brambles Industries, Limited................... 349,500 4,356
Burns, Philp & Co., Limited.................... 400,000 893
CSR, Limited................................... 310,000 1,079
Coles Myer Limited Australian.................. 68,400 232
GIO Australia Holdings, Limited................ 470,271 1,129
Goodman Fielder Limited........................ 800,000 850
News Corporation, Limited...................... 210,000 1,195
News Corporation Preferred Rights.............. 105,000 530
Pacific Dunlop, Limited........................ 401,000 951
Pioneer International, Limited................. 860,000 2,551
QBE Insurance Group, Limited................... 437,015 2,266
Westpac Banking Corporation.................... 86,000 405
----------
TOTAL AUSTRALIA COMMON STOCK......... 20,253
----------
AUSTRIA COMMON STOCK - .90%
EVN Energie-Versorgung Niederoesterreich AG 3,960 525
Mayr-Melnhof Karton AG......................... 16,000 800
VA Technologie AG.............................. 11,000 1,391
----------
TOTAL AUSTRIA COMMON STOCK........... 2,716
----------
BELGIUM COMMON STOCK - 1.14%
Arbed, SA (non-income producing)............... 3,000 329
G.I.B. Holdings, Limited, NPV.................. 14,400 684
Groupe Bruxelles Lambert, SA................... 11,550 1,567
Groupe Bruxelles Lambert, NPV.................. 209 28
Solvay Et Cie.................................. 1,400 826
----------
TOTAL BELGIUM COMMON STOCK........... 3,434
----------
CANADA COMMON STOCK - 2.30%
Anderson Exploration Limited................... 50,000 515
Bank of Nova Scotia............................ 62,439 1,400
Canadian Imperial Bank of Commerce............. 60,000 1,782
IMASCO, Limited................................ 75,000 1,421
Noranda, Incorporated.......................... 62,500 1,230
Wascana Energy, Incorporated...................
(non-income producing)....................... 60,000 574
----------
TOTAL CANADA COMMON STOCK............ 6,922
----------
</TABLE>
See accompanying notes
<PAGE> 148
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
DENMARK COMMON STOCK - .64%
Novo Nordisk AS, "B"........................... 7,000 $ 955
Unidanmark AS, "A"............................. 20,000 975
----------
TOTAL DENMARK COMMON STOCK........... 1,930
----------
FINLAND COMMON STOCK - 1.75%
Enso-Gutzeit OY................................ 170,000 1,189
Huhtamaki Group I Free......................... 36,000 1,203
Metsa-Serla OY................................. 20,000 620
Nokia OY "A"................................... 14,000 481
Repola OY...................................... 90,000 1,783
----------
TOTAL FINLAND COMMON STOCK........... 5,276
----------
FRANCE COMMON STOCK- 7.49%
Alcatel Alsthom CG............................. 17,000 1,509
Axa SA......................................... 8,342 539
Banque Nationale De Paris...................... 24,000 929
Bongrain SA.................................... 1,700 965
Credit Lyonnais-CDI (non-income producing)..... 9,100 446
ECCO SA........................................ 3,750 765
Lafarge Coppee................................. 31,400 2,161
La France SA................................... 9,000 2,067
PSA Peugeot.................................... 7,000 1,048
Rhone-Poulenc "A".............................. 50,000 1,247
Saint Gobain................................... 10,000 1,290
Societe Elf Aquitaine SA....................... 56,676 3,912
Thomson CSF.................................... 19,500 500
Total Petroleum Company B...................... 43,954 2,902
Usinor Sacilor................................. 72,000 1,126
Valeo SA ...................................... 20,000 1,105
----------
TOTAL FRANCE COMMON STOCK............ 22,511
----------
GERMANY - 6.99%
PREFERRED STOCK - 1.44%
Herlitz AG .................................... 5,947 793
RWE AG......................................... 42,000 1,310
Spar Handels - AG.............................. 1,700 326
Volkswagen AG.................................. 6,800 1,896
----------
TOTAL GERMANY PREFERRED STOCK........ 4,325
----------
</TABLE>
See accompanying notes
<PAGE> 149
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
COMMON STOCK - 5.55%
BASF AG........................................ 3,900 $ 979
BAYER AG....................................... 13,150 4,032
Commerzbank AG................................. 4,000 919
Deutsche Bank AG............................... 30,000 1,513
Hoechst AG..................................... 1,600 505
Karstadt AG.................................... 5,500 2,144
Mannesmann AG.................................. 3,600 1,286
Muenchener Rueckversicherung AG................ 300 531
Muenchener Rueckversicherung AG - Reg.......... 137 282
Muenchener Rueckversicherung AG - Warrants..... 37 5
Varta AG (non-income producing)................ 1,520 276
Veba AG........................................ 65,400 3,084
Volkswagen AG.................................. 3,000 1,142
----------
TOTAL GERMANY COMMON STOCK........... 16,698
----------
TOTAL GERMANY ....................... 21,023
----------
HONG KONG COMMON STOCK - 5.02%
Cheung Kong Holdings, Limited.................. 235,000 1,634
Dickson Concepts (International), Limited...... 1,750,000 1,788
Hang Lung Development Company, Limited......... 710,000 1,327
HSBC Holdings, Limited......................... 93,700 1,503
Hutchison Whampoa, Limited..................... 200,000 1,268
National Mutual of Asia, Limited............... 1,700,000 1,649
New World Development Company, Limited......... 320,000 1,560
Oriental Press Group, Limited.................. 3,005,000 1,331
Peregrine Investments Holdings, Limited........ 550,000 939
South China Morning Post (Holdings), Limited... 1,100,000 775
Sun Hung Kai Properties, Limited............... 110,100 984
Swire Pacific, Limited "A"..................... 40,000 349
----------
TOTAL HONG KONG COMMON STOCK......... 15,107
----------
IRELAND COMMON STOCK - .66%
Bank of Ireland Group.......................... 279,300 1,993
----------
TOTAL IRELAND COMMON STOCK........... 1,993
----------
ITALY - 2.58%
PREFERRED STOCK - .13%
Concessioni E Costruzioni Autostrade........... 350,000 396
----------
TOTAL ITALY PREFERRED STOCK.......... 396
----------
</TABLE>
See accompanying notes
<PAGE> 150
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
ITALY COMMON STOCK - 2.45%
Danieli Group Risp............................. 473,960 $ 1,687
Olivetti Ing C, & Co........................... 342,000 203
Sasib, SPA..................................... 400,000 917
STET Risp (non convertible).................... 550,000 1,682
STET Societa Finanziaria Telefonica............ 840,000 1,910
Telecom Italia, SPA............................ 500,000 837
Telecom Italia, SPA Non Convertable Risp....... 100,000 137
----------
TOTAL ITALY COMMON STOCK............. 7,373
----------
TOTAL ITALY ......................... 7,769
----------
JAPAN COMMON STOCK - 12.73%
Aisin Seiki Company, Limited................... 56,000 809
Bridgestone Corporation........................ 54,000 842
Canon, Incorporated............................ 70,000 1,285
Chudenko Corporation........................... 9,000 312
Daibiru Corporation............................ 90,000 1,070
Daicel Chemical................................ 110,000 643
Daikin Industries.............................. 34,000 352
Dainippon Ink & Chemical....................... 57,000 259
Daiwa House Industry Company, Limited.......... 103,000 1,557
East Japan Railway Company..................... 200 1,021
Fuji Photo Film................................ 183,000 5,185
Hitachi Koki Co., Limited...................... 69,000 646
Hitachi, Limited............................... 120,000 1,209
KAO Corporation................................ 110,000 1,381
Kirin Brewery Company, Limited................. 37,000 429
Matsushita Electric Industrial Company......... 93,000 1,486
Nichicon Corporation........................... 72,000 1,000
Nichido Fire & Marine Insurance................ 220,000 1,678
Nintendo Company, Limited..................... 32,000 2,160
Nippon Telegraph & Telephone Corporation....... 118 898
Promise Co. Limited............................ 21,000 915
Ryosan Company................................. 12,000 322
Sekisui Chemical Company, Limited.............. 127,000 1,618
Sony Corporation............................... 41,800 2,448
Stanley Electric Company, Limited.............. 49,000 335
Sumitomo Marine & Fire......................... 115,000 981
Sumitomo Rubber Industries..................... 190,000 1,631
Suzuki Motor Company, Limited.................. 167,000 1,953
TDK Corporation................................ 16,000 806
Toyo Seikan Kaisha............................. 53,000 1,648
Toyota Motor Corporation....................... 65,000 1,404
----------
TOTAL JAPAN COMMON STOCK............. 38,283
----------
</TABLE>
See accompanying notes
<PAGE> 151
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
MALAYSIA COMMON STOCK - .44%
Kedah Cement Holdings BHD...................... 350,000 $ 693
Malaysian International Shipping
Corporation BHD............................. 226,666 632
----------
TOTAL MALAYSIA COMMON STOCK.......... 1,325
----------
NETHERLANDS COMMON STOCK - 8.55%
ABN AMRO Holdings NV........................... 80,000 3,719
Aegon NV....................................... 45,000 1,936
Akzo Nobel NV ................................. 34,550 3,844
Fortis Amev NV................................. 29,460 1,966
Hollandsche Beton Groep NV..................... 11,428 1,792
Internationale Nederlanden Groep NV............ 91,766 6,095
Koninklijke Bijenkorf Beheer NV................ 14,000 902
Nedlloyd Groep NV.............................. 12,000 262
Philips Electronics NV......................... 55,000 2,290
Royal PTT Nederland NV......................... 38,468 1,545
Unilever NV.................................... 10,000 1,351
----------
TOTAL NETHERLANDS COMMON STOCK....... 25,702
----------
</TABLE>
<TABLE>
<CAPTION>
Par
Amount
----------
<S> <C> <C>
NEW ZEALAND - 1.02%
BONDS - 0.02%
Brierley Investments, Limited Subordinated
Convertible, 9.00%, Due 6-30-1998........... $ 63 50
----------
TOTAL NEW ZEALAND BONDS.............. 50
----------
</TABLE>
<TABLE>
<CAPTION>
Shares
---------
<S> <C> <C>
COMMON STOCK- 1.00%
Brierley Investments, Limited.................. 1,400,000 1,216
Fisher & Paykel, Limited....................... 11,300 34
Fletcher Challenge, Limited.................... 765,000 1,756
----------
TOTAL NEW ZEALAND COMMON STOCK....... 3,006
----------
TOTAL NEW ZEALAND.................... 3,056
----------
</TABLE>
See accompanying notes
<PAGE> 152
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
NORWAY COMMON STOCK- 3.01%
Den Norske Bank, Series A Free................. 506,000 $ 1,645
Hafslund Nycomed, Series B Free................ 99,500 2,659
Kvaerner Industries AS......................... 20,789 666
Norsk Hydro AS................................. 40,000 1,707
Saga Petroleum, Series B Free.................. 100,000 1,117
Unitor AS...................................... 80,000 1,250
----------
TOTAL NORWAY COMMON STOCK............ 9,044
----------
SINGAPORE COMMON STOCK- 0.89%
Hong Kong Land (SGD)........................... 420,000 911
Neptune Orient Lines........................... 300,000 346
Sembawang Corporation.......................... 258,000 1,417
----------
TOTAL SINGAPORE COMMON STOCK......... 2,674
----------
SPAIN COMMON STOCK - 4.68%
Banco Espana Credito SA........................ 7,000 50
Banco Popular Espanol.......................... 5,500 1,002
Banco Santander SA............................. 35,300 1,740
Iberdrola SA................................... 300,357 2,962
Repsol SA...................................... 50,500 1,845
Telefonica de Espana SA........................ 359,000 5,905
Uralita (non-income producing)................. 59,250 570
----------
TOTAL SPAIN COMMON STOCK............. 14,074
----------
SWEDEN COMMON STOCK - 5.19%
Assidomaen AB.................................. 48,000 1,077
Astra AB, "B" Free............................. 48,000 2,197
Celsius Industrier AB, "B"..................... 93,000 2,556
Electrolux AB.................................. 41,000 2,014
Esselte AB, "A" Free........................... 2,000 34
Esselte AB, "B" Free........................... 17,000 297
Foreningsbanken AB (non-income producing)...... 400,000 966
Marieberg Tidnings............................. 29,040 774
Nordbanken AS.................................. 27,500 483
Skandia Forsakrings AB......................... 15,000 351
Skandinaviska Enskilda Banken A................ 95,200 695
SKF AB, "B" Free............................... 50,000 1,096
Sparbanken Sverige AB.......................... 36,000 389
Stora Kopparsbergs Bergslags, "A".............. 21,100 272
Stora Kopparsbergs Bergslags, "B".............. 12,900 166
Svedala Industries, "A" Free................... 40,000 1,234
Svenska Cellulosa, "B" Free.................... 59,000 997
----------
TOTAL SWEDEN COMMON STOCK............ 15,598
----------
</TABLE>
See accompanying notes
<PAGE> 153
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
SWITZERLAND COMMON STOCK - 6.90%
BBC AG Series A................................ 1,100 $ 1,318
Ciba-Geigy AG.................................. 5,225 4,669
Forbo Holding AG-R............................. 2,000 844
Gerbrueder Sulzer AG........................... 1,500 976
Nestle SA...................................... 3,700 4,050
Schindler Holdings AG.......................... 300 335
Schindler Holdings AG Warrants................. 300 1
SGS Holding SA (Reg)........................... 4,200 1,559
SIG AG......................................... 1,140 2,568
SGS Holding SA (BR)............................ 240 461
Sulzer, AG..................................... 3,450 2,119
Swiss Reinsurance Company...................... 1,765 1,842
----------
TOTAL SWITZERLAND COMMON STOCK....... 20,742
----------
UNITED KINGDOM COMMON STOCK - 8.36%
Albert Fisher Group, PLC....................... 262,500 179
Argyll Group, PLC.............................. 309,677 1,399
Associated British Foods Group, PLC............ 72,000 436
Barclays, PLC.................................. 27,900 331
Barratt Developments, PLC...................... 280,000 1,080
BAT Industries, PLC............................ 216,000 1,890
Burton Group, PLC.............................. 465,000 949
Commercial Union, PLC.......................... 110,000 1,020
GKN, PLC....................................... 60,000 772
Grand Metropolitan, PLC........................ 149,960 996
Hanson, PLC.................................... 346,000 1,000
Hillsdown Holdings, PLC........................ 526,961 1,384
Kwik Save Group, PLC........................... 138,500 986
London Pacific Group, PLC...................... 130,000 468
National Power, PLC............................ 50,000 369
National Westminster Bank, PLC................. 175,000 1,851
PowerGen, PLC.................................. 127,000 1,048
Reckitt & Colman, PLC.......................... 100,820 1,013
Redland, PLC................................... 85,000 561
Rolls Royce, PLC............................... 128,000 406
Royal Insurance Holdings, PLC.................. 77,536 450
Salvesen, (Christian), PLC..................... 260,000 1,063
Shell Transportation and Trading, PLC.......... 45,000 581
Tesco, PLC..................................... 340,173 1,372
Thames Water Group, PLC........................ 64,800 528
Unilever, PLC.................................. 82,500 1,524
Welsh Water, PLC............................... 75,000 851
WPP Group, PLC................................. 230,000 637
----------
TOTAL UNITED KINGDOM COMMON STOCK.... 25,144
----------
</TABLE>
See accompanying notes
<PAGE> 154
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Shares Value
--------- ----------
(dollars in thousands)
<S> <C> <C>
UNITED STATES - 9.10%
UNITED STATES COMMON STOCK - 2.24%
Dairy Farm International....................... 908,000 $ 885
GP Batteries International Limited............. 137,000 338
GP Batteries Warrants Expires 11/15/2000....... 34,250 25
Jardine Matheson Holdings...................... 386,600 3,093
Jardine Strategic.............................. 700,000 2,380
----------
TOTAL UNITED STATES COMMON STOCK..... 6,721
----------
</TABLE>
<TABLE>
<CAPTION>
Par
Amount
----------
<S> <C> <C>
UNITED STATES GOVERNMENT OBLIGATIONS (Note A) - 6.86%
U. S. Treasury Bill, 4.91%, Due 3-7-1996...... $ 517 517
U. S. Treasury Bill, 4.91%, Due 3-14-1996..... 4,961 4,952
U. S. Treasury Bill, 4.86%, Due 3-28-1996..... 2,922 2,911
U. S. Treasury Bill, 4.87%, Due 4-4-1996...... 3,830 3,812
U. S. Treasury Bill, 4.73%, Due 4-11-1996..... 6,673 6,636
U. S. Treasury Bill, 4.84%, Due 4-18-1996..... 247 245
U. S. Treasury Bill, 4.86%, Due 5-2-1996...... 1,571 1,558
----------
TOTAL UNITED STATES GOVERNMENT
OBLIGATIONS..................... 20,631
----------
TOTAL UNITED STATES.................. 27,352
----------
TOTAL INVESTMENTS - 97.08% (Cost - $248,464).. 291,928
----------
OTHER ASSETS, NET OF LIABILITIES - 2.92%...... 8,777
----------
TOTAL NET ASSETS - 100%....................... $ 300,705
==========
</TABLE>
Based on the cost of investments of $248,605 for federal income tax purposes at
February 29, 1996, the aggregate gross unrealized appreciation was $48,703, the
aggregate gross unrealized depreciation was $5,380, and the net unrealized
appreciation of investments was $43,323.
(A) Rates associated with United States Government Bonds represent yield to
maturity from time of purchase.
ABBREVIATIONS:
AB - Company (Sweden)
AG - Company (Switzerland, Germany)
AGR-Company Registered (Switzerland)
AS - Company (Denmark, Norway)
BHD - Berhard (Malaysia)
BR-Bearer (Switzerland)
CDI-Certificate of Investment (France)
See accompanying notes
<PAGE> 155
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
- --------------------------------------------------------------------------------
CG - Company General (France)
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 (Singapore)
SPA - Company (Italy)
See accompanying notes
<PAGE> 156
AMR INVESTMENT SERVICES TRUST INTERNATIONAL EQUITY PROTFOLIO
INDUSTRY DIVERSIFICATION
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Percent of
Net Assets
----------
<S> <C>
Basic Industry................................................ 27.48%
Captial Goods................................................. 10.67%
Consumer Goods & Services..................................... 21.46%
Energy........................................................ 4.20%
Financing, Insurance & Real Estate............................ 20.87%
Transportation................................................ 0.87%
Utilities..................................................... 4.62%
Short Term Investments........................................ 6.86%
Other Assets/Liabilities...................................... 2.97%
------
NET ASSETS..................................... 100.00%
------
</TABLE>
<PAGE> 157
AMR INVESTMENT SERVICES TRUST LIMITED-TERM INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 34.50%
Federal Home Loan Mortgage Corporation 1311 H,
7.50%, Due 7/15/2020.................................. $ 5,000 $ 5,095
Federal Home Loan Mortgage Corporation MH-1 A
REMIC, 10.15%, Due 4/15/2006.......................... 234 239
Federal National Mortgage Association, G1992-13 PH,
Due 3/31/2000........................................... 7,400 7,440
Federal National Mortgage Association, 1992-203 EB,
6.25%, Due 6/25/2005.................................. 5,000 5,015
Federal National Mortgage Association, 1993-135 Z,
5.85%, Due 7/25/2005.................................. 18,603 18,510
Federal National Mortgage Association, 1992-131 H,
7.50%, Due 6/25/2021.................................. 15,000 15,278
Federal National Mortgage Association, 1995-W1 A1,
8.40%, Due 4/25/2025.................................. 3,305 3,290
U.S. Treasury Notes, 6.875%,
Due 3/31/2000......................................... 7,000 7,291
----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS........... 62,158
----------
CORPORATE OBLIGATIONS - 47.58%
BANK FUNDING - 19.53%
Abbey National First Capital, 8.20%,
Due 10/14/2004, Dated 10/15/1994...................... 5,000 5,475
Banponce Corporation, MTN, 6.71%,
Due 5/16/1997......................................... 7,000 7,078
Capital One Bank, Bank Note, 8.125%,
Due 2/27/1998......................................... 5,000 5,190
Capital One Bank Note, 8.125%,
Due 3/1/2000.......................................... 5,000 5,295
Midland Bank PLC, 7.65%, Due 5/1/2025, Puttable 2007,
Dated 5/10/1995....................................... 5,000 5,296
Southtrust Bank Of Alabama, 5.58%, Due 2/6/2006,
Puttable 2001,Dated 2/6/1996.......................... 7,000 6,856
----------
TOTAL BANK FUNDING................................. 35,190
----------
FOREST PRODUCTS - 8.48%
Carter Holt Harvey, 8.875%, Due 12/1/2004,
Dated 11/28/1994...................................... 7,000 7,902
Noranda Forest Incorporated, 6.875%, Due 11/5/2005,
Dated 11/22/1995...................................... 7,500 7,372
----------
TOTAL FOREST PRODUCTS.............................. 15,274
----------
</TABLE>
See accompanying notes
<PAGE> 158
AMR INVESTMENT SERVICES TRUST LIMITED-TERM INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
PERSONAL CREDIT - 9.20%
Chrysler Financial Corporation, 12.75%,
Due 11/1/1999......................................... $ 8,000 $ 9,593
Ford Motor Credit, Global Bond, 6.25%,
Due 11/8/2000......................................... 7,000 6,997
----------
TOTAL PERSONAL CREDIT.............................. 16,590
----------
SECURITIES FIRMS - 2.81%
Lehman Brothers, MTN, 6.90%,
Due 7/15/1999......................................... 5,000 5,073
----------
TOTAL SECURITIES FIRMS............................. 5,073
----------
UTILITIES - 7.56%
Great Lakes Power Incorporated, 8.90%, Due 5,000 5,378
12/1/1999.............................................
Hydro-Quebec, 8.05%, Due 7/7/2024, Puttable 2006........ 7,500 8,238
----------
TOTAL UTILITIES.................................... 13,616
----------
TOTAL CORPORATE OBLIGATIONS.......................... 85,743
----------
NON-AGENCY MORTGAGE BACKED OBLIGATIONS - 16.04%
Collateralized Mortgage Obligation Trust,
56 A, 9.00%, Due 5/1/2014............................ 258 266
Residential Funding Securities Corporation,
6.7125%, Due 6/25/2025................................ 6,013 6,044
Resolution Trust Corporation,
1992-MH3 B1, 7.25%, Due 12/15/2011.................... 8,790 8,873
Resolution Trust Corporation,
1992-7 A3, 6.97312%, Due 3/25/2022.................... 3,289 3,264
Resolution Trust Corporation,
1992-6 A3, 6.3616%, Due 1/25/2026..................... 3,199 3,226
Resolution Trust Corporation,
1992-1 A1, 6.3860%, Due 5/25/2028..................... 3,595 3,644
Resolution Trust Corporation,
1992-4 A2, 6.2696%, Due 7/25/2028..................... 3,541 3,579
----------
TOTAL NON-AGENCY MTGE BACKED OBLIGATIONS............. 28,896
----------
</TABLE>
See accompanying notes
<PAGE> 159
AMR INVESTMENT SERVICES TRUST LIMITED-TERM INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
SHORT-TERM INVESTMENTS (Note A) - 0.80%
Bank Brussels Lambert, Eurodollar TD, 5.625%
Due 3/1/1996.......................................... $ 1,452 $ 1,452
TOTAL SHORT-TERM INVESTMENTS......................... 1,452
----------
TOTAL INVESTMENTS - 98.92% (Cost $179,833).............. 178,249
----------
OTHER ASSETS, NET OF LIABILITIES - 1.08%................ 1,940
----------
TOTAL NET ASSETS - 100%................................. $ 180,189
==========
</TABLE>
Based on the cost of investments of $179,833 for federal income tax purposes at
February 29, 1996, the aggregate gross unrealized appreciation was $587, the
unrealized depreciation was $2,171, and the net unrealized depreciation of
investments was $1,584.
(A) Rates associated with short-term investments represent yield to maturity.
ABBREVIATIONS:
MTN - Medium Term Note
PLC - Public Limited Corporation
REMIC - Real Estate Mortgage Investment Conduit
TD - Time Deposit
See accompanying notes
<PAGE> 160
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Par
Amount Value
----------- ----------
(dollars in thousands)
<S> <C> <C>
EURODOLLAR TIME DEPOSITS (Note A) - 0.01%
Bank Brussells Lambert, 5.625%, Due 3/01/1996................................. $ 171 $ 170
----------
TOTAL EURODOLLAR TIME DEPOSITS........................................... 170
----------
CERTIFICATES OF DEPOSIT (Note A) - 12.55%
YANKEE DOLLAR, FOREIGN BANKS - 10.75%
Banca CRT, S.P.A., Variable Rate Demand, 5.25%, Due 3/10/1997................. 75,000 75,000
Mitsubishi Bank, New York, 5.80%, Due 5/31/1996............................... 35,000 35,000
Postipankki Bank, Limited, New York, Variable Rate Demand, 5.82%, Due 9/5/1996 69,000 69,000
----------
TOTAL YANKEE CERTIFICATES OF DEPOSIT....................................... 179,000
----------
DOMESTIC BANKS - 1.80%
Banco Popular De Puerto Rico, Variable Rate Demand, 5.75%, Due 4/1/1996 (Note 30,000 30,000
----------
TOTAL DOMESTIC BANKS..................................................... 30,000
----------
TOTAL CERTIFICATES OF DEPOSIT.............................................. 209,000
----------
YANKEE BANKERS' ACCEPTANCES (Note A) - 25.71%
Bank of Tokyo, Los Angeles, 5.40%, Due 7/15/1996.............................. 10,500 10,291
Bank of Tokyo, New York, 5.76%, Due 4/15/1996................................. 18,000 17,873
Bank of Tokyo, New York, 5.87%, Due 4/15/1996................................. 10,000 9,928
Bank of Tokyo, New York, 5.75%, Due 4/16/1996................................. 15,000 14,892
Bank of Tokyo, New York, 5.26%, Due 5/17/1996................................. 5,000 4,945
Bank of Tokyo, New York, 5.70%, Due 6/3/1996.................................. 7,000 6,899
Bank of Tokyo, New York, 5.23%, Due 6/17/1996................................. 15,000 14,769
Bank of Tokyo, New York, 5.46%, Due 6/26/1996................................. 10,000 9,827
Bank of Tokyo, New York, 5.14%, Due 8/1/1996.................................. 8,500 8,319
Dai-Ichi Kangyo Bank, Los Angeles, 5.23%, Due 5/20/1996....................... 5,000 4,943
Dai-Ichi Kangyo Bank, Los Angeles, 5.16%, Due 8/7/1996........................ 5,000 4,889
Dai-Ichi Kangyo Bank, New York, 5.94%, Due 3/26/1996.......................... 10,000 9,960
Dai-Ichi Kangyo Bank, New York, 5.76%, Due 4/11/1996.......................... 22,000 21,858
Dai-Ichi Kangyo Bank, New York, 5.825%, Due 4/9/1996.......................... 7,000 6,957
Dai-Ichi Kangyo Bank, New York, 5.89%, Due 4/18/1996.......................... 16,000 15,877
Dai-Ichi Kangyo Bank, New York, 5.30%, Due 4/22/1996.......................... 15,000 14,886
Dai-Ichi Kangyo Bank, New York, 5.30%, Due 4/24/1996.......................... 5,200 5,159
Dai-Ichi Kangyo Bank, New York, 5.26%, Due 5/3/1996........................... 5,000 4,955
Dai-Ichi Kangyo Bank, New York, 5.27%, Due 5/7/1996........................... 9,100 9,012
Dai-Ichi Kangyo Bank, New York, 5.90%, Due 5/15/1996.......................... 5,400 5,335
Industrial Bank of Japan, Los Angeles, 5.30%, Due 4/11/1996................... 5,500 5,467
Industrial Bank of Japan, Los Angeles, 5.23%, Due 5/15/1996................... 6,300 6,232
Industrial Bank of Japan, Los Angeles, 5.35%, Due 5/28/1996................... 47,000 46,393
Industrial Bank of Japan, New York, 5.22%, Due 5/20/1996...................... 5,950 5,882
Industrial Bank of Japan, New York, 5.46%, Due 6/3/1996....................... 8,200 8,085
</TABLE>
See accomanying notes
<PAGE> 161
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Par
Amount Value
----------- ----------
(dollars in thousands)
<S> <C> <C>
Industrial Bank of Japan, New York, 5.45%, Due 6/17/1996...................... $ 7,850 $ 7,724
Industrial Bank of Japan, New York, 5.24%, Due 7/15/1996...................... 9,100 8,924
Mitsubishi Bank, New York, 5.79%, Due 5/17/1996............................... 5,000 4,940
Mitsubishi Bank, New York, 5.80%, Due 5/22/1996............................... 20,000 19,743
Mitsubishi Bank, New York, 5.24%, Due 6/5/1996................................ 6,850 6,756
Mitsubishi Bank, New York, 5.45%, Due 6/11/1996............................... 5,000 4,924
Sanwa Bank, Limited, New York, 5.94%, Due 3/22/1996........................... 5,000 4,983
Sanwa Bank, Limited, New York, 6.04%, Due 4/3/1996............................ 5,000 4,973
Sanwa Bank, Limited, New York, 6.05%, Due 5/2/1996............................ 10,000 9,899
Sanwa Bank, Limited, New York, 5.25%, Due 5/7/1996............................ 7,000 6,933
Sanwa Bank, Limited, New York, 5.25%, Due 5/13/1996........................... 5,000 4,947
Sanwa Bank, Limited, New York, 5.24%, Due 5/13/1996........................... 10,000 9,895
Sanwa Bank, Limited, New York, 5.83%, Due 5/17/1996........................... 11,000 10,867
Sanwa Bank, Limited, New York, 5.88%, Due 5/20/1996........................... 2,000 1,975
Sanwa Bank, Limited, New York, 5.23%, Due 5/24/1996........................... 9,000 8,892
Sanwa Bank, Limited, New York, 5.22%, Due 6/10/1996........................... 5,000 4,928
Sanwa Bank, Limited, New York, 5.23%, Due 6/26/1996........................... 26,000 25,566
Sanwa Bank, Limited, New York, 5.18%, Due 8/5/1996............................ 8,000 7,824
----------
TOTAL YANKEE BANKERS' ACCEPTANCES.......................................... 428,326
----------
PROMISSORY NOTES (Note A)- 4.38%
Goldman Sachs Group, L.P., 5.625%, Due 3/12/1996.............................. 60,000 60,000
Goldman Sachs Group, L.P., 5.25%, Due 7/3/1996................................ 13,000 13,000
----------
TOTAL PROMISSORY NOTES..................................................... 73,000
----------
COMMERCIAL PAPER (Note A) - 6.28%
Chrysler Financial Corporation, 5.25%, Due 5/31/1996.......................... 106,000 104,612
----------
TOTAL COMMERCIAL PAPER..................................................... 104,612
----------
VARIABLE RATE MEDIUM-TERM NOTES (Note A) - 43.54%
American Honda Finance Corporation, 5.50%, Due 1/27/1997...................... 70,000 69,981
American Honda Finance Corporation, 5.34%, Due 2/7/1997....................... 10,000 10,000
American Honda Finance Corporation, 5.31%, Due 3/14/1997...................... 20,000 20,000
Bank of Boston, 5.41%, Due 1/24/1997.......................................... 50,000 50,000
Bank of Boston, 5.52%, Due 1/24/1997.......................................... 15,000 15,000
Bank of Boston, 5.52%, Due 1/29/1997.......................................... 5,000 5,000
BanPonce Corporation, 6.26%, Due 11/25/1996................................... 5,000 5,013
BanPonce Corporation, 6.31%, Due 1/7/1997..................................... 10,000 10,033
BanPonce Corporation, 6.13%, Due 2/3/1997..................................... 40,000 40,070
Bear Stearns Companies, 5.68%, Due 1/17/1997.................................. 60,000 60,000
Bear Stearns Companies, 5.31%, Due 3/5/1997................................... 15,000 15,000
Bear Stearns Companies, 5.30%, Due 3/11/1997.................................. 25,000 25,000
CS First Boston, Incorporated, 5.27%, Due 3/11/1996........................... 42,000 42,000
</TABLE>
See accomanying notes
<PAGE> 162
AMR INVESTMENT SERVICES TRUST MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Par
Amount Value
----------- ----------
(dollars in thousands)
<S> <C> <C>
CS First Boston, Incorporated, 5.59%, Due 5/11/1997........................... $ 58,000 $ 58,000
General Electric Capital Corporation, 5.625%, Due 10/3/1996................... 20,000 20,008
General Motors Acceptance Corporation, 5.56%, Due 5/6/1996.................... 10,000 10,003
General Motors Acceptance Corporation, 6.00%, Due 12/9/1996................... 25,000 25,043
General Motors Acceptance Corporation, 5.27%, Due 2/23/1998................... 70,000 70,000
Lehman Brothers Holdings Incorporated, 5.75%, Due 8/30/1996................... 5,000 5,008
Merrill Lynch & Company, Incorporated, 5.79%, Due 1/14/1997................... 65,000 64,988
Merrill Lynch & Company, Incorporated, 5.27%, Due 2/12/1997................... 30,000 30,000
Norwest Corporation, 5.86%, Due 9/18/1996..................................... 25,000 25,015
Sanwa Business Credit Corporation, 5.90%, Due 1/10/1997....................... 50,000 49,998
----------
TOTAL VARIABLE RATE MEDIUM-TERM NOTES...................................... 725,160
----------
BANK NOTES (Note A) - 1.20%
Old Kent Bank & Trust Company, Grand Rapids, Variable Rate, 5.62%,
Due 4/4/199................................................................. 20,000 20,000
----------
TOTAL BANK NOTES........................................................... 20,000
----------
MASTER NOTES (Note A) - 9.78%
Heller Financial, Incorporated, 5.81%, Due 12/20/1996......................... 65,000 65,000
Heller Financial, Incorpoarted, 5.60%, Due 1/27/1997.......................... 10,000 10,000
Heller Financial, Incorporated, 5.38%, Due 3/11/1997.......................... 25,000 25,000
Lehman Brothers Holdings Incorporated, 6.06%, Due 5/31/1996.................. 63,000 63,000
----------
TOTAL MASTER NOTES......................................................... 163,000
----------
TOTAL INVESTMENTS - 103.45% (Cost $1,723,268)................................. 1,723,268
----------
LIABILITIES, NET OF OTHER ASSETS - (3.45%)................................... (57,444)
----------
TOTAL NET ASSETS - 100%....................................................... $1,665,824
==========
</TABLE>
Based on the cost of investments of $1,723,268 for federal income tax purposes
at February 29, 1996, 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.
(C) Obligation is subject to an unconditional put back to the issuer with
seven calendar days notice.
ABBREVIATION:
L.P. - Limited Partnership
See accomanying notes
<PAGE> 163
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
MUNICIPAL BONDS (Note A) - 90.31%
ALASKA - 0.98%
Alaska Industrial Development Authority Revenue Bonds (Providence
Medical Office Bldg. Assoc. Project) Series 1985, 3.30%, Due
6/1/2010, LOC Kredietbank N.V., VRDO............................................... $ 685 $ 685
----------
TOTAL ALASKA.................................................................... 685
----------
ARIZONA - 3.71%
Industrial Development Authority Of Apache County Arizona Series
1985A (Tucson Electric Power Co.-Springerville Project), 3.15%,
Due 12/1/2020, LOC Barclays Bank, PLC VRDO......................................... 500 500
Industrial Development Authority Of Pima County Arizona Series 1988
(Tuscon Retirement Center Project), 3.15%, Due 1/1/2009, LOC
Swiss Bank Corporation, VRDO....................................................... 1,200 1,200
Industrial Development Authority Of Pima County Arizona Series
1982A (Tucson Electric Power Co. Gen. Project), 3.20%, Due
7/1/2022, LOC Bank of America NT & SA, VRDO........................................ 900 900
----------
TOTAL ARIZONA................................................................... 2,600
----------
ARKANSAS - 2.14%
Arkansas Development Finance Authority (Higher Education Capital
Asset Program) Series 1985A, 3.25%, Due 12/1/2015, Bond
Insurance-Federal Guarantee Insurance Company (FGIC), VRDO... 100 100
City Of Crosset Arkansas Pollution Control Revenue Bonds
(Georgia-Pacific Corp. Project) Series 1984, 3.25%, Due 10/1/2007,
LOC Toronto Dominion Bank, VRDO.................................................... 200 200
Little River County Arkansas Solid Waste Disposal Revenue Bonds
(Georgia-Pacific Corp. Project) Series 1991, 3.80%, Due 11/1/2026,
LOC Sumitomo Bank, Limited, VRDO................................................... 1,200 1,200
----------
TOTAL ARKANSAS.................................................................. 1,500
----------
CALIFORNIA - 5.06%
California Pollution Control Financing Authority Series 1983
(Southdown, Inc. Project), 3.35%, Due 2/15/1998, LOC Societe
Generale, VRDO..................................................................... 400 400
California Pollution Control Financing Authority Series 1983C
(Southdown, Inc. Project), 3.35%, Due 4/15/1998, LOC Societe
Generale, VRDO..................................................................... 300 300
</TABLE>
See accompanying notes
<PAGE> 164
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
California Statewide Communities Development Authority Series
1995C (Setton Properties, Inc. Project) 3.40%, Due 10/1/2010, LOC
Wells Fargo Bank N.A., VRDO........................................................ $ 750 $ 750
County Of Sacramento California Revenue Bonds Series 1985A,
3.45%, Due 4/15/2007, LOC Dai-Ichi Kangyo Bank Limited, VRDO....................... 200 200
County Of Sacramento California Revenue Bonds Series 1985B,
3.45%, Due 4/15/2007, LOC Dai-Ichi Kangyo Bank Limited, VRDO....................... 100 100
Los Angeles County Housing Authority (Sand Canyon
Villas Project) Series 1989A, 3.60%, Due 11/1/2009,
LOC Industrial Bank of Japan Limited, VRDO........................................ 1,000 1,000
Los Angeles County Industrial Development Authority (Bicara,
Limited Project) Series 1987A-II, 3.75%, Due 12/1/2007, LOC Dai-Ichi
Kangyo Bank Limited, VRDO.......................................................... 450 450
Los Angeles County Industrial Development Authority (Gary A. Bandy)
3.75%, Due 12/1/2007, LOC Dai- Ichi Kangyo Bank Limited, VRDO ..................... 345 345
----------
TOTAL CALIFORNIA................................................................ 3,545
----------
COLORADO - 3.83%
Adams County Colorado Industrial Development Revenue Bonds
Series 1985, City View Park Project) Series 1985, 3.30%, Due
12/1/2015, LOC Barclays Bank, PLC, VRDO............................................ 1,100 1,100
City Of Englewood Colorado Multi-Family Housing Revenue Bonds
(The Marks Apartments) Series 1985B, 3.25%, Due 12/15/1997,
LOC Citibank, VRDO................................................................. 1,580 1,580
----------
TOTAL COLORADO.................................................................. 2,680
----------
CONNECTICUT - 2.00%
Connecticut Development Authority Solid Waste Disposal Facility
Revenue Bonds (Exeter Energy Project) Series 1989A, 3.45%, Due
12/1/2019, LOC Sanwa Bank Limited, VRDO............................................ 200 200
State Of Connecticut Unemployment Revenue Bond (Connecticut
Unemployment Revenue Bonds "CURB") Series 1993B, 3.50%, Due
11/1/2001, LOC Mitsubishi Bank Limited, VRDO...................................... 1,200 1,200
----------
TOTAL CONNECTICUT............................................................... 1,400
----------
FLORIDA - 5.14%
City Of Naples Florida Hospital Revenue Bonds (Naples Community
Hospital, Inc. Project) Series 1992, 3.45%, Due 11/1/2022, LOC
Mellon Bank N.A., VRDO............................................................. 100 100
Dade County, Florida Health Facilities Authority (Miami Children's
Hospital Project) Series 1990, 3.55%, Due 9/1/2020, LOC Barnett
Bank of South Florida, VRDO........................................................ 500 500
</TABLE>
See accompanying notes
<PAGE> 165
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
Dade County, Florida Capital Asset Aquisition Special Obligation
Bonds Series 1990, 3.75%, Due 10/1/2010, LOC Sanwa Bank
Limited, VRDO...................................................................... $ 400 $ 400
Indian River Florida Hospital District Hospital Revenue Bonds Series
1985, 3.30%, Due 10/1/2015, LOC Kredietbank N.V., VRDO............................. 100 100
St Johns County, Florida Hospital Revenue Bonds (Flagler Hospital,
Inc. Project) Series 1986A, 3.25%, Due 8/1/2016, LOC Kredietbank
N.V., VRDO......................................................................... 2,500 2,500
----------
TOTAL FLORIDA................................................................... 3,600
----------
GEORGIA - 11.44%
Clayton County Georgia Housing Authority (Huntington Woods
Apartment Project) Series 1990A, 3.25%, Due 1/1/2021, Bond
Insurance- Financial Security Assurance, Inc. (FSA), VRDO ......................... 1,610 1,610
College Park Georgia Business & Industrial Development Authority
(Marriott Corporation Project) Series 1985, 3.55%, Due 8/1/2015,
LOC Bank of Nova Scotia, VRDO...................................................... 900 900
Industrial Development Authority Of Cartersville (Sekisui Jushi
America, Inc. Project) Series 1992, 3.90%, Due 6/1/2012, LOC
Sanwa Bank Limited, VRDO........................................................... 1,100 1,100
Gainesville Redevelopment Authority (Hotel of Gainesville Assoc.
Project) Series 1986, 3.40%, Due 12/1/2007, LOC SunTrust Bank,
Atlanta, VRDO...................................................................... 900 900
Thomaston-Upson County Industrial Development
Revenue Authority (Yamaha Music Manufacturing Inc.) Series 1988,
3.90%, Due 8/1/2018, LOC Bank of Tokyo Limited, VRDO............................... 3,500 3,500
----------
TOTAL GEORGIA................................................................... 8,010
----------
HAWAII - 0.72%
Hawaii Housing Finance & Development Corporation Rental
Housing System Revenue Bonds Series 1990B, 3.55%,
Due 7/1/2025, LOC Industrial Bank of Japan Limited, VRDO........................... 500 500
----------
TOTAL HAWAII.................................................................... 500
----------
ILLINOIS - 4.65%
Illinois Development Finance Authority (Illinois Power Project) Series
1987D, 3.55%, Due 3/1/2017, LOC Mitsubishi Bank Limited, VRDO...................... 900 900
Illinois Educational Facilities Authority (The Art Institute of Chicago)
Series 1987 - 3.55%, Due 3/1/27, LOC Mitsubishi Bank Limited,
VRDO............................................................................... 350 350
Illinois Housing Development Authority Multi-Family Mortgage -
Revenue Bonds (Hyde Park Project) Series 1989 3.80%, Due
2/1/2024, LOC Sumitomo Bank, Limited, VRDO......................................... 575 575
</TABLE>
See accompanying notes
<PAGE> 166
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
Illinois State Toll Highway Authority Revenue Bonds Series 1993B,
3.05%, Due 1/1/2010, Bond Insurance-Municipal Bond Investors
Assurance Corporation (MBIA), VRDO................................................. $ 1,000 $ 1,000
Oswego Illionois Industrial Development Revenue Bonds (Griffith
Laboratories Worl Wide, Inc. Project) Series 1995, 3.45%, Due
7/1/2025, LOC ABN/AMRO BANK, VRDO.................................................. 430 430
----------
TOTAL ILLINOIS.................................................................. 3,255
----------
INDIANA - 5.22%
Fort Wayne Industrial Economic Development Revenue Bonds
(ND-Tech Corporation Project) Series 1989, 3.40%, Due 7/1/2009,
LOC Societe Generale, VRDO......................................................... 600 600
Indianapolis, Indiana Resource Recovery Revenue Bonds (Ogden
Martin System) Series 1987, 3.55%, Due 12/1/2016, LOC Swiss
Bank Corporation, VRDO............................................................. 800 800
Princeton Industrial Development Revenue Bonds (Orion Electric
America, Inc. Project) Series 1987, 3.55%, Due 4/30/2017, LOC
Mitsubishi Bank, Limited, VRDO..................................................... 455 455
Seymour Economic Development Revenue Bonds (Kobelco Metal
Powder Of America, Inc. Project) Series 1987, 3.90%, Due
12/15/1997, LOC Industrial Bank of Japan Limited, VRDO............................. 600 600
Shelbyville, Kentucky Economic Development Revenue Bonds
(Nippinsun Indiana Corp. Project) Series 1991, 3.80%,
Due 9/1/2006, LOC Industrial Bank of Japan Limited, VRDO........................... 1,200 1,200
----------
TOTAL INDIANA................................................................... 3,655
----------
IOWA - 0.29%
Polk County Iowa Hospital Equipment & Improvement Revenue Bonds
Series 1985A, 3.25%, Due 12/1/2005, Bond Insurance-Municipal
Bond Investors Assurance Corporation (MBIA), VRDO.................................. 200 200
----------
TOTAL IOWA...................................................................... 200
----------
KENTUCKY - 4.43%
Bowling Green Industrial Building Revenue Bonds (TWN Fastener,
Inc. Project) Series 1988, 3.90%, Due 3/1/2008, LOC Industrial
Bank of Japan Limited, VRDO ....................................................... 900 900
Georgetown Kentucky Public Project Revenue Bond Series 1986,
3.75%, Due 12/1/2006, LOC Bank of Tokyo Limited, VRDO.............................. 600 600
Hopkinsville Industrial Development Revenue Bonds (American
Precision Machinery Inc., Project) Series 1990, 3.40%, Due 5/1/2000, LOC
Mitsubish Bank, Limited, VRDO...................................................... 1,400 1,400
Hopkinsville Kentucky Industrial Building Revenue Refunding Bonds
(Co Par, Inc. Project) Series 1994A, 3.80%, Due 4/1/2004, LOC
Dai-Ichi Kangyo Bank Limited, VRDO................................................. 100 100
</TABLE>
See accompanying notes
<PAGE> 167
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
Shelbyville, Kentucky Industrial Building Revenue Bonds (Ichikoh
Manufacturing, Inc. Project) Series 1987, 3.90%, Due,10/1/1997 LOC
Industrial Bank of Japan, VRDO..................................................... $ 100 $ 100
----------
TOTAL KENTUCKY.................................................................. 3,100
----------
LOUISIANA - 4.75%
Jefferson Parish, Louisiana Hospital District No.7 (West Jefferson
Medical Center) Series 1986 , 3.65%, 1/1/2026, LOC Citibank,
VRDO............................................................................... 115 115
Louisiana Public Facilities Authority Hospital Revenue Bonds (Willis
Knighton Medical Center Project), Series 1995, 3.25%, Due 9/1/2025,
Bond Insurance-AMBAC Indemnity Corporation, VRDO................................... 1,000 1,000
Louisiana Public Facilities Authority Capital Facilities Revenue Bonds
Series 1985A, 3.75%, Due 12/1/2005, LOC Sumitomo Bank, Limited,
VRDO............................................................................... 1,210 1,210
Louisiana Public Facilities College & University Equipment And Capital
Facilities Revenue Bonds Series 1985A, 3.25%, Due 9/1/2010, Bond
Insurance-Financial Guaranty Insurance Company (FGIC), VRDO........................ 500 500
Parish of Desoto, Louisiana Pollution Control Revenue Refunding
Bonds (Central Louisiana Electric Company, Inc. Project) Series
1991B, 3.25%, Due 7/1/2018, LOC Swiss Bank, Corporation, VRDO... 500 500
----------
TOTAL LOUISIANA................................................................. 3,325
----------
MARYLAND - 2.57%
Baltimore County Maryland Hospital Revenue Bonds (Sheppard And
Enoch Pratt Hospital Facility Project Series 1992), 3.25%, Due
7/1/2021, LOC Societe Generale, VRDO............................................... 1,800 1,800
----------
TOTAL MARYLAND.................................................................. 1,800
----------
MICHIGAN - 2.86%
Township of Bruce Michigan Hospital Finance Authority Revenue
Bonds, (Sisters Of Charity Health Care System-St Joseph Project)
Series 1988A, 3.20%, Due 5/1/2018, Bond Insurance-Municipal Bond
Investors Assurance Corporation (MBIA), VRDO....................................... 100 100
City Of Detroit Michigan Tax Increment Finance Authority (Central
Industrial Park Project) Series 1984A, 3.25%, Due 10/1/2010, LOC
Citibank, VRDO..................................................................... 1,300 1,300
Economic Development Corporation of the Township of Clinton
(Sisters Of Charity-St Joseph's Elder Care Project), Series 1988A,
3.20%, Due 5/1/2013, Bond Insurance-Municipal Bond Investors
Assurance Corporation (MBIA), VRDO................................................. 400 400
Kent Hospital Finance Authority (Butterworth Hospital Project) Series
1991A, 3.50%, Due 1/15/2020, LOC Sanwa Bank Limited,
VRDO............................................................................... 200 200
----------
</TABLE>
See accompanying notes
<PAGE> 168
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
TOTAL MICHIGAN.................................................................. $ 2,000
----------
MINNESOTA - 3.57%
St Paul, Minnesota Housing And Redevelopment Authority District
Heating Revenue Bonds Series 1982A, 3.40%, Due 12/1/2012, LOC
Sumitomo Bank Limited, VRDO........................................................ $ 2,500 2,500
----------
TOTAL MINNESOTA................................................................. 2,500
----------
MISSOURI - 2.00%
Missouri Higher Education Loan Authority Revenue Bonds Series
1988A, 3.40%, Due 6/1/2017, LOC National Westminster Bank PLC,
VRDO............................................................................... 1,400 1,400
----------
TOTAL MISSOURI.................................................................. 1,400
----------
NEBRASKA - 2.43%
Buffalo County, Nebraska Hospital Authority (Sisters Of Charity -
Richard H. Young Memorial Hospital Project) Series 1988A, 3.20%,
Due 5/1/2018, Bond Insurance-Municipal Bond Investors Assurance
Corporation (MBIA), VRDO........................................................... 100 100
Lancaster County, Nebraska Industrial Revenue Bonds (Sun-Husker
Foods, Incorporated Project) Series 1989, 3.90%, Due 8/15/2009,
LOC Bank of Tokyo Limited, VRDO.................................................... 900 900
Lancaster County, Nebraska Hospital Authority Revenue Bonds (St.
Elizabeth Community Hospital Project) Series 1988A, 3.20%, Due
5/1/2000, Bond Insurance-Municipal Bond Investors Assurance
Corporation (MBIA), VRDO........................................................... 700 700
----------
TOTAL NEBRASKA.................................................................. 1,700
----------
NEW JERSEY - 0.29%
New Jersey Economic Development Authority (Burham Castrol, Inc.
Project Series 1985), 3.05%, Due 8/1/2005, LOC Barclays Bank, PLC,
VRDO............................................................................... 200 200
----------
TOTAL NEW JERSEY................................................................ 200
----------
NEW YORK - 2.14%
City Of New York General Obligation Bonds Series 1994B-2, 3.40%,
Due 8/15/2018, LOC Dai-Ichi Kangyo Bank Limited, VRDO.............................. 1,000 1,000
City of New York General Obligation Bonds, Series 1994B-2, 3.40%,
Due 8/15/2019, LOC Dai-Ichi Kangyo Bank Limited, VRDO.............................. 500 500
----------
</TABLE>
See accompanying notes
<PAGE> 169
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
TOTAL NEW YORK.................................................................. $ 1,500
----------
PENNSYLVANIA - 2.71%
Gettysburg Area Industrial Development Authority Industrial
Development Refunding Bonds (Dal-Tile Corporation) Series 1987B,
3.45%, Due 3/1/2004, LOC Credit Suisse, VRDO...................................... $ 800 800
Northumberland County Industrial Development Authority Resource
Recovery Revenue Bonds (Foster Wheeler Mt. Carmel, Inc. Project)
Series 1987B, 3.40%, Due 2/1/2010, LOC Union Bank of Switzerland,
VRDO............................................................................... 600 600
Northumberland County Industrial Development Authority Resource
Recovery Revenue Bonds (Foster Wheeler Mt. Carmel, Inc. Project)
Series 1987A, 3.40%, Due 2/1/2010, LOC Union Bank of Switzerland,
VRDO .............................................................................. 500 500
----------
TOTAL PENNSYLVANIA.............................................................. 1,900
----------
SOUTH CAROLINA - 1.71%
Florence County, South Carolina Hospital Revenue Bonds (McLeod
Regional Medical Center Project) Series 1985A, 3.30%,
Due 11/1/2015, Bond Insurance-Financial Guaranty
Insurance Company (FGIC), VRDO..................................................... 1,200 1,200
----------
TOTAL SOUTH CAROLINA............................................................ 1,200
----------
TENNESSEE - 1.14%
Blount County Industrial Development Revenue Bonds (Advanced
Crystal Technology, Inc. Project) Series 1988, 3.90%, Due 8/1/2008,
LOC Industrial Bank of Japan Limited, VRDO......................................... 500 500
Covington Tennessee Industrial Development Board Industrial
Development Revenue Bonds (Charms Co. Project) Series 1992,
3.30%, Due 6/1/2027, LOC Societe Generale, VRDO.................................... 300 300
----------
TOTAL TENNESSEE................................................................. 800
----------
TEXAS - 1.00%
Harris County Industrial Development Revenue Bonds (Zeon
Chemicals Project) Series 1989, 3.90%, Due 2/1/2009,
LOC Industrial Bank of Japan Limited, VRDO......................................... 600 600
Harris County, Texas Industrial Development Revenue Bonds (Chusei
"USA"Project), Project 1991C 3.80%, Due 8/1/2001, LOC Bank of
Tokyo Limited, VRDO................................................................ 100 100
----------
TOTAL TEXAS..................................................................... 700
----------
</TABLE>
See accompanying notes
<PAGE> 170
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
UTAH - 1.43%
State Board Of Regents Utah Student Loan Revenue Bonds Series
1988C, 3.40%, Due 11/1/2013, Bond Insurance-AMBAC Indemnity
Corporation, VRDO.................................................................. $ 1,000 $ 1,000
----------
TOTAL UTAH...................................................................... 1,000
----------
VIRGINIA - 0.72%
Alexandria Industrial Development Authority Resource Recovery
Revenue Bonds (Alexandria/Arlington Waste-to-Energy Facility)
Series 1986A, 3.55%, Due 12/1/2016, LOC Swiss Bank Corporation,
VRDO............................................................................... 300 300
Virginia Housing Development Authority Series 1987A, 3.35%,
Due 9/1/2017, LOC Mitsubishi Bank Limited, VRDO.................................... 200 200
----------
TOTAL VIRGINIA.................................................................. 500
----------
WASHINGTON - 9.36%
Port Of Angeles Industrial Development Corporation
Revenue Bonds Series 1992B, 3.90%, Due 12/1/2007, LOC
Industrial Bank of Japan Limited, VRDO............................................. 200 200
Port Angeles Industrial Development Corporation (Daishowa
America Project) Series 1992, 3.90%, Due 8/1/2007, LOC
Industrial Bank of Japan Limited, VRDO............................................. 200 200
Port Everett Revenue Bonds Series 1986, 3.90%, Due 12/1/2006,
LOC Sumitomo Bank, Limited, VRDO................................................... 1,200 1,200
Port Of Kalama Washington Public Corporation Port Facility Revenue
Bonds (Conagra Inc.) Project Series 1983, 3.15%, Due 1/1/2004, LOC
Morgan Guaranty Trust Company, VRDO................................................ 150 150
Washington Student Loan Finance Association Revenue Bonds Series
1987A, 3.65%, Due 12/1/2002, LOC Sanwa Bank Limited, VRDO.......................... 2,400 2,400
Washington Student Loan Finance Association Revenue Bonds Series
1987B, 3.65%, Due 12/1/2002, LOC Sanwa Bank Limited, VRDO.......................... 1,000 1,000
Washington State Public Power Supply Series 3A-1, 3.20%, Due
7/1/2018, LOC Bank of America NT & SA, VRDO........................................ 1,400 1,400
----------
TOTAL WASHINGTON................................................................ 6,550
----------
WEST VIRGINIA - 1.59%
Marion County, West Virginia Solid Waste Disposal
Facility (Grant Town Cogeneration Project) Series 1990B, 3.40%,
Due 10/1/2017, LOC National Westminster Bank PLC, VRDO............................. 1,150 115
Marion County, West Virginia Solid Waste Disposal
Facility (Grant Town Cogeneration Project) Series 1990C, 3.40%,
Due 10/1/2017, LOC National Westminster Bank, PLC, VRDO............................ 1,000 1,000
----------
</TABLE>
See accompanying notes
<PAGE> 171
AMR INVESTMENT SERVICES TRUST MUNICIPAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Par
Amount Value
---------- ----------
(dollars in thousands)
<S> <C> <C>
TOTAL WEST VIRGINIA............................................................. $ 1,115
----------
WYOMING - 0.43%
Platte County Pollution Control Revenue Bonds (Tri- State
Generation And Transmission Association, Inc. Project) Series
1984A, 3.45%, Due 7/1/2014, LOC Societe Generale, VRDO............................. $ 300 300
----------
TOTAL WYOMING................................................................... 300
----------
TOTAL MUNICIPAL BONDS............................................................. 63,220
----------
MUNICIPAL COMMERCIAL PAPER (Note A) - 2.50%
Carbon County Industrial Development Authority Resource Recovery
Bonds (Panther Creek Project) Series 1991A, 3.55%, Due
4/10/1996, LOC National Westminster Bank, PLC...................................... 750 750
Indiana Development Financial Authority (Pure Air on the Lake
Partnership) Series 1990A, 3.70%, Due 4/10/1996, LOC Fuji Bank
Limited,........................................................................... 1,000 1,000
----------
TOTAL MUNICIPAL COMMERCIAL PAPER................................................ 1,750
----------
OTHER INVESTMENTS - 5.46%
Lehman Municipal Money Market Fund................................................... 3,235 3,235
Provident Institutional Municipal Cash Fund.......................................... 588 588
----------
TOTAL OTHER INVESTMENTS......................................................... 3,823
----------
TOTAL INVESTMENTS (Cost $68,793) - 98.27%............................................ 68,793
----------
OTHER ASSETS, NET OF LIABILITIES - 1.73%............................................. 1,214
----------
TOTAL NET ASSETS - 100%.............................................................. $ 70,007
==========
</TABLE>
Based on the cost of investments of $68,793 for federal income tax purposes at
February 29, 1996, 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
See accompanying notes
<PAGE> 172
AMR INVESTMENT SERVICES TRUST US TREASURY MONEY MARKET PORTFOLIO
SCHEDULES OF INVESTMENTS
FEBRUARY 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Par
Amount Value
----------- ---------
(dollars in thousands)
<S> <C> <C>
REPURCHASE AGREEMENTS (Note A) - 100.04%
CS First Boston Corporation, 5.40%, Dated 2/29/1996,
Due 3/1/1996 with a maturing value
of $50,008. (Collateralized by $84,617 U.S.
Treasury Strips, due 5/15/2004, market value -
$51,106)................................................................. $ 50,000 $ 50,000
J. P. Morgan Securities, Inc., 5.40%, Dated
2/29/1996, Due 3/1/1996 with a maturing value
of $54,762. (Collateralized by $56,272 U.S.
Treasury Bills, due 4/18/1996, market value -
$55,886)................................................................. 54,753 54,753
Sanwa UST Repo, 5.40%, Dated 2/29/1996,
Due 3/1/1996 with a maturing value
of $25,004. (Collateralized by $16,915 U.S.
Treasury Notes, due 2/15/2015, market value -
$25,512)................................................................. 25,000 25,000
---------
TOTAL REPURCHASE AGREEMENTS........................................... 129,753
---------
UNITED STATES TREASURY BILLS - 26.33%
U.S. Treasury Bills, 4.97%, Due 9/5/1996................................... 35,000 34,143
---------
TOTAL UNITED STATES TREASURY BILLS.................................... 34,143
---------
TOTAL INVESTMENTS - 126.37% (Cost - $163,896).............................. 163,896
---------
LIABILITIES, NET OF OTHER ASSETS - (26.37%)................................ (34,200)
---------
TOTAL NET ASSETS - 100%.................................................... $ 129,696
=========
</TABLE>
Based on the cost of investments of $163,896 for federal income tax purposes at
February 29, 1996, there was no unrealized appreciation or depreciation of
investments. (A) Rates associated with money market securities represent yield
to maturity.
See accompanying notes
<PAGE> 173
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities at value
(cost - $724,733; $722,851; $248,464;
$179,833, respectively) .................. $ 872,710 $ 934,133 $ 291,928 $ 178,249
Cash, including foreign currency............. - 8 11,948 -
Unrealized appreciation on foreign
currency contracts........................ - - 683 -
Dividends and interest receivable............ 5,974 2,930 235 2,269
Reclaims receivable.......................... - - 254 -
Receivable for investments sold.............. 2,746 1,623 3,326 -
Deferred organization costs.................. 40 40 40 40
------------ ------------ ------------ ------------
Total assets.................................... 881,470 938,734 308,414 180,558
------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased............ 994 66 5,306 -
Payable for portfolio redemptions............ 22,434 692 1,265 78
Unrealized depreciation on foreign
currency contracts......................... - - - -
Management and investment advisory
fees payable (Note 2)..................... 487 459 411 153
Accrued organization costs................... 43 43 43 43
Other liabilities............................ 367 280 684 95
------------ ------------ ------------ ------------
Total liabilities............................... 24,325 1,540 7,709 369
------------ ------------ ------------ ------------
Net assets applicable to investors'
beneficial interests......................... $ 857,145 $ 937,194 $ 300,705 $ 180,189
============ ============ ============ ============
</TABLE>
See accompanying notes
<PAGE> 174
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Municipal U.S. Treasury
Market Money Market Money Market
Portfolio Portfolio Portfolio
------------ ------------ ------------
(in thousands)
<S> <C> <C> <C>
ASSETS:
Investments in securities at value
(cost - $1,723,268; $68,793;
$163,896, respectively) *................. $ 1,723,268 $ 68,793 $ 163,896
Cash......................................... - - 6
Dividends and interest receivable............ 9,976 251 19
Receivable for investments sold.............. - 1,000 -
Deferred organization costs.................. 40 40 40
------------ ------------ ------------
Total assets.................................... 1,733,284 70,084 163,961
------------ ------------ ------------
Liabilities:
Payable for investments purchased............ 66,393 - 34,143
Management and investment advisory
fees payable (Note 2)..................... 707 - 37
Accrued organization costs................... 43 43 43
Other liabilities............................ 317 34 42
------------ ------------ ------------
Total liabilities............................... 67,460 77 34,265
------------ ------------ ------------
Net assets applicable to investors'
beneficial interests......................... $ 1,665,824 $ 70,007 $ 129,696
============ ============ ============
</TABLE>
* Includes repurchase agreements of $129,753 for the U.S. Treasury Money
Market Portfolio.
See accompanying notes
<PAGE> 175
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF OPERATIONS
PERIOD FROM NOVEMBER 1, 1995 THROUGH FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 7,417 $ 971 $ 310 $ 4,328
------------ ------------ ------------ ------------
Dividend income (net of foreign taxes of
$145 in International Equity Portfolio)....... 6,071 9,365 1,231 -
Income derived from securities lending, net....... 12 6 19 1
------------ ------------ ------------ ------------
Total investment income.............................. 13,500 10,342 1,560 4,329
------------ ------------ ------------ ------------
EXPENSES:
Management and investment advisory
fees (Note 2)................................... 946 923 411 153
Custodian fees.................................... 40 31 94 15
Professional fees................................. 7 7 6 5
Other............................................. 22 22 12 14
------------ ------------ ------------ ------------
1,015 983 523 187
------------ ------------ ------------ ------------
Less fees waived (Note 2)......................... - - - -
------------ ------------ ------------ ------------
Net expenses......................................... 1,015 983 523 187
------------ ------------ ------------ ------------
Net investment income................................ 12,485 9,359 1,037 4,142
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.................. 16,104 16,791 2,167 1,273
Net realized gain on foreign currency
transactions.................................. - - 242 -
Net unrealized appreciation (depreciation) of
investments..................................... 39,623 72,215 26,397 (1,647)
Net unrealized depreciation of foreign currency
contracts and translations..................... - - (5,365) -
------------ ------------ ------------ ------------
Net gain (loss) on investments....................... 55,727 89,006 23,441 (374)
------------ ------------ ------------ ------------
Increase in net assets resulting from
operations........................................ $ 68,212 $ 98,365 $ 24,478 $ 3,768
============ ============ ============ ============
<CAPTION>
Municipal U.S. Treasury
Money Money Money
Market Market Market
Portfolio Portfolio Portfolio
------------ ------------ -------------
(in thousands)
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................................... $ 27,474 $ 444 $ 1,351
------------ ------------ -------------
Dividend income (net of foreign taxes of
$145 in International Equity Portfolio)....... - - -
Income derived from securities lending, net....... - - -
------------ ------------ -------------
Total investment income.............................. 27,474 444 1,351
------------ ------------ -------------
EXPENSES:
Management and investment advisory
fees (Note 2)................................... 707 18 37
Custodian fees.................................... 57 1 3
Professional fees................................. 10 4 4
Other............................................. 32 9 9
------------ ------------ -------------
806 32 53
------------ ------------ -------------
Less fees waived (Note 2)......................... - 18 -
------------ ------------ -------------
Net expenses......................................... 806 14 53
------------ ------------ -------------
Net investment income................................ 26,668 430 1,298
------------ ------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.................. 31 - 25
Net realized gain on foreign currency
transactions.................................. - - -
Net unrealized appreciation (depreciation) of
investments..................................... - - -
Net unrealized depreciation of foreign currency
contracts and translations..................... - - -
------------ ------------ -------------
Net gain (loss) on investments....................... 31 - 25
------------ ------------ -------------
Increase in net assets resulting from
operations........................................ $ 26,699 $ 430 $ 1,323
============ ============ ============
</TABLE>
See accompanying notes
<PAGE> 176
AMR INVESTMENT SERVICES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM NOVEMBER 1, 1995 THROUGH FEBRUARY 29, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 12,485 $ 9,359 $ 1,037 $ 4,142
Net realized gain on investments and
foreign currency transactions.................. 16,104 16,791 2,409 1,273
Net unrealized appreciation
(depreciation) of investments and
foreign currency translations.................. 39,623 72,215 21,032 (1,647)
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations................................... 68,212 98,365 24,478 3,768
------------ ------------ ------------ ------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions......................................... 919,629 916,369 301,308 226,176
Reductions........................................ (130,696) (77,540) (25,081) (49,755)
------------ ------------ ------------ ------------
Net increase in net assets resulting
from transactions in investors'
beneficial interests.............................. 788,933 838,829 276,227 176,421
------------ ------------ ------------ ------------
Net increase in net assets........................... 857,145 937,194 300,705 180,189
------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period.................................. - - - -
------------ ------------ ------------ ------------
End of period........................................ $ 857,145 $ 937,194 $ 300,705 $ 180,189
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
- ------------------------------------------------------------------------------------------------------------
Ratios:
Net investment income to average net
assets (annualized)............................ 4.45% 3.24% 1.13% 6.76%
Expenses to average net assets
(annualized) *.................................... 0.36% 0.34% 0.57% 0.31%
Portfolio turnover rate........................... 56% 30% 28% 242%
Average commission rate paid...................... $ 0.0466 $ 0.0463 $ 0.0205 -
<CAPTION>
Municipal U.S. Treasury
Money Money Money
Market Market Market
Portfolio Portfolio Portfolio
------------ ------------ -------------
(in thousands)
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 26,668 $ 430 $ 1,298
Net realized gain on investments and
foreign currency transactions.................. 31 - 25
Net unrealized appreciation
(depreciation) of investments and
foreign currency translations.................. - - -
------------ ------------ -------------
Net increase in net assets resulting
from operations................................... 26,699 430 1,323
------------ ------------ -------------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTERESTS:
Additions......................................... 4,959,586 95,479 210,503
Reductions........................................ (3,320,461) (25,902) (82,130)
------------ ------------ -------------
Net increase in net assets resulting
from transactions in investors'
beneficial interests.............................. 1,639,125 69,577 128,373
------------ ------------ -------------
Net increase in net assets........................... 1,665,824 70,007 129,696
------------ ------------ -------------
NET ASSETS:
Beginning of period.................................. - - -
------------ ------------ -------------
End of period........................................ $ 1,665,824 $ 70,007 $ 129,696
============ ============ ============
- ----------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA:
- ----------------------------------------------------------------------------------------------
Ratios:
Net investment income to average net
assets (annualized)............................ 5.66% 3.65% 5.31%
Expenses to average net assets
(annualized) ..................................... 0.17% 0.12% 0.22%
Portfolio turnover rate........................... - - -
Average commission rate paid...................... - - -
</TABLE>
See accompanying notes
<PAGE> 177
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
AMR Investment Services Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a no-load, open-end, management
investment company which was organized as a trust under the laws of the State
of New York pursuant to a Declaration of Trust dated as of June 27, 1995 and
amended on August 11, 1995. Beneficial interests in the Trust are divided into
seven separate series, each having distinct investment objectives and policies,
as follows: AMR Investment Services Balanced Portfolio, AMR Investment Services
Growth and Income Portfolio, AMR Investment Services International Equity
Portfolio, AMR Investment Services Limited-Term Income Portfolio, AMR
Investment Services Money Market Portfolio, AMR Investment Services Municipal
Money Market Portfolio, and AMR Investment Services U.S. Treasury Money Market
Portfolio (each a "Portfolio" and collectively the "Portfolios"). The assets
of each Portfolio belong only to that Portfolio, and the liabilities of each
Portfolio are borne solely by that Portfolio and no other. The Trust commenced
active operations on November 1, 1995.
AMR Investment Services, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services.
The following is a summary of the significant accounting policies
followed by the Portfolios.
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. Portfolio 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 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 Portfolios
(the "Money Market Portfolios") 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 Portfolios, 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. 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 Portfolios. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
amortization of premiums or accretion of discounts on investment grade
short-term securities and zero coupon instruments. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
<PAGE> 178
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
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 Portfolios 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 Portfolio 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.
Federal Income and Excise Taxes
The Portfolios will be treated as partnerships for federal income tax
purposes. As such, each investor in a Portfolio will be taxed on its share of
the Portfolio's ordinary income and capital gains. It is intended that each
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of sub-chapter M of the
Internal Revenue Code. Accordingly, no provision for United States federal
income or excise tax is necessary.
Repurchase Agreements
Under the terms of a repurchase agreement, securities are acquired by
a Portfolio from a securities dealer or a bank which are subject to resale at a
later date. Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. All collateral is held through the Portfolios'
custodian bank and is monitored daily by each Portfolio so that the
collateral's market value exceeds the carrying value of the repurchase
agreement.
Deferred Organization Expenses
Expenses incurred by a Portfolio in connection with its organization
are being amortized on a straight-line basis over a five-year period.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement which
obligates the Manager to provide or oversee the provision of all
administrative, investment advisory and portfolio management services.
Investment assets of the Balanced, Growth and Income, and International Equity
Portfolios 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 Portfolio, and each
of the Money Market Portfolios. As compensation for performing the duties
required under the Management Agreement, the Manager receives from the
Portfolios an annualized fee equal to .25% of the average daily net assets of
the Limited-Term Income Portfolio, .15% of the average daily net assets of each
of the Money Market Portfolios, and .10% of the average daily net assets of the
Balanced, Growth and Income, and International Equity Portfolios. In addition,
the Manager is reimbursed by the Portfolios for fees paid to investment
advisers
<PAGE> 179
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
hired by the Manager to direct investment activities of the Balanced, Growth
and Income and International Equity Portfolios. During the period ended
February 29, 1996, the Manager waived management fees totaling $18,000 for the
Municipal Money Market Portfolio.
Other
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 and their spouses are provided unlimited air
transportation. For the period ended February 29, 1996, the cost of air
transportation was not material to any of the Portfolios.
3. INVESTMENT TRANSACTIONS
Investment transactions for the period ended February 29, 1996
(excluding short-term investments) are as follows (in thousands):
<TABLE>
<CAPTION>
Growth and International Limited-Term
Balanced Income Equity Income
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Purchases $174,546 $136,764 $31,339 $144,530
Proceeds from sales 152,570 80,845 23,858 163,098
</TABLE>
4. COMMITMENTS
In order to protect itself against a decline in the value of
particular foreign currencies against the U.S. dollar, the International
Equity Portfolio has entered into forward contracts to deliver foreign currency
in exchange for U.S. dollars as described below. The Portfolio 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 Portfolio also bears the credit risk if
the counterparty fails to perform under the contract. At February 29, 1996,
the Portfolio had outstanding forward foreign currency contracts as follows:
<TABLE>
<CAPTION>
CONTRACTS TO SELL Settlement Unrealized
(amounts in thousands) Date Value Gain (Loss)
---- ----- -----------
<S> <C> <C> <C>
5,300 DEM 3/1/96 3,606 68
1,800 DEM 8/9/96 1,233 60
7,000 DEM 8/9/96 4,795 44
8,000 FRF 10/11/96 1,592 3
303,456 JPY 10/11/96 2,966 233
2,750 NLG 11/14/96 1,695 74
3,900 NLG 11/14/96 2,404 117
300,000 ESP 12/2/96 2,369 (4)
195,000 JPY 12/20/95 1,923 88
------- ----
Total contracts to sell
(Receivable amount $23,266) $22,583 $683
======= ====
</TABLE>
<PAGE> 180
AMR INVESTMENT SERVICES TRUST
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(Unaudited) - (continued)
- --------------------------------------------------------------------------------
5. SECURITIES LENDING
The Portfolios 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 February 29, 1996, securities with
a market value of approximately $9,868,300, $13,533,200, $11,048,200 and
$3,822,000 were loaned by the Balanced, Growth and Income, International Equity
and Limited-Term Income Portfolios, respectively. The collateral for these
loans totaled $10,095,200, $13,844,400, $11,633,800 and $3,941,100,
respectively.
<PAGE> 181
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Trustees
American AAdvantage Balanced Mileage Fund
American AAdvantage Growth & Income Mileage Fund
American AAdvantage International Equity Mileage Fund
American AAdvantage Limited Term Income Mileage Fund
American AAdvantage Money Market Mileage Fund
American AAdvantage Municipal Money Market Mileage Fund
American AAdvantage U.S. Treasury Money Market Mileage Fund
We have audited the accompanying statements of assets and liabilities of the
American AAdvantage Balanced Mileage Fund, the American AAdvantage Growth &
Income Mileage Fund, the American AAdvantage International Equity Mileage Fund,
the American AAdvantage Limited-Term Income Mileage Fund, the American
AAdvantage Money Market Mileage Fund, the American AAdvantage Municipal Money
Market Mileage Fund, and the American AAdvantage U.S. Treasury Money Market
Mileage Fund (collectively, the "Mileage Funds") (seven separate portfolios
comprising the American AAdvantage Mileage Funds), as of September 13, 1995.
These statements of assets and liabilities are the responsibility of the Mileage
Funds' management. Our responsibility is to express an opinion on the
statements of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of assets and
liabilities. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial presentation of the statements of assets and liabilities. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of each of the
respective American AAdvantage Mileage Funds at September 13, 1995 in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Dallas, Texas
September 15, 1995
<PAGE> 182
AMERICAN AADVANTAGE MILEAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 13, 1995
<TABLE>
<CAPTION>
Balanced Growth and International Limited-Term
Fund Income Fund Equity Fund Income Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash......................................... $ 1,000 $ 1,000 $ 1,000 $ 1,000
Deferred organization expenses............... 10,200 10,200 10,200 10,200
------------ ------------ ------------ ------------
Total assets............................... 11,200 11,200 11,200 11,100
------------ ------------ ------------ ------------
LIABILITIES:
Due to Manager............................... 10,200 10,200 10,200 10,100
------------ ------------ ------------ ------------
Total liabilities.......................... 10,200 10,200 10,200 10,100
------------ ------------ ------------ ------------
NET ASSETS:
Applicable to 50; 50; 50; 50; 94,000;
1,000; and 1,000 shares of beneficial
interest, respectively (unlimited
authorization - no par value............... $ 1,000 $ 1,000 $ 1,000 $ 1,000
============ ============ ============ ============
NET ASSET VALUE, offering and
redemption price per share................... $ 20.00 $ 20.00 $ 20.00 $ 20.00
============ ============ ============ ============
<CAPTION>
Municipal U.S. Treasury
Money Market Money Market Money Market
Fund Fund Fund
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Cash......................................... $ 94,000 $ 1,000 $ 1,000
Deferred organization expenses............... 12,100 10,600 10,300
------------ ------------ ------------
Total assets............................... 106,100 11,600 11,300
------------ ------------ ------------
LIABILITIES:
Due to Manager............................... 12,100 10,600 10,300
------------ ------------ ------------
Total liabilities.......................... 12,100 10,600 10,300
------------ ------------ ------------
NET ASSETS:
Applicable to 50; 50; 50; 50; 94,000;
1,000; and 1,000 shares of beneficial
interest, respectively (unlimited
authorization - no par value............... $ 94,000 $ 1,000 $ 1,000
============ ============ ============
NET ASSET VALUE, offering and
redemption price per share................... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
</TABLE>
See accompanying notes.
<PAGE> 183
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 13, 1995
1. ORGANIZATION
American AAdvantage Mileage Funds (the "Trust") is organized as a
Massachusetts business trust under a Declaration of Trust dated February 14,
1995 and is registered under the Investment Company Act of 1940, as amended, as
a no-load, open-end, management investment company. On July 19, 1995, the
trust's Board of Trustees created seven new portfolios: the American AAdvantage
Balanced Mileage Fund, the American AAdvantage Growth and Income Mileage Fund,
the American AAdvantage International Equity Mileage Fund, the American
AAdvantage Limited-Term Income Mileage Fund, the American AAdvantage Money
Market Mileage Fund, the American AAdvantage Municipal Money Market Mileage
Fund, and the American AAdvantage U.S. Treasury Money Market Mileage Fund
(collectively, the "Funds"). The Funds had no operations other than those
related to organizational matters and the sale of 50 shares of beneficial
interest of the Balanced, Growth and Income, International Equity and
Limited-Term Income Funds for $1,000 per Fund, 94,000 shares of beneficial
interest of the Money Market Fund for $94,000 and 1,000 shares of beneficial
interest of the Municipal Money Market and U.S. Treasury Money Market Funds for
$1,000 per Fund to AMR Investment Services, Inc. (the "Manager"), on September
13, 1995. The Trust has been advised that the Manager has no present intention
of redeeming or reselling such shares. The Manager is a wholly owned subsidiary
of AMR Corporation, the parent company of American Airlines, Inc., and was
organized in 1986 to provide business management, advisory, administrative and
asset management consulting services.
2. DEFERRED ORGANIZATION EXPENSES AND TRANSACTIONS WITH AFFILIATES
It is expected that the Funds will reimburse the Manager over a
five-year period for the costs incurred by the Manager in connection with the
Funds' organization. The costs will be deferred and amortized on a
straight-line basis over a period of five years beginning upon commencement of
active operations.
Certain officers and/or Trustees of the Trust are also officers of the
Manager.
<PAGE> 184
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:
Financial Highlights - American AAdvantage Funds -
Money Market, Municipal Money Market and U.S.
Treasury Money Market Funds (Institutional Class) -
for each year from commencement of operations up to
fiscal year ending October 31, 1995.
Financial Highlights - American AAdvantage Money
Market Mileage Fund (Platinum Class) - for the period
January 29, 1996, (commencement of operations) to
February 29, 1996.
Included in Part B:
American AAdvantage Funds-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.
American AAdvantage Mileage Funds - Statements of
Assets and Liabilities - February 29, 1996; Statements of Operations for the
period from November 1, 1995 through February 29, 1996; Statements of Changes
in Net Assets for the period from November 1, 1995 through February 29, 1996;
Notes to Financial Statements.
AMR Investment Services Trust - Schedules of
Investments - February 29, 1996; Statements of Assets and Liabilities -
February 29, 1996; Statements of Operations for the period from November 1,
1995 through February 29, 1996; Statements of Changes in Net Assets for the
period from November 1, 1995 through February 29, 1996; Notes to Financial
Statements.
(b) Exhibits:
(1) Declaration of Trust (i)
(2) Bylaws (i)
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<PAGE> 185
(3) Voting trust agreement -- none
(4) Specimen security -- none
(5) (a) Fund Management Agreement (iv),
(ix), (x) & (xii)
(b) Fund Advisory Agreements (iii),
(iv), (v), (ix) & filed herewith
(c) Administrative Services Agreement
for the PlanAhead, AMR and
Institutional Classes (iv), (ix) &
(x)
(d) Administrative Services Plan for the
Platinum Class (x)
(6) Distribution Agreement (x)
(7) Bonus, profit sharing or pension plans --
none
(8) Custodian Agreement (ii) & (xii)
(9) (a) Transfer Agency and Service
Agreement with NationsBank Texas,
N.A. (ii), (xii) and filed herewith
(b) Transfer Agency and Registrar
Agreement with Goldman, Sachs & Co.
(vi) (ix) & (xii)
(c) Service Plan Agreement for the
PlanAhead Class (ix)
(10) Opinion and consent of counsel (xiii)
(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
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<PAGE> 186
(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. 2 to
the registration statement of the Trust on Form N-1A as filed
with the SEC on April 1, 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 PEA No. 15 to the registration
statement of the Trust on Form N-1A as filed with the SEC on
December 22, 1995.
(xiii) Incorporated by reference to the legal opinion contained in
the Trust's Rule 24f-2 Notice as filed with the SEC on
December 8, 1995.
Item 25. Persons Controlled by or under
Common Control with Registrant
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<PAGE> 187
See "Control Persons and 5% Shareholders" in the Statement of
Additional Information dated May 1, 1996.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders as of March 31, 1996
----------------------------------------------------------------------
Inst'l PlanAhead AMR Platinum
Fund Class Class Class Class
---- ------ --------- ----- --------
<S> <C> <C> <C> <C>
Balanced Fund 22 184 1 -
Growth and Income Fund 19 277 1 -
Limited-Term Income 20 38 1 -
Fund
International Equity 14 115 1 -
Fund
Money Market Fund 184 668 - 5,696*
Municipal Money Market 3 18 1,107*
Fund
U.S. Treasury Money 10 25 5,306*
Market Fund
</TABLE>
Short-Term Income Fund 1
* As of April 29, 1996
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,
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<PAGE> 188
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(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;
C-5
<PAGE> 189
(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.
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, 3232 McKinney Avenue, 15th Floor,
Dallas, Texas 75204.
Brandywine Asset Management, Inc., 201 North Walnut Street,
Wilmington, Delaware 19801.
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<PAGE> 190
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.
Rowe Price-Fleming International, Inc., 100 East Pratt Street,
Baltimore, Maryland 21202.
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.
Boatmen's Trust Company, ("Boatmen's") 100 N. Broadway, St. Louis,
Missouri 63178, 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
Boatmen's 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 is
listed above.
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
Howard F. Baer Director, Retired
Clarence C. Barksdale Director, Vice Chairman-Washington
7425 Forsyth Blvd. University
Campus Box 1227
St. Louis, MO 63105
Gerard D. Blatherwick Director, Retired
Stephen F. Brauer Director, President-Hunter
11250 Hunter Drive Engineering Company
Bridgeton, MO 63044
Mary L. Burke, Ph.D. Director, Head of School-Whitfield
175 South Mason Road School
</TABLE>
C-7
<PAGE> 191
<TABLE>
<S> <C>
St. Louis, MO 63141
Andrew B. Craig, III Director, Chairman & Chief
One Boatmen's Plaza Executive Officer Boatmen's
St. Louis, MO 63101 Bancshares, Inc.
Donald Danforth, Jr. Director, President-Danforth Agri-
700 Corporate Park Resources, Inc.
Drive, Suite 330
St. Louis, MO 63105
Martin E. Galt, III Chairman of the Board, President
and Chief Executive Officer-
Boatmen's Trust Company
A. William Hager Director, Chairman of the Board-
139 Victor Street Hager Hinge Company
St. Louis, MO 63104
Samuel B. Hayes, III Director, President-Boatmen's
One Boatmen's Plaza Bancshares, Inc.
St. Louis, MO 63101
Robert E. Kresko Director
Pierre Laclede Center
7701 Forsyth, Suite 680
St. Louis, MO 63105
John Peters MacCarthy Director, Retired
James S. McDonnell, III Director, Retired
John B. McKinney Director, President and Chief
One Metropolitan Executive Officer-Laclede Steel
Square, 15th Floor Company
St. Louis, MO 63102
Reuben M. Morriss, III Director, Retired
William C. Nelson Director, Chairman, President and
10th & Baltimore Chief Executive Officer Boatmen's
P.O. Box 419038 First National Bank of Kansas City
Kansas City, MO 64183
</TABLE>
Item 29. Principal Underwriter
(a) Brokers Transaction Services, Inc., 7001 Preston
Road, Dallas, TX 75205 is the principal underwriter for the Trust and the
American AAdvantage Mileage Funds.
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<PAGE> 192
(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 None
Raymond E. Wooldridge Chief Executive Officer, None
Director
William D. Felder Executive Vice None
President, Director
Sue H. Peden President None
Barbara Hart Secretary and Treasurer None
</TABLE>
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, 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.
C-9
<PAGE> 193
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.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <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)
(b) Fund Advisory Agreements (iii), (iv), (v), (viii), (ix) & (filed herewith)
(c) Administrative Services Agreement for the AMR, Institutional and PlanAhead Classes
(iv), (ix) & (x)
(d) Administrative Services Plan for the Platinum Class (x)
6 Distribution Agreement (x)
7 Bonus, profit sharing or pension plans -- none
8 Custodian Agreement (ii) & (xii)
9 (a) Transfer Agency and Service Agreement with
NationsBank Texas, N.A. (ii), (xii) & (filed herewith)
(b) Transfer Agency and Registrar Agreement with Goldman, Sachs & Co. (vi), (ix) & (xii)
(c) Service Plan Agreement for the PlanAhead Class (ix)
</TABLE>
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<PAGE> 194
<TABLE>
<S> <C>
10 Opinion and consent of counsel (xiii)
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. 2 to the registration statement of the Trust
on Form N-1A as filed with the SEC on April 1, 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.
</TABLE>
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<PAGE> 195
<TABLE>
<S> <C>
(x) Incorporated by reference to PEA No. 13 to the registration statement of the Trust Form on 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 PEA No. 15 to the registration statement of the Trust on Form N-1A as
filed with the SEC on December 22, 1995.
(xiii) Incorporated by reference to the legal opinion contained in the Trust's Rule 24f-2 Notice as filed with
the SEC on December 8, 1995.
</TABLE>
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<PAGE> 196
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. 16 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 April 30, 1996.
No other material event requiring prospectus disclosure has occurred since the
later of the dates specified in Rule 485(b)(3).
AMERICAN AADVANTAGE FUNDS
By: /s/ William F. Quinn
-------------------------------
William F. Quinn
President
Attest:
/s/ Barry Y. Greenberg
- --------------------------------------
Barry Y. Greenberg
Vice President and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 16 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 April 30, 1996
- ------------------------ Trustee
William F. Quinn
David G. Fox* Trustee April 30, 1996
- ------------------------
David G. Fox
John S. Justin* Trustee April 30, 1996
- ------------------------
John S. Justin
Stephen D. O'Sullivan* Trustee April 30, 1996
- ------------------------
Stephen D. O'Sullivan
Roger T. Staubach* Trustee April 30, 1996
- ------------------------
Roger T. Staubach
*By /s/ William F. Quinn
---------------------------------------
William F. Quinn, Attorney-In-Fact
</TABLE>
<PAGE> 197
SIGNATURES
AMR Investment Services Trust has duly caused this Post-Effective
Amendment No. 16 to the Registration Statement on Form N-1A of the American
AAdvantage Funds to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth and the State of Texas on April 30, 1996.
No other material event requiring prospectus disclosure has occurred since the
later of the dates specified in Rule 485(b)(3).
AMR INVESTMENT SERVICES TRUST
By: /s/ William F. Quinn
-------------------------------
William F. Quinn
President
Attest:
/s/ Barry Y. Greenberg
- --------------------------------------
Barry Y. Greenberg
Vice President and Assistant Secretary
This Post-Effective Amendment No. 16 to the Registration Statement of
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 April 30, 1996
- ------------------------ Trustee
William F. Quinn
David G. Fox* Trustee April 30, 1996
- ------------------------
David G. Fox
John S. Justin* Trustee April 30, 1996
- ------------------------
John S. Justin
Stephen D. O'Sullivan* Trustee April 30, 1996
- ------------------------
Stephen D. O'Sullivan
Roger T. Staubach* Trustee April 30, 1996
- ------------------------
Roger T. Staubach
*By /s/ William F. Quinn
---------------------------------------
William F. Quinn, Attorney-In-Fact
</TABLE>
<PAGE> 198
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ------------
<S> <C> <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)
(b) Fund Advisory Agreements (iii), (iv), (v), (viii), (ix) & (filed herewith)
(c) Administrative Services Agreement for the AMR, Institutional and PlanAhead Classes
(iv), (ix) & (x)
(d) Administrative Services Plan for the Platinum Class (x)
6 Distribution Agreement (x)
7 Bonus, profit sharing or pension plans -- none
8 Custodian Agreement (ii) & (xii)
9 (a) Transfer Agency and Service Agreement with
NationsBank Texas, N.A. (ii), (xii) & (filed herewith)
(b) Transfer Agency and Registrar Agreement with Goldman, Sachs & Co. (vi), (ix) & (xii)
(c) Service Plan Agreement for the PlanAhead Class (ix)
10 Opinion and consent of counsel (xiii)
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. 2 to the registration statement of the Trust
on Form N-1A as filed with the SEC on April 1, 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.
</TABLE>
<PAGE> 1
EXHIBIT 5(b)
AMERICAN AADVANTAGE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of April, 1996 by and between AMR
Investment Services, Inc., a Delaware Corporation, (the "Manager") and
_______________________ (the "Adviser");
WHEREAS, American AAdvantage Funds (the "Trust"), a Massachusetts
Business Trust, is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended, consisting of
several series (portfolios) of shares, each having its own investment policies;
and
WHEREAS, the Trust has retained the Manager to provide the Trust with
business and asset management services, subject to the control of the Board of
Trustees;
WHEREAS, the Trust's agreement with the Manager permits the Manager to
delegate to other parties certain of its asset management responsibilities; and
WHEREAS, the Manager desires to retain the Adviser to render
investment management services to the Trust with respect to certain of its
investment portfolios and such other investment portfolios as the Trust and the
Adviser may agree upon and so specify in the Schedule(s) attached hereto
(collectively the "Portfolios") and as described in the Trust's registration
statement on Form N-1A as amended from time to time, and the Adviser is willing
to render such services;
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Manager employs the Adviser to manage
the investment and reinvestment of such portion, if any, of the Portfolios'
assets as is designated by the Manager from time to time, and with respect to
such assets, to continuously review, supervise and administer the investment
program of the Portfolios, to determine in the Advisers discretion the
securities to be purchased or sold, to provide the Manager and the Trust with
records concerning the Adviser's activities which the Trust is required to
maintain, and to render regular reports to the Manager and to the Trust's
officers and Trustees concerning the Adviser's discharge of the foregoing
responsibilities. The Adviser shall discharge the foregoing responsibilities
subject to the Manager's oversight and the control of the officers and the
Trustees of the Trust and in compliance with such policies as the Trustees may
from time to
<PAGE> 2
time establish, and in compliance with the objectives, policies, and
limitations for each such Portfolio set forth in the Trust's current
registration statement as amended from time to time and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services for the compensation specified herein and to provide at its own
expense the office space, furnishings and equipment and the personnel required
by it to perform the services on the terms and for the compensation provided
herein. (With respect to any of the Portfolio assets allocated for management
by the Adviser, the Adviser can request that the Manager make the investment
decisions with respect to that portion of assets which the Adviser deems should
be invested in short-term money market instruments. The Manager agrees to
provide this service.) The Manager will instruct the Trust's Custodian(s) to
hold and/or transfer the Portfolios' assets in accordance with Proper
Instructions received from the Adviser. (For this purpose the term "Proper
Instructions" shall have the meaning(s) specified in the applicable
agreements(s) between the Trust and its Custodian(s).) The Adviser will not be
responsible for the cost of securities or brokerage commissions or any other
Trust expenses except as specified in this Agreement.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers (including, to the extent permitted by law and applicable
Trust guidelines, the Adviser or any of its affiliates) that will execute the
purchases and sales of portfolio securities for the Portfolios and is directed
to use its best efforts to obtain the best net results with respect to brokers'
commissions and discounts as described in the Trust's current registration
statement as amended from time to time. In selecting brokers or dealers, the
Adviser may give consideration to factors other than price, including, but not
limited to, research services and market information. Any such services or
information which the Adviser receives in connection with activities for the
Trust may also be used for the benefit of other clients and customers of the
Adviser or any of its affiliates. The Adviser will promptly communicate to the
Manager and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by
the Adviser as provided in Sections 1 and 2 of this Agreement, the Manager
shall pay to the Adviser compensation at the rate specified in Schedule(s)
attached hereto and made a part of this Agreement. Such compensation shall be
paid to the Adviser quarterly in arrears, and shall be calculated by applying
the annual percentage rate(s) as specified in the attached Schedule(s) to the
average month-end assets of the specified portfolios during the relevant
quarter. Solely for the purpose
2
<PAGE> 3
of calculating the applicable annual percentage rates specified in the attached
Schedule(s), there shall be included such other assets as are specified in said
Schedule(s).
The Adviser agrees that the fee charged to the Manager will be no more
than that charged for any other client of similar type. Furthermore, the
Adviser agrees to notify the Manager on a timely basis of any fee schedule it
enters into with any other client of similar type which is lower than the fee
paid by the Manager.
4. OTHER SERVICES. At the request of the Trust or the Manager, the
Adviser in its discretion may make available to the Trust office facilities,
equipment, personnel, and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Adviser and
billed to the Trust or the Manager at a price to be agreed upon by the Adviser
and the Trust or the Manager.
5. REPORTS. The Manager (on behalf of the Trust) and the Adviser
agree to furnish to each other, if applicable, current prospectuses, proxy
statements, reports to shareholders, certified copies of their financial
statements, and such other information with regard to their affairs as each may
reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser and its directors, officers,
employees and affiliates shall be free to render similar services to others so
long as its services to the Trust are not impaired thereby. The Adviser shall
be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Manager
or the Trust in any way or otherwise be deemed an agent to the Manager or the
Trust.
7. CERTAIN RECORDS. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or maintained by
the Adviser on behalf of the Manager or the Trust are the property of the
Manager or the Trust and will be surrendered promptly to the Manager or Trust
on request.
8. LIABILITY OF ADVISER. No provision of this Agreement shall be
deemed to protect the Adviser against any liability to the Trust or its
shareholders to which it might otherwise be subject by reason of any willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
the reckless disregard of its obligations under this Agreement.
3
<PAGE> 4
9. PERMISSIBLE INTERESTS. To the extent permitted by law, Trustees,
agents, and shareholders of the Trust are or may be interested in the Adviser
(or any successor thereof) as directors, partners, officers, or shareholders,
or otherwise; directors, partners, officers, agents, and shareholders of the
Adviser are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor thereof) is or may be interested
in the Trust as a shareholder or otherwise; provided that all such interests
shall be fully disclosed between the parties on an ongoing basis and in the
Trust's registration statement as required by law.
10. DURATION AND TERMINATION. This Agreement, unless sooner
terminated as provided herein, shall continue for two years after its initial
approval as to each Portfolio and thereafter for periods of one year for so
long as such continuance thereafter is specifically approved at least annually
(a) by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust or by vote of a majority of the outstanding voting
securities of each Portfolio; provided, however, that if the shareholders of
any Portfolio fail to approve the Agreement as provided herein, the Adviser may
continue to serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and rules thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the Investment Company Act of
1940 and the rules and regulations thereunder. This Agreement may be
terminated as to any Portfolio at any time, without the payment of any penalty,
by the Manager, by vote of a majority of the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Portfolio on not less
than 30 days nor more than 60 days written notice to the Adviser, or by the
Adviser at any time without the payment of any penalty, on 60 days written
notice to the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed postpaid, to the
other party at the primary office of such party, unless such party has
previously designated another address.
As used in this Section 10, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in the Investment company Act of 1940
and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission under said Act.
4
<PAGE> 5
11. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is not binding upon any of the Trustees, officers, or
shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
_______________________________ AMR INVESTMENT SERVICES INC.
By ____________________________ By ___________________________
Its ___________________________ Its ________________________
5
<PAGE> 6
Schedule A
to the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Boatmen's Trust Company
AMR Investment Services, Inc. shall pay compensation to Boatmen's
Trust Company pursuant to section 3 of the Investment Advisory Agreement
between said parties in accordance with the following annual percentage rates:
For the Balanced Fund and the Growth and Income Fund
Annualized Fee Equal to 0.25%
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another investment company, however, no portion of the
advisory fee attributable to that Fund as specified above shall be paid for the
period that such Fund's assets are so invested.
DATED: April 1, 1996
6
<PAGE> 7
Schedule A to the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Brandywine Asset Management, Inc.
AMR Investment Services, Inc. shall pay compensation to Brandywine
Asset Management Inc. pursuant to section 3 of the Investment Advisory
Agreement between said for rendering investment management services with
respect to the Growth and Income and Balanced Funds in accordance with the
following annual percentage rates:
1. For assets up to $500 million:
Growth and Income Fund: 0.25%
Balanced Fund: 0.225%
2. For assets $500 - 600 million:
0.225%
3. For assets over $600 million:
0.20%
In calculating the amount of assets under management solely for the
purpose of determining the applicable percentage rate, there shall be included
all other assets or trust assets of American Airlines, Inc. also under
management by the Adviser.
For purposes of calculating the fee for assets between $500 million
and $600 million, the reduced fee rate will be applied pro rata based on assets
for each equity portfolio. For purposes of calculating the fee for assets over
$600 million, the reduced fee rate will be applied pro rata based on assets for
each portfolio.
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another investment company, however, no portion of the
advisory fee attributable to that Fund as specified above shall be paid for the
period that such Fund's assets are so invested.
DATED: April 1, 1996
7
<PAGE> 8
Schedule A
to the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc. and
Rowe Price-Fleming International, Inc.
AMR Investment Services, Inc. shall pay compensation to Rowe
Price-Fleming International, Inc. pursuant to section 3 of the Investment
Advisory Agreement between said parties in accordance with the following annual
percentage rates:
1. Assets Less Than $200 Million*
0.75% per annum on the first $ 20 million
0.60% per annum on the next $ 30 million
0.50% per annum on the next $150 million
2. Assets More Than $200 Million and under $500 Million
0.50% per annum on all assets
3. Assets More Than $500 Million and Less Than $750 Million
0.45% per annum on all assets
4. Assets over $750 Million
0.40% on all assets
* A sliding credit to fees when asset levels are between $184 million
and $200 million has been established. The credit prorates the
difference between the original tiered fee and the flat fee over the
difference between $200 million and the current asset size. The
credit is calculated on a quarterly basis as follows:
Portfolio Size - $184 Million X $20,000
---------------------------------------
$16 Million
In calculating the amount of assets under management solely for the
purpose of determining the applicable percentage rate, there shall be included
all other assets or trust assets of American Airlines, Inc. also under
management by the Adviser.
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another investment company, however, no portion of the
advisory fee attributable to that Fund as specified above shall be paid for the
period that such Fund's assets are so invested.
DATED: April 1, 1996
8
<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
$110,000 per year
American AAdvantage Funds - AMR Class
$5,500 per year
American AAdvantage Funds - Platinum Class
$5,000 per year
<PAGE> 1
EXHIBIT 11
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 use of our report dated December 19,
1995 in the Registration Statement (Form N-1A) and its incorporation by
reference in the related Prospectus of American AAdvantage Funds, filed with
the Securities and Exchange Commission in this Post-Effective Amendment No. 16
to the Registration Statement under the Securities Act of 1933 (File No.
33-11387) and in this Amendment No. 17 to the Registration Statement under the
Investment Company Act of 1940.
ERNST & YOUNG LLP
Dallas, Texas
April 26, 1996
<PAGE> 1
Exhibit 16
SCHEDULE OF COMPUTATION OF PERFORMANCE
QUOTATIONS
P (1+T) n = ERV
Where: P = Hypothetical Initial Payment of $1000
T = Average Annual Total Return
n = Number of Years
ERV = Ending Redeemable Value of Hypothetical $1000
Investment Made at the Beginning of the Year
<TABLE>
<CAPTION>
ONE YEAR PERIOD FIVE YEAR PERIOD
PLATINUM CLASS (3/1/95 - 2/29/96) (3/1/91 - 2/29/96) SINCE INCEPTION TO 2/29/96
- -------------- ----------------------------- ------------------------------- ----------------------------
<S> <C> <C> <C>
(8.4982)
MONEY MARKET FUND 1000 (1+ .057719)= 1057.719 1000 (1+ .047431)5= 1260.745 1000 (1+ .062203)= 1670.001
Inception date (9/1/87) (5.77%) (4.74%) (6.22%)
MONEY MARKET MILEAGE (8.4982)
FUND Inception date 1000 (1+ .055735)= 1055.735 1000 (1+ .045182)5= 1247.268 1000 (1+ .060860)= 1652.142
(9/1/87) (5.57%) (4.52%) (6.09%)
MUNICIPAL MONEY MARKET (2.3064)
FUND 1000 (1+ .035763)= 1035.763 N/A 1000 (1+ .030926)= 1072.773
Inception date (3.58%) (3.09%)
(11/10/93)
U.S. TREASURY MONEY (3.9996)
MARKET FUND 1000 (1+.054766)= 1054.766 N/A 1000 (1+ .041134)= 1174.950
Inception date (3/2/92) (5.48%) (4.11%)
</TABLE>
MONEY MARKET FUNDS - FOR THE 7 DAY PERIOD ENDED 2/29/96
<TABLE>
<CAPTION>
PLATINUM CLASS CURRENT YIELD EFFECTIVE YIELD
- -------------- ------------- ---------------
<S> <C> <C>
MONEY MARKET FUND (.000892286313 x (365/7)) = 4.65% ((.000892286313 + 1)(365/7) -1) = 4.76%
MONEY MARKET MILEAGE FUND (.000860686957 x (365/7)) = 4.49% ((.000860686957 + 1)(365/7) -1) = 4.57%
MUNICIPAL MONEY MARKET FUND (.000518057725 x (365/7)) = 2.70% ((.000518057725 + 1)(365/7) -1) = 2.74%
U.S TREASURY MONEY MARKET FUND (.000853418749 x (365/7)) = 4.45% ((.000853418749 + 1)(365/7) -1) = 4.91%
</TABLE>
MUNICIPAL MONEY MARKET FUND - PLATINUM CLASS- FOR THE 7 DAY PERIOD ENDED
2/29/96
<TABLE>
<S> <C>
CURRENT TAX EQUIVALENT YIELD EFFECTIVE TAX EQUIVALENT YIELD
---------------------------- ------------------------------
(.000518057725 x (365/7))/(1-.396) = 4.47% ((.000518057725 + 1)(365/7) -1)/(1-.396) = 4.53%
</TABLE>
<TABLE> <S> <C>
<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>
<TABLE> <S> <C>
<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>
<TABLE> <S> <C>
<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>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERICAN
AADVANTAGE MILEAGE FUNDS STATEMENTS OF OPERATION, STATEMENTS OF ASSETS AND
LIABILITIES, FINANCIAL HIGHLIGHTS AND CHANGES IN NET ASSETS.
</LEGEND>
<SERIES>
<NUMBER> 132
<NAME> AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND - PLATINUM CLASS
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995<F1>
<PERIOD-END> FEB-29-1996
<INVESTMENTS-AT-COST> 104,539,745
<INVESTMENTS-AT-VALUE> 104,539,745
<RECEIVABLES> 18,829
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 8,849
<TOTAL-ASSETS> 104,566,883
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 562,415
<TOTAL-LIABILITIES> 562,415
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,004,468
<SHARES-COMMON-STOCK> 104,004,468
<SHARES-COMMON-PRIOR> 94,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 104,004,468
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,166,972
<OTHER-INCOME> 0
<EXPENSES-NET> 213,900
<NET-INVESTMENT-INCOME> 1,953,072
<REALIZED-GAINS-CURRENT> 1,843
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,954,915
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,954,915
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135,650,850
<NUMBER-OF-SHARES-REDEEMED> 33,240,579
<SHARES-REINVESTED> 1,500,197
<NET-CHANGE-IN-ASSETS> 103,910,468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,708
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 150,707
<AVERAGE-NET-ASSETS> 100,602,720
<PER-SHARE-NAV-BEGIN> 1.00<F2>
<PER-SHARE-NII> 0.004
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.004
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Platinum Class inception 1/29/96.
<F2>Platinum Class. Per share amounts are by Class.
</FN>
</TABLE>
