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