AMERICAN AADVANTAGE FUNDS
AMR Class
Supplement dated October 1, 1996
to the Prospectus dated March 1, 1996
1) The Board has approved a change to the dividend policy of the
Limited-Term Income Fund. Effective October 1, 1996, dividends from the
Limited-Term Income Fund will be payable to shareholders of record as of
the close of business on the day on which they are declared.
2) The AMR Trust Board has approved the addition of South Korea as an
eligible country in which the International Equity Portfolio may invest.
3) The second complete paragraph on page 17 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.
4) The first paragraph under "Fund Advisory Agreements" on page 24 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.
5)The applicable disclosures on pages 26-29 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.
6)The fee schedule for Brandywine on page 26 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.
