SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[x]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(3)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(c) or section
240.14a-12
__________________________________________________
AMERICAN AADVANTAGE MILEAGE FUNDS
__________________________________________________
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
American AAdvantage Funds
American AAdvantage Mileage Funds
4333 Amon Carter Boulevard, MD 5645
Fort Worth, TX 76155
November 15, 1996
Dear Shareholder:
The American AAdvantage Funds and the American AAdvantage Mileage
Funds (the "Trusts") will hold a combined special meeting of shareholders
on December 16, 1996. The Notice of the Meeting, the related Proxy
Statement and proxy card(s) are enclosed. Your prompt response will help
eliminate the cost of further proxy solicitations.
The Proxy Statement explains each proposal in detail. Please read
it carefully. The proposals are summarized below:
Election of Trustees
Shareholders of each Trust will be asked to elect seven Trustees to
each Trust's corresponding Board of Trustees. Six of the nominees are
currently serving as Trustees of the Trusts.
Supplements to the Management Agreements
Shareholders of each Fund will be asked to approve a supplement to
the Management Agreement of each Trust relating to securities lending
activities. If the proposed supplements are approved, AMR Investment
Services, Inc. (the "Manager") will be additionally compensated for the
administrative and oversight functions it will perform with respect to
the securities lending activity of each Fund and its corresponding
portfolio. The base level of investment advisory fees paid to the
Manager will remain the same. The Manager will receive additional
compensation only if the Fund engages in securities lending activities.
The amount of such compensation will depend upon the income generated by
the securities loans.
Elimination of Investment Restriction of Money Market Funds
Shareholders of the American AAdvantage Money Market Fund and the
American AAdvantage Money Market Mileage Fund (the "Money Market Funds")
will be asked to approve the elimination of the fundamental investment
restriction which prohibits them from investing in other investment
companies. Since the time of their inception, each Money Market Fund, as
a fundamental policy, has been restricted from purchasing the securities
of other investment companies except in certain limited circumstances.
The Manager recommends the elimination of this restriction and the
adoption of a non-fundamental investment restriction that would allow the
Money Market Funds to invest up to ten percent of their total assets in
the securities of other investment companies. This new non-fundamental
restriction follows the requirements of the Investment Company Act of
1940 and will provide the Money Market Funds with additional options for
satisfying their short-term liquidity needs.
Voting Procedures
The Funds currently operate under a Hub and Spoke(R)(1)structure,
pursuant to which each of the operating Funds of the Trusts seeks its
investment objective by investing all of its investable assets in a
corresponding portfolio of the AMR Investment Services Trust ("AMR
Trust") which has an identical investment objective to the corresponding
Fund. Interest holders of the AMR Trust will hold a separate meeting to
vote on the same matters described above as they relate to the AMR Trust.
Shareholders of each Fund will be asked to provide voting instructions as
to the AMR Trust meeting. The Funds will cast their votes in the same
proportion as the votes cast by the Funds' shareholders at the meeting.
Conclusion
We urge you to complete, sign and return the enclosed proxy card(s)
promptly, even if you plan to be present at the meeting. A postage-paid
return envelope is enclosed for this purpose. Should you have any
questions about the proposals, please do not hesitate to contact us. We
look forward to receiving your proxy.
Sincerely yours,
/s/ William F. Quinn
-------------------------
William F. Quinn
President
American AAdvantage Funds
American AAdvantage Mileage Funds
(1)"Hub and Spoke" is a registered service mark of Signature Financial
Group, Inc.
<PAGE>
PRELIMINARY COPY
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
NOTICE OF
COMBINED SPECIAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
A combined special meeting of the shareholders of the American
AAdvantage Funds ("AAdvantage Trust") and the American AAdvantage Mileage
Funds ("Mileage Trust") (collectively, the "Trusts") will be held on
December 16, 1996 at 9:00 a.m. Central time at the offices of AMR
Investment Services, Inc. ("Manager"), 4333 Amon Carter Boulevard, Fort
Worth, Texas 76155, Room 6E1D-36, for the purposes set forth below.
Under a Hub and Spoker1 operating structure, each of the currently
operating funds of the Trusts (the "Funds") seeks its investment
objective by investing all of its investable assets in a corresponding
portfolio of the AMR Investment Services Trust ("AMR Trust"). As a
result, you will be asked to vote twice on each of the following
proposals, once to approve that proposal on behalf of the AMR Trust and
once to approve that proposal of behalf of the Trusts of which you are a
shareholder.
(1) To authorize the Trusts, on behalf of the Funds, to vote at a
meeting of the AMR Trust:
(a) To elect the Board of Trustees of the AMR Trust (each
Trust);
(b) To approve a supplement to the AMR Trust Management Agreement
relating to securities lending activities (each Fund);
(c) To approve the elimination of the Money Market Portfolio's
fundamental investment restriction relating to investing in other
investment companies (American AAdvantage Money Market Fund
("Money Market Fund") and American AAdvantage Money Market Mileage
Fund ("Money Market Mileage Fund") only).
(2) To elect the Boards of Trustees of the AAdvantage Trust and the
Mileage Trust (each Trust);
(3) To approve a supplement to the Management Agreements of the
AAdvantage Trust and the Mileage Trust relating to securities lending
activities (each Fund);
(4) To approve the elimination of the fundamental investment
restrictions of the Money Market Fund and the Money Market Mileage Fund
relating to investing in other investment companies (Money Market Fund
and Money Market Mileage Fund only); and
(5) To transact such other business as may properly come before the
meeting or any adjournments thereof.
You will be entitled to vote at the meeting and any adjournments
thereof if you owned shares of the Funds at the close of business on
October 31, 1996. If you owned shares in more than one Trust or owned
shares in either the Money Market Fund or the Money Market Mileage Fund
and another Fund, you may receive more than one proxy card. Please be
certain to vote each proxy card you receive. If you attend the meeting,
you may vote your shares in person. If you do not expect to attend the
meeting, please complete, date, sign and return the enclosed proxy
card(s) in the enclosed postage paid envelope.
By order of the Board of Trustees,
CLIFFORD J. ALEXANDER
Secretary
November 15, 1996
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card(s),
date and sign the card(s), and return the card(s) in the envelope
provided. If you sign, date and return the proxy card(s) but give no
voting instructions, your shares will be voted "FOR" all proposals
noticed above. In order to avoid additional expense to the Funds of
further solicitation, management requests your cooperation in mailing in
your proxy card(s) promptly. Unless proxies are signed by the
appropriate persons, they will not be voted.
_______________________________
1 "Hub and Spoke" is a registered service mark of Signature Financial
Group, Inc.
<PAGE>
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
________________
PROXY STATEMENT
Combined Special Meeting of Shareholders
To Be Held on December 16, 1996
________________
This document is a Proxy Statement for the American AAdvantage Trust
("AAdvantage Trust") and the American AAdvantage Mileage Trust ("Mileage
Trust"). The AAdvantage Trust and the Mileage Trust each have seven
separate investment portfolios (each a "Fund" and collectively, the
"Funds") that are currently in operation. The AAdvantage Trust Funds are
as follows:
<TABLE>
<CAPTION>
Fund Name Abbreviated Name
<S> <C>
American AAdvantage Balanced Fund Balanced Fund
American AAdvantage Growth and Income Growth and Income Fund
Fund
American AAdvantage International International Equity Fund
Equity Fund
American AAdvantage Limited-Term Limited-Term Income Fund
Income Fund
American AAdvantage Money Market Fund Money Market Fund
American AAdvantage Municipal Money Municipal Money Market Fund
Market Fund
American AAdvantage U.S. Treasury U.S. Treasury Money Market
Money Market Fund Fund
</TABLE>
The Mileage Trust Funds are as follows:
<TABLE>
<CAPTION>
Fund Name Abbreviated Name
<S> <C>
American AAdvantage Balanced Mileage Balanced Mileage Fund
Fund
American AAdvantage Growth and Income Growth and Income Mileage
Mileage Fund Fund
American AAdvantage International International Equity
Equity Mileage Fund Mileage Fund
American AAdvantage Limited-Term Limited-Term Income Mileage
Income Mileage Fund Fund
American AAdvantage Money Market Money Market Mileage Fund
Mileage Fund
American AAdvantage Municipal Money Municipal Money Market
Market Mileage Fund Mileage Fund
American AAdvantage U.S. Treasury U.S. Treasury Money Market
Money Market Mileage Fund Mileage Fund
</TABLE>
This Proxy Statement is furnished in connection with the solicitation
of proxies made by, and on behalf of, the Board of Trustees of the
AAdvantage Trust and the Board of Trustees of the Mileage Trust to be
used at the Combined Special Meeting of Shareholders of the AAdvantage
Trust and the Mileage Trust and at any adjournments thereof ("Meeting"),
to be held at 9:00 a.m. on Monday, December 16, 1996, at the offices of
AMR Investment Services, Inc. ("Manager"). The Manager serves as manager
and administrator to the AAdvantage Trust, Mileage Trust and AMR
Investment Services Trust ("AMR Trust") (collectively, the "Trusts").
Brokers Transaction Services, Inc., located at 7001 Preston Road, Dallas,
Texas 75205, serves as underwriter to the Trusts. The purpose of the
Meeting is set forth in the accompanying Notice.
The Funds currently seek their investment objectives by investing all
of their investable assets in corresponding portfolios ("Portfolios") of
the AMR Trust, which have investment objectives identical to their
corresponding Funds. At a meeting of interest holders of the AMR Trust,
the AAdvantage Trust and the Mileage Trust each will vote its interest in
the AMR Trust in proportion to the votes cast by that Trust's
shareholders at the Meeting. Likewise, a Fund will vote its interest in
its corresponding Portfolio of the AMR Trust in proportion to the votes
cast by that Fund's shareholders when a meeting of interest holders of a
Portfolio of the AMR Trust is called. The AAdvantage Trust or the
Mileage Trust or each Fund of such Trust will vote shares for which they
receive no voting instructions in the same proportion as the shares for
which they do receive voting instructions. Because a Trust's votes are
proportionate to its percentage interest in the AMR Trust, the majority
of the AMR Trust's interest holders could approve an action against which
a majority of the outstanding voting securities of the AMR Trust had
voted. Similarly, the majority of a Portfolio's interest holders could
approve an action against which a majority of the voting securities of
its corresponding Fund had voted.
This Proxy Statement and the accompanying proxy card(s) will be mailed
to shareholders on or about November 15, 1996. The solicitation of
proxies will be made by mail, but also may include telephone or oral
communications by employees of the Manager, who will not receive any
compensation from the Trusts for such solicitation. Boston Financial
Data Services, Inc. has been retained by the Manager solely for the
purpose of mailing proxy materials to shareholders and tabulating voting
results at a cost of approximately $11,000. All expenses incurred in
connection with preparing these proxy materials will be borne pro rata by
the AAdvantage Trust, the Mileage Trust and the AMR Trust based upon
relative net assets.
A majority of each applicable Fund's shares of beneficial interest
outstanding on October 31, 1996 ("Record Date"), represented in person or
by proxy, constitutes a quorum and a quorum must be present for the
transaction of business with respect to Proposals 1(b), 1(c), 3 and 4.
With respect to Proposals 1(a) and 2, a majority of AAdvantage Trust's
and Mileage Trust's shares of beneficial interest outstanding on the
Record Date, represented in person or by proxy, constitutes a quorum and
must be present for the transaction of business. If a quorum is present
at the Meeting but sufficient votes to approve any of the proposals are
not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of
those shares represented at the Meeting in person or by proxy. If a
quorum is present, the persons named as proxies will vote those proxies
that they are entitled to vote FOR any such proposal in favor of such an
adjournment, and will vote those proxies required to be voted AGAINST any
such proposal against such adjournment. A shareholder vote may be taken
on one or more of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted
for or against any adjournment. Abstentions and broker non-votes will
not be counted, however, as votes cast for purposes of determining
whether sufficient votes have been received to approve a proposal.
Accordingly, abstentions and broker non-votes effectively will be a vote
against adjournment or against Proposals 1(b), 1(c), 3 and 4, for which
the required vote is a majority of the outstanding voting securities, as
defined below. Abstentions and broker non-votes will have no effect on
Proposals 1(a) and 2, for which the required vote is a plurality number
of the votes cast by each the AAdvantage Trust and the Mileage Trust.
The individuals named as proxies on the enclosed proxy card(s) will
vote in accordance with your directions as indicated thereon if your
proxy card is received and has been properly executed. If your proxy
card is properly executed and you give no voting instructions, your
shares will be voted in favor of the proposals described in this Proxy
Statement. You may revoke your proxy card by giving another proxy, by
letter or telegram revoking your initial proxy if received by the
applicable Trust prior to the Meeting, or by appearing and voting at the
Meeting.
Each Fund of the AAdvantage Trust consists of multiple classes of
shares, including the AMR Class, PlanAhead Class and Institutional Class.
In addition, the Money Market Fund, Municipal Money Market Fund and U.S.
Treasury Money Market Fund offer Platinum Class shares. The Money Market
Mileage Fund consists of two classes of shares, the Mileage Class and the
Platinum Class. The other Mileage Trust Funds offer only one class of
shares. Each share of each class is entitled to one vote. None of the
proposals in this Proxy Statement requires separate voting by class. As
of the Record Date, there were issued and outstanding the following
number of shares of each Fund:
<TABLE>
<CAPTION>
AADVANTAGE TRUST Total Number of MILEAGE TRUST Total Number
Shares of Shares
Outstanding Outstanding
<S> <C> <C> <C>
Balanced Fund ___________ Balanced Mileage __________
Fund
Growth and ___________ Growth and Income __________
Income Fund Mileage Fund
International ___________ International __________
Equity Fund Equity Mileage
Fund
Limited-Term ___________ Limited-Term __________
Income Fund Income Mileage
Fund
Money Market ___________ Money Market __________
Fund Mileage Fund
Municipal Money ___________ Municipal Money __________
Market Fund Market Mileage
Fund
U.S. Treasury ___________ U.S. Treasury __________
Money Market Money Market
Fund Mileage Fund
</TABLE>
For a list of shareholders who owned of record five percent or more of
the shares of each Fund or of the AAdvantage Trust or the Mileage Trust
as of the Record Date, see Appendix A. To the knowledge of the Manager,
the executive officers and Trustees, as a group, owned less than one
percent of the outstanding shares of each Fund and of each the AAdvantage
Trust and the Mileage Trust as of October 31, 1996.
Shareholders of record at the close of business on the Record Date will
be entitled to vote at the Meeting. Each full share of the Funds is
entitled to one vote and each fractional share is entitled to a
proportionate share of one vote. You may obtain a copy of the AAdvantage
Trust's and Mileage Trust's most recent Annual and Semi-Annual Reports to
Shareholders, free of charge, by writing to the Manager at 4333 Amon
Carter Boulevard, MD 5645, Fort Worth, Texas 76155, or by calling 1-800-
388-3344.
Approval of Proposals 1(b), 1(c), 3 and 4 outlined below with respect
to a Fund or a Trust requires the affirmative vote of the holders of a
"majority of the outstanding voting securities" of that Fund or Trust
entitled to vote on the particular proposal, as such term is defined in
the Investment Company Act of 1940, as amended ("1940 Act"). For that
purpose, a vote of the holders of a "majority of the outstanding voting
securities" of a Fund or Trust means the lesser of either (1) the vote of
67% or more of the shares of such Fund or Trust present at the Meeting if
the holders of more than 50% of the outstanding Fund or Trust shares are
present or represented by proxy, or (2) the vote of the holders of more
than 50% of the outstanding shares of such Fund or Trust. Approval of
Proposals 1(a) and 2 require a plurality of each the AAdvantage Trust's
and the Mileage Trust's shares voted in person or by proxy at the
Meeting. Approval and implementation of Proposals 1(b) and 3 with
respect to each Fund is not conditioned upon approval of these proposals
by the shareholders of any other Fund. However, approval and
implementation of Proposals 1(c) and 4 is conditioned upon approval of
these proposals by shareholders of both the Money Market Fund and the
Money Market Mileage Fund. Listed below are the proposals the
shareholders of each Fund are being asked to consider:
<TABLE>
<CAPTION>
Fund: Proposals Applicable to
Fund:
<S> <C>
All Funds except for Money All Proposals except for
Market Fund and Money Market 1(c) and 4
Mileage Fund
Money Market Fund and Money All Proposals
Market Mileage Fund
</TABLE>
______________________________
PROPOSAL 1(a): ELECTION OF THE BOARD OF TRUSTEES OF THE AMR TRUST. (Each
Trust.)
PROPOSAL 2: ELECTION OF THE BOARDS OF TRUSTEES OF THE AADVANTAGE TRUST
AND THE MILEAGE TRUST. (Each Trust.)
Proposals 1(a) and 2 relate to the election of seven Trustees to each
Board of Trustees of the AMR Trust, the AAdvantage Trust and the Mileage
Trust (collectively, the "Boards") at the Meeting. All of the nominees,
except for Dr. Kneeland Youngblood, currently serve as Trustees of the
Trusts and have been nominated for reelection. Each Board authorized an
increase in the number of Trustees who serve on each Board from six to
seven. Such increase allows each Board to nominate an additional Trustee
who is not an "interested person" of the Trusts ("Independent Trustees"),
as defined under the 1940 Act. If all nominees are elected, then each
Board will be composed of a majority of Independent Trustees.
The Boards propose the election of the seven nominees named below to
serve as Trustees for each of the AMR Trust, the AAdvantage Trust and the
Mileage Trust. Each elected Trustee would hold office for an indefinite
term and until his successor is elected and qualified. The term of
Trustees elected will be until a Trustee either resigns or is removed
from office, or reaches a mandatory retirement age. Any Trustee first
elected after February 22, 1995 must retire at the end of the fiscal year
in which the Trustee reaches the age of 70. A majority of Trustees then
in office may fill Trustee vacancies caused by resignation, death or
expansion of a Board, provided that, after such selection, at least two-
thirds of the Trustees will have been elected by shareholders. Any
Trustee may be removed by a vote of the holders of two-thirds of all
outstanding shares of beneficial interest of the respective Trust
qualified to vote at a meeting of shareholders or interest holders, as
appropriate.
Election of a nominee for Trustee requires the vote of a plurality of
the shares voted in person or by proxy at the Meeting. It is the
intention of the persons named in the accompanying Proxy to vote FOR the
election of the nominees named below. All of the nominees named below
have consented to serve as Trustees if elected. If any of those nominees
should not be available for election due to unforeseen circumstances, it
is the intention of the persons named in the accompanying Proxy to vote
FOR such other person(s) as the Trustees may recommend.
The seven nominees for election as Trustees of each Board, their ages
and a description of their business experience during the past five years
are as follows:
Alan D. Feld, 59, Trustee, AAdvantage Trust, Mileage Trust and AMR Trust
(October 1996-Present); Partner, Akin, Gump, Strauss, Hauer & Feld LLP
(1960-Present)#; Director, Clear Channel Communications (1984-Present);
Director, CenterPoint Properties, Inc. (1994-Present).
Ben J. Fortson, 64, Trustee, AAdvantage Trust, Mileage Trust and AMR
Trust (October 1996-Present); President and CEO, Fortson Oil Company
(1958-Present); Director, Kimbell Art Foundation (1964-Present);
Director, Burnett Foundation (1987-Present); Honorary Trustee, Texas
Christian University (1986-Present).
William F. Quinn,* 49, Trustee and President, AAdvantage Trust (1987-
Present), Mileage Trust (1995-Present) and AMR Trust (1995-Present);
President, AMR Investment Services, Inc. (1986-Present); Chairman,
American Airlines Employees Federal Credit Union (1989-Present); Trustee,
American Performance Funds (September 1990-1994); Director, Crescent Real
Estate Equities, Inc. (1994-Present).
John S. Justin, 80, Trustee, AAdvantage Trust (1989-Present), Mileage
Trust and AMR Trust (1995-Present); Chairman and Chief Executive Officer,
Justin Industries, Inc. (a diversified holding company) (1969-Present);
Executive Board Member, Blue Cross/Blue Shield of Texas (1985-Present);
Board Member, Zale Lipshy Hospital (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,* 61, Trustee, AAdvantage Trust (1987-Present),
Mileage Trust and AMR Trust (1995-Present); Consultant (1994-1995); Vice
President and Controller (1985-1994), American Airlines, Inc.
Roger T. Staubach, 55, Trustee, AAdvantage Trust, Mileage Trust and AMR
Trust (1995-Present); Chairman of the Board and Chief Executive Officer
(1982-Present) and President (1983-1991) of The 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); former quarterback of the Dallas Cowboys professional football
team.
Kneeland Youngblood, M.D.(2) 40, Physician (1982-Present); President,
Youngblood Enterprises, Inc. (1993-Present), a health care investment and
management firm; Trustee, Teacher Retirement System of Texas (1993-1999),
a Gubernatorial appointment; Director, United States Enrichment
Corporation (1993-Present), a Presidential appointment; Director, Just
For the Kids (1995-Present); Member, Council on Foreign Relations (1995-
Present).
# The law firm of Akin, Gump, Strauss, Hauer & Feld LLP ("Akin, Gump")
provides legal services to American Airlines, Inc., an affiliate of the
Manager. Mr. Feld has advised the Trusts that he has had no material
involvement in the services provided by Akin, Gump to American Airlines,
Inc. and that he has received no material benefit in connection with
these services. Akin, Gump does not provide legal services to the
Manager or AMR Corporation.
* By virtue of their current or former positions with AMR Corporation or
affiliated entities, Messrs. Quinn and O'Sullivan are deemed to be
"interested persons" of the AAdvantage Trust, the Mileage Trust and the
AMR Trust as that term is defined in the 1940 Act.
(2) Dr. Youngblood is the only nominee who does not serve currently as a
Trustee on each Board.
The Boards met four times for regularly scheduled meetings and one
time for a special meeting during the fiscal year ended October 31, 1996.
Each Trustee (who was then a Trustee), except Mr. O'Sullivan, attended at
least 75% or more of all meetings. The Board does not have an audit,
nominating or compensation committee.
Each Trust compensates each Independent Trustee by providing such
Trustee and his spouse with free airline travel on American Airlines,
Inc. and with payments in an amount equal to the Trustees' income tax on
the value of the airline travel. Mr. O'Sullivan, who as a retiree of
American Airlines, Inc. already receives free airline travel, receives
compensation annually of up to three round-trip airline tickets for each
of his three adult children. Trustees also are reimbursed for any
expenses incurred in attending Board meetings. The direct aggregate and
total remuneration (including reimbursements of such expenses) paid to
all Trustees on behalf of the each Trust for the fiscal year ended
October 31, 1996 is shown below. The Trusts do not offer Trustees a
bonus, pension, profit sharing or retirement plan.
<TABLE>
<CAPTION>
Aggregate
Compensat
ion From:
<S> <C> <C> <C> <C>
Total
Name of AAdvantage Mileage Compensation
Trustee Trust Trust AMR Trust Paid to
Trustees by
Fund Complex
William F. $0 $0 $0 $0
Quinn
Alan D. Feld(1) $0 $0 $0 $0
Ben J. $0 $0 $0 $0
Fortson(1)
David G. Fox(2) $____ $_____ $_____ $______
John S. Justin $____ $_____ $_____ $______
Stephen D. $____ $_____ $_____ $______
O'Sullivan
Roger T. $____ $_____ $_____ $______
Staubach
</TABLE>
(1) Messrs. Feld and Fortson did not serve as Trustees during this
period.
(2) Mr. Fox has resigned from each Board and is not seeking reelection.
EACH BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSALS 1(a) AND 2.
PROPOSAL 1(b): APPROVAL OF A SUPPLEMENT TO THE AMR TRUST MANAGEMENT
AGREEMENT RELATING TO SECURITIES LENDING ACTIVITIES. (Each Trust.)
PROPOSAL 3: APPROVAL OF A SUPPLEMENT TO EACH MANAGEMENT AGREEMENT OF THE
AADVANTAGE TRUST AND THE MILEAGE TRUST RELATING TO SECURITIES LENDING
ACTIVITIES. (Each Trust.)
The Manager has entered into investment management contracts with the
AMR Trust, AAdvantage Trust and Mileage Trust (each a "Management
Agreement" and collectively, the "Management Agreements"). Shareholders
are being asked to approve supplements to the Management Agreements
pursuant to which the Manager will undertake to perform certain services
in connection with securities lending activities on behalf of the Funds
and Portfolios and receive, in addition to its base advisory fee,
compensation based on the income generated by these activities.
The Current Management Agreements
Under the current Management Agreements, the Manager is obligated to
provide or oversee the provision of all administrative, investment
advisory and portfolio management services for the Funds and Portfolios.
Pursuant to the Management Agreements, the Manager provides the Trusts
with: office space, office equipment and personnel necessary to manage
and administer the operations of the Trusts, including compliance 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 selects and changes investment advisers for the Funds
and Portfolios (subject to approval by the Boards of Trustees of the
respective Trusts), allocates assets among the investment advisers,
monitors the investment advisers' investment programs and results and
coordinates the investment activities of the investment advisers to
ensure compliance with regulatory restrictions.
The Manager serves as the sole investment adviser to the
corresponding Portfolios of the Limited-Term Income Fund, the Limited-
Term Income Mileage Fund, the Money Market Fund, the Money Market Mileage
Fund, the Municipal Money Market Fund, the Municipal Money Market Mileage
Fund, the U.S. Treasury Money Market Fund and the U.S. Treasury Money
Market Mileage Fund. The assets of the corresponding Portfolios of each
other Fund are allocated by the Manager among investment advisers
designated for that Fund.
Each Trust pays all of its expenses other than those expressly
assumed by the Manager. Whenever a Fund's or Portfolio's expenses are
below applicable expense limits, the Manager can be reimbursed monthly
for any excess expenses it has assumed. Under the Management Agreements,
the Manager bears the expense of providing the above services and pays
the fees of the investment advisers of the Funds and their Portfolios.
To the extent that a Fund invests all of its investable assets in a
Portfolio of the AMR Trust, there are (1) no advisory fees paid under
such Management Agreements and (2) reduced administrative fees paid under
such Management Agreements and related Administrative Services
Agreements.
As compensation for paying the investment advisory fees and for
providing the Portfolios with advisory and asset allocation services, the
Manager receives from the AMR Trust an annualized fee, which is
calculated and accrued daily and payable monthly, equal to the sum of (1)
0.25% of the net assets of the Limited-Term Income Portfolio of the AMR
Trust, (2) 0.15% of the net assets of the Money Market Portfolio, the
Municipal Money Market Portfolio and the U.S. Treasury Money Market
Portfolio of the AMR Trust, (3) 0.10% of the net assets of the other
Portfolios of the AMR Trust, plus (4) all fees payable by the Manager to
the AMR Trust investment advisers.
The Management Agreement between the Manager and the AMR Trust, which
is dated October 1, 1995, was approved by interest holders on August 3,
1995. The Management Agreement between the Manager and the AAdvantage
Trust, which is dated April 3, 1987, was approved by shareholders on
August 3, 1995. The Management Agreement between the Manager and the
Mileage Trust, which is dated October 1, 1995, was approved by the
initial shareholder on September 28, 1995.
Each Management Agreement remains in full force with respect to a
Fund or Portfolio for an initial term of two years, and thereafter so
long as its continuance is specifically approved at least annually with
respect to each Fund or Portfolio (1) by a vote of a majority of the
outstanding voting securities of that Fund or Portfolio, or (2) by a vote
of a majority of the Trustees of the Trust who are not parties to the
agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on the Management Agreement.
Notwithstanding the foregoing, a Management Agreement may be terminated
at any time with respect to any Fund or Portfolio by either the Manager
or the Trustees of the Trust, without payment of any penalty, on sixty
days' written notice, by vote of the Trustees or by vote of a majority of
the outstanding voting securities of such Fund or Portfolio and will
terminate automatically in the event of its assignment.
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 Funds.
Administrative services fees for the fiscal year 1996 were approximately
$ for the AAdvantage Trust, of which approximately $ was
waived by the Manager. Administrative services fees for the fiscal year
1996 were approximately $ for the Mileage Trust, of which
approximately $ was waived by the Manager. In addition, for the
fiscal year 1996, the Manager was paid approximately $ for
distribution or shareholder services under a distribution plan with the
Funds of the Mileage Trust adopted pursuant to Rule 12b-1 under the 1940
Act. The Manager will continue to provide these services after the
proposed supplements to the Management Agreements are voted on by
shareholders.
The Proposed Supplements to the Management Agreements
Each Fund and Portfolio (each a "Lender" and, collectively,
"Lenders") has the ability to increase its investment income by lending
portfolio securities to registered broker-dealers or other institutional
investors ("Borrowers"). Each Lender may either lend its portfolio
securities directly or contract with a securities lending agent to do so.
Any contract between the Lenders and their securities lending agent
typically would set forth the manner in which all securities loans for
the Lenders will be transacted, including the types of securities that
are eligible for loan and the types of collateral to be received in
connection with each loan. Under a securities loan, a Lender, or its
securities lending agent, delivers portfolio securities owned by the
Lender to a Borrower against delivery by the Borrower to the Lender, or
its securities lending agent, of appropriate collateral. As collateral
for the securities so loaned, the Lender usually receives cash or high
quality liquid securities (such as United States Government securities).
The Lenders invest cash collateral received from the loan of their
securities, thereby generating additional investment income for the
Lenders. The Lenders also may receive a loan fee from Borrowers who post
collateral other than cash.
The Trusts are subject to regulatory and investment restrictions when
engaging in securities lending activities. Under the proposed
supplements to the Management Agreements (the "Supplements"), the Manager
will undertake to oversee the activities of the securities lending agent
and each Lender's participation in securities lending activities to
ensure compliance with all applicable regulatory and investment
guidelines. The Manager will determine which specific securities are
available for loan and will have the discretion and power to prevent any
loan from being made or to terminate any loan. The Manager will monitor
the securities lending agent to ensure that loans are effected in
accordance with its instructions and within the procedures adopted by the
Board of Trustees of the AMR Trust. In addition, the Manager will
prepare appropriate periodic reports for, and seek appropriate approvals
from, each Lender's Board of Trustees.
If the Supplements are approved by shareholders, the Manager will be
compensated for the administrative and oversight functions it will
perform with respect to those Lenders that lend their securities. The
base level of the investment advisory fees paid to the Manager will
remain the same. The Manager will receive additional compensation only
if the Lenders engage in securities lending activities. The amount of
such compensation will depend on the income generated by the loan of
securities of the Lenders.
Under the Supplements, if a Borrower posts cash collateral for the
loan of a Lender's securities, the Manager will receive 25% of the net
annual interest income (the gross interest income earned by the
investment of cash collateral, less the amount paid to Borrowers as well
as related expenses) received from the investment of such cash. If a
Borrower posts collateral other than cash for the loan of a Lender's
securities, the Borrower will pay to the lender a loan fee for the use of
the borrowed securities. Under the Supplements, the Manager will receive
25% of the loan fees posted by such Borrower as compensation for services
provided in connection with any such loan.
Subject to the receipt of an exemptive order pending with the
Securities and Exchange Commission, the Board of Trustees of each Trust
could elect to invest cash collateral received by the Lenders from the
loan of their portfolio securities in shares of one or more private
investment companies managed by the Manager (the "Investment Funds").
The Manager will receive compensation from the Investment Funds for
providing portfolio management and administrative services to the
Investment Funds.
Shareholders are being asked to approve Supplements to the Management
Agreements with the AAdvantage Trust, Mileage Trust and AMR Trust.
However, it is currently contemplated that all securities lending
activities will be done only by the AMR Trust. To the extent that a Fund
invests all of its investable assets in the AMR Trust, the Manager will
not receive any compensation under the Supplements to the Management
Agreements with the AAdvantage Trust and Mileage Trust.
For the fiscal year ended October 31, 1996, the AMR Trust paid
advisory fees under its Management Agreement of approximately $__________
of which approximately $______ was paid by the Manager to the AMR Trust
investment advisers. The AAdvantage Trust and the Mileage Trust did not
pay any advisory fees under their Management Agreements for the 1996
fiscal year. If the Supplements to the Management Agreements had been in
effect during the past fiscal year, the AMR Trust would have paid
management fees of approximately $________ based on the securities
lending activites conducted by the Trust during the year. The difference
in the management fees paid during the 1996 fiscal year and the projected
management fees that would have been paid if the Supplements had been in
effect is approximately __%. The management fees for the AAdvantage
Trust and the Mileage Trust would have been unchanged if the Supplements
had been in effect.
Consideration by the Boards
At meetings held on October 24, 1996, the Boards, including the
Independent Trustees of each Trust, evaluated the proposed Supplements to
the Management Agreements.
The Boards considered that securities lending activities generate
additional investment income for Portfolios that lend their portfolio
securities. The Boards found that the Manager's supervision and
involvement in the Portfolios' securities lending activities can assist
the Portfolios in the loan of their securities and that such services can
provide additional value to the Portfolios and Funds. The Boards found
that such services were in addition to and not duplicative of services
the Manager provides under the existing Management Agreements. The
Boards also found that lending portfolio securities and investing cash
collateral in shares of the Investment Funds would result in additional
services that provide the Portfolios, the Funds and their shareholders
with additional benefits.
The Boards reviewed the ability of the Manager to provide the
proposed services to the Funds and the Portfolios and the projected cost
of those services over the next fiscal year. The Boards determined that
it would be in the best interest of each Fund and Portfolio for the
Manager, pursuant to the Supplements, to provide services in connection
with securities lending activities. The Boards reviewed the services
that would be provided by the Manager pursuant to the Supplements and
analyzed the factors they deemed relevant, including the nature, quality
and scope of such services. Accordingly, on October 24, 1996, the
members of the Boards, including the Independent Trustees, unanimously
approved, subject to the required shareholder/interest holder approval
described herein, the Supplements to the Management Agreements between
the Manager and the Trusts. The Boards then recommended that the
Supplements be submitted to shareholders for their approval.
Portfolio Information
For the fiscal year ended October 31, 1996, the International Equity
Portfolio paid brokerage commissions of $_______ to Morgan Stanley, Inc.,
an affiliate of Morgan Stanley Asset Management, and $___________ to
Robert Fleming & Co., an affiliate of Rowe Price-Fleming-International,
Inc., which are subadvisers to that Portfolio. During that same period,
the Balanced Portfolio paid $__ in brokerage commissions to Sutro &
Company, an affiliate of Independence Investment Associates which is a
subadviser to that Portfolio. These amounts represented _% of the
International Equity Portfolio's and _____% of the Balanced Portfolio's
aggregate brokerage commissions paid during the most recent fiscal year.
About the Manager
AMR Investment Services, Inc., a Delaware corporation, 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 to the AAdvantage Trust and other investors. The principal
offices of both the Manager and AMR Corporation are at 4333 Amon Carter
Boulevard, Fort Worth, Texas 76155. As of September 30, 1996, the
Manager had assets under management (including assets under fiduciary
advisory control) totaling approximately $15 billion, including
approximately $6 billion under active management and $9 billion as named
fiduciary or fiduciary adviser. Of the total, approximately $11 billion
in assets are related to AMR Corporation.
The principal executive officers and each director of the Manager,
including those officers and directors who are officers and Trustees of
the Trusts, are as follows:
<TABLE>
<CAPTION>
Name and Principal Occupation
Address
<S> <C>
Robert L. Director and Chairman of the Manager; Chairman,
Crandall President and Chief Executive Officer of AMR
Corporation; Director, Chairman, and Chief
Executive Officer of American Airlines, Inc.
Gerard J. Director and Vice Chairman of the Manager;
Arpey Senior Vice President and Chief Financial Officer
of AMR Corporation.
Jeffrey M. Vice President and Treasurer of the Manager, Vice
Jackson President of Corporate Development and Treasurer
of AMR Corporation.
Charles D. Secretary of the Manager, Corporate Secretary of
MarLett American Airlines, Inc..
Anne H. Director of the Manager; Senior Vice President
McNamara and General Counsel of AMR Corporation; Senior
Vice President, Administration and General
Counsel, American Airlines, Inc.
William F. President of the Manager and Trustee and
Quinn President of the Trusts.
Michael W. Vice President of the Manager and of the Trusts.
Fields
John B. Vice President of the Manager and of the Trusts.
Roberson
Nancy A. Vice President of the Manager and of the Trusts.
Eckl
Barry Y. Director of Legal and Compliance of the Manager
Greenberg and Vice President and Assistant Secretary of the
Trusts.
Rebecca L. Director of Finance of the Manager and Treasurer
Harris of the Trusts.
Janice B. Senior Compliance Analyst of the Manager and
Schwarz Assistant Secretary of the Trusts.
</TABLE>
The business address of each individual listed above is 4333 Amon
Carter Boulevard, MD 5645, Fort Worth, Texas 76155.
EACH BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS 1(b) AND 3.
PROPOSAL 1(c): APPROVAL OF THE ELIMINATION OF THE MONEY MARKET
PORTFOLIO'S FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO INVESTING IN
OTHER INVESTMENT COMPANIES. (Money Market Fund and Market Mileage Fund
only.)
PROPOSAL 4: APPROVAL OF THE ELIMINATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION OF THE MONEY MARKET FUND AND THE MONEY MARKET MILEAGE FUND
RELATING TO INVESTING IN OTHER INVESTMENT COMPANIES. (Money Market Fund
and Money Market Mileage Fund only.)
On October 24, 1996, the Boards of each Trust approved, subject to
shareholder approval, the elimination of the fundamental restrictions of
the Money Market Portfolio, Money Market Fund and Money Market Mileage
Fund (collectively, the "Money Market Funds"), which prohibit those Funds
from investing their assets in securities issued by other investment
companies. Currently, these restrictions provide that the Money Market
Funds may not:
purchase the securities of other investment companies except in
connection with a merger, consolidation, acquisition of assets or
other reorganization approved by the Money Market Fund's shareholders
or interest holders, as appropriate.
Since the time of their inception, each Money Market Fund, as a
fundamental policy, has been restricted from purchasing such securities.
Currently, all other Funds may, as a non-fundamental investment
restriction, invest up to ten percent of their total assets in the
securities of other investment companies to the extent permitted by law.
The Manager believes that this restriction affecting only the Money
Market Funds is no longer necessary. The Manager recommends the
elimination of the restriction and the adoption of a non-fundamental
investment restriction that would allow the Money Market Funds to invest
up to ten percent of their total assets in the securities of other
investment companies. Such actions will provide the Money Market Funds
with additional investment options for satisfying their short-term
liquidity needs. By allowing the Money Market Funds to invest up to ten
percent of their total assets in other money market funds, the Money
Market Funds, under appropriate circumstances, will have the flexibility
to obtain a better return on their short-term investments without
assuming substantial risk. However, because any shares that a Money
Market Fund holds in another investment company will be subject to the
management fees and expenses of such investment company, investment by a
Money Market Fund in other investment companies may result, in effect, in
payment by shareholders of duplicate fees and expenses.
If the removal of this investment restriction is approved by
shareholders, each Board intends to adopt a non-fundamental investment
restriction that could be changed by vote of a Board in response to
regulatory or market developments without approval by shareholders. The
non-fundamental investment restriction would provide that each Money
Market Fund may:
invest up to 10% of its total assets in the securities of other
investment companies to the extent permitted by law.
This restriction follows the investment restrictions set forth by the
1940 Act. The 1940 Act permits a fund to invest up to ten percent of its
total assets in the shares of other investment companies in the
aggregate, subject to the restrictions that: (1) a fund cannot acquire
more than three percent of the total outstanding voting stock of another
investment company and (2) a fund cannot invest more than five percent of
the value of its total assets in securities of a single other investment
company.
Accordingly, the Boards believe that the proposed elimination of the
Money Market Funds' fundamental investment restrictions regarding
investing in other investment companies is in the best interest of the
Money Market Funds and their shareholders.
Approval and implementation of Proposals 1(d) and 5 are conditioned on
receiving approval from both Money Market Fund and Money Market Mileage
Fund shareholders as well as receiving approval on a similar proposal of
the interest holders of those Funds' corresponding portfolio of the AMR
Trust, the Money Market Portfolio. Such approval is required because the
Money Market Fund and the Money Market Mileage Fund must have
substantially the same investment restrictions as their corresponding
Money Market Portfolio. In such case, the current Money Market Funds'
fundamental limitations will remain in effect.
EACH BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR"
PROPOSALS 1(d) AND 5.
SHAREHOLDER PROPOSALS
As a general matter, the AAdvantage Trust and the Mileage Trust do not
hold annual or other regular meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a Proxy Statement for a
subsequent shareholders' meeting should send their written proposals to
their Trust at 4333 Amon Carter Boulevard, MD 5645, Fort Worth, Texas
76155. In addition, the AAdvantage Trust and the Mileage Trust are
required to convene a special shareholders' meeting upon written request
for such a meeting by their respective shareholders owning at least ten
percent of their outstanding shares.
OTHER BUSINESS
Management knows of no business to be presented to the meeting other
than the matters set forth in this Proxy Statement, but should any other
matter requiring a vote of shareholders arise, the proxies will vote
thereon according to their best judgment and in the best interest of the
Funds.
By order of the Board of Trustees,
CLIFFORD J. ALEXANDER
Secretary
November 15, 1996
It is important that you execute and return
your Proxy Card(s) promptly.
<PAGE>
APPENDIX A
[5% Shareholders of each Fund as of October 31, 1996]
<PAGE>
PROXY
AMERICAN AADVANTAGE MILEAGE FUNDS
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
American AAdvantage U.S. Treasury Money Market Mileage Fund
Combined Special Meeting of Shareholders
December 16, 1996
The undersigned hereby appoints as proxies William F. Quinn, Barry Y.
Greenberg and Janice B. Schwarz, each with the power of substitution, and
hereby authorizes each of them to represent and to vote, as designated
below, all the shares of each of the above-referenced funds ("Funds")
held of record by the undersigned on October 31, 1996, at the meeting of
shareholders to be held on December 16, 1996, or any adjournment thereof,
with discretionary power to vote upon such other business as may properly
come before this meeting. Unless indicated to the contrary, this proxy
shall be deemed to grant authority to vote "FOR" the proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby acknowledges receipt of the Proxy Statement
prepared on behalf of the Board of Trustees with respect to the matter
designated below.
Please date and sign this proxy and return it in the enclosed postage-
paid envelope to Boston Financial Data Services, Inc. at Proxy Services,
P.O. Box 9261, Boston, MA 02205-8524. Please indicate your vote by an
"X" in the appropriate box below.
1. To authorize the American AAdvantage Mileage Funds ("Mileage Trust")on
behalf of the Funds to vote at a meeting of the AMR Investment Services
Trust ("AMR Trust") to:
(a) Elect the following seven individuals as Trustees of the AMR
Trust(All Funds): Alan D. Feld, Ben J. Fortson, William F. Quinn,
John S. Justin, Stephen D. O'Sullivan, Roger T. Staubach, Dr.
Kneeland Youngblood.
FOR ALL
FOR ______ WITHHOLD ______ EXCEPT ______
IF YOU DO NOT WISH YOUR SHARES TO BE VOTED "FOR" A PARTICULAR
NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH
THAT NOMINEE'S NAME. YOUR SHARES WILL BE VOTED FOR THE REMAINING
NOMINEES.
(b) Approve a supplement to the AMR Trust Management Agreement
relating to securities lending activities (Each Fund);
FOR ______ AGAINST ______ ABSTAIN ______
(c) Approve the elimination of the Money Market Portfolio's
fundamental investment restriction relating to investing in other
investment companies (American AAdvantage Money Market Mileage Fund
only).
FOR ______ AGAINST ______ ABSTAIN ______
2. Elect the following seven individuals as Trustees of the Mileage Trust
(All Funds): Alan D. Feld, Ben J. Fortson, William F. Quinn, John S.
Justin, Stephen D. O'Sullivan, Roger T. Staubach, Dr. Kneeland
Youngblood.
FOR ALL
FOR ______ WITHHOLD ______ EXCEPT ______
IF YOU DO NOT WISH YOUR SHARES TO BE VOTED "FOR" A PARTICULAR NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THAT NOMINEE'S
NAME. YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEES.
3. Approve a supplement to the Management Agreement of the Mileage Trust
relating to securities lending activities (Each Fund);
FOR ______ AGAINST ______ ABSTAIN ______
4. Approve the elimination of the American AAdvantage Money Market
Mileage Fund's fundamental investment restriction relating to investing
in other investment companies (American AAdvantage Money Market Mileage
Fund only).
FOR ______ AGAINST ______ ABSTAIN ______
Please be sure to sign and date this proxy.
Date ____________
Shareholder sign here Co-owner sign here
______________________ ________________________
