AMERICAN AADVANTAGE MILEAGE FUNDS, 485APOS, 1997-02-14

AMERICAN AADVANTAGE MILEAGE FUNDS
485APOS, 1997-02-14

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<PAGE> 1

As filed with the Securities and Exchange Commission on February 13, 1997
1933 Act File No. 33-91058
1940 Act File No. 811-9018

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 4

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6

AMERICAN AADVANTAGE MILEAGE FUNDS
(Exact name of registrant as specified in charter)

4333 Amon Carter Boulevard 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
Fort Worth, Texas 76155
(Name and address of agent for service)

Copies to:

CLIFFORD J. ALEXANDER, ESQ.
ROBERT J. ZUTZ, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Telephone: (202) 778-9000

It is proposed that this filing will become effective on April 14, 1997
pursuant to paragraph (a)(2) of Rule 485.

Registrant filed a Notice pursuant to Rule 24f-2 under the Investment Company
Act of 1940 on December 20, 1996.

Registrant has adopted a Hub and Spoke (R) operating structure for each of its
series except the American AAdvantage Short-Term Income Fund. This
Post-Effective Amendment includes a signature page for the AMR Investment
Services Trust and the Equity 500 Index Fund, each a hub trust.
<PAGE> 2
AMERICAN AADVANTAGE MILEAGE FUNDS
CONTENTS OF REGISTRATION STATEMENT

This registration statement is comprised of the following:

Cover Sheet

Contents of Registration Statement

Cross Reference Sheet

Prospectus for the following American AAdvantage Mileage
Funds: Balanced Fund, Growth and Income Fund, International
Equity Fund, Limited-Term Income Fund, Money Market Fund,
Municipal Money Market Fund and U.S. Government Money Market
Fund.

Statement of Additional Information for the following American
AAdvantage Mileage Funds: Balanced Fund, Growth and Income
Fund, International Equity Fund, Limited-Term Income Fund,
Money Market Fund, Municipal Money Market Fund, and U.S.
Government Money Market Fund.

Prospectus for the Platinum Class of the American AAdvantage
Money Market Mileage Fund, American AAdvantage Money Market
Fund, American AAdvantage Municipal Money Market Fund and
American AAdvantage U.S. Government Money Market Fund.

Statement of Additional Information for the Platinum Class of
the American AAdvantage Money Market Mileage Fund, American
AAdvantage Money Market Fund, American AAdvantage Municipal
Money Market Fund, American AAdvantage U.S. Government Money
Market Fund.

Part C

Signature Pages

Exhibits

<PAGE> 3
AMERICAN AADVANTAGE MILEAGE FUNDS
American AAdvantage Mileage Funds -- Balanced, Growth and Income,
International Equity, Limited-Term Income, Money Market (Mileage
Class), Municipal Money Market and U.S. Government Money Market
Funds.

FORM N-1A CROSS-REFERENCE SHEET

Part A

<TABLE>
<CAPTION>
Form N-1A
- ---------
Item No. PROSPECTUS CAPTION
- -------- ------------------
<S> <C>
1 Cover Page

2 Table of Fees and Expenses

3 Financial Highlights; Yields and Total Returns

4 Cover Page; Introduction; Investment Objectives, Policies and
Risks; Investment Restrictions

5 Management and Administration of the Mileage Trust; Investment
Advisers

5A Not Applicable

6 Dividends, Other Distributions and Tax Matters; General
Information; Shareholder Communications

7 Management and Administration of the Mileage Trust; AAdvantage
Miles; How to Purchase Shares; Valuation of Shares

8 How to Redeem Shares; Exchange Privilege

9 Inapplicable
</TABLE>

Part B

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
N-1A Item No. INFORMATION CAPTION
- ------------- -----------------------
<S> <C>
10 Cover Page

11 Table of Contents

12 Not Applicable
</TABLE>

<PAGE> 4
<TABLE>
<S> <C>
13 Investment Restrictions; Approach to Stock Selection; Other
Information

14 Trustees and Officers of the Mileage Trust and the AMR Trust

15 Control Persons and 5% Shareholders

16 Management, Administrative Services and Distribution Fees;
Investment Advisory Agreements

17 Portfolio Securities Transactions

18 Description of the Mileage Trust; Other Information

19 Net Asset Value; Redemptions in Kind

20 Tax Information

21 Inapplicable

22 Yield and Total Return Quotations

23 Financial Statements
</TABLE>

<PAGE> 5
AMERICAN AADVANTAGE MILEAGE FUNDS
PLATINUM CLASS -- AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND

FORM N-1A CROSS-REFERENCE SHEET

Part A

<TABLE>
<CAPTION>
Form N-1A
- ---------
Item No. PROSPECTUS CAPTION
- -------- ------------------
<S> <C>
1 Cover Page

2 Table of Fees and Expenses

3 Financial Highlights; Yields and Total Returns

4 Cover Page; Introduction; Investment Objectives, Policies and Risks; Investment Restrictions

5 Management and Administration of the Trusts; Investment Advisers

5A Not Applicable

6 Dividends and Tax Matters; General Information; Shareholder Communications

7 Management and Administration of the Trusts; AAdvantage Miles(r); How to Purchase Shares;
Valuation of Shares

8 How to Redeem Shares

9 Inapplicable
</TABLE>

Part B

<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
N-1A Item No. INFORMATION CAPTION
- ------------- -----------------------
<S> <C>
10 Cover Page

11 Table of Contents

12 Not Applicable

13 Investment Restrictions; Other Information
</TABLE>
<PAGE> 6

<TABLE>
<S> <C>
14 Trustees and Officers of the Trusts and the AMR Trust

15 Control Persons and 5% Shareholders

16 Management, Administrative Services and Distribution Fees

17 Portfolio Securities Transactions

18 Description of the Trust; Other Information

19 Net Asset Value; Redemptions in Kind

20 Tax Information

21 Inapplicable

22 Yield and Total Return Quotations

23 Financial Statements
</TABLE>

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> 7

THIS PROSPECTUS CONTAINS important information about the AMERICAN AADVANTAGE
MILEAGE FUNDS ("Mileage Trust"), an open-end investment company which consists
of the separate investment portfolios listed on this cover page (individually
referred to as a "Fund" and, collectively, the "Funds"). EACH FUND SEEKS 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 THE INVESTING FUND. The
investment experience of each Fund will correspond directly with the investment
experience of each Portfolio. Fund shares are offered to individuals and
certain grantor trusts. Investors 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")
dated March 1, 1997 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 800-231-4252.

The Securities and Exchange Commission maintains a Web Site
(http://www.sec.gov) that contains the SAI, material incorporated by reference
and other information regarding the Funds and the Portfolios.

AN INVESTMENT IN ANY OF THE MONEY MARKET 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 SUCH STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

[AMERICAN AADVANTAGE MILEAGE FUNDS LOGO]
March 1, 1997

Managed by AMR Investment Services, Inc.

BALANCED MILEAGE FUND
GROWTH AND INCOME MILEAGE FUND
INTERNATIONAL EQUITY MILEAGE FUND
LIMITED-TERM INCOME MILEAGE FUND
MONEY MARKET MILEAGE FUND-
MILEAGE CLASS

MUNICIPAL MONEY MARKET
MILEAGE FUND

U.S. GOVERNMENT MONEY MARKET

MILEAGE FUND
---------------------------------
<PAGE> 8

The AMERICAN AADVANTAGE BALANCED MILEAGE FUND(SM) ("Balanced Fund") seeks income
and capital appreciation by investing all of its investable assets in the
Balanced Portfolio of the AMR Trust ("Balanced Portfolio") which in turn
primarily invests in equity and debt securities (such as stocks and bonds).

The AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND(SM) ("Growth and Income
Fund") seeks long-term capital appreciation and current income by investing all
of its investable assets in the Growth and Income Portfolio of the AMR Trust
("Growth and Income Portfolio") which in turn primarily invests in equity
securities (such as stocks).

The AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND(SM) ("International
Equity Fund") seeks long-term capital appreciation by investing all of its
investable assets in the International Equity Portfolio of the AMR Trust
("International Equity Portfolio") which in turn primarily invests in equity
securities of issuers based outside the United States (such as foreign stocks).

The AMERICAN AADVANTAGE LIMITED-TERM INCOME MILEAGE FUND(SM) ("Limited-Term
Income Fund") seeks income and capital appreciation by investing all of its
investable assets in the Limited-Term Income Portfolio of the AMR Trust
("Limited-Term Income Portfolio") which in turn primarily invests in debt
obligations.

The AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND(SM) ("Money Market Fund"),
AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET MILEAGE FUND(SM) ("Municipal Money
Market Fund") and AMERICAN AADVANTAGE U.S. GOVERNMENT MONEY MARKET MILEAGE
FUND(SM) ("U.S. Government Money Market Fund", formerly the American AAdvantage
U.S. Treasury Money Market Mileage Fund) (collectively, the "Money Market
Funds") each seeks current income, liquidity, and the maintenance of a stable
price per share of $1.00 by investing all of their investable assets in the
Money Market Portfolio of the AMR Trust ("Money Market Portfolio"), the
Municipal Money Market Portfolio of the AMR Trust ("Municipal Money Market
Portfolio") and the U.S. Government Money Market Portfolio of the AMR Trust
("U.S. Government Money Market Portfolio", formerly the U.S. Treasury Money
Market Portfolio), respectively (collectively the "Money Market 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.
Government Money Market Portfolio invests exclusively in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and in
repurchase agreements that are collateralized by such obligations.

<TABLE>
<S> <C>
TABLE OF FEES AND EXPENSES.............. 3
FINANCIAL HIGHLIGHTS.................... 4
INTRODUCTION............................ 6
INVESTMENT OBJECTIVES, POLICIES AND
RISKS................................. 6
INVESTMENT RESTRICTIONS................. 16
YIELDS AND TOTAL RETURNS................ 17
MANAGEMENT AND ADMINISTRATION OF THE
MILEAGE TRUST......................... 17
INVESTMENT ADVISERS..................... 20
AADVANTAGE(R) MILES..................... 22
HOW TO PURCHASE SHARES.................. 23
HOW TO REDEEM SHARES.................... 24
EXCHANGE PRIVILEGE...................... 25
VALUATION OF SHARES..................... 26
DIVIDENDS, OTHER DISTRIBUTIONS AND TAX
MATTERS............................... 27
GENERAL INFORMATION..................... 29
SHAREHOLDER COMMUNICATIONS.............. 29
</TABLE>

PROSPECTUS

2
<PAGE> 9

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 Objective, Policies and Risks -- Additional
Information About the Portfolios." A Fund may withdraw its investment in a
corresponding Portfolio at any time if the Mileage Trust's Board of Trustees
("Mileage Trust 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 OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

<TABLE>
<CAPTION>
MONEY U.S.
GROWTH LIMITED- MARKET MUNICIPAL GOVERNMENT
AND INT'L TERM FUND - MONEY MONEY
BALANCED INCOME EQUITY INCOME MILEAGE MARKET MARKET
FUND FUND FUND FUND CLASS FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
MANAGEMENT FEES 0.33% 0.33% 0.48% 0.25% 0.15% 0.15% 0.15%

12B-1 FEES(1) 0.00 0.00 0.00 0.00 0.14 0.12 0.00

OTHER EXPENSES (AFTER FEE WAIVERS AND
REIMBURSEMENTS)(2) 0.66 0.66 1.00 0.61 0.38 0.40 0.47
----- ---- ---- ---- ----- ------ ------

TOTAL OPERATING EXPENSES (AFTER FEE WAIVERS
AND REIMBURSEMENTS)(3) 0.99% 0.99% 1.48% 0.86% 0.67% 0.67% 0.62%
----- ---- ---- ---- ----- ------ ------
----- ---- ---- ---- ----- ------ ------
</TABLE>

(1) The Mileage Trust anticipates that the 12b-1 fee charged for the current
fiscal year will be used to pay for advertising and AAdvantage miles. See
"AAdvantage Miles."

(2) "Other Expenses" before fee waivers and reimbursements are estimated to be
2.35% for the Balanced Fund, 1.30% for the Growth and Income Fund, 1.98% for
the International Equity Fund, 3.09% for the Limited-Term Income Fund and
0.71% for the U.S. Government Money Market Fund.

(3) "Total Operating Expenses" before fee waivers and reimbursements are
estimated to be 2.93% for the Balanced Fund, 1.88% for the Growth and Income
Fund, 2.71% for the International Equity Fund, 3.19% for the Limited-Term
Income Fund, 0.78% for the Money Market Fund -- Mileage Class, 0.80% for the
Municipal Money Market Fund and 1.11% for the U.S. Government Money Market
Fund.

The above expenses reflect the expenses of each Fund and the Portfolio in
which it invests. The Mileage Trust 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.

- ---------------

1 Hub and Spoke is a registered service mark of Signature Financial Group, Inc.

PROSPECTUS

3
<PAGE> 10

EXAMPLES

An 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>
BALANCED FUND $10 $32 $55 $121

GROWTH AND INCOME FUND 10 32 55 121

INTERNATIONAL EQUITY FUND 15 47 81 177

LIMITED-TERM INCOME FUND 9 27 48 106

MONEY MARKET FUND 7 21 37 83

MUNICIPAL MONEY
MARKET FUND 7 21 37 83
U.S. GOVERNMENT MONEY MARKET FUND 6 20 35 77
</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 shareholder in a Fund. Additional information may be found under
"Management and Administration of the Mileage Trust" and "Investment Advisers."

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.

FINANCIAL HIGHLIGHTS

The financial highlights in the following table have been derived from
financial statements of the Mileage Trust. The information has been audited by
Ernst & Young LLP, independent auditors. Such information should be read in
conjunction with the financial statements and the report of the independent
auditors appearing in the Annual Report incorporated in the SAI, which contains
further information about performance of the Funds and can be obtained by
investors without charge.

PROSPECTUS

4
<PAGE> 11

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 1996
----------------------------------------------------------------------------------------------
MONEY U.S.
GROWTH LIMITED- MARKET MUNICIPAL GOVERNMENT
AND INT'L TERM FUND- MONEY MONEY
BALANCED INCOME EQUITY INCOME MILEAGE MARKET MARKET
FUND(1)(3)(4) FUND(1)(3)(4) FUND(1)(3) FUND(1)(3) CLASS(1)(2) FUND(1) FUND(1)
------------- ------------- ---------- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

NET ASSET VALUE, BEGINNING OF
PERIOD(5)......................... $ 13.97 $ 15.94 $ 13.15 $ 9.83 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------ -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME(6)........ 0.49 0.34 0.20 0.59 0.05 0.03 0.05
NET GAINS (LOSSES) ON SECURITIES
(BOTH REALIZED AND
UNREALIZED)(6)................ 1.65 3.16 2.03 (0.18) -- -- --
------- ------- ------- ------ -------- ------- -------
TOTAL FROM INVESTMENT
OPERATIONS...................... 2.14 3.50 2.23 0.41 0.05 0.03 0.05
------- ------- ------- ------ -------- ------- -------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT
INCOME........................ (0.10) (0.09) (0.07) (0.59) (0.05) (0.03) (0.05)
DISTRIBUTIONS FROM NET REALIZED
GAINS ON SECURITIES........... -- -- -- -- -- -- --
------- ------- ------- ------ -------- ------- -------
TOTAL DISTRIBUTIONS............... (0.10) (0.09) (0.07) (0.59) (0.05) (0.03) (0.05)
------- ------- ------- ------ -------- ------- -------
NET ASSET VALUE, END OF PERIOD.... $ 16.01 $ 19.35 $ 15.31 $ 9.65 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ====== ======== ======= =======
TOTAL RETURN (ANNUALIZED)......... 15.97% 22.77% 16.58% 4.55% 5.12% 3.19% 4.98%
======= ======= ======= ====== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (IN
THOUSANDS).................... $ 2,495 $ 6,234 $ 3,387 $1,168 $106,709 $28,726 $10,638
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED)(6)(7):
EXPENSES...................... 1.01% 1.00% 1.48% 0.86% 0.67% 0.66% 0.62%
NET INVESTMENT INCOME......... 3.58% 2.13% 1.63% 6.08% 5.02% 3.14% 4.82%
PORTFOLIO TURNOVER RATE(8).... 76% 40% 19% 304% -- -- --
AVERAGE COMMISSION RATE
PAID(8)..................... $0.0409 $0.0412 $0.0192 -- -- -- --
</TABLE>

(1) The Funds commenced active operations on November 1, 1995. Prior to March 1,
1997, the U.S. Government Money Market Fund was known as the American
AAdvantage U.S. Treasury Money Market Mileage Fund and operated under
different investment policies.

(2) The Platinum Class of the Money Market Mileage Fund commenced active
operations on January 29, 1996 and at that time the existing shares of the
Fund were designated as Mileage Class shares.

(3) 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 and a sale at net asset value on the last
day of each period reported.

(4) Capital Guardian Trust Company was replaced by Brandywine Asset Management,
Inc. as an investment adviser to the Balanced Fund and the Growth and Income
Fund on April 1, 1996.

(5) The net asset value per share for the Balanced, Growth and Income,
International Equity and Limited-Term Income Funds has been adjusted for a
stock split which occurred on November 1, 1995 in the ratio of 1.431690,
1.254705, 1.502913 and 2.034588, respectively.

(6) Per share amounts and ratios reflect income and expenses assuming inclusion
of each Fund's proportionate share of the income and expenses of its
corresponding Portfolio.

(7) Operating results exclude expenses reimbursed by the Manager. The ratios of
expenses to average net assets and of net investment income to average net
assets were 2.93% and 1.66%, respectively for the Balanced Fund, 1.88% and
1.25%, respectively for the Growth and Income Fund, 2.71% and 0.40%,
respectively for the International Equity Fund, 3.19% and 3.75%,
respectively for the Limited-Term Income Fund, 0.78% and 4.91%, respectively
for the Money Market Fund -- Mileage Class, 0.80% and 3.00%, respectively
for the Municipal Money Market Fund and 1.11% and 4.33%, respectively for
the U.S. Government Money Market Fund, for the year ended October 31, 1996.

(8) On November 1, 1995 each Fund invested all of its investable assets in its
corresponding Portfolio. Portfolio turnover rate and average commission rate
paid are those of the corresponding Portfolio.

PROSPECTUS

5
<PAGE> 12

INTRODUCTION

The Mileage Trust is an open-end, diversified management investment company
organized as a Massachusetts business trust on February 22, 1995. The Funds are
separate investment portfolios of the Mileage Trust. Each Fund has its own
investment objective and distinct investment policies. Each Fund will invest all
of its investable assets in a corresponding Portfolio of the AMR Trust which has
an identical investment objective. The Manager provides the Portfolios with
advisory and administrative services, including the evaluation and monitoring of
the investment advisers, and it provides the Funds with administrative services.
Each Fund, except for the Money Market Fund, currently consists of one class of
shares.The Money Market Fund consists of two classes of shares, the Mileage
Class, as described in this Prospectus, and the Platinum Class, which is
available to customers of certain broker-dealers as an investment for cash
balances in their brokerage accounts. The Funds are available to individuals and
certain grantor trusts ("Trust Accounts"). For further information or to obtain
a Platinum Class prospectus free of charge call (800) 967-9009.

Although each class of shares of the Money Market Fund is designed to meet
the needs of different investors, each class of the Fund shares the same
portfolio of investments and a common investment objective. See "Investment
Objectives, Policies and Risks." Based on its value, a share of the Money Market
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 Money Market
Fund as a whole. However, certain expenses are allocated separately to each
class of shares.

The assets of the Balanced Portfolio, the Growth and Income Portfolio and
the International Equity Portfolio are allocated by the Manager among investment
advisers designated for each of those Portfolios. Investment decisions for the
Limited-Term Income Portfolio and the Money Market Portfolios are made directly
by the Manager. Each investment adviser has discretion to purchase and sell
portfolio securities in accordance with the investment objectives, policies and
restrictions described in this Prospectus and in the SAI and by specific
investment strategies developed by the Manager. There is no guarantee that a
Fund will achieve its investment objective. See "Investment Advisers."

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."

Each shareholder 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 any Fund. 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 Mileage Trust 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.

- ---------------

2 American Airlines and AAdvantage are registered trademarks of American
Airlines, Inc.

PROSPECTUS

6
<PAGE> 13

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 Mileage
Trust Board.

AMERICAN AADVANTAGE BALANCED MILEAGE FUND -- This Fund's investment objective is
to realize both income and capital appreciation. This Fund seeks its investment
objective by investing all of its investable assets in the Balanced Portfolio,
which invests primarily in equity and debt securities. Although equity
securities (such as stocks) will be purchased primarily for capital appreciation
and debt securities (such as bonds) will be purchased primarily for income
purposes, income and capital appreciation potential will be considered in
connection with all such investments. Excluding collateral for securities
loaned, ordinarily the Portfolio will have a minimum of 30% and a maximum of 70%
of its assets invested in equity securities and a minimum of 30% and a maximum
of 70% of its assets invested in debt securities which, at the time of purchase,
are rated in one of the four highest rating categories by all nationally
recognized statistical rating organizations ("Rating Organizations") rating that
security such as Standard & Poor's or Moody's Investor Services, Inc.
("Moody's") or, if unrated, are deemed to be of comparable quality by the
applicable investment adviser. Obligations rated in the fourth highest rating
category are limited to 25% of the Portfolio's debt allocation. Obligations
rated BBB or Baa by any Rating Organization may have speculative characteristics
and thus changes in economic conditions or other circumstances are more likely
to lead to a weakened capacity to make principal and interest payments than is
the case with higher grade bonds. See the SAI for a description of debt ratings.
The Portfolio, at the discretion of the investment advisers, may retain a
security that has been downgraded below the initial investment criteria. The
Portfolio usually invests between 50% and 65% of its assets in equity securities
and between 35% and 50% of its assets in debt securities. The remainder of the
Portfolio's assets may be invested in cash or cash equivalents, including
obligations that are permitted investments for the Money Market Portfolio, and
in other investment companies. However, when its investment advisers deem that
market conditions warrant, the Portfolio may, for temporary defensive purposes,
invest up to 100% of its assets in cash, cash equivalents and investment grade
short-term obligations.

The Portfolio's investments in debt securities may include investments in
obligations of the U.S. Government or its agencies or instrumentalities,
including separately traded registered interest and principal securities
("STRIPS") and other zero coupon obligations; corporate bonds, notes and
debentures; non-convertible preferred stocks; mortgage-backed securities;
asset-backed securities; and domestic, Yankeedollar and Eurodollar bank deposit
notes, certificates of deposit, bonds and notes. Such obligations may have a
fixed, variable or floating rate of interest. See the SAI for a further
description of the foregoing securities. The value of the Portfolio's debt
investments will vary in response to interest rate changes as described in
"American AAdvantage Limited-Term Income Mileage Fund."

The Portfolio may also engage in dollar rolls, purchase or sell securities
on a "when-issued" basis and purchase or sell securities 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

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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.

The Portfolio's equity investments may consist of common stocks, preferred
stocks and convertible securities, including foreign securities that are
represented by U.S. dollar-denominated American Depository Receipts which are
traded in the United States on exchanges and in the over-the-counter market.
When purchasing equity securities, primary emphasis will be placed on
undervalued securities with above average growth expectations. The Manager
believes that purchasing securities which the investment advisers believe are
undervalued in the market and that have above average growth potential will
outperform other investment styles over the longer term while minimizing
volatility and downside risk. The Manager will recommend that, with respect to
portfolio management of equity assets, the Mileage Trust retain only those
investment advisers who, in the Manager's opinion, utilize such an approach.

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.; BRANDYWINE ASSET MANAGEMENT,
INC.; GSB INVESTMENT MANAGEMENT, INC.; HOTCHKIS AND WILEY; and INDEPENDENCE
INVESTMENT ASSOCIATES, INC. currently manage the assets of the Balanced
Portfolio. See "Investment Advisers."

AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND -- This Fund's investment
objective is to realize long-term capital appreciation and current income. This
Fund seeks its investment objective by investing all of its investable assets in
the Growth and Income Portfolio, which invests primarily in equity securities.
Excluding collateral for securities loaned, ordinarily at least 80% of the
Portfolio's assets will be invested in equity securities consisting of common
stocks, preferred stocks, securities convertible into common stocks, and
securities having common stock characteristics, such as rights and warrants, and
foreign equity securities that are represented by U.S. dollar-denominated
American Depository Receipts which are traded in the United States on exchanges
and in the over-the-counter market. When purchasing equity securities, primary
emphasis will be placed on undervalued securities with above average growth
expectations. In order to seek either above average current income or capital
appreciation when interest rates are expected to decline, the Portfolio may
invest in debt securities which, at the time of purchase, are rated in one of
the four highest rating categories by all Rating Organizations rating that
security or, if unrated, are deemed to be of comparable quality by the
applicable investment adviser. Obligations rated in the fourth highest rating
category are limited to 25% of the Portfolio's debt allocation. See "American
AAdvantage Balanced Mileage Fund" for a description of the risks involved with
these obligations. See the SAI for definitions of the foregoing securities and
for a description of debt ratings. The value of the Portfolio's debt investments
will vary in response to interest rate changes as described in "American
AAdvantage Limited-Term Income Mileage Fund." The Portfolio also may invest in
other investment companies or in cash and cash equivalents, including
obligations that are permitted investments for the Money Market Portfolio.
However, when its investment advisers deem that market conditions warrant, the
Portfolio may, for temporary defensive purposes, invest up to 100% of its assets
in cash, cash equivalents and investment grade short-term 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 Balanced Mileage
Fund."

AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND -- This Fund's investment
objective is to realize long-term capital appreciation. This Fund seeks its
investment objective by investing all of its investable assets in the
International Equity Portfolio, which invests primarily in equity securities of
issuers based outside the United States. Ordinarily the Portfolio will invest at
least 65% of its assets in common stocks and securities convertible into common
stocks of issuers in at least three different countries other than the United
States. However, excluding collateral for securities loaned, the Portfolio
generally invests in excess of 80% of its assets in such securities. The
remainder of the Portfolio's assets will be invested in non-U.S. debt securities
which, at the time of purchase, are rated in one of the three highest rating
categories by any Rating Organization or, if unrated, are

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deemed to be of comparable quality by the applicable investment adviser and
traded publicly on a world market, or in cash or cash equivalents, including
obligations that are permitted investments for the Money Market Portfolio, or in
other investment companies. The value of the Portfolio's debt investments will
vary in response to interest rate changes as described in "American AAdvantage
Limited-Term Income Mileage Fund." However, when its investment advisers deem
that market conditions warrant, the Portfolio may, for temporary defensive
purposes, invest up to 100% of its assets in cash, cash equivalents, other
investment companies and investment grade short-term obligations.

The investment advisers select securities based upon a country's economic
outlook, market valuation and potential changes in currency exchange rates. When
purchasing equity securities, primary emphasis will be placed on undervalued
securities with above average growth expectations.

Overseas investing carries potential risks not associated with domestic
investments. Such risks include, but are not limited to: (1) political and
financial instability abroad, including risk of nationalization or expropriation
of assets and the risk of war; (2) less liquidity and greater volatility of
foreign investments; (3) less public information regarding foreign companies;
(4) less government regulation and supervision of foreign stock exchanges,
brokers and listed companies; (5) lack of uniform accounting, auditing and
financial reporting standards; (6) delays in transaction settlement in some
foreign markets; (7) possibility of an imposition of confiscatory foreign taxes;
(8) possible limitation on the removal of securities or other assets of the
Portfolio; (9) restrictions on foreign investments and repatriation of capital;
(10) currency fluctuations; (11) cost and possible restrictions of currency
conversion; (12) withholding taxes on dividends in foreign countries; and (13)
possibly higher commissions, custodial fees and management costs than in the
U.S. market. These risks are often greater for investments in emerging or
developing countries.

The Portfolio will limit its investments to those in countries which have
been recommended by the Manager and which have been approved by the AMR Trust
Board. Countries may be added or deleted with AMR Trust Board approval. In
determining which countries will be approved, the AMR Trust Board will evaluate
the risk factors set forth above and will particularly focus on the ability to
repatriate funds, the size and liquidity of a particular country's market and
the investment climate for foreign investors. The current foreign countries in
which the Portfolio may invest are Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Singapore, South Korea, Spain, Sweden,
Switzerland, and the United Kingdom.

The Portfolio may trade forward foreign currency contracts ("forward
contracts"), which are "derivatives," to hedge currency fluctuations of
underlying stock or bond positions or in other circumstances permitted by the
Commodity Futures Trading Commission ("CFTC"). Forward contracts to sell foreign
currency may be used when the management of the Portfolio believes that the
currency of a particular foreign country may suffer a decline against the U.S.
dollar. Forward contracts are also used to set the exchange rate for a future
transaction. In this manner, the Portfolio may protect itself against a possible
loss resulting from an adverse change in the relationship between the U.S.
dollar or other currency which is being used for the security purchase and the
foreign currency in which the security is denominated during the period between
the date on which the security is purchased or sold and the date on which
payment is made or received. Forward contracts involve certain risks which
include, but are not limited to: (1) imperfect correlation between the
securities hedged and the contracts themselves; and (2) possible decrease in the
total return of the Portfolio. Forward contracts are discussed in greater detail
in the SAI.

The Portfolio also may trade currency futures ("futures"), which are
derivatives, for the same reasons as for entering into forward contracts as set
forth above. Futures are traded on U.S. and foreign currency exchanges. The use
of futures also entails certain risks which include, but are not limited to: (1)
less liquidity due to daily limits on price fluctuation; (2) imperfect
correlation between the securities hedged and the contracts themselves; (3)
possible decrease in the total return of the Portfolio due to hedging; (4)
possible reduction in value for both the contracts and the securities being
hedged; and (5) potential losses in excess of the amounts invested in the

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futures contracts themselves. The Portfolio may not enter into futures contracts
if the purchase or sale of such contract would cause the sum of the Portfolio's
initial and any variation margin deposits to exceed 5% of its total assets.
Futures contracts are discussed in greater detail in the SAI.

HOTCHKIS AND WILEY, MORGAN STANLEY ASSET MANAGEMENT INC. and TEMPLETON
INVESTMENT COUNSEL, INC. currently serve as investment advisers to the
International Equity Portfolio. ROWE PRICE-FLEMING INTERNATIONAL, INC.
("Fleming") is also an investment adviser to the International Equity Portfolio,
however, none of the Portfolio's assets have been allocated to Fleming at this
time. See "Investment Advisers."

AMERICAN AADVANTAGE LIMITED-TERM INCOME MILEAGE FUND -- This Fund's investment
objective is to realize income and capital appreciation. As an investment
policy, the Fund primarily seeks income and secondarily seeks capital
appreciation. The Fund seeks its investment objective by investing all of its
investable assets in the Limited-Term Income Portfolio, which invests primarily
in debt obligations. Permissible investments include securities of the U.S.
Government and its agencies and instrumentalities, including STRIPS and other
zero coupon obligations; corporate bonds, notes and debentures; non-convertible
preferred stocks; mortgage-backed securities; asset-backed securities; domestic,
Yankeedollar and Eurodollar certificates of deposit, bank deposit notes, and
bank notes; other investment companies; and cash or cash equivalents including
obligations that are permitted investments for the Money Market Portfolio. Such
obligations may have a fixed, variable or floating rate of interest. At the time
of purchase, all such securities will be rated in one of the four highest rating
categories by all Rating Organizations rating such obligation or, if unrated,
will be deemed to be of comparable quality by the Manager. Obligations rated in
the fourth highest rating category are limited to 25% of the Portfolio's total
assets. See "American AAdvantage Balanced Mileage Fund" for a description of the
risks involved with these obligations. The Portfolio, at the discretion of the
Manager, may retain a security which has been downgraded below the initial
investment criteria. See the SAI for definitions of the foregoing securities and
for a description of debt ratings. Principal and/or interest payments for
obligations of the U.S. Government's agencies or instrumentalities may or may
not be backed by the full faith and credit of the U.S. Government.

Investments in Yankeedollar and Eurodollar bonds, notes and certificates of
deposit involve risks that differ from investments in securities of domestic
issuers. See "American AAdvantage Money Market Mileage Fund" for a description
of these risks. The Portfolio also may engage in dollar rolls, or purchase or
sell securities on a when-issued or forward commitment basis as described under
"American AAdvantage Balanced Mileage Fund."

The market value of fixed rate securities, and thus the net asset value of
this Portfolio's shares, is expected to vary inversely with movements in
interest rates. The market value of variable and floating rate instruments will
not vary as much due to the periodic adjustments in their interest rates. An
adjustment which increases the interest rate of such securities should reduce or
eliminate declines in market value resulting from a prior upward movement in
interest rates, and an adjustment which decreases the interest rate of such
securities should reduce or eliminate increases in market value resulting from a
prior downward movement in interest rates.

Mortgage-backed securities are securities representing interests in "pools"
of mortgages in which payments of both interest and principal on the securities
are made monthly, in effect, "passing through" monthly payments made by the
individual borrowers on the mortgage loans which underlie the securities (net of
fees paid to the issuer or guarantor of the securities). Early repayment of
principal on mortgage pass-through securities (arising from prepayments of
principal due to sale of the underlying property, refinancing, or foreclosure,
net of fees and costs which may be incurred) may expose the Portfolio to a lower
rate of return upon reinvestment of principal. Also, if a security subject to
prepayment has been purchased at a premium, in the event of prepayment, the
value of the premium would be lost. Like other debt securities, when interest
rates rise, the value of mortgage-related securities generally will decline;
however, when interest rates decline, the value of mortgage-related securities
with prepayment features may not increase as much as other debt securities.

Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government (such as in the case

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of securities guaranteed by the Government National Mortgage Association
("GNMA")) or guaranteed by agencies or instrumentalities of the U.S. Government
(such as in the case of securities guaranteed by the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"),
which are supported only by the discretionary authority of the U.S. Government
to purchase the agency's obligations). Mortgage pass-through securities created
by non-governmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers) may be supported with various credit enhancements such
as pool insurance, guarantees issued by governmental entities, a letter of
credit from a bank or senior/subordinated structures.

Collateralized mortgage obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a mortgage pass-through, interest and prepaid principal
on a CMO are paid, in most cases, monthly. CMOs may be collateralized by whole
mortgage loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC or FNMA. CMOs are structured
in multiple classes, with each class bearing a different stated maturity or
interest rate.

The Portfolio is permitted to invest in asset-backed securities, subject to
the Portfolio's rating and quality requirements. Through the use of trusts and
special purpose subsidiaries, various types of assets, primarily home equity
loans, automobile and credit card receivables, and other types of receivables or
other assets as well as purchase contracts, financing leases and sales
agreements entered into by municipalities, are being securitized in pass-through
structures similar to the mortgage pass-through structures described above.
Consistent with the Fund's and the Portfolio's investment objective, policies
and quality standards, the Portfolio may invest in these and other types of
asset-backed securities which may be developed in the future.

Asset-backed securities involve certain risks that do not exist with
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the benefit of a complete security interest in
the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on the securities. The risks associated with
asset-backed securities are often reduced by the addition of credit enhancements
such as a letter of credit from a bank, excess collateral or a third-party
guarantee.

Although investments will not be restricted by the maturity 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 maturity of the
Portfolio, the maturity 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.

MONEY MARKET FUNDS -- The investment objectives of the Money Market Funds are
current income, liquidity and the maintenance of a stable $1.00 price per share.
The Money Market Funds seek to achieve these objectives by investing all of
their investable assets in the Money Market 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 Money Market Portfolios invest generally have remaining
maturities of 397 days or less, although instruments subject to repurchase
agreements and certain variable and floating rate obligations may bear longer
final maturities. The average dollar-weighted portfolio maturity of each Money
Market Portfolio will not exceed 90 days. The Manager serves as the sole
investment adviser to the Money Market Funds. See "Management and Administration
of the Mileage Trust."

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AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND -- The Fund's 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, bank 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 two
Rating Organizations such as "A-1" by Standard & Poor's and "P-1" by Moody's;
(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 may invest in
other investment companies. The Portfolio also may purchase or sell securities
on a when-issued or forward commitment basis as described under "American
AAdvantage Balanced Mileage Fund."

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 interest 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
affect adversely 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 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.

AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET MILEAGE 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 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
Mileage Fund"); (3) are guaranteed by one or more municipal bond insurance
policies that are noncancelable and issued by third-party guarantors possessing
the highest claims-paying rating from a Rating Organization; (4) have received

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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 also may 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 regular 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 obligations 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. The
Portfolio may purchase or sell obligations on a when-issued or forward
commitment basis as described under "American AAdvantage Balanced Mileage Fund."

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, the Manager
believes 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 also may 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.

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AMERICAN AADVANTAGE U.S. GOVERNMENT MONEY MARKET MILEAGE FUND -- The Fund's
corresponding Portfolio will invest exclusively in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements which are collateralized by such obligations. U.S.
Government securities include direct obligations of the U.S. Treasury (such as
Treasury bills, Treasury notes and Treasury bonds). The Fund may invest in
securities issued by the Agency for International Development, Farmers Home
Administration, Farm Credit Banks, Federal Home Loan Bank, Federal Intermediate
Credit Bank, Federal Financing Bank, Federal Land Bank, FNMA, GNMA, General
Services Administration, Rural Electrification Administration, Small Business
Administration, Tennessee Valley Authority, and others. Some of these
obligations, such as those issued by the Federal Home Loan Bank and FHLMC, are
supported only by the credit of the agency or instrumentality issuing the
obligation and the discretionary authority of the U.S. Government to purchase
the agency's obligations. Counterparties for repurchase agreements must be
approved by the AMR Trust Board. See the SAI for a further discussion of the
foregoing obligations. The Portfolio may purchase or sell securities on a
when-issued or a forward commitment basis as described under "American
AAdvantage Balanced Mileage Fund."

OTHER INVESTMENT POLICIES -- In addition to the investment policies described
previously, each Portfolio also may lend its securities, enter into fully
collateralized repurchase agreements, and invest in private placement offerings.

SECURITIES LENDING. 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 for any Portfolio exceeds 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. Should the borrower of the
securities fail financially, there is a risk of delay in recovery of the
securities or loss of rights in the collateral. However, loans are made 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. The Manager will receive compensation for administrative
and oversight functions with respect to securities lending. The amount of such
compensation will depend on the income generated by the loan of each Portfolio's
securities. The SEC has granted exemptive relief that permits the Portfolios to
invest cash collateral received from securities lending transactions in shares
of one or more private investment companies managed by the Manager. See the SAI
for further information regarding loan transactions.

REPURCHASE AGREEMENTS. 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
investment advisers or 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 OFFERINGS. 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 "1933 Act"), and
resold to qualified institutional buyers under Rule 144A under the 1993 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 who agree that they are
purchasing the securities for investment and not with an intention to distribute
to the public. Any resale by the purchaser must be in an exempt transaction and
may be accomplished in accordance with Rule 144A. Section 4(2) securities
normally are resold to other institutional investors like the Portfolios through
or with the assistance of the issuer or investment dealers who make a market in
the Section 4(2) securities, thus providing liquidity. The Money Market
Portfolios will not invest more than 10% (and the Balanced, Growth and Income,
International Equity and Limited-Term Income

PROSPECTUS

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Portfolios, no more than 15%) of their respective assets in Section 4(2)
securities and other illiquid securities unless the applicable investment
adviser 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.

The AMR Trust Board and the applicable investment adviser, pursuant to the
guidelines approved by the AMR Trust Board, will carefully monitor the
Portfolios' investments in Section 4(2) securities sold and offered under Rule
144A, 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 AND PORTFOLIO TURNOVER -- Each investment adviser will place
its own orders to execute securities transactions which are designed to
implement the applicable Portfolio's investment objective and policies. In
placing such orders, each investment adviser will seek the best available price
and most favorable execution. The full range and quality of services offered by
the executing broker or dealer is considered when making these determinations.
Pursuant to written guidelines approved by the AMR Trust Board, an investment
adviser of a Portfolio, or its affiliated broker-dealer, may execute portfolio
transactions and receive usual and customary brokerage commissions (within the
meaning of Rule 17e-1 of the 1940 Act) for doing so.

The Money Market Portfolios and the Limited-Term Income Portfolio normally
will not incur any brokerage commissions on their transactions because money
market and debt 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.

No Portfolio, other than the Limited-Term Income Portfolio, currently
expects its portfolio turnover rate to exceed 100%. The portfolio turnover rate
for the Limited-Term Income Portfolio for the year ended October 31, 1996 was
304%. High portfolio activity increases a Portfolio's transaction costs,
including brokerage commissions, and may result in a greater number of taxable
transactions.

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS -- As previously described,
investors should be aware that each Fund, unlike mutual funds which 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.

The Manager expects, although it cannot guarantee, that 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 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 may charge different sales commissions. Therefore,
investors in a Fund may experience different returns from investors in another
investment company which invests exclusively in that Fund's corresponding
Portfolio.

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in a Portfolio's fundamental objective, policies and restrictions, which 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 and the investment advisers would actively manage the
Fund.

See "Management and Administration of the Mileage Trust" 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 Mileage Trust and the AMR Trust, (3)
brokerage practices, (4) the Funds' shares, including the rights and liabilities
of its shareholders, (5) additional 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 restriction 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 the Mileage Trust 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.
Further, wholly owned subsidiaries of finance companies will be considered
to be in the industries of their parent companies if their activities are
primarily related to financing the activities of their parent companies.

The following non-fundamental investment restriction may be changed with respect
to a particular Fund by a vote of a majority of the Mileage Trust Board or with
respect to a Portfolio by a vote of a majority of the AMR Trust

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Board: no Portfolio may invest more than 15% (or, with respect to any Money
Market Portfolio, 10%) of its net assets in illiquid securities, including time
deposits and repurchase agreements which mature in more than seven days.

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 which 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 the Money Market Funds may advertise their "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 regular federal income tax. Each class of the Money Market
Fund has different expenses which will impact the performance of the class.

Advertised yields for the Balanced Fund, Growth and Income Fund,
International Equity Fund and Limited-Term Income Fund (collectively, the
"Variable NAV Funds") may be computed by dividing the net investment income per
share earned by a Fund during the relevant time period by the maximum offering
price per share for that Fund on the last day of the period. 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. Additionally, the Limited-Term Income Fund may advertise
a "monthly distribution rate." This rate is based on an annualized monthly
dividend accrual rate per share compared with the month-end share price of this
Fund. The Funds will at times compare their performance to applicable published
indices, and also may disclose their performance as ranked by certain ranking
entities. See the SAI for more information about the calculation of yields and
total returns.

MANAGEMENT AND ADMINISTRATION OF THE MILEAGE TRUST

The Mileage Trust Board has general supervisory responsibility over the
Mileage Trust's affairs. The Manager serves as investment manager and
administrator to the Funds and their corresponding Portfolios pursuant to
separate Management Agreements, each dated October 1, 1995, as amended on
December 17, 1996, which obligate the Manager to provide or oversee all
administrative, investment advisory and portfolio management services for the
Funds and their corresponding Portfolios. The Manager, located at 4333 Amon
Carter Boulevard, MD5645, Fort Worth, Texas 76155, is a wholly owned subsidiary
of AMR Corporation ("AMR"), the parent company of American Airlines, Inc.,
organized in 1986 to provide investment management, advisory, administrative and
asset management consulting services. The assets of the Balanced Portfolio, the
Growth and Income Portfolio and the International Equity Portfolio are allocated
by the Manager among one or more investment advisers designated for that
Portfolio. See "Investment Advisers." The Manager serves as the sole investment
adviser to the Money Market Portfolios and provides investment advisory services
with respect to all assets of the Limited-Term Income Portfolio. In addition,
with the exception of the International Equity Portfolio, if so requested by any
investment adviser, the Manager will make the investment decisions with respect
to assets

PROSPECTUS

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allocated to that investment adviser which the investment adviser determines
should be invested in short-term obligations of the type permitted for
investment by the Money Market Portfolio. As of December 31, 1996, the Manager
had assets under management (including assets under fiduciary advisory control)
totaling approximately $16.0 billion including approximately $5.7 billion under
active management and $10.3 billion as named fiduciary or fiduciary adviser. Of
the total, approximately $11.9 billion of assets are related to AMR. American
Airlines, Inc. is not responsible for investments made in the Mileage Trust.

The Manager provides the Mileage Trust and the AMR Trust 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 oversees each Portfolio's participation in
securities lending activities and any actions taken by securities lending agents
in connection with those activities to ensure compliance with all applicable
regulatory and investment guidelines. The Manager also develops the investment
programs for each Portfolio, selects and changes investment advisers (subject to
approval by the AMR Trust Board and appropriate interest holders), allocates
assets among 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 bears the expense of providing the above services, and pays the
fees of the investment advisers of the Funds and their Portfolios. 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,
equal to the sum of (1) 0.15% of the net assets of the Money Market Portfolios,
(2) 0.25% of the net assets of the Limited-Term Income Portfolio, (3) 0.10% of
the net assets of the other Portfolios, plus (4) all fees payable by the Manager
to the AMR Trust's investment advisers as described in "Investment Advisers." To
the extent that a Fund invests all of its investable assets in its corresponding
Portfolio, the Manager will need to provide only administrative services to the
Funds. As compensation for these services, the Manager receives from the Mileage
Trust an annualized fee equal to 0.25% of the net assets of each Variable NAV
Fund and 0.05% of the net assets of the Money Market Funds. The Manager receives
compensation in connection with securities lending activities. If a Portfolio
lends its portfolio securities and receives cash collateral from the borrower,
the Manager will receive up to 25% of the net annual interest income (the gross
interest earned by the investment less the amount paid to the borrower as well
as related expenses) received from the investment of such cash. If a borrower
posts collateral other than cash, the borrower will pay to the lender a loan
fee. The Manager will receive up to 25% of the loan fees posted by borrowers.
The fees received by the Manager from the Mileage Trust and the AMR Trust 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 Mileage Trust Board
and the AMR Trust Board, including the affirmative votes of a majority of the
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 Mileage Trust or
the AMR Trust. A Management Agreement will automatically terminate in the event
of its "assignment" as defined in the 1940 Act.

The Mileage Trust is 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.

PROSPECTUS

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A majority of the Independent Trustees have adopted written procedures
reasonably appropriate to deal with potential conflicts of interest between the
Mileage Trust and the AMR Trust, including creating a separate Board of Trustees
of the AMR Trust.

FUND ADVISORY AGREEMENTS -- Each investment adviser has entered into a separate
investment advisory agreement with the Manager to provide investment advisory
services to the Funds and their corresponding Portfolios, each dated October 1,
1995. To the extent that a Fund invests all of its investable assets in a
corresponding Portfolio, however, an investment adviser will receive an advisory
fee only on behalf of the Portfolio and not on behalf of its corresponding Fund.
Except for the Money Market Portfolios and the Limited-Term Income Portfolio,
the assets of each Portfolio are allocated among the investment advisers
designated for that Portfolio and described in this Prospectus in "Investment
Advisers." The Manager is permitted to enter into new or modified advisory
agreements with existing or new investment advisers without approval of Fund
shareholders or Portfolio interest holders, but subject to approval of the
Mileage Trust Board and the AMR Trust Board. The Securities and Exchange
Commission issued an exemptive order which eliminates the need for
shareholder/interest holder approval, subject to compliance with certain
conditions. These conditions include the requirement that within 90 days of
hiring a new adviser or implementing a material change with respect to an
advisory contract, the applicable Fund send a notice to shareholders containing
information about the change that would be included in a proxy statement. The
Manager recommends investment advisers to the AMR Trust Board based upon its
continuing quantitative and qualitative evaluation of the investment advisers'
skill in managing assets using specific investment styles and strategies. The
allocation of assets among investment advisers may be changed at any time by the
Manager. Allocations among investment advisers will vary based upon a variety of
factors, including the overall investment performance of each investment
adviser, the Portfolio's cash flow needs and market conditions. The Manager need
not allocate assets to each investment adviser designated for a Portfolio. The
investment advisers can be terminated without penalty to the AMR Trust by the
Manager, the AMR Trust Board or the interest holders of the applicable
Portfolio. Short-term investment performance, by itself, is not a significant
factor in selecting or terminating an investment adviser, and the Manager does
not expect to recommend frequent changes of investment advisers. The Prospectus
will be supplemented if additional investment advisers are retained or the
contract with any existing investment adviser is terminated.

Each investment adviser has discretion to purchase and sell securities for
its segment of a Portfolio's assets in accordance with that Portfolio's
objectives, policies and restrictions and the more specific strategies provided
by the Manager. Although the investment advisers are subject to general
supervision by the AMR Trust Board and the Manager, these parties do not
evaluate the investment merits of specific securities transactions. As
compensation for its services, each investment adviser is paid a fee by the
Manager out of the proceeds of the management fee received by the Manager from
the AMR Trust.

DISTRIBUTION PLAN -- The distribution plan for the Funds (the "Plan") was
adopted pursuant to Rule 12b-1 under the 1940 Act and provides that it will
continue in effect so long as its continuance is approved at least annually by a
majority of the Trustees, including the affirmative votes of a majority of the
Independent Trustees of the Mileage Trust Board, cast in person at a meeting
called for the purpose of considering such approval, or by the vote of
shareholders. The Plan may be terminated with respect to a particular Fund at
any time, without the payment of any penalty, by a vote of a majority of the
Independent Trustees of the Mileage Trust Board or by a vote of a majority of
the outstanding voting securities of the applicable Fund. Shares are distributed
through the Funds' principal underwriter, BTS. BTS is compensated by the
Manager, and not the Trust.

The Plan provides that each Fund will pay 0.25% per annum of its average
daily net assets to the Manager (or another entity approved by the Mileage Trust
Board) for distribution-related services. The fee will be payable monthly in
arrears without regard to whether the amount of the fee is more or less than the
actual expenses incurred in a particular month by the entity for the services
provided pursuant to the Plan. The primary expenses expected to be incurred
under the Plan are advertising and participation in the AAdvantage program.

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ALLOCATION OF FUND EXPENSES -- Expenses of the Money Market Fund's Platinum and
Mileage Classes generally are allocated equally among the shares of the Fund,
regardless of class. However, certain expenses approved by the Mileage Trust
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
Funds.

CUSTODIAN AND TRANSFER AGENT -- The transfer agent for the Funds is GOLDMAN,
SACHS & CO. ("Goldman"). NATIONSBANK OF TEXAS, N.A., Dallas, Texas, serves as
custodian for the Portfolios and the Funds except for the International Equity
Portfolio. THE BANK OF NEW YORK, New York, New York, serves as custodian for the
International Equity Portfolio.

INDEPENDENT AUDITOR -- The independent auditor for the Mileage Trust and the AMR
Trust is ERNST & YOUNG LLP, Dallas, Texas.

INVESTMENT ADVISERS

Set forth below is a brief description of the investment advisers for each
Fund and its corresponding Portfolio, except for the Money Market Funds and
their corresponding Portfolios, whose sole investment adviser is the Manager.
References to the investment advisers retained by a Portfolio also apply to the
corresponding Fund. Except for the Manager, none of the investment advisers
provides any services to the Funds or the Portfolios except for portfolio
investment management and related recordkeeping services, or has any affiliation
with the Mileage Trust, the AMR Trust or the Manager.

William F. Quinn has served as President of the Manager since it was founded
in 1986, and Nancy A. Eckl serves as Vice President - Trust Investments of the
Manager. Ms. Eckl previously served as Vice President - Finance and Compliance
of the Manager from December 1990 to May 1995. In these capacities, Mr. Quinn
and Ms. Eckl have primary responsibility for the day-to-day operations of the
Balanced Fund, the Growth and Income Fund, the International Equity Fund and
their corresponding Portfolios. These responsibilities include oversight of the
investment advisers, regular review of each adviser's performance and asset
allocations among investment advisers.

Michael W. Fields is responsible for the portfolio management oversight of
the Limited-Term Income Fund and its corresponding Portfolio. Mr. Fields has
been with the Manager since it was founded in 1986 and serves as Vice
President-Fixed Income Investments. Benjamin L. Mayer is responsible for the
day-to-day portfolio management of the Limited-Term Income Portfolio. Mr. Mayer
has served as Senior Portfolio Manager of the Manager since May 1995. Prior to
that time, he was a Vice President of Institutional Fixed Income Sales at
Merrill Lynch, Pierce, Fenner & Smith from January 1994 to April 1995 and Vice
President, Regional Senior Strategist from April 1989 to January 1994. Mr. Mayer
has had portfolio management responsibility for the Fund since August 1995.

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. ("Barrow"), 3232 McKinney Avenue,
Dallas, Texas 75204, is a professional investment counseling firm which has been
providing investment services since 1979. The firm is wholly owned by United
Asset Management Corporation, a Delaware corporation. As of December 31, 1996,
Barrow had discretionary investment management authority with respect to
approximately $20.5 billion of assets, including approximately $1.5 billion of
assets of AMR and its subsidiaries and affiliated entities. Barrow serves as an
investment adviser to the Balanced Portfolio, the Growth and Income Portfolio
and the Limited-Term Income Portfolio, although the Manager does not presently
intend to allocate any of the assets in the Limited-Term Income Portfolio to
Barrow. The Manager pays Barrow an annualized fee equal to .30% on the first
$200 million in AMR Trust assets under its discretionary management, .20% on the
next $300 million, .15% on the next $500 million, and .125% on assets over $1
billion.

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BRANDYWINE ASSET MANAGEMENT, INC. ("Brandywine"), 201 North Walnut Street,
Wilmington, Delaware 19801, is a privately held professional investment
counseling firm founded in 1986. As of December 31, 1996, Brandywine had assets
under management totaling approximately $6 billion, including approximately $285
million of assets of AMR and its subsidiaries and affiliated entities.
Brandywine serves as an investment adviser to the Balanced Portfolio and the
Growth and Income Portfolio. The Manager pays Brandywine, for the first $500
million of assets under its discretionary management, an annualized fee equal to
.25% of assets in the Growth and Income Portfolio and .225% of assets in the
Balanced Portfolio, .225% of the next $100 million on all assets, and .20% on
all excess assets.

GSB INVESTMENT MANAGEMENT, INC. ("GSB"), 301 Commerce Street, Fort Worth,
Texas 76102, is a professional investment management firm which was founded in
1987 by Frank P. Ganucheau, Mark J. Stupfel, and Lyle E. Brumley. GSB is wholly
owned by United Asset Management Corporation, a Delaware corporation. As of
December 31, 1996, GSB managed approximately $3.2 billion of assets, including
approximately $802 million of assets of AMR and its subsidiaries and affiliated
entities. GSB serves as an investment adviser to the Balanced Portfolio and the
Growth and Income Portfolio. The Manager pays GSB an annualized fee equal to
.30% of the first $100 million in AMR Trust assets under its discretionary
management, .25% of the next $100 million, .20% of the next $100 million, and
.15% on all excess assets.

HOTCHKIS AND WILEY, 800 West Sixth Street, 5th Floor, Los Angeles,
California 90017, is a professional investment counseling firm which was founded
in 1980 by John F. Hotchkis and George Wiley. Hotchkis and Wiley became a
division of Merrill Lynch Capital Management Group, a wholly owned subsidiary of
Merrill Lynch & Co., Inc., on November 12, 1996. Assets under management as of
December 31, 1996 were approximately $10.2 billion, which included approximately
$1.4 billion of assets of AMR and its subsidiaries and affiliated entities.
Hotchkis and Wiley serves as an investment adviser to the Balanced Portfolio,
Growth and Income Portfolio and International Equity Portfolio. The Manager pays
Hotchkis and Wiley an annualized fee equal to .60% of the first $10 million of
AMR Trust assets under its discretionary management, .50% of the next $140
million of assets, .30% on the next $50 million of assets, .20% of the next $800
million of assets and .15% of all excess assets.

INDEPENDENCE INVESTMENT ASSOCIATES, INC. ("IIA"), 53 State Street, Boston,
Massachusetts 02109, is a professional investment counseling firm which was
founded in 1982. The firm is a wholly owned subsidiary of John Hancock Mutual
Life Insurance Company. Assets under management as of December 31, 1996,
including funds managed for its parent company, were approximately $25.9
billion, which included approximately $981 million of assets of AMR and its
subsidiaries and affiliated entities. IIA serves as an investment adviser to the
Balanced Portfolio and Growth and Income Portfolio. The Manager pays IIA an
annualized fee equal to .50% of the first $30 million of AMR Trust assets under
its discretionary management, .25% of the next $70 million of assets, and .20%
of all excess assets.

MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM"), 25 Cabot Square, London,
United Kingdom, E14 4QA, is a wholly owned subsidiary of Morgan Stanley Group
Inc. MSAM provides portfolio management and named fiduciary services to taxable
and nontaxable institutions, international organizations and individuals
investing in United States and international equity and debt securities. At
September 30, 1996, MSAM, together with its other asset management affiliates,
had assets under management (including assets under fiduciary advisory control)
totaling approximately $67.1 billion, including approximately $50.2 billion
under active management and $16.9 billion as named fiduciary or fiduciary
adviser. As of September 30, 1996, MSAM had investment authority over
approximately $314 million of assets of AMR and its subsidiaries and affiliated
entities. MSAM serves as an investment adviser to the International Equity
Portfolio. For this service, the Manager pays MSAM an annual fee equal to .80%
of the first $25 million in AMR Trust assets under its discretionary management,
.60% of the next $25 million in assets, .50% of the next $25 million in assets
and .40% on all excess assets.

On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover &
Co. announced that they had entered into an Agreement and Plan of Merger to form
a new company to be named Morgan Stanley, Dean

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<PAGE> 28

Witter, Discover & Co. Subject to certain conditions being met, it is currently
anticipated that the transaction will close in mid-1997. Thereafter, MSAM will
be a subsidiary of Morgan Stanley, Dean Witter, Discover & Co.

ROWE PRICE-FLEMING INTERNATIONAL, INC., 100 East Pratt Street, Baltimore
Maryland 21202, is a professional investment counseling firm founded in 1979.
Fleming is a joint venture owned entirely by its three parent companies, T. Rowe
Price, Robert Fleming and Jardine Fleming. As of December 31, 1996, Fleming had
assets under management totaling approximately $29.0 billion, including
approximately $265 million of assets of AMR and its subsidiaries and affiliated
entities. Fleming serves as an investment adviser to the International Equity
Portfolio, although the Manager does not presently intend to allocate assets
from the Portfolio to Fleming. For its services to the International Equity
Portfolio when total assets under Fleming's management are less than $200
million, the Manager will pay Fleming an annualized fee equal to 0.75% of the
first $20 million, 0.60% of the next $30 million and .50% on amounts over $50
million. When assets under Fleming's management exceed $200 million but are less
than $500 million, the Manager will pay Fleming an annualized fee equal to 0.50%
on all assets. When assets under Fleming's management exceed $500 million but
are less than $750 million, the Manager will pay an annualized fee equal to
0.45% on all assets, and when assets exceed $750 million, the Manager will pay
Fleming a flat fee of 0.40% on all assets. When asset levels are between $184
million and $200 million, Fleming will credit the Manager with an adjustment for
the difference between the two fee schedules. The credit is determined by
pro-rating the difference between the original tiered fee and the flat fee
($80,000 per annum at all asset levels) over the difference between $200 million
and the current asset size for billing purposes.

TEMPLETON INVESTMENT COUNSEL, INC. ("Templeton"), 500 East Broward Blvd.,
Suite 2100, Fort Lauderdale, Florida 33394-3091, is a professional investment
counseling firm which has been providing investment services since 1979.
Templeton is indirectly owned by Franklin Resources, Inc. As of December 31,
1996, Templeton had discretionary investment management authority with respect
to approximately $21.7 billion of assets, including approximately $433.9 million
of assets of AMR and its subsidiaries and affiliated entities. Templeton serves
as an investment adviser to the International Equity Portfolio. For this
service, the Manager pays Templeton an annualized fee equal to .50% of the first
$100 million in AMR Trust assets under its discretionary management, .35% of the
next $50 million in assets, .30% of the next $250 million in assets and .25% on
assets over $400 million.

Solely for the purpose of determining the applicable percentage rates when
calculating the fees for each investment adviser other than MSAM, there shall be
included all other assets or trust assets of American Airlines, Inc. also under
management by each respective investment adviser (except assets managed by
Barrow under the HALO Bond Program). For the purpose of determining the
applicable percentage rates when calculating MSAM's fees, all equity account
assets managed by MSAM on behalf of American Airlines, Inc. shall be included.
The inclusion of any such assets will result in lower overall fee rates being
applied to the applicable Portfolio.

AADVANTAGE 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 a 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

PROSPECTUS

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<PAGE> 29

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 Funds. These miles
appear on the monthly account statement as well as 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, trustees of 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, Other Distributions 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 government regulations.

HOW TO PURCHASE SHARES

Shares are sold on a continuous basis. Purchase orders should be directed to
the transfer agent either by mail, by pre-authorized investment or by wire as
described here and in the chart below. The minimum initial purchase for each
Fund is $10,000, except for accounts opened by employees or retirees of AMR
Corporation or one of its subsidiaries ("AMR Related Accounts") for which a
$5,000 minimum applies. The Funds have no obligation to accept purchase requests
or maintain accounts which do not meet minimum purchase requirements. Accounts
opened through financial intermediaries may be subject to lower or higher
minimums. The minimum for subsequent purchases is $250, except for wire
purchases for which a $1,000 minimum applies. The Manager reserves the right to
waive or change the minimum investment requirements.

An order to purchase shares of a Variable NAV Fund will be executed at the
next share price calculated Monday through Friday on each day on which the New
York Stock Exchange (the "Exchange") is open for trading, which excludes the
following business holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
("Business Day"). Shares of the Variable NAV Funds are offered and purchase
orders are accepted until 4:00 p.m. Eastern time on each Business Day. An order
to purchase shares of the Money Market Funds will be executed at the Fund's next
determined net asset value per share on any day on which the Exchange is open
for business except for Martin Luther King's Birthday, Columbus Day and
Veteran's Day ("Money Market Business Day") and during which federal funds
become available to the Fund. Shares are offered and orders are accepted for the
Municipal Money Market Fund until 12:00 p.m. Eastern time, for the U.S.
Government Money Market Fund until 2:00 p.m. Eastern time, and for the Money
Market Fund until 3:00 p.m. Eastern time, on each Money Market Business Day. The
Mileage Trust reserves the right to reject any order for the purchase of shares
and to limit or suspend, without prior notice, the offering of shares. "Federal
funds" are funds deposited by a commercial bank in an account at a federal
reserve bank that can be transferred to a similar account of another bank in one
day and thus may be made immediately available to a Money Market Fund through
its custodian.

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<PAGE> 30

HOW TO PURCHASE SHARES

<TABLE>
<CAPTION>
INITIAL SUBSEQUENT
INVESTMENT INVESTMENTS
<S> <C> <C>
MINIMUM $10,000 ($5,000 for AMR Related $250, except $1,000 for wire transfers
INVESTMENT Accounts). Shares purchased through
financial intermediaries may have
lower or higher minimums.
- ------------------------------- ------------------------------------ ------------------------------------------
INVESTMENTS BY MAIL Please make check payable to American Please make check payable to the applicable
AAdvantage Mileage Funds and mail American AAdvantage Mileage Funds and
MAIL TO: with your application. include your account number on the check.
American AAdvantage Mail to the address printed on your account
Mileage Funds statement. Include either the detachable
P.O. Box 4580 form from your account statement, the
Chicago, IL 60680-4580 deposit slips provided with your checkbook
(if you have a Money Market account and
opted for checking) or a letter with the
account name and number.
- ------------------------------- ------------------------------------ ------------------------------------------
INVESTMENTS BY PRE-AUTHORIZED Not available. Amount is drawn on your bank checking
AUTOMATIC PURCHASE account and automatically invested on a
Call (800) 231-4252 to specific day each month.
establish.
- ------------------------------- ------------------------------------ ------------------------------------------
INVESTMENTS BY WIRE An application must precede initial $1,000 minimum
Call (800) 231-4252 to wire purchase. Indicate "new" for account
funds. number.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

Federal funds should be wired to: State Street Bank & Trust Co., ABA Routing
#0110-0002-8; BNF=GSFG/AC-25652520; Attn: American AAdvantage Mileage
Funds-Specific Fund (Balanced, Growth and Income, International Equity,
Limited-Term Income, Money Market, Municipal Money Market or U.S. Government
Money Market Fund) together with the account registration and number. Investors
will be responsible for any charges assessed by their bank to handle wire
transfers.

OPENING AN ACCOUNT -- A completed and signed application is required for each
new account opened, regardless of the method chosen for making an initial
investment. If an individual opening an account is not yet a member of the
AAdvantage program, he or she automatically will be enrolled and assigned an
AAdvantage account number. If assistance is required in filling out the
application, or if extra applications are required, call (800) 231-4252.

HOW TO REDEEM SHARES

Shares of the Variable NAV Funds may be redeemed by telephone, by
pre-authorized automatic redemption or by mail on any Business Day. Shares of
the Money Market Funds may be redeemed by telephone, by writing a check, by
pre-authorized automatic redemption or by mail on any Money Market 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 Fund's corresponding Portfolio. See the SAI
for further information concerning redemptions in kind.

A shareholder's account will be charged $12 for wire redemptions to cover
transaction costs. Redemption proceeds will generally be sent within one
Business Day or Money Market Business Day, as applicable. However, if making
immediate payment could adversely affect a Fund, it may take up to seven days to
send payment.

A minimum of $5,000 is required in order to maintain an account in a Fund.
Otherwise, a Fund may give a shareholder 60 days' notice to increase the account
balance to this level in order to avoid account closure. If a

PROSPECTUS

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<PAGE> 31

shareholder does not increase the account balance to $5,000 within the 60 day
period, the Fund is entitled to close the account and mail the proceeds to the
address of record.

To ensure acceptance of a redemption request, please adhere to the following
procedures.

REDEEMING BY TELEPHONE -- Shares may be redeemed by telephone if the
shareholder's account application reflects that option. Minimum redemption
amounts are $100 for check redemptions and $1,000 for wire redemptions.
Telephone redemptions in any 30 day period shall not exceed $25,000 without the
express written consent of the Mileage Trust. In order to redeem by telephone,
investors should call the transfer agent at (800) 231-4252. Redemption proceeds
will only be mailed to either the address of record or mailed or wired to a
commercial bank account designated on the account application.

By establishing the telephone redemption service, investors authorize the
Funds or their agent to act upon verbal instructions to redeem shares for any
account for which such service has been authorized. In an effort to prevent
unauthorized or fraudulent redemption requests by telephone, the transfer agent
will employ reasonable procedures specified by the Funds to confirm that such
instructions are genuine. For instance, all telephone redemption requests will
be recorded and proceeds of telephone redemption requests will only be sent to
the address or account designated in the application. Neither the Funds, the
Trusts, the Manager, Goldman or their trustees, directors or officers will be
liable for any unauthorized or fraudulent redemption instructions received by
telephone. If reasonable procedures as described above are not implemented,
these parties may be liable for any loss due to unauthorized or fraudulent
transactions. Due to the volume of calls or other unusual circumstances,
telephone redemptions may be difficult to implement during certain time periods.
This service may be amended or terminated at any time by the transfer agent or
the Mileage Trust without prior notice.

REDEEMING BY CHECK -- If an investor elects on the application, shares of the
Money Market Funds may be redeemed through the check writing feature. There is
no limit on the number of checks written per month and no check redemption fees.
Checks must be written in amounts of $100 or more. Check drafts however, are not
returned to shareholders. If copies of drafts are required, a service charge of
$2 per check will be assessed to the shareholder.

PRE-AUTHORIZED AUTOMATIC REDEMPTIONS -- Shareholders can arrange to have a
preauthorized 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 preauthorized automatic redemptions,
contact the transfer agent at (800) 231-4252.

REDEEMING BY MAIL -- A letter of instruction may be mailed to Goldman c/o the
American AAdvantage Mileage Funds, P.O. Box 4580, Chicago, IL 60680-4580. It
should specify the Fund (Balanced, Growth and Income, International Equity,
Limited-Term Income, Money Market, Municipal Money Market or U.S. Government
Money Market Fund), the number of shares or dollar amount to be redeemed, the
shareholder's name and account number. The letter of instruction must be signed
by all persons required to sign for the account, exactly as it is registered.
Redemptions over $25,000, redemption proceeds in any amount sent to an address
other than the address of record or to a commercial bank account other than the
account designated on the application, or redemptions on an account whose
address of record has been changed within thirty days, must be accompanied by a
signature guarantee by a financial institution satisfying the standards
established by Goldman.

FULL REDEMPTIONS -- Unpaid dividends credited to an account up to the date of
redemption of all shares of a Money Market Fund generally will be paid at the
time of redemption.

EXCHANGE PRIVILEGE

Shares of a Fund which have been registered in a shareholder's name for at
least 15 days may be exchanged into shares of another Fund. A minimum exchange
of $250 is required into existing accounts. If a shareholder

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<PAGE> 32

wishes to establish a new account by making an exchange, a $10,000 minimum
($5,000 for AMR Related Accounts) is required.

Shareholders may exchange shares by sending the Funds a written request or
by calling Goldman at (800) 231-4252. The exchange will be processed at the next
share price calculated after the request is received in good order by the Funds.
In establishing a telephone exchange service, shareholders authorize the Funds
or their agent to act upon verbal instructions to exchange shares from any
account for which such service is authorized to any identically registered
account(s). Goldman will use reasonable procedures specified by the Funds to
confirm that such instructions are genuine such as the recording of all
telephone exchange requests. If reasonable procedures as described above are
implemented, neither the Funds, the Trusts, the Manager, Goldman or their
trustees, directors or officers will be liable for any unauthorized or
fraudulent instructions.

The general redemption policies apply to redemptions by telephone exchange.
The exchange privilege may be modified or terminated at any time by the Funds.
The Funds reserve the right to limit the number of exchanges an investor may
exercise.

VALUATION OF SHARES

The net asset value of each share (share price) of the Variable NAV Funds is
determined as of 4:00 p.m. Eastern time on each Business Day and the net asset
value of each share of the Money Market Funds is determined as of 4:00 p.m.
Eastern time on each Money Market Business Day. Except for the Mileage Class of
the Money Market Fund, the net asset value of all outstanding shares of a Fund
will be determined by computing that Fund's total assets (which is the value of
the Fund's investment in its corresponding Portfolio), subtracting all of each
Fund's liabilities, and dividing the result by the total number of shares of
that Fund outstanding at such time. The net asset value of Mileage Class shares
of the Money Market Fund will be based on a pro rata allocation of the value of
the Fund's corresponding Portfolio's investment income, expenses and total
capital gains and losses. The allocation will be based on the 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.

Equity securities listed on securities exchanges, including all but United
Kingdom securities of the International Equity Portfolio, are valued at the last
quoted sales price on a designated exchange prior to the close of trading on the
Exchange or, lacking any sales, on the basis of the last current bid price prior
to the close of trading on the Exchange. Securities of the United Kingdom held
in the International Equity Portfolio are priced at the last jobber price (mid
of the bid and offer prices quoted by the leading stock jobber in the security)
prior to close of trading on the Exchange. Trading in foreign markets is usually
completed each day prior to the close of the Exchange. 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 AMR Trust 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) will normally 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 AMR Trust
Board. Assets and liabilities denominated in foreign currencies and forward
currency contracts are translated into U.S. dollar equivalents based on
prevailing market rates. Portfolio obligations held by the Money Market
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. Investment grade short-term
obligations with 60 days or less to maturity held by all other Portfolios also
are valued using the amortized cost method as described in the SAI.

PROSPECTUS

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<PAGE> 33

DIVIDENDS, OTHER DISTRIBUTIONS AND TAX MATTERS

DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS -- Dividends from the net investment
income of the Balanced Fund, the Growth and Income Fund and the International
Equity Fund will be declared annually. Dividends consisting of substantially all
of the net investment income of the Limited-Term Income Fund, which are paid
monthly, normally are declared on each Business Day immediately prior to the
determination of the net asset value and are payable to shareholders of record
as of the close of business on the day on which declared. A Fund's net
investment income consists of its share of its corresponding Portfolio's
dividends and interest (including discount) accrued on its securities, less
applicable expenses. Distributions of a Fund's share of its corresponding
Portfolio's realized net short-term capital gain, net capital gain (the excess
of net long-term capital gain over net short-term capital loss), and net gains
from foreign currency transactions, if any, normally will be made annually.

Dividends and other distributions paid on each class of the Money Market
Fund's shares are calculated at the same time and in the same manner. All of
each Money Market Fund's net investment income and net short-term capital gain,
if any, generally will be declared as dividends on each Money Market Business
Day immediately prior to the determination of the net asset value. Dividends
generally will be paid monthly, in cash or in Fund shares, on the first day of
the following month. The Money Market Fund's net investment income attributable
to the Mileage 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 estimated share of its expenses of
both the Portfolio and the Fund attributable to the Mileage Class. The Money
Market Portfolios do not expect to realize net capital gain, and, therefore, the
Money Market Funds do not foresee paying any capital gain distributions. If any
Money Market 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 and other distributions on a Fund's shares will be automatically
declared and paid in additional shares of that Fund. However, a shareholder may
choose to have distributions of net capital gain paid in shares and dividends
paid in cash, or have all such distributions and dividends paid in cash. An
election may be changed at any time by delivering written notice that is
received by the transfer agent at least ten days prior to the payment date for a
dividend or other distribution.

TAX INFORMATION -- 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, net investment income plus any net
short-term capital gain and gains from certain foreign currency transactions)
and net 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 and other distributions declared by a Fund in October,
November or December of any year and payable to shareholders of record on a date
in one of those months 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 Fund shares.
Distributions of a Fund's net capital gain (whether received in cash or paid in
additional Fund shares), when designated as such, generally will be taxable to
those shareholders as long-term capital gain, regardless of

PROSPECTUS

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<PAGE> 34

how long they have held their Fund shares. A capital gain distribution from a
Fund also may be offset by capital losses from other sources.

Some foreign countries may impose withholding taxes on certain dividends
payable to the International Equity Portfolio. The International Equity Fund's
share of any such tax withheld may either be treated by that Fund as a deduction
or if it satisfies certain requirements, it may elect to flow the tax through to
its shareholders, who in turn may either treat it as a deduction or use it in
calculating a credit against their federal income tax.

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 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 state or 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.

Redemption of Fund shares (other than shares of the Money Market Funds) may
result in taxable gain or loss to the redeeming shareholder, depending upon
whether the fair market value of the redemption proceeds exceeds or is less than
the shareholder's adjusted basis for the redeemed shares. An exchange of shares
of a Fund for shares of any other Fund (see "Exchange Privileges") generally
will have similar tax consequences. If shares of a Fund are sold at a loss after
being held for six months or less, the loss will be treated as long-term,
instead of short-term, capital loss to the extent of any capital gain
distributions received on those shares.

If shares are purchased shortly before the record date for a dividend (other
than an exempt-interest dividend) or other distribution, the investor will pay
full price for the shares and receive some portion of the price back as a
taxable distribution.

Each Fund notifies its shareholders following the end of each calendar year
of the amounts of dividends and capital gain distributions paid (or deemed paid)
(and for the International Equity Fund, if it satisfies the requirements and
makes the election referred to above, its share of the Fund's share of any
foreign taxes paid by the International Equity Portfolio) that year and of any
portion of those dividends that qualifies for the corporate dividends-received
deduction. 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
notice also might include in taxable dividends a nominal amount reflecting the
value of AAdvantage Miles credited to the shareholders' accounts, which are
deemed by the Internal Revenue Service to constitute taxable distributions by
the Funds.

Each Fund is required to withhold 31% of all taxable dividends, capital gain
distributions and, for all Funds other than the Money Market Funds, redemption
proceeds payable to any individuals and certain other non-corporate shareholders
who do not provide the Fund with a correct taxpayer identification number or
(except with respect to redemption proceeds) 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 Mileage
Trust, as well as any tax consequences relating to the receipt of AAdvantage
Miles. For further tax information, see the SAI.

PROSPECTUS

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<PAGE> 35

GENERAL INFORMATION

Each Fund's shares can be issued in an unlimited number. The Money Market
Fund consists of two classes of shares and all other Funds consist of one class
of shares. Each 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 the Mileage Trust vote on matters
affecting it as a whole. Share voting rights are not cumulative, and shares have
no preemptive or conversion rights. Shares of the Mileage Trust are
nontransferable. Each series in the Mileage Trust will not be involved in any
vote involving a Portfolio in which it does not invest its assets. Shareholders
of all of the series of the Mileage Trust, however, will vote together to elect
Trustees of the Mileage Trust and for certain other matters. Under certain
circumstances, the shareholders of one or more series could control the outcome
of these votes.

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 that 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 Mileage Trust 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 a Massachusetts business trust, the Mileage Trust is not obligated to
conduct annual shareholder meetings. However, the Mileage Trust will hold
special shareholder meetings whenever required to do so under the federal
securities laws or the Mileage Trust's Declaration of Trust or By-Laws. Trustees
can be removed by a shareholder vote at special shareholder meetings.

As more fully described in the SAI, the following persons may be deemed to
control certain Funds by virtue of their ownership of more than 25% of the
outstanding shares of a Fund as of January 31, 1997:

<TABLE>
<S> <C>
AMERICAN AADVANTAGE LIMITED-TERM INCOME MILEAGE FUND
Bonnie Stern 52%
</TABLE>

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 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 in writing to the Funds at P.O. Box 619003, MD5645, Dallas/Fort
Worth Airport, Texas 75261-9003 or by calling (800) 388-3344.

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 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 Mileage Funds is a service mark of AMR Corporation. Mileage
Class is a registered service mark and Platinum Class, 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. Government Money Market Mileage Fund are service marks of AMR Investment
Services, Inc.

PROSPECTUS

29
<PAGE> 36

-- NOTES --
<PAGE> 37

American Advantage Mileage Funds(SM) Logo

P.O. BOX 4580
CHICAGO, ILLINOIS 60680-4580
(800) 388-3344
<PAGE> 38

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 SEEKS 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 THE INVESTING 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 March 1, 1997 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.
---------------------
[AMERICAN AADVANTAGE LOGO]

[AMERICAN AADV FUNDS LOGO]
March 1, 1997
Available through
[SOUTHWEST SECURITIES LOGO]
---------------------

MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
MONEY MARKET MILEAGE FUND
<PAGE> 39

The AMERICAN AADVANTAGE MONEY MARKET FUNDSM ("Money Market Fund"), AMERICAN
AADVANTAGE MUNICIPAL MONEY MARKET FUNDSM ("Municipal Money Market Fund") and
AMERICAN AADVANTAGE U.S. GOVERNMENT MONEY MARKET FUNDSM("U.S. Government Money
Market Fund" formerly, the American AAdvantage U.S. Treasury Money Market Fund)
(collectively, "AAdvantage Funds") and the AMERICAN AADVANTAGE MONEY MARKET
MILEAGE FUNDSM ("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. Government
Money Market Fund seeks its investment objective by investing all of its
investable assets in the U.S. Government Money Market Portfolio of the AMR Trust
("U.S. Government Money Market Portfolio" formerly, the 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. Government Money Market
Portfolio invests exclusively in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and in repurchase agreements that
are collateralized by such 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.................................... 9
INVESTMENT OBJECTIVES, POLICIES AND RISKS....... 10
INVESTMENT RESTRICTIONS......................... 18
YIELDS AND TOTAL RETURNS........................ 19
MANAGEMENT AND ADMINISTRATION OF THE TRUSTS..... 19
AADVANTAGE(R) MILES............................. 22
HOW TO PURCHASE SHARES.......................... 23
HOW TO REDEEM SHARES............................ 24
VALUATION OF SHARES............................. 26
DIVIDENDS AND TAX MATTERS....................... 26
GENERAL INFORMATION............................. 28
SHAREHOLDER COMMUNICATIONS...................... 29
</TABLE>

- ---------------

1 "Hub and Spoke" is a registered service mark of Signature Financial Group,
Inc.
PROSPECTUS

2
<PAGE> 40

TABLE OF FEES AND EXPENSES

Annual Operating Expenses (as a percentage of average net assets):

<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT 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% 0.10%(1)

Other Expenses 0.53% 0.65% 0.60% 0.84%
---- ------ --------- -----

Total Operating Expenses 0.93% 1.05% 1.00% 1.09%
---- ------ --------- -----
---- ------ --------- -----
</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 above expenses reflect the expenses of each Fund and the Portfolio in
which it invests. 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 3 5 10
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
Money Market Fund 9 30 51 114

Municipal Money Market Fund 11 33 58 128

U.S. Government Money Market Fund 10 32 55 122
Money Market Mileage Fund 11 35 60 133
</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."

PROSPECTUS

3
<PAGE> 41

FINANCIAL HIGHLIGHTS

The financial highlights in the following tables for the AAdvantage Funds and
the Mileage Fund have been derived from financial statements of the AAdvantage
Trust and the Mileage Trust, respectively. The information has been audited by
Ernst & Young LLP, independent auditor. 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
-----------------------------------------------------------------------------------
PLATINUM CLASS INSTITUTIONAL CLASS
-------------- -----------------------------------------------------------------
PERIOD ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, -----------------------------------------------------------------
1996 1996 1995 1994(2) 1993 1992
-----------------------------------------------------------------------------------
<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 0.05(3) 0.05(3) 0.06 0.04 0.03 0.04
Less dividends from net
investment income (0.05) (0.05) (0.06) (0.04) (0.03) (0.04)
-------- ------ ------ ------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------ ------ ------ ------ ------
-------- ------ ------ ------ ------ ------
Total return (annualized) 4.85%(4) 5.57% 5.96% 3.85% 3.31% 4.41%
-------- ------ ------ ------ ------ ------
-------- ------ ------ ------ ------ ------
Ratios/supplemental data:
Net assets, end of period
(in thousands) $119,981 $1,406,939 $1,206,041 $1,893,144 $2,882,947 $2,223,829
Ratios to average net assets
(annualized)(5)(6):
Expenses 0.94%(3) 0.24%(3) 0.23% 0.21% 0.23% 0.26%
Net investment income 4.63%(3) 5.41%(3) 5.79% 3.63% 3.23% 4.06%
</TABLE>

(1) The Money Market Fund commenced active operations on September 1, 1987. The
Platinum Class commenced active operations on November 7, 1995.

(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(3) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Money Market Portfolio.

(4) Total return for the Platinum Class for the period ended October 31, 1996
reflects Institutional Class returns from November 1, 1995 through November
6, 1995 and returns of the Platinum Class through October 31, 1996. Due to
the different expense structures between the classes, total return would
vary from the results shown had the Platinum Class been in operation for the
entire year.

(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.

(6) 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> 42

<TABLE>
<CAPTION>
MONEY MARKET FUND--INSTITUTIONAL CLASS
----------------------------------------------------------------
PERIOD
YEAR ENDED OCTOBER 31, ENDED
----------------------------------------------- OCTOBER 31,
1991 1990 1989 1988 1987(1)
----------------------------------------------------------------
<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 0.08 0.09 0.08 0.01
Less dividends from net investment
income (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
----- ----- ----- ----- --------
----- ----- ----- ----- --------
Total return (annualized) 7.18% 8.50% 9.45% 7.54% 6.70%
----- ----- ----- ----- --------
----- ----- ----- ----- --------
Ratios/supplemental data:
Net assets, end of period
(in thousands) $715,280 $745,405 $385,916 $330,230 $71,660
Ratios to average net assets
(annualized)(4)(5):
Expenses 0.24% 0.20% 0.22% 0.28% 0.48%
Net investment income 6.93% 8.19% 9.11% 7.54% 6.78%
</TABLE>

PROSPECTUS

5
<PAGE> 43

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
-----------------------------------------------------------------
PLATINUM CLASS INSTITUTIONAL CLASS
-------------- --------------------------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1996 1995 1994(1)
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $1.00 $1.00 $ 1.00
-------- ----- ------- ---------
Net investment income 0.03(2) 0.04(2) 0.04 0.02
Less dividends from net investment
income (0.03) (0.04) (0.04) (0.02)
-------- ----- ------- ---------
Net asset value, end of period $ 1.00 $1.00 $1.00 $ 1.00
-------- ----- ------- ---------
-------- ----- ------- ---------
Total return (annualized) 2.88%(3) 3.59% 3.75% 2.44%
-------- ----- ------- ---------
-------- ----- ------- ---------
Ratios/supplemental data:
Net assets, end of period (in
thousands) $49,862 $ 6 $ 7 $9,736
Ratios to average net assets
(annualized)(4):
Expenses 0.97%(2) 0.27%(2) 0.35% 0.30%
Net investment income 2.72%(2) 3.49%(2) 3.70% 2.38%
</TABLE>

(1) The Municipal Money Market Fund commenced active operations on November 10,
1993. The Platinum Class commenced active operations on November 7, 1995.

(2) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Municipal Money Market Portfolio.

(3) The total return for the Platinum Class for the period ended October 31,
1996 reflects Institutional Class returns from November 1, 1995 through
November 6, 1995 and returns of the Platinum Class through October 31, 1996.
Due to the different expense structures between the classes, total return
would vary from the results shown had the Platinum Class been in operation
for the entire year.

(4) Operating results 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 of the Institutional Class would
have been 0.50% and 2.18%, respectively for the period ended October 31,
1994; 0.55% and 3.50%, respectively, for the year ended October 31, 1995,
and 0.33% and 3.43%, respectively for the year ended October 31, 1996. The
ratio of expenses and net investment income to average net assets of the
Platinum Class would have been 1.02% and 2.67%, respectively for the period
ended October 31, 1996.

PROSPECTUS

6
<PAGE> 44

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND
-------------------------------------------------------------------------------
PLATINUM CLASS INSTITUTIONAL CLASS
-------------- ------------------------------------------------------------
PERIOD PERIOD
ENDED YEAR ENDED OCTOBER 31, ENDED
OCTOBER 31, -------------------------------------------- OCTOBER 31,
1996 1996 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(3) 0.05(3) 0.06 0.04 0.03 0.02
Less dividends from
net investment income (0.04) (0.05) (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) 4.58%(4) 5.29% 5.67% 3.70% 3.07% 3.61%
-------- ---- ---- ------ ----- --------
-------- ---- ---- ------ ----- --------
Ratios/supplemental data:
Net assets, end of period
(in thousands) $52,153 $25,595 $47,184 $67,607 $136,813 $91,453
Ratios to average net
assets (annualized)(5):
Expenses 1.00%(3) 0.32%(3) 0.32% 0.25% 0.23% 0.27%(6)
Net investment income 4.35%(3) 5.16%(3) 5.49% 3.44% 2.96% 3.46%(6)
</TABLE>

(1) Prior to March 1, 1997 the U.S. Government Money Market Fund was known as
the American AAdvantage U.S. Treasury Money Market Fund and operated under
different investment policies. The American AAdvantage U.S. Treasury Money
Market Fund commenced active operations on March 2, 1992. The Platinum Class
commenced active operations on November 7, 1995.

(2) Average shares outstanding for the period rather than end of period shares
were used to compute net investment income per share.

(3) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the U.S. Government Money Market Portfolio.

(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.

(6) Estimated based on expected annual expenses and actual average net assets.

PROSPECTUS

7
<PAGE> 45

(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
MONEY MARKET MILEAGE FUND
--------------------------------------------
PLATINUM CLASS(1) MILEAGE CLASS
-------------------- --------------------
PERIOD ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1996
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
------ -------
Net investment income 0.03 0.05
Less dividends from net investment income (0.03) (0.05)
------ -------
Net asset value, end of period $ 1.00 $ 1.00
====== =======
Total return (annualized) 4.78% 5.12%
====== =======
Ratios/supplemental data:
Net assets, end of period
(in thousands) $15,429 $106,709
Ratios to average net assets
(annualized)(2)(3):
Expenses 1.09% 0.67%
Net investment income 4.48% 5.02%
</TABLE>

(1) The Platinum Class of the Money Market Mileage Fund commenced active
operations on January 29, 1996, and at that time the existing shares of the
Fund were designated as Mileage Class shares.

(2) The per share amounts reflect income and expenses assuming inclusion of the
Fund's proportionate share of the income and expenses of the Money Market
Portfolio.

(3) Operating results exclude expenses reimbursed by the Manager. Had the Fund
paid such fees, the ratio of expenses and net investment income to average
net assets would have been 1.24% and 4.33%, respectively for the Platinum
Class for the period ended October 31, 1996 and 0.78% and 4.91%,
respectively for the Mileage Class for the year ended October 31, 1996.

PROSPECTUS

8
<PAGE> 46

INTRODUCTION

The AAdvantage Trust and the Mileage Trust are open-end, diversified 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. Qualified retirement plans are not
eligible investors in the Money Market Mileage Fund. 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 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

9
<PAGE> 47

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. 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.

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 amortized cost. Obligations in which
the Portfolios invest generally have remaining maturities of 397 days or less,
although instruments subject to repurchase 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.

- ---------------

(2) American Airlines and AAdvantage are registered trademarks of American
Airlines, Inc.

PROSPECTUS

10
<PAGE> 48

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, bank 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 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.

11
<PAGE> 49

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 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
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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.

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 under "American AAdvantage Money Market Fund" and
"American AAdvantage Money Market Mileage Fund."

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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. GOVERNMENT MONEY MARKET FUND -- The Fund's
corresponding Portfolio will invest exclusively in obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements which are collateralized by such obligations. U.S.
Government securities include direct obligations of the U.S. Treasury (such as
Treasury bills, Treasury notes and Treasury bonds). The Fund may invest in
securities issued by the Agency for International Development, Farmers Home
Administration, Farm Credit Banks, Federal Home Loan Bank, Federal Intermediate
Credit Bank, Federal Financing Bank, Federal Land Bank, FNMA, GNMA, General
Services Administration, Rural Electrification Administration, Small Business
Administration, Tennessee Valley Authority, and others. Some of these
obligations, such as those issued by the Federal Home Loan Bank and FHLMC, are
supported only by the credit of the agency or instrumentality issuing the
obligation and the discretionary authority of the U.S. Government to purchase
the agency's obligations. See the SAI for a further discussion of the foregoing
obligations. Counterparties for repurchase agreements must be approved by the
AMR Trust Board. The Portfolio may purchase or sell securities on a
"when-issued" or a "forward commitment" basis as described under "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.
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SECURITIES LENDING. 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. 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. The Manager will receive compensation for administrative
and oversight functions with respect to securities lending. The amount of such
compensation will depend on the income generated by the loan of each Portfolio's
securities. The SEC has granted exemptive relief that permits the Portfolios to
invest cash collateral received from securities lending transactions in shares
of one or more private investment companies managed by the Manager. See the SAI
for further information regarding loan transactions.

REPURCHASE AGREEMENTS. 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 attempts 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 OFFERINGS. Investments in private placement offerings are made
in reliance on the "private placement" exemption from registration afforded by
Section 4(2) of the Securities Act of 1933 (the "1933 Act"), and resold to
qualified institutional buyers under Rule 144A under the 1933 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 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,

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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.

The AMR Trust Board and the Manager, pursuant to the guidelines approved by
the AMR Trust Board, will carefully monitor the Portfolios' investments in
Section 4(2) securities offered and sold under Rule 144A, 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.

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 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.

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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.

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 performance information,
including the method used to calculate yield and total return, and (6) the
determination of the value of each Fund's shares.

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INVESTMENT RESTRICTIONS

The following fundamental investment restrictions and the non-fundamental
investment restriction 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:

The following non-fundamental investment restriction 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 more than 10% of its net assets in illiquid securities,
including time deposits and repurchase agreements that mature in more than seven
days.

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.

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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
Trust's 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 December 17, 1996,
together with the Administrative Services Agreement described below. The Manager
provides or oversees all administrative, investment advisory and portfolio
management services for the Mileage Trust pursuant 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

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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
investment management, advisory, administrative and asset management consulting
services. The Manager serves as the sole investment adviser to the Portfolios.
As of December 31, 1996, the Manager had assets under management totaling
approximately $16.0 billion, including approximately $5.7 billion under active
management and $10.3 billion as named fiduciary or fiduciary adviser. Of the
total, approximately $11.9 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 Trust and the AMR Trust 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 oversees each Portfolio's participation in
securities lending activities and any actions taken by a securities lending
agent in connection with those activities to ensure compliance with all
applicable regulatory and investment guidelines. 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 Manager receives compensation in connection with securities lending
activities. If a Portfolio lends its portfolio securities and receives cash
collateral from the borrower, the Manager will receive up to 25% of the net
annual interest income (the gross interest earned by the investment less the
amount paid to the borrower as well as related expenses) received from the
investment of such cash. If a borrower posts collateral other than cash, the
borrower will pay to the lender a loan fee. The Manager will receive up to 25%
of the loan fees posted by borrowers. The fees received by the Manager from the
AMR Trust 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 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

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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.

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
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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 Rule 12b-1 fees on any activities or
expenses intended to result in 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 AAdvantage 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 Funds 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

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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, 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."

HOW TO PURCHASE SHARES

Platinum Class shares are sold on a continuous basis at net asset value through
selected financial services 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. Government Money Market
Fund until 2:00 p.m. Eastern time on each Business Day and for the Municipal
Money Market Fund until 12:00

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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 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 or a debit card) 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

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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 affect a Fund adversely,
it may take up to seven days to send payment.

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.

PROSPECTUS

25
<PAGE> 63

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.

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 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

PROSPECTUS

26
<PAGE> 64

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.

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.

PROSPECTUS

27
<PAGE> 65

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 Mileage Fund's notice also
might include in taxable dividends a nominal amount reflecting the value of
AAdvantage Miles credited to the shareholders' 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 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 nine separate investment
portfolios and the Mileage Trust currently is comprised of seven separate
investment portfolios. Each AAdvantage Fund included in this Prospectus 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.

PROSPECTUS

28
<PAGE> 66

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 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 Funds
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,
American AAdvantage Money Market Fund and PlanAhead Class are registered service
marks and Platinum Class, American AAdvantage Money Market Mileage Fund,
American AAdvantage Municipal Money Market Fund and American AAdvantage U.S.
Government Money Market Fund are service marks of AMR Investment Services, Inc.

PROSPECTUS

29
<PAGE> 67

[AMR AADV FUNDS LOGO]

P.O. BOX 619003
DALLAS/FORT WORTH AIRPORT, TEXAS
75261-9003

Available through

[SOUTHWEST SECURITIES LOGO]

1201 Elm Street, Suite 3500
Dallas, Texas
75270

(800) 973-7977
PROSPECTUS
<PAGE> 68

STATEMENT OF ADDITIONAL INFORMATION

AMERICAN AADVANTAGE MILEAGE FUNDS(SM)

MARCH 1, 1997

American AAdvantage Mileage Funds (the "Mileage Trust") is an open-end,
diversified management investment company composed of the American AAdvantage
Balanced Mileage Fund(sm) (the "Balanced Fund"), American AAdvantage Growth and
Income Mileage Fund(sm) (the "Growth and Income Fund"), American AAdvantage
International Equity Mileage Fund(sm) (the "International Equity Fund"),
American AAdvantage Limited-Term Income Mileage Fund(sm) (the "Limited-Term
Income Fund"), American AAdvantage Money Market Mileage Fund(sm) (the "Money
Market Fund"), American AAdvantage Municipal Money Market Mileage Fund(sm) (the
"Municipal Money Market Fund"), and American AAdvantage U.S. Government Money
Market Mileage Fund(sm) (the "U.S. Government Money Market Fund", formerly the
American AAdvantage U.S. Treasury Money Market Mileage Fund) (individually, a
"Fund" and, collectively, the "Funds"). All Funds consist of one class of
shares, except for the Money Market Fund, which consists of two classes of
shares. With respect to the Money Market Fund, this Statement of Additional
Information ("SAI") relates only to the Mileage Class.

Each Fund will seek 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 Prospectus for the
Mileage Trust dated March 1, 1997 ("Prospectus"), a copy of which may be
obtained without charge by calling (800) 388-3344.

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 Mileage Trust's Board of Trustees ("Mileage Trust
Board").

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. "Majority of the outstanding voting
securities" under the Investment Company Act of 1940, as amended (the "1940
Act"), and as used herein means, with respect to the Portfolio, 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. The
percentage of a Fund's votes representing that Fund's shareholders not voting
will be voted by the Mileage Trust Board in the same proportion as those Fund
shareholders who do, in fact, vote.

No Portfolio may:

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.

<PAGE> 69

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 and the International
Equity Portfolio may engage in currency futures and forward currency
contracts.

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 following non-fundamental investment restriction applies to each
Portfolio and may be changed with respect to a Portfolio by a majority vote of
the AMR Trust Board. No Portfolio may 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.

All Portfolios 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.

In addition, no Portfolio may invest in warrants, except as permitted by
its investment policies as described in the Prospectus, provided that no such
Portfolio shall invest more than 5% of its net assets, valued at the lower of
cost or market, in warrants or more than 2% of its net assets in warrants which
are not listed on the New York or American Stock Exchanges.

TRUSTEES AND OFFICERS OF THE MILEAGE TRUST AND THE AMR TRUST

The Mileage Trust Board provides broad supervision over the Mileage
Trust's affairs. AMR Investment Services, Inc. (the "Manager") is responsible
for the management of Mileage Trust's assets, and the Mileage Trust's officers
are responsible for the Mileage Trust's operations. The Trustees and officers
of the Mileage Trust and 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.

2
<PAGE> 70

<TABLE>
<CAPTION>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ------------- ----------------------------------------
<S> <C> <C>
William F. Quinn* (49) Trustee and President President, AMR Investment Services, Inc. (1986-Present);
Chairman, American Airlines Employees Federal Credit
Union (1989-Present); Trustee, American Performance
Funds (1990-July 1994); Director, Crescent Real Estate
Equities, Inc. (1994 - Present); Trustee, American
AAdvantage Funds (1987 - Present).

Alan D. Feld(59) Trustee Partner, Akin, Gump, Strauss, Hauer & Feld, LLP (1960-
1700 Pacific Avenue Suite 4100 Present)#; Director, Clear Channel Communications (1984-
Dallas, Texas 75201 Present); Director, CenterPoint Properties, Inc. (1994-
Present); Trustee, American AAdvantage Funds (1996-
Present).

Ben J. Fortson (64) Trustee President and CEO, Fortson Oil Company (1958-Present);
301 Commerce Street Suite 3301 Director, Kimbell Art Foundation (1964-Present);
Fort Worth, Texas 76012 Director, Burnett Foundation (1987-Present); Honorary
Trustee, Texas Christian University (1986-Present);
Trustee, American AAdvantage Funds (1996-Present).

John S. Justin (80) Trustee Chairman and Chief Executive Officer, Justin Industries,
2821 West Seventh Street Inc. (a diversified holding company) (1969-Present);
Fort Worth, Texas 76107 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); Trustee,
American AAdvantage Funds (1989-Present).

Stephen D. O'Sullivan* (61) Trustee Consultant (1994-Present); Vice President and Controller
(1985-1994), American Airlines, Inc.; Trustee, American
AAdvantage Funds (1987-Present).

Roger T. Staubach (55) Trustee Chairman of the Board and Chief Executive Officer (1982-
6750 LBJ Freeway present) and President (1983-1991) of The Staubach
Dallas, Texas 75240 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; Trustee, Institute for Aerobics Research; Member
of Executive Council, Daytop/Dallas; former quarterback
of the Dallas Cowboys professional football team;
Trustee, American AAdvantage Funds (1995-Present).

</TABLE>

3
<PAGE> 71

<TABLE>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ------------- ----------------------------------------
<S> <C> <C>
Kneeland Youngblood, M.D. (40) Trustee Physician (1982-Present); President (1983-Present),
2305 Cedar Springs Road Youngblood Enterprises, Inc. (a health care investment
Suite 401 and management firm); Trustee, Teachers Retirement
Dallas, Texas 75201 System of Texas (1993-Present); Director, United States
Enrichment Corporation (1993-Present), Director, Just
For the Kids (1995-Present); Member, Council on Foreign
Relations (1995-Present); Trustee, American AAdvantage
Funds (1996-Present).

Nancy A. Eckl (34) Vice President Vice President, AMR Investment Services, Inc. (1990-
Present).

Michael W. Fields (43) Vice President Vice President, AMR Investment Services, Inc. (1988-
Present).

Barry Y. Greenberg (33) Vice President and Director, Legal and Compliance, AMR Investment Services,
Assistant Secretary Inc. (1995-Present); Branch Chief (1992-June 1995) and
Staff Attorney (1988-1992), Securities and Exchange
Commission.

Rebecca L. Harris (30) Treasurer Director of Finance (1995-Present), Controller (1991-
1995), AMR Investment Services, Inc.

John B. Roberson (38) Vice President Vice President, AMR Investment Services, Inc. (1991-
Present).

Janice B. Schwarz (37) Assistant Secretary Senior Business System Coordinator (1996-Present),
Senior Compliance Analyst (1990-1996), AMR Investment
Services, Inc.

Clifford J. Alexander (53) Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)

Robert J. Zutz (44) Assistant Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)
</TABLE>

# 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 of AMR
Corporation.

* Messrs. Quinn and O'Sullivan, by virtue of their current or former
positions, are deemed to be "interested persons" of the Mileage 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 Mileage Trust and the AMR Trust,
the Independent Trustees and their spouses receive free air travel from
American Airlines, Inc., an affiliate of the Manager. The Mileage Trust and
the AMR Trust do not pay for these travel arrangements. However, the Trusts
compensate each Trustee with payments in an amount equal to the Trustees'
income tax on the value of this free 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 are also reimbursed for any
expenses incurred in attending Board meetings. These amounts are reflected in
the following table for the fiscal year ended October 31, 19961

- ------------------------------

Messrs. Feld and Fortson and Dr. Youngblood did not serve as Trustees during
this period.
1

4
<PAGE> 72

Aggregate Pension or Retirement Total Compensation
Compensation Benefits Accrued as Estimated Annual From American
From the Part of the Benefits Upon AAdvantage Fund
Name of Trustee Trust Trust's Expenses Retirement Complex
--------------- ----- ---------------- ---------- -------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0

John S. Justin $373 $0 $0 $1,492
Stephen D. O'Sullivan $458 $0 $0 $1,832
Roger T. Staubach $2,832 $0 $0 $11,330
</TABLE>

MANAGEMENT, ADMINISTRATIVE SERVICES AND DISTRIBUTION FEES

As described more fully in the Prospectus, the Manager is paid a
management fee as compensation for paying investment advisory fees and for
providing the Portfolios with advisory and asset allocation services.
Management fees incurred by the Portfolios for the fiscal year ended October
31, 1996 were approximately $10,403,000 of which approximately $5,161,000 was
paid by the Manager to the other investment advisers. Management fees in the
amount of approximately $44,000 were waived by the Manager during the fiscal
year ended October 31, 1996.

In addition, pursuant to a Management Agreement, the Manager is paid a
fee for providing administrative and management services (other than investment
advisory services) to the Funds. Such fees for the fiscal year ended October
31, 1996 were approximately $95,944.

Also as described more fully in the Prospectus, the Manager (or another
entity approved by the Mileage Trust Board) under a distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act, is paid by each Fund 0.25% per annum
of the average daily net assets of each Fund for distribution-related services.
Distribution fees pursuant to Rule 12b-1 under the 1940 Act for the fiscal
year ended October 31, 1996 were approximately $188,590.

Brokers Transaction Services, Inc. ("BTS") is the distributor of the
Funds' shares, and receives an annualized fee of $50,000 from the Manager for
distributing the shares of the Mileage Trust and the American AAdvantage Funds.

APPROACH TO STOCK SELECTION

Investment advisers to the corresponding Portfolios of the Balanced,
Growth and Income and International Equity Funds will select equity securities
which, in their opinion, have above average growth potential and are also
selling at a discount to the market. This approach focuses on the purchase of
a diverse group of stocks below their perceived economic value. Each of the
investment advisers determines the growth prospects of firms based upon a
combination of internal and external research using fundamental economic cycle
analysis and changing economic trends. The determination of value is based
upon the analysis of several characteristics of the issuer and its equity
securities including price to earnings ratio, price to book value ratio, assets
carried below market value, financial strength and dividend yield.

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.

- ----------
Messrs. Feld and Fortson and Dr. Youngblood did not serve as Trustees during
this period.

5
<PAGE> 73

INVESTMENT ADVISORY AGREEMENTS

Separate Investment Advisory Agreements between the investment advisers
(except Brandywine Asset Management, Inc. and Rowe Price - Fleming
International, Inc.) and the Balanced, the Growth and Income, the International
Equity and the Limited-Term Income Funds and their corresponding Portfolios,
as described in the Prospectus, were initially approved by the Mileage Trust
Board, the AMR Trust Board and the initial shareholders of the Mileage Trust
and the AMR Trust effective as of October 1, 1995. Additional Investment
Advisory Agreements with Brandywine Asset Management, Inc. and Rowe Price -
Fleming International, Inc. were approved by the shareholders of the Mileage
Trust and interest holders of the AMR Trust effective May 1, 1996 and April 1,
1996, respectively. Each Fund Investment Advisory Agreement provides that to
the extent a Fund invests all of its investable assets in its corresponding
Portfolio, the adviser will not receive an advisory fee under that Agreement.
Following the acquisition of Hotchkis and Wiley ("Hotchkis") by Merrill Lynch,
Pierce, Fenner & Smith, Inc., a new Advisory Agreement with Hotchkis was
approved by the Mileage Trust Board, effective as of November 12, 1996.

Each Investment Advisory Agreement will automatically terminate if
assigned, and may be terminated without penalty at any time by the Manager, by
a vote of a majority of the Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Fund on no less than thirty
(30) days' nor more than sixty (60) days' written notice to the investment
adviser, or by the investment adviser upon sixty (60) days' written notice to
the Trust. The Investment Advisory Agreements will continue in effect
provided that annually such continuance is specifically approved by a vote of
the Trustees, including the affirmative votes of a majority of the Trustees who
are not parties to the Agreement or "interested persons" (as defined in the
1940 Act) of any such party, cast in person at a meeting called for the purpose
of considering such approval, or by the vote of shareholders.

PORTFOLIO SECURITIES TRANSACTIONS

The Investment Advisory Agreements provide, in substance, that in
executing portfolio transactions and selecting brokers or dealers, the
principal objective of each investment adviser is to seek the best net price
and execution available. It is expected that securities ordinarily will be
purchased in the primary markets, and that in assessing the best net price and
execution available, each investment adviser shall consider all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis.

In selecting brokers or dealers to execute particular transactions,
investment advisers are authorized to consider the "brokerage and research
services" (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934), provision of statistical quotations (including the
quotations necessary to determine a Portfolio's net asset value), the sale of
Mileage Trust (or American AAdvantage Funds') shares by such broker or the
servicing of Mileage Trust (or American AAdvantage Funds') shareholders by such
broker, and other information provided to the applicable Portfolio, to the
Manager and/or to the investment advisers (or their affiliates), provided,
however, that the investment adviser determines that it has received the best
net price and execution available. The investment advisers are also authorized
to cause a Portfolio to pay a commission to a broker or dealer who provides
such brokerage and research services for executing a portfolio transaction that
exceeds the amount of the commission another broker or dealer would have
charged for effecting that transaction. The Trustees, the Manager or the
investment advisers, as appropriate, must determine in good faith, however,
that such commission was reasonable in relation to the value of the brokerage
and research services provided viewed in terms of that particular transaction
or in terms of all the accounts over which the Manager or the investment
adviser exercises investment discretion.

For the fiscal year ended October 31, 1996, the following brokerage
commissions were paid by the corresponding Portfolios.

<TABLE>
<S> <C>
Portfolio 1996
---------- ----
Balanced $503,947
Growth and Income $956,767
International Equity $544,844
Limited-Term Income $0
Money Market Funds $0
</TABLE>

6
<PAGE> 74

The commissions were paid by the corresponding Portfolios of the AMR
Trust, and shareholders of the Funds bear only their pro-rata portion.

Following is the portfolio turnover rate for the corresponding Portfolios
of the Funds for the fiscal year ended October 31, 1996.

<TABLE>
<S> <C>
Portfolio 1996
--------- ----
Balanced 76%
Growth and Income 40%
International Equity 19%
Limited-Term Income 304%
</TABLE>

High portfolio turnover can increase a Fund's transaction costs and
generate additional capital gains or losses. The high portfolio turnover rate
for the Limited-Term Income Portfolio was due to the repositioning of the
portfolio to a different internal benchmark.

The fees of the investment advisers are not reduced by reason of receipt
of such brokerage and research services. However, with disclosure to and
pursuant to written guidelines approved by the AMR Trust Board, an investment
adviser of a Portfolio or its affiliated broker-dealer may execute portfolio
transactions and receive usual and customary brokerage commissions (within the
meaning of Rule 17e-1 under the 1940 Act) for doing so. During the fiscal year
ended October 31, 1996, the Balanced Portfolio and the Growth and Income
Portfolio paid $125 and $2,750, respectively, in brokerage commissions to Sutro
& Company. The percentages of total commissions of the Balanced Portfolio and
the Growth and Income Portfolio paid to Sutro & Company in 1996 were 0.02% and
0.29%, respectively. The transactions represented 0.03% of the Balanced
Portfolio and 0.25% of the Growth and Income Portfolio's total dollar value of
portfolio transactions for the fiscal year ended October 31, 1996. During the
fiscal year ended October 31, 1996, the International Equity Portfolio paid
$2,142, $1,002, $2,051 and $20,129, to Fleming Martin, Jardine Fleming, Ord
Minnett and Robert Fleming & Co., respectively, affiliates of Rowe
Price-Fleming International, Inc., an adviser to the International Equity
Portfolio, and $3,892 to Morgan Stanley International, an affiliate of Morgan
Stanley Asset Management also an investment adviser to the International Equity
Portfolio. The percentage of total commissions paid to affiliated brokers of
the International Equity Portfolio in 1996 was 2.68%. The transactions
represented 2.2% of the International Equity Portfolio's total dollar value of
portfolio transactions for the fiscal year ending October 31, 1996.

NET ASSET VALUE

It is the policy of the Money Market Fund, the Municipal Money Market
Fund and the U.S. Government Money Market Fund (collectively the "Money Market
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 the Money Market Funds' corresponding Portfolios
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 Money
Market 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
Trustees to be of high quality with minimal credit risks. The corresponding
portfolios of the Money Market Funds may invest in issuers or instruments that
at the time of purchase have received the highest short-term rating by two
Rating Organizations, such as "D-1" by Duff & Phelps and "F-1" by Fitch
Investors Service, Inc., and have received the next highest short-term rating
by other Rating Organizations, such as "A-2" by Standard & Poors and "P-2" by
Moody's Investors Service, Inc. See "Ratings of Municipal Obligations" and
"Ratings of Short-Term Obligations" for further information concerning ratings.

TAX INFORMATION

TAXATION OF THE FUNDS

To qualify 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:

7
<PAGE> 75

* 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 (in the
case of the International Equity Fund) foreign currencies, or
certain other income, including (in the case of the International
Equity Fund) gains from futures or forward contracts ("Income
Requirement");

* Derive less than 30% of its gross income each taxable year from the
sale or other disposition of securities, or (in the case of the
International Equity Fund) foreign currencies (or futures or forward
contracts thereon) 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");

* Diversify its investments in securities within certain statutory
limits; and

* 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.

See the next section for a discussion of the tax consequences to the
Balanced, Growth and Income and International Equity Funds of investments in
passive foreign investment companies ("PFICs") by the Balanced, Growth and
Income and International Equity Portfolios (collectively the "Equity
Portfolios") and, in the case of the International Equity Fund, of engaging in
hedging transactions by the International Equity Portfolio.

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, each Portfolio is not 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
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.

A Portfolio may acquire zero coupon or other securities issued with
original issue discount. As an investor in a Portfolio that holds those
securities, a 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, a 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 a Fund's cash assets, if any, or the proceeds
of redemption of a portion of a Fund's interest in its corresponding Portfolio
(which redemption proceeds would be paid from the Portfolio's cash assets or
the proceeds of

8
<PAGE> 76

sales of portfolio securities, if necessary). A Portfolio might realize capital
gains or losses from any such sales, which would increase or decrease its
corresponding 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
a Fund, any such gains would reduce its corresponding Portfolio's ability to
sell other securities (or, in the case of the International Equity Fund, certain
futures or forward contracts) held for less than three months that it might wish
to sell in the ordinary course of its portfolio management.

If an Equity Portfolio acquires stock in a foreign corporation that is a
PFIC and holds the stock beyond the end of the year of acquisition, its
corresponding Fund will be subject to federal income tax on the Fund's share of
a portion of any "excess distribution" received by the Portfolio on the stock
or of any gain realized by the Portfolio from disposition of the stock
(collectively, "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. A Fund
may avoid this tax and interest if its corresponding Portfolio elects to treat
the PFIC as a "qualified electing fund"; however, the requirements for that
election are difficult to satisfy. The Equity Portfolios currently do not
intend to acquire securities that are considered PFICs.

Hedging strategies, such as entering into forward contracts and selling
and purchasing futures contracts, involve complex rules that will determine for
federal income tax purposes the character and timing of recognition of gains
and losses the International Equity Portfolio realizes in connection therewith.
The International Equity Fund's share of its Portfolio's (1) income from
foreign currencies (except certain gains that may be excluded by future
regulations) and (2) income from transactions in futures and forward
contracts derived with respect to its business of investing in securities or
foreign currencies will qualify as allowable income for the Fund under the
Income Requirement. Income from the International Equity Portfolio's
disposition of foreign currencies, and futures and forward contracts on foreign
currencies, that are not directly related to its principal business of
investing in securities also will be subject to the Short-Short Limitation for
the International Equity Fund if they are held for less than three months.

For purposes of determining whether the International Equity Fund
satisfies the Short-Short Limitation, if the International Equity Portfolio
satisfies certain requirements, an increase in value of a position that is part
of a designated hedge will be offset by any decrease in value (whether realized
or not) of the contra hedging position during the period of the hedge. Thus,
only the net gain (if any) will be included in gross income for purposes of
that limitation.

Dividends and interest received by the International Equity Portfolio may
be subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions that would reduce the yield on its securities. Tax
treaties between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains on investments by foreign investors.

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 Fund intends to continue to
satisfy this requirement. The aggregate dividends excludable from
shareholders' gross income may not exceed the Fund's net tax-exempt income.
The shareholders' treatment of dividends from the Fund under local and state
income tax laws may differ from the treatment thereof under the Code.

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.

9
<PAGE> 77
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.

If more than 50% of the value of the International Equity Fund's total
assets (including its share of the International Equity Portfolio's total
assets) at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible to, and may, file an election with the
IRS that will enable the Fund's shareholders, in effect, to receive the benefit
of the foreign tax credit with respect to the Fund's share of any foreign and
U.S. possessions income taxes paid by the Portfolio. If the Fund makes this
election, the Fund will treat those taxes as dividends paid to its shareholders
and each shareholder will be required to (1) include in gross income, and treat
as paid by him, his proportionate share of those taxes, (2) treat his share of
those taxes and of any dividend paid by the International Equity Fund that
represents income from foreign or U.S. possessions sources as his own income
from those sources and (3) either deduct the taxes deemed paid by him in
computing his taxable income or, alternatively, use the foregoing information in
calculating the foreign tax credit against his federal income tax. If the
election is made, the Fund will report to its shareholders shortly after each
taxable year their respective shares of its income (including its share of its
Portfolio's income) from foreign and U.S. possessions sources and, if the
election is made, its share of the taxes paid by the Portfolio to foreign
countries and U.S. possessions.

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 Funds commenced operations on November 1, 1995, and thus have limited
past performance. For purposes of advertising performance, and in accordance
with Securities and Exchange Commission staff interpretations, for periods
prior to November 1, 1995, the Funds have adopted the performance of the
Mileage Class of the American AAdvantage Funds, an open-end management
investment company with nine series, seven of which each have an identical
investment objective to one of the Funds and its corresponding Portfolio. The
Manager and the investment advisers described in the Prospectus also provide
investment management services to the American AAdvantage Funds. Like the
Funds, each series of the American AAdvantage Funds invests all of its
investable assets in a corresponding Portfolio of the AMR Trust. Performance
of the Funds will be different than that of the American AAdvantage Funds due
to the different expense structures between the Funds and the American
AAdvantage Funds.

A quotation of yield on shares of the Money Market 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 Money Market 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 Money Market 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
(or to a particular class of the Money Market 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 class of a Fund will compute the "base period return" in the
same manner

10
<PAGE> 78

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:

Effective yield
Current daily Current yield for the for the seven-day
American AAdvantage yield as seven-day period ended period ended
Mileage Funds: of October 31, 1996 October 31, 1996 October 31, 1996
-------------- ------------------- ---------------- ----------------
<S> <C> <C> <C>
Money Market Fund 5.01% 5.00% 5.12%
Municipal Money Market Fund 3.09% 3.09% 3.14%
U.S. Treasury Money Market Fund 5.04% 4.74% 4.85%
</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 October 31,
1996 were 5.12% and 5.20%, respectively (based upon a 39.6% personal tax rate).

The advertised yields for the Variable NAV Funds (as defined in the
prospectus) are computed by dividing the net investment income per share earned
during a 30-day (or one month) period less the aggregate fees that are charged
to all shareholder accounts of the Fund in proportion to the 30-day (or one
month) period and the weighted average size of an account in that Fund by the
maximum offering price per share of the Fund on the last day of the period,
according to the following formula:

YIELD = 2{(a-b +1)6 - 1}
---
cd

where, with respect to a particular Fund, "a" is the dividends and interest
earned during the period; "b" is the sum of the expenses accrued for the period
(net of reimbursement, if any) and the aggregate fees that are charged to all
shareholder accounts in proportion to the 30-day (or one month) period and the
weighted average size of an account in the Fund; "c" is the average daily
number of Fund shares outstanding during the period that were entitled to
receive dividends; and "d" is the maximum offering price per Fund share on the
last day of the period. Based on this formula, the estimated 30-day yield for
the period ended October 31, 1996 for the Limited-Term Income Fund was %.

The Limited-Term Income Fund may also advertise a monthly distribution
rate. The distribution rate gives the return of the Fund based solely on the
dividend payout to that Fund if someone was entitled to the dividends for an
entire month. A monthly distribution rate is calculated from the following
formula:

MONTHLY DISTRIBUTION RATE = A/P*(365/n)

where, with respect to the Fund, "A" is the dividend accrual per share during
the month, "P" is the share price at the end of the month and "n" is the number
of days in the month. Based on this formula, the monthly distribution rate for
the Limited-Term Income Fund for the month of October 1996 was %. The
"monthly distribution rate" is a non-standardized performance calculation and
when used in an advertisement will be accompanied by the appropriate
standardized SEC calculations.

The advertised total return for a Fund would be calculated by equating an
initial amount invested in a Fund to the ending redeemable value, according to
the following formula:

11
<PAGE> 79

P(1 + T)n= 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 and the Funds indicated:

<TABLE>
<CAPTION>
For the period
from commencement of
For the one-year For the five-year active operations
period ended period ended through
October 31, 1996(1) October 31, 1996(1)(2) October 31. 1996(1)(3)
------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Balanced Fund 15.97% 12.31% 10.60%
Growth and Income Fund 22.77% 15.30% 12.12%
International Equity Fund 16.58% 10.89% 10.66%
Limited-Term Income Fund 4.55% 5.56% 6.88%
Money Market Fund-Mileage Class 5.12% 4.29% 6.01%
Municipal Money Market Fund 3.19% N/A 2.92%
U.S. Government Money Market Fund(4) 4.98% N/A 4.11%
</TABLE>

(1) The Institutional Class is the initial class for each American AAdvantage
Fund. Performance represents the total returns achieved by the Institutional
Class of the American AAdvantage Funds from the inception date of each Fund up
to the inception date of the Mileage Class of each American AAdvantage Fund,
returns of the Mileage Class of each American AAdvantage Fund since the
inception of the Class and returns of the Funds since their November 1, 1995
inception. Expenses of the Funds are different from those of the Mileage and
Institutional Classes of each American AAdvantage Fund and therefore total
returns for the Funds would vary from the returns shown had they been in
operation since inception of the American AAdvantage Funds.

(2) The American AAdvantage International Equity Fund, Municipal Money Market
Fund and U.S. Government Money Market Fund had not commenced active operations
as of March 1, 1991.

(3) The Institutional Class of the American AAdvantage Balanced Fund and
Growth and Income Fund commenced active operations on July 17, 1987; the Money
Market Fund on September 1, 1987; the Limited-Term Income Fund on December 3,
1987; the International Equity Fund on August 7, 1991; the U.S. Government
Money Market Fund on March 2, 1992 and the Municipal Money Market Fund on
November 10, 1993. The Mileage Class of the American AAdvantage Money Market
Fund commenced active operations on November 1, 1991, the U.S. Government Money
Market Fund on November 1, 1993, the Municipal Money Market Fund on November
10, 1993, and the Balanced Fund, Growth and Income Fund, International Equity
Fund and Limited-Term Income Fund on August 1, 1994. The inception date of the
Funds is November 1, 1995.

(4) Prior to March 1, 1997, the U.S. Government Money Market Fund was known
as the U.S. Treasury Money Market Fund and operated under different investment
restrictions.

Each class of a 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 class of a Fund and assume reinvestment of dividends and
distributions.

Each Fund may give total returns from inception using the date when the
current managers began active management as the inception date. However,
returns using the actual inception date of the Fund will also be provided.

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.,
Morningstar, Inc., IBC Financial Data, Inc. and other similar independent
services which monitor the performance of mutual funds or publications such as
the "New York Times," "Barrons" and the "Wall Street Journal." Each Fund may
also compare its performance with various indices prepared by independent
services such as Standard & Poor's, Morgan Stanley or Lehman Brothers or to
unmanaged indices that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.

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.

12
<PAGE> 80

From time to time, the Manager may use contests as a means of promoting
the American AAdvantage Mileage Funds. Prizes may include free air travel
and/or hotel accommodations. Listing for certain of the Funds may be found in
newspapers under the heading "Amer AAdvant".

Each Fund may advertise the standard deviation of its returns for various
time periods and compare its standard deviation to that of various indices.
Standard deviation of performance over time is a measure of volatility. It
indicates the spread of performance as compared to the Fund's central tendency
or mean. In theory, a Fund that is more volatile should receive a higher
return in exchange for taking extra risk. Standard deviation is a
well-accepted statistic to gauge the riskiness of an investment strategy and
measure its historical volatility as a predictor of risk, although the measure
is subject to time selection bias.

DESCRIPTION OF THE MILEAGE TRUST

The Mileage Trust, organized on February 22, 1995, (originally named
American AAdvantage Funds II) is an entity 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, the Mileage Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Mileage Trust and provides for indemnification and reimbursement of expenses
out of Mileage Trust property for any shareholder held personally liable for
the obligations of the Mileage Trust. The Declaration of Trust also provides
that the Mileage Trust may maintain appropriate insurance (for example,
fidelity bonding) for the protection of the Mileage 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 Mileage Trust itself was unable to meet its
obligations. The Mileage Trust has not engaged in any other business.

The corresponding Portfolios of the Balanced, the Growth and Income and
the International Equity Funds utilize a multi-manager approach designed to
reduce volatility by diversifying assets over multiple investment management
firms. Each adviser is carefully chosen by the Manager through a rigorous
screening process.

CONTROL PERSONS AND 5% SHAREHOLDERS

The following persons may be deemed to control certain Funds by virtue of
their ownership of more than 25% of the outstanding shares of a Fund as of
January 31, 1997 The effect of their control is:

American AAdvantage Limited-Term Income Mileage Fund
Bonnie Stern %
760 Park Ave.
New York, NY 10021-4152

American AAdvantage Municipal Money Market Mileage Fund
Eric & Catherine Kobren
21A Farm St.
Dover, MA 02030-2303

In addition, the following persons own 5% or more of the outstanding
shares of a Fund or Class as of January 31, 1996:

American AAdvantage Balanced Mileage Fund

American AAdvantage Growth and Income Mileage Fund

American AAdvantage International Equity Mileage Fund

13
<PAGE> 81
American AAdvantage Limited-Term Income Mileage Fund

American AAdvantage Money Market Mileage Fund-Mileage Class

American AAdvantage Municipal Money Market Mileage Fund

American AAdvantage U.S. Government Money Market Mileage Fund

OTHER INFORMATION

American Depositary Receipts (ADRs), European Depositary Receipts
(EDRs)-ADRs are depositary receipts for foreign issuers in registered form
traded in U.S. securities markets, whereas, EDRs are in bearer form and traded
in European securities markets. These securities are not denominated in the
same currency as the securities into which they may be converted. Investing in
ADRs and EDRs involves greater risks than are normally present in domestic
investments. There is generally less publicly available information about
foreign companies and there may be less governmental regulation and supervision
of foreign stock exchanges, brokers and listed companies. In addition, such
companies may use different accounting and financial standards (and certain
currencies may become unavailable for transfer from a foreign currency),
resulting in a Fund's possible inability to convert immediately into U.S.
currency proceeds realized upon the sale of portfolio securities of the
affected foreign companies.

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 designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be
as long as 270 days, most acceptances have maturities of six months or less.

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. A variable amount master demand note (which is a type
of commercial paper) represents a direct borrowing arrangement involving
periodically fluctuating rates of interest under a letter agreement between a
commercial paper issuer and an institutional lender pursuant to which the
lender may determine to invest varying amounts.

Debentures-Debentures are unsecured debt securities. The holder of a
debenture is protected only by the general creditworthiness of the issuer.

Derivatives-Generally, a derivative is a financial arrangement, the value
of which is based on, or "derived" from, a traditional security, asset or
market index. Some "derivatives" such as mortgage-related and other
asset-backed securities are in many respects like any other investment,
although they may be more volatile or less liquid than more traditional debt
securities. There are, in fact, many different types of derivatives and many
different ways to use them. There are a range of risks associated with those
uses.

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Forward Foreign Currency Exchange Contracts-A forward foreign currency
exchange contract ("forward contract") is a contract to purchase or sell a
currency at a future date. The two parties to the contract set the number of
days and the price. Forward contracts are used as a hedge against movements in
future foreign exchange rates. The corresponding Portfolio of the
International Equity Fund may enter into forward contracts to purchase or sell
foreign currencies for a fixed amount of U.S. dollars or other foreign
currency.

Forward contracts may serve as long hedges -- for example, the Portfolio
may purchase a forward contract to lock in the U.S. dollar price of a security
denominated in a foreign currency that the Portfolio intends to acquire.
Forward contracts may also serve as short hedges -- for example, the Portfolio
may sell a forward contract to lock in the U.S. dollar equivalent of the
proceeds from the anticipated sale of a security denominated in a foreign
currency or from the anticipated dividend or interest payments denominated in a
foreign currency. The Manager may seek to hedge against changes in the value
of a particular currency by using forward contracts on another foreign currency
or basket of currencies, the value of which the Manager believes will bear a
positive correlation to the value of the currency being hedged.

In addition, the Portfolio may use forward contracts to shift the
Portfolio's exposure to foreign currency exchange rate changes from one foreign
currency to another. For example, if the Portfolio owns securities denominated
in a foreign currency and the Investment Adviser believes that currency will
decline relative to another currency, it might enter into a forward contract to
sell the appropriate amount of the first foreign currency with payment to be
made in the second foreign currency. Transactions that use two foreign
currencies are sometimes referred to as "cross hedging." Use of a different
foreign currency magnifies the Portfolio's exposure to foreign currency
exchange rate fluctuations.

The cost to the Portfolio of engaging in forward contracts varies with
factors such as the currency involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. When
the Portfolio enters into a forward contract, it relies on the contra party to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the contra party to do so would result in the loss of any
expected benefit of the transaction.

Buyers and sellers of forward contracts can enter into offsetting closing
transactions by selling or purchasing, respectively, an instrument identical to
the instrument purchased or sold. Secondary markets generally do not exist for
forward contracts, with the result that closing transactions generally can be
made for forward contracts only by negotiating directly with the contra party.
Thus, there can be no assurance that the Portfolio will in fact be able to
close out a forward contract at a favorable price prior to maturity. In
addition, in the event of insolvency of the contra party, the Portfolio might
be unable to close out a forward contract at any time prior to maturity. In
either event, the Portfolio would continue to be subject to market risk with
respect to the position, and would continue to be required to maintain a
position in the securities or currencies that are the subject of the hedge or to
maintain cash or securities in a segregated account.

The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value of
such securities, measured in the foreign currency, will change after the
forward contract has been established. Thus, the Portfolio might need to
purchase or sell foreign currencies in the spot (cash) market to the extent
such foreign currencies are not covered by forward contracts. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly uncertain.

Current Securities and Exchange Commission Policy requires that cash or
high grade liquid debt securities be set aside in a sufficient amount to cover
any cross hedging or other currency exchange contract that is deemed to be
speculative. These assets will be maintained in a segregated account and
marked to market daily.

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.

Futures Contracts-Futures contracts obligate a purchaser to take delivery
of a specific amount of an obligation underlying the futures contract at a
specified time in the future for a specified price. Likewise, the seller
incurs an obligation to deliver the specified amount of the underlying
obligation against receipt of the specified price. Futures are traded on both
U.S. and foreign commodities exchanges. Only currency futures will be
permitted in the corresponding Portfolio of the International Equity Fund.
Futures contracts will be traded for the same purposes as entering into forward
contracts

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The purchase of futures can serve as a long hedge, and the sale of
futures can serve as a short hedge.

No price is paid upon entering into a futures contract. Instead, at the
inception of a futures contract a Portfolio is required to deposit "initial
deposit" consisting of cash or U.S. Government Securities in an amount
generally equal to 10% or less of the contract value. Margin must also be
deposited when writing a call or put option on a futures contract, in
accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to the Portfolio at the termination of the transaction
if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, a Portfolio may be required
by a futures exchange to increase the level of its initial margin payment, and
initial margin requirements might be increased generally in the future by
regulatory action.

Subsequent "variation margin" payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
"marking-to-market." Variation margin does not involve borrowing, but rather
represents a daily settlement of a Portfolio's obligations to or from a futures
broker. When the Portfolio purchases or sells a futures contract, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If a Portfolio has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous.

Purchasers and sellers of futures contracts can enter into offsetting
closing transactions, by selling or purchasing, respectively, an instrument
identical to the instrument purchased or sold. Positions in futures contracts
may be closed only on a futures exchange or board of trade that provides a
secondary market. The Portfolios intend to enter into futures contracts only
on exchanges or boards of trade where there appears to be a liquid secondary
market. However, there can be no assurance that such a market will exist for a
particular contract at a particular time. In such event, it may not be
possible to close a futures contract.

Although futures contracts by their terms call for the actual delivery or
acquisition of securities or currency, in most cases the contractual obligation
is fulfilled before the date of the contract without having to make or take
delivery of the securities or currency. The offsetting of a contractual
obligation is accomplished by buying (or selling, as appropriate) on a
commodities exchange an identical futures contract calling for delivery in the
same month. Such a transaction, which is effected through a member of
an exchange, cancels the obligation to make or take delivery of the securities
or currency. Since all transactions in the futures market are made, offset or
fulfilled through a clearinghouse associated with the exchange on which the
contracts are traded, a Portfolio will incur brokerage fees when it purchases
or sells futures contracts.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract can vary from the previous
day's settlement price; once that limit is reached, no trades may be made that
day at a price beyond the limit. Daily price limits do not limit potential
losses because prices could move to the daily limit for several consecutive
days with little or no trading, thereby preventing liquidation of unfavorable
positions.

If a Portfolio were unable to liquidate a futures contract due to the
absence of a liquid secondary market or the imposition of price limits, it
could incur substantial losses. The Portfolio would continue to be subject to
market risk with respect to the position. In addition, the Portfolio would
continue to be required to make daily variation margin payments and might be
required to maintain the position being hedged by the futures contract or
option thereon or to maintain cash or securities in a segregated account.

To the extent that a Portfolio enters into futures contracts, in each
case other than for bona fide hedging purposes (as defined by the Commodities
Futures Trading Commission ("CFTC"), the aggregate initial margin will not
exceed 5% of the liquidation value of a Portfolio's portfolio, after taking
into account unrealized profits and unrealized losses on any contracts that the
Portfolio has entered into. This policy does not limit to 5% the percentage of
the Portfolio's assets that are at risk in futures contracts.

Futures contracts require the deposit of initial margin valued at a
certain percentage of the contract and possibly adding "variation margin"
should the price of the contract move in an unfavorable direction. As with
forward contracts, the segregated assets must be either cash or high grade
liquid debt securities.

Risk of Futures Contracts-The ordinary spreads between prices in the cash
and futures market, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures market are
subject to initial deposit and variation margin requirements. Rather than
meeting additional variation margin deposit requirements,

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investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the cash and futures markets.
Second, the liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced, thus producing distortion. Third, from the point of
view of speculators, the margin deposit requirements in the futures market are
less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may cause temporary
price distortions. Due to the possibility of distortion, a correct forecast of
securities price or currency exchange rate trends by the investment adviser may
still not result in a successful transaction.

In addition, futures contracts entail risks. Although an investment
adviser believes that use of such contracts will benefit a particular
Portfolio, if that investment adviser's investment judgment about the general
direction of, for example, an index is incorrect, a Portfolio's overall
performance would be poorer than if it had not entered into any such contract.

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.

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 or the Equity 500 Index
Portfolio Board, as appropriate, 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 or the Equity 500 Index Portfolio Board, as appropriate, 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 or the Equity 500
Index Portfolio Board, as appropriate, 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.

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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
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

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market for such securities is becoming increasingly liquid, securities issued by
certain private organizations may not be readily marketable.

Municipal Lease Obligations ("MLOs")-MLOs 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 MLOs purchased by the corresponding Portfolio of
the Municipal Money Market Fund, the AMR Trust Board has established the
following guidelines for determining the liquidity of the MLOs in its portfolio,
and, subject to review by the AMR Trust 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, 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 four highest Moody's Investors Service, Inc. ("Moody's") ratings for
long-term obligations (or issuers thereof) are Aaa, Aa, A and Baa. 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. Obligations which are rated A by Moody's possess many favorable
investment attributes and are considered "upper medium-grade obligations."
Obligations which are rated Baa by Moody's are considered to be medium grade
obligations, i.e., they are neither highly protected or poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. 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 four highest Standard & Poor's ratings for long-term obligations are
AAA, AA, A and BBB. 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. Obligations rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions. Obligations rated BBB by
Standard & Poor's are regarded as having adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Duff & Phelps' four highest ratings for long-term obligations are AAA,
AA, A and BBB. 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. Obligations rated A have average but
adequate protection factors. However, risk factors are more variable and
greater in periods of economic stress. Obligations rated BBB have below
average protection factors with considerable variability in risk during
economic cycles, but are still considered sufficient for prudent investment.

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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 four highest ratings for
long-term obligations are AAA, AA, A and BBB. 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. Obligations rated A indicate the ability to
repay principal and interest is strong. Issues rated A could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings. BBB is the lowest investment grade category
and indicates an acceptable capacity to repay principal and interest. Issues
rated BBB are, however, more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.

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. Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings. Bonds
rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

IBCA's four highest long term obligation ratings are AAA, AA, A and BBB.
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 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. Obligations rated A have a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic, or financial conditions
may lead to increased investment risk. Obligations rated BBB have a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic, or
financial conditions are more likely to lead to increased investment risk than
for obligations in other categories.

Standard & Poor's, Duff & Phelps and Fitch apply indicators, such as
"+","-," or 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.

20
<PAGE> 88
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, A-2, or A-3.

IBCA's short-term rating of A-1 indicates obligations supported by the
highest capacity for timely repayment. Where issues possess particularly
strong credit features, a rating of A-1+ is assigned. Obligations rated A-2
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.

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.

21
<PAGE> 89

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.

Rights and Warrants-Rights are short-term warrants issued in conjunction
with new stock issues. Warrants are options to purchase an issuer's securities
at a stated price during a stated term. There is no specific limit on the
percentage of assets a Portfolio may invest in rights and warrants, although
the ability of some of the Portfolios to so invest is limited by their
investment objectives or policies.

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.
Because they do not pay coupon income, the prices of STRIPS and zero coupon
obligations can be very volatile when interest rates change. 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.

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.

22
<PAGE> 90

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.

FINANCIAL STATEMENTS

The Mileage Trust's Annual Report to Shareholders for the period ended
October 31, 1996 is supplied with the Statement of Additional Information, and
the financial statements and accompanying notes appearing therein are
incorporated by reference in this Statement of Additional Information.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . 1

Trustees and Officers of the Mileage Trust and the AMR Trust . . 2

Management, Administrative Services and Distribution Fees . . . . 5

Approach to Stock Selection . . . . . . . . . . . . . . . . . . . 7

Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . . . 6

Investment Advisory Agreements . . . . . . . . . . . . . . . . . 6

</TABLE>

23
<PAGE> 91

<TABLE>
<CAPTION>
<S> <C>
Portfolio Securities Transactions . . . . . . . . . . . . . . . . 7

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . 8

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . 9

Yield and Total Return Quotations . . . . . . . . . . . . . . . . 11

Description of the Mileage Trust . . . . . . . . . . . . . . . . 14

Control Persons and 5% Shareholders . . . . . . . . . . . . . . . 14

Other Information . . . . . . . . . . . . . . . . . . . . . . . . 15

Financial Statements . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

24
<PAGE> 92
STATEMENT OF ADDITIONAL INFORMATION

AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS

-- PLATINUM CLASS(sm) --

MARCH 1, 1997

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. Government Money Market
Fund(sm) (the "U.S. Government Money Market Fund", formerly the American
AAdvantage 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 March 1, 1997 ("Prospectus"), a copy of which may be obtained without
charge by calling (800) 388-3344.

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. "Majority of the outstanding voting
securities" under the Investment Company Act of 1940, as amended (the "1940
Act"), and as used herein means, with respect to the Portfolio, 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. The
percentage of a Fund's votes representing that Fund's shareholders not voting
will be voted by the AAdvantage Board and the Mileage Trust Board in the same
proportion as those Fund shareholders who do, in fact, vote.

<PAGE> 93
No Portfolio may:

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.

6. Issue senior securities except that the Portfolio may engage in
when-issued and forward commitment transactions.

2
<PAGE> 94

TRUSTEES AND OFFICERS OF THE TRUSTS AND THE AMR TRUST

The AAdvantage Board, the Mileage Trust Board and the AMR Trust Board
provide broad supervision over each Trust's affairs. AMR Investment Services,
Inc. (the "Manager") is responsible for the management and the administration
of each Trust's 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* (49) Trustee and President, AMR Investment Services, Inc. (1986-
President Present); Chairman, American Airlines Employees
Federal Credit Union (October 1989-Present);
Trustee, American Performance Funds (1990-1994);
Director, Crescent Real Estate Equities, Inc. (1994
- Present); Trustee, American AAdvantage Funds
(1987-Present); Trustee, American AAdvantage Mileage
Funds (1995-Present).

Alan D. Feld (59) Trustee Partner, Akin, Gump, Strauss, Hauer & Feld, LLP
1700 Pacific Avenue (1960-Present)#; Director, Clear Channel
Suite 4100 Communications (1984-Present); Director, CenterPoint
Dallas, Texas 75201 Properties, Inc. (1994-Present); Trustee, American
AAdvantage Funds (1993-Present); Trustee, American
AAdvantage Funds(1996- Present); Trustee American
AAdvantage Mileage Funds (1996-Present).

Ben J. Fortson (64) Trustee President and CEO, Fortson Oil Company (1958-
301 Commerce Street Present); Director, Kimbell Art Foundation (1964-
Suite 3301 Present); Director, Burnett Foundation (1987-
Fort Worth, Texas 76102 Present); Honorary Trustee, Texas Christian
University (1986-Present); Trustee, American
AAdvantage Funds (1996-Present); Trustee, American
AAdvantage Mileage Funds (1996-Present).

John S. Justin (80) 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); Trustee, American AAdvantage Funds
(1989-Present); Trustee, American AAdvantage
Mileage Funds (1995-Present).

Stephen D. O'Sullivan* (61) Trustee Consultant (1994-Present); Vice President and
Controller (1985-1994), American Airlines, Inc.;
Trustee, American AAdvantage Funds (1987-Present);
Trustee, American AAdvantage Mileage Funds (1995-
Present).
</TABLE>

<PAGE> 95

<TABLE>
POSITION WITH
NAME, AGE AND ADDRESS EACH TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- ------------- ----------------------------------------
<S> <C> <C>
Roger T. Staubach (55) 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; Trustee, Institute for Aerobics
Research; Member of Executive Council,
Daytop/Dallas; former quarterback of the Dallas
Cowboys professional football team; Trustee,
American AAdvantage Funds (1995-Present); Trustee,
American AAdvantage Mileage Funds (1995-Present).

Kneeland Youngblood, M.D. (40) Trustee Physician (1982-Present); President (1983-
2305 Cedar Springs Road Present), Youngblood Enterprises, Inc. (a health
Suite 401 care investment and management firm); Trustee,
Dallas, Texas 75201 Teachers Retirement System of Texas (1993-
Present); Director, United States Enrichment
Corporation (1993-Present), Director, Just For the
Kids (1995-Present); Member, Council on Foreign
Relations (1995-Present; Trustee, American
AAdvantage Funds (1996-Present); Trustee, American
AAdvantage Mileage Funds (1996-Present).

Nancy A. Eckl (34) Vice President Vice President, AMR Investment Services, Inc.
(December 1990-Present).

Michael W. Fields (43) Vice President Vice President, AMR Investment Services, Inc.
(August 1988-Present).

Barry Y. Greenberg (33) Vice President and Director, Legal and Compliance, AMR Investment
Assistant Services, Inc. (1995-Present); Branch Chief (1992-
Secretary 1995) and Staff Attorney (1988-1992), Securities
and Exchange Commission.

Rebecca L. Harris (30) Treasurer Director of Finance (1995-Present), Controller
(1991-1995), AMR Investment Services, Inc.

John B. Roberson (38) Vice President Vice President, AMR Investments Services, Inc.
(1991-Present).

Janice B. Schwarz (37) Assistant Senior Business Systems Coordinator, (1996-
Secretary Present), Senior Compliance Analyst (1990-1996),
AMR Investment Services, Inc.

Clifford J. Alexander (53) Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)

Robert J. Zutz (44) Assistant Partner, Kirkpatrick & Lockhart LLP (law firm)
Secretary
</TABLE>

4
<PAGE> 96

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.

* Messrs. Quinn and O'Sullivan, by virtue of their current or former
positions, are deemed to be "interested persons" of each 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 and the AMR Trust, the
Independent Trustees and their spouses receive free air travel from American
Airlines, Inc., an affiliate of the Manager. The Trusts and the AMR Trust do
not pay for these travel arrangements. However, the Trusts and the AMR Trust
compensate each Trustee with payments in an amount equal to the Trustees'
income tax on the value of this free airline travel. Mr. O'Sullivan, whom 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 are also reimbursed for any
expenses incurred in attending Board meetings. These amounts are reflected in
the following table for the fiscal year ended October 31, 1996.1

<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Aggregate Benefits Estimated
Compensation Compensation Accrued as Annual Total
From the From the Part of the Benefits Compensation
AAdvantage Mileage Trusts' Upon From AAdvantage
Name of Trustee Trust Trust Expenses Retirement Funds Complex
--------------- ----- ----- -------- ---------- -------------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0
John S. Justin $ $0 $0 $14,475
Stephen D. O'Sullivan $ $0 $0 $ 1,832
Roger T. Staubach $ $0 $0 $11,330
</TABLE>

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: 1994, $6,950,000
of which approximately $2,965,000 was paid by the Manager to the other
investment advisers; 1995, $7,603,000 of which approximately $3,985,000 was
paid by the Manager to the other investment advisers; and 1996, $10,403,000 of
which approximately $5,161,000 was paid by the Manager to the other investment
advisers. Management fees in the amount of approximately $214,000, $29,000 and
$44,000 were waived by the Manager during the fiscal years ended October 31,
1994, 1995 and 1996, respectively. These amounts include payments by
Portfolios 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 Funds. Administrative services fees for
the AAdvantage Trust for the fiscal years ended October 31 were approximately
as follows: 1994, $1,473,000; 1995, $2,731,000; and 1996, $2,893,400.
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 by Portfolios in the
AAdvantage Trust other than the Funds.

Brokers Transaction Services, Inc. ("BTS"), is the distributor of the
Funds' shares. BTS receives an annualized fee of $50,000 from the Manager for
distributing the shares of the Trusts. Prior to September 1, 1995, the
AAdvantage Trust was self-distributed.

__________________________________

1 Messrs. Feld and Fortson and Dr. Youngblood did not serve as Trustees during
the period.

5
<PAGE> 97
REDEMPTIONS IN KIND

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. The corresponding portfolios of the Money Market Funds may invest in
issuers or instruments that at the time of purchase have received the highest
short-term rating by two Rating Organizations, such as "D-1" by Duff & Phelps
and "F-1" by Fitch Investors Service, Inc., and have received the next highest
short-term rating by other Rating Organizations, such as "A-2" by Standard &
Poors and "P-2" by Moody's Investors Service, Inc. See "Ratings of Municipal
Obligations" and "Ratings of Short-Term Obligations" for further information
concerning ratings.

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:

* 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");

* Diversify its investments in securities within certain statutory
limits; and

* 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").

Each Fund has received either a ruling from the Internal Revenue Service
("IRS") or an opinion of counsel that the 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.

See the next section for a discussion of the tax consequences to the
Funds of certain investments by the Portfolios.

6
<PAGE> 98
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 income, gains,
losses, deductions, credits and tax preference items, without regard to whether
it has received any cash distributions from the Portfolio.

Because, as noted above, 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

7
<PAGE> 99
"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.

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.

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 its inception date. The performance results for the Platinum Class will be
lower, because the 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

8
<PAGE> 100
The current and effective yields for the Funds are as follows:

<TABLE>
<CAPTION>
Current daily Current yield for Effective yield for
yield as of the seven-day the seven-day
October 31, period ended period ended
1996 October 31, 1996 October 31, 1996
---- ---------------- ----------------
<S> <C> <C> <C>
Platinum Class
Money Market Fund 4.73% 4.73% 4.84%
Municipal Money Market Fund 2.75% 2.75% 2.79%
U.S. Government Money Market Fund 4.63% 4.33% 4.42%
Mileage Fund 4.59% 4.58% 4.68%

</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 October 31,
1996 were 4.55% and 4.62%, 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:

P(1 + T)n= ERV

Based on this formula, annualized total returns were as follows for the
periods indicated:

For the period from
For the one-year For the five-year commencement of
period ended period ended operations through
October 31, October 31, October 31,
1996(1) 1996(1)(2) 1996(1)
------- ---------- -------
<S> <C> <C> <C>
Platinum Class
- --------------
Money Market Fund 4.85% 4.47% 6.11%
Municipal Money Market Fund 2.88% N/A 3.03%
U. S. Government Money Mkt. Fund(3) 4.58% N/A 4.16%
Mileage Fund 4.78% 4.23% 5.97%
</TABLE>

(1) Performance of the Funds of the AAdvantage Trust represents total returns
achieved by the Institutional Class from the inception date of each Fund up to
the inception date of the Platinum Class on 11/7/95. Performance of the
Mileage Fund represents total return of the Money Market Fund-Institutional
Class (9/1/87-10/31/91); the Money Market Fund- Mileage Class
(11/1/91-10/31/95); the Money Market Mileage Fund-Mileage Class
(11/1/95-1/28/96) and the Money Market Mileage Fund-Platinum Class since its
1/29/96 inception. Total returns have not been adjusted for any difference
between the fees and expenses of each Fund and the historical fees and expenses
of the predecessor Funds. Inception dates are: Money Market Fund-Institutional
Class, 9/1/87; Municipal Money Market Fund-Institutional Class, 11/10/93; U.S.
Government Money Market Fund-Institutional Class, 3/1/92.

(2) The Municipal Money Market Fund and the U.S. Government Money Market Fund
had not commenced active operations as of 11/1/91.

(3) Prior to March 1, 1997, the U.S. Government Money Market Fund was known as
the U.S. Treasury Money Market Fund and operated under different investment
policies.

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.

9
<PAGE> 101

In reports or other communications to shareholders or in advertising
material, each class of a Fund may from time to time compare its performance
with that of other mutual funds in rankings prepared by Lipper Analytical
Services, Inc., Morningstar, Inc., IBC Financial Data, Inc. and other similar
independent services which monitor the performance of mutual funds or
publications such as the "New York Times," "Barrons" and the "Wall Street
Journal." Each Fund may also compare its performance with various indices
prepared by independent services such as Standard & Poor's, Morgan Stanley or
Lehman Brothers or to unmanaged indices that may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.

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.

From time to time, the Manager may use contests as a means of promoting
the American AAdvantage Funds and the American AAdvantage Mileage Funds.
Prizes may include free air travel and/or hotel accommodations. Listings for
certain of the Funds may be found in newspapers under the heading Amer AAdvant.

DESCRIPTION OF THE TRUST

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 Trust
also provides 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. The Platinum Class was created as an
investment vehicle for cash balances of customers of certain broker-dealers.

CONTROL PERSONS AND 5% SHAREHOLDERS

The following persons may be deemed to control certain Funds by virtue of
their ownership of more than 25% of the outstanding shares of a Fund as of
January 31, 1997:

American AAdvantage Money Market Fund Total Fund

American AAdvantage Municipal Money Market Fund

10
<PAGE> 102

American AAdvantage U.S. Government Money Market Fund

American AAdvantage Money Market Mileage Fund

OTHER INFORMATION

Illiquid Securities. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the 1933 Act, securities that are otherwise not
readily marketable and repurchase agreements having a remaining maturity of
longer than seven calendar days. Securities that have not been registered
under the 1933 Act are referred to as private placements or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty

11
<PAGE> 103

satisfying redemptions within seven calendar days. A mutual fund also might
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be
readily resold or on an issuer's ability to honor a demand for repayment.
However, the fact that there are contractual or legal restrictions on resale of
such investments to the general public or to certain institutions may not be
indicative of their liquidity.

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.

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.

12
<PAGE> 104
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 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.

13
<PAGE> 105
Municipal Lease Obligations ("MLOs")-MLOs 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 MLOs purchased by the corresponding Portfolio of
the Municipal Money Market Fund, the AMR Trust Board has established the
following guidelines for determining the liquidity of the MLOs in its
portfolio, and, subject to review by the AMR Trust 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.

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.

14
<PAGE> 106
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 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, such as
"+","-," or no character, to indicate relative standing within the major rating
categories.

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.

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, A-2, or A-3.

15
<PAGE> 107
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.

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.

Revenue Obligations-Revenue obligations are backed by the revenue cash
flow of a project or facility.

16
<PAGE> 108
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.

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:

17
<PAGE> 109
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.

FINANCIAL STATEMENTS

The American AAdvantage Money Market Funds' and the American AAdvantage
Mileage Funds' Annual Reports to Shareholders for the fiscal year ended October
31, 1996, as audited by Ernst & Young, LLP, are supplied with the SAI, and the
financial statements and accompanying notes appearing therein are incorporated
by reference in this SAI.

18
<PAGE> 110
TABLE OF CONTENTS

<TABLE>
<S> <C>
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Trustees and Officers of the Trust and the AMR Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Management, Administrative Services and Distribution Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Yield and Total Return Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Description of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Control Persons and 5% Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>

19
<PAGE> 111

AMERICAN AADVANTAGE MILEAGE 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 of the Registration Statement:

Financial Highlights - American AAdvantage Mileage
Funds-Balanced, Growth and Income, International
Equity, Limited-Term Income, Money Market (Mileage
Class), Municipal Money Market and U.S. Treasury
Money Market - for the period November 1, 1995
(commencement of operations) to October 31, 1996.
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; (Platinum Class)
for year ended October 31, 1996. Financial
Highlights - American AAdvantage Money Market Mileage
Fund (Platinum Class) - for the period January 29,
1996, (commencement of operations) to October 31,
1996.

Included in Part B of the Registration Statement:

American AAdvantage Funds- Money Market, Municipal
Money Market and U.S. Treasury Money Market Funds - Statements of Assets and
Liabilities - October 31, 1996; Statements of Changes in Net Assets for the
years ended October 31, 1995 and October 31, 1996; Statements of Operations -
for the year ended October 31, 1996; Notes to Financial Statements; Report of
Ernst & Young LLP, Independent Auditors, dated December 20, 1996.

American AAdvantage Mileage Funds - Statements of
Assets and Liabilities - October 31, 1996; Statements of Operations for the
year ended October 31, 1996; Statements of Changes in Net Assets for the year
ended October 31, 1996; Notes to Financial Statements; Report of Ernst & Young
LLP, Independent Auditors, dated December 20, 1996.

AMR Investment Services Trust - Schedules of
Investments - October 31, 1996; Statements of Assets and Liabilities - October
31, 1996; Statements of Operations for the year ended October 31, 1996;
Statements of Changes in Net Assets for the year ended October 31, 1996; Notes
to Financial Statements; Report of Ernst & Young LLP, Independent Auditors
dated December 20, 1996.

(b) Exhibits:

(1) Amended and Restated Declaration of Trust*

(2) Amended Bylaws*

(3) Voting trust agreement -- none

(4) Specimen security -- none

(5) (a) Management Agreement* & (filed herewith)
(b) Advisory Agreements* & (filed herewith)

(6) Distribution Agreement*

1
<PAGE> 112
(7) Bonus, profit sharing or pension plans --
none

(8) Custodian Agreement*

(9) (a) Transfer Agency and Service
Agreement for the Mileage Class with
Goldman, Sachs & Co.*

(10) Opinion and consent of counsel***

(11) Consent of Independent Auditors (filed
herewith)

(12) Financial statements omitted from prospectus
(not applicable)

(13) Letter of investment intent*

(14) Prototype retirement plan -- (not applicable)

(15) (a) Plan pursuant to Rule 12b-1 for the
Mileage Class*
(b) Plan pursuant to Rule 12b-1 for the
Platinum Class**
(c) Administrative Services Plan for the
Platinum Class**

(16) Schedule for Computation of Performance
Quotations (filed herewith)

(17) Financial Data Schedules (filed herewith as
Exhibit 27)

(18) Plan Pursuant to Rule 18f-3**

Other -Powers of Attorney for Trustees

* Incorporated by reference to Pre-Effective Amendment No. 2 to the
registration statement of the American AAdvantage Mileage Funds
("Mileage Trust") on Form N-1A as filed with the Securities and
Exchange Commission on September 21, 1995.

** Incorporated by reference to Post-Effective Amendment No. 1 to the
Mileage Trust's registration statement on Form N-1A as filed with the
Securities and Exchange Commission on October 13, 1995.

*** Incorporated by reference to the legal opinion contained in the
Trust's Rule 24f-2 Notice as filed with the SEC on December 20, 1996.

Item 25. Persons Controlled by or under Common Control with Registrant

None.

Item 26. Number of Holders of Securities

<TABLE>
<CAPTION>
Number of Record Holders
Title of Fund as of December 31, 1996
- ---------- -----------------------
<S> <C>
Balanced Mileage Fund 119

Growth and Income Mileage Fund 279
</TABLE>

<PAGE> 113
<TABLE>
<S> <C>
Limited-Term Income Mileage Fund 24

International Equity Mileage Fund 167

Money Market Mileage Fund - Mileage Class 1,422

Money Market Mileage Fund - Platinum Class 2

Municipal Money Market Mileage Fund 225

U.S. Treasury Money Market Mileage Fund 157
</TABLE>

Item 27. Indemnification

Article XI, Section 2 of the Declaration of Trust of the Mileage 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 Mileage 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,
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 Mileage 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 Mileage 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 Mileage 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 Mileage 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 Mileage Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract or
otherwise under law.

3
<PAGE> 114
(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 Mileage 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;

(ii) the Mileage 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 Mileage 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
Mileage 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 Mileage 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 Mileage Trust.

Barrow, Hanley, Mewhinney & Strauss, 3232 McKinney Avenue, 15th Floor,
Dallas, Texas 75204.

Brandywine Asset Management, Inc., 201 North Walnut Street,
Wilmington, Delaware 19801.

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.

<PAGE> 115
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.

Item 29. Principal Underwriter

(a) Brokers Transaction Services, Inc., 7001 Preston
Road, Dallas, TX 75205, is the principal underwriter for the Mileage Trust and
the American AAdvantage Funds.

(b) The directors and officers of the Mileage Trust's
principal underwriter are:

<TABLE>
<CAPTION>
Positions & Offices Position
Name with Underwriter with Registrant
- ---- ------------------- ---------------
<S> <C> <C>
Don A. Buckholz Chairman and Director None

Raymond E. Wooldridge Chief Executive Officer None
and Director

William D. Felder Executive Vice None
President and Director

Sue H. Peden President 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 as follows: 31a-1(b)(1) -
Journals - in the physical possession of the Trust's custodian (NationsBank of
Texas, NA); 31a-1(b)(2)(i),(ii)&(iii) - in the physical possession of the
Trust's custodian; 31a-1(b)(2)(iv) - in the physical possession of the Trust's
transfer agents (NationsBank NA and Goldman Sachs); 31a-1(b)(4) - in the
physical possession of the Trust's Manager; 31a-1(b)(5) - in the physical
possession of the Trust's investment advisers; 31a-1(b)(6) - in the physical
possession of the Trust's Manager, investment advisers and custodian;
31a-1(b)(7) - in the physical possession of the Trust's custodian; 31a-1(b)(8)
- - in the physical possession of the Trust's custodian; 31a-1(b)(9) - in the
physical possession of the Trust's investment advisers; 31a-1(b)(10) - in the
physical possession of the Trust's Manager; 31a-1(b)(11) - in the physical
possession of the Trust's Manager; 31a-1(b)(12) - in the physical possession of
the Trust's Manager; investment advisers and custodian

Item 31. Management Services

All substantive provisions of any management-related service
contract are discussed in Part A or Part B.

5
<PAGE> 116
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.

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 in 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.

6
<PAGE> 117
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. 4 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 February 13,
1997.

AMERICAN AADVANTAGE MILEAGE 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. 4 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 February 13, 1997
- ------------------------------ Trustee
William F. Quinn

Alan D. Feld* Trustee February 13, 1997
- ------------------------------
Alan D. Feld

Ben J. Fortsen* Trustee February 13, 1997
- ------------------------------
Ben J. Fortsen

John S. Justin* Trustee February 13, 1997
- -----------------------------
John S. Justin

Stephen D. O'Sullivan* Trustee February 13, 1997
- -----------------------------
Stephen D. O'Sullivan

Roger T. Staubach* Trustee February 13, 1997
- -----------------------------
Roger T. Staubach

Dr. Kneeland Youngblood * Trustee February 13, 1997
- -----------------------------
Dr. Kneeland Youngblood

*By /s/ William F. Quinn
------------------------------------------
William F. Quinn, Attorney-In-Fact
</TABLE>

7
<PAGE> 118
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, AMR Investment
Services Trust has duly caused this Post-Effective Amendment No. 4 to the
Registration Statement for the American AAdvantage Mileage Funds 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 February 13, 1997.

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

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 4 to the Registration Statement for
the American AAdvantage Mileage Funds has been signed below by the following
persons in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/ William F. Quinn President and February 13, 1997
- ------------------------------ Trustee
William F. Quinn

Alan D. Feld* Trustee February 13, 1997
- ------------------------------
Alan D. Feld

Ben J. Fortsen* Trustee February 13, 1997
- ------------------------------
Ben J. Fortsen

John S. Justin* Trustee February 13, 1997
- ------------------------------
John S. Justin

Stephen D. O'Sullivan* Trustee February 13, 1997
- ------------------------------
Stephen D. O'Sullivan

Roger T. Staubach* Trustee February 13, 1997
- ------------------------------
Roger T. Staubach

Dr. Kneeland Youngblood * Trustee February 13, 1997
- ------------------------------
Dr. Kneeland Youngblood

*By /s/ William F. Quinn
----------------------------------
William F. Quinn, Attorney-In-Fact

8
<PAGE> 119
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C>
1 Amended and Restated Declaration of Trust*

2 Amended Bylaws*

3 Voting trust agreement - none

4 Specimen security -- none

5 (a) Management Agreement* & (filed herewith)
(b) Advisory Agreements* & (filed herewith)

6 Distribution Agreement*

7 Bonus, profit sharing or pension plans - none

8 Custodian Agreement*

9 Transfer Agency and Service
Agreement for with Goldman, Sachs & Co.*

10 Opinion and consent of counsel***

11 Consent of Independent Auditors (filed herewith)

12 Financial statements omitted from prospectus - (not applicable)

13 Letter of investment intent*

14 Prototype retirement plan -- (not applicable)

15 (a) Plan pursuant to Rule 12b-1 for the Mileage Class*
(b) Plan pursuant to Rule 12b-1 for the Platinum Class**
(c) Administrative Services Plan for the Platinum Class**

16 Schedule for Computation of Performance
Quotations (filed herewith)

17 Financial Data Schedules (filed herewith as Exhibit 27)

18 Plan Pursuant to Rule 18f-3**

Other Trustee Powers of Attorney filed herewith
</TABLE>

* Incorporated by reference to Pre-Effective Amendment No. 2 to the
Mileage Trust's registration statement on Form N-1A as filed with the
Securities and Exchange Commission on September 21, 1995.

** Incorporated by reference to Post-Effective Amendment No. 1 to the
Mileage Trust's registration statement on Form N-1A as filed with the
Securities and Exchange Commission on October 13, 1995.

*** Incorporated by reference to the legal opinion contained in the
Trust's Rule 24f-2 Notice as filed with the SEC on December 20, 1996.

<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 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT DATED OCTOBER 31, 1996.
</LEGEND>
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND
<SERIES>
<NUMBER> 110
<NAME> AMERICAN AADVANTAGE GROWTH AND INCOME MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 6236
<RECEIVABLES> 0
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6253
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19
<TOTAL-LIABILITIES> 19
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5439
<SHARES-COMMON-STOCK> 322
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 84
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 371
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 340
<NET-ASSETS> 6234
<DIVIDEND-INCOME> 133
<INTEREST-INCOME> 12
<OTHER-INCOME> 0
<EXPENSES-NET> 46
<NET-INVESTMENT-INCOME> 99
<REALIZED-GAINS-CURRENT> 371
<APPREC-INCREASE-CURRENT> 340
<NET-CHANGE-FROM-OPS> 810
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 514
<NUMBER-OF-SHARES-REDEEMED> 193
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 6233
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 71
<AVERAGE-NET-ASSETS> 4552
<PER-SHARE-NAV-BEGIN> 15.94
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 3.16
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> .09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.35
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE BALANCED MILEAGE FUND
<SERIES>
<NUMBER> 120
<NAME> AMERICAN AADVANTAGE BALANCED MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 2489
<RECEIVABLES> 7
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2513
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18
<TOTAL-LIABILITIES> 18
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2254
<SHARES-COMMON-STOCK> 156
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 60
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 154
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27
<NET-ASSETS> 2495
<DIVIDEND-INCOME> 34
<INTEREST-INCOME> 54
<OTHER-INCOME> 0
<EXPENSES-NET> 20
<NET-INVESTMENT-INCOME> 68
<REALIZED-GAINS-CURRENT> 154
<APPREC-INCREASE-CURRENT> 27
<NET-CHANGE-FROM-OPS> 249
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 182
<NUMBER-OF-SHARES-REDEEMED> 27
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 2494
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 50
<AVERAGE-NET-ASSETS> 1895
<PER-SHARE-NAV-BEGIN> 13.97
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> 1.65
<PER-SHARE-DIVIDEND> .10
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.01
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND-MILEAGE CLASS
<SERIES>
<NUMBER> 130
<NAME> AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND-MILEAGE CLASS
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 122742
<RECEIVABLES> 61
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 122811
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 673
<TOTAL-LIABILITIES> 673
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122138
<SHARES-COMMON-STOCK> 106709<F1>
<SHARES-COMMON-PRIOR> 94
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 122138
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6215
<OTHER-INCOME> 0
<EXPENSES-NET> 768
<NET-INVESTMENT-INCOME> 5447
<REALIZED-GAINS-CURRENT> 4
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5451
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5054
<DISTRIBUTIONS-OF-GAINS> 4
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 214459
<NUMBER-OF-SHARES-REDEEMED> 112236
<SHARES-REINVESTED> 4392
<NET-CHANGE-IN-ASSETS> 122044
<ACCUMULATED-NII-PRIOR> 0
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<FN>
<F1>MILEAGE CLASS - ALL PER SHARE AMOUNTS ARE BY CLASS
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND-PLATINUM CLASS
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<NUMBER> 134
<NAME> AMERICAN AADVANTAGE MONEY MARKET MILEAGE FUND-PLATINUM CLASS
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<S> <C>
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<FN>
<F1>PLATINUM CLASS - ALL PER SHARE AMOUNTS ARE BY CLASS
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME MILEAGE FUND
<SERIES>
<NUMBER> 140
<NAME> AMERICAN AADVANTAGE LIMITED-TERM INCOME MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND
<SERIES>
<NUMBER> 150
<NAME> AMERICAN AADVANTAGE INTERNATIONAL EQUITY MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE US TREASURY MONEY MARKET MILEAGE FUND
<SERIES>
<NUMBER> 170
<NAME> AMERICAN AADVANTAGE US TREASURY MONEY MARKET MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
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</TABLE>

<ARTICLE> 6
<CIK> 0000943824
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET MILEAGE FUND
<SERIES>
<NUMBER> 180
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET MILEAGE FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
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</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 034
<NAME> AMERICAN AADVANTAGE MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
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<FN>
<F1>PLATINUM CLASS - ALL PER SHARE AMOUNTS ARE BY CLASS
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 074
<NAME> AMERICAN AADVANTAGE US TREASURY MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
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<FN>
<F1>PLATINUM CLASS - ALL PER SHARE AMOUNTS ARE BY CLASS
</FN>

</TABLE>

<ARTICLE> 6
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<NUMBER> 084
<NAME> AMERICAN AADVANTAGE MUNICIPAL MONEY MARKET FUND
<MULTIPLIER> 1000

<S> <C>
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<FN>
<F1>PLATINUM CLASS - PER SHARE AMOUNTS ARE BY CLASS
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 210
<NAME> AMR INVESTMENT SERVICES GROWTH AND INCOME PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
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<EXPENSE-RATIO> .35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 220
<NAME> AMR INVESTMENT SERVICES BALANCED PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 764769
<INVESTMENTS-AT-VALUE> 900785
<RECEIVABLES> 6706
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 907526
<PAYABLE-FOR-SECURITIES> 10606
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1438
<TOTAL-LIABILITIES> 12044
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 895482
<DIVIDEND-INCOME> 15597
<INTEREST-INCOME> 24184
<OTHER-INCOME> 89
<EXPENSES-NET> 3105
<NET-INVESTMENT-INCOME> 36765
<REALIZED-GAINS-CURRENT> 67731
<APPREC-INCREASE-CURRENT> 27670
<NET-CHANGE-FROM-OPS> 132166
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 895482
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2005
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3105
<AVERAGE-NET-ASSETS> 862172
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 230
<NAME> AMR INVESTMENT SERVICES MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 1755588
<INVESTMENTS-AT-VALUE> 1755588
<RECEIVABLES> 9671
<ASSETS-OTHER> 34
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1765293
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 371
<TOTAL-LIABILITIES> 371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1765293
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 89923
<OTHER-INCOME> 0
<EXPENSES-NET> 2785
<NET-INVESTMENT-INCOME> 87138
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 87211
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1764922
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2393
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2785
<AVERAGE-NET-ASSETS> 1597543
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 240
<NAME> AMR INVESTMENT SERVICES LIMITED-TERM INCOME PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 171449
<INVESTMENTS-AT-VALUE> 174479
<RECEIVABLES> 1278
<ASSETS-OTHER> 34
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 175791
<PAYABLE-FOR-SECURITIES> 2508
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106
<TOTAL-LIABILITIES> 2614
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 173177
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12656
<OTHER-INCOME> 7
<EXPENSES-NET> 561
<NET-INVESTMENT-INCOME> 12102
<REALIZED-GAINS-CURRENT> (3216)
<APPREC-INCREASE-CURRENT> 458
<NET-CHANGE-FROM-OPS> 9344
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 173177
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 404
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 561
<AVERAGE-NET-ASSETS> 181350
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 250
<NAME> AMR INVESTMENT SERVICES INTERNATIONAL EQUITY PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 335924
<INVESTMENTS-AT-VALUE> 389195
<RECEIVABLES> 1794
<ASSETS-OTHER> 15169
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 406158
<PAYABLE-FOR-SECURITIES> 678
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 984
<TOTAL-LIABILITIES> 1662
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 404496
<DIVIDEND-INCOME> 8527
<INTEREST-INCOME> 1389
<OTHER-INCOME> 54
<EXPENSES-NET> 1835
<NET-INVESTMENT-INCOME> 8135
<REALIZED-GAINS-CURRENT> 11172
<APPREC-INCREASE-CURRENT> 30752
<NET-CHANGE-FROM-OPS> 50059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 404496
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1132
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1835
<AVERAGE-NET-ASSETS> 325410
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 27
<NAME> AMR INVESTMENT SERVICES US TREASURY MNY MKT PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 90714
<INVESTMENTS-AT-VALUE> 90714
<RECEIVABLES> 14
<ASSETS-OTHER> 51
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90779
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 87
<TOTAL-LIABILITIES> 87
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 90692
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4915
<OTHER-INCOME> 0
<EXPENSES-NET> 181
<NET-INVESTMENT-INCOME> 4734
<REALIZED-GAINS-CURRENT> 39
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4773
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 90692
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 137
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 181
<AVERAGE-NET-ASSETS> 91344
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 28
<NAME> AMR INVESTMENT SERVICES MUNICIPAL MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 81035
<INVESTMENTS-AT-VALUE> 81035
<RECEIVABLES> 274
<ASSETS-OTHER> 34
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 81343
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85
<TOTAL-LIABILITIES> 85
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 81258
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2275
<OTHER-INCOME> 0
<EXPENSES-NET> 79
<NET-INVESTMENT-INCOME> 2196
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2196
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 81258
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 92
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 126
<AVERAGE-NET-ASSETS> 61253
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<PAGE> 1
EXHIBIT 99.B5(a)

SUPPLEMENTAL TERMS AND CONDITIONS TO
THE MANAGEMENT AGREEMENT BETWEEN
THE AMERICAN AADVANTAGE MILEAGE FUNDS
AND
AMR INVESTMENT SERVICES, INC.

The attached amended Schedule A is hereby incorporated into the
Management Agreement dated October 1, 1995 (the "Agreement") between the
American AAdvantage Mileage Funds (the "Trust") and AMR Investment Services,
Inc. (the "Manager"). To the extent that there is any conflict between the
terms of the Agreement and these Supplemental Terms and Conditions
("Supplement"), this Supplement shall govern.

Dated: December 17, 1996

American AAdvantage Mileage Funds

By: /s/ William F. Quinn
---------------------
Title: President

AMR Investment Services, Inc.

By: /s/ William F. Quinn
--------------------
Title: President
<PAGE> 2
AMENDED
SCHEDULE A
TO THE
MANAGEMENT AGREEMENT
BETWEEN
AMR INVESTMENT SERVICES, INC.
AND THE
AMERICAN AADVANTAGE MILEAGE FUNDS

I. BASE FEE

As compensation pursuant to section 7 of the Management Agreement
between AMR Investment Services, Inc. (the "Manager") and the American
AAdvantage Mileage Funds (the "Mileage Trust"), the Mileage Trust shall pay to
the Manager a fee, computed daily and paid monthly, at the following annual
rates as percentages of each Portfolio's average daily net assets:

(1) 0.15% of the net assets of the Money Market Portfolio, the
Municipal Money Market Portfolio and the U.S. Treasury Money Market
Portfolio;

(2) 0.25% of the net assets of the Limited-Term Income Portfolio;

(3) 0.10% of the net assets of the Balanced Portfolio, the Growth
and Income Portfolio and the International Equity Portfolio;

(4) plus all fees payable by the Manager with respect to such
Portfolios pursuant to any Investment Advisory Agreement entered into
pursuant to Paragraph 2(d) of said Management Agreement.

II. SECURITIES LENDING DUTIES AND FEES

A. Manager Duties

The Manager agrees to provide the following services in connection
with the investment of cash collateral received from the securities lending
activities of each Portfolio of the Mileage Trust: (a) assist the securities
lending agent (the "Agent") in determining which specific securities are
available for loan, (b) monitor the Agent to ensure that securities loans are
effected in accordance with its instructions and within the procedures adopted
by the Board of Trustees of the Mileage Trust, (c) prepare appropriate periodic
reports for, and seek appropriate approvals from, the Board of Trustees of the
Mileage Trust with respect to securities lending activities, (d) respond to
Agent inquiries concerning Agent's compliance with applicable guidelines, and
(e) perform such other duties as necessary.
<PAGE> 3
B. Securities Lending Fees

As compensation for services provided by the Manager in connection
with securities lending activities of each Portfolio of the Mileage Trust, a
lending Portfolio shall pay to the Manager, with respect to cash collateral
posted by borrowers, a fee equal to 25% of the net monthly interest income (the
gross interest income earned by the investment of cash collateral, less the
amount paid to borrowers as well as related expenses) from such activities and,
with respect to loan fees paid by borrowers when a borrower posts collateral
other than cash, a fee equal to 25% of such loan fees.

DATED: December 17, 1996

<PAGE> 1
EXHIBIT 99.B5(b)

AMERICAN AADVANTAGE MILEAGE FUNDS
INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 12th day of November, 1996 by and between AMR
Investment Services, Inc., a Delaware Corporation (the "Manager"), and
Hotchkis and Wiley, a division of the Capital Management Group of Merrill Lynch
Asset Management, L.P. (the "Adviser");

WHEREAS, American AAdvantage Mileage Funds (the "Mileage Trust"), a
Massachusetts Business Trust, is an open- end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"), consisting of several portfolios of shares, each having
its own investment policies; and

WHEREAS, the Mileage Trust has retained the Manager to provide the
Mileage Trust with business and asset management services, subject to the
control of the Mileage Trust's Board of Trustees;

WHEREAS, the Mileage 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 Mileage Trust with respect to certain of
its investment portfolios and such other investment portfolios as the Mileage
Trust and the Adviser may agree upon and so specify in the Schedule(s) attached
hereto (collectively, the "Portfolios") and as described in the Mileage 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 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 Adviser's discretion the
securities to be purchased or sold, to provide the Manager and the Mileage
Trust with records concerning the Adviser's activities which the Mileage Trust
is required to maintain, and to render regular reports to the Manager and to
the Mileage 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 Mileage Trust and in compliance with such
policies as the Trustees may
<PAGE> 2
from time to time establish, and in compliance with the objectives, policies,
and limitations for each such Portfolio set forth in the Mileage 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 Mileage 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
agreement(s) between the Mileage Trust and its custodian(s).) The Adviser will
not be responsible for the cost of securities or brokerage commissions or any
other Mileage 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
Mileage 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 Mileage 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 Mileage 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 Mileage 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 A
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 A to the
average month-end assets of the specified portfolios during the relevant
quarter. Solely for the purpose 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).
<PAGE> 3
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 Mileage Trust or the
Manager, the Adviser in its discretion may make available to the Mileage 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 Mileage Trust or the Manager at a price to be
agreed upon by the Adviser and the Mileage Trust or the Manager.

5. REPORTS. The Manager (on behalf of the Mileage 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 Mileage
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 Mileage 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 Mileage Trust in any way or otherwise be deemed an
agent to the Manager or the Mileage 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 1940 Act which are prepared or maintained by the Adviser on behalf of
the Manager or the Mileage Trust are the property of the Manager or the Mileage
Trust and will be surrendered promptly to the Manager or Mileage Trust on
request.

8. LIABILITY OF ADVISER. No provision of this Agreement shall be
deemed to protect the Adviser against any liability to the Mileage 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.

9. PERMISSIBLE INTERESTS. To the extent permitted by law, Trustees,
agents, and shareholders of the Mileage 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
<PAGE> 4
Adviser are or may be interested in the Mileage Trust as Trustees, shareholders
or otherwise; and the Adviser (or any successor thereof) is or may be
interested in the Mileage 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 Mileage 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 Mileage 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 Mileage 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 1940 Act 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 1940 Act 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 Mileage 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 Mileage
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 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.

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 Mileage Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is not binding
<PAGE> 5
upon any of the Trustees, officers, or shareholders of the Mileage Trust
individually.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.

Hotchkis and Wiley AMR Investment Services, Inc.

By /s/Nancy D. Celek By /s/William F. Quinn
-------------------------- -----------------------------

Title Chief Financial Officer Title President
----------------------- --------------------------
<PAGE> 6
Schedule A
to the
American AAdvantage Mileage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Hotchkis and Wiley

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:

0.60% per annum of the first $10 million
0.50% per annum of the next $140 million
0.30% per annum of the next $50 million
0.20% per annum of the next $800 million
0.15% per annum of all excess assets

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.

Funds:

American AAdvantage Balanced Fund
American AAdvantage Growth and Income Fund
American AAdvantage International Equity Fund

DATED: November 12, 1996

<PAGE> 1
Exhibist 99.B11

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights," "Management and Administration of the Mileage Trust-Independent
Auditor" and "Shareholder Communications" and to the use of our report dated
December 20, 1996, in the Registration Statement (Form N-1A) and its
corporation by reference in the related Prospectus of American AAdvantage
Mileage Funds, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 4 to the Registration Statement under the
Securities Act of 1933 (File No. 33-91058) and in this Amendment No. 6 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-9018).

/s/Ernst & Young LLP
--------------------
ERNST & YOUNG LLP

Dallas, Texas
February 12, 1997

<PAGE> 1

Exhibit 99.B16

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
(11/1//95 - 10/31/96) (11/1/91 - 10/31/96) SINCE INCEPTION TO 10/31/96
------------------------------- -------------------------------- -----------------------------
<S> <C> <C> <C>
(9.2909)
BALANCED FUND 1000 (1+ .159700)= 1159.700 1000 (1+ .123149)5= 1787.256 1000 (1+ .106037) = 2550.701
Inception date (7/1/87) (15.97%) (12.31%) (10.60%)

GROWTH AND INCOME FUND (9.2909)
Inception date (7/1/87) 1000 (1+ .227700)= 1227.700 1000 (1+ .153049)5= 2038.163 1000 (1+ .121176) = 2894.105
(22.77%) (15.30%) (12.12%)

INTERNATIONAL EQUITY (5.2333)
FUND 1000 (1+ .165800)= 1165.800 1000 (1+.108933) 5= 1676.975 1000 (1+ .106611) = 1699.178
Inception date (8/7/91) (16.58%) (15.30%) (10.66%)

LIMITED-TERM INCOME FUND (8.91279)
Inception date (12/3/87) 1000 (1+ .045546)= 1045.546 1000 (1+ .055559)5= 1310.426 1000 (1+ .068813) = 1809.652
(4.55%) (5.56%) (6.88%)

MONEY MARKET FUND - (9.1676)
MILEAGE CLASS Inception 1000 (1+ .051171)= 1051.171 1000 (1+ .042937)5= 1233.930 1000 (1+ . 060114)= 1707.742
date (9/1/87) (5.12%) (4.29%) (6.01%)

MUNICIPAL MONEY MARKET (2.9758)
FUND 1000 (1+ .031917)= 1031.917 N/A 1000 (1+ .029213)= 1089.465
Inception date (3.19%) (2.92%)
(11/10/93)

U.S. GOVERNMENT MONEY (4.6689)
MARKET FUND 1000 (1+.049794)= 1049.794 N/A 1000 (1+ .041078)= 1206.779
Inception date (3/2/92) (4.98%) (4.11%)
</TABLE>
<PAGE> 2
SCHEDULE FOR COMPUTATION OF PERFORMANCE
QUOTATIONS

MONEY MARKET FUNDS - FOR THE 7 DAY PERIOD ENDED 10/31/96

<TABLE>
<CAPTION>
CURRENT YIELD EFFECTIVE YIELD
------------- ---------------
<S> <C> <C>
MONEY MARKET FUND-MILEAGE CLASS (.0009581546 x (365/7)) = 5.00% ((.0009581546 + 1)(365/7) -1) = 5.12%
MUNICIPAL MONEY MARKET FUND (.0005926504 x (365/7)) = 3.09% ((.0005926504 + 1)(365/7) -1) = 3.14%
U.S GOVERNMENT MONEY MARKET FUND (.0009089457 x (365/7)) = 4.74% ((.0009089457 + 1)(365/7) -1) = 4.85%
</TABLE>

MUNICIPAL MONEY MARKET FUND - FOR THE 7 DAY PERIOD ENDED 10/31/96

<TABLE>
<S> <C>
CURRENT TAX EQUIVALENT YIELD EFFECTIVE TAX EQUIVALENT YIELD
---------------------------- ------------------------------

(.0005926504 x (365/7))/(1-.396) = 4.75% ((.0005926504+ 1)(365/7) -1)/(1-.396) = 5.19%
</TABLE>

LIMITED - TERM INCOME FUND - 30 DAY S.E.C. YIELD FOR THE PERIOD ENDING 10/31/96

30 day yield = 2 x { ((a-b) + 1)6 - 1}
cd
<TABLE>

<S> <C>
Where: a = Dividends and interest earned during the period.

b = Expenses accrued for the period (net of reimbursements)

c = The average daily number of shares outstanding during the period entitled to
receive dividends

d = The maximum offering price per share on the last day of the period.

2 x { (( 6,732.850 - 837.240 ) + 1 )6 - 1 } = 6.150%
-------------------
120,566 x 9.66
</TABLE>

LIMITED - TERM INCOME FUND MONTHLY DIVIDEND RATE FROM 10/1/96 TO 10/31/96

Monthly Dividend Rate = A/P*(365/n)

Where: A = Dividend accrual per share during the month
(income distributions)

P = Share price at the end of month

n = Number of Days

.589342 / 9.66x (365 / 31) = 7.18%
<PAGE> 3

SCHEDULE OF COMPUTATION OF PERFORMANCE
QUOTATIONS

n
P (1+T) = 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 (11/1/95 - 10/31/96) (11/1/91 - 10/31/96) SINCE INCEPTION TO 10/31/96
- -------------- ------------------------------- --------------------------------- ---------------------------

(9.1676)
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND 1000 (1+ .048481)= 1048.481 1000 (1+ .044722)5= 1244.525 1000 (1+ .061103)= 1722.403
Inception date (9/1/87) (4.85%) (4.47%) (6.11%)

MONEY MARKET MILEAGE FUND (9.1676)
Inception date (9/1/87) 1000 (1+ .047817)= 1047.817 1000 (1+ .042270)5= 1229.989 1000 (1+ .059744)= 1702.285
(4.78%) (4.23%) (5.97%)

MUNICIPAL MONEY MARKET (2.9758)
FUND 1000 (1+ .028827)= 1028.827 N/A 1000 (1+ .030260)= 1092.766
Inception date (11/10/93) (2.88%) (3.03%)

U.S. GOVERNMENT MONEY (4.6689)
MARKET FUND 1000 (1+.045835)= 1045.835 N/A 1000 (1+ .041624)= 1209.737
Inception date (3/2/92) (4.58%) (4.16%)
</TABLE>

MONEY MARKET FUNDS - FOR THE 7 DAY PERIOD ENDED 10/31/96

<TABLE>
<CAPTION>
PLATINUM CLASS CURRENT YIELD EFFECTIVE YIELD
- -------------- ------------- ---------------
<S> <C> <C>
MONEY MARKET FUND (.0009063637 x (365/7)) = 4.73% ((.0009063637 + 1)(365/7) -1) = 4.84%
MONEY MARKET MILEAGE FUND (.0008776068 x (365/7)) = 4.58% ((.0008776068 + 1)(365/7) -1) = 4.68%
MUNICIPAL MONEY MARKET FUND (.0005272725 x (365/7)) = 2.75% ((.0005272725 + 1)(365/7) -1) = 2.79%
U.S GOVERNMENT MONEY MARKET FUND (.0008297088 x (365/7)) = 4.33% ((.0008297088 + 1)(365/7) -1) = 4.42%
</TABLE>

MUNICIPAL MONEY MARKET FUND - PLATINUM CLASS-
FOR THE 7 DAY PERIOD ENDED 10/31/96

<TABLE>
<CAPTION>
CURRENT TAX EQUIVALENT YIELD EFFECTIVE TAX EQUIVALENT YIELD
---------------------------- ------------------------------
<S> <C>
(.0005272725x (365/7))/(1-.396) = 4.55% ((.0005272725 + 1)(365/7) -1)/(1-.396) = 4.61%
</TABLE>

<PAGE> 1
POWER OF ATTORNEY

I, Alan D. Feld, Trustee of AMR Investment Services Trust ("AMR
Trust"), American AAdvantage Funds ("AAdvantage Trust") and American AAdvantage
Mileage Funds ("Mileage Trust") (collectively, the "Trusts"), hereby constitute
and appoint William F. Quinn and Barry Y. Greenberg my true and lawful attorney
with full power to sign for me in my capacity as Trustee for the Trusts any
registration statement on Form N-1A under the Securities Act of 1933 and/or the
Investment Company Act of 1940 and any amendments thereto of the AMR Trust,
AAdvantage Trust or Mileage Trust, and all instruments necessary or desirable
in connection therewith, hereby ratifying and confirming my signature as it may
be signed by said attorney to any and all amendments to said registration
statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 13th day of January, 1997.

Signature Title
--------- -----

/s/Alan D. Feld
---------------
Alan D. Feld Trustee

<PAGE> 2

POWER OF ATTORNEY

I, Ben J. Fortson, Trustee of AMR Investment Services Trust ("AMR
Trust"), American AAdvantage Funds ("AAdvantage Trust") and American AAdvantage
Mileage Funds ("Mileage Trust") (collectively, the "Trusts"), hereby constitute
and appoint William F. Quinn and Barry Y. Greenberg my true and lawful attorney
with full power to sign for me in my capacity as Trustee for the Trusts any
registration statement on Form N-1A under the Securities Act of 1933 and/or the
Investment Company Act of 1940 and any amendments thereto of the AMR Trust,
AAdvantage Trust or Mileage Trust, and all instruments necessary or desirable
in connection therewith, hereby ratifying and confirming my signature as it may
be signed by said attorney to any and all amendments to said registration
statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 13th day of January, 1997.

Signature Title
--------- -----

/s/Ben J. Fortson
-----------------
Ben J. Fortson Trustee

<PAGE> 3

POWER OF ATTORNEY

I, Kneeland Youngblood, M.D., Trustee of AMR Investment Services Trust
("AMR Trust"), American AAdvantage Funds ("AAdvantage Trust") and American
AAdvantage Mileage Funds ("Mileage Trust") (collectively, the "Trusts"), hereby
constitute and appoint William F. Quinn and Barry Y. Greenberg my true and
lawful attorney with full power to sign for me in my capacity as Trustee for
the Trusts any registration statement on Form N-1A under the Securities Act of
1933 and/or the Investment Company Act of 1940 and any amendments thereto of
the AMR Trust, AAdvantage Trust or Mileage Trust, and all instruments necessary
or desirable in connection therewith, hereby ratifying and confirming my
signature as it may be signed by said attorney to any and all amendments to
said registration statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 14th day of January, 1997.

Signature Title
--------- -----

/s/Kneeland Youngblood
----------------------
Kneeland Youngblood, M.D. Trustee

<PAGE> 4

POWER OF ATTORNEY

The person signing below makes, constitutes and appoints William F.
Quinn, Clifford J. Alexander and Robert J. Zutz, and each of them, his true and
lawful attorney-in-fact, with full power of substitution and resubstitution, in
his name, place and stead to execute and cause to be filed with the Securities
and Exchange Commission on behalf of American AAdvantage Funds II Registration
Statement and any or all amendments to this Registration Statement.

Signature Title Date
--------- ----- ----

/s/Roger T. Staubach
--------------------
Roger T. Staubach Trustee March 23, 1995

<PAGE> 5

POWER OF ATTORNEY

Signature Title Date
--------- ----- ----

/s/Stephen D. O'Sullivan
------------------------
Stephen D. O'Sullivan Trustee March 23, 1995

<PAGE> 6

POWER OF ATTORNEY

Signature Title Date
--------- ----- ----

/s/John S. Justin
-----------------
John S. Justin Trustee March 24, 1995

<PAGE> 7

POWER OF ATTORNEY

I, Roger T. Staubach, Trustee of AMR Investment Services Trust
("AMR Trust"), hereby constitute and appoint William F. Quinn and Barry Y.
Greenberg my true and lawful attorney with full power to sign for me in my
capacity as Trustee for the AMR Trust any registration statement on Form N-1A
under the Securities Act of 1933 and/or the Investment Company Act of 1940 and
any amendments thereto of the AMR Trust, the American AAdvantage Funds or
American AAdvantage Mileage Funds and all instruments necessary or desirable
in connection therewith, hereby ratifying and confirming my signature as it may
be signed by said attorney to any and all amendments to said registration
statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 13th day of February, 1997.

Signature Title
--------- -----

/s/Roger T. Staubach
--------------------
Roger T. Staubach Trustee

<PAGE> 8

POWER OF ATTORNEY

I, Stephen D. O'Sullivan, Trustee of AMR Investment Services Trust
("AMR Trust") and the American AAdvantage Funds ("AAdvantage Trust")
(collectively the "Trusts"), hereby constitute and appoint William F. Quinn
and Barry Y. Greenberg my true and lawful attorney with full power to sign for
me in my capacity as Trustee for the AMR Trust any registration statement on
Form N-1A under the Securities Act of 1933 and/or the Investment Company Act
of 1940 and any amendments thereto of the AMR Trust, the AAdvantage Trust or
American AAdvantage Mileage Funds and all instruments necessary or desirable in
connection therewith, hereby ratifying and confirming my signature as it may be
signed by said attorney to any and all amendments to said registration
statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 13th day of February, 1997.

Signature Title
--------- -----

/s/Stephen D. O'Sullivan
-----------------
Stephen D. O'Sullivan Trustee

<PAGE> 9

POWER OF ATTORNEY

I, John S. Justin, Trustee of AMR Investment Services Trust ("AMR
Trust") hereby constitute and appoint William F. Quinn and Barry Y. Greenberg
my true and lawful attorney with full power to sign for me in my capacity as
Trustee for the AMR Trust any registration statement on Form N-1A under the
Securities Act of 1933 and/or the Investment Company Act of 1940 and any
amendments thereto of the AMR Trust, the American AAdvantage Funds or American
AAdvantage Mileage Funds and all instruments necessary or desirable in
connection therewith, hereby ratifying and confirming my signature as it may be
signed by said attorney to any and all amendments to said registration
statements.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this instrument has been signed below by the following in my capacity
and on the 13th day of February, 1997.

Signature Title
--------- -----

/s/John S. Justin
-----------------
John S. Justin Trustee