<PAGE> 1
------------------
PLATINUM CLASS(SM)
------------------
[GRAPHIC]
PROSPECTUS
NOVEMBER 1, 1999
[AMERICAN ADVANTAGE FUNDS(R) LOGO]
[AMERICAN ADVANTAGE MILEAGE FUNDS(R) LOGO]
MANAGED BY AMR INVESTMENT SERVICES, INC.
[GRAPHIC]
o Money Market Fund
o Municipal Money~Market Fund
o U.S. Government Money Market Fund
o Money Market Mileage Fund
o Municipal Money Market Mileage Fund
o U.S. Government Money Market Mileage Fund
Available through:
[LOGO] TD WATERHOUSE
The Securities and Exchange Commission does not guarantee that the information
in this Prospectus or any other mutual fund's prospectus is accurate or
complete, nor does it judge the investment merit of these Funds. To state
otherwise is a criminal offense.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
About the Funds
Overview.................................................... 2
Money Market Fund...................................... 3
Municipal Money Market Fund............................ 7
U.S. Government Money Market Fund...................... 11
Money Market Mileage Fund.............................. 14
Municipal Money Market Mileage Fund.................... 18
U.S. Government Money Market Mileage Fund.............. 22
The Manager................................................. 26
Valuation of Shares......................................... 26
About Your Investment
Purchase and Redemption of Shares........................... 27
Distributions and Taxes..................................... 30
AAdvantage(R) Miles......................................... 30
Additional Information
Distribution of Trust Shares................................ 32
Master-Feeder Structure..................................... 32
Year 2000................................................... 33
Financial Highlights........................................ 33
</TABLE>
ABOUT THE FUNDS
- --------------------------------------------------------------------------------
Overview
- ---------------
The American AAdvantage Funds (the "AAdvantage Funds") and the American
AAdvantage Mileage Funds (the "Mileage Funds") are managed by AMR Investment
Services, Inc. (the "Manager"), a wholly owned subsidiary of AMR Corporation.
The AAdvantage Funds and Mileage Funds (collectively, the "Funds") operate under
a master-feeder structure. This means that each Fund seeks its investment
objective by investing all of its investable assets in a corresponding Portfolio
of the AMR Investment Services Trust ("AMR Trust") that has a similar name and
identical investment objective. Throughout this Prospectus, statements regarding
investments by a Fund refer to investments made by its corresponding Portfolio.
For easier reading, the term "Fund" is used throughout the Prospectus to refer
to either a Fund or its Portfolio, unless stated otherwise. See "Master-Feeder
Structure".
Each shareholder of the Mileage Funds will receive American Airlines(R)
AAdvantage(R) travel awards program ("AAdvantage") miles.(1) 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".
- ---------------
(1)American Airlines and AAdvantage are registered trademarks of American
Airlines, Inc.
- --------------------------------------------------------------------------------
About the Funds 2 Prospectus
<PAGE> 3
AMERICAN AADVANTAGE
MONEY MARKET FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
The Fund invests exclusively in high quality variable or fixed rate, U.S.
dollar-denominated short-term money market instruments. These securities may
include obligations of the U.S. Government, its agencies and instrumentalities;
corporate debt securities, such as commercial paper, master demand notes, loan
participation interests, medium-term notes and funding agreements; Yankeedollar
and Eurodollar bank certificates of deposit, time deposits, and bankers'
acceptances; asset-backed securities; and repurchase agreements involving the
foregoing obligations.
The Fund will only buy securities with the following credit qualities:
- - rated in the highest short-term categories by two rating organizations, such
as "A-1" by Standard & Poor's Corporation and "P-1" by Moody's Investors
Service, Inc.,
- - rated in the highest short-term category by one rating organization if the
securities are rated only by one rating organization, or
- - unrated securities that are determined to be of equivalent quality by the
Manager.
The Fund invests more than 25% of its total assets in obligations issued by the
banking industry. However, for temporary defensive purposes when the Manager
believes that maintaining this concentration may be inconsistent with the best
interests of shareholders, the Fund may not maintain this concentration.
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
- --------------------------------------------------------------------------------
Prospectus 3 About the Funds
<PAGE> 4
AMERICAN AADVANTAGE
MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
- - As with any money market fund, there is the risk that the issuers or
guarantors of securities owned by the Fund will default on the payment of
principal or interest or the obligation to repurchase securities from the
Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income from a highly liquid investment
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek a rate of return that is potentially higher than certificates of deposit
or savings accounts
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. The Platinum Class of the Fund began
offering its shares on November 7, 1995. However, another class of shares of the
Fund not offered in this prospectus has been offered since September 1, 1987. In
the chart and table below, performance results before November 7, 1995 are for
the older class. Because the other class had lower expenses, its performance was
better than the Platinum Class of the Fund would have realized in the same
period. Past performance is not necessarily
- --------------------------------------------------------------------------------
About the Funds 4 Prospectus
<PAGE> 5
AMERICAN AADVANTAGE
MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
indicative of how the Fund will perform in the future. Investors may call
1-800-388-3344 to obtain the Fund's current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 2.45%
(1/1/89 through 12/31/98) (2nd Quarter 1989)
Lowest Quarterly Return: 0.80%
(1/1/89 through 12/31/98) (2nd & 4th Quarter 1993,
1st Quarter 1994)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
---------------------------
AS OF 12/31/98
---------------------------
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
Money Market Fund........................................... 4.82% 4.93% 5.64%
</TABLE>
- --------------------------------------------------------------------------------
Prospectus 5 About the Funds
<PAGE> 6
AMERICAN AADVANTAGE
MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Money Market Fund.(1)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.59
----
TOTAL ANNUAL FUND OPERATING EXPENSES........................ 0.94%
====
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 YEAR ......................................................$96
3 YEARS.....................................................$300
5 YEARS.....................................................$520
10 YEARS..................................................$1,155
Investment Adviser
- -----------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
About the Funds 6 Prospectus
<PAGE> 7
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
Under normal market conditions, the Fund invests at least 80% of its net assets
in securities whose interest income is exempt from federal income tax. These
securities may be issued by or on behalf of the governments of U.S. states,
counties, cities, towns, territories, or public authorities. All securities
purchased by the Fund will be guaranteed by the U.S. Government, its agencies,
or instrumentalities; secured by irrevocable letters of credit issued by
qualified banks; or guaranteed by one or more municipal bond insurance policies.
The Fund will only buy securities with the following credit qualities:
- - rated in the highest short-term categories by two rating organizations, such
as "A-1" by Standard & Poor's and "P-1" by Moody's Investors Service, Inc.,
- - rated in the highest short-term category by one rating organization if the
securities are rated only by one rating organization, or
- - unrated securities that are determined to be of equivalent quality by the
Manager.
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
- --------------------------------------------------------------------------------
Prospectus 7 About the Funds
<PAGE> 8
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
- - As with any money market fund, there is the risk that the issuers or
guarantors of securities owned by the Fund will default on the payment of
principal or interest or the obligation to repurchase securities from the
Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income that is generally exempt from Federal income
tax
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek an after-tax rate of return that is potentially higher than certificates
of deposit or savings accounts
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. The Platinum Class of the Fund began
offering its shares on November 7, 1995. However, another class of shares of the
Fund not offered in this prospectus has been offered since November 10, 1993. In
the chart and table below, performance results before November 7, 1995 are for
the older class. Because the other class had lower expenses, its performance was
better than the Platinum Class of the Fund would have realized in the same
period. Past performance is not necessarily
- --------------------------------------------------------------------------------
About the Funds 8 Prospectus
<PAGE> 9
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
indicative of how the Fund will perform in the future. Investors may call 1-800-
388-3344 to obtain the Fund's current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 1.00%
(1/1/94 through 12/31/98) (2nd Quarter 1995)
Lowest Quarterly Return: 0.52%
(1/1/94 through 12/31/98) (1st Quarter 1994)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------
AS OF 12/31/98
----------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS (11/10/93)
------ ------- ---------------
<S> <C> <C> <C>
Municipal Money Market Fund.......................... 2.64% 2.92% 2.91%
</TABLE>
- --------------------------------------------------------------------------------
Prospectus 9 About the Funds
<PAGE> 10
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Municipal Money Market Fund.(1)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.72
----
Total Annual Fund Operating Expenses........................ 1.07%
====
Fee Waiver and/or Expense Reimbursement..................... 0.02(2)
NET EXPENSES................................................ 1.05%
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
(2) The Manager has agreed to waive a portion of Distribution Fees through
December 31, 2000 to the extent that Total Annual Fund Operating Expenses
exceed 1.05%.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 YEAR .....................................................$107
3 YEARS.....................................................$338
5 YEARS.....................................................$588
10 YEARS..................................................$1,304
Investment Adviser
- -----------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
About the Funds 10 Prospectus
<PAGE> 11
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
The Fund invests exclusively in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements that are
collateralized by such obligations. Some of these securities are not backed by
the full faith and credit of the U.S. Government. U.S. Government securities
include direct obligations of the U.S. Treasury (such as Treasury bills,
Treasury notes and Treasury bonds).
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income from a highly liquid investment
- --------------------------------------------------------------------------------
Prospectus 11 About the Funds
<PAGE> 12
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek a rate of return that is potentially higher than certificates of deposit
or savings accounts
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. The Platinum Class of the Fund began
offering its shares on November 7, 1995. However, another class of shares of the
Fund not offered in this prospectus has been offered since March 2, 1992. In the
chart and table below, performance results before November 7, 1995 are for the
older class. Because the other class had lower expenses, its performance was
better than the Platinum Class of the Fund would have realized in the same
period. Past performance is not necessarily indicative of how the Fund will
perform in the future. Investors may call 1-800-388-3344 to obtain the Fund's
current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 1.43%
(1/1/93 through 12/31/98) (2nd Quarter 1995)
Lowest Quarterly Return: 0.74%
(1/1/93 through 12/31/98) (4th Quarter 1993)
</TABLE>
- --------------------------------------------------------------------------------
About the Funds 12 Prospectus
<PAGE> 13
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------
AS OF 12/31/98
----------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS (3/2/92)
------ ------- ---------------
<S> <C> <C> <C>
U.S. Government Money Market Fund................ 4.62% 4.70% 4.31%
</TABLE>
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the U.S. Government Money Market Fund.(1)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.66
----
TOTAL ANNUAL FUND OPERATING EXPENSES........................ 1.01%
====
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 YEAR .....................................................$103
3 YEARS.....................................................$322
5 YEARS.....................................................$558
10 YEARS..................................................$1,236
Investment Adviser
- -----------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
Prospectus 13 About the Funds
<PAGE> 14
AMERICAN AADVANTAGE
MONEY MARKET MILEAGE FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
The Fund invests exclusively in high quality variable or fixed rate, U.S.
dollar-denominated short-term money market instruments. These securities may
include obligations of the U.S. Government, its agencies and instrumentalities;
corporate debt securities, such as commercial paper, master demand notes, loan
participation interests, medium-term notes and funding agreements; Yankeedollar
and Eurodollar bank certificates of deposit, time deposits, and bankers'
acceptances; asset-backed securities; and repurchase agreements involving the
foregoing obligations.
The Fund will only buy securities with the following credit qualities:
- - rated in the highest short-term categories by two rating organizations, such
as "A-1" by Standard & Poor's Corporation and "P-1" by Moody's Investors
Service, Inc.,
- - rated in the highest short-term category by one rating organization if the
securities are rated only by one rating organization, or
- - unrated securities that are determined to be of equivalent quality by the
Manager.
The Fund invests more than 25% of its total assets in obligations issued by the
banking industry. However, for temporary defensive purposes when the Manager
believes that maintaining this concentration may be inconsistent with the best
interests of shareholders, the Fund may not maintain this concentration.
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
- --------------------------------------------------------------------------------
About the Funds 14 Prospectus
<PAGE> 15
AMERICAN AADVANTAGE
MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
- - As with any money market fund, there is the risk that the issuers or
guarantors of securities owned by the Fund will default on the payment of
principal or interest or the obligation to repurchase securities from the
Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income from a highly liquid investment
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek a rate of return that is potentially higher than certificates of deposit
or savings accounts
- - desire to receive miles in the American Airlines AAdvantage(R) program
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. The performance shown in the chart and
table below is a combination of the Fund's performance and that of its
predecessor fund. The Fund was created from a predecessor fund that began
offering its shares on September 1, 1987. Performance results through October
31, 1991 are for the Institutional Class of the predecessor fund, and results
from November 1, 1991 through October 31, 1995 are for the predecessor fund's
Mileage Class, and results from November 1, 1995 through Janu-
- --------------------------------------------------------------------------------
Prospectus 15 About the Funds
<PAGE> 16
AMERICAN AADVANTAGE
MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
ary 28, 1996 are for the original class of this Fund. The Platinum Class of the
Fund began offering its shares on January 29, 1996. Performance results shown
from that date through December 31, 1998 are for the Platinum Class of the Fund.
Because the predecessor fund and the original class of this Fund had lower
expenses, their performance was better than the Platinum Class of the Fund would
have realized in the same period. Past performance is not necessarily indicative
of how the Fund will perform in the future. Investors may call 1-800-388-3344 to
obtain the Fund's current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 2.45%
(1/1/89 through 12/31/98) (2nd Quarter 1989)
Lowest Quarterly Return: 0.74%
(1/1/89 through 12/31/98) (2nd & 4th Quarter 1993,
1st Quarter 1994)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
---------------------------
AS OF 12/31/98
---------------------------
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
Money Market Mileage Fund................................... 4.67% 4.73% 5.48%
</TABLE>
- --------------------------------------------------------------------------------
About the Funds 16 Prospectus
<PAGE> 17
AMERICAN AADVANTAGE
MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Money Market Mileage Fund.(1)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.77
----
Total Annual Fund Operating Expenses........................ 1.12%
====
Fee Waiver and/or Expense Reimbursement..................... 0.02(2)
NET EXPENSES................................................ 1.10%
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
(2) The Manager has agreed to waive a portion of Distribution Fees through
December 31, 2000 to the extent that Total Annual Fund Operating Expenses
exceed 1.10%.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year .........................................................$112
3 Years.........................................................$354
5 Years.........................................................$615
10 Years......................................................$1,361
Investment Adviser
- -----------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
Prospectus 17 About the Funds
<PAGE> 18
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET MILEAGE FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
Under normal market conditions, the Fund invests at least 80% of its net assets
in securities whose interest income is exempt from federal income tax. These
securities may be issued by or on behalf of the governments of U.S. states,
counties, cities, towns, territories, or public authorities. All securities
purchased by the Fund will be guaranteed by the U.S. Government, its agencies,
or instrumentalities; secured by irrevocable letters of credit issued by
qualified banks; or guaranteed by one or more municipal bond insurance policies.
The Fund will only buy securities with the following credit qualities:
- - rated in the highest short-term categories by two rating organizations, such
as "A-1" by Standard & Poor's Corporation and "P-1" by Moody's Investors
Service, Inc.,
- - rated in the highest short-term category by one rating organization if the
securities are rated only by one rating organization, or
- - unrated securities that are determined to be of equivalent quality by the
Manager.
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
- --------------------------------------------------------------------------------
About the Funds 18 Prospectus
<PAGE> 19
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
- - As with any money market fund, there is the risk that the issuers or
guarantors of securities owned by the Fund will default on the payment of
principal or interest or the obligation to repurchase securities from the
Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income that is generally exempt from Federal income
tax
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek an after-tax rate of return that is potentially higher than certificates
of deposit or savings accounts
- - desire to receive miles in the American Airlines AAdvantage(R) program
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. Platinum Class shares of the Fund were
not offered prior to November 1, 1999. The performance shown in the chart and
table below is a combination of the Fund's performance and that of its
predecessor fund. The Fund was created from a predecessor fund that began
offering its shares on November 10, 1993. Performance results through October
31, 1995 are for the Mileage Class of the predecessor fund. The Fund began
offering its shares on November 1, 1995. Performance results shown from that
date through December 31, 1998 are for the original class of the Fund. Because
the predecessor fund and the original class of this Fund had lower expenses,
their performance was better than the Platinum Class of the Fund would have
realized in the same period. Past performance is not necessarily indicative of
- --------------------------------------------------------------------------------
Prospectus 19 About the Funds
<PAGE> 20
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
how the Fund will perform in the future. Investors may call 1-800-388-3344 to
obtain the Fund's current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 0.91%
(1/1/94 through 12/31/98) (2nd Quarter 1995)
Lowest Quarterly Return: 0.46%
(1/1/94 through 12/31/98) (1st Quarter 1994)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-------------------------------
AS OF 12/31/98
-------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS (11/10/93)
------ ------- ----------
<S> <C> <C> <C>
Municipal Money Market Mileage Fund.................... 3.06% 3.04% 3.01%
</TABLE>
- --------------------------------------------------------------------------------
About the Funds 20 Prospectus
<PAGE> 21
AMERICAN AADVANTAGE
MUNICIPAL MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Municipal Money Market Mileage Fund.(1)
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.81(2)
----
Total Annual Fund Operating Expenses........................ 1.16%
====
Fee Waiver and/or Expense Reimbursement..................... 0.06(3)
NET EXPENSES................................................ 1.10%
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
(2) Other Expenses are based on estimates for the current fiscal year.
(3) The Manager has agreed to waive Distribution Fees through December 31,
2000 to the extent that Total Annual Fund Operating Expenses exceed 1.10%.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<S> <C>
1 YEAR ................................................ $112
3 YEARS.................................................$363
</TABLE>
Investment Adviser
- --------------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
Prospectus 21 About the Funds
<PAGE> 22
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET MILEAGE FUND(sm)
- --------------------------------------------------------------------------------
Investment Objective
- -------------------------------
Current income, liquidity and the maintenance of a stable price of $1.00 per
share.
Principal Strategies
- ------------------------------
The Fund invests exclusively in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements that are
collateralized by such obligations. Some of these securities are not backed by
the full faith and credit of the U.S. Government. U.S. Government securities
include direct obligations of the U.S. Treasury (such as Treasury bills,
Treasury notes and Treasury bonds).
Securities purchased by the Fund 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 maturity of the Fund will not exceed 90 days.
Risk Factors
- -------------------
- - The yield paid by the Fund is subject to changes in interest rates. As a
result, there is risk that a decline in short-term interest rates would lower
its yield and the overall return on your investment.
- - Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.
Your investment in the Fund is not insured or guaranteed by the U.S. Government
or any financial or government institution.
- --------------------------------------------------------------------------------
About the Funds 22 Prospectus
<PAGE> 23
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Investor Profile
- -----------------------
This Fund may be suitable for investors who:
- - seek the preservation of capital and to avoid fluctuations in principal
- - desire regular, monthly income from a highly liquid investment
- - require a short-term vehicle for cash when making long-term investment
decisions
- - seek a rate of return that is potentially higher than certificates of deposit
or savings accounts
- - desire to receive miles in the American Airlines AAdvantage(R) program
Historical Performance
- -----------------------------------
The bar chart below provides an indication of risk by showing how the Fund's
performance has varied from year to year. Platinum Class shares of the Fund were
not offered prior to November 1, 1999. The performance shown in the chart and
table below is a combination of the Fund's performance and that of its
predecessor fund. The Fund was created from a predecessor fund that began
offering its shares on March 2, 1992. Performance results through October 31,
1993 are for the Institutional Class of the predecessor fund, and from November
1, 1993 through October 31, 1995 are for the predecessor fund's Mileage Class.
The Fund began offering its shares on November 1, 1995. Performance results
shown from that date through December 31, 1998 are for the original class of the
Fund. Because the predecessor fund and the original class of this Fund had lower
expenses, their performance was better than the Platinum Class of the Fund would
have realized in the same period. Past performance is
- --------------------------------------------------------------------------------
Prospectus 23 About the Funds
<PAGE> 24
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
not necessarily indicative of how the Fund will perform in the future. Investors
may call 1-800-388-3344 to obtain the Fund's current seven-day yield.
[PERFORMANCE GRAPH]
<TABLE>
<S> <C>
Highest Quarterly Return: 1.35%
(1/1/93 through 12/31/98) (2nd Quarter 1995)
Lowest Quarterly Return: 0.70%
(1/1/93 through 12/31/98) (4th Quarter 1993,
1st Quarter 1994)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-------------------------------
AS OF 12/31/98
-------------------------------
SINCE
INCEPTION
1 YEAR 5 YEARS (3/2/92)
------ ------- ----------
<S> <C> <C> <C>
U.S. Government Money Market Mileage Fund.............. 5.04% 4.83% 4.40%
</TABLE>
- --------------------------------------------------------------------------------
About the Funds 24 Prospectus
<PAGE> 25
AMERICAN AADVANTAGE
U.S. GOVERNMENT MONEY MARKET MILEAGE FUND(sm) -- (CONTINUED)
- --------------------------------------------------------------------------------
Fees and Expenses
- ----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the U.S. Government Money Market Mileage Fund.(1)
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<S> <C>
Management Fees............................................. 0.10%
Distribution (12b-1) Fees................................... 0.25
Other Expenses.............................................. 0.84(2)
----
Total Annual Fund Operating Expenses........................ 1.19%
====
Fee Waiver and/or Expense Reimbursement..................... 0.09(3)
NET EXPENSES................................................ 1.10%
</TABLE>
(1) The expense table and the Example below reflect the expenses of both the
Fund and its corresponding Portfolio.
(2) Other Expenses are based on estimates for the current fiscal year.
(3) The Manager has agreed to waive Distribution Fees through December 31,
2000 to the extent that Total Annual Fund Operating Expenses exceed 1.10%.
Example
- -------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<S> <C>
1 YEAR .................................................$112
3 YEARS.................................................$369
</TABLE>
Investment Adviser
- --------------------------------
AMR Investment Services, Inc.
- --------------------------------------------------------------------------------
Prospectus 25 About the Funds
<PAGE> 26
The Manager
- ---------------------
The Trust has retained AMR Investment Services, Inc. to serve as its Manager.
The Manager, located at 4333 Amon Carter Boulevard, Fort Worth, Texas 76155, is
a wholly owned subsidiary of AMR Corporation, the parent company of American
Airlines, Inc. The Manager was organized in 1986 to provide investment
management, advisory, administrative and asset management consulting services.
As of June 30, 1999, the Manager had approximately $20.3 billion of assets under
management, including approximately $6.3 billion under active management and
$14.0 billion as named fiduciary or financial adviser. Of the total,
approximately $14.4 billion of assets are related to AMR Corporation.
The Manager provides or oversees the provision of all administrative, investment
advisory and portfolio management services to the Funds. The Manager develops
the investment programs for each Fund and serves as the sole investment adviser
to the Funds. As compensation for providing management services, each Fund pays
the Manager an annualized advisory fee that is calculated and accrued daily,
equal to the sum of 0.10% of the net assets of the Fund.
Valuation of Shares
- -------------------------------
The price of each Fund's shares is based on its net asset value ("NAV") per
share. Each Fund's NAV is computed by adding total assets, subtracting all of
the Fund's liabilities, and dividing the result by the total number of shares
outstanding. Securities held by the Funds are valued in accordance with the
amortized cost method, which is designed to enable the Funds to maintain a
stable NAV of $1.00 per share. Debt securities (other than short-term
securities) usually are valued on the basis of prices provided by a pricing
service. In some cases, the price of debt securities is determined using quotes
obtained from brokers.
The NAV of Platinum Class shares will be determined based on a pro rata
allocation of investment income, expenses and total capital gains and losses.
Each Fund's NAV per share is determined as of the close of the New York Stock
Exchange ("Exchange"), generally 4:00 p.m. Eastern time, on each day on which
the Exchange is open for business, with the exception of Columbus Day and
Veterans Day. The Funds are closed and no NAV is calculated on these days.
- --------------------------------------------------------------------------------
About the Funds 26 Prospectus
<PAGE> 27
ABOUT YOUR INVESTMENT
- --------------------------------------------------------------------------------
Purchase and Redemption of Shares
- ----------------------------------------------------------
Eligibility
- ---------------
Platinum Class shares are offered on a continuous basis at net asset value
through selected financial institutions (such as banks and broker-dealers).
Shares of the Mileage Funds are offered only to individuals and certain grantor
trusts. Qualified retirement plans (i.e. IRAs, Keogh, profit sharing plans) and
institutional investors are not eligible to invest in the Mileage Funds.
Purchase Policies
- --------------------------
No sales charges are assessed on the purchase or sale of Fund shares. Shares of
the Funds are offered and purchase orders accepted until the deadlines listed
below on each day on which the Exchange is open for trading. In addition, shares
are not offered and orders are not accepted on Columbus Day and Veterans Day.
<TABLE>
<CAPTION>
PURCHASE BY
FUND (EASTERN TIME)*:
---- ----------------
<S> <C>
Money Market 4:00 p.m.
Municipal Money Market 11:45 a.m.
U.S. Government Money Market 4:00 p.m.
Money Market Mileage 4:00 p.m.
Municipal Money Market Mileage 11:45 a.m.
U.S. Government Money Market Mileage 4:00 p.m.
* or the close of the Exchange (whichever comes first)
</TABLE>
If a purchase order is received in good order prior to the applicable Fund's
deadline, the purchase price will be the NAV per share next determined on that
day. If a purchase order is received in good order after the applicable
deadline, the purchase price will be the NAV of the following day that the Fund
is open for business. Checks to purchase shares are accepted subject to
collection at full face value in U.S. funds and must be drawn in U.S. dollars on
a U.S. bank.
- --------------------------------------------------------------------------------
Prospectus 27 About Your Investment
<PAGE> 28
Opening an Account
- -------------------------------
A completed, signed application is required to open an account. Financial
institutions may have different procedures for opening an account. Eligible
investors in the Mileage Funds can enroll in the American Airlines AAdvantage(R)
Program by calling (800) 433-7300. You may request a Fund application form by
calling (800) 934-4410.
Complete the application, sign it and:
Mail to:
TD Waterhouse
Processing Center
P.O. Box 1085
New York, NY 10268-1085
Redemption Policies
- ------------------------------
Shares of any Fund may be redeemed by telephone or mail on any day that the Fund
is open for business by contacting the financial institution through which Fund
shares were purchased. The redemption price will be the NAV next determined
after a redemption order is received in good order. Any questions regarding what
constitutes good order should be directed to the financial institution through
which Fund shares were purchased. Proceeds from redemptions requested by the
following deadlines will generally be wired to shareholders on the same day.
<TABLE>
<CAPTION>
SAME DAY WIRE REDEMPTION
ORDER DEADLINE
FUND (EASTERN TIME)*:
- ---- ------------------------
<S> <C>
Money Market 2:00 p.m.
Municipal Money Market 11:45 a.m.
U.S. Government Money Market 2:00 p.m.
Money Market Mileage 2:00 p.m.
Municipal Money Market Mileage 11:45 a.m.
U.S. Government Money Market Mileage 2:00 p.m.
* or the close of the Exchange (whichever comes first)
</TABLE>
In any event, proceeds from a redemption order for any Fund will be transmitted
to a shareholder by no later than seven days after the receipt of a redemption
request in good order. Delivery of proceeds from shares purchased by check may
be delayed until the check has cleared, which may take up to 15 days.
- --------------------------------------------------------------------------------
About Your Investment 28 Prospectus
<PAGE> 29
The Funds reserve the right to suspend redemptions or postpone the date of
payment (i) when the Exchange is closed (other than for customary weekend and
holiday closings); (ii) when trading on the Exchange is restricted; (iii) when
the SEC determines that an emergency exists so that disposal of a Fund's
investments or determination of its NAV is not reasonably practicable; or (iv)
by order of the SEC for protection of the Funds' shareholders.
Although the Funds intend to redeem shares in cash, each Fund reserves the right
to pay the redemption price in whole or in part by a distribution of readily
marketable securities held by the applicable Fund's corresponding Portfolio.
Unpaid dividends credited to an account up to the date of redemption of all
shares generally will be paid at the time of redemption.
General Policies
- ------------------------
If a shareholder's account balance in any Fund falls below $1000, the
shareholder may be asked to increase the balance. If the account balance remains
below $1,000 after 45 days, the Funds reserve the right to close the account and
send the proceeds to the shareholder.
The following policies apply to instructions you may provide to the Funds by
telephone:
- - The Funds, their officers, trustees, directors, employees, or agents are not
responsible for the authenticity of instructions provided by telephone, nor
for any loss, liability, cost or expense incurred for acting on them.
- - The Funds employ procedures reasonably designed to confirm that instructions
communicated by telephone are genuine.
- - Due to the volume of calls or other unusual circumstances, telephone
redemptions may be difficult to implement during certain time periods.
The Funds reserve the right to:
- - reject any order for the purchase of shares and to limit or suspend, without
prior notice, the offering of shares,
- - modify or terminate the exchange privilege at any time,
- - limit the number of exchanges between Funds an investor may exercise, and
- - seek reimbursement from you for any related loss incurred if your payment for
the purchase of Fund shares by check does not clear your bank.
Each financial institution is responsible for the prompt transmission of
purchase and redemption orders of its clients. Financial institutions may
provide varying arrangements for their clients with respect to the purchase and
redemption of Platinum Class shares. Shares purchased through financial
institutions may be subject to transaction fees. Financial institutions offering
Platinum Class shares may impose fees on investors for check writing privileges
- --------------------------------------------------------------------------------
Prospectus 29 About Your Investment
<PAGE> 30
or, if approved by the Funds, establish variations on minimum check amounts.
Some institutions may arrange for additional privileges associated with Platinum
Class shares, such as a debit card, which may only be available subject to
certain conditions or limitations.
Distributions and Taxes
- ---------------------------------------
The Funds distribute most or all of their net earnings in the form of dividends
from net investment income and distributions of realized net capital gains that
are paid to shareholders monthly on the first business day after the month ends.
Unless the account application instructs otherwise, distributions will be
reinvested in additional Fund shares. Usually, dividends (except those paid by
the Municipal Money Market Fund and the Municipal Money Market Mileage Fund) and
distributions of net realized gains are taxable events.
The Municipal Money Market Fund and the Municipal Money Market Mileage Fund
designate most of their distributions as "exempt-interest dividends," which may
be excluded from gross income. If the Funds earn taxable income from any of
their investments, that income will be distributed as a taxable dividend. If the
Funds invest in private activity obligations, shareholders will be required to
treat a portion of the exempt-interest dividends they receive as a "tax
preference item" in determining their liability for federal alternative minimum
tax ("AMT"). Some states exempt from income tax the interest on their own
obligations and on obligations of governmental agencies and municipalities in
the state; accordingly, each year shareholders will receive tax information on
the Funds' exempt-interest income by state.
This is only a summary of some of the important income tax considerations that
may affect Fund shareholders. Shareholders should consult their tax adviser
regarding specific questions as to the effect of federal, state or local income
taxes on an investment in the Funds.
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 rental and hotel accommodations. For more
information about the AAdvantage program, call American Airlines at (800)
433-7300.
- --------------------------------------------------------------------------------
About Your Investment 30 Prospectus
<PAGE> 31
AAdvantage travel awards ("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 each Mileage Fund. Mileage is calculated on the
average daily balance and posted monthly. The average daily balance is
calculated by adding each day's balance and dividing by the number of days in
the month. For example, the average daily balance on a $50,000 account funded on
the 16th day of a month having 30 days (and maintained at that balance through
the end of the month) would be $25,000. Mileage received for that month would be
208 miles. If the same balance were maintained through the next month, the
average daily balance would be $50,000, and the mileage would be 417 miles that
month and every month the $50,000 investment was maintained in the Mileage Fund.
These miles appear on subsequent AAdvantage program statements.
For 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
the Mileage Funds, 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 Mileage 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 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.
American Airlines may find it necessary to change AAdvantage program rules,
regulations, travel awards and special offers at any time. This means that
American Airlines may initiate changes impacting, for example, participant
affiliations, rules for earning mileage credit, mileage levels and rules for the
use of travel awards, continued availability of travel awards, blackout dates
and limited seating for travel awards, and the features of special offers.
American Airlines reserves the right to end the AAdvantage program with six
months' notice. AAdvantage travel awards, mileage accrual and special offers are
subject to governmental regulations.
- --------------------------------------------------------------------------------
Prospectus 31 About Your Investment
<PAGE> 32
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Distribution of Trust Shares
- ----------------------------------------------
The AAdvantage Funds and Mileage Funds have each adopted a Distribution Plan for
the Platinum Class (the "Plans") in accordance with Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act"), which allow the Funds to pay
distribution and other fees for the sale of Fund shares and for other services
provided to shareholders. In addition, the Mileage Funds' Plan authorizes
expenses incurred in connection with participation in the AAdvantage program.
The Plans provide that each Platinum Class will pay 0.25% per annum of its
average daily net assets to the Manager (or another entity approved by the
applicable Board). Because these fees are paid out of each Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Master-Feeder Structure
- --------------------------------------
The Funds operate under a master-feeder structure. This means that each Fund is
a "feeder" fund that invests all of its investable assets in a "master" fund
with the same investment objective. The "master" fund purchases securities for
investment. The master-feeder structure works as follows:
[MASTER-FEEDER STRUCTURE GRAPH]
Each Fund can withdraw its investment in its corresponding Portfolio at any time
if the Board determines that it is in the best interest of the Fund and its
shareholders to do so. If this happens, the Fund's assets will be invested
according to the investment policies and restrictions described in this
Prospectus.
- --------------------------------------------------------------------------------
Additional Information 32 Prospectus
<PAGE> 33
Year 2000
- -----------------
The Funds could be affected adversely if the computer systems used by the
Manager, the Funds' other service providers, or companies in which the Funds
invest do not properly process and calculate information that relates to dates
beginning on January 1, 2000 and beyond. Due to the Funds' reliance on various
service providers to perform essential functions, each of the Funds could have
difficulty calculating its NAV, processing orders for share redemptions and
delivering account statements and other information to shareholders. The Manager
has taken steps that it believes are reasonably designed to address the
potential failure of computer systems used by the Manager and the Funds' service
providers to address the Year 2000 issue. There can be no assurance that the
steps taken by the Manager will be sufficient to avoid any adverse impact.
In evaluating current and potential portfolio positions, Year 2000 is one of the
factors that the Manager takes into consideration. The Manager will rely upon
public filings and other statements made by companies regarding their Year 2000
readiness. Issuers in countries outside of the U.S. may not be required to make
the level of disclosure regarding Year 2000 readiness that is required in the
U.S. If the value of a Fund's investment is adversely affected by a Year 2000
problem, the NAV of the Fund may be affected as well.
Financial Highlights
- ---------------------------------
The financial highlights tables are intended to help you understand each Fund's
financial performance for the past five years (or, if shorter, the period of the
Fund's operations). Certain information reflects financial results for a single
share of the Fund's Platinum Class. The total returns in the table represent the
rate that an investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). Financial highlights
are not available for the Platinum Class of the Municipal Money Market Mileage
Fund or the U.S. Government Money Market Mileage Fund, because as of the date of
this Prospectus, they had not commenced active operations. Except for the
six-month period ended April 30, 1999, each Fund's highlights were audited by
Ernst & Young LLP, independent auditors. More financial information about the
Funds is found in their Annual Report and Semi-Annual Report, which you may
obtain upon request.
- --------------------------------------------------------------------------------
Prospectus 33 Additional Information
<PAGE> 34
<TABLE>
<CAPTION>
MONEY MARKET FUND
-----------------------------------------------------------
PLATINUM CLASS
-------------------------------------------------------
SIX MONTHS YEAR ENDED PERIOD
ENDED OCTOBER 31, ENDED
APRIL 30, ----------------------- OCTOBER 31,
FOR A SHARE OUTSTANDING 1999 1998 1997 1996(A)
THROUGHOUT THE PERIOD: ----------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Net investment income........ 0.02(B) 0.05(B) 0.05(B) 0.05(B)
Less dividends from net
investment income........... (0.02) (0.05) (0.05) (0.05)
-------- -------- -------- --------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total return (annualized).... 2.15% 4.89% 4.87% 4.85%(C)
======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period
(in thousands)............ $884,485 $744,226 $494,413 $119,981
Ratios to average net assets
(annualized)
Expenses.................. 0.95%(B) 0.94%(B) 0.93%(B) 0.94%(B)
Net investment income..... 4.24%(B) 4.78%(B) 4.80%(B) 4.63%(B)
<CAPTION>
MONEY MARKET FUND
--------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------
FOR A SHARE OUTSTANDING 1996 1995
THROUGHOUT THE PERIOD: ---------- ---------- 1994
----------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Net investment income........ 0.05(B) 0.06 0.04
Less dividends from net
investment income........... (0.05) (0.06) (0.04)
---------- ---------- ----------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total return (annualized).... 5.57% 5.96% 3.85%
========== ========== ==========
Ratios and supplemental data:
Net assets, end of period
(in thousands)............ $1,406,939 $1,206,041 $1,893,144
Ratios to average net assets
(annualized)
Expenses.................. 0.24%(B) 0.23% 0.21%
Net investment income..... 5.41%(B) 5.79% 3.63%
</TABLE>
(A) The Money Market Fund-Platinum Class commenced active operations on November
7, 1995.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
its corresponding Portfolio.
(C) 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.
- --------------------------------------------------------------------------------
Additional Information 34 Prospectus
<PAGE> 35
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET FUND
-------------------------------------------------------------
PLATINUM CLASS
---------------------------------------------------------
SIX MONTHS YEAR ENDED PERIOD
ENDED OCTOBER 31, ENDED
APRIL 30, --------------------- OCTOBER 31,
FOR A SHARE OUTSTANDING 1999 1998 1997 1996(A)
THROUGHOUT THE PERIOD: ----------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Net investment income................ 0.01(B) 0.03(B) 0.03(B) 0.03(B)
Less dividends from net investment
income.............................. (0.01) (0.03) (0.03) (0.03)
------- ------- ------- -------
Net asset value, end of period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total return (annualized)............ 1.08% 2.75% 2.79% 2.88%(C)
======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in
thousands)........................ $82,842 $87,852 $63,883 $49,862
Ratios to average net assets
(annualized)(D)
Expenses.......................... 1.05%(B) 1.04%(B) 1.03%(B) 0.97%(B)
Net investment income............. 2.14%(B) 2.69%(B) 2.75%(B) 2.72%(B)
<CAPTION>
MUNICIPAL MONEY MARKET FUND
--------------------------------------
INSTITUTIONAL CLASS
--------------------------------------
YEAR ENDED
OCTOBER 31, PERIOD
------------------- ENDED
FOR A SHARE OUTSTANDING 1996 1995 OCTOBER 31,
THROUGHOUT THE PERIOD: ------ ------ 1994(A)
-----------
<S> <C> <C> <C>
Net asset value, beginning of
period............................... $ 1.00 $ 1.00 $ 1.00
------ ------ ------
Net investment income................ 0.04(B) 0.04 0.02
Less dividends from net investment
income.............................. (0.04) (0.04) (0.02)
------ ------ ------
Net asset value, end of period....... $ 1.00 $ 1.00 $ 1.00
====== ====== ======
Total return (annualized)............ 3.59% 3.75% 2.44%
====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in
thousands)........................ $ 6 $ 7 $9,736
Ratios to average net assets
(annualized)(D)
Expenses.......................... 0.27%(B) 0.35% 0.30%
Net investment income............. 3.49%(B) 3.70% 2.38%
</TABLE>
(A) The Municipal Money Market Fund commenced active operations on November 10,
1993. The Municipal Money Market Fund-Platinum Class commenced active
operations on November 7, 1995.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
its corresponding Portfolio.
(C) 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.
(D) Operating results exclude management and administrative services fees
waived by the Manager. Had the Platinum Class of the Fund paid such fees,
the ratio of expenses and net investment income to average net assets would
have been 1.02% and 2.67%, respectively, for the period ended October 31,
1996, 1.04% and 2.74%, respectively, for the year ended October 31, 1997
and 1.07% and 2.66%, respectively, for the year ended October 31, 1998. Had
the Institutional Class of the Fund paid such fees, the ratio of expenses
and net investment income to average net assets would have been 0.50% and
2.18%, respectively, for the period ended October 31, 1994, 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.
- --------------------------------------------------------------------------------
Prospectus 35 Additional Information
<PAGE> 36
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------------------------------------------------------------------------
PLATINUM CLASS
--------------------------------------------------------- INSTITUTIONAL CLASS
SIX MONTHS YEAR ENDED PERIOD -----------------------------------
ENDED OCTOBER 31, ENDED YEAR ENDED OCTOBER 31,
FOR A SHARE OUTSTANDING APRIL 30, --------------------- OCTOBER 31, -----------------------------------
THROUGHOUT THE PERIOD: 1999 1998 1997(B) 1996(A) 1996 1995
----------- ------- ------- ----------- ------- ------- 1994
(UNAUDITED) -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- -------
Net investment income....... 0.02(C) 0.05(C) 0.05(C) 0.04(C) 0.05(C) 0.06 0.04
Less dividends from net
investment income.......... (0.02) (0.05) (0.05) (0.04) (0.05) (0.06) (0.04)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= =======
Total return (annualized)... 2.02% 4.71% 4.61% 4.58%(D) 5.29% 5.67% 3.70%
======= ======= ======= ======= ======= ======= =======
Ratios and supplemental
data:
Net assets, end of period
(in thousands)........... $81,554 $78,412 $68,439 $52,153 $25,595 $47,184 $67,607
Ratios to average net
assets (annualized)(E)
Expenses................. 1.00%(C) 1.01%(C) 0.99%(C) 1.00%(C) 0.32%(C) 0.32% 0.25%
Net investment income.... 3.99%(C) 4.62%(C) 4.53%(C) 4.35%(C) 5.16%(C) 5.49% 3.44%
</TABLE>
(A) The U.S. Government Money Market Fund-Platinum Class commenced active
operations on November 7, 1995.
(B) Prior to March 1, 1997, the American AAdvantage U.S. Government Money Market
Fund was known as the U.S. Treasury Money Market Fund and operated under
different investment policies.
(C) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
its corresponding Portfolio.
(D) 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.
(E) Operating results excluded fees waived by the Manager during the year ended
October 31, 1998. The ratio of expenses to average net assets was 1.02% and
the ratio of net investment income to average net assets was 4.62% prior to
expenses waived.
- --------------------------------------------------------------------------------
Additional Information 36 Prospectus
<PAGE> 37
<TABLE>
<CAPTION>
MONEY MARKET MILEAGE FUND
------------------------------------------------------------------------
PLATINUM CLASS
------------------------------------------------------ MILEAGE
SIX MONTHS YEAR ENDED CLASS
ENDED OCTOBER 31, PERIOD ENDED -----------
APRIL 30, --------------------- OCTOBER 31, YEAR ENDED
FOR A SHARE OUTSTANDING 1999 1998 1997 1996(A) OCTOBER 31,
THROUGHOUT THE PERIOD: ----------- ------- ------- ------------ 1996
(UNAUDITED) -----------
<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..................... 0.02%(B) 0.05(B) 0.05(B) 0.03(B) 0.05(B)
Less dividends from net investment
income................................... (0.02) (0.05) (0.05) (0.03) (0.05)
-------- ------- ------- ------- --------
Net asset value, end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ========
Total return (annualized)................. 2.09% 4.74% 4.71% 4.78% 5.12%
======== ======= ======= ======= ========
Ratios and supplemental data:
Net assets, end of period (in
thousands)............................. $156,433 $73,875 $49,184 $15,429 $106,709
Ratios to average net assets
(annualized)(C)
Expenses............................... 1.08%(B) 1.09%(B) 1.09%(B) 1.09%(B) 0.67%(B)
Net investment income.................. 4.07%(B) 4.64%(B) 4.64%(B) 4.48%(B) 5.02%(B)
</TABLE>
(A) The Money Market Mileage Fund-Platinum Class commenced active operations on
January 29, 1996, and at that time the existing shares of the Fund were
designated as Mileage Class shares.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
its corresponding Portfolio.
(C) Operating results exclude expenses reimbursed by the Manager. Had the
Platinum Class of 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 period ended October 31, 1996, 1.14% and 4.59%,
respectively, for the year ended October 31, 1997 and 1.12% and 4.61%,
respectively, for the year ended October 31, 1998. Had the Mileage Class of
the Fund paid such fees, the ratio of expenses and net investment income to
average net assets would have been 0.78% and 4.91%, respectively, for the
year ended October 31, 1996.
- --------------------------------------------------------------------------------
Prospectus 37 Additional Information
<PAGE> 38
-- Notes --
<PAGE> 39
-- Notes --
<PAGE> 40
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE FUNDS IS FOUND IN THE DOCUMENTS LISTED BELOW.
REQUEST A FREE COPY OF THESE DOCUMENTS BY CALLING (800) 934-4410.
ANNUAL REPORT/SEMI-ANNUAL REPORT
The Funds' Annual and Semi-Annual Reports list the Funds' actual investments as
of the report's date. They also include a discussion by the Manager of market
conditions and investment strategies that~significantly affected the Funds'
performance. The report of the Funds' independent auditors is included in the
Annual Report.
STATEMENT OF ADDITIONAL INFORMATION
The SAI contains more details about the Funds and their investment policies. The
SAI is incorporated in this Prospectus by reference (it is legally part of this
Prospectus). A current SAI is on file with the Securities and Exchange
Commission (SEC).
Copies of these documents may also be obtained from the SEC Public Reference
Room in Washington, D.C. The Public Reference Room can be reached at (800)
732-0330 or by mailing a request, including a duplicating fee to: SEC's Public
Reference Section, 450 5th Street NW, Washington, D.C. 20549-6009.
Available through:
[LOGO] WATERHOUSE
tdwaterhouse.com o aol: TD Waterhouse o 1-800-934-4410
est. 1979 o 160 branches nationwide o over 1.9 million accounts
[AMERICAN ADVANTAGE FUNDS(R) LOGO]
SEC File Number 811-4984
[AMERICAN ADVANTAGE MILEAGE FUNDS LOGO]
SEC File Number 811-9018
American Airlines is not responsible for investments made in the American
AAdvantage Funds. American AAdvantage Funds and American AAdvantage Mileage
Funds are registered service marks of AMR Corporation. Platinum Class, American
AAdvantage Money Market Fund, American AAdvantage Municipal Money Market Fund,
American AAdvantage U.S. Government Money Market 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.
