EXHIBIT 99.(m)(iii)

                            AMERICAN AADVANTAGE FUNDS
                                  SERVICE CLASS
                                DISTRIBUTION PLAN

         WHEREAS, the American AAdvantage Funds (the "Trust") is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as an
open-end management investment company, and offers for public sale distinct
series of shares of beneficial interest, each corresponding to a distinct
portfolio (a "Fund"); and

         WHEREAS, the Trust, on behalf of the Service Class of its one or more
designated portfolios presently existing or hereafter established (hereinafter
referred to as "Portfolios"), desires to adopt a Distribution Plan pursuant to
Rule l2b-1 under the 1940 Act and the Board of Trustees of the Trust ("Board")
has determined that there is a reasonable likelihood that adoption of this
Distribution Plan will benefit the Service Class and its shareholders; and

         WHEREAS, the Trust presently intends to retain a registered
broker-dealer ("Distributor") as distributor of the securities of which it is
the issuer;

         NOW, THEREFORE, the Service Class hereby adopts this Distribution Plan
(the "Plan") in accordance with Rule l2b-1 under the 1940 Act on the following
terms and conditions:

         1.       A Fund is authorized to pay to the Distributor or to AMR
Investment Services, Inc. ("AMR"), or to such other entities as approved by the
Board, as compensation for the distribution-related and/or shareholder services
provided by such entities, an aggregate fee at the rate of up to 0.25% on an
annualized basis of the average daily net assets of the Service Class of each
such Fund which has approved this Plan in accordance with the conditions of
approval set forth herein. Such fee shall be calculated and accrued daily and
paid quarterly or at such other intervals as the Board shall determine.

         2.       The Distributor, AMR or any other entity approved by the Board
pursuant to paragraph 1 may spend such amounts as it deems appropriate on any
activities or expenses primarily intended to result in or relate to the sale or
servicing of a participating Fund's shares or shareholders, including, but not
limited to, advertising, shareholder servicing fees, transfer agency or
subtransfer agency expenses and distribution and preparation of advertising
materials and sales literature, sales seminars.

         3.       This Plan shall not take effect with respect to a Fund, unless
it first has been approved by a vote of the then existing shareholder(s) of such
Fund.

         4.       This Plan shall not take effect with respect to a Fund unless
it first has been approved, together with any related agreements, by votes of a
majority of both (a) the Board and (b) those

                                     - 1 -



Trustees of the Trust who are not "interested persons" of the Trust and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related thereto ("Independent Trustees"), cast in person at a meeting
(or meetings) called for the purpose of voting on such approval; and until the
Trustees who approve the Plan's taking effect with respect to such Fund have
reached the conclusion required by Rule 12b-1(e) under the 1940 Act.

         5.       After approval as set forth in paragraphs 3 and 4, this Plan
shall take effect and continue in full force and effect with respect to a Fund
for so long as such continuance is specifically approved at least annually in
the manner provided for approval of this Plan in paragraph 4.

         6.       The Distributor, AMR and any other recipient of payments
hereunder shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended with respect to the Platinum
Class of each applicable Fund by such recipient under this Plan and the purposes
for which such expenditures were made.

         7.       This Plan may be terminated with respect to the Service Class
of any Fund at any time by vote of the Board, by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding voting
securities of such Service Class.

         8.       This Plan may not be amended to increase materially the amount
of fees provided for in paragraph 1 hereof unless such amendment is approved in
the manner provided for initial approval in paragraphs 3 and 4 hereof, and no
material amendment to the Plan shall be made unless approved in the manner
provided for approval and annual renewal in paragraph 5 hereof.

         9.       The amount of the fees payable by a Fund to the Distributor or
to AMR or any other authorized entity under paragraph 1 hereof is not related
directly to expenses incurred by such entities hereunder on behalf of such Fund
in providing distribution-related and/or shareholder services hereunder, and
paragraph 2 hereof does not obligate such Fund to reimburse any such entity for
such expenses. The fees set forth in paragraph 1 hereof will be paid by such
Fund to such entities until the Plan is either terminated or not renewed. If the
Plan is terminated or not renewed with respect to a Fund, any
distribution-related or shareholder servicing expenses incurred by such entities
on behalf of such Fund in excess of payments of the fees specified in paragraph
1 hereof which have been received or accrued through the termination date are
the sole responsibility and liability of the entity incurring such expenses, and
are not obligations of such Fund.

         10.      While this Plan is in effect, the selection and nomination of
the Trustees who are not interested persons of the Trust shall be committed to
the discretion of the Trustees who are not interested persons of the Trust.

         11.      As used in this Plan, the terms "majority of the outstanding
voting securities" and "interested person" shall have the same meaning as those
terms have in the 1940 Act.

                                     - 2 -



         12.      The Trust shall preserve copies of this Plan (including any
amendments thereto) and any related agreements and all reports made pursuant to
paragraph 6 hereof for a period of not less than six years from the date of this
Plan, the first two years in an easily accessible place.

         13.      The Trustees of the Trust and the shareholders of the Funds
shall not be liable for any obligations of the Trust or the Fund under this
Plan, and AMR or any other person, in asserting any rights or claims under this
Plan, shall look only to the assets and property of the Trust or the Funds in
settlement of such right or claim, and not to such Trustees or shareholders.

Date: May 1, 2003

                                     - 3 -