<PAGE>
SEMI-ANNUAL REPORT
OCTOBER 31, 1995
THE AAL U.S. GOVERNMENT
ZERO COUPON
TARGET FUNDS
SERIES 2001 AND 2006
THE AAL MUTUAL FUNDS
HELPING YOU BUILD A
BETTER FINANCIAL FUTURE
<PAGE>
December 15, 1995
Dear AAL Target Funds Shareholder:
We are pleased to provide you with the updated semi-annual report for The AAL
U.S. Government Zero Coupon Target Funds.
In addition to the Target Funds, which are no longer open to investors, we also
offer seven other diverse portfolios to help you plan for your financial future,
including:
o The AAL International Fund for long-term capital growth through a diversified
portfolio of foreign securities.
o The AAL Smaller Company Stock Fund for capital appreciation
o The AAL Capital Growth Fund for capital appreciation with the potential for
some income
o The AAL Utilities Fund for current income, long-term growth of income and
capital appreciation
o The AAL Bond Fund for current income
o The AAL Municipal Bond Fund for current income exempt from federal income
taxes
o The AAL Money Market Fund for preservation of capital and liquidity.
To invest in these Funds, you can either use new dollars to purchase shares, or
you can use our exchange privilege to exchange your current Target Fund shares
for those of another Fund--at no additional cost to you.
For more information about these Funds and the exchange privilege, contact your
personal Registered Representative or call our Mutual Fund Service Center at
800-553-6319 for your complimentary prospectus kit.
Thank you again for your continued confidence in The AAL Mutual Funds. We look
forward to serving you again in the near future.
Sincerely,
/s/ H. Michael Spence
H. Michael Spence
President
AAL Capital Management Corporation
<PAGE>
The AAL U.S. Government Zero Coupon Target Funds are no longer open to
investments. However, we will continue to provide you with financial
statements for these Funds. We are also providing you with a copy of the
financial statements for The AAL International Fund, The AAL Smaller Company
Stock Fund, The AAL Capital Growth Fund, The AAL Utilities Fund, The AAL Bond
Fund, The AAL Municipal Bond Fund and The AAL Money Market Fund.
These Funds Seek: High investment return from U.S. Government securities that
provide investors with a reasonable assurance that they will receive a target
dollar amount predictable at the time of investment.
The AAL U.S. Government
Zero Coupon Target Fund:
Series 2001
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1995
----------------------------------------------
<TABLE>
<CAPTION>
Principal Yield to Maturity Market
Long-Term Obligations (100.0%) Amount Maturity Date Value
- - ------------------------------ --------- -------- ---- -----
<S> <C> <C> <C> <C>
U.S. GOVERNMENT ZERO COUPON BONDS
Separate Trading of Registered Interest
and Principal of Securities
(amortized cost basis $1,797,927) $2,758,000 5.88% 11/15/2001 $1,943,698
</TABLE>
The AAL U.S. Government
Zero Coupon Target Fund:
Series 2006
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1995
----------------------------------------------
<TABLE>
<CAPTION>
Principal Yield to Maturity Market
Long-Term Obligations (100.0%) Amount Maturity Date Value
- - ------------------------------ --------- -------- ---- -----
<S> <C> <C> <C> <C>
U.S. GOVERNMENT ZERO COUPON BONDS
Separate Trading of Registered Interest
and Principal of Securities
(amortized cost basis $1,369,300) $3,212,000 6.26% 11/15/2006 $1,626,618
</TABLE>
The accompanying notes are an integral part of this schedule.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
----------------
<TABLE>
<CAPTION>
THE AAL U.S. GOVERNMENT
TARGET TARGET
FUND FUND
2001 2006
---- ----
<S> <C> <C>
ASSETS
Investments, at value (Cost: $1,797,927 and
$1,369,300 respectively) .......................................................... $1,943,698 $1,626,618
Unamortized organization & initial registration expense ............................. 995 995
Prepaid expenses .................................................................... 10,750 1,739
Receivable from Affiliate ........................................................... 3,074 1,570
Cash ................................................................................ -- 1,485
---------- ----------
TOTAL ASSETS .................................................................... 1,958,517 1,632,407
========== ==========
LIABILITIES
Income distributions payable ........................................................ $ 89,472 $ 73,842
Redemptions Payable ................................................................. 1,674 1,773
Accrued expenses .................................................................... 21,214 8,096
---------- ----------
TOTAL LIABILITIES ............................................................... 112,360 83,711
---------- ----------
NET ASSETS
Trust capital (beneficial interest) ................................................. 1,678,224 1,263,210
Accumulated undistributed net investment income .............................. 15,378 16,275
Net unrealized appreciation on investments .......................................... 145,771 257,318
Accumulated net realized gain on investments ................................. 6,784 11,893
---------- ----------
TOTAL NET ASSETS ................................................................ 1,846,157 1,548,696
---------- ----------
TOTAL LIABILITIES AND CAPITAL ................................................... $1,958,517 $1,632,407
========== ==========
Shares of beneficial interest outstanding
(unlimited number of shares authorized) ........................................... 166,452 125,148
========== ==========
Net Asset Value Per Share ........................................................... $ 11.09 $ 12.37
========== ==========
Maximum Public Offering Price ....................................................... $ 11.64 $ 12.99
========== ==========
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1995
-----------------------------------------
<TABLE>
<CAPTION>
THE AAL U.S. GOVERNMENT
TARGET TARGET
FUND FUND
2001 2006
---- ----
<S> <C> <C>
INVESTMENT INCOME
Taxable interest ................................................................. $ 63,686 $ 52,773
--------- ---------
EXPENSES
Audit and Legal fees ............................................................. 3,863 3,863
Custodian fees ................................................................... 201 193
Administrative service fees ...................................................... 2,752 2,752
Amortization of organization & registration expense .............................. 3,301 3,301
Printing and postage expense ..................................................... 1,710 1,881
S.E.C. and state registration fees ............................................... 1,094 1,024
Transfer agent fees .............................................................. 688 726
Trustees fees and expenses ....................................................... 3,686 3,686
Shareholder maintenance fee ...................................................... 467 472
Other expenses ................................................................... 554 553
--------- ---------
TOTAL EXPENSES ................................................................ 18,316 18,451
--------- ---------
Less reimbursement from Adviser ............................................... (9,088) (10,840)
--------- ---------
TOTAL NET EXPENSES ............................................................ 9,228 7,611
--------- ---------
NET INVESTMENT INCOME .............................................................. 54,458 45,162
------ ------
REALIZED AND UNREALIZED GAINS (LOSS) ON INVESTMENTS
Net realized gain on investments ................................................ 4,019 9,126
Decrease in unrealized appreciation on investments .............................. 118,165 174,883
--------- ---------
NET REALIZED & UNREALIZED GAINS ON INVESTMENTS .................................... 122,184 184,009
--------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................................................. $ 176,642 $ 229,171
========= =========
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
<TABLE>
<CAPTION>
THE AAL U.S. GOVERNMENT
TARGET FUND 2001 TARGET FUND 2006
YEAR SIX MONTHS YEAR SIX MONTHS
ENDED ENDED ENDED ENDED
4/30/95 10/31/95 4/30/95 10/31/95
------- -------- ------- --------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income ................................ $ 111,844 $ 54,458 $ 91,231 $ 45,162
Net realized gain
on investments ..................................... 10,895 4,019 9,677 9,126
Increase (decrease) in unrealized
appreciation on investments ......................... (9,839) 118,165 18,370 174,883
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................ 112,900 176,642 119,278 229,171
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income ................. (111,844) (54,458) (91,231) (45,162)
Capital gains distributions .......................... (27,312) -- (25,359) --
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................... (139,156) (54,458) (116,590) (45,162)
----------- ----------- ----------- -----------
TRUST SHARES TRANSACTIONS
Income dividends reinvested .......................... 106,973 -- 88,160 --
Capital gains distributions reinvested ............... 27,008 -- 25,152 --
Redemption of trust shares ........................... (177,690) (30,544) (80,729) (35,474)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN TRUST CAPITAL ............... (43,709) (30,544) 32,583 (35,474)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS .................. (69,965) 91,640 35,271 148,535
NET ASSETS BEGINNING OF PERIOD.......................... 1,824,482 1,754,517 1,364,890 1,400,161
----------- ----------- ----------- -----------
NET ASSETS END OF PERIOD................................ $ 1,754,517 $ 1,846,157 $ 1,400,161 $ 1,548,696
=========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(A) ORGANIZATION
The AAL Mutual Funds (the "Trust") was organized as a Massachusetts Business
Trust on March 31, 1987, and is registered as an open-end diversified management
company under the Investment Company Act of 1940. The Trust commenced operations
on July 16, 1987, with The AAL Capital Growth Fund, The AAL Income Fund and The
AAL Municipal Bond Fund. On March 10, 1988, The AAL Money Market Fund commenced
operations. On July 1, 1992, The AAL Income Fund changed its name to the AAL
Bond Fund. On June 30, 1993, The AAL Smaller Company Stock Fund commenced
operations. On March 17, 1994, The AAL Utilities Fund commenced operations. On
November 14, 1990, The AAL U.S. Government Zero Coupon Target Funds, Series 2001
and 2006, (The "Target Funds") commenced operations. On August 1, 1995, The AAL
International Fund commenced operations. The nine AAL Mutual Funds
are collectively referred to as the "Funds". Effective June 1, 1993, the Board
of Trustees of The AAL Mutual Funds closed The AAL U.S. Government Zero Coupon
Target Funds, Series 2001 and 2006, to new shareholders and to additional
purchases of shares by existing shareholders.
(B) SIGNIFICANT ACCOUNT POLICIES
The Funds' principal accounting policies are:
VALUATION - Securities traded on national securities exchanges are valued at
last reported sales prices. All other securities are valued at the latest bid
quotation if such quotations are readily available. Otherwise, such securities
are valued at a fair value as determined in good faith by the Board of Trustees
which has authorized the use of bid valuations provided by a pricing service.
FEDERAL INCOME TAXES - The Funds' policy is to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment companies
and to distribute substantially all of their taxable income to their
shareholders. The Funds accordingly paid no Federal income taxes and no Federal
income tax provision was required.
DISTRIBUTIONS TO SHAREHOLDERS - Net investment income is distributed to each
shareholder as a dividend. Dividends from the Target Funds are declared daily
and distributed annually. Net realized gains from securities transactions, if
any, are distributed at least annually in the calendar year.
OTHER - For financial statement purposes, investment security transactions are
accounted for on trade date. Interest income is recognized on an accrual basis.
Discount is amortized over the life of the respective Bonds. Realized gains or
losses on sales are determined on a specific cost identification basis. The cost
incurred with the organization and initial registration of shares for The Target
Funds is being amortized over the period of benefit, but not to exceed 60 months
from each Fund's commencement of operation.
During the prior fiscal year, the Funds adopted Statement of Position 93-2
(SOP), "Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies." In accordance with provisions of the SOP, permanent differences
between book and taxable net investment income and realized gain/loss on
security transactions have been reclassified from accumulated net
investment income (loss) and accumulated realized loss on investments, to
trust capital. As of April 30, 1995, $15,378 and $16,275 was
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
reclassified in The AAL U.S. Government Zero Coupon Target Funds, Series 2001
and 2006, respectively. Net investment income, net realized gain on investments
and net assets were not affected by this change.
(C) INVESTMENT ADVISORY MANAGEMENT FEES AND TRANSACTIONS WITH
RELATED PARTIES
The Trust has entered into an Investment Advisory Agreement with AAL Capital
Management Corporation, (the "Adviser") under which the two separate Target Fund
portfolios pay a fee for investment advisory services. The annual rate of fees
under the Investment Advisory Agreement are calculated at: .50 of 1% of the
average daily net assets of The AAL U.S. Government Zero Coupon Target Funds,
Series 2001 and Series 2006. The Adviser has entered into a sub-advisory
agreement with Duff &Phelps Investment Management Co. (the "Sub-Adviser"). The
sub-advisory fee, which is paid by the Adviser, is equal to: .10 of 1% of the
average daily net assets for The AAL Target Funds. Payments were waived
effective July 1, 1993. This sub-advisory agreement was terminated October
31, 1995.
The Trust has entered into an Administrative Services Agreement with the Adviser
pursuant to which the Adviser provides certain administrative services. The
Adviser received $5,000 from each of The AAL U.S. Government Zero Coupon
Target Funds, Series 2001 and 2006. The Trust has also contracted with AAL
Capital Management Corporation for certain shareholder maintenance services,
effective April 1, 1995. These shareholder services
include, pre-processing and quality control of new accounts, shareholder
correspondence, account response and answering customer inquiries regarding
account status, option and facilitating shareholder telephone transactions. Fees
charged to the Funds under terms of the contract approximated $3.58
per shareholder account.
The Trust has adopted a distribution plan ("The Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan authorizes the Trust to use a
portion of its assets to finance certain sales activities relating to the
distribution of shares to investors. Payments under The Plan are equal to a
maximum of .10 of 1% of the average daily net assets. Payments under The
Plan were waived effective July 1, 1993.
Trustees of the Trust not affiliated with AAL or the Adviser receive an annual
fee of $10,000 and $1,000 for each meeting of the Board of Trustees or
Committee thereof, attended. No remuneration has been paid by the Trust
to any of the officers or affiliated Trustees of the Trust. In addition,
the Trust reimbursed unaffiliated Trustees for reasonable expenses incurred in
relation to attendance at the meetings.
Each Fund is charged for those expenses that are directly attributable to it,
such as advisory, custodian and certain shareholder service fees, while other
expenses that cannot be directly attributable to a Fund are allocated among the
Funds in proportion to the net assets of the respective Fund.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Adviser reimburses the Funds for annual expenses in excess of the lowest
expense limitation imposed by the states. In addition to the reimbursement
required under the Investment Advisory Agreement, the Adviser voluntarily has
reimbursed The AAL Target Funds for all expenses in excess of 1% of average
daily net assets since inception.
AAL is the ultimate parent company for AAL Capital Management Corporation.
(D) SECURITY TRANSACTIONS
During the year ended April 30, 1995, and six months ended October 31, 1995,
purchases and sales of securities other than short-term obligations were as
follows:
<TABLE>
<CAPTION>
Purchases Sales
--------- -----
Year Six Months Year Six Months
Ended Ended Ended Ended
4/30/95 10/31/95 4/30/95 10/31/95
------- -------- ------- --------
<S> <C> <C> <C> <C>
Target Fund 2001 .................................... - - $210,068 $37,219
Target Fund 2006 .................................... - - 97,604 51,917
</TABLE>
All purchases and sales of The AAL U.S. Government Zero Coupon Target Funds,
Series 2001 and 2006 were in U.S. Government Obligations.
Cost of investments is substantially the same for financial reporting purposes
and Federal income tax purposes.
The gross unrealized appreciation on investments at April 30, 1995, and October
31, 1995, were as follows:
<TABLE>
<CAPTION>
4/30/95 10/31/95
------- --------
Net Net
Unrealized Unrealized
Appreciation (Depreciation) Appreciation Appreciation (Depreciation) Appreciation
------------ -------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Target Fund 2001 ......................... $27,606 - $27,606 $145,771 - $145,771
Target Fund 2006 ......................... 82,434 - 82,434 257,318 - 257,318
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(E) TRUST TRANSACTIONS
Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
Target Fund 2001 Target Fund 2006
---------------- ----------------
Year Six Months Year Six Months
Ended Ended Ended Ended
4/30/95 10/31/95 4/30/95 10/31/95
------- -------- ------- --------
<S> <C> <C> <C> <C>
Shares purchased ................................... -- -- -- --
Income dividends reinvested ........................ 10,917 0 10,943 0
Capital gains reinvested ........................... 2,759 0 207 0
Shares redeemed .................................... (17,557) (2,785) (7,591) (2,950)
------- ------- ------- -------
Net increase of trust shares ....................... (3,881) (2,785) 3,559 (2,950)
======= ======= ======= =======
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------
<TABLE>
<CAPTION>
Target Fund 2001
----------------
Period Year Year Year Year Six Months
Ended Ended Ended Ended Ended Ended
PER SHARE INFORMATION 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 10/31/95
- - --------------------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Beginning of .. $ 10.00 $ 10.25 $ 10.61 $ 12.25 $ 10.54 $ 10.37
Period
Income from Investment
Operations
Net investment income 0.444 0.772 0.741 0.700 0.663 0.327
Net realized and unrealized gain
(loss) on investments ........ 0.250 0.360 1.679 (0.623) 0.000 0.720
---------- ----------- ----------- ----------- ----------- --------------
Total From Investment Operations
Distributions from:........... 0.694 1.132 2.420 0.077 0.663 1.047
---------- ----------- ----------- ----------- ----------- --------------
Net investment income ........ (0.444) (0.772) (0.741) (0.700) (0.663) (0.327)
Net realized capital gains ... -- -- (0.039) (1.087) (0.170) --
---------- ----------- ----------- ----------- ----------- --------------
Total distributions .. (0.444) (0.772) (0.780) (1.787) (0.833) (0.327)
---------- ----------- ----------- ----------- ----------- --------------
Net increase (decrease) in net
asset value ................. 0.250 0.360 1.640 (1.710) (0.170) 0.720
Net asset value:
End of period ................ $ 10.25 $ 10.61 $ 12.25 $ 10.54 $ 10.37 $ 11.09
========== =========== =========== =========== =========== ==============
Total Return ................... 6.97% 10.76% 23.27% 0.34% 6.82% 10.09%
SUPPLEMENTAL DATE & RATIOS
Net Assets, End of Period ...... $ 668,211 $ 1,494,818 $ 2,760,499 $ 1,824,482 $ 1,754,517 $ 1,846,157
Ratio of expenses to average
net assets (a) (b) ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets (a) (c) 10.21% 7.19% 6.38% 5.74% 6.50% 5.89%
Portfolio Turnover Rate ........ 0.00% 2.93% 2.79% 1.65% 0.00% 0.00%
<FN>
- - ------------------------
(a) Calculated on an annualized basis for periods less than twelve months.
(b) Computed after giving effect to Adviser's expense limitation undertaking.
If the Funds had paid all of their expenses, the ratio would have been as
follows: The AAL U.S. Government Target Fund Series 2001: year ended
April 30, 1991, 13.27%; year ended April 30, 1992, 7.32%; year ended
April 30, 1993, 4.60%; year ended April 30, 1994, 2.33%; year ended
April 30, 1995, 2.00%; six months ended October 31, 1995, 1.98%.
(c) If the Funds had paid all of their expenses the ratios would have been as
follows: The AAL U.S. Government Target Fund Series 2001: year ended
April 30, 1991, -2.06%; year ended April 30, 1992, 0.87%; year ended
April 30, 1993, 2.78%; year ended April 30, 1994, 4.41%; year ended
April 30, 1995, 5.51%; six months ended October 31, 1995, 4.91%.
(d)100% of distributions from net realized capital gains during the fiscal year
ended April 30, 1995, was long term.
(e)Total returns are based on net amount invested.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Target Fund 2006
----------------
Period Year Year Year Year Six Months
Ended Ended Ended Ended Ended Ended
PER SHARE INFORMATION 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 10/31/95
- - --------------------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value: Beginning of .. $ 10.00 $ 10.31 $ 10.42 $ 12.52 $ 10.96 $ 10.93
Period
Income from Investment
Operations
Net investment income 0.473 0.824 0.795 0.740 0.734 0.359
Net realized and unrealized gain
(loss) on investments ........ 0.310 0.116 2.114 (0.567) 0.184 1.440
---------- ----------- ----------- ------------ -------------- --------------
Total From Investment Operations
Distributions from:........... 0.783 0.940 2.909 0.173 0.918 1.799
---------- ----------- ----------- ------------ -------------- --------------
Net investment income ........ (0.473) (0.824) (0.795) (0.740) (0.734) (0.359)
Net realized capital gains ... -- (0.006) (0.014) (0.993) (0.214) --
----------- ---------- ----------- ------------ -------------- --------------
Total distributions .. (0.473) (0.830) (0.809) (1.733) (0.948) (0.359)
----------- ---------- ----------- ------------ -------------- --------------
Net increase (decrease) in net
asset value ................. 0.310 0.110 2.100 (1.560) (0.030) 1.440
Net asset value:
End of period ................ $ 10.31 $ 10.42 $ 12.52 $ 10.96 $ 10.93 $ 12.37
========== =========== =========== ============ ============== ==============
Total Return ................... 7.86% 8.73% 28.44% 0.18% 9.05% 16.46%
SUPPLEMENTAL DATE & RATIOS
Net Assets, End of Period ...... $ 451,758 $ 1,066,226 $ 1,951,566 $ 1,364,890 $ 1,400,161 $ 1,548,696
Ratio of expenses to average
net assets (a) (b) ........... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets (a) (c) 10.70% 7.68% 6.79% 5.86% 6.95% 5.92%
Portfolio Turnover Rate ........ 2.78% 2.31% 5.44% 1.05% 0.00% 0.00%
<FN>
- - ------------------------
(a) Calculated on an annualized basis for periods less than twelve months.
(b) Computed after giving effect to Adviser's expense limitation undertaking If
the Funds had paid all of their expenses, the ratio would have been as follows:
The AAL U.S. Government Target Fund Series 2006: year ended April 30, 1991,
17.44%; year ended April 30, 1992, 10.36%; year ended April 30, 1993, 6.19%;
year ended April 30, 1994, 6.19%; year ended April 30, 1995, 2.49%;
six months ended October 31, 1995, 2.42%.
(c) If the Funds had paid all of their expenses the ratios would have been as
follows: The AAL U.S. Government Target Fund Series 2006: year ended
April 30, 1991, -5.75%; year ended April 30, 1992, -1.68%; year ended
April 30, 1993, 1.60%; year ended April 30, 1994, 3.72%; year ended
April 30, 1995, 5.46%; six months ended October 31, 1995, 4.50%.
(d)100% of distributions from net realized capital gains during the fiscal year
ended April 30, 1995, was long term.
(e)Total returns are based on net amount invested.
</FN>
</TABLE>
<PAGE>
BOARD OF TRUSTEES
John H. Pender
Chairman of the Board
Richard L. Gady
Lawrence M. Woods
D.W. Russler
F. Gregory Campbell
Richard L. Gunderson
OFFICERS
John H. Pender
President
H. Michael Spence
Vice President
Robert G. Same
Secretary
Terrance P. Gallagher
Treasurer
INVESTMENT ADVISER AND DISTRIBUTOR
AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007
CUSTODIAN, TRANSFER AGENT
AND DISBURSING AGENT
Firstar Trust Company
615 East Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
LEGAL COUNSEL
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
100 East Wisconsin Avenue, Suite 1500
Milwaukee, WI 53202
