THE AAL MUTUAL FUNDS SEMI-ANNUAL REPORT
October 31, 1996
The AAL
Capital
Growth Fund
The AAL
Mid Cap
Stock Fund
The AAL
Small Cap
Stock Fund
The AAL
International
Fund
The AAL
Utilities
Fund
The AAL
Municipal
Bond Fund
The AAL
Bond Fund
The AAL
Money
Market
Fund
[AAL LOGO]
The AAL Mutual Funds
<PAGE>
[PHOTO OF H. MICHAEL SPENCE APPEARS HERE]
Dear AAL Mutual Fund Shareholder:
A robust economy combined with uncertainty about its effect on inflation drove
the financial markets during the six-month period ended October 31, 1996. The
high rate of economic growth in the second quarter raised fears that the Federal
Reserve would act to raise interest rates. These fears and uncertainty over
Federal Reserve action caused volatility in the bond markets through the summer.
When it became clear that economic growth had slowed significantly in the third
quarter, the markets not only rebounded through October, the end of our
reporting period, but continued to reach record highs in November. The
performance of The AAL Mutual Funds reflected the volatility in the markets,
particularly in July when the stock market went through a correction. Because we
expect volatility, and because the possibility of market decline from time to
time is natural, we focus on quality investments that will grow in value over
the long term. Our goal is to provide our shareholders with sound investment
choices in major asset classes that allow diversification of risk and the
achievement of differing investment objectives.
October 31, 1996, also marked the end of The AAL Mutual Funds' first year of
in-house management (except for The AAL International Fund, which is managed by
Jean-Marie Eveillard and his team at Societe Generale Asset Management
Corporation). We have assembled a staff of committed investment professionals
that emphasize our long-term approach to investing without taking undue risk to
enhance short-term returns. In this report, you will find our portfolio
managers' comments on their investment strategies and performance information
about the Funds they manage.
We remain committed to providing you with consistent, quality investment
opportunities and appreciate the investment relationship you have entrusted to
us.
Very truly yours,
/s/ H. Michael Spence
H. Michael Spence
President
The AAL Mutual Funds
This report is submitted for the information of shareholders of The AALMutual
Funds. It is not authorized for distribution to prospective investors unless
preceded or accompanied by the current prospectus for The AALMutual Funds which
contains more complete information about the Funds, including investment
policies, charges and expenses.
<PAGE>
[PHOTO OF FREDERICK L. PLAUTZ APPEARS HERE]
The AAL Capital Growth Fund
How did The AAL Capital Growth Fund perform compared to the market? What
investment techniques did you use to achieve the return?
The Fund performed well compared to the S&P 500(R) Index.1 For the six months
ended October 31, 1996, the Fund had a total return of 7.93% on net amount
invested, compared to 7.81% for the S&P 500(R) Index.1 We focus on picking
stocks of larger companies that sell for reasonable prices relative to their
earnings growth potential. We also try to spread our risk across many stocks in
the major market sectors. For example, we currently hold shares in 98 different
companies across ten different sectors. In addition, we do not try to time the
market. Typically we have only 3-5% of our assets in cash, remaining for the
most part, fully invested.
What sectors or stocks in the portfolio performed well during the six-month
period ended October 31, 1996?
The telecommunications equipment and personal computing sectors performed
particularly well over the last six months. In telecommunications equipment, we
held Tellabs and ADC Telecommunications, which returned 54% and 64%,
respectively. In personal computing, we owned Compaq and Intel Corp., which
produced returns of 49% and 62%, respectively.
Looking ahead, how do you think U.S. equities will perform in the next year?
The outlook for U.S. equities is challenging. More often than not, equity
markets have difficulty the year after a presidential election. In addition, the
U.S. may be due for a recession. The economy and the stock market have
experienced extended growth. The economy has been expanding for at least six
years to date, and the U.S. stock market has been growing at a better than
average rate for the past two years. An
1 An unmanaged group of securities
often taken as representative of the
stock market as a whole.
[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment Made 5 Years Ago
(assumes maximum 4.75% sales charge)
[_] Value of shares initially purchased ($14,588)
[_] Value of shares acquired through reinvestment of
dividends and capital gains ($17,143)
-----------------------
Initial Net
Asset Value
$9,525
-----------------------
<PAGE>
The AAL Capital Growth Fund
31-Oct-96
(Assuming Reinvestment of all Dividends)
Capital Growth
Original Amount Dividends and Total
Date Invested Captial Gains Value
- ------------- --------------- --------------- ------------
31-Oct-91 9,523.12 000 9,523.12
30-Nov-91 9,212.43 0.00 9,212.43
27-Dec-91 9,927.75 101.88 10,029.62
31-Dec-91 10,173.41 104.40 10,277.81
31-Jan-92 9,927.75 101.88 10,029.62
28-Feb-92 9,971.10 102.32 10,073.42
31-Mar-92 9,819.36 100.77 9,920.13
30-Apr-92 10,158.96 104.25 10,263.21
29-May-92 10,223.99 104.92 10,328.91
30-Jun-92 10,079.48 103.44 10,182.92
06-Jul-92 10,072.25 198.26 10,270.51
31-Jul-92 10,346.82 203.66 10,550.48
31-Aug-92 10,223.99 201.24 10,425.23
30-Sep-92 10,303.47 202.81 10,506.28
30-Oct-92 10,426.30 205.22 10,631.53
30-Nov-92 10,650.29 209.63 10,859.92
31-Dec-92 10,549.13 315.21 10,864.34
31-Dec-92 10,549.13 315.21 10,864.34
29-Jan-93 10,368.50 309.81 10,678.31
26-Feb-93 10,657.51 318.45 10,971.96
31-Mar-93 10,780.35 322.12 11,102.47
30-Apr-93 10,715.32 320.18 11,035.49
31-May-93 10,881.50 325.14 11,206.64
30-Jun-93 10,859.83 324.49 11,184.32
01-Jul-93 10,708.09 425.63 11,133.72
30-Jul-93 10,650.29 423.33 11,073.62
31-Aug-93 10,953.76 435.39 11,389.15
30-Sep-93 10,830.92 430.51 11,261.43
29-Oct-93 11,098.27 441.14 11,539.40
30-Nov-93 10,997.11 437.12 11,434.22
31-Dec-93 10,932.08 542.71 11,474.79
31-Dec-93 10,932.08 590.25 11,522.33
31-Jan-94 11,011.56 594.54 11,606.10
28-Feb-94 10,729.77 579.32 11,309.09
31-Mar-94 10,325.14 557.48 10,882.62
29-Apr-94 10,469.65 566.28 11,034.93
31-May-94 10,484.10 56606 11,050.16
30-Jun-94 10,137.28 671.47 10,808.75
29-Jul-94 10,382.95 687.74 11,070.69
31-Aug-94 10,679.19 707.36 11,386.55
30-Sep-94 10,534.68 697.79 11,232.47
31 -0ct-94 1 0,794.80 715.02 11,509.82
30-Nov-94 10,469.65 693.48 11,163.14
<PAGE>
30-Dec-94 10,122.83 1,136.91 11,259.75
30-Dec-94 10,122.83 1,240.92 11,363.75
31-Jan-95 10,375.72 1,271.92 11,647.64
28-Feb-95 10,715.32 1,313.51 12,028.87
31-Mar-95 10.903.18 1,336.58 12,239.76
28-Apr-95 11,242.77 1,378.21 12,620.98
31-May-95 11,632.95 1,426.04 13,058.98
30-Jun-95 11,697.98 1,528.91 13,226.89
31-Jul-95 12,095.38 1,580.85 13,676.22
31-Aug-95 12,044.80 1,574.24 13,619.04
29-Sep-95 12,615.61 1,648.84 14,264.45
31-Oct-95 12,550.58 1,640.34 14,190.92
30-Nov-95 13,020.23 1,701.73 14,721.96
28-Dec-95 12,702.31 1,741.87 14,444.18
28-Dec-95 12,702.31 1,847.58 14,149.89
28-Dec-95 12,702.31 2,158.48 14,860.79
29-Dec-95 12,723.99 2,162.16 14,886.15
31-Jan-96 13,251.45 2,251.79 15,503.24
29-Feb-96 13,273.12 2,255.48 15,528.60
29-Mar-96 13,251,45 2,251.79 15,503.24
30-Apr-96 13,576.59 2,307.05 15,893.64
31-May-96 13,872.83 2,357.39 16,230.22
28-Jun-96 13,800.58 2,416.96 16,217.54
31-Jul-96 13,179.19 2,308.13 15,487.32
30-Aug-96 13,453.76 2,356022 15,809.98
30-Sep-96 14,414.74 2,524.52 16,939.26
31-Oct-96 14,588.15 2,554.89 17,143.04
<PAGE>
economic slowdown would slow or reverse these trends. On the other hand, if the
economy can continue growing at a moderate pace with inflation remaining under
control, interest rates should decline. If this happens, the stock market may
still have room for a continued advance. However, stock prices are high and the
margin for growth is much smaller than it was last year.
Will the Fund distribute capital gains in December, and if so, what affect will
the distribution have on the value of its shares?
Due to large overall gains from the sales of securities in the Fund's portfolio
over the past year ended October 31, 1996, we will make a fairly sizeable
capital gains distribution for the Fund in December. The Fund's share price will
drop by the amount of the gain distributed after the record date. Except for
shares held in individual retirement accounts or some other tax-deferred vehicle
or plan, these capital gains distributions represent taxable income to the
shareholders of record, even if they were reinvested to buy more shares of the
Fund.
10 LARGEST HOLDINGS
Merck & Co., Incorporated
General Electric Company
American International Group, Inc.
Exxon Corporation
Pfizer Incorporated
Intel Corporation
Philip Morris Companies, Inc.
American Express Company
Walgreen Company
Procter & Gamble Company
PORTFOLIO SECTORS
[PIE CHART APPEARS HERE]
Consumer-Related 26%
Health Care 13%
Technology 12%
Financial Services 11%
Utilities/Telecommunications 9%
Computer Software/Services 9%
Other Equities 8%
Cash and Cash Equivalents 5%
Petroleum/Natural Gas 4%
Entertainment/Media 3%
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date 9.68% 15.16%
1-Year 15.04% 20.80%
5-Year 11.38% 12.48%
From Inception (July 16, 1987) 10.22% 10.80%
* Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is 8.38%, 13.12%, 11.47%, and 10.17%.
/s/ Frederick L. Plautz
Frederick L. Plautz
PORTFOLIO MANAGER
THE AAL CAPITAL GROWTH FUND
<PAGE>
[PHOTO OF KEVIN A. SCHMITTING APPERS HERE]
The AAL Mid Cap Stock Fund
Over the last six months, you had a challenge with the performance of this Fund
relative to the market. What factors influenced the Fund's performance?
Several factors affected performance in the past several months. You may recall
that the Fund was performing quite well through the end of May. In June,
however, the Nasdaq1 market began correcting over concerns that the economy was
growing too fast and that the Federal Reserve would have to raise interest rates
to stem growth. This sentiment continued through June and July causing a great
deal of volatility and uncertainty in the markets. The environment was
particularly harsh on high-growth stocks and stocks that had higher-than-average
price-to-earnings ratios, which are the type of stocks we generally hold in the
portfolio. When the market rebounded in August and September, the Fund also
rebounded, but not as much as the overall market. Several companies in our
portfolio reported lower than expected earnings. We also were overweighted in
health care stocks. The health care sector did not bounce back as much as the
overall market.
What sectors or stocks in the portfolio affected performance?
You can divide this year's performance into two segments: the pre-market
correction (before July) and post-market correction periods (after July). With
the Fund's growth orientation, in the pre-market correction our overweighting in
technology stocks helped performance. In the post-market correction period, our
overweighting in technology and health care stocks and our underweighting in
financial and energy stocks hurt performance. Despite good earnings
announcements, health care stocks performed poorly over investor concerns about
health care reform. Financial and energy stocks, which were areas where the Fund
was underweighted, performed particularly well this year.
What economic factors do you see affecting mid cap stocks, and how will you
position the Fund to take advantage of these factors in the near future?
Contrary to the concerns of last summer, the economy appears to be slowing down.
1 The National Association of Securities Dealers' Automated Quotation System for
securities traded over-the-counter.
<PAGE>
There is even discussion now of a possible decrease in interest rates. In this
environment, companies that can increase their revenues and earnings at an
above-average rate should be rewarded. We will continue to invest in
higher-growth companies and diversify our holdings, looking for companies in
even more economic sectors than in the past.
Will the Fund make a capital gains distribution in December, and, if so, what
effect will this have on the Fund's share value?
The Fund will make a sizeable capital gains distribution in December. The Fund
realized overall taxable gains on the sale of securities, that had appreciated
significantly. After the record date, the Fund's share price will drop by the
amount of the gain distributed. Except for shares held in individual retirement
accounts or some other tax-deferred vehicle or plan, these capital gains
represent taxable income to the shareholders of record, even if reinvested to
buy more shares of the Fund.
10 LARGEST HOLDINGS
CUC International, Inc.
Genzyme Corporation
QUALCOMM, Inc.
LSI Logic Corporation
PacifiCare Health Systems, Inc.
3Com Corporation
HEALTHSOUTH Rehabilitation Corp.
BioChem Pharma, Inc.
Evergreen Media Corporation
Parametric Technology Corporation
PORTFOLIO SECTORS
[PIE CHART APPEARS HERE]
Health Care 20%
Consumer-Related 19%
Technology 15%
Computer Software/Services 11%
Retailing 11%
Telecommunications 8%
Transportation 5%
Other Equities 4%
Cash and Cash Equivalents 4%
Entertainment/Media 3%
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date -0.32% 4.69%
1-Year 4.06% 9.22%
From Inception (June 30, 1993) 12.67% 14.33%
* Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is 5.10%, 11.49% and 14.88%.
/s/ Kevin A. Schmitting
Kevin A. Schmitting
PORTFOLIO MANAGER
THE AAL MIDCAP STOCK FUND
<PAGE>
[PHOTO OF KEVIN A. SCHMITTING APPEARS HERE]
The AAL Small Cap Stock Fund
How has the Fund performed since its inception on July 1, 1996, in comparison to
the market?
The Fund has performed pretty well since its inception. As of October 31, 1996,
the Fund was up 8.80% on net amount invested, which compared favorably to 2.2%
for the S&P(R) Small Cap 600 Index.1 The Fund began in a difficult month for
small companies, so we invested our cash slowly. Fortunately, we were able to
take advantage of some very depressed stock prices due to the July decline. When
August arrived, the market sentiment improved and the Fund benefitted nicely
from a pickup in stock prices for small companies.
What happened to small company stocks in July and how did it affect the Fund?
July was a very difficult month. We had an uncertain economic environment and a
prevailing sentiment at the time that the Federal Reserve would need to raise
interest rates. This made investors very nervous. A nervous stock market tends
to affect small company stocks more than large company stocks, because they do
not have the trading liquidity that large company stocks have.
Reduced trading liquidity means that market moves can be exaggerated in small
company stocks. So the downward movement in many small company stocks during
July was probably more severe due to their illiquid trading status than due to a
deterioration in the companies' operating fundamentals. This created an
opportunity for long-term investors to buy a number of stocks rather cheaply and
that is exactly what The AAL Small Cap Stock Fund was able to do.
What stock picks did you make that performed particularly well?
Two stocks that have performed very well for the Fund are Hyperion Software and
Midwest Express Holdings. Hyperion, a client/server software company, has
continued its corporate turnaround and is now reporting very good earnings. We
bought
1 An unmanaged index composed of 600
stocks representative of the small capitalization sector of the stock market.
<PAGE>
the stock in the $11- $13 range and it has traded above $21 recently. Midwest
Express is the regional airline based in Milwaukee, Wisconsin. Its stock was
somewhat depressed due to oil price increases during the summer. Fortunately, we
were more impressed with the long-term prospects than the near-term negatives.
We were able to buy the stock in the mid-$20 range and recently the stock was
trading in the mid-$30 range.
What economic factors do you anticipate affecting small cap stocks in the near
future?
Contrary to the concerns of this past summer, the economy appears to be slowing
down. There is even discussion now of a possible decrease in interest rates. In
this environment, companies that can increase their revenues and earnings at an
above-average rate should be rewarded. We will continue to invest in higher
growth companies and diversify our holdings, looking for companies in even more
economic sectors than in the past.
10 LARGEST HOLDINGS
Dura Automotive Systems, Inc.
United Dental Care, Inc.
SOS Staffing Services
Discount Auto Parts
National Surgery Centers, Inc.
Applied Power, Inc.
Wabash National Corporation
Petroleum Geo-Services
Midwest Express Holdings
Tower Automotive, Incorporated
PORTFOLIO SECTORS
[PIE CHART APPEARS HERE]
Consumer-Related 21%
Cash and Cash Equivalents 18%
Health Care 16%
Technology 14%
Computer Software/Services 10%
Transportation 8%
Retailing 6%
Financial Services 3%
Telecommunications 3%
Other Equities 1%
/s/ Kevin A. Schmitting
Kevin A. Schmitting
PORTFOLIO MANAGER
THE AAL SMALL CAP STOCK FUND
<PAGE>
[PHOTO OF JEAN-MARIE EVEILLARD APPEARS MORE]
The AAL International Fund
In light of your value strategy, how do you view the Fund's performance over the
last six months?
Our priority is to protect the downside risk of the Fund's securities--over
time, the upside tends to take care of itself. We believe that if we do not
overpay for stocks, our holdings should better resist falling during market
declines such as during a period like this past summer when many markets dropped
significantly around the world. The Fund's first fiscal quarter (May, June and
July) performance was down 3.43% on net amount invested, compared to the larger
drop of 4.13% for the Morgan Stanley Capital International EAFE Index.1 The
subsequent recovery of most markets in the second fiscal quarter (August,
September and October) reduced the Fund's loss to 0.45% on net amount invested
for the six-month period.
Which security has performed particularly well lately that best exemplifies your
approach to foreign securities investing?
The Fund owns Orrefors Kosta Boda, a small crystal manufacturer based in Sweden.
When we bought the stock in February 1996, it appeared significantly
under-valued. The stock was trading at only nine times earnings, which
represented a large discount to the valuation of most of its European
competitors, such as Waterford from Ireland or Baccarat from France. We believed
that investors had neglected Orrefors and that it was worth a great deal more
than its market value. Confirming our belief, in October 1996, a group of
Swedish and Danish investors bid for the company, paying a 55% premium to the
stock price. The Fund will lose this holding in December, registering a gain of
over 60% on this investment.
What economic factors, including currency movements, affected the results of
your strategy?
We make our stock selections based on the value of each individual stock. If the
stock of a decent company appears cheap, we will take a closer look. We may add
the stock to the Fund's portfolio, even though the economic cycle does not favor
the company at the time. We do not mind holding a stock that will not perform
for a while if we think the downside risk is limited. We are long-term and
patient investors.
1 A market capitalization weighted equity index composed of a sample of
companies representative of the market structure in twenty countries.
Constituent stocks are selected on the basis of industry representation,
liquidity and sufficient float.
<PAGE>
We can possibly mitigate the impact of currency movements on the Fund's net
asset value by hedging the Fund's foreign currency exposure, as long as it does
not cost very much in the process. We use hedging when we feel that currencies
are over-valued relative to the dollar. At the moment, we have partially hedged
the portfolio against the Japanese yen, Deutsche mark, Swiss franc, French franc
and New Zealand dollar.
How do you view the prospects for foreign investing in the near future?
Most foreign markets have not appreciated as much as the U.S. market has in
recent years. As a result, they have plenty of reasonably priced stocks with
long-term growth potential. Although we generally find the Japanese market too
expensive, from time to time we find pockets of value. We are looking constantly
for securities that have limited downside risk, which we may find among small or
large capitalization stocks. Other stocks may have disappointed investors and
may present attractive opportunities after a severe price correction. We also
might find convertible bonds interesting.
10 LARGEST HOLDINGS SECURITIES
Buderus AG (Germany)
Bank for International Settlements (Switzerland)
Schibsted Gruppen (Norway)
Carlsberg International A/S `B' (Denmark)
Canadian Pacific, Ltd. (Canada)
Philips Electronics N.V. (Netherlands)
Compagnie Generale des Eaux (France)
Montedison SpA (Italy)
Wilson & Horton Ltd. (New Zealand)
Societe Generale D'Affichage SA D.R.C. (Switzerland)
PORTFOLIO MIX
[PIE CHART APPEARS HERE]
Equities 86%
Foreign Currency Bonds 5%
Cash & Cash Equivalents 5%
U.S.$ Denominated Bonds 4%
5 LARGEST HOLDINGS COUNTRIES
Japan
France
Germany
Switzerland
Sweden
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date 3.86% 8.99%
1-Year 5.70% 11.01%
From Inception (August 1, 1995) 4.21% 8.35%
*Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is 2.92%, 4.55% and 3.71%.
/s/ Jean-Marie Eveillard
Jean-Marie Eveillard
PORTFOLIO MANAGER
THE AAL INTERNATIONAL FUND
<PAGE>
[PHOTO OF LEWIS A. BOHANNON APPEARS HERE]
The AAL Utilites Fund
How did The AAL Utilities Fund perform relative to the market during the past
six months and what factors affected the performance?
The AAL Utilities Fund, as well as most other utilities funds, had a tough six
months in terms of performance. The problems stemmed from rising interest rates
and regulatory uncertainty. Interest rates have risen significantly since the
end of last year and have been proven to be quite volatile along the way.
Because of their high dividends, utilities stocks, especially electric
utilities, trade a lot like bonds--they get pummeled when interest rates rise.
In addition, regulatory changes and the uncertainty surrounding these changes
have had a large negative impact on telephone stocks. The passage of the
Telecommunications Act earlier this year paved the way for a deregulated and far
more competitive telephone industry over the long term. However, the gradual
transition to this more competitive environment has created much short-term
uncertainty. The transition has had a particularly negative impact on the
larger, incumbent local and long distance telephone companies, which are
weighted heavily in The AAL Utilities Fund.
What sectors or securities in the public utilities industry show promise and how
are you positioning the Fund to take advantage of them?
Two areas show increased promise for investment in the public utilities
industries over the next year. First, smaller, faster-growing telecommunications
companies that have established, well-positioned franchises in either local or
long distance telecommunications show promise. Large telecommunications
companies, which are under increasing pressure to expand into full-service
global telecommunications companies, may find these smaller companies attractive
as potential acquisition candidates. WorldCom, Inc. and Frontier Corporation are
examples of these faster growing companies. Second, electric utilities
companies, which have high operating costs, show increasing opportunity in
states that have improved their regulatory environment. California's regulatory
environment has improved substantially due to recently passed legislation that
will greatly aid its high-cost utilities to become more competitive.
At this time, how do you view the potential for public utilities securities in
this country and abroad?
We believe that utilities stocks will continue to do what they have done
historically--offer more income than most stocks and greater growth potential
than most bonds. However, utilities investing is becoming more risky and
volatile as the utilities sectors become more deregulated and competitive. With
this increased risk will come more growth opportunities and better-managed,
well-positioned companies will thrive. Foreign utilities also show potential for
greater growth and the Fund will continue to invest in these securities.
10 LARGEST HOLDINGS
Telefonica de Espana ADR
NIPSCO Industries, Inc.
Pinnacle West Capital Corp.
SBC Communications, Inc.
Teco Energy Incorporated
CMS Energy Corp.
Carolina Power & Light Co.
WorldCom, Inc.
GTE Corporation
MCI Communications
<PAGE>
PORTFOLIO MIX
[PIE CHART APPEARS HERE]
Equities 83%
Electric 50%
Telephone 28%
Energy 4%
Other 1%
Cash & Cash Equivalents 9%
Bonds 5%
U.S.Government Obligations 3%
AVERAGE ANNUAL TOTAL RETURNS
---------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date -4.85% -0.14%
1-Year 1.02% 6.10%
From Inception (March 17,1994) 5.15% 7.12%
*Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is -8.39%, -1.44% and 3.76%.
/s/ Lewis A. Bohannon
Lewis A. Bohannon
PORTFOLIO MANAGER
THE AAL UTILITIES FUND
<PAGE>
[PHOTO OF MICHAEL R. HILT APPEARS HERE]
The AAL Bond Fund
How did the Fund perform over the past six months and what factors influenced
this performance?
The AAL Bond Fund had a total return over the six-month period ended October 31,
1996, of 4.85% on net amount invested. Recently, we have managed the Fund from a
position of neutral duration (interest rate sensitivity) relative to the Lipper
peer group.1 This means we have managed the Fund so it has a duration similar to
the group. Neutral duration has allowed us to focus on selecting individual
bonds rather than forecasting the direction of interest rates.
What types of bonds have performed well for the Fund recently?
We have been buying bonds with put options embedded in them because we believe
the market has been under-pricing these securities. The put option gives us the
right to sell these bonds back to the issuer at par at a specific date prior to
maturity.
What do you think of the market potential for intermediate-term, investment
grade bonds?
We believe it is quite favorable. Corporations have improved their fixed charge
coverage ratios (by lowering their fixed expenses such as interest, depreciation
and rent) and by increasing their cash holdings. In addition, the economy has
lost some steam and inflation has remained under control.
If interest rates decline, as we expect they will, we will focus on locking in
the current (higher) yields in the Fund's portfolio and participating in any
price appreciation.
1 The Lipper intermediate-term investment grade category contained 171 funds
with 65% or more of their assets in investment grade debt and an average
maturity between five and ten years.
[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment Made 5 Years Ago
(assumes maximum 4.75% sales charge)
[_] Value of shares initially purchased ($9,226)
[_] Value of shares acquired throgh reinvestment of
dividends and capital gains ($12,889)
-----------------------
Initial Net
Asset Value
$9,525
-----------------------
<PAGE>
The AAL Bond Fund
31-Oct-96
(Assuming Reinvestment of all Dividends)
Original Amount Dividends and Total
Date Invested Captial Gains Value
- ------------- --------------- -------------- -----------
31-Oct-91 9,528.30 0.00 9,528.30
30-Nov-91 9,547.17 54.15 9,601.32
27-Dec-91 9,726.42 67.63 9,794.04
31-Dec-91 9,773.58 126.18 9,899.77
31-Jan-92 9,547.17 179.57 9,726.74
28-Feb-92 9,547.17 233.06 9,780.23
31-Mar-92 9,443.40 288.66 9,732.06
30-Apr-92 9,452.83 344.21 9,797.04
29-May-92 9,566.04 401.46 9,967.50
30-Jun-92 9,679.25 465.34 10,144.58
31-Jul-92 9,849.06 529.60 10,379.66
31-Aug-92 9,886.79 587.79 10,47458
30-Sep-92 9,971.70 648.39 10,620.09
30-Oct-92 9,764.15 688.28 10,452.43
30-Nov-91 9,660.38 737.94 10,398.32
31-Dec-92 9,726.42 780.84 10,507.25
31-Dec-92 9,726.42 836.75 10,563.16
29-Jan-93 9,867.92 900.53 10,768.46
29-Feb-93 9,990.57 966.82 10,957.39
31-Mar-93 9,981.13 1,025.40 11,006.53
30-Apr-93 10,009.43 1,082.21 11,091.64
28-May-93 9,943.40 1,124.75 11,068.15
30-Jun-93 10,075.47 1,199.19 11,274.67
01-Jul-93 10,009.43 1,268.73 11,278.16
30-Jul-93 9,990.57 1,318.43 11,309.00
31-Aug-93 10,132.08 1,392.54 11,524.62
30-Sep-93 10,113.21 1,442.71 11,555.92
29-Oct-93 10,103.77 1,490.13 11,593.90
30-Nov-93 9,915.09 1,518.01 11,433.10
31-Dec-93 9,745.28 1,695.22 11,440.50
31-Dec-93 9,745.28 1,747.32 11,492.61
31-Jan-94 9,830.19 1,814.53 11,644.72
28-Feb-94 9,566.04 1,817.71 11,383.74
31-Mar-94 9,283.02 1,816.94 11,099.96
29-Apr-94 9,141.51 1,839.85 10,981.36
31-May-94 9,084.91 1,880.86 10,965.77
30-Jun-94 9,028.30 1,920.62 10,948.93
29-Jul-94 9,122.64 1,991.53 11,114.17
31-Aug-94 9,094.34 2,043.26 11,137.60
30-Sep-94 8,924.53 2,059.85 10,984.38
31-Oct-94 8,858.49 2,099.67 10,958.16
30-Nov-94 8,764.15 2,134.87 10,899.02
<PAGE>
30-Dec-94 8,754.72 2,189.71 10,944.42
30-Dec-94 8,754.72 2,192.53 10,947.25
31-Jan-95 8,849.06 2,277.98 11,127.03
28-Feb-95 8,981.13 2,370.92 11,352.06
31-Mar-95 9,000.00 2,436.64 11,436.64
28-Apr-95 9,066.04 2,511.63 11,577.67
31-May-95 9,301.89 2,641.83 11,943.72
30-Jun-95 9,311.32 2,704.86 12,016.18
31-Jul-95 9,226.42 2,739.23 11,965.64
31-Aug-95 9,283.02 2,813.79 12,096.80
29-Sep-95 9,320.75 2,883.00 12,203.75
31-Oct-95 9,386.79 2,966.00 12,352.79
30-Nov-95 9,481.13 3,056.11 12,537.24
29-Dec-95 9,566.04 3,139.45 12,705.49
31-Jan-96 9,566.04 3,203.95 12,769.99
29-Feb-96 9,311.32 3,178.00 12,489.32
29-Mar-96 9,188.68 3,192.32 12,381.00
30-Apr-96 9,075.47 3,217.54 12,293.02
31-May-96 9,000.00 3,252.33 12,252.33
28-Jun-96 9,056.60 3,331.56 12,388.17
31-Jul-96 9,037.74 3,393.55 12,431.29
30-Aug-96 8,981.13 3,435.75 12,416.89
30-Sep-96 9,075.47 3,538.51 12,613.98
31-Oct-96 9,226.42 3,662.30 12,888.71
<PAGE>
PORTFOLIO MIX
[PIE CHART APPEARS HERE]
AAA 47%
A 27%
BBB 14%
AA 12%
14
[PIE CHART APPEARS HERE]
Corporate Obligations 52%
U.S.Government Agencies 38%
U.S.Government Obligations 10%
Average Quality: AA-
Average Maturity: 7.13 years
10 LARGEST HOLDINGS
GNMA Pool #780212 8.0% 8/15/2025
U.S. Treasury Bonds 6.375% 5/15/1999
GNMAPool #780213 7.5% 8/15/2025
Citicorp Mortgage 6.25% 5/25/2024
McDonnell Douglas 9.75% 4/1/2012
Delta Air Lines Inc. 10.5% 4/30/2016
Coca-Cola Enterprise 7.00% 10/1/2026
ContiMor Home Equity 6.85% 4/15/2011
Korea Electric Power 7.4% 4/1/2016
FHLMCGold 15 Yr. Pool #G10380 7.0% 8/1/2010
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date -3.42% 1.44%
1-Year -0.65% 4.34%
5-Year 5.21% 6.23%
From Inception (July 16,1987) 6.89% 7.46%
* Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is -5.47%, -1.52%, 5.04% and 6.71%.
/s/ Michael R. Hilt
Michael R. Hilt
PORTFOLIO MANAGER
THE AAL BOND FUND
<PAGE>
[PHOTO OF DUANE A. MCALLISTER APPEARS HERE]
The AAL Municipal Bond Fund
How has the Fund performed over the past six months?
During the most recent period, the Fund experienced both positive returns and
favorable relative performance. Interest rates rose significantly early in 1996
and fears of a strengthening economy and rising inflation forced yields higher
and bond prices lower. However, as the year has progressed, investor fears
proved to be overly pessimistic and yields have once again begun to decline. As
a result, the Fund had a total return of 5.08% on the net amount invested for
the six-month period ended October 31, 1996.
What investment techniques did you use to help you achieve this result?
One strategy that enhanced performance this period was actively managing the
Fund's maturity structure. For most of the summer, we had overweighted positions
in very short-term maturities (less than two years) and in very long-term
maturities (more than 20 years). In periods of market stability, a relatively
uniform maturity structure--where the maturity dates of bonds within the Fund
are spread fairly evenly along the yield curve--generally exists. However, in a
period of extreme volatility, such as that of early 1996, varying the allocation
of maturities can be beneficial. As interest rates declined, the higher
allocation to long-term maturities allowed the Fund to keep pace with its peers.
When yields rose, the short-term maturities provided a ready source of cash for
buying quality bonds with higher yields. Combined, this "barbelled" structure
proved to be a winning strategy for the Fund.
[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment Made 5 Years Ago
(assumes maximum 4.75% sales charge)
[_] Value of shares initially purchased ($10,313)
[_] Value of shares acquired through reinvestment of
dividends and capital gains ($13,430)
------------------------
Initial Net
Asset Value
$9,525
------------------------
<PAGE>
The AAL Municipal Bond Fund
31-Oct-96
(Assuming Reinvestment of all Dividends)
Original Amount Dividends and Total
Date Invested Capital Gains Value
- ---------- --------------- ------------- -----------
31-Oct-91 9,521.18 0.00 9,521.18
30-Nov-91 9,484.35 0.00 9,484.35
27-Dec-91 9,594.84 3.50 9,598.34
31-Dec-91 9,622.47 96.09 9,718.55
31-Jan-92 9,59484 95.81 9,690.65
28-Feb-92 9,539.59 95.26 9,634.85
31-Mar-92 9,493.55 230.81 9,724.37
30-Apr-92 9,539.59 231.93 9,771.53
29-May-92 9,613.26 233.72 9,846.98
30-Jun-92 9,714.55 372.46 10,087.01
31-Jul-92 10,036.83 384.82 10,421.65
31-Aug-92 9,834.25 377.05 10,211.31
30-Sep-92 9,806.63 515.73 10,322.36
30-Oct-92 9,631.68 506.53 10,138.21
30-Nov-92 9,806.63 515.73 10,322.36
31-Dec-92 9,871.09 520.06 10,391.15
31-Dec-92 9,871.09 657.39 10,528.48
29-Jan-93 9,935.54 661.69 10,597.23
26-Feb-93 10,193.37 678.86 10,872.23
31-Mar-93 10,082.87 809.67 10,892.54
30-Apr-93 10,119.71 812.63 10,932.33
28-May-93 10,119.71 812.63 10,932.33
30-Jun-93 10,230.20 959.58 11,189.78
30-Jul-93 10,202.58 956.99 11,159.57
31-Aug-93 10,349.91 970.81 11,320.71
30-Sep-93 10,441.99 1,117.00 11,558.99
29-Oct-93 10,451,20 1,117.99 11,569.18
30-Nov-93 10,294.66 1,101.24 11,395.90
31-Dec-93 10,441.99 1,137.31 11,579.30
31-Dec-93 10,441.99 1,274.11 11,716.10
31-Jan-94 10,515.65 1,283.10 11,798.75
28-Feb-94 10,220.99 1,247.14 11,468.14
31-Mar-94 9,769.80 1,329.31 11,099.11
29-Apr-94 9,723.76 1,323.04 11,046.80
31-May-94 9,742.17 1,325.55 11,067.72
30-Jun-94 9,668.51 1,453.32 11,121.83
29-Jul-94 9,797.42 1,472.70 11,270.12
31-Aug-94 9,788.21 1,471.31 11,259.52
30-Sep-94 9,585.64 1,578.82 11,164.45
<PAGE>
31-Oct-94 9,392.27 1,546.97 10,939.23
30-Nov-94 9,171,27 1,510.57 10,681.84
30-Dec-94 9,318.60 1,671.81 10,990.41
30-Dec-94 9,318.60 1,731.43 11,050.03
31-Jan-95 9,502.70 1,765.65 11,268.41
28-Feb-95 9,779.01 1,816.97 11,595.98
31-Mar-95 9,825.05 1,971.30 11,796.35
28-Apr-95 9,843.46 1,975.00 11,818.46
31-May-95 10,082.87 2,023.03 12,105.91
30-Jun-95 9,963.17 2,145.26 12,108.43
31-Jul-95 9,981.58 2,195.90 12,177.49
31-Aug-95 10,036.83 2,255.30 12,292.14
29-Sep-95 10,055.25 2,305.97 12,361.22
31-Oct-95 10,202.58 2,390.22 12,592.80
30-Nov-95 10,395.95 2,485.07 12,881.02
28-Dec-95 10,414.36 2,581.09 12,995.46
29-Dec-95 10,432.78 2,632.48 13,065.26
31-Jan-96 10,432.78 2,687.16 13,119.94
29-Feb-96 10,340.70 2,713.13 13,053.82
29-Mar-96 10,147.33 2,709.49 12,856.82
30-Apr-96 10,046.04 2,735.61 12,781.65
31-May-96 10,018.42 2,778.24 12,796.66
29-Jun-96 10,082.87 2,842.35 12,925.22
31-Jul-96 10,138.12 2,911.17 13,049.29
30-Aug-96 10,073.66 2,942.70 13,016.36
30-Sep-96 10,230.20 3,041.10 13,271.30
31-Oct-96 10,313.08 3,116.95 13,430.03
<PAGE>
What specific municipal bonds or types of municipal bonds contributed the most
to performance?
Primarily, bonds from municipalities that had enhanced their credit outlook
provided the best relative performance in the Fund. As the economy has been
improving, coincidentally many municipalities have been doing a much better job
of managing their costs and growth rates, resulting in increased general
revenues. For example, many California municipalities have improved their fiscal
condition. As the state with the second-highest allocation in the Fund,
California's emergence from its deep recession of the early 1990s has increased
the relative value of the Fund. In addition, most California municipalities have
structured their bonds with coupon and call features that make them appealing to
retail and institutional investors alike, allowing investors to fully benefit
from their improved value.
How do you plan to position the Fund in the near future to increase yield?
The backdrop for the bond market remains favorable.
The 1990s have provided an appealing combination of slow growth and low
inflation and nothing has appeared on the horizon to dramatically alter this
scenario. In addition, the demand for municipal securities remains solid and the
available supply of municipal debt is expected to begin growing again in 1997,
after shrinking for two consecutive years. If the economy were to slow even
further, or the stock market lose some of its appeal, many investors will find
municipal bonds one of the more attractive investment choices available.
PORTFOLIO MIX
[PIE CHART APPEARS HERE]
AAA 39.3%
AA 27.9%
BBB 22.4%
A 10.4%
Average Quality: AA
Average Maturity: 18 years
5 LARGEST HOLDINGS
BY STATE
New York
California
Illinois
Texas
Washington
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------
As of October 31, 1996
On Offering On Net
Price* Asset Value
Year-to-Date -2.12% 2.81%
1-Year 1.62% 6.67%
5-Year 6.08% 7.12%
From Inception (July 16, 1987) 6.48% 7.04%
*Average annual total return calculated on gross amount invested, including a
maximum sales load of 4.75% for the SEC designated period ended September 30,
1996, is -3.28%, 2.32%, 6.04% and 6.40%.
/s/ Duane A McAllister
Duane A. McAllister
PORTFOLIO MANAGER
THE AAL MUNICIPAL BOND FUND
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : Long-term capital growth by investing in common stocks, and
securities convertible into common stocks.
The Fund Is : A diversified portfolio consisting primarily of high-quality,
large company common stocks and convertible securities. The Fund may also invest
in fixed-income investments and cash equivalents under appropriate conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Common Stocks (94.8%) Market Value
=================================================================================================================================
Aerospace (1.9%)
................
97,000 Boeing Co. $9,251,375
(Produces products for commercial and military transportation, missiles and space)
190,000 General Motors Class H (GM Hughes Electronics) 10,141,250
(Produces weapons, radar, communications and auto electronics)
86,000 United Technologies Corp. 11,072,500
(Manufactures aerospace, building and automobile products)
-------------------------------------------
Total Aerospace 30,465,125
-------------------------------------------
Apparel (0.8%)
..............
204,000 Nike Incorporated 12,010,500
(Designs, develops and markets a wide variety of high quality footwear and
apparel products)
-------------------------------------------
Total Apparel 12,010,500
-------------------------------------------
Banking & Finance (5.2%)
.........................
451,776 First Chicago Corporation 23,040,576
(Bank holding company; parent company of FNB of Chicago)
200,000 J.P. Morgan & Company 17,275,000
(Financial services company, primarily serving large corporations)
410,000 National City Corporation 17,783,750
(Ohio based regional bank holding company)
257,000 Nationsbank Corporation 24,222,250
(Commercial banking company based in North Carolina)
-------------------------------------------
Total Banking & Finance 82,321,576
-------------------------------------------
Basic Materials (0.9%)
.......................
210,000 Illinois Tool Works Incorporated 14,752,500
(Manufactures construction fasteners and packing systems)
-------------------------------------------
Total Basic Materials 14,752,500
-------------------------------------------
Chemicals (0.8%)
................
230,000 PPG Industries, Incorporated 13,110,000
(Global manufacturer of glass, paint and chemical products)
-------------------------------------------
Total Chemicals 13,110,000
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Consumer Cyclical (0.7%)
.........................
340,000 Chrysler Corporation $11,432,500
(Holding company of Chrysler automotive and financial divisions)
-------------------------------------------
Total Consumer Cyclical 11,432,500
-------------------------------------------
Consumer Products (7.1%)
........................
35,000 Colgate-Palmolive Company 3,220,000
(Global consumer products company)
244,000 Gillette Company 18,239,000
(Manufactures shaving, toiletry, stationery, and dental products)
288,000 McDonald's Corporation 12,780,000
(World's largest restaurant chain)
386,000 Phillip Morris Companies, Inc. 35,753,250
(Consumer product and financial company)
300,400 Proctor & Gamble Company 29,739,600
(Major consumer products company)
284,000 Service Corporation International 8,094,000
(Operates funeral homes, cemeteries and crematories)
75,000 Tommy Hilfiger Corp. 3,900,000
(Designer and marketer of an upscale sportswear line)
-------------------------------------------
Total Consumer Products 111,725,850
-------------------------------------------
Consumer Software/Services (9.0%)
..................................
650,000 Automatic Data Processing, Incorporated 27,056,250
(Employer, financial and specialized data processing services)
135,450 Computer Associates International Incorporated 8,008,481
(Designs and markets standardized computer software products)
200,000 Electronic Arts, Inc. 7,500,000
(Develops, markets and distributes interactive entertainment software)
465,500 Electronic Data Systems Corporation 20,947,500
(Provides information technology services to companies worldwide)
223,083 First Data Corporation 17,790,869
(Provides information processing and related services, such as credit card transactions
and mutual fund shareholder recordkeeping)
60,000 Gateway 2000, Inc. 2,823,750
(Markets personal computers to consumers)
164,700 Microsoft Corporation 22,605,075
(Develops and markets a variety of microcomputer software, operating systems,
languages and application programs)
412,500 Oracle Systems Corporation 17,453,906
(Develops and markets computer software products)
250,000 Seagate Technology Incorporated 16,687,500
(Produces and markets computer drives)
-------------------------------------------
Total Consumer
Software/Services 140,873,331
-------------------------------------------
<PAGE>
Drugs (9.4%)
.............
40,000 Biochem Pharma, Incorporated 1,705,000
(Canadian pharmaceutical company specializing in products for human diseases)
400,000 Boston Scientific Corporation 21,750,000
(Develops, produces and markets medical devices worldwide)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Drugs (9.4%) - continued
.........................
100,000 Centacor Incorporated $2,937,500
(Develops human health care products)
200,000 Elan Corporation plc 5,550,000
(Produces controlled-absorption drug delivery systems)
230,000 Eli Lilly & Company 16,215,000
(Pharmaceutical company)
640,000 Merck & Co., Incorporated 47,440,000
(Pharmaceutical and consumer health care products)
488,000 Pfizer Incorporated 40,382,000
(Produces ethical drugs, hospital products, animal health items, specialty
chemicals and consumer products)
300,000 U S Healthcare Incorporated 11,362,500
(Owns and operates health maintenance organizations)
-------------------------------------------
Total Drugs 147,342,000
-------------------------------------------
Electric (0.4%)
...............
200,000 Entergy Corporation 5,600,000
(Holding company whose subsidiaries provide electricity to Arkansas, Louisiana,
Mississippi and Texas)
-------------------------------------------
Total Electric 5,600,000
-------------------------------------------
Electronics (4.0%)
.................
383,000 Atmel Corporation 9,718,625
(Designs, develops, manufactures and markets high performance circuits)
480,000 General Electric Company 46,440,000
(Multi-industry company, primarily electronics)
130,000 Varian Associates Inc. 5,866,250
(Produces electronic equipment)
-------------------------------------------
Total Electronics 62,024,875
-------------------------------------------
Entertainment (0.4%)
....................
86,300 Disney (Walt) Company 5,685,013
(Diversified international, family entertainment company)
-------------------------------------------
Total Entertainment 5,685,013
<PAGE>
-------------------------------------------
Financial Services (5.7%)
..........................
690,000 American Express Company 32,430,000
(Offers diversified financial and investment services world-wide)
50,000 Associates First Capital Corporation 2,168,750
(Offers consumer finance services to customers throughout America)
580,000 Federal National Mortgage Association 22,692,500
(Holds mortgages and issues and sells guaranteed mortgage-backed securities)
141,500 Household International Corporation 12,522,750
(Financial services company, serves individuals and businesses)
508,650 MBNA Corporation 19,201,538
(Issues premium and standard bank credit cards)
-------------------------------------------
Total Financial Services 89,015,538
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUTED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Food & Beverages (1.8%)
.......................
153,900 CPC International Inc. $12,138,863
(Major food distribution company)
150,000 Lone Star Steakhouse & Saloon 3,843,750
(Operates a chain of over 104 mid-price, full-service restaurants)
100,000 Outback Steakhouse, Inc. 2,318,750
(Operates 173 full-service restaurants under the "Outback Steakhouse" name)
338,000 PepsiCo, Inc. 10,013,250
(Worldwide competitor in soft drink, snack food and restaurant business)
-------------------------------------------
Total Food & Beverages 28,314,613
-------------------------------------------
Health Care (2.1%)
..................
540,000 Johnson & Johnson 26,595,000
(Manufactures and sells consumer and pharmaceutical products)
90,000 PacifiCare Health Systems, Inc. 6,322,500
(Regionally focused health care company providing a wide range of managed
health care products)
-------------------------------------------
Total Health Care 32,917,500
-------------------------------------------
Insurance (5.3%)
.................
390,000 American International Group, Inc. 42,363,750
(Underwrites, through its insurance related subsidiaries, commercial and
industrial insurance)
200,000 Cigna Corporation 26,100,000
(Provides a variety of insurance products to individuals and businesses)
31,900 Highlands Insurance Group 630,025
(Commercial property and casualty insurance)
200,000 MGIC Investments Corp. 13,725,000
(Provides private mortgage coverage)
-------------------------------------------
Total Insurance 82,818,775
-------------------------------------------
Media (1.9%)
............
98,000 Gannett Inc. 7,435,750
(Publishes newspapers and operates television and radio stations)
1,457,649 U.S. West Media Group 22,775,765
(Provides multimedia services)
--------------------------------------------
Total Media 30,211,515
--------------------------------------------
<PAGE>
Medical Supplies/Services (1.1%)
................................
200,000 Medtronic, Inc. 12,875,000
(Manufactures pacemakers, heart valves, neurological stimulation devices, therapeutic
catheters and blood oxygenators)
110,000 Oxford Health Plans, Inc. 5,005,000
(Managed care company providing health benefit plans)
-------------------------------------------
Total Medical
Supplies/Services 17,880,000
-------------------------------------------
Miscellaneous Manufacturing (1.3%)
..................................
55,000 Caterpillar, Inc. 3,774,375
(Designs, manufactures and markets earthmoving, construction and materials
handling machinery)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Miscellaneous Manufacturing (1.3%) - continued
..............................................
220,000 Deere & Company $9,185,000
(Manufactures, distributes and finances the sale and lease of mobile power machinery)
132,000 Honeywell, Inc. 8,200,500
(Manufactures automation and control systems)
-------------------------------------------
Total Miscellaneous
Manufacturing 21,159,875
-------------------------------------------
Motor Vehicles (0.4%)
.....................
150,000 Harley-Davidson, Inc. 6,768,750
(Manufactures heavyweight motorcycles, recreational vehicles and specialized vehicles)
-------------------------------------------
Total Motor Vehicles 6,768,750
-------------------------------------------
Natural Gas/Petroleum (7.0%)
............................
135,000 British Petroleum Company plc 17,364,375
(Explores, produces, refines and retails petroleum products)
304,000 Enron Corporation 14,136,000
(Transports and markets natural gas)
460,000 Exxon Corporation 40,767,500
(World's largest oil company)
100,000 Mobil Corporation 11,675,000
(Holding company with operations in oil and chemicals)
154,000 Royal Dutch Petroleum Company - ADR 25,467,750
(Major multi-national petroleum company)
-------------------------------------------
Total Natural Gas/Petroleum 109,410,625
-------------------------------------------
Office Products (1.2%)
......................
422,000 Alco Standard Corporation 19,570,250
(Distributes office products and paper)
-------------------------------------------
Total Office Products 19,570,250
-------------------------------------------
<PAGE>
Other Equities (5.4%)
.....................
252,700 Eastman Kodak Company 20,152,825
(Provides products and services including cameras, photofinishing, film and plastics)
319,000 Halliburton Company 18,063,375
(Provides oil field equipment service, design, engineering, and
construction services)
485,000 Pall Corporation 12,428,125
(Operates three divisions: healthcare, aeropower and fluid processing)
408,000 Raytheon Company 20,094,000
(Large U.S. defense contractor)
360,600 Thermo Electron Corporation 13,161,900
(Through subsidiaries - manufactures and sells alternate energy and power plants,
analytical instruments and biomedical products)
-------------------------------------------
Total Other Equities 83,900,225
-------------------------------------------
Retail Stores (3.6%)
....................
500,000 General Nutrition Companies Inc. 9,125,000
(Retails vitamin, mineral and sports nutrition supplements)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Retail Stores (3.6%) - continued
.................................
360,000 Office Depot Inc. $7,065,000
(Operates a chain of office product warehouse stores)
230,000 Safeway Inc. 9,861,250
(Multi-regional food retailer)
806,000 Walgreen Company 30,426,500
(Largest drug store retailer)
-------------------------------------------
Total Retail Stores 56,477,750
-------------------------------------------
Technology (6.4%)
.................
147,000 Andrew Corporation 7,166,250
(International supplier of communication systems equipment and services)
154,000 Cisco Systems, Inc. 9,528,750
(Produces multi-protocol internetworking systems)
1,273,600 Comcast Corporation 18,785,600
(Domestic and international communications company)
159,000 Compaq Computers Incorporated 11,070,375
(Designs, develops, manufactures and markets personal computers)
294,000 Hewlett-Packard Company 12,972,750
(Produces computers, calculators, workstations, video displays, printers,
disc and tape drives, medical diagnostic and monitoring devices, and mass spectrometers)
359,800 Intel Corporation 39,533,025
(Leading manufacturer in semiconductor chips)
30,000 QUALCOMM, Incorporated 1,192,500
(Develops, manufactures, markets, licenses and operates communication systems
and products)
-------------------------------------------
Total Technology 100,249,250
-------------------------------------------
<PAGE>
Telecommunications (9.4%)
.........................
265,000 ADC Telecommunications Inc. 18,119,375
(Develops, manufactures and markets transmission systems for voice, data and
video networks)
150,000 American Telephone and Telegraph Company 5,231,250
(Operates domestically and internationally, providing communication products, services,
and systems)
480,000 Ameritech Corporation 26,280,000
(Telecommunications firm serving five Midwestern states)
294,000 Bell Atlantic Corporation 17,713,500
(Owns and operates various telephone subsidiaries and provides cellular service globally)
714,000 Cox Communications 13,209,000
(Fully-integrated diversified media and broadband communications company)
86,112 Lucent Technologies, Inc. 4,047,264
(Worldwide communications company)
200,000 MCI Communications Corporation 5,025,000
(Diversified communications company)
100,000 Paging Network, Inc. 1,712,500
(Provides paging services in 50 States and the District of Columbia)
1,900,000 Tele-Communications, Inc. 23,631,250
(Operates cable television systems)
228,000 Tellabs, Incorporated 19,408,500
(Designs, assembles, markets and services voice and data networking products)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL CAPITAL GROWTH FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (94.8%) Market Value
================================================================================================================================
Telecommunications (9.4%) - continued
.....................................
435,649 U S WEST, Incorporated $13,232,838
(Telecommunications firm serving 14 western states from Arizona to Washington)
-------------------------------------------
Total Telecommunications 147,610,477
-------------------------------------------
Transportation (1.6%)
.....................
123,000 Norfolk Southern Corp. 10,962,375
(Holding company of railroad and motor carriers)
600,000 Southwest Airlines Co. 13,500,000
(Provides scheduled air carrier service)
-------------------------------------------
Total Transportation 24,462,375
-------------------------------------------
-------------------------------------------
Total Common Stocks
(cost basis $1,083,645,755) 1,488,110,788
-------------------------------------------
Par Value Short-Term Obligations (5.2%)
===============================================================================================================================
$8,419,756 American Family Insurance Company 8,419,756
12,300,000 Countrywide 5.27% 11/19/96 12,267,590
344,349 General Mills Company 344,349
5,000,000 Merrill Lynch & Company 5.27% 11/1/96 5,000,000
18,672,000 Merrill Lynch & Company 5.25% 11/4/96 18,663,831
16,000,000 Merrill Lynch & Company 5.38% 11/7/96 15,985,653
17,000,000 Merrill Lynch & Company 5.26% 11/12/96 16,972,677
125,000 Pitney Bowes Credit Corporation 125,000
173,469 SaraLee Corporation 173,469
3,564,565 Wisconsin Electric Power Company 3,564,565
-------------------------------------------
Total Short-Term Obligations
(amortized cost basis $81,516,890)
81,516,890
-------------------------------------------
-------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $1,165,162,645)
$1,569,627,678
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : Long-term capital growth by investing primarily in common
stocks, and securities convertible into common stocks, of mid-sized companies.
The Fund Is : A diversified portfolio of mid-sized company common stocks and
convertible securities. The Fund may also invest in fixed-income investments and
cash equivalents under appropriate conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Common Stocks (96.3%) Market Value
================================================================================================================================
Advertising (0.4%)
..................
70,000 Universal Outdoor Holdings, Inc. $2,056,250
(Focuses on developing and maintaining a diverse base of local advertisers)
-------------------------------------------
Total Advertising 2,056,250
-------------------------------------------
Automobile Parts (0.5%)
.......................
60,000 Pep Boys-Manny, Moe & Jack 2,100,000
(Retailer of automotive parts and accessories, automotive maintenance and
installation of parts)
-------------------------------------------
Total Automobile Parts 2,100,000
-------------------------------------------
Business Services (1.7%)
........................
150,000 AccuStaff, Inc. 4,012,500
(National provider of temporary staffing personnel)
180,000 Alternative Resource Corporation 3,622,500
(Provides technical personnel that specialize in information services)
-------------------------------------------
Total Business Services 7,635,000
-------------------------------------------
Communication (0.2%)
....................
125,000 Paxson Communication Corporation 1,109,375
(Owns and operates a nationwide network of 36 TV stations dedicated to
infomercial programming as well as two network TV stations)
-------------------------------------------
Total Communication 1,109,375
-------------------------------------------
Computer Software (11.3%)
.........................
90,000 3Com Corporation 6,086,250
(Designs, produces and markets a broad range of ISO 9000-compliant global
data networking solutions)
110,000 Adobe Systems, Inc. 3,808,750
(Develops, markets and supports computer software products and technologies)
50,000 Broderbund Software, Inc. 1,406,250
(Publishes and develops personal computer software for the home, school and
small business market)
60,000 Edmark Corporation 652,500
(Publishes and distributes software to children and adults who are struggling
with fundamental skills)
110,000 Electronic Arts Inc. 4,125,000
(Develops, markets and distributes interactive entertainment software)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Computer Software (11.3%) - continued
.....................................
150,000 Gartner Group, Inc. $4,612,500
(Provides subscription-based research and analysis of computer hardware
and software)
70,000 HBO & Company 4,208,750
(Designs and sells computerized information systems to the healthcare industry)
170,000 Hyperion Software Corporation 3,463,750
(Develops and markets computer software)
185,000 Informix Corporation 4,104,688
(Develops, produces and markets database management programs and
spreadsheet packages)
110,000 Intuit, Inc. 2,970,000
(Develops and markets software products and related services)
140,000 Maxis, Inc. 1,820,000
(Provides entertainment and educational software)
120,000 Network General Corporation 2,895,000
(Designs, manufactures and sells software-based local area network
(LAN) and wide area network (WAN) analysis tools)
120,000 Parametric Technology Corporation 5,865,000
(Develops and markets integrated software for automating the mechanical
design process)
60,000 Primark Corporation 1,492,500
(Offers global information technology solutions combining software
and applications to worldwide databases)
150,000 Structural Dynamics Research Corporation 2,662,500
(Supplies mechanical design automation software and engineering
services to automotive, aerospace and industrial manufacturers)
35,000 Synopsys, Inc. 1,575,000
(Develops and markets computer software)
-------------------------------------------
Total Computer Software 51,748,438
-------------------------------------------
Consumer Products (0.8%)
........................
70,000 Tommy Hilfiger Corporation 3,640,000
(Designer and marketer of an upscale sportswear line)
-------------------------------------------
Total Consumer Products 3,640,000
-------------------------------------------
<PAGE>
Drugs (4.4%)
............
140,000 Biochem Pharma, Inc. 5,967,500
(Canadian pharmaceutical company specializing in products for human diseases)
45,000 Biogen, Inc. 3,352,500
(Biopharmaceutical company involved in developing and manufacturing drugs for
human healthcare)
100,000 Boston Scientific Corporation 5,437,500
(Develops, produces and markets medical devices worldwide)
340,000 ImmuLogic Pharmaceutical Corporation 2,847,500
(Develop treatments for allergies and autoimmune diseases)
160,000 Neurex Corporation 2,500,000
(Develops products primarily for the treatment of cardiorenal and neurological diseases)
-------------------------------------------
Total Drugs 20,105,000
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Electronics (9.1%)
..................
120,000 Amphenol Corporation $2,385,000
(Manufactures electrical, electronic and fiber optic connectors, coaxial and flat-ribbon
cable and interconnect systems)
190,000 Atmel Corporation 4,821,250
(Designs, develops, manufactures and markets high performance circuits)
100,000 Harman International Industries, Inc. 5,137,500
(Designs and manufactures high fidelity audio and video components)
95,000 ITI Technologies, Inc. 2,731,250
(Designs and manufactures wireless security systems)
180,000 Input/Output, Inc. 5,355,000
(Designs and manufactures seismic data acquisition systems)
180,000 Kent Electronics 4,117,500
(Distributes electronic connectors, wire cable, components and interconnect assemblies)
130,000 Linear Technology Corp. 4,355,000
(Manufactures linear integrated circuits)
240,000 Macromedia, Inc. 3,990,000
(Develops, markets and supports computer software programs)
100,000 Microchip Technology, Inc. 3,625,000
(Supplier of field 8-bit micro-controllers and related specialty memory products)
110,000 Sanmina Corporation 5,032,500
(Manufactures custom-designed backplane assemblies, sub-assemblies and circuit boards)
-------------------------------------------
Total Electronics 41,550,000
-------------------------------------------
Energy (0.5%)
............
50,000 ENSCO International, Inc. 2,162,500
(Provides a variety of services to the international petroleum industry, including
contract drilling of oil and gas worldwide)
-------------------------------------------
Total Energy 2,162,500
-------------------------------------------
Entertainment (0.7%)
....................
70,000 Gaylord Entertainment Co. 1,382,500
(Owns Opryland USA and music publishing and syndication businesses)
75,000 Regal Cinemas, Inc. 1,950,000
(Operates 125 multi-screen theaters with an aggregate of over nine theaters throughout
the U.S.)
-------------------------------------------
Total Entertainment 3,332,500
-------------------------------------------
<PAGE>
Environmental Control (0.8%)
............................
155,000 Tetra Tech, Inc. 3,448,750
(Provides environmental engineering and consulting services)
-------------------------------------------
Total Environmental Control 3,448,750
-------------------------------------------
Financial Services (1.5%)
.........................
70,000 Fiserv, Inc. 2,686,250
(Provides data processing and management systems)
110,000 SunAmerica, Inc. 4,125,000
(Financial services company specializing in retirement savings products and services)
-------------------------------------------
Total Financial Services 6,811,250
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Health Care (6.0%)
..................
220,000 Healthsource, Inc. $2,695,000
(Owns and manages health maintenance organizations)
150,000 MedPartners/Mullikin Inc. 3,168,750
(Develops, consolidates and manages integrated healthcare delivery systems)
90,000 PacifiCare Health Systems, Inc. 6,322,500
(Regionally focused health care company providing a wide range of managed
health care products)
75,000 PhyCor, Inc. 2,325,000
(Operates multi-specialty medical clinics)
110,000 Renal Treatment Centers, Inc. 2,942,500
(Provides dialysis treatments to patients suffering from chronic kidney failure)
160,000 Vencor, Inc. 4,740,000
(Provides long-term hospital care to chronically ill patients dependent on
life support systems)
60,000 Ventritex, Inc. 3,650,000
(Develops, designs and produces defibrillators for abnormal heart rhythms)
50,000 Vivra, Inc. 1,593,750
(Provides dialysis services to outpatients in independent facilities and to
inpatients in hospitals)
-------------------------------------------
Total Health Care 27,437,500
-------------------------------------------
Insurance (3.4%)
................
85,000 AMBAC, Inc. 5,312,500
(Provides insurance, investment and financial products and healthcare
information systems)
60,000 CMAC Investment Corporation 4,147,500
(Provides private mortgage insurance coverage)
70,000 The PMI Group, Inc. 3,998,750
(Provides private mortgage insurance coverage)
80,000 Vesta Insurance Group, Inc. 2,050,000
(Offers treaty reinsurance and primary insurance on selected personal and
commercial risks)
-------------------------------------------
Total Insurance 15,508,750
-------------------------------------------
Lodging (0.4%)
..............
100,000 La Quinta Inns, Inc. 2,000,000
(Operates and manages over 200 motels in Texas, California and Florida)
-------------------------------------------
Total Lodging 2,000,000
-------------------------------------------
<PAGE>
Machine-Diversified (2.1%)
..........................
150,000 Applied Power, Inc. 5,400,000
(Provides tools, equipment, systems and consumable items to a variety of end users)
152,000 Greenfield Industries 4,028,000
(Manufactures cutting tools and related products that are consumed during use)
-------------------------------------------
Total Machine-Diversified 9,428,000
-------------------------------------------
Media (2.5%)
............
75,000 Clear Channel Communications, Inc. 5,475,000
(Owns, operates and manages radio and television stations)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE ALL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Media (2.5%) - continued
........................
220,000 Evergreen Media Corporation $5,940,000
(Owns and operates 13 radio stations in 13 markets)
-------------------------------------------
Total Media 11,415,000
-------------------------------------------
Medical Supplies/Services (9.1%)
................................
110,000 Dentsply International, Inc. 4,633,750
(Manufactures and markets x-ray systems for the dental and medical markets)
80,000 Endosonics Corporation 1,010,000
(Develops, produces and sells angioplast and diagnostic imaging catheters)
280,000 Genzyme Corporation 6,440,000
(Researches and develops biopharmaceuticals for cartilage damage)
160,000 HEALTHSOUTH Corporation 6,000,000
(Offers rehabilitation services for disabled patients)
120,000 Idexx Laboratories, Inc. 4,710,000
(Develops and manufactures biotechnology-based detection systems)
130,000 Lincare Holdings, Inc. 4,875,000
(Provides oxygen and other respiratory therapy services to in-home patients)
110,000 Omnicare, Inc. 2,997,500
(Provider of pharmacy services to long-term care institutions such as nursing homes and
retirement centers)
120,000 Oxford Health Plans, Inc. 5,460,000
(Managed care company providing health benefit plans)
90,000 Target Therapeutics, Inc. 3,330,000
(Develops, produces, and markets disposable medical devices used to treat vascular
diseases of the brain)
200,000 Uromed Corporation 2,025,000
(Develops and manufactures products for the management of urological disorders)
-------------------------------------------
Total Medical
Supplies/Services 41,481,250
-------------------------------------------
Miscellaneous Manufacturing (1.6%)
..................................
140,000 Millipore Corporation 4,900,000
(Analyzes and purifies fluids using separation technology)
140,000 Wabash National Corporation 2,257,500
(Designs, manufactures and sells truck trailers)
-------------------------------------------
Total Miscellaneous
Manufacturing 7,157,500
-------------------------------------------
<PAGE>
Motor Vehicles (1.2%)
.....................
120,000 Harley-Davidson, Inc. 5,415,000
(Manufactures heavyweight motorcycles, recreational vehicles and specialized vehicles)
-------------------------------------------
Total Motor Vehicles 5,415,000
-------------------------------------------
Natural Gas (1.8%)
..................
130,000 Belco Oil & Gas Corporation 3,233,750
(Explores for, develops and produces natural gas and oil)
100,000 Petroleum Geo-Services A/S ADR 3,425,000
(Acquires marine data and markets company-owned data)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Natural Gas (1.8%) - continued
..............................
50,000 Reading & Bates Corporation $1,437,500
(Involved in the contract drilling business with worldwide exploratory and
development drilling)
-------------------------------------------
Total Natural Gas 8,096,250
-------------------------------------------
Office Products (0.9%)
.......................
100,000 Danka Business Systems plc 3,962,500
(Distributes and services office equipment)
-------------------------------------------
Total Office Products 3,962,500
-------------------------------------------
Other Equities (2.2%)
.....................
50,000 Danaher Corporation 2,043,750
(Manufactures automotive/transportation products and precision instrumentation
components)
205,000 Integrated Process Equipment Corp. 2,229,375
(Designs, manufactures, markets and services semiconductor processing equipment for
the Chemical Mechanical Planarization and cleaning of advanced integrated circuits)
200,000 Manpower Inc. 5,675,000
(Provides temporary and permanent placement services and training for customers' staffs)
-------------------------------------------
Total Other Equities 9,948,125
-------------------------------------------
Personal Computers (1.3%)
.........................
210,000 Data General Corporation 3,123,750
(Designs, manufactures and sells general purpose computer and communication
systems, peripherals and software products and services)
95,000 Sterling Commerce Inc. 2,671,875
(Global provider of electronic commerce software products and network services that
enable businesses to engage in business-to-business electronic communications
and transactions)
-------------------------------------------
Total Personal Computers 5,795,625
-------------------------------------------
Restaurant & Food Service (2.2%)
................................
250,000 Apple South, Inc. 2,937,500
(Operates 138 restaurants under the name "Applebee's Neighborhood Grill & Bar")
130,000 Lone Star Steakhouse & Saloon 3,331,250
(Operates a chain of over 104 mid-priced, full-service restaurants)
160,000 Outback Steakhouse, Inc. 3,710,000
(Operates 173 full-service restaurants under the "Outback Steakhouse" name )
-------------------------------------------
Total Restaurant
& Food Service 9,978,750
-------------------------------------------
<PAGE>
Retail Stores (10.8%)
.....................
100,000 Bed, Bath, & Beyond Inc. 2,525,000
(National operator of "superstores" selling domestic merchandise and
home furnishings)
270,000 CUC International, Inc. 6,615,000
(Membership-based consumer services company)
65,000 CompUSA, Inc. 3,006,250
(Operates retail computer stores and offers microcomputer related products)
134,000 Corporate Express, Inc. 4,371,750
(Sells office supplies through its telephone ordering system and facsimile data interchange)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Retail Stores (10.8%) - continued
.................................
150,000 Discount Auto Parts, Inc. $3,262,500
(Retailing company that operates stores throughout Florida)
120,000 Dollar General Corporation 3,330,000
(Operates general merchandise retail stores throughout western and southern states)
300,000 General Nutrition Companies, Inc. 5,475,000
(Retails vitamin, mineral and sports nutrition supplements)
110,000 Kohl's Corporation 3,960,000
(Operates 108 family oriented, specialty department stores in ten Midwestern states)
244,800 Staples, Inc. 4,559,400
(Owns and operates high-volume office superstores and markets office supplies)
100,000 Sunglass Hut International, Inc. 887,500
(Specialty retailer of prescription and non-prescription sunglasses and operates optical
and watch stores)
200,000 The Sports Authority Inc. 4,850,000
(Operates large format sporting goods stores in the United States and Canada)
130,000 US Office Products Company 3,770,000
(Supplies office products to corporate, commercial and industrial customers)
100,000 Viking Office Products, Inc. 2,912,500
(Sells office products to small and medium sized businesses through direct marketing,
catalogs and programs)
-------------------------------------------
Total Retail Stores 49,524,900
-------------------------------------------
Technology (5.2%)
.................
250,000 Comcast Corporation 3,687,500
(Communications company with domestic and international interests in cable television,
wireless and wireline telecommunications)
240,000 LSI Logic Corporation 6,360,000
(Designs, markets and provides service for application specific products)
95,000 Premisys Communications, Inc. 4,750,000
(Designs, manufactures and markets integrated access products for
telecommunications services)
160,000 QUALCOM, Inc. 6,360,000
(Develops, manufactures, markets, licenses and operates communications systems
and products)
80,000 Xilinx Inc. 2,620,000
(Supplier of field programmable gate arrays and CMOS programmable
logic devices)
-------------------------------------------
Total Technology 23,777,500
-------------------------------------------
<PAGE>
Telecommunications (8.3%)
.........................
50,000 ADC Telecommunications, Inc. 3,418,750
(Develops, manufactures and markets transmission systems for voice, data and
video networks)
90,000 Adtran, Inc. 3,285,000
(Designs, develops, produces, markets and services high speed digital
transmission products)
230,000 Arch Communications Group, Inc. 2,673,750
(Provides paging services in 13 states)
40,000 Ascend Communications, Inc. 2,615,000
(Develops, manufactures, sells and supports a broad range of high-speed digital wide
area network access products)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (96.3%) Market Value
===============================================================================================================================
Telecommunications (8.3%) - continued
.....................................
35,000 DSP Communications, Inc. $1,330,000
(Develops integrated low power chip sets for wireless personal
communications applications)
220,000 Glenayre Technologies, Inc. 5,665,000
(Manufactures telecommunications equipment and software)
120,000 Millicom International Cellular S.A. 4,770,000
(Develops and operates cellular telephone networks)
210,000 Paging Network, Inc. 3,596,250
(Provides paging services in 50 states and the District of Columbia)
120,000 Picturetel Corporation 3,240,000
(Develops, manufactures and markets visual telecommunications systems)
110,000 Teltrend, Inc. 3,630,000
(Designs, manufactures and markets telecommunications equipment used by
telephone companies)
60,000 U.S. Robotics, Inc. 3,772,500
(Designs, manufactures, markets and supports remote access servers, enterprise
communications systems, desktop/mobile client products and modems and telephony
products)
-------------------------------------------
Total Telecommunications 37,996,250
-------------------------------------------
Transportation (3.8%)
.....................
170,000 Atlantic Southeast Airlines, Inc. 3,570,000
(Regional air carrier offering service to 26 cities in the southwest)
220,000 Comair Holdings, Inc. 4,427,500
(Regional air carrier offering service to approximately 78 cities in the United States)
96,000 Heartland Express, Inc. 2,112,000
(Irregular route motor freight carrier)
109,000 Knight Transportation, Inc. 2,452,500
(Transports consumer goods, packaged foodstuffs, paper products, beverage
containers and commodities)
160,000 Landstar Systems, Inc. 3,780,000
(Provides a wide range of transportation services throughout the U.S., Mexico
and Canada)
30,000 Wisconsin Central Transportation Corp. 1,080,000
(Operates a regional railroad transporting a variety of freight)
-------------------------------------------
Total Transportation 17,422,000
-------------------------------------------
<PAGE>
Water Filtration (0.4%)
.......................
50,000 Culligan Water Technologies, Inc. 1,875,000
(Manufactures and distributes products that purify and treat water)
-------------------------------------------
Total Water Filtration 1,875,000
-------------------------------------------
Wholesale Special Line (1.2%)
.............................
125,000 AmeriSource Health Corporation 5,296,875
(Wholesales drugs through subsidiary)
-------------------------------------------
Total Wholesale Special Line 5,296,875
-------------------------------------------
-------------------------------------------
-------------------------------------------
Total Common Stocks
(cost basis $406,042,126) 439,215,838
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MID CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Par Value Short-Term Obligations (3.7%) Market Value
===============================================================================================================================
$1,644,239 American Family Insurance Company $1,644,239
5,500,000 Merrill Lynch & Company, Inc., 5.38% 11/6/96 5,495,890
9,271,000 Merrill Lynch & Company, Inc., 5.25% 11/4/96 9,266,944
125,000 Pitney Bowes Credit Corporation 125,000
87,167 Wisconsin Electric Power Company 87,167
-------------------------------------------
Total Short-Term Obligations
(amortized cost basis $16,619,240)
16,619,240
-------------------------------------------
-------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $422,661,366)
$455,835,078
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : Long-term capital growth by investing primarily in common
stocks, and securities convertible into common stocks of small companies.
The Fund Is : A diversified portfolio of small company common stocks and
convertible securities. The Fund may also invest in fixed-income investments and
cash equivalents under appropriate conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Advertising (0.8%)
..................
4,000 Outdoor Systems, Inc. $179,000
(Outdoor advertising company)
-------------------------------------------
Total Advertising 179,000
-------------------------------------------
Aerospace (0.7%)
................
8,000 Rohr Industries, Inc. 148,000
(Manufactures Nacelle Systems, and components, pylons, non-rating components
for jet engines)
-------------------------------------------
Total Aerospace 148,000
-------------------------------------------
Automobile Parts (1.1%)
.......................
2,000 Dura Automotive Systems, Inc. 240,000
(Designs and manufactures mechanical assemblies and integrated systems for the
auto industry)
-------------------------------------------
Total Automobile Parts 240,000
-------------------------------------------
Banking & Finance (0.8%)
........................
6,000 Texas Regional Bancshares, Inc. 193,500
(Registered bank holding company)
-------------------------------------------
Total Banking & Finance 193,500
-------------------------------------------
Bicycles (0.8%)
...............
14,000 RockShox, Inc. 178,500
(Designs, manufactures and markets high performance bicycle suspension products)
-------------------------------------------
Total Bicycles 178,500
-------------------------------------------
Biopharmaceuticals (0.7%)
.........................
25,000 IBAH, Inc. 165,625
(Develops and manufactures drugs for pharmaceutical companies)
-------------------------------------------
Total Biopharmaceuticals 165,625
-------------------------------------------
Building Materials (1.0%)
.........................
7,000 Diamond Home Services, Inc. 161,000
(Markets and sells installed improvement products including roofing systems, doors
and gutters)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Building Materials (1.0%) - continued
......................................
2,000 NCI Building Systems, Inc. $65,500
(Manufactures & markets metal building systems)
-------------------------------------------
Total Building Materials 226,500
-------------------------------------------
Business Services (0.7%)
........................
8,000 Alternative Resource Corporation 161,000
(Provides technical personnel for information services)
-------------------------------------------
Total Business Services 161,000
-------------------------------------------
Chemicals (1.4%)
................
5,000 Cambrex Corporation 156,250
(Manufactures and markets a broad line of specialty chemicals and fine chemicals)
12,000 Polymer Group, Inc. 153,000
(Manufactures and markets a broad range of nonwoven and woven polyolefin products)
-------------------------------------------
Total Chemicals 309,250
-------------------------------------------
Commercial Services (1.7%)
..........................
3,000 Mecon, Inc. 57,750
(Provider of operations benchmarking data, products and decision support)
4,000 Right Management Consultants 88,000
(Outplacement consulting firm)
20,000 SOS Staffing Services, Inc. 235,000
(Provides temporary staffing services in the western state region)
-------------------------------------------
Total Commercial Services 380,750
-------------------------------------------
Communication (2.1%)
....................
10,000 Allen Group, Inc. 158,750
(Supplier to the worldwide two-way wireless communications marketplace)
4,000 Black Box Corp. 135,000
(Provides communications, networking and connectivity solutions to businesses)
20,000 Paxson Communication Corporation 177,500
(Owns and operates a nationwide network of 36 TV stations dedicated to
infomercial programming as well as two network TV stations)
-------------------------------------------
Total Communication 471,250
-------------------------------------------
<PAGE>
Computer Software (9.0%)
.........................
6,000 Applix, Inc. 145,500
(Develops, markets and supports Applixware, an integrated family of software
applications and tools)
5,000 Broderbund Software, Inc. 140,625
(Publishes and develops personal computer software for the home, school and
small business markets)
12,000 Edmark Corporation 130,500
(Publishes and distributes software to children and adults who are struggling with
fundamental skills)
4,000 EPIC Design Technology, Inc. 98,000
(Develops, markets and supports a family of simulation and analysis software tools)
4,000 HCIA, Inc. 111,000
(Develops and markets integrated clinical and financial information systems and products)
9,000 Hyperion Software Corporation 183,375
(Develops and markets computer software)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Computer Software (9.0%) - continued
....................................
10,000 Industri-Matematik International Corp. $97,500
(Develops, markets and supports client/server application software)
11,000 Maxis, Inc. 143,000
(Provides entertainment and educational software)
10,000 Mechanical Dynamics, Inc.. 143,750
(Develops, markets and supports virtual prototyping solutions)
7,500 Memco Software Ltd. 136,875
(Develops, markets, licenses and supports security software)
10,000 OrCad, Inc. 102,500
(Develops, markets and supports Windows-based software products)
20,000 Restrac, Inc. 155,000
(Human resource staffing software)
8,000 Structural Dynamics Research Corporation 142,000
(Mechanical design automation software and engineering services)
11,000 Sync Research, Inc. 145,750
(Wide-area access network company)
12,000 Technology Modeling Associates, Inc. 128,250
(Provides physical simulation software to support integrated
circuit design and manufacturing)
-------------------------------------------
Total Computer Software 2,003,625
-------------------------------------------
Drugs (2.0%)
............
4,000 Biochem Pharma, Inc. 170,500
(Canadian pharmaceutical company specializing in products for human disease)
15,000 ImmuLogic Pharmaceutical Corporation 125,625
(Develops treatments for allergies and autoimmune diseases)
10,000 Neurex Corporation 156,250
(Develops products primarily for the treatment of cardiorenal and neurological diseases)
-------------------------------------------
Total Drugs 452,375
-------------------------------------------
Electrical Equipment (2.9%)
...........................
11,000 Altron, Inc. 162,250
(Produces and sells electronic interconnect products that are used
with printed circuit technology)
15,000 C.P. Clare Corporation 123,750
(Manufactures small signal electromagnetic and semi-conductor switches and relays)
20,000 California Amplifier, Inc. 165,000
(Designs, manufactures and markets amplifiers and products for the reception of
microwave signals)
10,000 Methode Electronics, Inc. 195,000
(Manufactures printed circuit boards, electronic connectors and automated test
equipment)
-------------------------------------------
Total Electrical Equipment 646,000
-------------------------------------------
<PAGE>
Electronics (6.6%)
..................
9,000 Actel Corporation 160,875
(Designs, develops and markets field programmable gate arrays and development system
software)
11,000 Digital Link Corporation 191,125
(Designs, manufactures, markets and services high-speed digital products)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Electronics (6.6%) - continued
..............................
3,500 Harman International Industries, Inc. $179,812
(Manufactures high fidelity audio and video components)
6,000 ITI Technologies, Inc. 172,500
(Manufactures wireless security systems)
7,000 Kent Electronics 160,125
(Distribution of electronic connectors, wire and cable, components and
interconnect assemblies)
8,000 Macromedia, Inc. 133,000
(Develops, markets and supports computer software programs)
3,000 Sanmina Corporation 137,250
(Manufactures custom-designed backplane assemblies, sub-assemblies and circuit boards)
14,000 Sierra Semiconductor Corporation 182,875
(Supplies high performance mixed signal integrated circuits)
6,000 Sipex Corporation 158,250
(Manufactures, markets and sells analog integrated circuits)
-------------------------------------------
Total Electronics 1,475,812
-------------------------------------------
Entertainment (1.2%)
....................
6,000 Golden Bear Golf, Inc. 108,000
(Develops, markets and manages golf-related businesses)
7,000 K2, Inc. 161,000
(Designs, manufactures and markets brand name sporting goods and other
recreational products)
-------------------------------------------
Total Entertainment 269,000
-------------------------------------------
Environmental Control (0.6%)
............................
6,000 Tetra Tech, Inc 133,500
(Provides environmental engineering and consulting services)
-------------------------------------------
Total Environmental Control 133,500
-------------------------------------------
Financial Services (1.8%)
.........................
6,000 Bank United Corp. 159,750
(Provides financial services to consumers and businesses in Texas and other
selected markets)
3,000 Hambrecht & Quist Group 59,625
(Investment bank focused on emerging growth companies and growth oriented investors)
5,000 Sirrom Capital Corporation 182,500
(Closed-end investment company that makes loans to small, privately owned companies)
-------------------------------------------
Total Financial Services 401,875
-------------------------------------------
<PAGE>
Food & Beverages (1.1%)
.......................
9,000 Boston Beer Company, Inc. 111,375
(Produces and markets craft-brewed beers and ales)
7,000 Dominick's Supermarkets, Inc. 139,125
(Operates 97 supermarket stores in the Chicago metro area under the "Dominick's"
and "Omni" names)
-------------------------------------------
Total Food & Beverages 250,500
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Health Care (7.0%)
..................
14,000 American Oncology Resources, Inc. $112,000
(Provides comprehensive management services to 12 oncology practices in nine states)
12,000 Amylin Pharmaceuticals, Inc. 135,000
(Develops novel therapeutic products)
4,000 Enterprise Systems, Inc. 64,500
(Develops, markets, installs and services an integrated suite of application software
products that assist healthcare providers in managing their operations)
12,000 Healthsource, Inc. 147,000
(Owns and manages health maintenance organizations)
6,000 MedPartners/Mullikin, Inc. 126,750
(Develops, consolidates and manages integrated healthcare delivery systems)
12,000 Meridian Diagnostics, Inc. 126,000
(Develops, manufactures and markets immunodiagnostic test kits and reagents for use in
hospitals and research labs)
8,000 National Surgery Centers, Inc. 216,000
(Owns and operates freestanding multi-specialty ambulatory surgery centers)
12,000 Raytel Medical Corporation 132,000
(Provides healthcare services and outpatient diagnostic imaging services)
4,000 Renal Treatment Centers, Inc. 107,000
(Provides dialysis treatments to patients suffering from chronic kidney failure)
4,400 Sierra Health Services, Inc. 125,950
(Owns and operates a health maintenance organization)
8,000 Superior Consultant Holdings Corporation 196,000
(Healthcare consulting firm that provides a wide range of information
technology consulting)
10,000 Transition Systems, Inc. 95,000
(Provides integrated clinical and financial decision support systems for hospitals)
-------------------------------------------
Total Health Care 1,583,200
-------------------------------------------
<PAGE>
Insurance (4.2%)
................
5,000 Amerin Corporation 98,750
(Provides private mortgage insurance to mortgage bankers, banks and lenders)
5,000 CapMAC Holdings Inc. 166,875
(Provides financial guaranty insurance, principally of asset-backed obligations)
7,000 Risk Capital Holdings, Inc. 126,000
(Through its wholly-owned subsidiary, provides reinsurance services)
3,000 The PMI Group, Inc. 171,375
(Provides private mortgage insurance and various services)
8,000 United Dental Care, Inc. 240,000
(Manages dental benefits)
6,000 Vesta Insurance Group, Inc. 153,750
(Offers treaty reinsurance and primary insurance of selected personal and
commercial risks)
-------------------------------------------
Total Insurance 956,750
-------------------------------------------
Machine Diversified (1.4%)
..........................
6,000 Applied Power, Inc. 216,000
(Provides tools, equipment, systems and consumable items to a wide variety of end-users)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Machine Diversified (1.4%) - continued
......................................
4,200 Greenfield Industries $111,300
(Manufactures cutting tools and related products that are consumed during use)
-------------------------------------------
Total Machine Diversified 327,300
-------------------------------------------
Media (1.3%)
............
5,000 Evergreen Media Corporation 135,000
(Owns & operates 34 radio stations in 13 markets)
10,000 Granite Broadcasting Corporation 115,000
(Owns & operates nine network-affiliated television stations)
2,000 Metro Networks, Inc. 40,500
(Provides traffic reporting services to the television and radio broadcast industries)
-------------------------------------------
Total Media 290,500
-------------------------------------------
Medical Supplies/Services (3.7%)
................................
4,000 Cephalon, Inc. 89,500
(Develops products to treat neurological diseases and disorders)
10,000 Endosonics Corporation 126,250
(Develops, produces and sells angioplast and diagnostic imaging catheters)
2,400 Gulf South Medical Supply, Inc. 52,800
(Distributes medical supplies and related items to the long-term healthcare industry)
4,000 Patterson Dental Company 112,000
(Distributes dental supplies and equipment)
5,000 Physio-Control International Corporation 97,500
(Manufactures and markets vital sign devices)
3,000 Sola International, Inc. 108,375
(Manufactures and distributes eyeglass lenses)
4,000 Target Therapeutics, Inc. 148,000
(Develops, produces and markets disposable medical devices used to treat
vascular diseases of the brain)
10,000 Uromed Corporation 101,250
(Develops and manufactures products for the management of urological disorders)
-------------------------------------------
Total Medical
Supplies/Services 835,675
-------------------------------------------
Metals (1.0%)
.............
6,000 Gibraltar Steel Corporation 145,500
(Processes value-added steel products)
5,000 NN Ball & Roller, Inc. 67,500
(Supplies steel balls and rollers to manufacturers)
-------------------------------------------
Total Metals 213,000
-------------------------------------------
<PAGE>
Miscellaneous Manufacturing (1.8%)
..................................
17,000 Integrated Process Equipment Corporation 184,875
(Designs, manufactures, markets and services semiconductor processing equipment for
the Chemical, Mechanical, Planarization and cleaning of advanced integrated circuits)
13,000 Wabash National Corporation 209,625
(Designs, manufactures and sells truck trailers)
-------------------------------------------
Total Miscellaneous
Manufacturing 394,500
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Motor Vehicles (1.7%)
.....................
10,000 Custom Chrome, Inc. $188,750
(Wholesale supplier of parts and accessories for motorcycles)
7,000 Tower Automotive, Inc. 203,875
(Produces equipment for the automotive industry)
-------------------------------------------
Total Motor Vehicles 392,625
-------------------------------------------
Natural Gas & Oil (2.5%)
........................
7,000 Belco Oil & Gas Corporation 174,125
(Explores for, develops and produces natural gas and oil)
6,000 Petroleum Geo-Services A/S 205,500
(Acquires marine seismic data and markets company-owned data)
11,000 Pride Petroleum Services, Inc. 192,500
(Well servicing company providing rigs and crews to oil and gas companies)
-------------------------------------------
Total Natural Gas & Oil 572,125
-------------------------------------------
Pharmaceuticals (2.1%)
......................
6,000 Curative Technologies, Inc. 136,500
(Healthcare service company that treats non-healing conditions)
2,000 Dura Pharmaceuticals, Inc. 69,000
(Marketer of prescription pharmaceutical products)
6,500 Martek Biosciences Corporation 139,750
(Researches, develops and manufactures nutritional supplements from microalgae)
7,000 Pharmaceutical Product Development, Inc. 133,875
(Contract research organization providing a variety of integrated product
development services)
-------------------------------------------
Total Pharmaceuticals 479,125
-------------------------------------------
Restaurants/Food Service (1.9%)
...............................
10,000 Apple South, Inc. 117,500
(Operates 138 restaurants under the name "Applebee's Neighborhood Grill & Bar")
3,500 Rainforest Cafe, Inc. 113,750
(Operates combination retail/restaurant facilities based on a rainforest theme)
20,000 Taco Cabana, Inc. 117,500
(Operates 125 Mexican food restaurants)
10,000 Uno Restaurant Corporation 76,250
(Operates and franchises 84 "Pizza Uno" casual dining restaurants and a frozen
foods division)
-------------------------------------------
Total Restaurants/
Food Service 425,000
-------------------------------------------
<PAGE>
Retail Stores (5.4%)
.....................
7,000 Abercrombie & Fitch Company 154,000
(Retails casual apparel for men and women approximately 15 to 50 years of age)
15,000 Creative Computers, Inc. 151,875
(Direct marketer of personal computer hardware, software and peripheral products)
7,000 Department 56, Inc. 154,000
(Designs, imports and distributes collectibles and specialty giftware)
10,000 Discount Auto Parts, Inc. 217,500
(Retailing company that operates stores throughout Florida)
10,000 Garden Ridge Corporation 96,250
(Retails home accessories, seasonal products and crafts)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Retail Stores (5.4%) - continued
................................
5,000 The Sports Authority Inc. $121,250
(Operates large format sporting goods stores in the United States and Canada)
6,000 U.S. Office Products Company 174,000
(Supplies office products to corporate, commercial and industrial customers)
5,000 Wet Seal, Inc. 157,500
(Retailer of moderately priced casual apparel)
-------------------------------------------
Total Retail Stores 1,226,375
-------------------------------------------
Telecommunications (3.8%)
.........................
13,000 Arch Communications Group, Inc. 151,125
(Provides paging services in 13 states)
10,000 Digital Systems International, Inc. 136,250
(Produces, sells and supports telecommunication systems, mainly telephone call
processing systems)
4,000 Level One Communications, Inc. 113,000
(Designs, develops and markets mixed signal application specific standard
integrated circuit products)
25,000 PageMart Wireless, Inc. 187,500
(Provider of wireless messaging services)
2,000 Premisys Communications, Inc. 100,000
(Designs, manufactures and markets integrated access products for
telecommunications services)
5,000 Teltrend, Inc. 165,000
(Designs, manufactures and markets telecommunications equipment used by
telephone companies)
-------------------------------------------
Total Telecommunications 852,875
-------------------------------------------
<PAGE>
Transportation (5.6%)
.....................
9,000 Atlantic Southeast Airlines, Inc. 189,000
(Regional air carrier offering service to 26 cities in the southwest)
8,000 Hub Group, Inc. 178,000
(Provides intermodal marketing and third party logistics services)
8,000 JB Hunt Transport Services, Inc. 117,000
(Irregular route truckload carrier, transporting general commodities throughout the
continental US)
4,400 Knight Transportation, Inc. 99,000
(Transports consumer goods, packaged foodstuffs, paper products, beverage containers
and commodities)
7,000 Landstar Systems, Inc. 165,375
(Provides a wide range of transportation services throughout the U.S., Mexico
and Canada)
15,000 Mesa Airlines, Inc. 138,750
(Provides scheduled commuter flights to 30 states plus the District of Columbia)
6,000 Midwest Express Holdings, Inc. 204,000
(Operates a fleet of 19 passenger jet aircraft that caters to business travelers)
8,000 Swift Transportation Co, Inc. 182,000
(Regional truckload carrier operating throughout the United States)
-------------------------------------------
Total Transportation 1,273,125
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL SMALL CAP STOCK FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (82.4%) Market Value
===============================================================================================================================
Water Filtration (0.7%)
.......................
4,000 Culligan Water Technologies, Inc. $150,000
(Manufactures and distributes products that purify and treat water)
-------------------------------------------
Total Water Filtration 150,000
-------------------------------------------
Wholesale Special Line (1.3%)
..............................
2,000 AmeriSource Health Corporation 84,750
(Wholesales drugs through subsidiary)
15,000 Richey Electronics, Inc. 131,250
(Distributes electronic components)
6,000 The Peak Technologies Group 70,500
(Distributor and systems integrator of bar code data collection equipment and systems)
-------------------------------------------
Total Wholesale Special Line 286,500
-------------------------------------------
-------------------------------------------
Total Common Stocks
(cost basis $18,380,338) 18,544,737
-------------------------------------------
Par Value Short-Term Obligations (17.6%)
===========================================================================================================================
$1,028,104 American Family Insurance Company 1,028,104
226,610 General Mills Company 226,610
1,000,000 Merrill Lynch & Company, Inc. 5.26% 11/13/96 998,247
716,383 Pitney Bowes Credit Corporation 716,383
573,699 Sara Lee Corporation 573,699
434,130 Wisconsin Electric Power Company 434,130
-------------------------------------------
Total Short-Term Obligations
(amortized cost basis $3,977,173)
3,977,173
-------------------------------------------
-------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $22,357,511)
$22,521,910
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : Long-term capital growth by investing in foreign securities.
The Fund Is : A diversified portfolio of foreign stocks in at least three
different countries not including the United States. The Fund also may invest up
to 20% of its assets in bonds under appropriate conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Argentina (1.9%)
................
50,000 Cresud SA Food & Agriculture $89,018
(Argentine farm company)
85,864 IRSA Inversiones y Representaciones SA Real Estate 262,796
(Invests in and develops industrial, commercial and
residential real estate)
425,000 Ledesma S.A.I.C. Food & Agriculture 535,607
(Produces and sells sugar, alcohol and fruit)
450,000 Siderca S.A.I.C. Capital Goods 708,892
(Manufactures and sells seamless steel pipes)
-------------------------------------------
Total Argentina 1,596,313
-------------------------------------------
Australia (0.6%)
................
286,053 Spotless Services Limited Commercial Services 555,817
(Operates food catering and textile rental services)
-------------------------------------------
Total Australia 555,817
-------------------------------------------
Austria (1.2%)
..............
12,000 VAE AG Misc.- Manufacturing 1,069,537
(Manufactures and sells railroad turnouts, and
turnout components)
-------------------------------------------
Total Austria 1,069,537
-------------------------------------------
Belgium (0.8%)
..............
5,000 Deceuninck Plastics Industries SA Building Materials 734,210
(Produces PVC windows and door profiles)
-------------------------------------------
Total Belgium 734,210
-------------------------------------------
Canada (3.1%)
.............
50,000 Canadian Pacific, Ltd. Conglomerate 1,262,500
(Interests in transportation, energy, real estate, hotels
and telecommunications)
6,500 Franco-Nevada Mining Corp., Ltd. Gold 278,710
(Receives royalties from gold mines)
50,000 Noranda, Inc. Metals-Diversified 1,099,925
(Produces copper and other metals and holds
interests in oil and gas companies)
-------------------------------------------
Total Canada 2,641,135
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Denmark (1.5%)
..............
20,000 Carlsberg International A/S `B' Food & Beverage $1,262,991
(Produces and sells Carlsberg and Tuborg beers)
-------------------------------------------
Total Denmark 1,262,991
-------------------------------------------
Finland (0.7%)
...............
10,000 Vaisala Oy A Technology 617,897
(Develops and manufactures electronic measurement
systems and equipment for meteorology)
-------------------------------------------
Total Finland 617,897
-------------------------------------------
France (10.6%)
..............
10,000 Compagnie Generale des Eaux Utilities 1,196,116
(Service group that provides municipalities with water
and environment services, also owns interests in real
estate and communications businesses)
2,500 Conflandey SA Iron/Steel 124,750
(Produces fine galvanized wires)
8,500 Elf Aquitaine Oil-International 680,240
(Major integrated oil and gas company; also produces
chemicals and pharmaceuticals)
12,000 Emin Leydier Forest Products & Paper 916,174
(Manufactures corrugated paper and cardboard)
18,000 Eramet Mining 835,833
(Involved in the refining and production of nickel,
special metals and steel)
5,000 FIMALAC SA Holdings-Diversified 460,045
(Holding company whose subsidiaries are involved in
precious metals, chemicals, services, communication
and real estate)
5,500 Gaumont SA Entertainment 439,401
(Produces and distributes films and television
programming, manages theaters)
8,500 Marine-Wendel SA Holdings-Diversified 767,433
(Holding company for computer services and
packaging group)
<PAGE>
4,038 Groupe NSC Machine-Diversified 513,030
(Manufactures and markets textile machinery)
3,250 Promodes C.I. Retail Stores 647,048
(Owns and operates hypermarkets, convenience
stores and supermarkets)
4,000 Rougier SA Forest Products 266,238
(Operates forestry concessions in Africa; also
produces wood paneling)
1,500 Sabeton SA Holding Company 220,234
(Investment company with interests in real estate,
food and agricultural businesses)
2,500 Eurafrance Holding Company 1,093,830
(Financial holding company)
750 Societe Sucriere de Pithiviers-le-Vieil Food & Agriculture 481,579
(Manufactures sugar from beets)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
France (10.6%) - continued
...........................
2,500 Taittinger C.I. Wine & Spirits $489,409
(Produces and sells champagne; also owns hotels)
-------------------------------------------
Total France 9,131,360
-------------------------------------------
Germany (5.6%)
..............
20,000 Bayer AG Chemicals 756,014
(Produces polymers, organic, industrial, pharmaceuticals,
agrochemicals and imaging technology products)
3,500 Bertelsmann AG D.R.C. Publishing/Printing 467,684
(Produces and sells books, magazines, and other media
for music, literature, TV and film)
3,000 Buderus AG Misc.-Manufacturing 1,356,066
(Manufactures a variety of heating products; also active
in casting, stainless steel and aircraft equipment)
2,500 Degussa AG Conglomerate 980,538
(Manufactures and produces a variety of metals; also
active in pharmaceuticals and specialty chemicals)
20,000 IVG Holding AG Real Estate 709,754
(Manages real estate properties and provides other
services including truck leasing and storage facility rental)
20,000 SKW Trostberg AG Building Materials 587,497
(Produces natural and synthetic ingredients for food
and cosmetics industries; also manufactures
specialized products for the construction industry.)
---------------------------------------
Total Germany 4,857,553
---------------------------------------
Hong Kong (3.9%)
................
6,500,000 Burwill Holdings Ltd Distributor/Wholesale 706,129
(Metal division and investment division)
2,020,015 CDL Hotels International Ltd. Lodging 1,044,975
(Investment holding company whose subsidiaries
own and operate hotels globally)
1,000,000 Shaw Brothers (Hong Kong) Limited Entertainment 1,060,487
(Involved in film production and distribution as well as
T.V. programming)
650,000 South China Morning Post Holdings Corporation Publishing/Printing 554,815
(Publishes and sells the "South China Morning Post",
"South China Sunday Morning Post")
-------------------------------------------
Total Hong Kong 3,366,406
-------------------------------------------
Israel (0.5%)
.............
20,000 Super-Sol Retail Store 447,302
(Operates a chain of retail grocery stores and
supermarkets under the "Supersol" and
"Hyperkol" names)
-------------------------------------------
Total Israel 447,302
-------------------------------------------
<PAGE>
Italy (3.2%)
............
100,000 Avir Finanziatria SpA Packaging & Container 861,279
(Holding company for a group that produces glass
bottles and other glass containers)
100,000 Arnoldo Mondarori Editore SpA Publishing/Printing 738,616
(Second-largest publishing company in Italy)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Italy (3.2%) - continued
........................
1,850,000 Montedison SpA (non-convertible savings share) Conglomerate $1,171,233
(Industrial holding company whose subsidiaries have
activities in chemicals, energy, agro-industrial services)
-------------------------------------------
Total Italy 2,771,128
-------------------------------------------
Japan (13.0%)
..............
55,000 Aida Engineering Ltd. Machine-Diversified 391,683
(Leading manufacturer of presses)
26,500 Chofu Seisakusho Machine-Diversified 605,768
(Manufactures air conditioners and water heaters)
100,000 The Dai-Tokyo Fire & Marine Insurance Co., Ltd. Insurance 625,110
(Nonlife insurance company)
35,000 Fuji Photo Film Co., Ltd. ADR Photographic Equipment 1,001,875
Manufactures photographic equipment, film and
imaging systems)
200,000 Hanshin Electric Railway Co., Ltd. Transportation-Rail 812,379
(Major railway company operates shortest line among
leading private railway operators)
2,500 Hitachi, Ltd. ADR Technology 223,438
(Manufactures electronic and electrical products)
65,000 Iino Kaiun Kaisha, Ltd. Transportation/Shipping 268,595
(Carrier and specialized carrier operator)
12,000 Ito-Yokado Co., Ltd. Retail Stores 599,261
(Leading department store and convenience
store operator)
150,000 The Koa Fire & Marine Insurance Co. Insurance 879,638
(Medium-scale nonlife insurance company specialized
in auto and fire insurance)
100,000 The Nichido Fire & Marine Insurance Co., Ltd. Insurance 624,231
(Medium-ranking nonlife insurance firm)
45,000 Nisshinbo Industries, Inc. Textiles 392,078
(Manufactures cotton fabrics and chemical and
synthetic fibers)
45,000 Nittetsu Mining Co., Ltd. Mining 385,748
(Limestone mining company)
20,000 Shimano Inc. Bicycles 356,954
(Major maker of bicycle parts and fishing tackle)
<PAGE>
85,000 Shoei Co., Ltd. Holding Company 1,008,880
(Manufactures electronic parts including aluminum
electrolytic capacitors; also active in the
real estate business)
30,000 Sotoh Co., Ltd. Textiles 313,874
(Leading dyer-finisher of woolen fabrics)
12,000 T. Hasegawa Co., Ltd. Fragrances & Flavors 253,209
(Manufactures natural and synthetic fragrances
and flavors)
65,000 Tachi-S Co. Limited Auto Parts-Original Equipment 668,630
(Manufactures automobile seats)
6,000 Toho Co., Ltd. Entertainment 923,158
(One of the Big 4 in the movie industry)
55,000 The Tokio Marine & Fire Insurance Co., Ltd. Insurance 604,449
(Writes marine, fire and casualty, automobile and
allied lines of insurance)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Japan (13.0%) - continued
..........................
6,000 Tsutsumi Jewelry Co., Ltd. Jewelry, Watches, Gemstones $189,379
(Manufacturer, wholesaler and retailer of jewelry)
10,000 Yoshimoto Kogyo Co., Ltd. Entertainment 132,759
(Major entertainment company)
-------------------------------------------
Total Japan 11,261,096
-------------------------------------------
Luxembourg (0.7%)
.................
250 Socfinasia Food & Agriculture 583,320
(Holding company that has interests in Asian rubber
and palm oil plantations)
-------------------------------------------
Total Luxembourg 583,320
-------------------------------------------
Mexico (1.0%)
.............
225,000 Industrias Pe-oles S.A. de C.V. Mining 893,311
(Explores for and markets minerals and non-ferrous
metals including lead, zinc and silver)
-------------------------------------------
Total Mexico 893,311
-------------------------------------------
Netherlands (2.7%)
..................
20,000 Apothekers Cooperatie OPG U.A. Wholesale Special 518,929
(Wholesaler of pharmaceuticals in the Netherlands
and Belgium)
35,000 German City Estates NV Real Estate 553,131
(Netherlands-based real estate investment company
with commercial property located in various
German cities)
35,000 Philips Electronics NV ADR Electronics 1,233,750
(Manufactures lighting products, consumer electronics,
home appliances, medical systems and
industrial electronics)
-------------------------------------------
Total Netherlands 2,305,810
-------------------------------------------
<PAGE>
New Zealand (4.1%)
..................
100,000 Apple Fields Limited Food & Agriculture 38,198
(Owns and manages apple orchards and dairy farms)
450,000 Carter Holt Harvey Limited Forest Products & Paper 1,012,237
(Owns large forest plantations and manufactures
building products)
575,000 Shortland Properties Limited Real Estate 398,599
(Owns real estate properties)
1,100,425 Tasman Agriculture Limited Food & Agriculture 918,513
(Owns and manages large dairy farms)
150,000 Wilson & Horton Group Limited Publishing/Printing 1,167,150
(Publishes and markets newspapers and magazines)
-------------------------------------------
Total New Zealand 3,534,697
-------------------------------------------
Norway (1.5%)
.............
85,000 Schibsted A/S Publishing/Printing 1,299,959
(Publishes newspapers and other publications in
Norway; has interests in local TV channels)
-------------------------------------------
Total Norway 1,299,959
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Panama (0.5%)
..............
8,500 Banco Latinoamericano de Exportaciones SA Financial Services $444,125
(Specialized multinational bank established to finance
foreign trade in Latin America and the
Caribbean region)
-------------------------------------------
Total Panama 444,125
-------------------------------------------
Portugal (1.0%)
...............
10,000 Companhia de Celulose do Caima SA Forest Products & Paper 185,984
(Pulp producer with paper mill operations in Portugal)
56,200 Espirito Santo Financial Holding SA ADR Financial Institutions 681,425
Holding company for Banco Espirito Santo, a major
Portuguese bank)
-------------------------------------------
Total Portugal 867,409
-------------------------------------------
Singapore (3.4%)
.................
225,000 Clipsal Industries Ltd. Electrical Equipment 720,000
(Manufactures and markets electrical
installation products)
450,000 Intraco Ltd. Holdings-Diversified 689,900
(Involved in international trading, industrial marketing
and distribution)
77,000 Singapore Bus Service Ltd. Transportation 412,627
(Operates bus service in Singapore)
825,000 Thakral Corporation Ltd. Manufacturing 585,750
(Manufactures audio, visual, telecommunication and
household electrical products)
250,000 Times Publishing Ltd. Publishing/Printing 546,526
(Publishes, prints, distributes and sells books, directories,
and magazines)
-------------------------------------------
Total Singapore 2,954,803
-------------------------------------------
South Africa (0.7%)
...................
30,000 Minorco SA ADR Metals & Mining 633,750
(Natural resources group with interests in agribusiness,
mining and processing metals and industrial materials)
-------------------------------------------
Total South Africa 633,750
-------------------------------------------
<PAGE>
South Korea (1.1%)
...................
48,000 LG Electronics Co., Ltd. Electronics 242,400
(Manufactures cordless phones and other
telecommunications equipment)
20,000 LG Industrial Systems Manufacturing 510,247
(Manufacturing)
5,000 Youngchang Akki Co. Leisure 168,672
(Manufactures grand, upright and electric pianos as
well as other musical instruments)
-------------------------------------------
Total South Korea 921,319
-------------------------------------------
Spain (1.1%)
............
1,500 Corporac'on Financiera Alba SA Holdings-Diversified 127,084
(Industrial holdings company with interests in retail,
financial services and communications)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
Spain (1.1%) - continued
........................
165,000 Energia e Industrias Arago-esas SA Chemicals $846,519
(Fully integrated PVC producer)
-------------------------------------------
Total Spain 973,603
-------------------------------------------
Sweden (4.5%)
.............
45,000 AssiDoman AB Forest Products 1,113,946
(Swedish forestry group)
55,000 IRO AB Misc.-Manufacturing 628,380
(Produces yarn feeders for weaving and
knitting machines)
25,000 Investor AB `B' Investment Company 1,009,216
(Investment company)
27,500 Orrefors Kosta Boda AB Manufacturer 636,759
(Manufactures hand-made and machine-made crystals
and glass products)
25,600 Terra Mining AB Mining 512,819
(Prospecting, mining and gold producing)
-------------------------------------------
Total Sweden 3,901,120
-------------------------------------------
Switzerland (6.0%)
..................
145 Bank for International Settlements (U.S. tranche) Gold 1,301,740
(The central bank of all central banks)
1,750 Kuehne & Nagel International AG Bearer Transportation 924,565
(Transports freight worldwide)
175 Lindt & Spruengli AG PC Food & Beverages 289,882
(Chocolate processor and manufacturer)
500 Schindler Holding AG Capital Goods 511,639
(Maintains airports, subway stations and
railroad terminals)
3,500 Sika Finanz AG Bearer Building Materials 814,730
(Produces specialty products for water management)
2,500 Societe Generale D'Affichage SA D.R.C. Advertising 1,161,913
(Provides billboard advertising)
1,155 Swissair AG D.R.C. Airlines 151,406
(Operates an international airline for passengers and
freight; total ownership)
-------------------------------------------
Total Switzerland 5,155,875
-------------------------------------------
<PAGE>
Thailand (0.3%)
...............
50,000 Oriental Hotel PCL Lodging 274,456
(Operates hotel with 394 rooms in Bangkok)
-------------------------------------------
Total Thailand 274,456
-------------------------------------------
United Kingdom (4.0%)
.....................
150,000 Antofagasta Holdings plc Holding Company 867,264
(Interests in mining, transportation, banking, forestry
and natural resources in Chile)
15,000 BAA plc Air Transportation 120,928
(Operates seven airports in the United Kingdom)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (79.5%) Industry Market Value
===============================================================================================================================
United Kingdom (4.0%) - continued
.................................
250,000 Berisford plc Construction Products $435,668
(Industrial holding company involved in furniture
products and automotive components)
425,000 Lonrho plc Conglomerate 1,034,813
(Industrial holding company with many assets in Africa)
200,000 McBride plc Consumer Goods 493,485
(Manufactures private label household and personal
care products)
100,000 Royal Doulton plc Consumer Products 471,498
(Produces fine china, china and giftware)
-------------------------------------------
Total United Kingdom 3,423,656
-------------------------------------------
Miscellaneous (0.3%)
....................
18,000 North European Oil Royalty Trust Gas-International 247,500
(Holds overriding royalty rights covering gas
production in Germany)
-------------------------------------------
Total Miscellaneous 247,500
-------------------------------------------
-------------------------------------------
Total Common Stocks
(cost basis $69,437,559) 68,727,458
-------------------------------------------
<PAGE>
Preferred Stocks (6.8%)
===========================================================================================================================
19,030 Cheil Jedang Corporation, South Korea Conglomerate 416,472
6,500 Freeport-McMoran Copper & Gold, Inc. Gold 213,687
Preferred Series Gold, United States
21,500 Freeport-McMoran Copper & Gold, Inc. Silver 416,563
Preferred Series Silver, United States
32,500 Freeport-McMoran Copper & Gold, Inc. Gold 1,007,500
Preferred Series II, United States
10,000 Hornbach Holding AG, Germany Retail Stores 631,113
115,000 Istituto Finanziario Industriale SpA Holdings-Diversified 936,624
Privileged Shares, Italy
12,180 Korean Air Lines, South Korea Airlines 114,871
10,000 Legrand ADP, France Electrical 1,088,446
8,533 LG Electronics Co., Ltd. South Korea Electronics 79,444
2,500 Sagem ADP, France Technology 652,872
34,620 Ssangyong Cement Industries, South Korea Building Materials 368,364
-------------------------------------------
Total Preferred Stock
(cost basis $3,886,458) 5,925,956
-------------------------------------------
-------------------------------------------
Total Equities
(cost basis $73,324,017) 74,653,414
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Par Value Long-Term Fixed Income Obligations (8.7%) Currency Market Value
===============================================================================================================================
Bonds and Notes
................
$500,000 Air Canada Variable Rate Perpetual Notes 6.25%
3/29/2049 Deutsche Mark $193,299
350,000 Republic of New Zealand 10.00% 3/15/2002 New Zealand Dollar 276,643
750,000 Trans Power Finance Ltd. 8.00% 3/15/2002 New Zealand Dollar 537,154
Convertible Bonds
..................
3,500 Alcatel Alsthom 2.50% 1/1/2004 French Franc 595,415
350,000 BAA plc 5.75% 3/29/2006 Pound Sterling 585,708
250,000 Berisford 5.00% 1/31/2015 Pound Sterling 226,995
611 Gaumont SA 3.75% 1/1/2003 French Franc 62,198
11,250 Immobiliere Hoteliere 5.00% 1/1/2001 French Franc 407,433
150,000 Intertan, Inc. 9.00% 8/3/2000 Canadian Dollar 116,051
2,000,000 Michelin 6.00% 1/2/98 French Franc 418,934
65,000,000 Nippon Yusen Kabushiki 2.00% 9/29/2000 Japanese Yen 662,915
U.S. Dollar Bonds and Notes
...........................
440,560 Federal Republic of Brazil Capitalization 8.00% 4/15/2014 305,088
250,000 Federal Republic of Brazil Debt Conversion Bond, Floating Rate Note 6.5625% 4/15/2012 177,813
490,000 Republic of Argentina Floating Rate Bond 6.625% 3/31/2005 403,638
1,000,000 United Mexican States Discount Floating Rate Note A 6.45% 12/31/2019 822,500
250,000 United Mexican States Discount Floating Rate Note B 6.39% 12/31/2019
(1,536,000 United Mexican States Oil Recovery Rights) 205,625
250,000 Yangming Marine Transport Corporation 2.00% 10/6/2001 288,438
U.S. Dollar Convertible Bonds
.............................
350,000 Cheil Jedang Corporation 3.00% 12/31/2006 420,000
150,000 Far Eastern Textile 4.00% 10/7/2006 180,000
450,000 Scandinavian Broadcasting System SA 7.25% 8/1/2005 451,688
150,000 Sincere Navigation Corporation 3.75% 5/26/2003 166,875
-------------------------------------------
Total Long-Term Fixed
Income Obligations
(cost basis $7,363,484) 7,504,410
-------------------------------------------
-------------------------------------------
Total Long-Term Investments
(cost basis $80,687,501) 82,157,824
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL INTERNATIONAL FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Par Value Commercial Paper (5.0%) Market Value
===============================================================================================================================
$1,147,000 AT&T Capital Corporation 5.40% 11/4/96 $1,146,484
919,000 American Home Products, Inc. 5.28% 11/1/96 919,000
1,534,000 Viacom, Inc. 5.60% 11/6/96 1,532,807
756,000 Weyerhauser Mortgage, Inc. 5.30% 11/1/96 756,000
-------------------------------------------
Total Commercial Paper
(amortized cost $4,354,291) 4,354,291
-------------------------------------------
-------------------------------------------
TOTAL INVESTMENTS
(amortized cost basis $85,041,792)
$86,512,115
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
THE AAL UTILITES FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : Current income, long-term growth of income and capital growth
by investing primarily in public utility securities.
The Fund Is : A diversified portfolio of stocks and bonds of companies in the
public utilities industry. The Fund may also invest in fixed-income investments
and cash equivalents under appropriate conditions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares Common Stocks (83.5%) Market Value
===============================================================================================================================
Electric (49.7%)
................
54,000 Baltimore Gas & Electric Company $1,471,500
(Provides electricity and natural gas service to the state of Maryland)
56,400 Boston Edison Company 1,353,600
(Provides electricity to Boston and surrounding areas)
92,000 Carolina Power & Light Company 3,323,500
(Provides electricity to portions of North and South Carolina)
73,000 Central & Southwest Corporation 1,934,500
(Electric utility holding company in Texas and Oklahoma)
38,000 CINergy Corporation 1,258,750
(Produces, transmits and distributes electricity to southwestern Ohio, Kentucky and most
of Indiana)
110,000 CMS Energy Corporation 3,478,750
(Distributes electricity and natural gas throughout Michigan)
22,650 Consolidated Edison Company of New York 662,512
(Supplies electricity to New York City and most of Westchester County, N.Y.)
26,000 Delmarva Power & Light Company 516,750
(Provides electric service for Delaware and parts of Maryland and Virginia)
28,000 Dominion Resources, Inc. 1,057,000
(Holding company whose subsidiary provides electricity in Virginia and North Carolina)
41,515 Duke Power Company 2,029,046
(Provides electricity to sections of North Carolina and South Carolina)
42,265 Empresa Nacional Electric ADR 2,599,297
(Provides electricity in Spain)
93,650 Entergy Corporation 2,622,200
(Holding company whose subsidiaries provide electricity to Arkansas, Louisiana, Mississippi,
and Missouri)
64,650 FPL Group, Incorporated 2,973,900
(Diversified electric utility holding company whose major asset is Florida Power &
Light Company)
90,200 General Public Utilities Corporation 2,965,325
(Electric utility holding company)
45,000 Huaneng Power International, Incorporated ADR 686,250
(Develops, constructs, owns and operates large coal-fired power plants throughout China)
39,800 KU Energy Corporation 1,179,075
(Holding company for Kentucky Utilities which provides electric services)
38,000 National Power ADR 1,030,750
(Generates and sells electricity in England and Wales)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL UTILITIES FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (83.5%) Market Value
===============================================================================================================================
52,720 New England Electric System $1,779,300
(Provides electricity to Massachusetts, New Hampshire, and Rhode Island through
its subsidiaries)
112,500 NIPSCO Industries Incorporated 4,260,938
(Holding company whose subsidiary provides electricity and gas to 1/3 of Indiana)
35,000 Oklahoma Gas & Electric Company 1,369,375
(Provides electricity to wholesale and retail customers in Oklahoma and
western Arkansas)
57,000 PacifiCorp 1,204,125 (Conducts retail electric service through two
divisions, Pacific Power & Light and Utah Power & Light which serve portions of
Idaho, California, Montana, Oregon, Utah, Washington and Wyoming)
38,000 Pacific Gas & Electric Company 893,000
(Provides electric and natural gas service throughout most of northern and
central California)
132,000 Pinnacle West Capital Corporation 4,075,500
(Utility holding company for Arizona Public Service Company)
49,000 PowerGen ADR 1,641,500
(Generation and sale of electricity to England and Wales)
75,000 P P & L Resources, Inc. 1,753,125
(Holding company for Pennsylvania Power & Light that provides power to customers in
central eastern Pennsylvania)
39,000 Public Service Company of Colorado 1,443,000
(Provides electricity and natural gas to Colorado)
33,500 Public Service Enterprise Group, Inc. 900,312
(Holding company for Public Service Electric & Gas whose subsidiary provides electricity
and natural gas to New Jersey)
110,805 Southern Company 2,451,561
(Parent company of five electric companies which provides service for most of
the Southeast)
58,000 Southwestern Public Service Company 1,972,000
(Provides electric energy & utility engineering services to portions of New Mexico, Texas,
Oklahoma, and Kansas)
153,000 TECO Energy Incorporated 3,767,625
(Holding company of Tampa Electric Company whose subsidiary provides electricity to
west central Florida)
36,000 Texas Utilities Company 1,458,000
(Holding company of Texas Utilities Electric Company whose subsidiary provides
electricity to northcentral, eastern and western parts of Texas)
25,000 Unicom Corporation 650,000
(Provides electricity to areas of Chicago metropolitan and northern Illinois)
36,000 Union Electric Company 1,390,500
(Provides electric service in Missouri and Illinois)
32,085 Wisconsin Energy Corporation 870,306
(Provides electricity and some gas to portions of Wisconsin and Michigan)
33,500 WPL Holdings, Inc. 942,188
(Holding company for Wisconsin Power & Light Company whose subsidiary provides
electricity, natural gas and water to south-central Wisconsin)
-------------------------------------------
Total Electric 63,965,060
-------------------------------------------
<PAGE>
Energy (3.6%)
.............
15,000 Coastal Corporation 645,000
(Owns and operates natural gas pipeline, stores oil, gas, coal, etc.)
14,000 Exxon Corporation 1,240,750
(World's largest oil company)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL UTILITIES FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (83.5%) Market Value
===============================================================================================================================
Energy (3.6%) - continued
.........................
12,000 Consolidated Natural Gas Company $637,500
(Public utility holding company for natural gas)
19,000 PanEnergy Corporation 731,500
(Holding company whose subsidiaries transport and sell natural gas)
18,000 Questar Corporation 648,000
(Holding company for natural gas which also produces and sells oil)
14,000 Sonat Inc. 689,500
(Transmits natural gas and markets natural gas and electric power)
-------------------------------------------
Total Energy 4,592,250
-------------------------------------------
Media (1.0%)
............
78,800 U.S. West Media Group 1,231,250
(Provides multimedia services over wireless networks, cable television and publishes the
White and Yellow pages)
-------------------------------------------
Total Media 1,231,250
-------------------------------------------
Telecommunications (29.2%)
..........................
55,000 Airtouch Communications, Inc. 1,436,875
(Provides wireless telecommunication services to customers worldwide)
63,600 American Telephone & Telegraph Company 2,218,050
(Operates domestically and internationally providing communication products, services
and systems)
52,870 Ameritech Corporation 2,894,633
(Telecommunications firm serving five midwestern states)
35,300 Bell Atlantic Corporation 2,126,825
(Owns and operates telephone subsidiaries and provides cellular services in the
Mid-Atlantic states and the District of Columbia)
48,000 BellSouth Corporation 1,956,000
(Holding company, provides telecommunications services in nine southeastern states)
90,000 Cable & Wireless plc ADR 2,148,750
(International provider of telecommunications services in more than 50 countries)
26,000 Cincinnati Bell, Inc. 1,283,750
(Provides telecommunication services and products to customers in southwestern Ohio,
northern Kentucky and Indiana.)
66,400 Frontier Corporation 1,925,600
(Holding company, provides long distance telecommunications nationally)
<PAGE>
71,000 GTE Corporation 2,990,875
(Provides local telephone and mobil-cellular services to customers in 28 states,
British Columbia and Quebec in Canada, the Dominican Republic and Venezuela)
20,611 Lucent Technologies, Inc. 968,717
(Designs and provides a wide range of public and private networks,
communications systems and software and microelectronics components)
119,000 MCI Communications Corporation 2,989,875
(Offers consumers & businesses long distance, wireless, local access, paging, etc.)
5,000 PT Indosat ADR 150,625
(Provides international telecommunications services to Indonesia)
79,185 SBC Communications Incorporated 3,850,371
(Holding company whose subsidiaries provide communication services ranging from a
local basis to an international one)
30,000 Telefonica de Argentina ADR 697,500
(Monopoly provider of local and long distance telecommunication services in
southern Argentina)
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL UTILITES FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Shares Common Stocks (83.5%) Market Value
===============================================================================================================================
Telecommunications (29.2%) - continued
......................................
74,200 Telefonica de Espana ADR $4,470,550
(Supplies telephone service in Spain that includes domestic, international, mobile and
news transmitting)
78,800 U S WEST, Incorporated 2,393,550
(Telecommunications firm serving 14 western states from Arizona to Washington)
125,000 WorldCom, Inc. 3,046,875
(Offers domestic and international voice, data, and video products and services to
business customers, other carriers and the residential market)
-------------------------------------------
Total Telecommunications 37,549,421
-------------------------------------------
-------------------------------------------
Total Common Stocks
(cost basis $97,279,196) 107,337,981
-------------------------------------------
Par Value Long-Term Fixed Income Obligations (7.9%)
===============================================================================================================================
$1,500,000 Illinois Power Corporation 6.75% 3/15/2005 1,475,017
(Provides electricity and natural gas to parts of northern, central and southern Illinois)
1,000,000 K.C. Power and Light 5.60% 3/10/1998 994,494
(Provides electricity to western Missouri and eastern Kansas)
1,000,000 Potomac Electric Power 9.00% 4/15/2000 1,059,610
(Generates, transmits, distributes and sells electric energy in parts of Maryland)
20,000 Texas Utilities Electric 8.125% 2/1/2002 21,301
(Holding company whose subsidiary provides electricity in Texas)
1,650,000 Texas Utilities Electric 9.75% 5/1/2021 1,887,385
(Holding company whose subsidiary provides electricity in Texas)
1,000,000 Union Electric Company 6.875% 8/1/2004 1,008,488
(Provides electric services in Missouri and Illinois)
3,150,000 U.S. Treasury Note 6.875% 3/31/2000 3,233,299
500,000 U.S. Treasury Note 7.50% 11/15/2016 540,780
-------------------------------------------
Total Long-Term Fixed
Income Obligations
(amortized cost basis $10,056,799)
10,220,374
-------------------------------------------
-------------------------------------------
Total Long-Term Investments
(amortized cost basis $107,335,995)
117,558,355
-------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL UTILITIES FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Par Value Short-Term Obligations (8.6%) Market Value
===============================================================================================================================
$785,533 American Family Insurance Company $785,533
3,343,000 Consolidated Natural Gas Company 5.23% 11/13/96 3,337,172
2,000,000 GTE Capital Corporation 5.29% 11/15/96 1,995,886
335,895 Johnson Controls, Inc. 335,895
3,400,000 Merrill Lynch & Company 5.38% 11/6/96 3,397,459
1,276,793 Wisconsin Electric Power Company 1,276,793
-------------------------------------------
Total Short-Term Obligations
(amortized cost basis $11,128,738)
11,128,738
-------------------------------------------
-------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $118,464,733)
$128,687,093
-------------------------------------------
</TABLE>
<PAGE>
THE AAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : High level of current income consistent with capital
preservation.
The Fund Is : A diversified portfolio of investment grade bonds and other debt
securities which for the most part will include corporate debt issues, U.S.
Government Bonds, Government National Mortgage Association (GNMA) securities and
other debt-based investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount Long-Term Obligations (99.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
U.S. Government Agency Obligations (28.2%)
..........................................
$4,001,398 Federal Home Loan Mortgage
Corporation #M90345 7.000% 5/1/99 $4,053,132
5,011,254 Federal Home Loan Mortgage
Corporation #L90123 7.000 6/1/99 5,076,045
8,998,867 Federal Home Loan Mortgage
Corporation #M90346 7.000 6/1/99 9,115,213
7,000,000 Federal Home Loan Mortgage
Corporation REMIC Trust Series 1300-G 7.250 12/15/2005 7,125,783
4,000,000 Federal Home Loan Mortgage
Corporation REMIC Trust Series 1219-H 7.500 8/15/2006 4,099,556
9,428,885 Federal Home Loan Mortgage
Corporation Pool #G10380 7.000 8/1/2010 9,443,566
2,458,611 Federal Home Loan Mortgage
Corporation REMIC Trust Series 1303-G 7.750 8/15/2018 2,472,893
6,258,240 Federal Home Loan Mortgage
Corporation REMIC Trust Series 1062-G 7.000 4/15/2019 6,303,981
1,000,000 Federal Home Loan Mortgage
Corporation REMIC Trust Series 1721-G 7.500 8/15/2022 1,033,189
1,497,702 Federal National Mortgage Association
Pool #124264 7.500 3/1/99 1,530,994
1,248,886 Federal National Mortgage Association
Pool #143273 7.500 12/1/2007 1,268,393
6,814,290 Federal National Mortgage Association
Pool #44046 7.500 2/1/2014 6,930,330
5,000,000 Federal National Mortgage Association
REMIC Trust Series 1993-G26 PE 5.900 7/25/2015 4,942,895
23,509,290 Government National Mortgage
Association Pool #780213 7.500 8/15/2025 23,607,535
31,258,149 Government National Mortgage
Association Pool #780212 8.000 8/15/2025 31,995,535
----------------------------------------------------
Total U.S. Government
Agency Obligations 118,999,040
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Long-Term Obligations (99.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
U.S. Government Obligations (9.4%)
..................................
$31,000,000 U.S. Treasury Bonds 6.375% 5/15/99 $31,364,436
2,000,000 U.S. Treasury Bonds 6.250 10/31/2001 2,013,434
1,000,000 U.S. Treasury Bonds 5.750 8/15/2003 973,788
5,000,000 U.S. Treasury Bonds 7.000 7/15/2006 5,223,430
----------------------------------------------------
Total U.S. Government Obligations 39,575,088
----------------------------------------------------
Collateralized Mortgage Obligations (10.4%)
...........................................
3,000,000 Associates Housing Services
Series 1996-1 Class M 7.900 3/15/2027 3,066,537
10,000,000 ContiMortgage Home Equity Loan
Trust Series 1996-2 Class A4 6.850 4/15/2011 10,080,490
4,671,234 ContiMortgage Home Equity Loan
Trust Series 1996-3 Class A1 6.760 2/15/2011 4,687,392
12,900,000 Citicorp Mortgage Securities, Inc.
Series 1994-8 Class A3 6.250 5/25/2024 12,748,928
5,000,000 Green Tree Financial Corporation
Series 1996-6 Class A6 7.950 9/15/2027 5,200,025
5,000,000 Green Tree Financial Corporation
Series 1996-7 Class A6 7.650 10/15/2027 5,176,545
3,000,000 Green Tree Home Equity Loans
Series 1996-D 8.100 9/15/2027 3,108,417
----------------------------------------------------
Total Collateralized
Mortgage Obligations 44,068,334
<PAGE>
----------------------------------------------------
Corporate Obligations (51.2%)
.............................
5,000,000 Aetna Services, Inc. 6.970 8/15/2036 5,077,070
4,000,000 Allegiance Corp. 7.000 10/15/2026 4,041,268
5,000,000 American Airlines, Inc. Series C-2 9.730 9/29/2014 5,739,145
5,000,000 AT&T Capital Corporation 6.240 5/15/98 5,015,960
5,000,000 Baltimore Gas & Electric Company 5.500 7/15/2000 4,864,025
6,000,000 Bank America Corp. 7.200 9/15/2002 6,159,342
10,000,000 Coca-Cola Enterprise 7.000 10/1/2026 10,221,030
4,000,000 Conagra Incorporated 7.125 10/1/2026 4,092,232
5,555,000 Dean Witter Discover & Company 6.250 3/15/2000 5,535,146
10,000,000 Delta Air Lines, Inc 10.500 4/30/2016 12,277,790
4,500,000 Enron Corporation 6.750 9/15/2004 4,469,477
5,000,000 Federal Express Corporation Series B2 9.875 4/1/2002 5,711,000
4,945,823 Federal Express Corporation Series 93-A 7.110 1/2/2014 4,857,634
5,000,000 First National Bank of Chicago 8.080 1/5/2018 5,338,375
5,000,000 First Union Corporation 6.824 8/1/2026 5,064,515
5,500,000 Florida Power & Light Company 6.875 4/1/2004 5,473,210
5,000,000 Ford Motor Credit Company 7.250 10/1/2008 5,098,490
5,000,000 Gulf State Utilities Corp. Series A 8.250 4/1/2004 5,201,610
5,000,000 Harris Corporation Series A 6.650 8/1/2006 5,043,665
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Long-Term Obligations (99.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Corporate Obligations (51.2%) - continued
..........................................
$3,870,000 Ingersoll-Rand Company 6.480% 6/1/2025 $3,809,957
9,887,100 Korea Electric Power Company 7.400 4/1/2016 9,954,144
5,000,000 Lehman Brothers Holdings 7.250 10/15/2003 5,024,375
9,975,000 McDonnell Douglas Corporation 9.750 4/1/2012 12,420,192
2,500,000 Merrill Lynch & Company, Inc. 8.000 2/1/2002 2,647,327
5,000,000 News America Holdings 10.125 10/15/2012 5,790,355
2,000,000 Pennzoil Company 10.250 11/1/2005 2,385,522
5,000,000 Puget Sound Power & Light Company Series A 7.875 10/1/2097 5,088,445
5,000,000 Quebec Providence Series A 6.890 4/15/2026 5,037,660
5,000,000 Salomon, Inc. 7.250 5/1/2001 5,063,085
5,000,000 Sears Roebuck Acceptance Corporation 6.800 10/9/2002 5,033,705
7,000,000 Southwest Airlines Company
Series 1995 Class A3 7.220 7/1/2013 7,113,323
5,000,000 Telstra Corporation Ltd. 6.500 11/28/2005 4,875,000
7,500,000 Time Warner Entertainment, Inc. 9.625 5/1/2002 8,413,875
5,500,000 Union Electric Company 6.750 5/1/2008 5,462,704
4,500,000 UpJohn Company 5.875 4/15/2000 4,453,484
4,000,000 Western Resources, Inc. 7.250 7/1/99 4,095,436
5,000,000 WMX Technologies, Inc. 7.100 8/1/2026 5,160,910
5,000,000 Whitman Corporation 7.290 9/15/2026 5,137,515
----------------------------------------------------
Total Corporate Obligations 216,247,998
----------------------------------------------------
----------------------------------------------------
Total Long-Term Obligations
(amortized cost basis $415,636,386) 418,890,460
----------------------------------------------------
<PAGE>
Short-Term Tax-Exempt Variable Rate Obligations (0.8%)
====================================================================================================================================
2,398,279 American Family Insurance Company 2,398,279
650 General Mills Company 650
866,910 Pitney Bowes Credit Corporation 866,910
341,128 Wisconsin Electric Power Company 341,128
----------------------------------------------------
Total Short-Term Variable Rate
Obligations (cost basis $3,606,967) 3,606,967
----------------------------------------------------
----------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $419,243,353) $422,497,427
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : High level of current income that is exempt from federal income
taxes, consistent with capital preservation.
The Fund Is : A diversified portfolio of at least 80% investment grade municipal
securities exempt from federal income taxation.
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Alabama (0.4%)
..............
$2,000,000 Alabama Special Care Facility Finance
Authority (Daughters of Charity System) 5.570% 11/1/2025 $1,785,000
----------------------------------------------------
Total Alabama 1,785,000
----------------------------------------------------
Alaska (0.2%)
.............
800,000 Alaska State Housing Finance Corporation
Revenue Bonds (MBIA Insured) 6.050 12/1/2017 796,000
----------------------------------------------------
Total Alaska 796,000
----------------------------------------------------
Arizona (4.9%)
..............
2,500,000 Arizona State Student Loan Marketing
Corporation Revenue Bonds 6.850 9/1/99 2,618,750
12,920,000 Arizona State Student Loan Marketing
Corporation Revenue Bonds 6.550 3/1/99 13,339,900
5,000,000 Salt River Arizona Project Revenue Bonds 5.500 1/1/2019 4,875,000
----------------------------------------------------
Total Arizona 20,833,650
----------------------------------------------------
California (13.4%)
..................
960,000 California Housing Finance Authority
Revenue Bonds 7.750 8/1/2017 1,012,800
4,855,000 Contra Costa County California Home
Mortgage Revenue Bonds
(Escrowed to Maturity) 7.500 5/1/2014 5,807,794
7,780,000 East Bay Municipal Utility District
California Water System Revenue Bonds 5.000 6/1/2026 7,011,725
1,335,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2005 831,037
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2009 3,156,250
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2010 3,156,250
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2011 3,162,500
6,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2013 3,817,500
7,145,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000 1/1/2014 4,537,075
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
California (13.4%) - continued
...............................
10,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 5.000 1/1/2035 $8,400,000
$605,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A 0.000% 1/1/2012 381,906
4,200,000 Fresno, California Sewer Revenue Bonds,
Series 1993 A-1 (AMBAC Insured) 6.250 9/1/2014 4,609,500
3,500,000 Orange County California Transit Authority,
Sales Tax Revenue Bonds, Series 1992 M
(MBIA Insured) 6.000 2/15/2009 3,705,625
4,000,000 Pomona California Single Family Housing
Revenue Bonds (Escrowed to Maturity) 7.600 5/1/2023 4,995,000
3,000,000 South California Public Power Authority
Project Revenue Bonds (MBIA Insured) 5.000 7/1/2022 2,703,750
----------------------------------------------------
Total California 57,288,712
----------------------------------------------------
Colorado (0.9%)
...............
2,250,000 Colorado Housing Single Family
Mortgage Revenue Bonds 7.250 11/1/2031 2,382,188
1,255,000 Colorado Springs Utilities Revenue Bonds 5.750 11/15/2023 1,267,550
----------------------------------------------------
Total Colorado 3,649,738
----------------------------------------------------
Connecticut (0.6%)
..................
2,910,000 Connecticut State G.O. Bonds 5.125 8/15/2014 2,775,412
----------------------------------------------------
Total Connecticut 2,775,412
----------------------------------------------------
District of Columbia (1.9%)
...........................
4,175,000 District of Columbia G.O. Bonds, Series
1993 A (MBIA Insured) 7.000 6/1/98 4,265,431
3,700,000 District of Columbia G.O., Howard
University Revenue Bonds 7.250 10/1/2011 4,037,625
----------------------------------------------------
Total District of Columbia 8,303,056
<PAGE>
----------------------------------------------------
Florida (5.1%)
..............
2,000,000 Orange County, Florida Health Facilities
Authority Bonds (MBIA Insured) 6.250 10/1/2018 2,152,500
6,200,000 Florida State Turnpike Authority
Revenue Bonds (FGIC Insured) 5.000 7/1/2019 5,696,250
1,900,000 Orlando Florida Utility Community
Water & Electric Revenue Bonds 5.000 10/1/2020 1,712,375
3,000,000 Orlando Florida Utility Community
Water & Electric Revenue Bonds 5.250 10/1/2023 2,790,000
8,090,000 Orlando Florida Utility Community
Water & Electric Revenue Bonds 5.250 10/1/2023 7,523,700
2,050,000 Venice Health Care Revenue Bonds
(Secours Health System Project)
(MBIA Insured) 5.625 8/15/2026 2,014,125
----------------------------------------------------
Total Florida 21,888,950
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Georgia (2.0%)
..............
$4,000,000 Georgia Municipal Electric Authority Power
Revenue Bonds, Series Z (FGIC Insured) 5.500% 1/1/2012 $4,025,000
1,690,000 Georgia Municipal Electric Authority Special
Obligation Bonds, Series 1993
(AMBAC Insured) 7.000 1/1/2008 1,932,937
335,000 Metropolitan Atlanta Rapid Transit
Authority Sales Tax Revenue Bonds,
Series 1983 E (Escrowed to Maturity) 7.000 7/1/2011 377,294
2,000,000 Municipal Electric Authority Georgia
Revenue Bonds (MBIA Insured) 6.500 1/1/2012 2,215,000
----------------------------------------------------
Total Georgia 8,550,231
----------------------------------------------------
Illinois (11.8%)
................
10,200,000 Chicago, Illinois Metropolitan Water,
Reclamation District G.O. Bonds 5.500 12/1/2012 10,161,750
4,225,000 Cook County, Illinois G.O. Bonds
(FGIC Insured) 5.875 11/15/2022 4,225,000
2,250,000 Cook County, Illinois G.O. Bonds,
(FGIC Insured) 5.500 11/15/2022 2,143,125
4,200,000 Cook County, Illinois School District #25 -
Arlington Heights G.O. Bonds (FSA Insured) 5.700 5/1/2013 4,215,750
5,620,000 Du Page County, Illinois Stormwater
Project, G.O. Bonds 5.600 1/1/2021 5,605,950
9,400,000 Hoffman Estates, Illinois Tax Increment
Revenue Bonds 0.000 5/15/2003 6,615,250
2,500,000 Illinois Regional Transit Authority
Revenue Bonds, Series A (FGIC Insured) 6.700 11/1/2021 2,856,250
2,965,000 Kankakee County School District #111 -
Kankakee G.O. Bonds (FBIC Insured) 5.250 1/1/2013 2,890,875
10,650,000 Metropolitan Pier and Exposition
Center Illinois Revenue Bonds 7.000 7/1/2026 11,848,125
----------------------------------------------------
Total Illinois 50,562,075
<PAGE>
----------------------------------------------------
Indiana (2.7%)
..............
2,000,000 Indiana Student Loan Authority
Revenue Bonds (AMBAC Insured) 7.000 12/1/99 2,135,000
3,050,000 Indiana Transportation Finance
Authority (MBIA Insured) 7.250 6/1/2015 3,637,125
1,500,000 Indiana Transportation Finance Authority,
Airport Facilities Lease Revenue Bonds 6.500 11/1/2007 1,595,625
650,000 Indiana State Toll Road Revenue
Bonds (Escrowed to Maturity) 9.000 1/1/2015 889,687
1,125,000 Kokomo Indiana Hospital Authority
Revenue Bonds (St. Joseph Hospital) 6.350 8/15/2013 1,095,469
2,000,000 Lawrence Township Indiana
Metropolitan School District G.O. Bonds 6.875 7/5/2011 2,230,000
----------------------------------------------------
Total Indiana 11,582,906
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Iowa (0.6%)
............
$2,500,000 Iowa Student Loan Fund Marketing
Association, Inc., Student Loan Revenue
Bonds (AMBAC Insured) 6.750% 12/1/2001 $2,659,375
----------------------------------------------------
Total Iowa 2,659,375
----------------------------------------------------
Massachusetts (1.4%)
....................
1,000,000 Massachusetts State G.O. Bonds 6.500 8/1/2011 1,063,750
5,000,000 New England Education Loan Marketing
Corp. Revenue Bonds 5.200 8/1/2002 5,025,000
----------------------------------------------------
Total Massachusetts 6,088,750
----------------------------------------------------
Michigan (4.9%)
...............
5,500,000 Michigan Public Power Agency Revenue
Refunding Bonds (Belle River Project)
(MBIA Insured) 5.000 1/1/2019 4,963,750
3,000,000 Michigan State Hospital Finance Authority
Revenue Bonds (Henry Ford Health System) 5.250 11/15/2020 2,790,000
5,000,000 Michigan State University Revenue Bonds
(AMBAC Insured) 5.000 2/15/2026 4,525,000
6,850,000 Royal Oak Michigan Hospital Finance
Authority Revenue Bonds (William
Beamont Hospital) 6.250 1/1/2012 7,338,063
1,500,000 Ypsilanti Michigan School District G.O.
Bonds (FBIC Insured) 5.375 5/1/2026 1,404,423
----------------------------------------------------
Total Michigan 21,021,236
----------------------------------------------------
Minnesota (0.4%)
.................
1,815,000 Southern Minnesota Municipal Power Agency
Revenue Bonds, Series A (MBIA Insured)
(Escrowed to Maturity) 5.750 1/1/2018 1,860,375
----------------------------------------------------
Total Minnesota 1,860,375
----------------------------------------------------
Missouri (0.3%)
...............
1,265,000 Missouri State Housing Development
Revenue Bonds 9.375 4/1/2016 1,345,644
----------------------------------------------------
Total Missouri 1,345,644
----------------------------------------------------
Montana (1.1%)
...............
3,530,000 Montana State Board Housing Revenue
Bonds, Single Family Program, Series B-1 6.300% 6/1/2008 3,653,550
1,000,000 Montana State Housing Revenue Bonds 6.400 12/1/2012 1,035,000
----------------------------------------------------
Total Montana 4,688,550
---------------------------------------------------
New Mexico (0.6%)
.................
2,275,000 New Mexico Mortgage Finance
Authority Revenue Bonds, Series 1995 F 7.000 1/1/2026 2,542,312
----------------------------------------------------
Total New Mexico 2,542,312
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
New York (16.5%)
................
$5,000,000 New York City G.O. Bonds 6.500% 2/15/2004 $5,243,750
5,000,000 New York Dormitory Authority State
University Educational Facilities
Revenue Bonds 5.250 5/15/2019 4,575,000
2,000,000 New York Dormitory Authority State
University Revenue Bonds 7.500 5/15/2013 2,340,000
3,500,000 New York Dormitory Authority State
University Revenue Bonds 5.875 5/15/2011 3,517,500
3,930,000 New York State Dormitory Authority
Court Facilities Revenue Bonds 5.625 5/15/2013 3,758,062
5,000,000 New York Dormitory Authority State
University Revenue Bonds 5.875 5/15/2017 4,987,500
2,500,000 New York State Local Government
Assistance Corporation, Sales Tax
Revenue Bonds 5.250 4/1/2016 2,406,250
4,620,000 New York State Local Assistance
Corporation, Sales Tax Revenue Bonds 5.000 4/1/2021 4,169,550
3,000,000 New York State Medical Care Facilities,
Finance Agency Revenue Bonds, Mental
Health Services (FSA Insured) 5.375 2/15/2014 2,902,500
6,295,000 New York State Thruway Revenue Bonds 5.750 4/1/2008 6,310,738
9,500,000 New York State Thruway Revenue Bonds 5.600 4/1/2005 9,654,375
2,155,000 New York State Urban Development
Corporation Revenue Bonds 5.375 10/1/2023 1,942,194
6,960,000 Triborough Bridge and Tunnel Authority,
New York Convention Center Project Bonds,
Series 1990 E 7.250 1/1/2010 7,899,600
6,915,000 Triborough Bridge & Tunnel Authority 5.000 1/1/2020 6,370,444
5,000,000 Triborough Bridge & Tunnel Authority 5.000 1/1/2017 4,575,000
----------------------------------------------------
Total New York 70,652,463
----------------------------------------------------
North Carolina (3.1%)
.....................
4,705,000 North Carolina Eastern Municipal
Power Agency Revenue Bonds 6.000 1/1/2026 4,693,238
1,845,000 North Carolina Eastern Municipal Power
Agency Revenue Bonds (FSA Insured) 7.500 1/1/2010 2,207,081
2,155,000 North Carolina Municipal Power #1
Revenue Bonds (AMBAC Insured) 5.000 1/1/2015 1,993,375
4,500,000 Randolph County, North Carolina
Certificates of Participation (MBIA Insured) 5.300 6/1/2015 4,353,750
----------------------------------------------------
Total North Carolina 13,247,444
<PAGE>
----------------------------------------------------
Ohio (0.2%)
...........
1,090,000 Franklin County, Ohio G.O. Bonds 5.400 12/1/2013 1,081,825
----------------------------------------------------
Total Ohio 1,081,825
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Pennsylvania (3.3%)
...................
$3,005,000 Muhlenberg Pennsylvania School District
G.O. Bonds (MBIA Insured) 5.200% 4/1/2017 $2,866,019
8,825,000 Pennsylvania State Higher Education
Authority Revenue Bonds (FGIC Insured) 6.800 12/1/2000 9,431,719
2,000,000 Philadelphia Pennsylvania Hospital Authority
Children's Hospital Revenue Bonds 5.000 2/15/2021 1,780,000
----------------------------------------------------
Total Pennsylvania 14,077,738
----------------------------------------------------
South Carolina (0.7%)
.....................
2,150,000 South Carolina Public Service Authority
Revenue Bonds (FGIC Insured) 5.000 1/1/2025 1,913,500
1,260,000 Oconee County, South Carolina Pollution
Control Revenue Bonds (Duke Power) 7.500 2/1/2017 1,365,525
----------------------------------------------------
Total South Carolina 3,279,025
----------------------------------------------------
Texas (7.3%)
............
2,405,000 Austin, Texas Public G.O. Bonds 5.250 9/1/2010 2,374,938
2,470,000 Beaumont, Texas School District G.O. Bonds
(PSF Guaranteed) 5.000 2/15/2017 2,275,487
2,325,000 Beaumont, Texas School District G.O. Bonds
(PSF Guaranteed) 5.000 2/15/2016 2,162,250
5,000,000 Keller Texas Independent School District G.O.
Bonds (PSF Guaranteed) 5.125 8/15/2025 4,631,250
4,775,000 Lewisville, Texas Independent School District
G.O. Bonds (PSF Guaranteed) 5.250 8/15/2014 4,613,844
7,880,000 Waco Texas Health Facilities Development
Corporation (Daughters of Charity System) 5.00 11/1/2020 7,082,150
7,050,000 Wylie Texas Independent School
District G.O. Bonds (PSF Guaranteed) 7.000 8/15/2024 8,186,813
----------------------------------------------------
Total Texas 31,326,732
----------------------------------------------------
Utah (2.2%)
...........
1,100,000 Intermountain Power Agency Special
Obligation Revenue Bonds Series 1986 C 5.000 7/1/2018 991,375
3,265,000 Utah Associated Municipal Power
System Revenue Bonds
Hunter Project (AMBAC Insured) 5.000 7/1/2009 3,097,669
1,795,000 Utah State Housing Finance Agency 7.250 7/1/2011 1,911,675
3,655,000 Intermountain Power Agency Special
Obligation Revenue Bonds, Series 1986 A 5.000 7/1/2021 3,248,381
----------------------------------------------------
Total Utah 9,249,100
<PAGE>
----------------------------------------------------
Virginia (0.5%)
...............
2,000,000 Virginia State Housing Development
Authority Revenue Bonds, Series B 6.700 1/1/2015 2,115,000
----------------------------------------------------
Total Virginia 2,115,000
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Municipal Bonds (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
Washington (6.2%)
.................
$2,875,000 Pierce County, Washington School
District G.O. Bonds (AMBAC Insured) 5.450% 12/1/2013 $2,835,469
1,485,000 Washington State Public Power Supply
System Project #3 Revenue Bonds 5.150 7/1/2002 1,494,281
10,000,000 Washington State Public Power Supply
System Project #2 Revenue Bonds,
Series 1994 A 6.000 7/1/2007 10,462,500
6,195,000 Washington State Public Power Supply
System Project #3 Revenue Bonds,
(MBIA Insured) 5.700 7/1/2009 6,241,462
5,000,000 Washington State G.O. Bonds 6.750 2/1/2015 5,712,500
----------------------------------------------------
Total Washington 26,746,212
----------------------------------------------------
Wisconsin (2.1%)
................
1,990,000 Wisconsin Housing and Economic
Development Authority Home Ownership
Revenue Bonds, Series 1990 D 7.750 9/1/2010 2,101,938
570,000 Wisconsin State Health & Educational
Facilities Authority Revenue Bond,
Medical College of Wisconsin 4.950 12/1/2000 574,987
3,000,000 Wisconsin State Health & Educational
Facilities Authority Revenue Bond,
Sinai Samaritan Medical Center 5.875 8/15/2026 2,996,250
1,000,000 Wisconsin State Health & Educational
Facilities Authority Revenue Bond,
Medical College of Wisconsin 5.400 12/1/2004 1,022,500
1,000,000 Wisconsin State Health & Educational
Facilities Authority Revenue Bond,
Medical College of Wisconsin 5.150 12/1/2002 1,015,000
1,240,000 Wisconsin State Health & Educational
Facilities Authority Revenue Bond,
Medical College of Wisconsin 5.300 12/1/2003 1,264,800
----------------------------------------------------
Total Wisconsin 8,975,475
----------------------------------------------------
Wyoming (2.6%)
..............
3,930,000 Wyoming Community Development
Authority Single Family Mortgage
Revenue Bonds, Series B 6.650 6/1/2013 4,111,762
5,765,000 Wyoming State Farm Loan Board
Capital Projects Facilities Revenue Bonds 5.750 10/1/2020 5,772,206
1,015,000 Wyoming State Farm Loan Board
Capital Facilities Revenue Bonds 6.250 10/1/2008 1,083,512
----------------------------------------------------
Total Wyoming 10,967,480
----------------------------------------------------
----------------------------------------------------
Total Municipal Bonds
(amortized cost basis $402,263,670)
419,940,466
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MUNICIPAL BOND FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
Principal Amount Short-Term Tax-Exempt Variable Rate Obligations (2.1%) Market Value
====================================================================================================================================
$9,018,134 Strong Municipal Money Market $9,018,134
----------------------------------------------------
Total Short-Term Tax-Exempt
Variable Rate Obligations
(cost basis $9,018,134) 9,018,134
----------------------------------------------------
----------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $411,281,804)
$428,958,600
----------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
THE AAL MONEY MARKET FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996
The Fund Seeks : A high level of current income with capital preservation.
The Fund Is : A diversified portfolio of high-quality, short-term money market
instruments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Principal Amount Commercial Paper (99.9%) Interest Rate Range* Maturity Date Range Market Value
====================================================================================================================================
$5,000,000 AT&T Corporation 5.25-5.37% 11/6-11/12/96 $4,993,620
6,000,000 American Express Credit Corporation 5.29-5.30 11/7/96 5,994,708
2,000,000 American General Finance Corporation 5.30 1/8/97 1,979,978
5,000,000 Aristar Incorporated 5.30-5.36 11/26-12/3/96 4,974,095
6,000,000 Associates Corporation of North America 5.32 1/21/97 5,928,180
5,000,000 Beneficial Corporation 5.47 11/14/96 4,990,123
5,000,000 CIT Group Holdings Inc. 5.28 1/24/97 4,938,400
6,000,000 CPC International 5.30 11/18/96-1/23/97 5,955,833
3,000,000 Cargill Incorporated 5.38 12/5/96 2,984,757
2,000,000 Coca-Cola Company 5.25 12/6/96 1,989,792
6,000,000 Countrywide Home Loans Incorporated 5.35-5.46 12/11/96-1/9/97 5,955,225
4,000,000 Eaton Corporation 5.37-5.39 12/12/96 3,975,491
3,000,000 Ford Motor Credit Company 5.29-5.50 11/13-12/16/96 2,989,627
6,000,000 General Electric Capital Services 5.25-5.41 11/8/96-1/28/97 5,952,835
2,000,000 General Motors Acceptance Corporation 5.30-5.32 11/15/96 1,995,870
2,500,000 Gillette Company 5.62 11/1/96 2,500,000
4,000,000 GMAC Medium Term Note 7.75 2/25/97 4,030,930
3,000,000 GTE Corporation 5.30-5.31 11/13-12/17/96 2,989,682
5,000,000 Heller Financial, Inc. 5.40-5.48 12/4-12/30/96 4,963,157
5,000,000 Household Finance Corporation 5.28 1/31/97 4,933,267
6,000,000 International Business Machines
Credit Corporation 5.32 2/3/97 5,916,653
<PAGE>
5,000,000 International Lease Finance Corporation 5.32-5.48 1/6-1/15/97 4,947,907
6,000,000 John Deere Capital Corporation 5.39-5.42 12/17/96-1/29/97 5,926,449
6,000,000 Lucent Technologies 5.37-5.45 12/19-12/20/96 5,956,230
1,900,000 McGraw-Hill, Inc. 5.29 12/3/96 1,891,066
5,000,000 Merrill Lynch & Co., Inc. 5.33-5.35 1/10-2/7/97 4,935,580
6,000,000 Norwest Financial, Inc. 5.35-5.46 11/12-12/31/96 5,982,741
5,000,000 NYNEX Corporation 5.40-5.49 11/4-12/5/96 4,983,545
2,000,000 PHH Corporation 5.30 11/19/96 1,994,700
6,000,000 Philip Morris Companies, Inc. 5.28-5.30 12/6/96-1/13/97 5,941,131
6,000,000 Sears Roebuck Acceptance Corporation 5.30-5.32 11/21/96-2/13/97 5,957,272
2,000,000 Sony Capital Corporation 5.43 12/18/96 1,985,822
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
THE AAL MONEY MARKET FUND SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 1996 - CONTINUED
Principal Amount Commercial Paper (99.9%) - continued Interest Rate Range* Maturity Date Range Market Value
====================================================================================================================================
$6,000,000 Toyota Motor Credit Corporation 5.34-5.39% 12/2/96-1/17/97 $5,955,332
6,000,000 Transamerica Finance Corporation 5.31-5.41 1/2/96-2/10/97 5,921,297
6,000,000 Walt Disney Company 5.38-5.40 11/20/96-1/6/97 5,963,162
----------------------------------------------------
Total Commercial Paper 159,274,457
----------------------------------------------------
Variable Rate Obligations (0.1%)
====================================================================================================================================
59,623 Wisconsin Electric Power Company 59,623
----------------------------------------------------
Total Variable Rate Obligations 59,623
----------------------------------------------------
----------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost $159,334,080) $159,334,080
----------------------------------------------------
*The interest rate shown reflects the coupon rate or, for the securities
purchased at a discount, the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES AS OF OCTOBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The AAL The AAL The AAL The AAL
Capital Growth Mid Cap Small Cap International
Fund Stock Fund Stock Fund Fund
====================================================================================================================================
Assets
.......
Investments, at value $1,569,627,678 $455,835,078 $22,521,910 $86,512,115
(Cost: $1,165,162,645, $422,661,366, $22,357,511
$85,041,792, $118,464,733, $419,243,353,
$411,281,804, and $159,334,080 respectively)
Unamortized organization & initial registration expense -- 12,211 33,843 55,105
Dividends and interest receivable 1,657,706 17,365 12,430 279,739
Prepaid expenses 78,761 52,389 2,008 40,113
Receivable from securities sold 4,534,263 5,626,474 386,633 --
Receivable for forward contracts held -- -- -- 30,411,710
Cash 446,064 261,236 300,663 254,294
------------------------------------------------------------------------
Total Assets $1,576,344,472 $461,804,753 $23,257,487 $117,553,076
------------------------------------------------------------------------
Liabilities
............
Payable for forward currency contracts held $-- $-- $-- $30,103,204
Payable for investments purchased 29,980,113 8,769,713 1,358,572 511,659
Income distributions payable -- -- -- --
Redemptions payable -- -- -- --
Payable to affiliate 1,136,837 398,074 17,500 96,665
Accrued expenses 509,083 221,959 62,862 86,519
------------------------------------------------------------------------
Total Liabilities 31,626,033 9,389,746 1,438,934 30,798,047
------------------------------------------------------------------------
Net Assets
..........
Trust capital (beneficial interest) 1,063,908,460 339,200,069 20,912,566 82,700,097
Accumulated undistributed net investment income (loss) 3,047,255 (2,604,766) (57,514)
35,211
Accumulated net realized gain on investments 73,297,691 82,645,992 799,102 1,124,265
Net unrealized appreciation on:
Investments 404,465,033 33,173,712 164,399 853,347
Foreign currency contracts -- -- -- 308,506
Foreign currency related transactions -- -- -- 2,115
------------------------------------------------------------------------
Total Net Assets 1,544,718,439 452,415,007 21,818,553 86,755,029
------------------------------------------------------------------------
------------------------------------------------------------------------
Total Liabilities and Capital $1,576,344,472 $461,804,753 $23,257,487 $117,553,076
------------------------------------------------------------------------
Shares of beneficial interest outstanding
(unlimited number of shares authorized) 76,491,908 28,920,987 2,006,193 7,865,937
Net asset value per share $20.19 $15.64 $10.88 $11.03
Maximum public offering price $21.20 $16.42 $11.41 $11.58
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
The AAL The AAL
The AAL The AAL Municipal Money Market
Utilities Fund Bond Fund Bond Fund Fund
====================================================================================================================================
Assets
.......
Investments, at value $128,687,093 $422,497,427 $428,958,600 $159,334,080
(Cost: $1,165,162,645, $422,661,366, $22,357,511
$85,041,792, $118,464,733, $419,243,353,
$411,281,804, and $159,334,080 respectively)
Unamortized organization & initial registration expense -- -- -- --
Dividends and interest receivable 716,563 5,042,208 7,032,860 29,330
Prepaid expenses 40,091 23,123 32,282 43,328
Receivable from securities sold -- 2,216,763 4,000,000 --
Receivable for forward contracts held -- -- -- --
Cash 78,767 227,639 1,578,411 96,864
------------------------------------------------------------------------
Total Assets $129,522,514 $430,007,160 $441,602,153 159,503,602
------------------------------------------------------------------------
Liabilities
............
Payable for forward currency contracts held $-- $-- $-- $--
Payable for investments purchased -- 2,013,914 13,173,297 --
Income distributions payable -- 437,125 324,350 7,096
Redemptions payable -- -- -- --
Payable to affiliate 87,217 292,338 264,092 6,824
Accrued expenses 57,647 211,387 310,482 412,051
------------------------------------------------------------------------
Total Liabilities 144,864 2,954,764 14,072,221 425,971
------------------------------------------------------------------------
Net Assets
..........
Trust capital (beneficial interest) 118,809,477 442,233,907 402,813,067 159,042,420
Accumulated undistributed net investment income (loss) 1,766,699 763,659 96,451 41,917
35,211
Accumulated net realized gain on investments (417,846) (18,532,036) 6,998,152 --
Net unrealized appreciation on:
Investments 10,222,360 3,254,074 17,676,796 --
Foreign currency contracts -- -- -- --
Foreign currency related transactions -- -- -- --
------------------------------------------------------------------------
Total Net Assets 129,377,650 427,052,396 427,529,932 159,077,631
------------------------------------------------------------------------
------------------------------------------------------------------------
Total Liabilities and Capital $129,522,514 $430,007,160 $441,602,153 $159,503,602
------------------------------------------------------------------------
Shares of beneficial interest outstanding
(unlimited number of shares authorized) 11,767,078 43,647,941 38,174,022 159,077,631
Net asset value per share $10.99 $9.78 $11.20 $1.00
Maximum public offering price $11.54 $10.27 $11.76
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
The AAL The AAL The AAL The AAL
Capital Growth Mid Cap Small Cap International
Fund Stock Fund Stock Fund Fund
====================================================================================================================================
Investment Income
..................
Dividends $12,283,024 $177,294 $4,795 $920,560
Taxable interest 972,377 250,904 32,907 300,312
Tax exempt interest -- -- -- --
------------------------------------------------------------------------
Total Investment Income 13,255,401 428,198 37,702 1,220,872
------------------------------------------------------------------------
Expenses
.........
Adviser fees 4,252,575 1,542,346 26,733 91,831
Sub-Adviser fees -- -- -- 275,493
Audit fees 9,062 6,868 4,854 14,083
Custody fees 65,605 71,565 4,014 33,623
Administrative service and pricing fees 19,038 19,462 13,381 33,379
Legal fees 2,034 2,016 2,020 6,342
Amortization of organization & registration expense -- 3,696 2,423 7,406
Printing and postage expense 155,189 109,720 7,982 38,825
Distribution expense (12b-1) 1,811,322 554,445 8,911 91,831
S.E.C. and state registration fees 34,051 24,317 285 16,259
Transfer agent fees 1,087,479 549,899 18,328 146,541
Shareholder maintenance fee 279,093 135,869 2,808 31,250
Trustees fees and expenses 2,215 2,215 2,215 2,215
Other expenses 14,179 10,546 3,432 15,405
------------------------------------------------------------------------
Total Expenses 7,731,842 3,032,964 97,386 804,483
------------------------------------------------------------------------
Less reimbursement from Adviser -- -- (2,170) --
------------------------------------------------------------------------
Total Net Expenses 7,731,842 3,032,964 95,216 804,483
------------------------------------------------------------------------
------------------------------------------------------------------------
Net Investment Income (Loss) 5,523,559 (2,604,766) (57,514) 416,389
------------------------------------------------------------------------
Realized and Unrealized Gains (Losses) on Investments
.....................................................
Net realized gains (losses) on investment transactions 40,739,806 35,698,609 799,102 542,942
Net realized gains on foreign currency transactions -- -- -- 823,443
Increase (decrease) in unrealized appreciation
on investments 66,832,112 (71,715,618) 164,399 (2,075,025)
Increase in unrealized appreciation on
currency transactions -- -- -- 311,923
------------------------------------------------------------------------
Net Realized & Unrealized Gains (Losses)
on Investments 107,571,918 (36,017,009) 963,501 (396,717)
------------------------------------------------------------------------
------------------------------------------------------------------------
Net Increase in Net Assets Resulting Operations $113,095,477 $(38,621,775) $905,987 $19,672
------------------------------------------------------------------------
The accompanying notes to the financial statements are an integral part of this schedule.
<PAGE>
The AAL The AAL The AAL
Utilities The AAL Municipal Money Market
Fund Bond Fund Bond Fund Fund
====================================================================================================================================
Investment Income
..................
Dividends $2,521,307 $ -- $ -- $ --
Taxable interest 700,129 15,125,674 246,196 3,714,992
Tax exempt interest -- -- 11,394,355 --
------------------------------------------------------------------------
Total Investment Income 3,221,436 15,125,674 11,640,551 3,714,992
------------------------------------------------------------------------
Expenses
.........
Adviser fees 307,849 1,133,996 1,150,831 340,103
Sub-Adviser fees -- -- -- --
Audit fees 8,550 7,644 7,319 2,524
Custody fees 9,279 15,721 17,264 9,703
Administrative service and pricing fees 18,494 19,487 23,361 20,079
Legal fees 2,015 2,342 2,016 2,187
Amortization of organization & registration expense 4,552 -- -- --
Printing and postage expense 24,735 59,904 34,972 26,128
Distribution expense (12b-1) 153,925 535,499 525,953 85,026
S.E.C. and state registration fees 17,013 15,245 17,300 22,413
Transfer agent fees 140,710 219,502 122,736 197,326
Shareholder maintenance fee 25,012 62,864 33,166 35,895
Trustees fees and expenses 2,215 2,215 2,215 2,215
Other expenses 5,083 7,077 5,564 946
------------------------------------------------------------------------
Total Expenses 719,432 2,081,496 1,942,697 744,545
------------------------------------------------------------------------
Less reimbursement from Adviser -- -- -- (425,130)
------------------------------------------------------------------------
Total Net Expenses 719,432 2,081,496 1,942,697 319,415
------------------------------------------------------------------------
------------------------------------------------------------------------
Net Investment Income (Loss) 2,502,004 13,044,178 9,697,854 3,395,577
------------------------------------------------------------------------
Realized and Unrealized Gains (Losses) on Investments
.....................................................
Net realized gains (losses) on investment transactions 422,765 (2,757,566) 2,174,130 --
Net realized gains on foreign currency transactions -- -- -- --
Increase (decrease) in unrealized appreciation
on investments 445,353 10,100,443 8,901,079 --
Increase in unrealized appreciation on
currency transactions -- -- -- --
------------------------------------------------------------------------
Net Realized & Unrealized Gains (Losses)
on Investments 868,118 7,342,877 11,075,209 --
------------------------------------------------------------------------
------------------------------------------------------------------------
Net Increase in Assets Resulting Operations $3,370,122 $20,387,055 $20,773,063 $3,395,577
------------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
The AAL Capital Growth Fund The AAL Mid Cap Stock Fund The AAL Small Cap Stock Fund
----------------------------- --------------------------- -----------------------------
Year Ended Six Months Ended Year Ended Six Months Ended Year Ended Six Months Ended
4/30/96 10/31/96 4/30/96 10/31/96 4/30/96 10/31/96(a)
====================================================================================================================================
Operations
..........
Net investment income (loss) $13,985,245 $5,523,559 $(2,485,777) $(2,604,766) $ -- $(57,514)
Net realized gains on
investment transactions 68,503,278 40,739,806 67,728,842 35,698,609 -- 799,102
Net realized gains (losses) on
foreign currency transactions -- -- -- -- -- --
Increase (decrease) in unrealized
appreciation on investments 189,806,057 66,832,112 70,556,642 (71,715,618) -- 164,399
Increase in unrealized appreciation
on foreign currency -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 272,294,580 113,095,477 135,799,707 (38,621,775) -- 905,987
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
.............................
Dividends from net investment income (14,682,748) (6,322,002) -- -- -- --
Capital gains distributions (35,099,992) -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (49,782,740) (6,322,002) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Trust Shares Transactions
.........................
Purchases of trust shares 171,912,068 104,507,291 100,047,117 92,259,697 -- 21,227,285
Income dividends reinvested 14,539,765 6,266,878 -- -- -- --
Capital gains distributions reinvested 34,786,821 -- -- -- --
- --
Redemption of trust shares (94,566,393) (54,181,427) (31,664,066) (26,197,743) -- (314,719)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Trust Capital 126,672,261 56,592,742 68,383,051 66,061,954 -- 20,912,566
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets 349,184,101 163,366,217 204,182,758 27,440,179 -- 21,818,553
Net Assets Beginning of Period 1,032,168,121 1,381,352,222 220,792,070 424,974,828 -- --
Net Assets End of Period (1) $1,381,352,222 $1,544,718,439 $424,974,828 $452,415,007 -- $21,818,553
</TABLE>
(a) Since inception July 1, 1996.
(b) Since inception August 1, 1995.
(1) Including undistributed income of $3,845,699 and $3,047,255 for The AAL
Capital Growth Fund; $0 and $(2,604,766) for The AAL Mid Cap Stock Fund; $0 and
$(57,514) for The AAL Small Cap Stock Fund; $1,350,310 and $1,766,699 for The
AAL International Fund; and $533,101 and $763,659 for The AAL Utilities Fund for
each period respectively.
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The AAL International Fund The AAL Utilities Fund
------------------------------- -------------------------------
Year Ended Six Months Ended Year Ended Six Months Ended
4/30/96 (b) 10/31/96 4/30/96 10/31/96
====================================================================================================================================
Operations
..........
Net investment income (loss) $172,634 $416,389 $3,188,811 $2,502,004
Net realized gains on
investment transactions 55,899 542,942 (771,932) 422,765
Net realized gains (losses) on
foreign currency transactions 322,668 823,443 -- --
Increase (decrease) in unrealized
appreciation on investments 3,251,893 (2,075,025) 10,947,842 445,353
Increase in unrealized appreciation
on foreign currency 292,153 311,923 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 4,095,247 19,672 13,364,721 3,370,122
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
.............................
Dividends from net investment income (59,178) -- (2,958,088) (2,271,446)
Capital gains distributions (809) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (59,987) -- (2,958,088) (2,271,446)
- ------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Transactions
.........................
Purchases of trust shares 53,745,186 32,880,422 41,504,800 20,140,961
Income dividends reinvested 56,542 -- 2,809,415 2,118,070
Capital gains distributions reinvested -- 771 -- --
- --
Redemption of trust shares (720,574) (3,262,250) (11,121,866) (8,440,443)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Trust Capital 53,081,925 29,618,172 33,192,349 13,818,588
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets 57,117,185 29,637,844 43,598,982 14,917,264
Net Assets Beginning of Period -- 57,117,185 70,861,404 114,460,386
Net Assets End of Period (1) $57,117,185 $86,755,029 $114,460,386 $129,377,650
</TABLE>
(a) Since inception July 1, 1996.
(b) Since inception August 1, 1995.
(1) Including undistributed income of $3,845,699 and $3,047,255 for The AAL
Capital Growth Fund; $0 and $(2,604,766) for The AAL Mid Cap Stock Fund; $0 and
$(57,514) for The AAL Small Cap Stock Fund; $1,350,310 and $1,766,699 for The
AAL International Fund; and $533,101 and $763,659 for The AAL Utilities Fund for
each period respectively.
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
The AAL Bond Fund
-------------------------
Year Ended Six Months Ended
4/30/96 10/31/96
====================================================================================================================================
Operations
..........
Net investment income $25,889,466 $13,044,178
Net realized gains (losses) on investment transactions (2,338,822)
- --
Increase in unrealized appreciation on investments 2,660,208 10,100,443
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations 26,210,852 20,387,055
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
.............................
Dividends from net investment income (25,889,466) (13,044,178)
Capital gains distributions -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (25,889,466) (13,044,178)
- ------------------------------------------------------------------------------------------------------------------------------------
Purchases of trust shares 48,352,817 24,694,988
.........................
Trust Shares Transactions
Income dividends reinvested 21,399,951 10,439,233
Capital gains distributions reinvested -- --
Redemption of trust shares (68,582,631) (46,271,388)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Trust Capital 1,170,137 (11,137,167)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets 1,491,523 (3,794,290)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of Period 429,355,163 430,846,686
Net Assets End of Period (1) $430,846,686 $427,052,396
</TABLE>
(1) Including undistributed income of $96,451 for The AAL Bond Fund; $41,917 for
The AAL Municipal Bond Fund; and $35,211 for The AAL Money Market Fund for each
period respectively.
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The AAL Municipal Bond Fund The AAL Money Market Fund
------------------------------- -------------------------------
Year Ended Six Months Ended Year Ended Six Months Ended
4/30/96 10/31/96 4/30/96 10/31/96
====================================================================================================================================
Operations
..........
Net investment income $18,870,527 $9,697,854 $4,407,596 $3,395,577
Net realized gains (losses) on investment transactions (2,757,566) 9,680,486 2,174,130 --
- --
Increase in unrealized appreciation on investments 555,380 8,901,079 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations 29,106,393 20,773,063 4,407,596 3,395,577
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
.............................
Dividends from net investment income (18,870,527) (9,697,854) (4,407,596) (3,395,577)
Capital gains distributions (2,937,391) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (21,807,918) (9,697,854) (4,407,596) (3,395,577)
- ------------------------------------------------------------------------------------------------------------------------------------
Purchases of trust shares 52,190,830 21,591,303 180,198,221 143,255,946
.........................
Trust Shares Transactions
Income dividends reinvested 16,770,677 7,993,563 4,222,862 3,379,068
Capital gains distributions reinvested 2,442,657 -- -- --
Redemption of trust shares (43,691,180) (25,907,463) (138,617,667) (103,571,474)
- ------------------------------------------------------
Net Increase (Decrease) in Trust Capital 27,712,984 3,677,403 45,803,416 43,063,540
- -----------------------------------------------------
- -----------------------------------------------------
Net Increase (Decrease) in Net Assets 35,011,459 14,752,612 45,803,416 43,063,540
- -----------------------------------------------------
Net Assets Beginning of Period 377,765,861 412,777,320 70,210,675 116,014,091
Net Assets End of Period (1) $412,777,320 $427,529,932 $116,014,091 $159,077,631
</TABLE>
(1) Including undistributed income of $96,451 for The AAL Bond Fund; $41,917 for
The AAL Municipal Bond Fund; and $35,211 for The AAL Money Market Fund for each
period respectively.
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
NOTES TO FINANCIAL STATEMENTS AS OF OCTOBER 31, 1996
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, and currently consists of The AAL Capital Growth, Mid Cap
Stock (formerly known as The AAL Smaller Company Stock Fund), Small Cap Stock,
International, Utilities, Bond, Municipal Bond, Money Market, and U.S.
Government Zero Coupon Target Funds. The ten AAL Mutual Funds are
collectively referred to as the "Funds".
B: Significant Accounting Policies The Funds' principal accounting policies are:
Valuation: Securities traded on national securities exchanges abroad are valued
at last reported sales prices. Each over-the-counter security for which the last
sale price is available from NASDAQ is valued at that price. Interest bearing
money market instruments and variable rate demand notes are valued at a cost
that approximates the market. All other instruments held by The AAL Money Market
Fund and money market investments with a remaining maturity of 60 days or less
held by the other Funds are valued on an amortized cost basis. The AAL
International Fund invests in foreign securities, including stocks, bonds, notes
and convertible securities, whose values are subject to change in market
conditions, as well as changes in political and regulatory environments. 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 Investment Adviser under supervision of the
Board of Trustees.
Foreign Currency Translation: The market values of securities that are not
traded in United States currency are recorded in the financial statements after
translation to U.S. dollars using the exchange quotation in effect at the time
net asset value is calculated. The costs of such securities are translated at
exchange rates prevailing when acquired. Additionally, other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars.
The AAL International Fund does not isolate that portion of realized gains and
losses on investments that is due to changes in foreign exchange rates from that
which is due to changes in market prices of the equity securities.
Foreign Currency Contracts: In connection with purchases and sales of securities
denominated in foreign currencies, The AAL International Fund may enter into
forward currency contracts. Additionally, the Fund may enter into such contracts
to hedge certain other foreign currency denominated investments. These contracts
are recorded at market value, and the related realized and unrealized foreign
exchange gains and losses are included in the statement of operations. In the
event that counter parties fail to settle these currency contracts or the
related foreign security trades, The AAL International Fund could be exposed to
foreign currency fluctuations.
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 to shareholders are recorded on the
ex-dividend date. Dividends from The AAL Capital Growth Fund are declared and
paid semi-annually. Dividends from The AAL Mid Cap Stock, Small Cap Stock and
International Funds are declared and paid annually. Dividends from the AAL
Utilities Fund are declared and paid quarterly. Dividends from The AAL Bond,
Municipal Bond and Money Market Funds are declared daily and distributed
monthly. Dividends from Net realized gains from securities transactions, if any,
are distributed at least annually in the calendar year.
<PAGE>
Credit Risk: The Funds hold investments in variable rate demand notes, which are
unsecured instruments. The Funds may be susceptible to credit risk with respect
to these instruments to the extent the issuer defaults on its payment
obligation. The Funds' policy is to monitor the creditworthiness of the issuer
and does not anticipate nonperformance on the instruments.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Other: For financial statement purposes, investment security transactions are
accounted for on the trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual basis.
Discounts and premiums on municipal bonds are amortized over the life of the
respective bonds. Discounts on bonds purchased after April 30, 1995, are
amortized over the life of the respective bonds in The AAL International, Bond,
and Utilities Funds. Realized gains or losses on sales are determined on a
specific cost identification basis. The Funds have no right to require
registration of unregistered securities. The cost incurred with the organization
and initial registration of shares for The AAL Small Cap Stock, Mid Cap Stock,
International, and Utilities Funds is being amortized over the period of
benefit, but not to exceed 60 months from each Fund's commencement of operation.
Statement of Position 93-2 requires that permanent financial reporting and tax
differences be reclassified to trust capital. During the prior fiscal year, The
AAL Mid Cap Stock Fund reclassification a permanent difference between book and
taxable net investment loss, to trust capital. In the amount of $2,485,776. Net
assets were not affected by this reclassification.
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 each of the mutual fund
portfolios pay a fee for investment advisory services. For periods prior to
November 1, 1995, the adviser had entered into sub-advisory agreements with Duff
& Phelps Investment Management Company and Pilgrim Baxter & Associates LTD for
which the adviser paid a portion of its fees. Effective November 1, 1995, the
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Board of Trustees approved the termination of the sub-advisory agreement with
both Duff & Phelps Investment Management Company and Pilgrim Baxter & Associates
LTD and approved the current fee schedule described above. The adviser has hired
a team of portfolio managers to manage the Funds' assets.
Effective November 1, 1995, the annual rates of fees under the Investment
Advisory Agreement are calculated at the following rates: 70 of 1% on the first
$250 million of average daily net assets, .65 of 1% on the next $250 million,
.575 of 1% on the next $500 million and .50 of 1% on average daily net assets
over $1 billion for The AAL Capital Growth Fund; 1% of the Funds average daily
net assets for The AAL International Fund, .75 of 1% on the first $200 million
of average daily net assets and .65 of 1% on the average daily net assets over
$200 million for The AAL Small Cap Stock and Mid Cap Stock Funds; .55 of 1% on
the first $250 million of average daily net assets, .50 of 1% on the next $250
million and .45 of 1% on average daily net assets over $500 million for The AAL
Bond and Municipal Bond Funds; .50 of 1% on the first $500 million and .45 of 1%
on average daily net assets over $500 million for The AAL Money Market and
Utilities Funds. In addition, The AAL International Fund has entered into a
Sub-Advisory Agreement with Societe Generale Asset Management Corporation, which
is paid .75 of 1% on average daily net assets.
The Trust has entered into an Administrative Services Agreement with the Adviser
pursuant to which the Adviser provides certain administrative services. The
adviser earned the following fees from the respective Funds for the six months
ended October 31, 1996: $20,000 for The AAL International Fund, $11,667 for The
AAL Small Cap Stock Fund, and $16,666 for The AAL Mid Cap Stock, Capital Growth,
Utilities, Bond, Municipal Bond and Money Market Funds, respectively.
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
inquires regarding account status, option and facilitating shareholder telephone
transactions. Fees and cost reimbursements charged to the Funds under terms of
the contract approximated $4.08 per year 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 activities relating to the distribution
of its shares to investors. Payments under the Plan are equal to a maximum of
.25 of 1% of the average daily net assets of The AAL Capital Growth, Small Cap
Stock, International, Utilities, Bond and Municipal Bond Funds; and .125 of 1%
of the average daily net assets of The AAL Money Market Fund.
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.
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 various funds since inception. As of April 30, 1995, the Adviser is
reimbursing The AAL Money Market .625% of average daily net assets. Voluntary
reimbursements to this Fund may be modified or discontinued at any time by the
Adviser.
AAL is the ultimate parent company for AAL Capital Management Corporation.
<PAGE>
D : Security Transactions
During the year ended April 30, 1996, and six months ended October 31, 1996,
purchases and sales of securities other than short-term obligations were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Purchases Sales
-------------------------------- -------------------------------
Year Ended Six Months Ended Year Ended Six Months Ended
4/30/96 10/31/96 4/30/96 10/31/96
===========================================================================================================================
The AAL Capital Growth Fund $ 557,752,827 $ 222,029,647 $517,205,642 $169,831,224
The AAL Mid Cap Stock Fund 326,900,164 321,100,374 253,451,798 244,544,828
The AAL Small Cap Stock Fund N/A 22,502,707 N/A 4,921,470
The AAL International Fund 46,911,078 36,295,235 267,466 2,807,321
The AAL Utilities Fund 38,069,103 19,152,601 18,309,757 1,401,610
The AAL Bond Fund 541,194,780 325,149,569 547,177,273 327,598,539
The AAL Municipal Bond Fund 507,267,650 247,915,168 500,090,847 210,880,552
</TABLE>
For the year ended April 30, 1996, The AAL Utilities Fund purchased $5,970,117
and sold $1,862,969, and for the six months ended October 31, 1996, the Fund did
not purchase or sell any U.S. Government Obligations.
For the year ended April 30, 1996, The AAL Bond Fund purchased $54,604,531 and
sold $117,798,125, and for the six months ended October 31, 1996, the Fund
purchased $130,599,492 and sold $149,535,638 in U.S. Government Obligations.
Cost of investments is substantially the same for financial reporting purposes
and Federal income tax purposes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS AS OF OCTOBER 31, 1996 - CONTINUED
The gross unrealized appreciation and depreciation on investments at year ending
April 30, 1996, and the six months ending October 31, 1996, were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
4/30/96 10/31/96
Net Unrealized Net Unrealized
Appreciation Appreciation
Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
====================================================================================================================================
The AAL Capital
Growth Fund $351,273,890 $(13,640,969) $337,632,921 $437,071,596 $(32,606,563) $404,465,033
The AAL Mid Cap
Stock Fund 113,186,743 (8,297,413) 104,889,330 65,830,406 (32,656,694) 33,173,712
The AAL Small Cap
Stock Fund N/A N/A N/A 1,461,516 (1,297,117) 164,399
The AAL
International Fund 4,211,438 (959,545) 3,251,893 5,871,423 (4,401,099) 1,470,324
The AAL Utilities
Fund 11,405,167 (1,628,160) 9,777,007 12,696,122 (2,473,762) 10,222,360
The AAL Bond Fund 4,559,814 (11,406,183) (6,846,369) 5,347,517 (2,093,443) 3,254,074
The AAL Municipal
Bond Fund 9,884,307 (1,108,590) 8,775,717 17,865,763 (188,967) 17,676,796
</TABLE>
E: Trust Transactions
Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
The AAL The AAL The AAL
Capital Growth Fund Mid Cap Stock Fund Small Cap Stock Fund
---------------------- ---------------------- -----------------------
Year Six Months Year Six Months Year Six Months
Ended Ended Ended Ended Ended Ended
4/30/96 10/31/96 4/30/96 10/31/96 4/30/96 10/31/96
====================================================================================================================================
Shares purchased 9,785,929 5,465,416 6,940,300 5,736,104 N/A 2,035,572
Income dividends reinvested 864,754 328,079 -- -- N/A --
Capital gains reinvested 1,978,773 -- -- -- N/A --
Shares redeemed (5,428,045) (2,831,541) (2,323,788) (1,655,988) N/A (29,379)
--------- --------- --------- --------- ------- ----------
Net increase of trust shares 7,201,411 2,961,954 4,616,512 4,080,116 N/A 2,006,193
========= ========= ========= ========= ======= ==========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS AS OF OCTOBER 31, 1996 - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
The AAL The AAL The AAL
International Fund Utilities Fund Bond Fund
---------------------- ---------------------- -----------------------
Year Six Months Year Six Months Year Six Months
Ended Ended Ended Ended Ended Ended
4/30/96 10/31/96 4/30/96 10/31/96 4/30/96 10/31/96
===========================================================================================================================
Shares purchased 5,220,133 3,007,739 3,811,394 1,853,226 4,899,331 2,574,776
Income dividends reinvested 5,611 -- 261,139 195,203 2,163,280 1,086,830
Capital gains reinvested 77 -- -- -- -- --
Shares redeemed (69,174) (298,450) (1,056,401) (778,444) (6,934,723) (4,820,130)
---------- ---------- ---------- --------- --------- ----------
Net increase (decrease)
of trust shares 5,156,647 2,709,289 3,016,132 1,269,985 (127,888) (1,158,524)
========== ========== ========== ========= ========= ==========
The AAL The AAL
Municipal Bond Fund Money Market Fund
--------------------------- -----------------------------
Year Six Months Year Six Months
Ended Ended Ended Ended
4/30/96 10/31/96 4/30/96 10/31/96
===========================================================================================================================
Shares purchased 4,715,857 1,968,052 180,198,222 143,255,946
Income dividends reinvested 1,521,292 724,932 4,222,862 3,379,068
Capital gains reinvested 215,973 -- -- --
Shares redeemed (3,963,923) (2,358,049) (138,617,668) (103,571,474)
---------- ---------- ------------ ------------
Net increase of trust shares 2,489,199 334,935 45,803,416 43,063,540
========== ========== ============ ============
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS AS OF OCTOBER 31, 1996 - CONTINUED
F: Forwarded Currency Contracts
As of October 31, 1996, The AAL International Fund had entered into forward
currency contracts, as summarized above, resulting in net unrealized
depreciation of $308,506.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Settlement Date Currency to Be Delivered U.S. Value at Currency to Be Received U.S. Value at
Through October 31, 1996 October 31, 1996
===================================================================================================================================
11/1/96 $ 71,792 U.S Dollar $71,792 8,193,958 Japanese Yen $72,041
11/1/96 18,064 U.S. Dollar 18,064 22,679 Swiss Franc 18,018
11/29/96 140,974 U.S Dollar 140,974 717,556 French Franc 140,471
11/4/96 204,512 U.S Dollar 204,512 1,339,758 Swedish Krona 204,091
11/7/96 61,696 U.S Dollar 61,696 37,932 British Pounds 61,778
12/16/96 540,000 New Zealand Dollar 371,574 382,789 U.S Dollar 382,789
12/27/96 2,796,000 Swiss Franc 2,286,170 2,232,335 U.S Dollar 2,232,335
1/10/97 31,080,000 French Franc 6,125,947 6,107,050 U.S Dollar 6,107,050
1/17/97 537,300,000 Japanese Yen 5,036,729 4,771,330 U.S Dollar 4,771,330
1/3/97 3,749,500 Deutsche Mark 2,512,123 2,486,901 U.S Dollar 2,486,902
5/14/97 3,283,000 Deutsche Mark 2,178,139 2,195,693 U.S Dollar 2,195,693
5/21/97 27,130,600 French Franc 5,270,138 5,368,463 U.S Dollar 5,368,463
5/28/97 535,850,000 Japanese Yen 4,902,562 4,845,809 U.S Dollar 4,845,808
5/7/97 1,504,000 Swiss Franc 1,231,290 1,216,435 U.S Dollar 1,216,435
----------- ------------
$30,411,710 $30,103,204
=========== ============
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PER SHARE INFORMATION
The AAL Capital Growth Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92 4/3093
====================================================================================================================================
Net asset value:
Beginning of period $10.00 $8.36 $9.84 $10.72 $12.42 $14.06
Income from Investment Operations
.................................
Net investment income 0.112 0.218 0.233 0.271 0.276 0.284
Net realized and unrealized gain (loss)
on investments (1.709) 1.466 0.889 1.726 1.659 0.761
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.597) 1.684 1.122 1.997 1.935 1.045
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
....................
Net investment income (0.043) (0.204) (0.242) (0.269) (0.280) (0.274)
Net realized capital gains -- -- -- (0.028) (0.015) (0.001)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.043) (0.204) (0.242) (0.297) (0.295) (0.275)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value (1.640) 1.480 0.880 1.700 1.640
1.400
Net asset value:
End of period $8.36 $9.84 $10.72 $12.42 $14.06 $14.83
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission per share -- -- -- -- -- --
Total return (d) (15.95)% 20.46% 11.45% 18.93% 15.77% 7.52%
Net assets, end of period $23,672,346 $48,915,003 $119,731,099 $209,055,868 $423,231,713 $714,184,330
Ratio of expenses to average
net assets (a) (b) 1.50% 1.50% 1.44% 1.41% 1.28% 1.20%
Ratio of net investment income to
average net assets (a) (c) 2.61% 2.80% 2.56% 2.59% 2.27% 2.15%
Portfolio turnover rate 1.36% 2.78% 1.43% 2.26% 1.11% 2.99%
<PAGE>
Year Ended Year Ended Year Ended Six Months Ended
4/30/94 4/30/95 4/30/96 10/31/96
====================================================================================================================================
Net asset value:
Beginning of period $14.83 $14.49 $15.56 $18.79
Income from Investment Operations
.................................
Net investment income 0.296 0.274 0.201 0.072
Net realized and unrealized gain (loss)
on investments (0.287) 1.699 3.756 1.413
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.009 1.973 3.957 1.485
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
....................
Net investment income (0.286) (0.298) (0.217) (0.085)
Net realized capital gains (0.063) (0.605) (0.510) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.349) (0.903) (0.727) (0.085)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.770 (0.340) 1.070 3.230
1.400
Net asset value:
End of period $14.49 $15.56 $18.79 $20.19
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission per share -- -- $0.053 $0.058
Total return (d) 0.00% 14.37% 25.85% 7.93%
Net assets, end of period $868,850,190 $1,032,168,122 $1,381,352,222 $1,544,718,439
Ratio of expenses to average
net assets (a) (b) 1.18% 1.17% 1.12% 1.07%
Ratio of net investment income to
average net assets (a) (c) 2.07% 1.89% 1.16% 0.76%
Portfolio turnover rate 40.60% 33.34% 44.26% 12.15%
</TABLE>
<PAGE>
PER SHARE INFORMATION
The AAL Mid Cap Stock Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Six Months Ended
4/30/94 4/30/95 4/30/96 10/31/96
====================================================================================================================================
Net asset value:
Beginning of period $10.00 $10.38 $10.92 $17.11
Income from Investment Operations
.................................
Net investment income (0.044) (0.054) (0.100) (0.089)
Net realized and unrealized gain (loss) on
investments 0.424 0.594 6.290 (1.381)
- ---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.380 0.540 6.190 (1.470)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income -- -- -- --
Net realized capital gains -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.000 0.000 0.000 0.000
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.380 0.540 6.190 (1.470)
Net asset value:
End of period $10.38 $10.92 $17.11 $15.64
- ---------------------------------------------------------------------------------------------------------------------------
Average commission per share -- -- $0.055 $0.058
Total return (d) (3.80)% 5.20% 56.59% (8.54)%
Net assets, end of period $142,529,469 $220,792,070 $424,974,829 $452,415,007
Ratio of expenses to average net assets (a) (b) 1.72% 1.54% 1.39% 1.36%
Ratio of net investment income to average net
assets (a) (c) (1.14)% (0.77)% (0.82)% (1.17)%
Portfolio turnover rate 55.49% 88.18% 90.14% 56.49%
</TABLE>
<PAGE>
PER SHARE INFORMATION
The AAL Small Cap Stock Fund
Six Months Ended
10/31/96 (2)
================================================================================
Net asset value:
Beginning of period $10.00
Income from Investment Operations
..................................
Net investment income (0.029)
Net realized and unrealized gain (loss) on investments 0.909
- -------------------------------------------------------------------------------
Total from Investment Operations 0.880
- --------------------------------------------------------------------------------
Distributions from:
...................
Net investment income 0.000
Net realized capital gains (d) --
- -------------------------------------------------------------------------------
Total Distributions 0.000
- -------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.880
Net asset value:
End of period $10.88
- -------------------------------------------------------------------------------
Average commission per share $0.049
Total return (d) 8.80%
Net assets, end of period $21,818,553
Ratio of expenses to average net assets (a) (b) 2.67%
Ratio of net investment income to average net assets(a)(c) (1.61)%
Portfolio turnover rate 52.27%
(2) Since inception July 1, 1996.
<PAGE>
PER SHARE INFORMATION
The AAL International Fund
Period Ended Six Months Ended
4/30/96 (1) 10/31/96
================================================================================
89
Net asset value:
Beginning of period $10.00 $11.08
Income from Investment Operations
..................................
Net investment income 0.046 (0.022)
Net realized and unrealized gain on investments 1.058 (0.028)
- --------------------------------------------------------------------------------
Total from Investment Operations 1.104 (0.05)
- --------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.024) 0.000
Net realized capital gains -- --
- --------------------------------------------------------------------------------
Total Distributions (0.024) 0.000
- -------------------------------------------------------------------------------
Net increase in net asset value 1.080 (0.05)
Net asset value:
End of period $11.08 $11.03
================================================================================
Average commission per share $0.018 $0.017
Total return (d) 11.07% (0.45)%
Net assets, end of period $57,117,185 $86,755,029
Ratio of expenses to average net assets (a) (b) 2.15% 2.19%
Ratio of net investment income to
average net assets (a) (c) 0.94% 1.13%
Portfolio turnover rate 1.30% 3.89%
(1) From commencement of operation on August 1, 1995.
<PAGE>
PER SHARE INFORMATION
The AAL Utilities Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Six Months Ended
4/30/94 4/30/95 4/30/96 10/31/96
===========================================================================================================================
Net asset value:
Beginning of period $10.00 $9.95 $9.47 $10.90
Income from Investment Operations
...........................................................................................................................
Net investment income 0.022 0.338 0.360 0.216
Net realized and unrealized gain (loss) on
investments (0.072) (0.498) 1.420 0.084
- ---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.050) (0.160) 1.780 0.300
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from:
...........................................................................................................................
Net investment income -- (0.320) (0.350) (0.200)
Net realized capital gains (d) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.000 (0.320) (0.350) (0.200)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.050) (0.480) 1.430 0.100
Net asset value:
End of period $9.95 $9.47 $10.90 $11.00
- ---------------------------------------------------------------------------------------------------------------------------
Average commission per share -- -- $0.056 $0.059
Total return (d) (0.50)% (1.51)% 18.90% 2.78%
Net assets, end of period $15,423,861 $70,861,404 $114,460,386 $129,377,650
Ratio of expenses to average
net assets (a) (b) 1.60% 1.19% 1.20% 1.17%
Ratio of net investment income to
average net assets (a) (c) 5.12% 4.08% 3.58% 4.06%
Portfolio turnover rate 0.00% 24.65% 21.79% 1.26%
</TABLE>
<PAGE>
PER SHARE INFORMATION
The AAL Bond Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
===================================================================================================================================
Net asset value:
Beginning of period $10.00 $9.64 $9.33 $9.25 $9.76
Income from Investment Operations
.................................
Net investment income 0.602 0.826 0.806 0.772 0.721
Net realized and unrealized gain (loss)
on investments (0.360) (0.255) (0.080) 0.510 0.273
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.242 0.571 0.726 1.282 0.994
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.602) (0.826) (0.806) (0.772) (0.721)
Net realized capital gains (d) -- (0.055) -- -- (0.013)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.602) (0.881) (0.806) (0.772) (0.734)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value (0.360) (0.310) (0.080) 0.510 0.260
Net asset value:
End of period $9.64 $9.33 $9.25 $9.76 $10.02
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (d) 2.56% 6.21% 7.84% 14.34% 10.47%
Net assets, end of period $20,938,863 $54,006,123 $94,937,997 $139,228,954 $229,309,955
Ratio of expenses to average
net assets (a) (b) 0.75% 0.83% 0.98% 1.00% 1.03%
Ratio of net investment income
to average net assets (a) (c) 8.67% 8.86% 8.38% 8.06% 7.19%
Portfolio turnover rate 85.88% 54.49% 38.00% 6.39% 12.18%
<PAGE>
Year Ended Year Ended Year Ended Year Ended Six Months Ended
4/30/93 4/30/94 4/30/95 4/30/96 10/31/96
====================================================================================================================================
Net asset value:
Beginning of period $10.02 $10.61 $9.69 $9.61 $9.62
Income from Investment Operations
.................................
Net investment income 0.661 0.584 0.580 0.584 0.298
Net realized and unrealized gain (loss)
on investments 0.627 (0.660) (0.078) 0.010 0.160
- ---------------------------------------
Total from Investment Operations 1.288 (0.076) 0.502 0.594 0.458
- ---------------------------------------
Distributions from:
...................
Net investment income (0.661) (0.584) (0.580) (0.584) (0.298)
Net realized capital gains (d) (0.037) (0.260) (0.002) -- --
- ---------------------------------------
Total Distributions (0.698) (0.844) (0.582) (0.584) (0.298)
- ---------------------------------------
Net increase (decrease) in
net asset value 0.590 (0.920) (0.080) 0.010 0.160
Net asset value:
End of period $10.61 $9.69 $9.61 $9.62 $9.78
- ---------------------------------------
Total return (d) 13.22% (0.99)% 5.47% 6.18% 4.85%
Net assets, end of period $370,219,492 $442,962,543 $429,355,163 $430,846,686 $427,052,396
Ratio of expenses to average
net assets (a) (b) 1.03% 1.02% 1.03% 1.01% 0.97%
Ratio of net investment income
to average net assets (a) (c) 6.35% 5.61% 6.12% 5.89% 6.09%
Portfolio turnover rate 26.12% 27.75% 44.57% 125.77% 78.10%
<PAGE>
PER SHARE INFORMATION
The AAL Municipal Bond Fund
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
Net asset value:
Beginning of period $10.00 $9.72 $9.74 $9.70 $10.13
Income from Investment Operations
.................................
Net investment income 0.398 0.599 0.608 0.616 0.598
Net realized and unrealized gain (loss)
on investments (0.280) 0.020 (0.035) 0.434 0.234
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.118 0.619 0.573 1.050 0.832
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.398) (0.599) (0.608) (0.616) (0.598)
Net realized capital gains (d) -- -- (0.005) (0.004) (0.004)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.398) (0.599) (0.613) (0.620) (0.602)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value (0.280) 0.020 (0.040) 0.430 0.230
Net asset value:
End of period $9.72 $9.74 $9.70 $10.13 $10.36
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (d) 1.29% 6.53% 5.93% 11.12% 8.39%
Net assets, end of period $10,031,478 $41,217,475 $78,844,594 $114,953,939 $172,494,589
Ratio of expenses to average
net assets (a) (b) 1.50% 0.94% 0.90% 0.90% 0.95%
Ratio of net investment income to
average net assets (a) (c) 5.72% 6.30% 6.13% 6.21% 5.81%
Portfolio turnover rate 20.83% 29.24% 30.83% 13.63% 0.74%
<PAGE>
Year Ended Year Ended Year Ended Year Ended Six Months Ended
4/30/93 4/30/94 4/30/95 4/30/96 10/31/96
====================================================================================================================================
Net asset value:
Beginning of period $10.36 $10.99 $10.56 $10.69 $10.91
Income from Investment Operations
.................................
Net investment income 0.571 0.539 0.523 0.521 0.258
Net realized and unrealized gain (loss)
on investments 0.631 (0.410) 0.186 0.300 0.290
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.202 0.129 0.709 0.821 0.548
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.571) (0.539) (0.523) (0.521) (0.258)
Net realized capital gains (d) (0.001) (0.020) (0.056) (0.080) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.572) (0.559) (0.579) (0.601) (0.258)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value 0.630 (0.430) 0.130 0.220 0.290
Net asset value:
End of period $10.99 $10.56 $10.69 $10.91 $11.20
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (d) 11.84% 1.04% 7.01% 7.74% 5.08%
Net assets, end of period $271,319,546 $370,568,847 $377,765,861 $412,777,320 $427,529,932
Ratio of expenses to average
net assets (a) (b) 1.00% 0.99% 0.98% 0.95% 0.89%
Ratio of net investment income to
average net assets (a) (c) 5.32% 4.87% 5.01% 4.69% 4.65%
Portfolio turnover rate 3.41% 10.15% 172.49% 130.52% 54.49%
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PER SHARE INFORMATION
The AAL Money Market Fund
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
Net asset value:
Beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
.................................
Net investment income 0.009 0.078 0.079 0.068 0.045
Net realized and unrealized gain (loss)
on investments -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.009 0.078 0.079 0.068 0.045
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.009) (0.078) (0.079) (0.068) (0.045)
Net realized capital gains (d) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.009) (0.078) (0.079) (0.068) (0.045)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value 0.000 0.000 0.000 0.000 0.000
Net asset value:
End of period $1.00 $1.00 $1.00 $1.00 $1.00
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Total return (d) 0.91% 8.10% 8.24% 7.07% 4.54%
Net assets, end of period $7,990,507 $143,217,501 $223,447,573 $228,465,749 $147,584,931
Ratio of expenses to average
net assets (a) (b) 0.07% 0.76% 1.04% 1.07% 1.11%
Ratio of net investment income to
average net assets (a) (c) 7.06% 8.29% 7.84% 6.85% 4.56%
Portfolio turnover rate N/A N/A N/A N/A N/A
<PAGE>
Year Ended Year Ended Year Ended Year Ended Six Months Ended
4/30/93 4/30/94 4/30/95 4/30/96 10/31/96
====================================================================================================================================
Net asset value:
Beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
.................................
Net investment income 0.025 0.019 0.038 0.048 0.025
Net realized and unrealized gain (loss)
on investments -- -- -- -- --
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Total from Investment Operations 0.025 0.019 0.038 0.048 0.025
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from:
...................
Net investment income (0.025) (0.019) (0.038) (0.048) (0.025)
Net realized capital gains (d) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.025) (0.019) (0.038) (0.048) (0.025)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value 0.000 0.000 0.000 0.000 0.000
Net asset value:
End of period $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (d) 2.53% 1.95% 3.92% 4.94% 2.59%
Net assets, end of period $83,274,493 $65,008,303 $70,210,675 $116,014,091 $159,077,631
Ratio of expenses to average
net assets (a) (b) 1.13% 1.26% 1.17% 0.83% 0.46%
Ratio of net investment income to
average net assets (a) (c) 2.53% 2.00% 3.95% 4.89% 4.90%
Portfolio turnover rate N/A N/A N/A N/A N/A
<PAGE>
(a) Calculated on an annualized basis.
(b) Computed after giving effect to Adviser's expense limitation undertaking. If
the Funds had paid all of their expenses, the ratios would have been as follows:
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
The AAL Capital Growth Fund 1.91% 1.77% 1.49% 1.41% 1.28%
The AAL Mid Cap Stock Fund -- -- -- -- --
The AAL Small Cap Stock Fund -- -- -- -- --
The AAL International Fund -- -- -- -- --
The AAL Utilities Fund -- -- -- -- --
The AAL Bond Fund 1.83% 1.37% 1.22% 1.17% 1.08%
The AAL Municipal Bond Fund 2.28% 1.46% 1.14% 1.10% 1.04%
The AAL Money Market Fund 1.76% 1.18% 1.04% 1.07% 1.11%
(c) If the Funds had paid all of their expenses the ratios would have been as
follows:
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
The AAL Capital Growth Fund 2.21% 2.54% 2.51% 2.59% 2.27%
The AAL Mid Cap Stock Fund -- -- -- -- --
The AAL Small Cap Stock Fund -- -- -- -- --
The AAL International Fund -- -- -- -- --
The AAL Utilities Fund -- -- -- -- --
The AAL Bond Fund 7.59% 8.32% 8.13% 7.89% 7.14%
The AAL Municipal Bond Fund 4.95% 5.79% 5.89% 6.01% 5.72%
The AAL Money Market Fund 5.37% 7.87% 7.84% 6.85% 4.56%
(d) Total return calculations are based on net amount invested and are for six months.
<PAGE>
(a) Calculated on an annualized basis.
(b) Computed after giving effect to Adviser's expense limitation undertaking. If
the Funds had paid all of their expenses, the ratios would have been as follows:
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
The AAL Capital Growth Fund 1.20% 1.18% 1.17% 1.12% 1.07%
The AAL Mid Cap Stock Fund -- 1.73% 1.54% 1.39% 1.36%
The AAL Small Cap Stock Fund -- -- -- -- 2.73%
The AAL International Fund -- -- -- 2.32% 2.19%
The AAL Utilities Fund -- 2.91% 1.19% 1.20% 1.17%
The AAL Bond Fund 1.03% 1.02% 1.03% 1.01% 0.97%
The AAL Municipal Bond Fund 1.00% 0.99% 0.98% 0.95% 0.89%
The AAL Money Market Fund 1.27% 1.51% 1.42% 1.28% 1.07%
(c) If the Funds had paid all of their expenses the ratios would have been as
follows:
Period Ended Year Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92
====================================================================================================================================
The AAL Capital Growth Fund 2.15% 2.07% 1.89% 1.16% 0.76%
The AAL Mid Cap Stock Fund -- (1.14)% (0.77)% (0.82)% (1.17)%
The AAL Small Cap Stock Fund -- -- -- -- (1.67)%
The AAL International Fund -- -- -- 0.77% 1.13%
The AAL Utilities Fund -- 5.12% 4.08% 3.58% 4.06%
The AAL Bond Fund 6.35% 5.61% 6.12% 5.89% 6.09%
The AAL Municipal Bond Fund 5.32% 4.87% 5.01% 4.69% 4.65%
The AAL Money Market Fund 2.38% 1.75% 3.70% 4.46% 4.30%
(d) Total return calculations are based on net amount invested and are for six months.
</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
Ronald Anderson
Officers H. Michael Spence - President
Robert G. Same - Vice President & Secretary
Terrance P. Gallagher - Treasurer
Charles D. Gariboldi, Jr. - Assistant Treasurer
Joseph F. Wreschnig - Assistant Secretary
Investment Adviser
& Distributor AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007
Sub-Adviser (AAL
International Fund Only) Societe Generale Asset Management Corp
1221 Avenue of the Americas
New York, NY 10020
Custodian, Transfer Agent
& Disbursing Agent Firstar Trust Company
615 East Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
Custodian (AAL
International Fund Only) The Chase Manhattan Bank, N.A.
Chase Metro Tech Center
Brooklyn, NY 11245
Legal Counsel Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202
Independent Accountants Price Waterhouse LLP
Suite 1500
100 East Wisconsin Avenue
Milwaukee, WI 53202
Must be preceded or accompanied by the current prospectus for The AAL Mutual
Funds.
[THE AAL MUTUAL FUND LOGO APPEARS HERE]
222 West College Avenue, Appleton, WI 54919-0007
800-553-6319
World Web: http://www.aal.org
e-mail address: [email protected]
