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
MUTUAL FUNDS
Annual Report April 30, 1997
The AAL Bond Fund
The AAL
Municipal Bond Fund
The AAL
High Yield Bond Fund
The AAL
Money Market Fund
[INSERT LOGO]
THE AAL MUTUAL FUNDS
<PAGE>
[ART]
TABLE OF CONTENTS
President's Letter....................................... 2
Portfolio Perspectives
The AAL Capital Growth Fund........................... 3
The AAL Mid Cap Stock Fund............................ 5
The AAL Small Cap Stock Fund.......................... 7
The AAL International Fund............................ 9
The AAL Utilities Fund................................11
The AAL Bond Fund.....................................13
The AAL Municipal Bond Fund...........................15
The AAL High Yield Bond Fund..........................17
Schedule of Investments
The AAL Capital Growth Fund...........................19
The AAL Mid Cap Stock Fund............................25
The AAL Small Cap Stock Fund..........................31
The AAL International Fund............................38
The AAL Utilities Fund................................48
The AAL Bond Fund.....................................52
The AAL Municipal Bond Fund...........................55
The AAL High Yield Bond Fund..........................61
The AAL Money Market Fund.............................65
Statement of Assets and Liabilities......................67
Statement of Operations..................................69
Statement of Changes in Net Assets.......................71
Notes to Financial Statements............................75
Financial Highlights
The AAL Capital Growth Fund...........................83
The AAL Mid Cap Stock Fund............................85
The AAL Small Cap Stock Fund..........................86
The AAL International Fund............................87
The AAL Utilities Fund................................88
The AAL Bond Fund.....................................89
The AAL Municipal Bond Fund...........................91
The AAL High Yield Bond Fund..........................93
The AAL Money Market Fund.............................95
Report of Independent Accountants........................99
<PAGE>
[ART]
Ronald G. Anderson
PRESIDENT
THE AAL MUTUAL FUNDS
[PHOTO]
APRIL 30, 1997
Dear Shareholder:
Financial & Economic Highlights
What a ride! After performing well in 1996 and hitting all-time highs in the
first quarter of 1997, stocks took a plunge in late-March/early-April, causing
some economists to fear a bear market. Then, the bull reappeared at the end of
April with the Dow fully recovering within a couple of days. The rise in stock
and bond prices was bolstered by strong profit growth, news of an agreement on a
balanced budget plan between the Clinton Administration and Republicans and a
string of economic reports suggesting that despite continuing economic growth,
interest rates may not move much higher this year.
Where Are We Headed?
While we certainly cannot predict the market's future course, we believe it is
worth reminding you that your asset allocations should be based on reasonable
expectations for those asset classes, not on their most recent performance. When
you consider how to allocate either new or existing assets among our Funds,
please look closely at their performance over the long term. As always, we need
to be prepared for volatility in the markets, with its corresponding short-term
impacts, and not be surprised by normal market adjustments -- they are
inevitable.
On the Homefront
In our continuing efforts to provide you with the best service possible, we are
happy to announce that AAL Mutual Funds' shareholders can now visit our website
(www.aalorg) to access up-to-date account balances and transaction history. A
personal identification number (PIN) is required to access this information. You
will be able to select a PIN upon your initial access. Or, if you prefer, you
can reach one of our Mutual Fund Service Center Representatives or our automated
voice response unit by calling 800-553-6319. Of course, your local Registered
Representative is always eager to assist you as well.
In addition, you can now buy and sell securities from your home by establishing
a brokerage account with AAL Capital Management Corporation. Contact us today
for more information on this new service!
Please read on in this report to find our portfolio managers' comments on their
investment strategies and performance information about the Funds they manage. I
believe you will find that they have some valuable insights to share. All of us
at AAL Capital Management Corporation remain committed to providing you with
consistent, quality investment opportunities and appreciate the investment
relationship you have entrusted to us.
Very truly yours,
/s/ Ronald G. Anderson
President's Letter - April 30, 1997
<PAGE>
[ART]
Ticker Symbol (A shares)................AALGX
TickerSymbol (B shares).................BBLGX
NAV (A shares)..........................$21.50
NAV (B shares)..........................$21.45
Number of Securities in Portfolio.......96
Frederick L. Plautz
PORTFOLIO MANAGER
[Photo]
EQUITY-ORIENTED
The AAL Capital Growth Fund
How did The AAL Capital Growth Fund perform relative to the market? What
investment techniques did you use to achieve the return?
The AAL Capital Growth Fund had a total return of 20.55% for the year ended
April 30, 1997, based on net amount invested in Class A shares. This compares
with a 25.13% total return from the S&P 500(R) Index./1/ The difference of 4.58%
is due mostly to the Fund's growth orientation during a period of rising
interest rates. As rates rise, price-earnings (P/E) ratios tend to contract more
for growth stocks.
The investment techniques used to get this return remain the same. Picking
stocks that will grow earnings, yet sell for reasonable prices relative to their
earnings growth, is the primary investment focus. Secondly, the Fund is
diversified across the major sectors of the market and holds shares in 96
different companies. Lastly, the Fund does not try to time the market and
typically has 3-5% in cash.
Have you made any changes to the Fund's sector or investment strategy?
The most significant change in sector weightings recently has been the reduction
of the financial sector from what it was the last year. This change was made to
reduce the Fund's interest rate exposure. This has worked so far, since shortly
afterward the Federal Reserve raised rates and it seems likely that they may
raise them some more in the near future. The strategy of the Fund has not
changed, but I have been emphasizing positive earnings revisions in the stocks I
buy and negative earnings revisions in the stocks I sell.
<PAGE>
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL CAPITAL GROWTH FUND S&P 500(R) INDEX/1/
FROM INCEPTION FROM INCEPTION
DATE ENDING DATE ENDING
DOLLARS DOLLARS
- ----------------------------- -----------------------------
$10,000.00
16-Jul-87 9,596.93 7/16/87 $ 10,000
30-Jul-87 9,760.08 7/31/87 $ 10,214
30-Aug-87 10,086.37 8/31/87 $ 10,595
30-Dec-87 7,806.17 12/31/87 $ 8,028
30-Jun-88 8,491.27 6/30/88 $ 9,048
30-Dec-88 8,779.03 12/30/88 $ 9,358
30-Jun-89 10,072.68 6/30/89 $ 10,903
31-Dec-89 11,375.38 12/29/89 $ 12,317
29-Jun-90 11,779.48 6/29/90 $ 12,698
31-Dec-90 11,469.81 12/31/90 $ 11,936
28-Jun-91 12,952.79 6/28/91 $ 13,634
31-Dec-91 14,932.71 12/31/91 $ 15,564
30-Jun-92 14,794.84 6/30/92 $ 15,460
31-Dec-92 15,784.89 12/31/92 $ 16,748
30-Jun-93 16,249.79 6/30/93 $ 17,563
31-Dec-93 16,740.88 12/31/93 $ 18,429
30-Jun-93 15,704.12 6/30/94 $ 17,806
30-Dec-94 16,510.48 12/30/94 $ 18,672
30-Jun-95 19,217.45 6/30/95 $ 22,441
29-Dec-95 21,628.21 12/29/95 $ 25,681
28-Jun-96 23,562.59 6/28/96 $ 28,271
31-Dec-96 26,397.41 12/31/96 $ 31,573
30-Apr-97 27,820.80 4/30/97 $ 34,355
Average Annual Total Returns*
As of April 30, 1997
From Inception
1-Year 5-Year Inception Date
--------------------------------------
Class A (without sales charge)............20.55% 13.28% 11.48% 7/16/87
Class A** (with sales charge).............15.75% 12.36% 11.01% 7/16/87
- --------------------------------------------------------------------------------
Class B (without CDSC)....................NA NA 3.82% 1/8/97
Class B** (with CDSC).....................NA NA (1.18)% 1/8/97
- --------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge).............12.92% 12.02% 10.55%
Class B** (with CDSC).....................NA NA (6.06)%
*Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total return
and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC) of 5%.
/1/ An index composed of 500 common stocks representative of the stock market as
a whole.
<PAGE>
[ART]
Have any of the Fund's holdings made significant contributions over the past
fiscal year?
Yes. The most significant contribution was made by Intel. Over the last year the
stock appreciated 126% and was a large holding the entire fiscal year. Intel
continues to dominate the world market for microprocessors, and this market
continues to grow rapidly. Intel's microprocessors are now even beginning to
take market share from workstations and mini computers.
Looking ahead, how do you think U.S. equities will perform during the remainder
of 1997?
The outlook for U.S. equities is challenging. The year after a presidential
election is often difficult. In addition, the previous two years have been much
better than average for the equity market. Also, the Federal Reserve has
recently raised rates for the first time in two years and more rate increases
have been predicted. If the economy can slow down to a more sustainable growth
rate and if inflation stays under control, interest rates should start to
decline. If this happens, the equity market will still have room to continue its
advance.
Fund Allocations
----------------
[PIE CHART APPEARS HERE]
% of Net Assets
---------------
Technology..................................................21%
Financials..................................................17%
Consumer Staples............................................16%
Health Care.................................................13%
Energy......................................................10%
Capital Goods................................................8%
Consumer Cyclicals...........................................5%
Communication Services.......................................3%
Cash & Cash Equivalents......................................3%
Transportation...............................................2%
Basic Materials..............................................1%
Utilities....................................................1%
-----------
Total 100%
5 Largest Holdings
------------------
Security % of Net Assets
- -------- ---------------
Merck & Co., Incorporated..................................3.5%
Intel Corporation..........................................3.3%
General Electric Company...................................3.2%
Exxon Corporation..........................................3.1%
American International Group, Inc..........................3.0%
<PAGE>
[ART]
Ticker Symbol (A shares).........................AASCX
Ticker Symbol (B shares).........................BBSCX
NAV (A shares)...................................$12.71
NAV (B shares)...................................$12.69
Number of Securities in Portfolio................120
Michael R. Hochholzer
PORTFOLIO MANAGER
[PHOTO]
EQUITY-ORIENTED
The AAL Mid Cap Stock Fund
How has the Fund performed for the year ended April 30, 1997? What factors
affected the performance?
The Fund had a difficult year in fiscal 1997, losing about 11% based on net
amount invested in Class A shares. A large exposure to high-growth, high-P/E
stocks resulted in the Fund suffering substantial losses during the market sell-
off of June and July. The Fund had large positions in technology and health care
stocks which did not rebound as strongly as others during the remainder of
calendar 1996.
Led by funds with large holdings of financial and energy stocks, the average
mid-cap stock fund returned about one percent during the same time frame. The
S&P/(R)/ MidCap 400/1/, a common benchmark for the mid-cap market, gained about
10% during the fiscal year.
Have you made any changes to the Fund's investment strategy since you took over
management of the Fund?
The key change that I have made to the Fund's investment strategy since I took
over in mid-March is to alter the portfolio's sector and industry exposures to
broadly reflect those of the mid-cap market as a whole. To accomplish this, I
have selectively sold shares from the overweighted technology and health care
areas and used the proceeds to buy new stocks in such areas as financials,
energy and utilities. While some of these generally are not considered "classic"
growth industries, because the Fund is focused on mid-cap companies,
opportunities exist to buy growing companies at attractive prices.
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL MID CAP STOCK FUND S&P(R) 400 MIDCAP INDEX/1/
From Inception From Inception
Ending Ending
Date Dollar Date Dollar
- ---- ------ ---- ------
10,000.00
30-Jun-93 9,596.93 6/30/93 $ 10,000
21-Aug-93 9,971.21 8/31/93 $ 10,388
29-Oct-93 10,268.71 10/29/93 $ 10,531
31-Dec-93 10,422.26 12/31/93 $ 10,775
28-Feb-94 10,786.95 2/28/94 $ 10,868
29-Apr-94 9,961.61 4/29/94 $ 10,442
30-Jun-94 8,598.85 6/30/94 $ 9,987
31-Aug-94 9,443.38 8/31/94 $ 10,866
31-Oct-94 9,932.82 10/31/94 $ 10,780
30-Dec-94 9,923.22 12/30/94 $ 10,388
28-Feb-95 10,009.60 2/28/95 $ 11,047
28-Apr-95 10,479.85 4/28/95 $ 11,465
30-Jun-95 11,631.48 6/30/95 $ 12,220
31-Aug-95 12,735.12 8/31/95 $ 13,094
31-Oct-95 13,742.80 10/31/95 $ 13,067
29-Dec-95 14,337.81 12/29/95 $ 13,601
29-Feb-96 14,980.81 2/29/96 $ 14,266
30-Apr-96 16,410.75 4/30/96 $ 14,878
28-Jun-96 15,950.10 6/28/96 $ 14,853
30-Aug-96 15,028.79 8/30/96 $ 14,650
31-Oct-96 15,009.60 10/31/96 $ 15,334
31-Dec-96 15,591.79 12/31/96 $ 16,214
28-Feb-97 15,603.27 2/28/97 $ 16,684
30-Apr-97 14,592.90 4/30/97 $ 16,388
Average Annual Total Returns*
As of April 30, 1997
From Inception
1-Year Inception Date
--------------------------------------
Class A (without sales charge)......... (11.08)% 11.55% 6/30/93
Class A** (with sales charge).......... (14.62)% 10.36% 6/30/93
- --------------------------------------------------------------------------------
Class B (without CDSC)................... NA (7.17)% 1/8/97
Class B** (with CDSC).................... NA (11.81)% 1/8/97
- --------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge)............ (8.10)% 10.31%
Class B** (with CDSC).................... NA (12.65)%
*Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total return
and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC) of 5%.
/1/ An index comprised of 400 stocks designed to represent performance of the
mid-cap segment of the U.S. equity markets.
<PAGE>
[ART]
This change should be viewed as an addition to the previous process of seeking
out quality growth companies in the mid-cap marketplace which has not changed
much at all. This additional piece of the process should reduce the volatility
of the Fund substantially and have a minimal impact on the expected returns.
What are your expectations for the Fund?
While predicting the direction or level of the stock market in the future is a
difficult undertaking, I can say that mid-cap stocks are now as fundamentally
attractive as they have been in several years. The threat of a continuation of
the rise in interest rates and concerns about growth in profits have reduced the
valuations of stocks in the mid-cap market to attractive levels. When considered
relative to the large-cap market, these valuations become even more attractive.
Going forward, I believe that The AAL Mid Cap Stock Fund provides an attractive
risk/reward trade-off.
What stock contributed most to the Fund's performance?
AMBAC, Inc. was among the top contributors to the Fund for the fiscal year. It
is the second largest provider of financial guarantee insurance and financial
services to municipalities, states and other governments across the country and
around the world. The company assists its customers in issuing bonds through
both providing consulting services and insuring the obligations against default.
The company's stock returned over 45% to the Fund during fiscal 1997. AMBAC's
fundamentals improved consistently throughout the year as a result of solid
expense controls, a growing international base of business and a favorable
domestic environment. As a result, the company met and exceeded earnings
expectations for the year and the P/E multiple expanded from 9.8x to 11.1x.
Because the fundamentals for the company remain positive and the valuation of
the stock remains reasonable, we continue to hold our position in the company.
While another 45% year is unlikely, AMBAC remains an attractive investment.
Fund Allocations
[GRAPH APPEARS HERE]
% of Net Assets
---------------
Technology.......................15%
Consumer Staples.................14%
Consumer Cyclicals...............13%
Financials.......................13%
Health Care......................11%
Capital Goods.................... 8%
Energy........................... 7%
Utilities........................ 7%
Cash & Cash Equivalents.......... 5%
Basic Materials.................. 4%
Transportation................... 2%
Communication Services........... 1%
-----------
Total 100%
5 Largest Holdings
Security % of Net Assets
-------- ---------------
LSI Logic Corporation...........1.4%
Public Service Company
of Colorado.....................1.3%
Flowers Industries, Inc.........1.3%
Applied Power, Inc..............1.2%
General Nutrition
Companies, Inc..................1.2%
<PAGE>
[ART]
Ticker Symbol (A shares)..............AASMX
Ticker Symbol (B shares)..............BBSMX
NAV (A shares)........................$9.84
NAV (B shares)........................$9.81
Number of Securities in Portfolio.....144
Kevin A. Schmitting
PORTFOLIO MANAGER
[PHOTO]
EQUITY-ORIENTED
The AAL SMALL CAP STOCK FUND
How did The AAL Small Cap Stock Fund compare to the overall market for small-cap
securities for the year ended April 30, 1997?
Since the inception of the Fund on July 1, 1996, the small-cap stock market has
had a very difficult time. The average small-cap stock fund lost about 2% during
that time period. The AAL Small Cap Stock Fund actually had a slight gain during
those ten months. Since last summer, small-cap stocks, especially growth stocks,
suffered from fears of higher interest rates, earnings volatility and overly
optimistic expectations. While the past year has been difficult for small-cap
investors, it has provided a healthy correction to a market that was getting
overheated with big returns in 1995 and early 1996. This corrective action,
while painful, often sets the market up for further advances.
Have you made any changes to the Fund's sector weightings or your investment
strategy over the fiscal year?
The Fund's sector weightings have changed a bit since its inception. The Fund
has become more diversified with more emphasis being placed on non-traditional
growth areas such as financial and small utilities stocks. The primary emphasis
of the Fund is still very heavily weighted toward growth companies, but the
diversification efforts have proven helpful especially as growth stocks fell out
of favor in early 1997. Going forward, the Fund will continue to be broadly
diversified with representation in almost all major segments of the economy.
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL SMALL CAP STOCK FUND S&P(R) 600 SMALL CAP INDEX/1/
From Inception From Inception
Date Ending Dollars Date Ending Dollars
- ------- -------------- ------- --------------
10,000.00 7/1/96 $10,000
01-Jul-96 9,596.93 7/31/96 $ 9,242
31-Jul-96 9,165.07 8/30/96 $ 9,812
30-Aug-96 10,316.70 10/31/96 $10,171
31-Oct-96 10,441.46 12/31/96 $10,825
31-Dec-96 11,008.07 2/28/97 $10,777
28-Feb-97 10,565.78 4/30/97 $10,349
30-Apr-97 9,671.38
Average Annual Total Returns*
As of April 30, 1997
From Inception
Inception Date
------------------------------
Class A (without sales charge)..... 0.78% 7/1/96
Class A** (with sales charge)...... (3.28)% 7/1/96
- --------------------------------------------------------------------
Class B (without CDSC)............. (12.18)% 1/8/97
Class B** (with CDSC).............. (16.57)% 1/8/97
- --------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge)...... (1.12)%
Class B** (with CDSC).............. (14.61)%
*Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total return
and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC) of 5%.
/1/An index comprised of 600 stocks designed to represent performance of the
small-cap segment of the U.S. equity markets.
<PAGE>
[ART]
How does your investment process differ from that of The AAL Mid Cap Stock Fund?
Both Funds are looking for fast-growing companies across many industries. The
biggest difference would be in the average market capitalization of the
companies held in each Fund. The AAL Small Cap Stock Fund will obviously be in
smaller companies. This lower market capitalization will also make The AAL Small
Cap Stock Fund more aggressive with a higher risk/return profile.
Was there a particular success story you could share with us?
One of the Fund's top performing stocks since its inception has been Evergreen
Media. Evergreen is a radio broadcasting company that operates stations in many
of the top markets nationally. During 1996, the Telecommunications Act was
passed, which, among other things, allows less restrictive ownership rules for
radio stations. This change allows broadcasting companies to own more companies
in a given geographic area. By owning more stations, the broadcasting companies
can become much more efficient, especially with advertising and personnel.
Evergreen has taken advantage of this new law by making several acquisitions of
other broadcasting companies. These acquisitions have greatly enhanced the
company's long-term earnings power. The Fund has a gain of over 30% on the stock
and it has remained as one of the Fund's largest positions.
Fund Allocations
------------------------
[PIE CHART APPEARS HERE]
% of Net Assets
---------------
Technology...................20%
Consumer Cyclicals...........18%
Health Care..................14%
Capital Goods................13%
Financials................... 9%
Consumer Staples............. 8%
Energy....................... 6%
Transportation............... 4%
Basic Materials.............. 3%
Utilities.................... 3%
Cash & Cash Equivalents...... 2%
-----------
Total 100%
5 Largest Holdings
------------------
Security % of Net Assets
-------- ---------------
Tower Automotive, Inc..............1.4%
Ambassador Apartments, Inc.........1.4%
Evergreen Media Corporation........1.4%
BISYS Group, Inc...................1.3%
Peoples Heritage Financial Group...1.3%
<PAGE>
[ART]
Ticker Symbol (A shares)..............AAITX
Ticker Symbol (B shares)..............BBITX
NAV (A shares)........................$11.37
NAV (B shares)........................$11.34
Number of Securities in Portfolio.....149
Jean-Marie Eveillard
PORTFOLIO MANAGER
[PHOTO]
EQUITY-ORIENTED
The AAL International Fund
How have international markets performed over the past fiscal year and what
economic factors affected performance?
In Europe, an improving economic outlook for major economies, low inflation,
declining interest rates and a stronger dollar provided substantial support to
most markets. Although political controversy and uncertainties related to the
implementation of the European economic and monetary union dampened performance
in the first few months, most markets recovered quickly and rose sharply in the
second half of the Fund's fiscal year. Conversely, in Japan, the stock market
retreated further as the extent of the local economic recovery proved
disappointing and the health of the Japanese financial sector remained an area
of concern.
How did the Fund perform over the same period and what factors affected its
performance?
For the year ended April 30, 1997, the Fund's total return was 6.32% based on
net amount invested in Class A shares, compared with a loss of 0.89% for the
Morgan Stanley Capital International EAFE Index/1/. Since approximately 38% of
its net assets are invested in established European markets, the Fund's
performance was positively impacted by developments in those markets. The
decline in the value of the Japanese holdings was somewhat offset by strong
currency gains because the Fund had partially hedged its Yen exposure throughout
the year. The balance of the Fund's investments in smaller emerging markets
performed reasonably well over the past fiscal year, with the exception of South
Korean holdings. Fixed income securities generated satisfactory total returns,
particularly from investments in Brady bonds. Cash and cash equivalents totaled
about 15% of net assets by fiscal year end.
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL INTERNATIONAL FUND MSCI EAFE INDEX/1/
From Inception From Inception
Ending Ending
Date Dollars Date Dollars
- --------- --------- --------- ---------
10,000.00
01-Aug-95 9,596.93 8/1/95 * $10,000.00
31-Aug-95 9,616.12 8/31/95 $9,618.54
29-Sep-95 9,577.74 9/30/95 $9,806.39
31-Oct-95 9,558.54 10/31/95 $9,542.79
30-Nov-95 9,558.54 11/30/95 $9,808.31
29-Dec-95 9,735.51 12/31/95 $10,203.49
31-Jan-96 10,149.17 1/31/96 $10,245.37
29-Feb-96 10,110.69 2/29/96 $10,280.01
29-Mar-96 10,264.61 3/31/96 $10,498.32
30-Apr-96 10,659.04 4/30/96 $10,803.54
31-May-96 10,601.32 5/31/96 $10,604.73
28-Jun-96 10,649.42 6/30/96 $10,664.42
31-Jul-96 10,293.47 7/31/96 $10,352.72
30-Aug-96 10,322.33 8/31/96 $10,375.41
30-Sep-96 10,514.73 9/30/96 $10,851.04
31-Oct-96 10,610.94 10/31/96 $10,542.04
29-Nov-96 10,986.12 11/30/96 $10,961.47
31-Dec-96 10,923.86 12/31/96 $10,820.49
31-Jan-97 11,123.20 1/31/97 $10,441.70
28-Feb-97 11,372.38 2/28/97 $10,612.59
31-Mar-97 11,352.44 3/31/97 $10,651.01
30-Apr-97 11,332.51 4/30/97 $10,707.63
*7/31/95 as inception.
Average Annual Total Return*
As of April 30, 1997
From Inception
1-Year Inception Date
----------------------------
Class A (without sales charge).................6.32% 9.98% 8/1/95
Class A** (with sales charge)..................2.08% 7.42% 8/1/95
- ---------------------------------------------------------------------------
Class B (without CDSC)...........................NA 3.28 1/8/97
Class B** (with CDSC)............................NA (1.72)% 1/8/97
- ---------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge)..................6.22% 7.91%
Class B** (with CDSC)............................NA (1.45)%
*Past performance is not indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total
return and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC) of 5%.
/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>
[ART]
Fund Allocations
------------------------------------------
% of Net Assets
---------------
Common Stocks ...................... 73%
Preferred Stocks .................... 7%
Bonds ............................... 7%
Short-Term Investments ............. 13%
--------------
Total 100.0%
[WORLD MAP SHOWING PERCENTAGES APPEARS HERE]
Canada 2.54% Sweden 2.29% Turkey 0.17%
Mexico 2.32% Norway 1.33% Japan 17.01%
Panama 0.97% Denmark 0.78% Taiwan 0.38%
Brazil 0.79% Finland 0.52% Hong Kong 3.17%
Argentina 1.52% Germany 5.81% Singapore 2.65%
United Kingdom 4.78% Austria 1.10% Thailand 0.38%
Netherlands 1.79% Belgium 0.81% South Korea 3.27%
France 11.88% Luxembourg 1.14% Indonesia 1.72%
Spain 0.90% Switzerland 6.15% Australia 0.45%
Portugal 1.11% Italy 3.24% New Zealand 3.64%
Israel 0.74%
How did your value strategy contribute to the Fund's strong performance and do
you have any particular success story about the Fund?
We tend to focus on securities that are out of favor or altogether ignored by
momentum investors. Our investment in Orrefors, a Swedish crystal manufacturer
bought out by a group of local investors, generated a 67% capital gain for the
Fund. This company was small and undervalued by the market.
5 Largest Holdings
----------------------------------------------------------
Security % of Net Assets
-------- ---------------
Secom Company, Limited (Japan) ................. 1.5%
Buderus AG (Germany) ........................... 1.5%
Fuji Photo Film Company, Ltd. ADR (Japan) ...... 1.4%
Industrias Penoles S.A. de C.V. (Mexico) ....... 1.4%
Sika Finanz AG Bearer (Switzerland) ............ 1.3%
<PAGE>
[ART]
Ticker Symbol (A shares)..............AAUTX
Ticker Symbol (B shares)..............NA
NAV (A shares)........................$11.34
NAV (B shares)........................$11.37
Number of Securities in Portfolio.....71
Lewis A. Bohannon
PORTFOLIO MANAGER
[PHOTO]
EQUITY-ORIENTED
The AAL Utilities Fund
How has The AAL Utilities Fund performed over the last fiscal year and what
factors affected the performance?
This past year was a difficult one for utilities stocks. Interest rates were
volatile throughout the year with rates rising sharply, particularly in the
second half of the fiscal year. The strong economic growth that drove the
broader stock market indexes to new highs caused bond investors to worry about
the potential for increased inflation; a negative for interest-sensitive
investments such as utilities stocks. There was also uncertainty over the impact
of deregulation in both the electric utilities and telephone industries, which
created volatility in utilities stocks. Overall, these concerns lead to
utilities stocks underperforming the broader market indexes. Still the Fund
substantially outperformed the S&P/R/ Utilities Index./1/
Deregulation has been a hot topic for the utilities industry, how does the
regulatory environment look at this point?
With the passage of the Telecommunications Act of 1996 and efforts by many
states to increase competition in the electric utilities industry, deregulation
has played a dominant role in the performance of utilities stocks over the past
12-18 months. Along with rising interest rates, investor concerns about the
regulatory environment have been the primary reason for the generally weak
performance of utilities over the period. Our strategy has been to accept this
new reality of increased competition in both industries, but we have taken the
position that the transition to a more competitive environment will be an
evolutionary, not revolutionary happening. With this in mind, our approach is to
invest in companies best positioned for increased competition and whose
managements are able to exploit this changing market. Despite last year's
performance, recent decisions by the FCC concerning telecommunications
regulations and decisions on electric regulations by a number of important
states have convinced us that our assumptions about the pace of change and our
strategy of investing in competitively well-positioned companies is the correct
investment approach in this rapidly changing environment.
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL UTILITIES FUND S&P(R) UTILITIES INDEX/1/
From Inception From Inception
Ending Ending
Date Dollars Date Dollars
- ---- ------- ---- -------
10,000.00
18-Mar-94 9,596.93 3/17/94 $ 10,000
29-Apr-94 9,548.94 4/29/94 $ 9,921
31-May-94 9,337.81 5/31/94 $ 9,652
29-Jul-94 9,378.40 7/29/94 $ 10,001
30-Sep-94 9,126.76 9/30/94 $ 9,719
30-Nov-94 9,087.72 11/30/94 $ 9,657
31-Jan-95 9,286.22 1/31/95 $ 10,464
31-Mar-95 9,207.44 3/31/95 $ 10,378
31-May-95 9,882.85 5/31/95 $ 11,101
31-Jul-95 10,062.51 7/31/95 $ 11,436
29-Sep-95 10,693.30 9/29/95 $ 12,404
30-Nov-95 10,986.13 11/30/95 $ 12,886
31-Jan-96 11,735.36 1/31/96 $ 13,972
29-Mar-96 11,358.77 3/29/96 $ 13,137
31-May-96 11,215.12 5/31/96 $ 13,263
31-Jul-96 11,046.58 7/31/96 $ 12,908
30-Sep-96 11,067.27 9/30/96 $ 13,337
29-Nov-96 11,924.22 11/29/96 $ 14,309
31-Jan-97 12,191.34 1/31/97 $ 14,288
31-Mar-97 11,895.79 3/31/97 $ 13,740
30-Apr-97 12,066.04 4/30/97 $ 13,508
Average Annual Total Returns*
As of April 30, 1997
From Inception
1-Year Inception Date
-----------------------------------
Class A (without sales charge)........... 7.88% 7.61% 3/17/94
Class A** (with sales charge)............ 3.61% 6.20% 3/17/94
- -------------------------------------------------------------------------------
Class B (without CDSC)................... NA (0.04)% 1/8/97
Class B** (with CDSC).................... NA (15.04)% 1/8/97
- -------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge)............ 0.55% 5.88%
Class B** (with CDSC).................... NA (6.21)%
* Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more
or less than their original cost. Periods less than one year represent total
return and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to
1/1/97, this was 4.75%. Class B performance reflects the maximum contingent
deferred sales charge (CDSC) of 5%.
/1/ A capitalization-weighted index of all stocks designed to measure
the performance of the utility sector of the S&P 500/(R)/.
<PAGE>
[ART]
What changes have been made to the Fund's sector weightings or your investment
strategy over the past fiscal year?
Historically, The AAL Utilities Fund has been more of a pure utilities fund than
many other utilities funds. This caused the Fund to struggle during the first
half of the fiscal year. The diversity in the Fund was increased during the
second half of the fiscal year in order to decrease its interest rate
sensitivity. This additional diversity, combined with a strong rebound in the
Fund's telecommunications holdings, lead to strong second half performance.
What holdings in the Fund have made significant contributions over the past
fiscal year?
One area of investments that we have increased significantly this year, and
which has added substantially to overall performance, is foreign holdings,
particularly in the telecommunications industry. Many foreign countries are
experiencing substantially greater growth in telecommunications than the United
States due to the transformation from government-controlled to privatized
telecommunications. The Fund's investments in both Europe and South America
added significantly to the Fund's total return for the year ended April 30,
1997.
Fund Allocations
[PIE CHART APPEARS HERE]
% of Net Assets
---------------
Utilities.............................. 57%
Communication Services................. 35%
U.S. Gov't Obligations................. 3%
Cash & Cash Equivalents................ 2%
Utility Bonds.......................... 2%
Energy................................. 1%
---------
Total 100%
5 Largest Holdings
Security % of Net Assets
-------- ---------------
Telefonica de Espana ADR............. 4.0%
MCI Communications
Corporation.......................... 3.4%
NIPSCO Industries
Incorporated......................... 3.3%
SBC Communications
Incorporated......................... 3.3%
Pinnacle West Capital
Corporation.......................... 2.8%
<PAGE>
[ART]
Ticker Symbol (A shares)..............AAINX
Ticker Symbol (B shares)..............NA
NAV (A shares)........................$9.63
NAV (B shares)........................$9.64
Number of Securities in Portfolio.....49
Michael R. Hilt
PORTFOLIO MANAGER
[PHOTO]
INCOME-ORIENTED
The AAL Bond Fund
How has the Fund performed over the last fiscal year and what factors affected
the performance?
For the year ended April 30, 1997, the Fund returned 6.43% based on net amount
invested in Class A shares. This was due to security selection. Over the year I
overweighted mortgage-backed bonds and corporate bonds, and underweighted
Treasury bonds. The Fund continues to be run on a duration (interest rate risk)
neutral basis.
What sort of defensive positioning will you take in light of slowly rising
interest rates?
I believe the Fund owns more putable bonds and mortgage-backed bonds than other
bond funds. These are both a good defense against rising interest rates. Here's
why -- putable bonds give the owner the right to sell the bonds back to the
issuing company prior to their maturity. And, most of the mortgage-backed bonds
owned by the Fund carry high coupons and mortgage rates, which provides an
incentive for home owners to refinance them. If rates were to increase, this
refinancing incentive would become less valuable and the Fund's mortgage-backed
bonds would increase in relative value.
Have you made any changes to the Fund's sector weightings or your investment
strategy over the fiscal year?
I have become more selective and somewhat defensive in terms of corporate bonds
due to yield spreads. The recent proceeds from the corporate sales have been
invested in mortgage-backed securities and Treasuries. You will also note that
the Fund's cash position has increased. This does not reflect an effort to time
the market, rather it is just the opposite-- because we own many bonds with
longer maturities we need to hold some cash in order to maintain our desired
average duration, effective maturity and interest rate risk levels.
Value of a $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL BOND FUND LEHMAN BROTHERS AGGREGATE BOND INDEX/1/
From Inception From Inception
Date Ending Dollars Date Ending Dollars
- -------------------------------- ------------------------------
$10,000.00 7/16/87 $10,000
16-Jul-87 $ 9,596.93 7/31/87 $ 9,996
31-Jul-87 $ 9,479.55 8/31/87 $ 9,943
31-Aug-87 $ 9,341.31 12/31/87 $10,296
30-Dec-87 $ 9,554.24 6/30/88 $10,810
30-Jun-88 $ 9,980.93 12/30/88 $11,108
30-Dec-88 $10,205.24 6/30/89 $12,129
30-Jun-89 $10,976.19 12/29/89 $12,722
31-Dec-89 $11,459.75 6/29/90 $13,080
29-Jun-90 $11,749.40 12/31/90 $13,859
31-Dec-90 $12,433.08 6/28/91 $14,478
28-Jun-91 $12,957.26 12/31/91 $16,077
31-Dec-91 $14,389.31 6/30/92 $16,513
30-Jun-92 $14,745.15 12/31/92 $17,268
31-Dec-92 $15,353.85 6/30/93 $18,460
30-Jun-93 $16,388.03 12/31/93 $18,951
31-Dec-93 $16,706.19 6/30/94 $18,217
30-Jun-94 $15,915.87 12/30/94 $18,398
30-Dec-94 $15,913.46 6/30/95 $20,504
30-Jun-95 $17,467.30 12/29/95 $21,797
29-Dec-95 $18,469.31 6/28/96 $21,631
28-Jun-96 $18,008.04 12/31/96 $22,585
31-Dec-96 $18,886.34 4/30/97 $22,797
30-Apr-97 $19,018.60
AVERAGE ANNUAL TOTAL RETURNS*
as of April 30, 1997
From Inception
1-Year 5-Year Inception Date
-------------------------------------
Class A (without sales charge) 6.43% 5.96% 7.23% 7/16/87
Class A** (with sales charge) 2.18% 5.09% 6.78% 7/16/87
- -------------------------------------------------------------------------------
Class B (without CDSC) NA NA 0.96% 1/8/97
Class B** (with CDSC) NA NA (4.04)% 1/8/97
- -------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge) 0.36% 5.01% 6.73%
Class B** (with CDSC) NA NA (5.11)%
*Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total return
and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC)of 5%.
/1/ An index that encompases four major classes of fixed-income securities in
the U.S.: U.S. Treasury and U.S. government agency securities, corporate debt
obligations, mortgage-backed securities and asset-backed securities.
<PAGE>
[ART]
What do you look for when seeking out an investment?
I look for a combination of price appreciation and good yield characteristics
and pay very close attention to how a new security will affect the overall
portfolio structure.
How do you plan to position the Fund in the near future?
As mentioned, I have recently reduced our corporate holdings and increased
mortgage-backed holdings and Treasury bond holdings. Cash is held instead of
Treasuries to give us the average duration we desire. We do not structure the
portfolio to take advantage of any predicted change in the overall level of
interest rates, instead we focus on individual security selection and hope to
offer investors a competitive yield and an incremental total return advantage
without taking imprudent risks.
Credit Quality
[PIE CHART APPEARS HERE]
% of Net Assets
---------------
AAA............... 61%
AA................ 8%
A................. 14%
BBB............... 17%
-------------
Total 100%
Average Quality: AA
Average Maturity: 7.8 years
5 Largest Holdings
Security % of Net Assets
-------- ---------------
Federal National Mortgage
Association #313002.......... 8.1%
Coupon Rate: 9.00%
Maturity Date: 6/1/2026
Government National Mortgage
Association Pool #780212..... 7.8%
Coupon Rate: 8.00%
Maturity Date: 8/15/2025
Government National Mortgage
Association Pool #780213..... 5.8%
Coupon Rate: 7.50%
Maturity Date: 8/15/2025
U. S. Treasury Notes......... 4.1%
Coupon Rate: 6.50%
Maturity Date: 11/15/2026
Citicorp Mortgage Securities, Inc.
Series 1994-8 Class A3....... 3.3%
Coupon Rate: 6.25%
Maturity Date: 5/25/2024
<PAGE>
[ART]
Ticker Symbol (A shares)..............AAMBX
Ticker Symbol (B shares)..............NA
NAV (A shares)........................$10.92
NAV (B shares)........................$10.92
Number of Securities in Portfolio.....99
Duane A. McAllister
PORTFOLIO MANAGER
[PHOTO]
INCOME-ORIENTED
The AAL Municipal Bond Fund
Given all the volatility in the bond market over the year ended April 30, 1997,
what impact did this have on the municipal market and our Fund?
It's true that Alan Greenspan and other members of the Federal Reserve Board
kept the financial markets on edge for much of the last fiscal year waiting to
see if, when and by how much short-term rates would be raised. This uncertainty
prompted, at times, significant changes in market-driven interest rates.
Municipals generally followed the gyrations of the Treasury market as rates
moved up and down, but somewhat surprisingly, like the Treasury market, ended
this fiscal year with rates very near where they started. Yields on longer-
maturity municipal issues fell modestly, but that was primarily due more to
technical factors (i.e., more demand than supply) than for economic reasons. The
Fund did very well through this volatility, providing a total return of 6.64%
based on the net amount invested in Class A shares.
What significant factors contributed to the Fund's performance?
A combination of two different strategies worked well for the Fund. First,
maintaining a longer than average interest rate posture was beneficial for much
of the fiscal year. On average, municipal rates were unchanged for the period.
However, the longer end of the yield curve, where the Fund was overweighted,
outperformed the rest of the municipal curve. This structure not only enhanced
the Fund's yield, but also provided modest capital appreciation on the longest
maturities. Secondly, holding a higher than average position in "BBB" rated
issues also served us well. As economic growth improved so did the outlook for
some of the lower- rated investment grade credits. In addition, the strong
demand for these "yieldier" issues helped to tighten the spread on some of the
"BBB" rated securities in the Fund.
Value of $10,000 Investment
In Class A shares - including 4% sales charge
[LINE GRAPH APPEARS HERE]
THE AAL MUNICIPAL BOND FUND LEHMAN MUNICIPAL BOND INDEX
From Inception From Inception
Date Ending Dollars Date Ending Dollars
- ----------------------------- -----------------------------
$10,000.00 7/16/87 $ 10,000
16-Jul-87 9,596.93 7/31/87 $ 10,051
31-Jul-87 9,520.23 8/31/87 $ 10,074
31-Aug-87 9,472.20 12/31/87 $ 10,135
31-Dec-87 9,462.10 6/30/88 $ 10,667
30-Jun-88 9,854.06 12/30/88 $ 11,164
31-Dec-88 10,163.56 6/30/89 $ 11,904
30-Jun-89 10,699.01 12/29/89 $ 12,368
29-Dec-89 11,029.42 6/29/90 $ 12,714
29-Jun-90 11,306.91 12/31/90 $ 13,270
31-Dec-90 11,741.26 6/28/91 $ 13,859
28-Jun-91 12,229.58 12/31/91 $ 14,882
31-Dec-91 13,072.28 6/30/92 $ 15,493
30-Jun-92 13,567.88 12/31/92 $ 16,194
31-Dec-92 14,161.70 6/30/93 $ 17,344
30-Jun-93 15,051.20 12/31/93 $ 18,182
31-Dec-93 15,759.14 6/30/94 $ 17,374
30-Jun-94 14,959.80 12/30/94 $ 17,242
30-Dec-94 14,863.22 6/30/95 $ 18,907
30-Jun-95 16,286.86 12/29/95 $ 20,252
29-Dec-95 17,573.88 6/26/96 $ 20,162
28-Jun-96 17,387.09 12/31/96 $ 21,151
31-Dec-96 18,343.85 4/30/97 $ 21,279
30-Apr-97 18,334.29
Average Annual Total Returns*
As of April 30, 1997
From Inception
1-Year 5-Year Inception Date
---------------------------------------
- --------------------------------------------------------------------------------
Class A (without sales charge)........... 6.64% 6.78% 6.83% 7/16/87
Class A** (with sales charge)............ 2.42% 5.92% 6.38% 7/16/87
- --------------------------------------------------------------------------------
Class B (without CDSC)..................... NA NA (0.34)% 1/8/97
Class B** (with CDSC)...................... NA NA (4.66)% 1/8/97
- --------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/97
Class A** (with sales charge)............. 0.91% 5.93% 6.35%
Class B** (with CDSC)..................... NA NA (5.43)%
*Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. Periods less than one year represent total return
and are not annualized.
**Class A performance reflects the maximum sales charge of 4%. Prior to 1/1/97,
this was 4.75%. Class B performance reflects the maximum contingent deferred
sales charge (CDSC) of 5%.
/1/ A broad-based index that provides a performance indicator of the overall
municipal bond market.
<PAGE>
[ART]
Have you made any changes in investment strategy in light of the Federal Reserve
Board raising interest rates in March 1997?
Not really. The Fed's action of raising the Fed Funds rate by 25 basis points
had been well-anticipated and in some respects the market was relieved to
finally see action after watching and waiting for months. The economy has been
strong and it seems the Fed's move was prudent. The greatest risk to the
municipal market from Fed intervention should be among intermediate maturities
(e.g., 5 to 10 years), where the Fund is underweighted. The longer maturities
should hold their value relatively well, and may actually appreciate if the Fed
keeps inflation in check.
What are the goals of the Fund? Can you summarize the investment approach used
to pursue these goals?
In addition to providing our shareholders with a steady stream of tax-exempt
income, it is my goal for the Fund to provide consistent, above-average
performance relative to other municipal bond funds. This is not always possible
given the uncertainties of the financial markets, but if achieved, the Fund will
do very well on a long-term basis. An outlook on the long-term direction of
interest rates will be reflected in how the Fund is structured. The average
maturity, the maturity structure and the coupon selection will vary over time
based on this outlook. In addition, in spite of looking to always maintain a
very high average credit quality, the credit structure of the Fund will also
vary over time, primarily to reflect changes in the economic cycle for
municipalities.
Credit Quality
[PIE CHART APPEARS HERE]
% of Net Assets
---------------
AAA........................ 47%
AA......................... 21%
A.......................... 8%
BBB........................ 24%
--------------
Total 100%
Average Quality: AA
Average Maturity: 16.8 years
5 Largest Holdings
Security % of Net Assets
-------- ---------------
Michigan State Tax & Revenue
G.O. Bonds 3.6%
Coupon Rate: 4.50%
Maturity Date: 9/30/1997
Detroit, Michigan School
District, School Aid Notes 3.6%
Coupon Rate: 4.50%
Maturity Date: 5/1/1997
Metropolitan Pier and Exposition
Center Illinois Revenue Bonds 2.8%
Coupon Rate: 7.00%
Maturity Date: 7/1/2026
Washington State Public Power
Supply System Project #2
Revenue Bonds, Series 1994 A 2.5%
Coupon Rate: 6.00%
Maturity Date: 7/1/2007
District of Columbia G.O.,
Howard University Revenue Bonds 2.5%
Coupon Rate: 7.25%
Maturity Date: 4/1/2020
<PAGE>
[ART]
Ticker Symbol (A shares)..............AAHYX
Ticker Symbol (B shares)..............NA
NAV (A shares)........................$9.88
NAV (B shares)........................$9.88
Number of Securities in Portfolio.....81
David G. Carroll
PORTFOLIO MANAGER
[PHOTO]
INCOME-ORIENTED
The AAL High Yield Bond Fund
How has the Fund performed since its inception on January 8, 1997?
For the period ended April 30, 1997, the Fund had an SEC 30-day yield of 9.25%
and a total return of 1.51% based on net amount invested in Class A shares. The
largest challenge facing the Fund was quickly investing the $20 million initial
investment in a well-diversified manner. A total of 40 different investments
were made over a 10-day period. As of April 30, 1997, the Fund contained 81
different investments in 25 various industries. This diversification is the
primary strategy I employ to control the risk of default in a high yield
portfolio.
You just quoted a yield and a total return. What's the difference?
Yield is the annual return on an investment (from dividends or interest)
expressed as a percentage of either cost or current price. In the case of this
Fund, yield is the percentage return from monthly dividend payments received.
Total return is comprised of both income and price change of the investment over
a certain period of time, which is then expressed as a percentage of the
original investment.
How are you managing the Fund?
I am managing the Fund for high current income. In order to achieve this
objective, the Fund is invested primarily in below investment grade corporate
bonds. I focus on bonds issued by companies that have been operating for at
least five years. An increasing number of issuers of high yield debt today are
start-ups in the telecommunications industry with unproven technology. I believe
these investments are better suited for venture capitalists, not income-
oriented investors. All of the bonds in the portfolio make cash interest
payments. In addition, I do not time the market. Typically I have only 2-5% in
cash, the balance being fully invested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Beginning NAV Annual Income Yield Ending NAV Price Change Total Return
Example 1
$10.00/per share $1.00 10% $10.50 +5% 15%
Example 2
$10.00/per share $1.00 10% $ 9.50 -5% 5%
</TABLE>
This hypothetical example shows the yield and total return on an investment in a
bond fund over a one-year period based on initial $10.00 NAV.
<PAGE>
[ART]
What do you look for when seeking out an investment?
When considering an investment for the Fund, I look for three main ingredients:
1.) a seasoned management team; 2.) strong market share; and 3.) stable sales
and earnings. A recent investment highlights this approach. Neenah Corp.
manufactures iron castings for the municipal market such as manhole covers
(sewer caps) and sewer street grates. The company controls over 50% of the
market for these products in the midwest and mideast portions of the U.S. The
demand for these products has historically been very stable, growing 3-4% per
year. A dominant market share allows the company to be the price leader for
their products, which in turn has resulted in relatively high profit margins.
The management team is led by two individuals with extensive experience in the
industry. An additional factor favoring this investment is the location of the
company. Neenah is located only 10 miles from Appleton. I will be able to visit
with management and follow their progress in the local media.
What is your outlook for the high yield market?
I am positive on the high yield market. A healthy economy is the high yield
market's best friend. A growing economy makes it easier for companies to service
their debt, which results in lower rates of default. The default rate for the 12
months ended March 1997 stood at only 1.6%, versus 3.1% for the similar period
one year ago. The AAL High Yield Bond Fund has not had an investment default on
its interest payments. My main concern is that the Federal Reserve, in an effort
to fight inflation, increases interest rates too aggressively which may result
in an economic slowdown or recession. Up until now, the Fed has done an
excellent job in guiding the economy toward solid growth with minimal inflation.
Credit Quality
[PIE CHART HERE]
% of Net Assets
---------------
BB....................25%
B.....................73%
CCC................... 1%
Non-Rated Bonds....... 1%
-----------
Total 100%
Average Quality: B+
Average Maturity: 8.0 years
5 Largest Holdings
Security % of Net Assets
-------- ---------------
Specialty Foods Corporation.......2.1%
Coupon Rate: 10.25%
Maturity Date: 8/15/2001
Terex Corporation.................2.0%
Coupon Rate: 13.25%
Maturity Date: 5/15/2002
Paging Network, Inc...............1.9%
Coupon Rate: 10.00%
Maturity Date: 10/15/2008
Wyman-Gordan Company..............1.8%
Coupon Rate: 10.75%
Maturity Date: 3/15/2003
Algoma Steel Corporation..........1.8%
Coupon Rate: 12.375%
Maturity Date: 7/15/2005
<PAGE>
The AAL Capital Growth Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
[GRAPHIC] The Fund Seeks: Long-term capital growth by investing in common
-------------- stocks and securities convertible into common stocks.
[GRAPHIC] 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>
Shares Common Stocks (94.8%) Market Value
===============================================================================================================================
<S> <C> <C>
Basic Materials (1.0%)
- ---------------
248,800 PPG Industries, Incorporated........................................................... $13,528,500
(Global manufacturer of glass, paint and chemical products)
97,300 Praxair, Inc........................................................................... 5,023,113
(Industrial gas supplier with worldwide sales concentrated in North and South America)
------------------------------------------
Total Basic Materials 18,551,613
==========================================
Capital Goods (7.7%)
- -------------
104,800 Boeing Co.............................................................................. 10,335,900
(Produces products for commercial and military transportation, missiles and space)
59,500 Caterpillar Inc........................................................................ 5,295,500
(Designs, manufactures and markets earthmoving, construction and materials handling
machinery)
238,000 Deere & Company........................................................................ 10,948,000
(Manufactures, distributes and finances the sale and lease of mobile power machinery)
519,100 General Electric Company............................................................... 57,555,213
(Multi-industry company, primarily electronics)
142,800 Honeywell, Inc......................................................................... 10,085,250
(Manufactures automation and control systems)
227,100 Illinois Tool Works Incorporated....................................................... 20,751,262
(Manufactures construction fasteners and packaging systems)
390,100 Thermo Electron Corporation*........................................................... 13,458,450
(Manufactures and sells alternate energy power plants, analytical instruments and
biomedical products)
186,000 United Technologies Corp............................................................... 14,066,250
(Manufactures and sells aerospace, building and automobile products and services)
------------------------------------------
Total Capital Goods 142,495,825
==========================================
Communication Services (3.1%)
- ----------------------
302,800 Ameritech Corporation.................................................................. 18,508,650
(Telecommunications firm serving five states in the Midwest)
162,300 AT&T Corporation....................................................................... 5,437,050
(Operates domestically and internationally providing communication products and services)
318,000 Bell Atlantic Corporation.............................................................. 21,544,500
(Owns and operates telephone subsidiaries and provides cellular services)
297,500 MCI Communications Corporation......................................................... 11,342,187
(Diversified communications company)
-------------------------------------------
Total Communication Services 56,832,387
===========================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (94.8%) Market Value
===============================================================================================================================
<S> <C> <C>
Consumer Cyclicals (5.0%)
- ------------------
229,200 APAC Teleservices, Inc.*............................................................... $ 2,549,850
(Provides sales, marketing and customer management services)
367,700 Chrysler Corporation................................................................... 11,031,000
(Manufactures Chrysler, Plymouth, Dodge and Eagle cars and trucks)
129,900 Fila Holdings S.p.A.................................................................... 5,618,175
(Designs and markets athletic and casual footwear, activewear, casualwear and sportswear)
106,000 Gannett Company, Inc................................................................... 9,248,500
(Publishes newspapers and operates television and radio stations)
316,600 Harley-Davidson, Inc................................................................... 12,505,700
(Manufactures heavyweight motorcycles and specialized commercial vehicles)
220,600 Nike Incorporated...................................................................... 12,408,750
(Designs, develops and markets high-quality footwear and apparel products)
523,500 Service Corporation International...................................................... 17,929,875
(Operates funeral and cemetery related businesses)
228,200 Tiffany and Company.................................................................... 9,042,425
(Jeweler and specialty retailer)
81,200 Tommy Hilfiger Corporation*............................................................ 3,227,700
(Designer and marketer of an upscale sportswear line)
385,300 US Office Products Company*............................................................ 9,825,150
(Supplies office products to corporate, commercial and industrial customers)
-----------------------------------------
Total Consumer Cyclicals 93,387,125
-----------------------------------------
Consumer Staples (17.8%)
- ----------------
1,377,500 Comcast Corporation.................................................................... 21,695,625
(International communications company)
1,369,100 Cox Communications, Inc.*.............................................................. 26,697,450
(Fully-integrated diversified media and broadband communications company)
166,500 CPC International Inc.................................................................. 13,757,062
(Major food distribution company)
93,300 Disney (Walt) Company.................................................................. 7,650,600
(Diversified international, family entertainment company)
540,700 General Nutrition Companies, Inc.*..................................................... 11,625,050
(Retails vitamin, mineral and sports nutrition supplements and other health products)
263,900 Gillette Company....................................................................... 22,431,500
(Manufactures shaving, toiletry, stationery and dental products)
311,500 McDonald's Corporation................................................................. 16,704,188
(World's largest restaurant chain)
310,400 PepsiCo, Inc........................................................................... 10,825,200
(Operates worldwide soft drink, snack food and restaurant businesses)
1,252,600 Philip Morris Companies, Inc........................................................... 49,321,125
(Consumer product and financial company)
324,900 Procter & Gamble Company............................................................... 40,856,175
(Major consumer products company)
248,800 Safeway, Inc.*......................................................................... 11,102,700
(Multi-regional food retailer)
205,500 TCI Satellite Entertainment, Inc.*..................................................... 1,541,250
(Provides television programming via digital satellite)
2,055,000 Tele-Communications, Inc.*............................................................. 28,384,687
(Operates cable television systems)
1,576,549 U.S. West Media Group*................................................................. 27,195,471
(Provides multimedia services)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (94.8%) Market Value
=================================================================================================================================
Consumer Staples (17.8%) - continued
- ------------------------------------
<S> <C> <C>
871,800 Walgreen Company............................................................................ $ 40,102,800
(Pharmaceutical retailer)
----------------------------------------
Total Consumer Staples 329,890,883
========================================
Energy (7.7%)
- --------------
297,500 Baker Hughes, Inc........................................................................... 10,263,750
(Provides products and services to explore for, extract, recover and process oil and gas)
146,000 British Petroleum Company plc ADR........................................................... 20,093,250
(Explores for, produces, refines and retails petroleum products)
206,600 Chevron Corporation......................................................................... 14,152,100
(International oil company)
995,000 Exxon Corporation........................................................................... 56,341,875
(World's largest oil company)
172,000 Halliburton Company......................................................................... 12,147,500
(Diversified energy services, engineering, maintenance and construction company)
166,600 Royal Dutch Petroleum Company ADR........................................................... 30,029,650
(Major multi-national petroleum company)
----------------------------------------
Total Energy 143,028,125
========================================
Financials (17.1%)
- ------------------
367,700 American Express Company.................................................................... 24,222,237
(Provides a variety of diversified travel and financial services)
421,900 American International Group, Inc........................................................... 54,214,151
(International commercial and industrial insurance underwriter)
54,000 Associates First Capital Corporation........................................................ 2,767,500
(Offers consumer finance services to customers throughout America)
216,300 Cigna Corporation........................................................................... 32,526,112
(Provides a variety of insurance products to individuals and businesses)
627,300 Fannie Mae.................................................................................. 25,797,712
(Holds mortgages and issues guaranteed mortgage-backed securities)
488,576 First Chicago Corporation................................................................... 27,482,400
(Bank holding company for First National Bank of Chicago)
153,100 Household International, Inc................................................................ 13,472,800
(Financial services company, serving individuals and businesses)
216,300 J.P. Morgan & Company....................................................................... 22,035,563
(Financial services company, primarily serving large corporations)
392,575 MBNA Corporation............................................................................ 12,954,976
(Issues premium and standard bank credit cards)
242,300 MGIC Investments Corporation................................................................ 19,686,875
(Provides private mortgage coverage)
443,500 National City Corporation................................................................... 21,620,625
(Ohio-based regional bank holding company)
555,900 Nationsbank Corporation..................................................................... 33,562,462
(Commercial banking company based in North Carolina)
86,500 Northern Trust Corporation.................................................................. 3,849,250
(Holding company for Northern Trust Company)
408,900 Travelers Group, Inc........................................................................ 22,642,837
(Diversified financial services company)
----------------------------------------
Total Financials 316,835,500
========================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Capital Growth Fund - continued
SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (94.8%) Market Value
==================================================================================================================================
<S> <C> <C>
Health Care (12.8%)
108,100 Centocor, Inc.*............................................................................ $ 3,040,312
(Develops human health care products)
312,800 Dura Pharmaceuticals, Inc.*................................................................ 9,071,200
(Develops and markets prescription pharmaceutical products for respiratory conditions)
166,600 Elan Corporation plc*...................................................................... 5,664,400
(Produces controlled-absorption drug delivery systems)
248,800 Eli Lilly & Company........................................................................ 21,863,300
(Diversified pharmaceutical company)
584,100 Johnson & Johnson.......................................................................... 35,776,125
(Manufactures and sells consumer and pharmaceutical products)
216,300 Medtronic, Inc............................................................................. 14,978,775
(Manufactures pacemakers, heart valves, neurological stimulation devices, therapeutic
catheters and blood oxygenators)
692,200 Merck & Co., Incorporated.................................................................. 62,644,100
(Manufactures and produces a wide range of health products and services)
156,800 Oxford Health Plans, Inc.*................................................................. 10,329,200
(Managed care company providing health benefit plans)
97,300 PacifiCare Health Systems, Inc.*........................................................... 7,808,325
(Provides health care systems)
527,800 Pfizer Incorporated........................................................................ 50,668,800
(Produces ethical drugs, hospital products, specialty chemicals and consumer products)
324,400 United Healthcare Corporation.............................................................. 15,773,950
(Owns and manages health maintenance organizations)
-------------------------------------------------------
Total Health Care 237,618,487
-------------------------------------------------------
Technology (20.1%)
573,300 ADC Telecommunications, Inc.*............................................................. 14,977,463
(Develops, manufactures and markets a variety of transmission and networking systems)
238,450 Andrew Corporation*........................................................................ 5,901,638
(International supplier of communication systems equipment and services)
703,100 Automatic Data Processing Incorporated..................................................... 31,815,275
(Offers a variety of data processing services)
193,600 Cisco Systems, Inc.*....................................................................... 10,018,800
(Develops multi-protocol internetworking systems)
172,000 Compaq Computer Corporation*............................................................... 14,684,500
(Designs, develops, manufactures and markets personal computers)
146,450 Computer Associates International, Inc..................................................... 7,615,400
(Designs and markets standardized computer software products)
273,400 Eastman Kodak Company...................................................................... 22,828,900
(Provides products and services including cameras, photofinishing, film and plastics)
335,300 Electronic Arts Inc.*...................................................................... 8,089,113
(Develops, markets and distributes interactive entertainment software)
482,666 First Data Corporation..................................................................... 16,651,977
(Provides information processing for credit card transactions)
64,800 Gateway 2000, Inc.*........................................................................ 3,555,900
(Develops, markets and manufactures IBM-compatible PCs)
175,800 HBO & Company.............................................................................. 9,405,300
(Designs and sells computerized information systems to the health care industry)
318,000 Hewlett-Packard Company.................................................................... 16,695,000
(Produces computers, calculators, workstations, video displays, printers and drives)
240,000 Ikon Office Solutions, Inc................................................................. 6,450,000
(Through its subsidiaries, distributes office products and paper)
389,100 Intel Corporation.......................................................................... 59,580,938
(Leading manufacturer in semiconductor chips)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (94.8%) Market Value
=======================================================================================================================
<S> <C> <C>
Technology (20.1%) - continued
- ------------------------------
93,112 Lucent Technologies, Inc................................................................. $ 5,505,247
(Designs, develops and delivers a wide range of communications systems and components)
356,300 Microsoft Corporation*................................................................... 43,290,450
(Develops and markets a variety of microcomputer software, systems and programs)
334,200 National Data Corporation................................................................ 12,532,500
(Operates a nationwide 24 hours-a-day, seven days-a-week information processing system)
446,100 Oracle Systems Corporation*.............................................................. 17,732,475
(Develops and markets computer software products)
108,100 Paging Network, Inc.*.................................................................... 753,316
(Provides paging services in 50 states)
441,300 Raytheon Company......................................................................... 19,251,712
(Large U.S. defense contractor)
540,700 Seagate Technology Incorporated*......................................................... 24,804,611
(Produces and markets computer drives)
493,300 Tellabs, Inc.*........................................................................... 19,670,338
(Designs, assembles, markets and services voice and data networking products)
---------------------------------------------
Total Technology 371,810,853
=============================================
Transportation (1.6%)
- ---------------------
133,000 Norfolk Southern Corporation............................................................. 11,953,375
(Holding company for railroad and motor carriers)
648,900 Southwest Airlines Company............................................................... 17,844,750
(Provides scheduled air carrier service)
--------------------------------------------
Total Transportation 29,798,125
============================================
Utilities (0.9%)
- ----------------
328,800 Enron Corporation........................................................................ 12,371,100
(Transports and markets natural gas)
216,300 Entergy Corporation...................................................................... 5,056,013
(Holding company whose subsidiaries provide electricity to four Southern states)
--------------------------------------------
Total Utilities 17,427,113
============================================
--------------------------------------------
Total Common Stocks
(cost basis $1,198,682,878) 1,757,676,036
============================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Par Value Short-Term Variable Rate Obligations (5.2%) Market Value
=======================================================================================================================
<S> <C> <C>
$ 9,984,091 American Family Insurance Company **...................................................... $ 9,984,091
8,500,000 Aristar Incorporated, 5.61%, 6/2/1997..................................................... 8,457,613
17,500,000 Merrill Lynch Capital Markets, 5.60%, 5/1/1997............................................ 17,500,000
15,000,000 Merrill Lynch Capital Markets, 5.35%, 5/6/1997............................................ 14,988,854
17,000,000 Merrill Lynch Capital Markets, 5.45%, 5/14/1997........................................... 16,966,543
4,000,000 Merrill Lynch Capital Markets, 5.58%, 5/21/1997........................................... 3,987,600
2,300,000 Merrill Lynch Capital Markets, 5.57%, 6/2/1997............................................ 2,288,613
1,300,000 Merrill Lynch Capital Markets, 5.55%, 6/3/1997............................................ 1,293,386
9,600,000 Merrill Lynch Capital Markets, 5.57%, 6/10/1997........................................... 9,540,587
9,800,000 Philip Morris Companies Inc., 5.49%, 5/27/1997........................................... 9,761,143
67,432 Sara Lee Corporation **................................................................... 67,432
1,428,306 Wisconsin Electric Power Company **....................................................... 1,428,306
----------------------------------------------
Total Short-Term Variable Rate Obligations
(amortized cost basis $96,264,168) 96,264,168
==============================================
-----------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $1,294,947,046) $1,853,940,204
=====================================================
*Non-income producing security
**Variable rate demand notes
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 APRIL 30, 1997
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>
Shares Common Stocks (95.0%) Market Value
<S> <C> <C>
==================================================================================================================
Basic Materials (3.7%)
- ----------------------
125,000 Cytec Industries Inc.*........................................................ $4,703,125
(Manufactures and markets chemicals and specialty materials)
263,000 Hanna (M.A.) Company.......................................................... 5,490,125
(Manufactures specialty chemicals and distributes plastic resins)
209,500 Lawter International, Inc..................................................... 2,225,937
(Manufactures specialty chemicals and thermographic machines)
141,500 Minerals Technologies Inc..................................................... 4,970,188
(Develops and produces performance enhancing minerals)
---------------------------------------------
Total Basic Materials 17,389,375
=============================================
Capital Goods (8.2%)
- --------------------
137,500 Applied Power, Inc............................................................ 5,826,563
(Provides tools, equipment, systems and consumable items to a
variety of end users)
25,000 Belden, Inc................................................................... 768,750
(Designs, manufactures and markets wire, cable and cord products)
265,000 Computers Products, Inc.*..................................................... 4,538,125
(Designs, develops and manufactures power conversion products,
computers and systems)
62,000 Culligan Water Technologies, Inc.*............................................ 2,534,250
(Manufactures and distributes products that purify and treat water)
150,000 Danka Business Systems plc.................................................... 4,584,375
(Distributes and services office equipment, including copiers and
facsimile machines)
120,000 Harman International Industries, Inc.......................................... 4,590,000
(Designs and manufactures high fidelity audio and video components)
245,000 Integrated Process Equipment Corp.*........................................... 3,338,125
(Develops and supplies semiconductor processing equipment)
185,000 Memtec Ltd.................................................................... 4,278,125
(Researches, develops and produces membrane products)
210,000 Rohr Industries, Inc.*........................................................ 3,281,250
(Manufactures Nacelle Systems and components and pylons for jet
engines)
124,000 Tower Automotive, Inc.*....................................................... 4,588,000
(Designs and produces high-quality, engineered metal stampings and
assemblies)
---------------------------------------------
Total Capital Goods 38,327,563
=============================================
Communication Services (0.7%)
- -----------------------------
200,000 360 Communications Company*................................................... 3,475,000
(Provides wireless voice and data service in 91 markets in 14 states)
---------------------------------------------
Total Communication Services 3,475,000
=============================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.0%) Market Value
<S> <C> <C>
===============================================================================================================================
Consumer Cyclicals (14.1%)
100,000 Bed, Bath & Beyond Inc.*.................................................................. $2,737,500
(National operator of "superstores" selling domestic merchandise and home furnishings)
120,000 CompUSA, Inc.*............................................................................ 2,310,000
(Operates retail computer stores under the "CompUSA" name throughout the U.S.)
260,000 CUC International, Inc.*.................................................................. 5,492,500
(Membership-based consumer services company offering discounts to members)
225,000 Discount Auto Parts, Inc.*................................................................ 3,656,250
(Retailing company that operates stores throughout Florida)
135,000 Dollar General Corporation................................................................ 4,269,375
(Operates retail stores throughout Midwestern and Southeastern states)
190,000 Equity Corporation International*......................................................... 4,085,000
(Provides death care services and products to individuals)
162,500 Gartner Group, Inc.*...................................................................... 4,265,625
(Provides research and analysis of computer hardware and software)
132,000 Harley-Davidson, Inc...................................................................... 5,214,000
(Manufactures heavyweight motorcycles and specialized commercial vehicles)
75,000 Knight-Ridder, Inc........................................................................ 2,915,625
(Involved in newspaper publishing and business news and information services)
140,000 La Quinta Inns, Inc....................................................................... 3,062,500
(Operates and manages over 200 motels under the La Quinta name in 29 states)
50,000 Nine West Group, Inc...................................................................... 1,981,250
(Designs, develops and markets women's footwear)
80,000 Pep Boys-Manny, Moe & Jack................................................................ 2,610,000
(Retailer of automotive parts and accessories, automotive maintenance and service)
90,000 Primark Corporation*...................................................................... 1,642,500
(Through subsidiaries, offers global information technology solutions)
190,700 Shopko Stores, Inc........................................................................ 3,814,000
(Regional discount store with a chain of 129 discount retail stores in the upper Midwest)
90,000 Snap-On, Inc.............................................................................. 3,465,000
(Develops, manufactures and distributes hand and power tools)
200,000 The Sports Authority Inc.*................................................................ 3,550,000
(Operates large sporting goods stores in the United States and Canada)
43,300 Tommy Hilfiger Corporation*............................................................... 1,721,175
(Designer and marketer of an upscale sportswear line)
120,000 Universal Outdoor Holdings, Inc.*......................................................... 3,270,000
(Outdoor advertising company)
220,000 US Office Products Company*............................................................... 5,610,000
(Supplies office products to corporate, commercial and industrial customers)
--------------------------------------
Total Consumer Cyclicals 65,672,300
======================================
Consumer Staples (12.9%)
185,000 AccuStaff, Inc.*.......................................................................... 3,376,250
(National provider of strategic staffing, consulting and outsourcing services)
180,000 Alternative Resource Corporation*......................................................... 2,610,000
(Provides technical personnel who specialize in information services)
250,000 Apple South, Inc.......................................................................... 3,250,000
(Operates 264 full-service, casual dining restaurants and 10 fast-food chains)
100,000 Clear Channel Communications, Inc.*....................................................... 4,850,000
(Owns, operates and manages radio and television stations)
68,300 Coca-Cola Enterprises, Inc................................................................ 4,123,613
(Bottles and distributes Coca-Cola soft drinks across the world)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.0%) Market Value
====================================================================================================================================
<S> <C> <C>
Consumer Staples (12.9%) - continued
- ------------------------------------
250,000 Comcast Corporation .................................................................... $ 3,937,500
(International communications company)
126,000 Evergreen Media Corporation* ........................................................... 4,079,250
(Owns and operates 34 radio stations in 13 markets)
240,000 Flowers Industries, Inc. ............................................................... 5,850,000
(Produces and sells baked goods, snacks and convenience foods)
267,000 General Nutrition Companies, Inc.* ..................................................... 5,740,500
(Retails vitamin, mineral and sports nutrition supplements and other health products)
130,000 Lone Star Steakhouse & Saloon*.......................................................... 2,567,500
(Operates and franchises food service stores)
129,500 Manpower Inc. .......................................................................... 5,196,188
(Provides temporary and permanent placement services and training)
70,000 Newell Company ......................................................................... 2,450,000
(Manufactures and markets high-volume staple consumer products)
160,000 Outback Steakhouse, Inc.* .............................................................. 3,140,000
(Operates 272 full-service restaurants)
75,000 Regal Cinemas, Inc.*.................................................................... 2,043,750
(Operates 125 multi-screen theaters with an aggregate of 972 throughout the U.S.)
97,000 Rite Aid Corporation .................................................................. 4,462,000
(Operates a national chain of approximately 3,500 drugstores in 26 Eastern states)
197,500 USA Detergents, Inc.* .................................................................. 2,246,562
(Manufactures and markets laundry and household cleaning products)
-------------------------------------
Total Consumer Staples 59,923,113
=====================================
Energy (7.2%)
- -------------
175,000 Belco Oil & Gas Corporation* ........................................................... 3,543,750
(Explores for, develops and produces natural gas and oil)
111,000 ENSCO International, Inc.* ............................................................. 5,272,500
(Its subsidiaries provide a variety of services to the international petroleum industry)
240,000 Hugoton Energy Corporation* ............................................................ 2,610,000
(Develops, produces, acquires and explores for natural gas and oil in Hugoton Field)
241,000 Marine Drilling Companies, Inc.* ....................................................... 3,795,750
(Provides offshore drilling services for independent and major oil and gas companies)
135,000 Petroleum Geo-Services ASA ADR* ........................................................ 5,197,500
(Acquires and markets marine data)
75,000 Reading & Bates Corporation* ........................................................... 1,678,125
(Involved in the contract drilling business)
135,000 Tosco Corporation ...................................................................... 3,999,375
(Independent refiner and marketer of petroleum products in the United States)
118,000 Ultramar Diamond Shamrock Corporation .................................................. 3,790,750
(Independent refining and marketing company in North America)
120,000 United Meridian Corporation* ........................................................... 3,405,000
(Acquires, exploits, develops and explores oil and natural gas resources)
------------------------------------
Total Energy 33,292,750
====================================
Financials (12.8%)
- ------------------
120,000 AFLAC, Inc. ........................................................................... 5,160,000
(Through its subsidiaries, writes mainly individual supplemental health insurance)
80,000 AMBAC, Inc. ............................................................................ 5,180,000
(Provides financial guarantee insurance, investment and financial products)
200,000 Ambassador Apartments, Inc. ............................................................ 4,875,000
(Self-administered and self-managed real estate investment trust)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.0%) Market Value
====================================================================================================================================
<S> <C> <C>
Financials (12.8%) - continued
- ------------------------------
10,000 Astoria Financial Corporation .......................................................... $ 381,250
(Specializes in single-family residential mortgage lending)
149,500 CapMAC Holdings Inc. ................................................................... 3,887,000
(Provides financial guaranty insurance through its subsidiary CapMAC)
118,500 Charles Schwab Corporation ............................................................. 4,340,062
(Financial services firm)
110,000 CMAC Investment Corporation ............................................................ 4,180,000
(Provides private mortgage insurance coverage)
114,000 Conseco Inc. ........................................................................... 4,716,750
(Financial services holding company)
120,000 Credit Acceptance Corporation* ......................................................... 1,297,500
(Provides funding, receivables management and collection sales training to auto dealers)
88,000 Franklin Resources Inc. ................................................................ 5,203,000
(Operates mutual funds)
175,000 Peoples Heritage Financial Group, Inc. ................................................. 5,490,625
(Multi-bank holding company with 61 banking offices throughout Maine)
72,000 The PMI Group, Inc. .................................................................... 3,681,000
(Provides private mortgage insurance coverage)
57,500 State Street Corporation .............................................................. 4,528,125
(Servicer of institutional investors and manager of financial assets worldwide)
104,500 SunAmerica, Inc. ....................................................................... 4,807,000
(Financial services company specializing in retirement savings products and services)
45,000 Vesta Insurance Group, Inc. ............................................................ 1,878,750
(Holding company offering treaty reinsurance and primary insurance on selected risks)
-------------------------------------------
Total Financials 59,606,062
===========================================
Health Care (11.1%)
- -------------------
106,000 AmeriSource Health Corporation* ........................................................ 4,730,250
(Wholesale distributor of pharmaceuticals)
114,000 Biochem Pharma, Inc.*................................................................... 2,050,210
(Canadian pharmaceutical company)
70,000 Biogen, Inc.* .......................................................................... 2,240,000
(Develops and manufactures drugs for human health care through genetic engineering)
50,000 Cephalon, Inc.* ........................................................................ 837,500
(Develops products to treat neurological diseases and disorders)
60,000 Dura Pharmaceuticals, Inc.* ........................................................... 1,740,000
(Develops and markets prescription pharmaceutical products for respiratory conditions)
195,000 Genzyme Corporation* ................................................................... 4,509,375
(Researches and develops biopharmaceuticals for cartilage damage)
110,000 Healthsource, Inc.* .................................................................... 2,310,000
(Owns and manages health maintenance organizations)
237,000 HEALTHSOUTH Corporation* .............................................................. 4,680,750
(Offers rehabilitation services for disabled patients)
140,000 Heartport, Inc.* ....................................................................... 3,587,500
(Develops proprietary systems and procedures for cardiac surgeons)
130,000 Idexx Laboratories, Inc.* .............................................................. 1,690,000
(Develops and manufactures biotechnology-based detection systems)
110,000 Lincare Holdings, Inc.* ................................................................ 4,317,500
(Provides oxygen and other respiratory therapy services to in-home patients)
150,000 MedPartners/Mullikin, Inc.* ........................................................... 2,737,500
(Develops, consolidates and manages integrated healthcare delivery systems)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (95.0%) Market Value
====================================================================================================================================
<S> <C> <C>
Health Care (11.1%) - continued
- -------------------------------
55,000 Oxford Health Plans, Inc.* ............................................................. $ 3,623,125
(Managed care company providing health benefit plans)
67,000 PacifiCare Health Systems Inc.* ........................................................ 5,376,750
(Provides health care systems)
125,000 Vencor, Inc.* .......................................................................... 5,203,125
(Provides long-term hospital care to patients dependent on life support systems)
130,000 Ventritex, Inc.* ....................................................................... 2,096,250
(Involved in the design, development, production and sale of implantable defibrillators)
-----------------------------------
Total Health Care 51,729,835
===================================
Technology (15.2%)
- -----------------
242,500 ABR Information Services, Inc.*......................................................... 4,880,312
(Provides benefits administration, compliance and information services to employers)
95,000 ADC Telecommunications, Inc.* ......................................................... 2,481,875
(Develops, manufactures and markets a variety of transmission and networking systems)
80,000 Adobe Systems, Inc. .................................................................... 3,130,000
(Develops, markets and supports computer software products and technologies)
70,000 Adtran, Inc.* .......................................................................... 2,073,750
(Designs, develops, produces, markets and services digital transmission products)
130,000 Andrew Corporation* .................................................................... 3,217,500
(International supplier of communication systems equipment and services)
130,000 Black Box Corporation* ................................................................. 3,071,250
(Provides communications, networking and connectivity solutions to businesses)
115,000 Cascade Communications Corporation* ................................................... 3,622,500
(Designs, develops and maintains a line of multi-service wide network switches)
210,000 Data General Corporation* .............................................................. 3,937,500
(Designs, manufactures and sells computer and communication systems)
200,000 DSP Communications, Inc.* .............................................................. 1,587,500
(Develops integrated, low-power chip sets for wireless communications applications)
100,000 ECI Telecommunications Limited Designs ................................................. 2,187,500
(Develops, manufactures and markets digital telecommunications equipment)
130,000 Fiserv, Inc.* .......................................................................... 4,907,500
(Provides data processing and management systems)
135,000 Glenayre Technologies, Inc.* ........................................................... 1,333,125
(Manufactures telecommunications equipment and software)
97,500 HBO & Company ......................................................................... 5,216,250
(Designs and sells computerized information systems to the health care industry)
155,000 Kent Electronics Corp.* ................................................................ 3,875,000
(Specializes in the distribution of electronic connectors, wire and cable components)
100,000 Linear Technology Corp. ................................................................ 5,025,000
(Manufactures linear integrated circuits)
175,000 LSI Logic Corporation* ................................................................ 6,693,750
(Designs, makes, markets and provides service for circuits and graphic boards)
75,000 Millicom International Cellular S.A.* .................................................. 3,412,500
(Develops and operates cellular telephone networks)
320,000 Network General Corporation* ........................................................... 4,400,000
(Designs, manufactures and sells software-based LAN and WAN analysis tools)
95,000 Sterling Commerce, Inc.* ............................................................... 2,458,125
(Global provider of electronic commerce software products and network services)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.0%) Market Value
============================================================================================================================
<S> <C> <C>
Technology (15.2%) - continued
..............................
150,000 Structural Dynamics Research Corporation* .......................................... $ 3,187,500
(Supplies mechanical design automation software and engineering services)
------------------------------------------------------------
Total Technology 70,698,437
============================================================
Transportation (2.5%)
....................
25,000 ASA Holdings, Inc................................................................... 531,250
(Regional air carrier offering service to 55 markets)
220,000 Comair Holdings, Inc................................................................ 4,647,500
(Holding company for Comair, Inc., a U.S. air carrier)
160,000 Landstar Systems, Inc.*............................................................. 4,100,000
(Provides a wide range of transportation services)
75,000 Royal Caribbean Cruise Lines........................................................ 2,390,625
(Offers passenger cruises that specialize in the Caribbean and North American
markets)
------------------------------------------------------------
Total Transportation 11,669,375
============================================================
Utilities (6.6%)
...............
87,500 AES Corporation*.................................................................... 5,709,375
(Develops, owns and operates independent electric power generation facilities)
194,000 Allegheny Power System, Inc......................................................... 5,092,500
(Electric utility holding company with direct and indirect subsidies)
177,000 CMS Energy Corporation.............................................................. 5,619,750
(Distributes electricity and natural gas throughout Michigan)
62,000 El Paso Natural Gas Company......................................................... 3,603,750
(Operates natural gas transmission systems serving the Southwestern U.S.)
160,000 Pinnacle West Capital Corporation................................................... 4,560,000
(Utility holding company for Arizona Public Service Company)
156,700 Public Service Company of Colorado.................................................. 6,072,125
(Provides electric and natural gas service to customers in the Denver area)
------------------------------------------------------------
Total Utilities 30,657,500
============================================================
------------------------------------------------------------
Total Common Stocks
(cost basis $443,340,788) 442,441,310
============================================================
Par Value Short-Term Variable Rate Obligations (5.0%)
============================================================================================================================
$ 2,089,091 American Family Insurance Company **................................................ 2,089,091
1,600,000 Aristar, Inc., 5.57%, 5/13/1997..................................................... 1,597,029
2,300,000 Merrill Lynch & Co., Inc., 5.60%, 5/1/1997.......................................... 2,300,000
12,500,000 Philip Morris, 5.00%, 5/7/1997...................................................... 12,488,542
4,600,000 Transamerica Finance Corporation, 5.49%, 5/2/1997................................... 4,599,299
165,381 Wisconsin Electric Power Company **................................................. 165,381
------------------------------------------------------------
Total Short-Term Variable Rate Obligations
(amortized cost basis $23,239,342) 23,239,342
============================================================
------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $466,580,130) $465,680,652
============================================================
</TABLE>
*Non-income producing security
**Variable rate demand notes
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
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 securities and cash equivalents under appropriate
conditions.
Shares Common Stocks (95.6%) Market Value
====================================================================================================================================
<S> <C> <C>
Basic Materials (3.2%)
- ----------------------
15,000 Cambrex Corporation ..................................................................... $ 508,125
(Manufactures and markets a broad line of specialty chemicals)
9,333 Delta & Pine Land Company ............................................................... 233,325
(Breeds, produces and markets hybrid seed)
10,000 Gibraltar Steel Corporation*............................................................. 245,000
(Produces cold-rolled strip steel products for industrial applications)
22,000 Northland Cranberries, Inc. ............................................................. 253,000
(Grows cranberries through its properties in Wisconsin and Massachusetts)
16,000 Steel Dynamics, Inc.* ................................................................... 312,000
(Owns and operates a new flat-rolled steel mini-mill)
----------------------------------------------------
Total Basic Materials 1,551,450
====================================================
Capital Goods (13.2%)
- ---------------------
4,000 Applied Power, Inc. ..................................................................... 169,500
(Provides tools, equipment, systems and consumable items to a variety of end users)
5,000 Belden, Inc. ............................................................................ 153,750
(Designs, manufactures and markets wire, cable and cord products)
2,000 Culligan Water Technologies, Inc.* ...................................................... 81,750
(Manufactures and distributes products that purify and treat water)
40,000 Cuno Incorporated* ...................................................................... 555,000
(Designs, manufactures and markets a line of liquid and gas filtration products)
35,000 Farr Company* ........................................................................... 420,000
(Designs and manufactures filtration equipment)
10,000 Harman International Industries, Inc. ................................................... 382,500
(Designs and manufactures high fidelity audio and video components)
25,000 Integrated Process Equipment Corp.* ..................................................... 340,625
(Develops and supplies semiconductor processing equipment)
22,000 Kemet Corporation* ...................................................................... 429,000
(Manufactures and supplies solid tantalum and multi-layered ceramic capacitors)
8,000 Kuhlman Corporation ..................................................................... 202,000
(Manufactures and markets transformers, electrical wire and cable and spring products)
20,000 Memtec Ltd. ............................................................................. 462,500
(Researches, develops and produces membrane products)
24,000 Rohr Industries, Inc.* .................................................................. 375,000
(Manufactures nacelle systems, components and pylons for jet engines)
9,000 Sanmina Corporation* ................................................................... 450,000
(Manufactures custom-designed backplane assemblies, sub-assemblies and circuit boards)
5,000 SCI Systems, Inc.* ...................................................................... 308,750
(Has operations in the electronic equipment industry)
9,500 Superior Services, Inc.* ................................................................ 209,000
(Provides solid waste collection, transfer, recycling and disposal)
25,000 Tetra Tech, Inc.* ....................................................................... 356,250
(Provides environmental engineering and consulting services)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.6%) Market Value
==================================================================================================================================
<S> <C> <C>
Capital Goods (13.2%) - continued
- ---------------------------------
18,000 Tower Automotive, Inc.*..................................................................... $ 666,000
(Designs and produces high-quality, engineered metal stampings and assemblies)
22,000 Tracor, Inc.*............................................................................... 478,500
(Designs, manufactures and markets defense electronic and avionics systems)
24,000 Wabash National Corporation................................................................. 429,000
(Designs, manufactures and markets truck trailers)
----------------------------------------
Total Capital Goods......... 6,469,125
========================================
Consumer Cyclicals (17.1%)
- --------------------------
25,000 Abercrombie & Fitch Company*................................................................ 365,625
(Retails casual apparel for men and women approximately 15 to 50 years of age)
8,000 Acxiom Corporation*......................................................................... 105,000
(Provides data processing and related computer-based services and software products)
3,000 Catalina Marketing Corporation*............................................................. 94,500
(Provides cost-effective methods of implementing targeted consumer marketing strategy)
25,000 Claire's Stores, Inc........................................................................ 478,125
(A retailer specializing in fashion accessories for girls and women)
14,000 CompUSA, Inc.*.............................................................................. 269,500
(Operates retail computer stores under the "CompUSA" name throughout the U.S.)
5,000 DeVry, Inc.*................................................................................ 110,000
(Owns and manages higher education systems throughout North America)
5,000 Dollar Tree Stores, Inc..................................................................... 197,500
(Operates discount variety stores which offer merchandise at the $1.00 price point)
16,000 Dura Automotive Services, Inc............................................................... 432,000
(Designs and manufactures mechanical assemblies and systems for the auto industry)
19,000 Forrester Research, Inc.*................................................................... 346,750
(Offers products and services to help clients assess the effect of technology on businesses)
22,000 K2, Inc.*................................................................................... 574,750
(Designs, manufactures and markets brand-name sporting goods)
10,000 Lazare Kaplan International, Inc.*.......................................................... 136,250
(Cuts, polishes and sells ideally proportioned diamonds)
5,000 Nautica Enterprises, Inc.*.................................................................. 110,625
(Designs, manufactures and sells men's activewear, sportswear, outerwear and furnishings)
15,000 O'Reilly Automotive, Inc.*.................................................................. 525,000
(A specialty retailer and supplier of automotive parts, tools, supplies and accessories)
21,000 Outdoor Systems, Inc.*...................................................................... 582,750
(Outdoor advertising company)
9,000 Primark Corporation*........................................................................ 164,250
(Through subsidiaries, offers global information technology solutions)
30,000 RockShox, Inc.*............................................................................. 451,875
(Manufactures high performance bicycle suspension products)
30,000 Strattec Security Corporation*.............................................................. 502,500
(Designs, develops, manufactures and markets automotive locks)
20,000 The North Face, Inc.*....................................................................... 282,500
(Designs and distributes "The North Face" brand outerwear, skiwear, sportswear)
25,000 The Sports Authority, Inc.*................................................................. 443,750
(Operates large sporting goods stores in the United States and Canada)
20,000 Universal Outdoor Holdings, Inc.*........................................................... 545,000
(Outdoor advertising company)
23,000 US Office Products Company*................................................................. 586,500
(Supplies office products to corporate, commercial and industrial customers)
30,000 Vans, Inc.*................................................................................. 288,750
(Designs, manufactures and distributes a collection of casual and active-casual footwear)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.6%) Market Value
====================================================================================================================================
<S> <C> <C>
Consumer Cyclicals (17.1%) - continued
- --------------------------------------
15,000 Wet Seal, Inc.* ...................................................................... $ 371,250
(A specialty retailer of moderately priced casual apparel for young women)
13,000 Williams-Sonoma Inc.* ................................................................ 403,000
(Retails cookware, home furnishings and garden accessories)
------------------------------------------------
Total Consumer Cyclicals 8,367,750
================================================
Consumer Staples (7.4%)
- -----------------------
18,000 Alternative Resource Corporation* .................................................... 261,000
(Provides technical personnel who specialize in information services)
45,000 Apple South, Inc. .................................................................... 585,000
(Operates 264 full-service, casual dining restaurants and 10 fast-food chains)
17,000 Dominick's Supermarkets, Inc.* ....................................................... 348,500
(Operates 97 supermarket stores in the Chicago Metropolitan area)
20,000 Evergreen Media Corporation* ........................................................ 647,500
(Owns and operates 34 radio stations in 13 markets)
25,000 Guest Supply, Inc.* ................................................................. 237,500
(Supplies disposable housekeeping products, room accessories and personal care amenities)
10,000 Rainforest Cafe, Inc.*................................................................ 238,750
(Develops, owns and operates combination retail/restaurant facilities)
9,000 Richfood Holdings, Inc. .............................................................. 183,375
(Wholesale food distributor)
17,000 SFX Broadcasting Inc.* ............................................................... 535,500
(Owns and operates or provides services to approximately 80 radio stations in the U.S.)
40,000 SOS Staffing Services, Inc.* ........................................................ 470,000
(Provides temporary staffing services)
10,000 USA Detergents, Inc.* ............................................................... 113,750
(Manufactures and markets laundry and household cleaning products)
------------------------------------------------
Total Consumer Staples 3,620,875
================================================
Energy (5.7%)
- -------------
23,000 Belco Oil & Gas Corporation* ......................................................... 465,750
(Explores for, develops and produces natural gas and oil)
4,000 Camco International, Inc. ............................................................ 177,500
(Provides oilfield equipment and services for a number of specialty applications)
40,000 Hugoton Energy Corporation* ......................................................... 435,000
(Develops, produces, acquires and explores for natural gas and oil in Hugoton Field)
20,000 Noble Drilling Corporation* ......................................................... 347,500
(A drilling contractor providing offshore and onshore contract drilling services)
12,000 Petroleum Geo-Services ASA ADR* ..................................................... 462,000
(Acquires and markets marine data)
12,000 Pride Petroleum Services, Inc.* ..................................................... 207,000
(Provides rigs and crews to oil and gas exploration and production companies)
25,000 Tuboscope Vetco International Corporation* ........................................... 350,000
(Provides oilfield services to the international petroleum industry)
13,000 United Meridian Corporation* ......................................................... 368,875
(Acquires, exploits, develops and explores oil and natural gas resources)
------------------------------------------------
Total Energy 2,813,625
================================================
Financials (9.1%)
- -----------------
5,000 Alex Brown, Inc. ..................................................................... 321,875
(Operates through its subsidiary, Alex. Brown & Sons, Inc., an investment banking firm)
27,000 Ambassador Apartments, Inc. ......................................................... 658,125
(Self-administered and self-managed real estate investment trust)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.6%) Market Value
====================================================================================================================================
<S> <C> <C>
Financials (9.1%) - continued
- -----------------------------
10,000 Bank United Corp. ....................................................................... $ 305,000
(Through its subsidiary, Bank United, provides financial services)
7,000 Charter One Financial, Inc. ............................................................. 311,500
(A holding company for Charter One Bank, a federal savings bank in Ohio)
6,000 CMAC Investment Corporation ............................................................. 228,000
(Provides private mortgage insurance coverage)
15,000 First Financial Corporation ............................................................. 395,625
(A savings and loan holding company)
20,000 Peoples Heritage Financial Group, Inc. ................................................. 627,500
(Multi-bank holding company with 61 banking offices throughout Maine)
30,000 Risk Capital Holdings, Inc.* ........................................................... 570,000
(Provides reinsurance services)
5,000 TCF Financial Corporation .............................................................. 204,375
(A stock savings bank holding company)
16,000 Texas Regional Bancshares, Inc. ......................................................... 544,000
(Bank holding company whose subsidiary conducts commercial banking services)
7,000 Vesta Insurance Group, Inc. ............................................................. 292,250
(A holding company offering treaty reinsurance and primary insurance on selected risks)
--------------------------------------------------
Total Financials 4,458,250
==================================================
Health Care (13.4%)
- -------------------
50,000 American Oncology Resources, Inc.* ..................................................... 443,750
(Provides comprehensive management services to 12 oncology practices in nine states)
10,000 AmeriSource Health Corporation* ......................................................... 446,250
(Wholesale distributor of pharmaceuticals)
10,000 Amylin Pharmaceuticals, Inc.* ........................................................... 102,500
(Performs research for and develops novel therapeutic products based on amylin)
12,000 Biochem Pharma, Inc.* .................................................................. 215,812
(Canadian pharmaceutical company)
18,000 Cephalon, Inc.* ......................................................................... 301,500
(Develops products to treat neurological diseases and disorders)
15,000 Dura Pharmaceuticals, Inc.* ............................................................ 435,000
(Develops and markets prescription pharmaceutical products for respiratory conditions)
30,000 Endosonics Corporation* ................................................................ 262,500
(Develops, produces and sells imaging catheters and ultrasound imaging systems)
25,000 FPA Medical Management, Inc.* ........................................................... 406,250
(Provides regional health care management services)
8,000 Idexx Laboratories, Inc.* .............................................................. 104,000
(Develops and manufactures biotechnology-based detection systems)
5,000 Lincare Holdings, Inc.* ................................................................ 196,250
(Provides oxygen and other respiratory therapy services to in-home patients)
26,000 Martek Biosciences Corporation* ........................................................ 380,250
(Produces nutritional supplements, drug design tools, diagnostics and pharmaceuticals)
35,000 Meridian Diagnostics, Inc. .............................................................. 249,375
(Produces a variety of diagnostic test kits, reagents and related products)
30,000 Neurex Corporation* ..................................................................... 330,000
(Develops products primarily for the treatment of cardiorenal and neurological diseases)
12,000 Omnicare, Inc. .......................................................................... 292,500
(Provides pharmacy services to long-term care institutions)
14,000 Pharmaceutical Product Development, Inc.* .............................................. 234,500
(Provides integrated product development services to pharmaceutical companies)
11,000 PhyCor, Inc.* .......................................................................... 292,875
(Operates multi-specialty medical clinics)
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (95.6%) Market Value
=======================================================================================================================
<S> <C> <C>
Health Care (13.4%) - continued
- -------------------------------
23,000 Physio-Control International Corporation*................................................... $ 287,500
(Manufactures cardiac defibrillator and vital sign assessment devices)
11,000 Protein Design Labs, Inc.*.................................................................. 276,375
(Develops human and humanized antibodies and other novel proteins)
8,000 Renal Treatment Centers, Inc.*.............................................................. 173,000
(Provides dialysis treatments to patients suffering from chronic kidney failure)
6,000 Sola International, Inc.*................................................................... 150,000
(Designs, manufactures and distributes eyeglass lenses)
10,000 Steris Corporation*......................................................................... 327,500
(Develops, manufactures and markets infection prevention and surgical support systems)
7,000 Sybron International Corporation*........................................................... 232,750
(Designs, manufactures and markets laboratory, orthodontic and dental supply products)
20,000 UroCor, Inc.*............................................................................... 185,000
(Provides diagnostic services for certain urological cancers and diseases)
10,000 Vivra, Inc.*................................................................................ 258,750
(Provides dialysis services)
-------------------------------------------------------
Total Health Care 6,584,187
=======================================================
Technology (19.8%)
- ------------------
9,000 Adtran, Inc.*............................................................................... 266,625
(Designs, develops, produces, markets and services digital transmission products)
30,000 Allen Telecom, Inc.*........................................................................ 517,500
(A supplier to the worldwide two-way wireless communications marketplace)
5,000 Aspect Telecommunications Inc.*............................................................. 88,750
(Develops, manufactures and supports application-specific telecommunications systems)
20,000 BISYS Group, Inc.*.......................................................................... 640,000
(Provides information processing, loan servicing and recordkeeping services)
15,000 Black Box Corporation*...................................................................... 354,375
(Provides communications, networking and connectivity solutions to businesses)
6,000 BMC Industries, Inc.*....................................................................... 174,000
(Manufactures precision imaged and optical products)
15,000 Check Point Software Technologies, Ltd.*.................................................... 354,375
(Develops, markets and supports network security software products)
13,000 CSG Systems International, Inc.*............................................................ 230,750
(Provides customer management solutions for the communications markets)
20,000 Data General Corporation*................................................................... 375,000
(Designs, manufactures and sells computer and communication systems)
6,000 Dialogic Corporation*....................................................................... 118,500
(Provides hardware and software signal computing components)
15,000 Digital Link Corporation*................................................................... 230,625
(Designs, manufactures, markets and services high-speed digital products)
30,000 DSP Communications, Inc.*................................................................... 238,125
(Develops integrated, low-power chip sets for wireless communications applications)
10,000 Electronic Arts, Inc.*...................................................................... 241,250
(Develops, markets and distributes interactive entertainment software)
16,000 HCIA, Inc.*................................................................................. 330,000
(Develops and markets integrated clinical and financial information systems and products)
3,000 HNCSoftware, Inc.*.......................................................................... 79,500
(Develops, markets and supports client-server software solutions)
22,000 Hyperion Software Corporation*.............................................................. 357,500
(Develops and markets computer software)
35,000 Industri-Matematik International Corp.*..................................................... 323,750
(Develops client-server application software)
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF
APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (95.6%) Market Value
============================================================================================================================
<S> <C> <C>
Technology (19.8%) - continued
- ------------------------------
17,000 Inso Corporation*........................................................................ $ 357,000
(Develops and markets software tools globally)
20,000 Kent Electronics Corp.*.................................................................. 500,000
(Specializes in the distribution of electronic connectors, wire and cable components)
3,000 Lattice Semiconductor Corporation*....................................................... 167,625
(Designs, develops and markets high-speed programmable logic devices)
25,000 May & Speh, Inc.*........................................................................ 184,375
(Provides computer-based direct marketing information management services)
6,000 Microchip Technology, Inc.*.............................................................. 187,500
(A supplier of field programmable 8-bit microcontrollers)
22,000 Molecular Dynamics, Inc.*................................................................ 272,250
(A supplier of integrated instrumentation, software and reagent systems)
30,000 Network General Corporation*............................................................. 412,500
(Designs, manufactures and sells software-based LAN and WAN analysis tools)
3,000 Novellus Systems, Inc.*.................................................................. 173,250
(Designs, makes and sells Chemical Vapor Deposition wafer process equipment)
10,000 Perceptron, Inc.*........................................................................ 282,500
(Develops, manufactures and markets three-dimensional, non-contact sensing systems)
6,000 Read-Rite Corporation*................................................................... 155,250
(Manufactures recording heads, head gimbal assemblies and head stack assemblies)
20,000 Sierra Semiconductor Corporation*........................................................ 337,500
(Supplies high-performance mixed signal integrated circuits)
13,000 Sipex Corporation*....................................................................... 312,000
(Manufactures, markets and sells analog integrated circuits)
20,000 Stanford Telecommunications, Inc.*....................................................... 295,000
(Designs, manufactures and operates electronic systems primarily for aerospace programs)
20,000 Structural Dynamics Research Corporation*................................................ 425,000
(Supplies mechanical design automation software and engineering services)
40,000 Sync Research, Inc.*..................................................................... 116,248
(Wide area network (WAN) access company)
10,000 Synopsys, Inc.*.......................................................................... 318,750
(Develops and markets computer software)
20,000 Transition Systems, Inc.*................................................................ 240,000
(Provides integrated clinical and financial decision support systems for hospitals)
------------------------------------------------------------
Total Technology 9,657,373
============================================================
Transportation (4.1%)
- ---------------------
21,000 Comair Holdings, Inc..................................................................... 443,625
(Holding company for Comair, Inc., a U.S. air carrier)
20,000 Heartland Express, Inc.*................................................................. 432,500
(Irregular route motor freight carrier)
10,000 Knight Transportation, Inc.*............................................................. 217,500
(Transports consumer goods, food, beverage containers and commodities)
12,000 Landstar Systems, Inc.*.................................................................. 307,500
(Provides a wide range of transportation services)
30,000 Mesa Airlines, Inc.*..................................................................... 159,375
(Provides scheduled commuter flights to 30 states plus the District of Columbia)
15,000 Swift Transportation Co., Inc.*.......................................................... 427,500
(Regional truckload carrier operating throughout the Western and Eastern U.S.)
------------------------------------------------------------
Total Transportation 1,988,000
============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF
APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (95.6%) Market Value
============================================================================================================================
<S> <C> <C>
Utilities (2.6%)
...............
5,000 CILCORP, Inc............................................................................ $ 193,125
(Through its subsidiary, Central Illinois Light Company, provides electric and
gas service)
15,000 Interstate Power Company*............................................................... 429,375
(An electric and gas utility)
4,000 KN Energy, Inc.......................................................................... 149,000
(A natural gas services company)
18,000 Sierra Pacific Resources................................................................ 510,750
(A holding company that operates regulated electric, gas and water utilities)
------------------------------------------------------------
Total Utilities 1,282,250
============================================================
------------------------------------------------------------
Total Common Stocks
(cost basis $50,079,504) 46,792,885
============================================================
Par Value Short-Term Variable Rate Obligations (4.4%)
========================================================================================================
$1,002,645 American Family Insurance Company **.................................................... 1,002,645
1,176,338 Wisconsin Electric Power Company **..................................................... 1,176,338
----------------------------------------------------------------------
Total Short-Term Variable Rate Obligations
(amortized cost basis $2,178,983) 2,178,983
======================================================================
----------------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $52,258,487) $48,971,868
======================================================================
</TABLE>
* Non-income producing security
**Variable rate demand notes
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL International Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
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>
Shares Common Stocks (72.8%) Industry Market Value
============================================================================================================================
<S> <C> <C> <C>
Argentina (1.0%)
...............
87,500 Cresud SA........................................................ Food & Agriculture $ 162,799
(Argentine Farm Company)
65,864 IRSA Inversiones y Representaciones SA........................... Real Estate 231,911
(Invests in and develops industrial, commercial and
residential real estate)
454,629 Ledesma S.A.I.C.................................................. Food & Agriculture 491,147
(Produces and sells sugar, alcohol and fruit)
150,000 Siderca S.A.I.C.................................................. Capital Goods 317,345
(Manufactures and sells seamless steel pipes)
-----------------------------------------
Total Argentina 1,203,202
=========================================
Australia (0.5%)
...............
552,570 Spotless Services Limited........................................ Commercial Services 535,595
(Operates food catering and textile rental services)
-----------------------------------------
Total Australia 535,595
=========================================
Austria (1.1%)
.............
13,500 VAE AG........................................................... Misc.-Manufacturing 1,305,969
(Manufactures and sells railroad turnouts, and
turnout components)
-----------------------------------------
Total Austria 1,305,969
=========================================
Belgium (0.8%)
..............
5,000 Deceuninck Plastics Industries SA................................ Building Materials 965,845
(Produces PVC windows and door profiles)
-----------------------------------------
Total Belgium 965,845
=========================================
Canada (2.2%)
............
50,000 Canadian Pacific, Ltd............................................ Conglomerate 1,218,750
(Interests in transportation, energy, real estate, hotels
and telecommunications)
5,000 Franco-Nevada Mining Corp., Ltd.................................. Gold 232,541
(Receives royalties from gold mines)
50,000 Noranda, Inc..................................................... Metals-Diversified 1,055,381
(Produces copper and other metals and holds
interests in oil and gas companies)
-----------------------------------------
Total Canada 2,506,672
=========================================
Denmark (0.8%)
.............
15,000 Carlsberg International A/S 'B'.................................. Food & Beverage 923,959
(Produces and sells Carlsberg and Tuborg beers)
-----------------------------------------
Total Denmark 923,959
=========================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (72.8%) Industry Market Value
===========================================================================================================================
<S> <C> <C> <C>
Finland (0.5%)
..............
10,000 Vaisala Oy A...................................................... Technology $ 622,646
(Develops and manufactures electronic measurement
systems and equipment for meteorology)
----------------------------------
Total Finland 622,646
----------------------------------
France (9.2%)
.............
5,000 Compagnie Generale des Eaux....................................... Utilities 696,503
(Service group that provides municipalities with water
and environment services; also owns interests in real
estate and communications businesses)
3,000 Conflandey SA..................................................... Iron/Steel 158,834
(Produces fine galvanized wires)
8,500 Elf Aquitaine..................................................... Oil-International 824,324
(Major integrated oil and gas company; also produces
chemicals and pharmaceuticals)
15,000 Emin Leydier...................................................... Forest Products & Paper 963,796
(Manufactures corrugated paper and cardboard)
20,000 Eramet............................................................ Mining 1,010,914
(Involved in the refining and production of nickel,
special metals and steel)
3,000 Eurafrance........................................................ Holding Company 1,296,369
(Financial holding company)
4,500 FIMALAC SA........................................................ Holdings-Diversified 424,070
(Holding company whose subsidiaries are involved in
precious metals, chemicals, services, communication
and real estate)
5,500 Gaumont SA........................................................ Entertainment 376,009
(Produces and distributes films and television
programming, manages theaters)
2,707 Groupe Didot-Bottin............................................... Publishing/Printing 395,639
(French holding company that conducts operations in
three areas: publishing and printing, distilling and cosmetics)
4,500 Groupe NSC........................................................ Machine-Diversified 569,025
(Manufactures and markets textile machinery)
10,000 Marine-Wendel SA.................................................. Holdings-Diversified 1,036,616
(Holding company for computer services and
packaging group)
5,000 Michelin Class B.................................................. Transportation 279,372
(Manufactures all-purpose tires, wheels, steel cables, maps
and tourist guides)
3,250 Promodes C.I...................................................... Retail Stores 835,289
(Owns and operates hypermarkets, convenience
stores and supermarkets)
7,500 Rougier SA........................................................ Forest Products 470,332
(Operates forestry concessions in Africa)
2,355 Sabeton SA........................................................ Holding Company 305,053
(Investment company with interests in real estate,
food and agricultural businesses)
750 Societe Sucriere de Pithiviers-le-Vieil........................... Food & Agriculture 462,622
(Manufactures sugar from beets)
2,500 Taittinger C.I.................................................... Wine & Spirits 579,134
(Produces and sells champagne; also owns hotels)
----------------------------------
Total France 10,683,901
----------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (72.8%) Industry Market Value
======================================================================================================================
<S> <C> <C> <C>
Germany (4.8%)
- -------------
1,000 Axel Springer Verlag AG....................................... Publishing/Printing $ 831,601
(Publishes magazines and newspapers, provides printing
and advertising services and other publications)
18,000 Bayer AG...................................................... Chemicals 716,008
(Produces polymers, organic, industrial, pharmaceuticals,
agrochemicals and imaging technology products)
6,000 Bertelsmann AG D.R.C.......................................... Publishing/Printing 696,466
(Produces and sells books, magazines and other media
for music, literature, TV and film)
3,750 Buderus AG.................................................... Misc.-Manufacturing 1,764,986
(Manufactures a variety of heating products; also active
in casting, stainless steel and aircraft equipment)
10,000 Degussa AG.................................................... Conglomerate 443,521
(Manufactures and produces a variety of metals; also
active in pharmaceuticals and specialty chemicals)
20,000 Gerresheimer Glas AG.......................................... Manufacturing 392,700
(Manufactures glass beverage bottles and glass packaging
for food, pharmaceuticals and cosmetics)
12,000 IVG Holding AG................................................ Real Estate 395,010
(Manages real estate properties and provides other
services including truck leasing and storage facility rental)
10,000 SKW Trostberg AG.............................................. Building Materials 306,075
(Produces natural and synthetic ingredients for food
and cosmetics industries; also manufactures
specialized products for the construction industry)
---------------------------------
Total Germany 5,546,367
=================================
Hong Kong (3.3%)
- ----------------
7,500,000 Burwill Holdings Ltd.......................................... Distributor/Wholesale 813,271
(Metal division and investment division)
3,170,015 CDL Hotels International Ltd.................................. Lodging 1,381,114
(Investment holding company whose subsidiaries
own and operate hotels globally)
1,000,000 Shaw Brothers Limited......................................... Entertainment 1,013,361
(Involved in film production and distribution as well as
T.V. programming)
650,000 South China Morning Post Holdings Corporation................. Publishing/Printing 557,994
(Publishes and sells the "South China Morning Post")
---------------------------------
Total Hong Kong 3,765,740
=================================
Israel (0.8%)
- -------------
296,000 Super-Sol...................................................... Retail Store 883,803
(Operates a chain of grocery stores and supermarkets
under the "Supersol" and "Hyperkol" names)
---------------------------------
Total Israel 883,803
=================================
Italy (2.3%)
- ------------
85,000 Avir SpA...................................................... Packaging & Container 1,035,268
(A holding company for a group that produces glass
bottles and other glass containers)
135,000 Arnoldo Mondarori Editore SpA................................. Publishing/Printing 785,849
(Second-largest publishing company in Italy)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (72.8%) Industry Market Value
==========================================================================================================================
<S> <C> <C> <C>
Italy (2.3%) - continued
- ------------------------
1,250,000 Montedison SpA* (non-convertible savings share)........... Conglomerate $ 820,007
(Industrial holding company whose subsidiaries have
activities in chemicals, energy, agro-industrial services)
-----------------------------------------
Total Italy 2,641,124
==========================================
Japan (17.0%)
- -------------
150,000 Aida Engineering Ltd...................................... Machine-Diversified 921,913
(Leading manufacturer of presses)
50,700 Chofu Seisakusho.......................................... Machine-Diversified 798,992
(Manufactures air conditioners and water heaters)
200,000 The Dai-Tokyo Fire & Marine Insurance Co., Ltd............ Insurance 937,672
(Nonlife insurance company)
45,000 Fuji Photo Film Co., Ltd. ADR............................. Photographic Equipment 1,726,875
(Manufactures photographic equipment, film and
imaging systems)
275,000 Hanshin Electric Railway Co., Ltd......................... Transportation-Rail 899,259
(Major railway company operates the shortest line
among leading private railway operators)
3,500 Hitachi, Ltd. ADR........................................ Technology 321,125
(Manufactures electronic and electrical products)
180,000 Iino Kaiun Kaisha, Ltd.................................... Transportation/Shipping 483,650
(Carrier and specialized carrier operator)
20,000 Ito-Yokado Co., Ltd....................................... Retail Stores 959,735
(Leading department and convenience store operator)
175,000 The Koa Fire & Marine Insurance Co........................ Insurance 820,463
(Medium-scale nonlife insurance company specialized
in auto and fire insurance)
185,000 The Nichido Fire & Marine Insurance Co., Ltd.............. Insurance 995,627
(Medium-ranking nonlife insurance firm)
55,000 Nisshinbo Industries, Inc................................. Textiles 364,904
(Manufactures cotton fabrics and chemical and
synthetic fibers)
55,000 Nittetsu Mining Co., Ltd.................................. Mining 354,503
(Limestone mining company)
30,000 Secom Co., Ltd............................................ Electronics 1,784,729
(Pioneer in the security service industry)
75,000 Shimano Inc............................................... Bicycles 1,264,676
(Major maker of bicycle parts and fishing tackle)
85,000 Shiseido Company Ltd...................................... Cosmetics 1,218,974
(Largest cosmetics producer boasting 27% market share,
and one of the world's Big 3)
123,000 Shoei Co., Ltd............................................ Holding Company 969,191
(Manufactures electronic parts including aluminum
electrolytic capacitors; also active in real estate)
65,000 Sotoh Co., Ltd............................................ Textiles 614,609
(Leading dyer-finisher of woolen fabrics)
21,000 T. Hasegawa Co., Ltd...................................... Fragrances & Flavors 350,800
(Manufactures natural and synthetic fragrances
and flavors)
115,000 Tachi-S Co. Limited....................................... Auto Parts-Original Equipment 1,023,954
(Manufactures automobile seats)
8,500 Toho Co., Ltd............................................. Entertainment 1,138,602
(One of the Big 4 in the movie industry)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (72.8%) Industry Market Value
==========================================================================================================================
Japan (17.0%) - continued
<S> <C> <C> <C>
150,000 The Tokio Marine & Fire Insurance Co., Ltd................. Insurance $ 1,465,606
(Writes marine, fire and casualty, automobile and
allied lines of insurance)
6,000 Tsutsumi Jewelry Co., Ltd.................................. Jewelry, Watches, Gemstones 122,449
(Manufacturer, wholesaler and retailer of jewelry)
10,000 Yoshimoto Kogyo Co., Ltd................................... Entertainment 98,495
(Major entertainment company)
------------------------------------------
Total Japan 19,636,803
==========================================
Luxembourg (1.2%)
40,000 Minorco SA ADR............................................. Metals & Mining 890,000
(Natural resources group with interests in agribusiness,
mining and processing metals and industrial materials)
150 Socfinasia................................................. Food & Agriculture 466,126
(Holding company that has interests in Asian rubber
and palm oil plantations)
------------------------------------------
Total Luxembourg 1,356,126
==========================================
Mexico (1.4%)
350,000 Industrias Penoles S.A. de C.V............................. Mining 1,641,622
(Explores for and markets minerals and non-ferrous
metals including lead, zinc and silver)
------------------------------------------
Total Mexico 1,641,622
==========================================
Netherlands (1.8%)
23,500 Apothekers Cooperative OPG U.A............................. Wholesale Special 683,974
(Wholesaler of pharmaceuticals in the Netherlands
and Belgium)
35,000 German City Estates NV..................................... Real Estate 477,902
(Netherlands-based real estate investment company
with commercial property located in various
German cities)
18,000 Philips Electronics NV ADR................................. Electronics 963,000
(Manufactures lighting products, consumer electronics,
home appliances, medical systems and
industrial electronics)
------------------------------------------
Total Netherlands 2,124,876
==========================================
New Zealand (2.1%)
100,000 Apple Fields Limited*...................................... Food & Agriculture 33,287
(Owns and manages apple orchards and dairy farms)
600,000 Carter Holt Harvey Limited................................. Forest Products & Paper 1,331,484
(Owns large forest plantations and manufactures
building products)
575,000 Shortland Properties Limited............................... Real Estate 366,852
(Owns real estate properties)
1,204,825 Tasman Agriculture Limited................................. Food & Agriculture 685,129
(Owns and manages large dairy farms)
------------------------------------------
Total New Zealand 2,416,752
==========================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (72.8%) Industry Market Value
===================================================================================================================
<S> <C> <C> <C>
Norway (0.6%)
- -------------
40,000 Schibsted A/S.............................................. Publishing/Printing $ 690,943
(Publishes newspapers and other publications in
Norway; has interests in local TV channels)
-----------------------------------
Total Norway 690,943
===================================
Portugal (1.1%)
- ---------------
10,000 Companhia de Celulose do Caima SA.......................... Forest Products & Paper 207,200
(Pulp producer with paper mill operations in Portugal)
65,000 Espirito Santo Financial Holding SA ADR.................... Financial Institutions 1,105,000
(Holding company for Banco Espirito Santo, a major
Portuguese bank)
-----------------------------------
Total Portugal 1,312,200
===================================
Singapore (2.7%)
- ----------------
135,000 Clipsal Industries Ltd..................................... Electrical Equipment 529,200
(Manufactures and markets electrical
installation products)
499,000 Intraco Ltd................................................ Holdings-Diversified 679,686
(Involved in international trading, industrial marketing
and distribution)
115,000 Singapore Bus Service Ltd.................................. Transportation 556,593
(Operates bus service in Singapore)
825,000 Thakral Corporation Ltd.................................... Manufacturing 771,375
(Manufactures audio, visual, telecommunication and
household electrical products)
275,000 Times Publishing Ltd....................................... Publishing/Printing 608,449
(Publishes, prints, distributes and sells books, directories
and magazines)
-----------------------------------
Total Singapore 3,145,303
===================================
South Korea (2.2%)
- ------------------
13,720 Cheil Jedang Corporation................................... Food & Agriculture 676,771
(Korea's leading food producer)
18,000 Dong Yang Department....................................... Retail Store 355,157
(Korean department store)
7,000 Dongah Tire Industry Company............................... Transportation 478,699
(Manufactures tire tubes, rubber flaps and retread tires)
48,000 LG Electronics Co., Ltd.................................... Electronics 164,400
(Manufactures cordless phones and other
telecommunications equipment)
20,000 LG Industrial Systems...................................... Manufacturing 349,776
(Industrial manufacturing company)
3,750 Nam Yang Dairy Products Company............................ Food & Agriculture 428,811
(Produces dairy products with an emphasis on
baby formula)
2,060 Woong Jin Publishing Company............................... Publishing/Printing 133,946
(Korean publishing company)
-----------------------------------
Total South Korea 2,587,560
===================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Shares Common Stocks (72.8%) Industry Market Value
====================================================================================================================================
<S> <C> <C> <C>
Spain (0.9%)
- -------------
1,500 Corporacion Financiera Alba SA............................ Holdings-Diversified $ 154,031
(Industrial holdings company with interests in retail,
financial services and communications)
150,000 Energia e Industrias Aragonesas SA........................ Chemicals 913,914
(Fully integrated PVC producer)
--------------------------------------
Total Spain 1,067,945
======================================
Sweden (2.3%)
- -------------
50,000 AssiDoman AB.............................................. Forest Products 1,252,326
(Swedish forestry group)
55,000 IRO AB.................................................... Misc.-Manufacturing 588,880
(Produces yarn feeders for weaving and
knitting machines)
20,000 Investor AB 'B'........................................... Investment Company 874,398
(Investment company)
--------------------------------------
Total Sweden 2,715,604
======================================
Switzerland (6.3%)
- ------------------
200 Bank for International Settlements (U.S. tranche).......... Gold 1,356,047
(The central bank of all central banks)
5,500 Edipresse S.A. ........................................... Publishing/Printing 1,254,242
(Operates printing companies and publishes
newspapers and magazines)
2,250 Kuehne & Nagel International AG Bearer ................... Transportation 1,298,018
(Transports freight worldwide)
175 Lindt & Spruengli AG PC .................................. Food & Beverages 296,932
(Chocolate processor and manufacturer)
6,000 Sika Finanz AG Bearer .................................... Building Materials 1,547,442
(Produces specialty products for water management)
3,750 Societe Generale D'Affichage SA D.R.C. ................... Advertising 1,348,921
(Provides billboard advertising)
1,155 Swissair AG D.R.C.* ...................................... Airlines 188,136
(Operates an international airline for passengers and
freight; total ownership)
--------------------------------------
Total Switzerland 7,289,738
======================================
Thailand (0.4%)
- ---------------
100,000 Oriental Hotel PCL ....................................... Lodging 447,847
(Operates a hotel with 394 rooms in Bangkok)
--------------------------------------
Total Thailand 447,847
======================================
United Kingdom (4.1%)
- ---------------------
215,000 Antofagasta Holdings plc ................................. Holding Company 1,343,314
(Interests in mining, transportation, banking,
forestry and natural resources in Chile)
25,000 BAA plc .................................................. Air Transportation 206,913
(Operates seven airports in the United Kingdom)
250,000 Berisford plc ............................................ Construction Products 511,198
(Industrial holding company involved in furniture
products and automotive components)
550,000 Lonrho plc ............................................... Conglomerate 1,227,280
(Industrial holding company with many assets
in Africa)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Shares Common Stocks (72.8%) Industry Market Value
====================================================================================================================
<S> <C> <C> <C>
United Kingdom (4.1%) - continued
- ---------------------------------
200,000 McBride plc.............................................. Consumer Goods $ 412,204
(Manufactures private label household and personal
care products)
225,000 Royal Doulton plc........................................ Consumer Products 1,024,221
(Produces fine china, china and giftware)
-------------------------------------
Total United Kingdom 4,725,130
=====================================
Miscellaneous (1.4%)
- --------------------
25,000 Banco Latinoamerican de Exportaciones SA................ Financial Institutions 1,146,875
(Specialized multinational bank established to finance
foreign trade in Latin America and the Caribbean region)
30,000 North European Oil Royalty Trust......................... Gas-International 408,750
(Holds overriding royalty rights covering gas
production in Germany)
-------------------------------------
Total Miscellaneous 1,555,625
=====================================
-------------------------------------
Total Common Stocks
(cost basis $83,083,664) 84,298,897
=====================================
Preferred Stocks (7.3%)
=========================================================
25,030 Cheil Jedang Corporation, South Korea.................... Conglomerate 423,714
15,000 Freeport-McMoran Copper & Gold, Inc...................... Gold 470,625
Preferred Series Gold, United States
28,500 Freeport-McMoran Copper & Gold, Inc...................... Silver 523,687
Preferred Series Silver, United States
35,000 Freeport-McMoran Copper & Gold, Inc...................... Gold 1,041,250
Preferred Series II, United States
12,000 Hornbach Holding AG, Germany............................. Retail Stores 776,161
206,250 Independent Press Communications Ltd., New Zealand....... Publishing/Printing 1,127,080
100,000 Istituto Finanziario Industriale SpA..................... Holdings-Diversified 1,203,359
Privileged Shares, Italy
12,180 Korean Air Lines, South Korea............................ Airlines 86,025
12,000 Legrand ADP, France...................................... Electrical 1,377,585
8,533 LG Electronics Co., Ltd. South Korea..................... Electronics 44,770
3,500 Sagem ADP, France........................................ Technology 1,010,486
2,800 Samsung Electronics, South Korea......................... Electronics 89,148
34,620 Ssangyong Cement Industries, South Korea................. Building Materials 224,719
-------------------------------------
Total Preferred Stocks
(cost basis $8,956,530) 8,398,609
=====================================
-------------------------------------
Total Equities
(cost basis $92,040,194) 92,697,506
=====================================
The accompanying notes to the financial statements are an integral part of this schedule.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Par Value Long-Term Fixed-Income Obligations (7.4%) Currency Market Value
====================================================================================================================================
<S> <C> <C> <C>
Non U.S. Dollar Bonds and Notes
500,000 Air Canada Variable Rate Perpetual Notes, 6.25%,
3/29/2049 ............................................... Deutsche Mark $179,170
350,000 Republic of New Zealand, 10.00%, 3/15/2002............... New Zealand Dollar 264,529
750,000 Trans Power Finance Ltd., 8.00%, 3/15/2002................New Zealand Dollar 516,002
Non U.S. Dollar Convertible Bonds
3,500 Alcatel Alsthom, 2.50%, 1/1/2004..........................French Franc 557,716
350,000 BAA plc, 5.75%, 3/29/2006.................................Pound Sterling 589,297
350,000 Berisford, 5.00%, 1/31/2015...............................Pound Sterling 362,098
611 Gaumont SA, 3.75%, 1/1/2003...............................French Franc 57,056
11,250 Immobiliere Hoteliere, 5.00%, 1/1/2001....................French Franc 403,445
750,000 Intertan, Inc., 9.00%, 8/3/2000...........................Canadian Dollar 508,461
65,000,000 Nippon Yusen Kabushiki, 2.00%, 9/29/2000..................Japanese Yen 545,465
U.S. Dollar Bonds and Notes
$ 448,240 Federal Republic of Brazil Capitalization, 8.00%, 4/15/2014 ......................... 338,421
750,000 Federal Republic of Brazil Debt Conversion Bond, Floating Rate
Note, 6.5625%, 4/15/2012............................................................. 597,187
150,000 IRSA S.A., 4.50%, 8/2/2003 .......................................................... 158,625
485,000 Republic of Argentina Floating Rate Bond, 6.625%, 3/31/2005 ......................... 444,988
1,000,000 United Mexican States Discount Floating Rate Note A, 6.45%, 12/31/2019............... 886,250
250,000 United Mexican States Discount Floating Rate Note B, 6.39%, 12/31/2019............... 221,563
1,920,000 United Mexican States Oil Recovery Rights............................................ 0
250,000 Yangming Marine Transport Corporation, 2.00%, 10/6/2001.............................. 284,375
U.S. Dollar Convertible Bonds
- -----------------------------
350,000 Cheil Jedang Corporation, 3.00%, 12/31/2006......................................... 423,500
250,000 Medya International Ltd., 10.00%, 6/28/2001......................................... 200,000
1,000,000 Scandinavian Broadcasting System SA, 7.25%, 8/1/2005................................ 885,000
150,000 Sincere Navigation Corporation, 3.75%, 5/26/2003.................................... 170,250
------------------------------------------------
Total Long-Term Fixed-
Income Obligations
(amortized cost basis $8,583,080) 8,593,398
================================================
------------------------------------------------
Total Long-Term Investments
(amortized cost basis $100,623,274) 101,290,904
================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Par Value Commercial Paper (12.5%) Market Value
====================================================================================================================================
<S> <C> <C>
$2,821,000 American Home Products, Inc., 5.60%, 5/1/1997 ............................ $2,821,000
1,803,000 CSX, Inc., 5.67%, 5/7/1997 ............................................... 1,801,296
1,785,000 Dayton Hudson Corporation, 5.55%, 5/2/1997 ............................... 1,784,725
1,084,000 Louisiana Land & Exploration Company, 5.60%, 5/6/1997..................... 1,083,157
1,943,000 Raytheon Company, 5.67%, 5/1/1997 ........................................ 1,943,000
1,771,000 Reynolds Metals, Inc., 5.64%, 5/5/1997.................................... 1,769,890
1,073,000 Samsung Electronics, 5.72%, 5/16/1997 .................................... 1,070,443
2,195,000 Texas Instruments, Inc., 5.46%, 5/8/1997 ................................. 2,192,669
---------------------------------------------------------
Total Commercial Paper
(amortized cost $14,466,180) 14,466,180
=========================================================
---------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $115,089,454) 115,757,084
=========================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
</TABLE>
<PAGE>
The AAL Utilities Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
The Fund Seeks: Current income, long-term growth of income and capital
growth by investing primarily in public utilities
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>
Shares Common Stocks (93.1%) Market Value
=================================================================================================================================
<S> <C> <C>
Communication Services (33.7%)
55,000 Airtouch Communications, Inc............................................................... $ 1,402,500
(Provides wireless telecommunications services to customers worldwide)
52,870 Ameritech Corporation...................................................................... 3,231,679
(Telecommunications firm serving five states in the Midwest)
63,600 AT&T Corporation........................................................................... 2,130,600
(Operates domestically and internationally providing communication products and services)
35,300 Bell Atlantic Corporation.................................................................. 2,391,575
(Owns and operates telephone subsidiaries and provides cellular services)
48,000 BellSouth Corporation...................................................................... 2,136,000
(Holding company, provides telecommunications services in nine Southeastern states)
90,000 Cable & Wireless plc ADR................................................................... 2,081,250
(International provider of telecommunications services in over 50 countries)
26,000 Cincinnati Bell, Inc....................................................................... 1,456,000
(Provides telecommunication services and products to customers)
66,400 Frontier Corporation....................................................................... 1,054,100
(Holding company, provides long distance telecommunications nationally)
71,000 GTE Corporation............................................................................ 3,257,125
(Provides local telephone and mobil-cellular services to customers)
20,611 Lucent Technologies, Inc................................................................... 1,218,625
(Designs, develops and delivers a wide range of communications systems and components)
119,000 MCI Communications Corporation............................................................. 4,536,875
(Diversified communications company)
5,000 PT Indosat ADR............................................................................. 137,500
(Provides international telecommunications services to Indonesia)
33,500 Public Service Enterprise Group, Inc....................................................... 808,188
(Holding company for Public Service Electric & Gas)
79,185 SBC Communications Incorporated............................................................ 4,394,767
(Provides communication services ranging from local to international)
16,000 Telecomunicacoes Brasileiras S/A-Telebras ADR.............................................. 1,836,000
(Holding company for the telecommunications system in Brazil)
30,000 Telefonica de Argentina ADR................................................................ 997,500
(Monopoly provider of local and long distance telecommunication services in Argentina)
74,200 Telefonica de Espana ADR................................................................... 5,713,400
(Supplies telephone service in Spain)
22,000 Teleport Communications Group Inc.......................................................... 627,000
(Offers telecommunications services in metropolitan markets nationwide)
78,800 U.S. West, Incorporated.................................................................... 2,767,850
(Telecommunications firm serving 14 Western states from Arizona to Washington)
125,000 Worldcom, Inc*............................................................................. 3,000,000
(Offers domestic and international voice, data and video products andservices)
---------------------------------------------
Total Communication Services 45,178,534
=============================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Utilities Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (93.1%) Market Value
=========================================================================================================================
<S> <C> <C>
Consumer Staples (1.6%)
58,000 Tele-Communications Inc............................................................. $ 801,125
(Invests in entertainment and educational programs for media)
78,800 U.S. West Media Group*.............................................................. 1,359,300
(Provides multimedia services over wireless networks and cable television)
-----------------------------------------
Total Consumer Staples 2,160,425
=========================================
Energy (1.2%)
28,000 Exxon Corporation................................................................... 1,585,500
(World's largest oil company)
-----------------------------------------
Total Energy 1,585,500
=========================================
Utilities (56.6%)
32,000 AGL Resources, Inc.................................................................. 616,000
(Provides gas distribution in the Southeast)
46,000 Allegheny Power System, Inc......................................................... 1,207,500
(Electric utility holding company with direct and indirect subsidiaries)
54,000 Baltimore Gas & Electric Company.................................................... 1,377,000
(Provides electricity and natural gas service to the state of Maryland)
56,400 Boston Edison Company............................................................... 1,438,200
(Provides electricity to Boston and surrounding areas)
92,000 Carolina Power & Light Company...................................................... 3,128,000
(Provides electricity to portions of North and South Carolina)
73,000 Central & Southwest Corporation..................................................... 1,469,125
(Electric utility holding company in Texas and Oklahoma)
38,000 CINergy Corporation................................................................. 1,263,500
(Produces, transmits and distributes electricity to southwestern Ohio, Kentucky and
most of Indiana)
110,000 CMS Energy Corporation.............................................................. 3,492,500
(Distributes electricity and natural gas throughout Michigan)
15,000 Coastal Corporation................................................................. 712,500
(Owns and operates natural gas pipeline and stores oil, gas and coal)
21,000 Columbia Gas System, Inc........................................................... 1,299,375
(Explores for,Eproduces and markets natural gas)
22,650 Consolidated Edison Company of New York............................................. 628,537
(Supplies electricity to New York City and most of Westchester County, NY)
24,000 Consolidated Natural Gas Company.................................................... 1,209,000
(Public utility holding company for natural gas)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Utilities Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (93.1%) Market Value
===================================================================================================================================
<S> <C> <C>
Utilities (56.6%) - continued
26,000 Delmarva Power & Light Company............................................................ $ 455,000
(Provides electric service for Delaware and parts of Maryland and Virginia)
28,000 Dominion Resources, Inc................................................................... 962,500
(Holding company whose subsidiary provides electricity in Virginia and North
Carolina)
41,515 Duke Power Company........................................................................ 1,821,471
(Provides electricity to sections of North Carolina and South Carolina)
65,000 Edison International...................................................................... 1,365,000
(Operates through five subsidiaries that compete globally in the energy market)
42,265 Empresa Nacional Electric ADR............................................................. 2,953,267
(Provides electricity in Spain)
60,000 Enova Corporation......................................................................... 1,327,500
(Supplies electricity, natural gas and steam heat to southern California)
93,650 Entergy Corporation....................................................................... 2,189,069
(Holding company whose subsidiaries provide electricity to four states)
64,650 FPL Group, Incorporated................................................................... 2,885,006
(Diversified electric utility holding company)
90,200 General Public Utilities Corporation...................................................... 2,908,950
(An electric utility holding company)
45,000 Huaneng Power International, Incorporated ADR............................................. 1,091,250
(Develops, constructs, owns and operates large coal-fired power plants throughout
China)
39,800 KU Energy Corporation..................................................................... 1,208,925
(Holding company for Kentucky Utilities which provides electric services)
38,000 National Power ADR........................................................................ 1,330,000
(Generates and sells electricity in England and Wales)
78,720 New England Electric System............................................................... 2,686,320
(Provides electricity to three Eastern states through subsidiaries)
112,500 NIPSCO Industries Incorporated............................................................ 4,443,750
(Holding company whose subsidiary provides electricity and gas to 1/3 of Indiana)
35,000 OGE Energy Company........................................................................ 1,452,500
(Provides electricity to wholesale and retail customers in Oklahoma and Arkansas)
57,000 PacifiCorp................................................................................ 1,132,875
(Conducts retail electric service through Pacific Power & Light and Utah Power &
Light)
19,000 PanEnergy Corporation..................................................................... 840,750
(Holding company whose subsidiaries transport & sell natural gas)
56,000 PG&E Corporation.......................................................................... 1,344,000
(Provides electric and natural gas service throughout Northcentral California)
132,000 Pinnacle West Capital Corporation......................................................... 3,762,000
(Utility holding company for Arizona Public Service Company)
49,000 PowerGen ADR.............................................................................. 2,094,750
(Generates and sells electricity to England and Wales)
75,000 P P & L Resources, Inc.................................................................... 1,471,875
(Holding company for Pennsylvania Power & Light)
39,000 Public Service Company of Colorado........................................................ 1,511,250
(Provides electricity and natural gas to Colorado)
36,000 Questar Corporation....................................................................... 1,368,000
(Holding company for natural gas which also produces and sells oil)
26,000 Sonat Inc................................................................................. 1,485,250
(Transmits natural gas and markets natural gas & electric power)
110,805 Southern Company.......................................................................... 2,257,652
(Parent company of five electric companies which provides service to the Southeast)
58,000 Southwestern Public Service Company....................................................... 2,124,250
(Provides electric energy & utility engineering services)
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Utilities Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Shares Common Stocks (93.1%) Market Value
====================================================================================================================================
<S> <C> <C>
Utilities (56.6%) - continued
153,000 TECO Energy Incorporated................................................................ $ 3,652,875
(Holding company of Tampa Electric Company)
36,000 Texas Utilities Company................................................................. 1,215,000
(Holding company of Texas Utilities Electric Company)
36,000 The Williams Companies, Inc............................................................. 1,579,500
(Owns and operates natural gas and petroleum products pipelines)
36,000 Union Electric Company.................................................................. 1,282,500
(Provides electric service in Missouri and Illinois)
32,085 Wisconsin Energy Corporation............................................................ 802,125
(Provides electricity and some gas to portions of Wisconsin and Michigan)
33,500 WPL Holdings, Inc....................................................................... 908,687
(Holding company for Wisconsin Power & Light Company)
--------------------------------------------
Total Utilities 75,755,084
============================================
--------------------------------------------
Total Common Stocks
(cost basis $110,006,747) 124,679,543
============================================
Par Value Long-Term Fixed-Income Obligations (4.9%)
=====================================================================================================================
$1,000,000 Potomac Electric Power, 9.00%, 04/15/2000............................................... 1,039,784
(Generates, transmits, distributes and sells electric energy in parts of Maryland)
1,650,000 Texas Utilities Electric, 9.75%, 05/01/2021............................................. 1,834,432
(Holding company whose subsidiary provides electricity in Texas)
3,150,000 U.S. Treasury Note, 6.875%, 03/31/2000.................................................. 3,185,438
500,000 U.S. Treasury Bond, 7.50%, 11/15/2016................................................... 523,438
---------------------------------------------------------------
Total Long-Term Fixed-Income Obligations
(amortized cost basis $6,711,076) 6,583,092
===============================================================
---------------------------------------------------------------
Total Long-Term Investments
(amortized cost basis $116,717,823) 131,262,635
===============================================================
Short-Term Variable Rate Obligations (2.0%)
====================================================================================================================================
45,305 American Family Insurance Company **.................................................... 45,305
1,500,000 Merrill Lynch & Company Inc., 5.48%, 05/12/1997......................................... 1,497,488
1,073,396 Wisconsin Electric Power Company **..................................................... 1,073,396
---------------------------------------------------------------
Total Short-Term Variable Rate Obligations
(amortized cost basis $2,616,189) 2,616,189
===============================================================
---------------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $119,334,012) $133,878,824
===============================================================
</TABLE>
**Variable rate demand notes
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Bond Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
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>
Principal Amount Long-Term Fixed-Income Obligations (93.9%) Interest Rate Maturity Date Market Value
=======================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations (27.2%)
$8,785,121 Federal Home Loan Mortgage
Corporation Pool #G10380................... 7.000% 08/01/2010 $ 8,711,845
1,096,398 Federal National Mortgage
Association Pool #143273................... 7.500 12/01/2007 1,106,846
6,167,388 Federal National Mortgage
Association Pool #44046.................... 7.500 02/01/2014 6,247,681
29,984,890 Federal National Mortgage
Association Pool #313002................... 9.000 06/01/2026 31,409,173
22,498,270 Government National Mortgage
Association Pool #780213................... 7.500 08/15/2025 22,343,234
30,017,166 Government National Mortgage
Association Pool #780212................... 8.000 08/15/2025 30,473,097
----------------------------------------------
Total U.S. Government
Agency Obligations 100,291,876
==============================================
U.S. Government Obligations (10.0%)
17,000,000 U.S. Treasury Bonds........................ 6.500 11/15/2026 15,948,125
5,000,000 U.S. Treasury Bonds........................ 6.375 09/30/2001 4,962,500
1,000,000 U.S. Treasury Bonds........................ 6.625 03/31/2002 1,001,875
5,000,000 U.S. Treasury Bonds........................ 5.750 08/15/2003 4,770,310
10,000,000 U.S. Treasury Bonds........................ 7.250 05/15/2004 10,309,370
----------------------------------------------
Total U.S. Government
Obligations 36,992,180
==============================================
Asset-Backed Securities (8.8%)
3,000,000 Associates Housing Services
Series 1996-1 Class M...................... 7.900 03/15/2027 2,999,088
10,000,000 Contimortgage Home Equity Loan Trust
Series 1996-2 Class A4..................... 6.850 04/15/2011 10,012,900
3,083,816 Contimortgage Home Equity Loan Trust
Series 1996-3 Class A1..................... 6.760 02/15/2011 3,090,785
5,000,000 Green Tree Financial Corporation
Series 1996-6 Class A6..................... 7.950 09/15/2027 5,063,800
5,000,000 Green Tree Financial Corporation
Series 1996-7 Class A6..................... 7.650 10/15/2027 5,066,950
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed Income Obligations (93.9%) Interest Rate Maturity Date Market Value
===============================================================================================================================
<S> <C> <C> <C> <C>
Asset-Backed Securities (8.8%) - continued
- ------------------------------------------
$ 3,000,000 Green Tree Home Equity Loans
Series 1996-D....................................... 8.100% 09/15/2027 $ 3,091,743
3,000,000 Team Fleet
Series 97-A......................................... 7.350 05/15/2003 3,026,250
-------------------------------------------------
Total Asset-Backed Securities 32,351,516
=================================================
Collateralized Mortgage Obligations (9.7%)
- ------------------------------------------
12,900,000 Citicorp Mortgage Securities, Inc.
Series 1994-8 Class A3.............................. 6.250 05/25/2024 12,643,419
7,000,000 Federal Home Loan Mortgage Corporation
REMICTrust Series 1300-G............................ 7.250 12/15/2005 7,054,110
4,000,000 Federal Home Loan Mortgage Corporation
REMICTrust Series 1219-H............................ 7.500 08/15/2006 4,047,936
1,424,033 Federal Home Loan Mortgage Corporation
REMICTrust Series 1303-G............................ 7.750 08/15/2018 1,429,658
4,743,832 Federal Home Loan Mortgage Corporation
REMICTrust Series 1062-G............................ 7.000 04/15/2019 4,760,910
1,000,000 Federal Home Loan Mortgage Corporation
REMICTrust Series 1721-G............................ 7.500 08/15/2022 1,019,335
5,000,000 Federal National Mortgage Association
REMICTrust Series 1993-G26 PE....................... 5.900 07/25/2015 4,913,050
-------------------------------------------------
Total Collateralized
Mortgage Obligations 35,868,418
=================================================
Corporate Obligations (38.2%)
- -----------------------------
5,000,000 Aetna Services, Inc.*............................... 6.970 08/15/2036 5,002,075
4,000,000 Allegiance Corp.*................................... 7.000 10/15/2026 3,967,172
5,000,000 American Airlines, Inc. Series C-2.................. 9.730 09/29/2014 5,597,050
5,000,000 AT&T Capital Corporation............................ 6.800 02/01/2001 4,965,600
5,000,000 Auburn Hills Trust.................................. 12.000 05/01/2020 7,346,350
3,000,000 Continental Airlines, Inc. Series 144-A............. 7.420 10/01/2008 3,008,877
10,000,000 Delta Air Lines, Inc. Series 93A2................... 10.500 04/30/2016 12,401,890
4,500,000 Enron Corporation................................... 6.750 09/15/2004 4,370,611
10,000,000 First National Bank of Chicago...................... 8.080 01/05/2018 10,409,410
5,000,000 First Union Corporation*............................ 6.824 08/01/2026 4,933,460
5,500,000 Florida Power & Light Company....................... 6.875 04/01/2004 5,377,234
9,500,000 Hydro-Quebec Company*............................... 8.050 07/07/2024 10,103,906
5,000,000 JC Penney & Company*................................ 7.400 04/01/2037 5,055,990
5,710,000 Lehman Brothers Holdings*........................... 7.500 08/01/2026 5,819,718
4,075,000 Pennzoil Company.................................... 10.625 06/01/2001 4,366,216
5,000,000 Petroleum Geo-Services.............................. 7.500 03/31/2007 4,971,940
5,000,000 Service Corporation International*.................. 7.000 06/01/2015 4,961,910
5,000,000 State Street Boston Corp.*.......................... 7.350 06/15/2026 5,142,980
5,000,000 Tennessee Gas Pipeline Company*..................... 7.000 03/15/2027 4,929,630
7,500,000 Time Warner Entertainment, Inc...................... 9.625 05/01/2002 8,243,340
5,000,000 Transocean Offshore Inc.*........................... 7.450 04/15/2027 5,080,300
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed Income Obligations (93.9%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
Corporate Obligations (38.2%) - continued
- -----------------------------------------
$4,964,542 United Air Lines, Inc. Series 96A1................. 7.270% 01/30/2013 $ 4,837,698
5,000,000 Whitman Corporation................................ 7.290 09/15/2026 5,021,890
5,000,000 WMX Technologies, Inc.............................. 7.100 08/01/2026 5,046,740
--------------------------------------------------
Total Corporate Obligations 140,961,987
==================================================
--------------------------------------------------
Total Long-Term Obligations
(amortized cost basis $347,600,634) 346,465,977
==================================================
Short-Term Variable Rate Obligations (6.1%)
===========================================================================================================
3,537,790 American Family Insurance Company **............................... 3,537,790
18,600,000 Merrill Lynch & Co., Inc., 5.60%, 05/01/1997...................... 18,600,000
202,498 Wisconsin Electric Power Company **................................ 202,498
--------------------------------------------------
Total Short-Term Variable Rate
Obligations (cost basis $22,340,288) 22,340,288
==================================================
--------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $369,940,922) $368,806,265
==================================================
</TABLE>
*Putable bond
**Variable rate demand notes
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 APRIL 30, 1997
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.
<TABLE>
<CAPTION>
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
================================================================================================================================
<S> <C> <C> <C> <C>
Alabama (0.4%)
$2,000,000 Alabama Special Care Facility Finance
Authority Revenue Bonds (Daughters of
Charity System)..................................... 5.000% 11/01/2025 $ 1,740,000
-------------------------------------------------------
Total Alabama 1,740,000
=======================================================
Alaska (1.6%)
7,000,000 Alaska State Housing Finance Corporation
Revenue Bonds....................................... 7.650 12/01/2010 6,997,690
-------------------------------------------------------
Total Alaska 6,997,690
=======================================================
Arizona (1.1%)
5,000,000 Salt River Arizona Project Revenue Bonds............ 5.500 01/01/2019 4,818,750
-------------------------------------------------------
Total Arizona 4,818,750
=======================================================
California (13.9%)
840,000 California Housing Finance Authority
Revenue Bonds....................................... 7.750 08/01/2017 880,950
3,915,000 California Rural Home Finance Authority
Single Family Mortgage Revenue Bonds
(GNMA Insured) (Subject to "AMT").................. 6.250 09/01/2029 4,203,731
4,855,000 Contra Costa County California Home
Mortgage Revenue Bonds
(Escrowed to Maturity).............................. 7.500 05/01/2014 5,850,275
7,780,000 East Bay Municipal Utility District
California Water System Revenue Bonds
(FGIC Insured)...................................... 5.000 06/01/2026 6,904,750
1,335,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2005 851,062
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2009 3,256,250
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2010 3,256,250
5,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2011 3,262,500
605,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2012 394,006
6,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2013 3,937,500
7,145,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 0.000 01/01/2014 4,688,906
10,000,000 Foothill/Eastern Transportation
California Toll Road Revenue Bonds, Series A........ 5.000 01/01/2035 8,175,000
4,200,000 Fresno, California Sewer Revenue Bonds,
Series 1993 A-1 (AMBAC Insured)..................... 6.250 09/01/2014 4,551,750
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
California (13.9%) - continued
$3,500,000 Orange County California Transit Authority,
Sales Tax Revenue Bonds, Series 1992 M
(MBIA Insured)............................................ 6.000% 02/15/2009 $ 3,696,875
4,200,000 Pomona California Single Family Housing
Revenue Bonds (Escrowed to Maturity)...................... 7.600 05/01/2023 5,202,750
------------------------------------------------
Total California 59,112,555
================================================
Colorado (0.5%)
2,065,000 Colorado Housing Single Family
Mortgage Revenue Bonds.................................... 7.250 11/01/2031 2,178,575
------------------------------------------------
Total Colorado 2,178,575
================================================
Delaware (0.3%)
1,225,000 Delaware State Economic Development
Authority Revenue Bonds (MBIA Insured).................... 7.300 03/01/2014 1,316,875
------------------------------------------------
Total Delaware 1,316,875
------------------------------------------------
District of Columbia (3.8%)
10,000,000 District of Columbia, Georgetown
University Revenue Bonds.................................. 7.250 04/01/2020 10,404,600
3,700,000 District of Columbia, Howard
University Revenue Bonds.................................. 7.250 10/01/2011 4,000,625
1,500,000 District of Columbia, Howard
University Revenue Bonds.................................. 7.250 10/01/2020 1,601,250
------------------------------------------------
Total District of Columbia 16,006,475
================================================
Florida (2.6%)
6,200,000 Florida State Turnpike Authority
Revenue Bonds (FGIC Insured).............................. 5.000 07/01/2019 5,541,250
1,750,000 Manatee County, Florida Housing Finance Authority Mortgage
Revenue Bonds (GNMA Collateral)(Subject to 'AMT')......... 7.200 05/01/2028 1,894,375
2,000,000 Orange County, Florida Health Facilities
Authority Bonds (MBIA Insured)............................ 6.250 10/01/2018 2,140,000
1,900,000 Orlando Florida Utility Community
Water & Electric Revenue Bonds............................ 5.000 10/01/2020 1,702,875
------------------------------------------------
Total Florida 11,278,500
================================================
Georgia (2.2%)
4,000,000 Georgia Municipal Electric Authority Power
Revenue Bonds, Series Z (FGIC Insured).................... 5.500 01/01/2012 4,020,000
2,690,000 Georgia Municipal Electric Authority Special
Obligation Bonds, Series 1993
(AMBAC Insured)........................................... 7.000 01/01/2008 3,043,062
2,000,000 Municipal Electric Authority Georgia
Revenue Bonds (MBIA Insured).............................. 6.500 01/01/2012 2,210,000
------------------------------------------------
Total Georgia 9,273,062
================================================
Illinois (9.9%)
9,000,000 Chicago, Illinois G.O. Bonds
(FGIC Insured)............................................ 5.250 01/01/2027 8,178,750
2,500,000 Chicago, Illinois Single Family Mortgage
Revenue Bonds (GNMA Collateral)
(Subject to OAMTO)........................................ 7.250 09/01/2028 2,734,375
2,250,000 Cook County, Illinois G.O. Bonds,
(FGIC Insured)............................................ 5.500 11/15/2022 2,129,062
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Illinois (9.9%) - continued
$3,700,000 Cook County, Illinois School District #25 -
Arlington Heights G.O. Bonds (FSA Insured).................. 5.700% 05/01/2013 $ 3,676,875
3,620,000 Du Page County, Illinois Stormwater
Project, G.O. Bonds......................................... 5.600 01/01/2021 3,520,450
9,400,000 Hoffman Estates, Illinois Tax Increment
Revenue Bonds............................................... 0.000 05/15/2003 6,838,500
3,000,000 Illinois Regional Transit Authority
Revenue Bonds, Series A (FGIC Insured)...................... 6.700 11/01/2021 3,371,250
10,650,000 Metropolitan Pier and Exposition
Center, Illinois Revenue Bonds.............................. 7.000 07/01/2026 11,768,250
------------------------------------------------------
Total Illinois 42,217,512
======================================================
Indiana (2.8%)
1,900,000 Indiana Municipal Power Revenue Bonds
(MBIA Insured).............................................. 5.500 01/01/2016 1,857,250
4,550,000 Indiana Transportation Finance Authority
Revenue Bonds (MBIA Insured)................................ 7.250 06/01/2015 5,312,125
1,500,000 Indianapolis, Indiana Bond Bank Revenue Bonds............... 6.500 01/01/2013 1,651,875
1,125,000 Kokomo Indiana Hospital Authority
Revenue Bonds (St. Joseph Hospital)......................... 6.350 08/15/2013 1,115,156
2,000,000 Lawrence Township Indiana
Metropolitan School District G.O. Bonds..................... 6.875 07/05/2011 2,207,500
------------------------------------------------------
Total Indiana 12,143,906
======================================================
Massachusetts (0.3%)
1,250,000 Massachusetts State Housing Finance
Agency Revenue Bonds (AMBAC Insured)
(Subject to "AMT").......................................... 6.400 07/01/2038 1,251,563
------------------------------------------------------
Total Massachusetts 1,251,563
======================================================
Michigan (6.9%)
2,220,000 Ferndale, Michigan School District G.O.
Bonds (FGIC Insured)........................................ 5.375 05/01/2021 2,109,000
5,500,000 Michigan Public Power Agency Revenue
Refunding Bonds (Belle River Project)
(MBIA Insured).............................................. 5.000 01/01/2019 4,901,875
3,000,000 Michigan State Hospital Finance Authority
Revenue Bonds (Henry Ford Health System).................... 5.250 11/15/2020 2,801,250
15,000,000 Michigan State Tax & Revenue G.O. Bonds..................... 4.500 09/30/1997 15,039,600
5,000,000 Michigan State University Revenue Bonds
(AMBAC Insured)............................................. 5.000 02/15/2026 4,412,500
------------------------------------------------------
Total Michigan 29,264,225
======================================================
Minnesota (2.7%)
1,000,000 Northern Minnesota Municipal Power
Agency Revenue Bonds........................................ 7.250 01/01/2016 1,055,000
1,925,000 St. Paul, Minnesota Housing & Redevelopment
Authority Hospital Revenue Bonds............................ 9.750 11/01/2017 2,010,489
8,000,000 St. Paul, Minnesota Housing & Redevelopment
Authority Hospital Revenue Bonds............................ 9.750 11/01/2017 8,355,280
------------------------------------------------------
Total Minnesota 11,420,769
======================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Missouri (1.0%)
- ---------------
$1,130,000 Missouri State Housing Development
Revenue Bonds.............................................. 9.375% 04/01/2016 $ 1,197,800
2,735,000 Missouri State Housing Development
Community Single Family Mortgage
Revenue Bonds.............................................. 7.300 03/01/2028 2,984,569
-------------------------------------------------------
Total Missouri 4,182,369
=======================================================
Montana (1.1%)
- --------------
3,475,000 Montana State Board Housing Revenue
Bonds, Single Family Program, Series B-1................... 6.300 06/01/2008 3,587,937
1,000,000 Montana State Housing Revenue Bonds........................ 6.400 12/01/2012 1,032,500
-------------------------------------------------------
Total Montana 4,620,437
=======================================================
New Mexico (0.6%)
- -----------------
2,275,000 New Mexico Mortgage Finance
Authority Revenue Bonds, Series 1995 F..................... 7.000 01/01/2026 2,533,781
-------------------------------------------------------
Total New Mexico 2,533,781
=======================================================
New York (16.4%)
- ----------------
5,000,000 New York City, New York G.O. Bonds......................... 5.875 08/01/2024 4,743,750
5,000,000 New York Dormitory Authority State
University Educational Facilities
Revenue Bonds.............................................. 5.250 05/15/2019 4,556,250
3,500,000 New York Dormitory Authority State
University Revenue Bonds................................... 5.875 05/15/2011 3,556,875
5,000,000 New York Dormitory Authority State
University Revenue Bonds................................... 5.875 05/15/2017 5,012,500
2,000,000 New York Dormitory Authority State
University Revenue Bonds................................... 7.500 05/15/2013 2,352,500
3,930,000 New York State Dormitory Authority
Court Facilities Revenue Bonds............................. 5.625 05/15/2013 3,753,150
4,620,000 New York State Local Assistance
Corporation, Sales Tax Revenue Bonds....................... 5.000 04/01/2021 4,054,050
3,000,000 New York State Local Government
Assistance Corporation, Refunding
Revenue Bonds (MBIA Insured)............................... 5.250 04/01/2016 2,820,000
3,000,000 New York State Medical Care Facilities,
Finance Agency Revenue Bonds, Mental
Health Services (FSA Insured).............................. 5.375 02/15/2014 2,865,000
9,000,000 New York State Thruway Revenue Bonds....................... 5.600 04/01/2005 9,033,750
6,295,000 New York State Thruway Revenue Bonds....................... 5.750 04/01/2008 6,247,787
2,155,000 New York State Urban Development
Corporation Revenue Bonds.................................. 5.375 01/01/2023 1,936,806
6,915,000 Triborough Bridge & Tunnel Authority
Revenue Bonds.............................................. 5.000 01/01/2020 6,318,581
5,000,000 Triborough Bridge & Tunnel Authority
Revenue Bonds.............................................. 5.000 01/01/2017 4,543,750
7,150,000 Triborough Bridge and Tunnel Authority,
New York Convention Center Project Bonds,
Series 1990 E.............................................. 7.250 01/01/2010 7,981,188
-------------------------------------------------------
Total New York 69,775,937
=======================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
North Carolina (0.5%)
$1,845,000 North Carolina Eastern Municipal Power
Agency Revenue Bonds (FSA Insured)..................... 7.500% 01/01/2010 $ 2,184,019
-------------------------------------------------------
Total North Carolina 2,184,019
=======================================================
Pennsylvania (1.8%)
3,005,000 Muhlenberg Pennsylvania School District
G.O. Bonds (MBIA Insured).............................. 5.200 04/01/2017 2,835,969
1,365,000 Pennsylvania Housing Finance Agency
Revenue Bonds (Subject to 'AMT')....................... 6.750 10/01/2009 1,492,969
1,455,000 Pennsylvania Housing Finance Agency
Revenue Bonds(Subject to 'AMT')........................ 6.750 10/01/2010 1,585,950
2,000,000 Philadelphia Pennsylvania Hospital Authority
Children's Hospital Revenue Bonds...................... 5.000 02/15/2021 1,782,500
-------------------------------------------------------
Total Pennsylvania 7,697,388
=======================================================
South Dakota (0.2%)
675,000 South Dakota Student Loan Assistance
Corporation Revenue Bonds(Subject to 'AMT')............ 7.450 08/01/2000 696,938
-------------------------------------------------------
Total South Dakota 696,938
=======================================================
Texas (8.3%)
5,000,000 Keller Texas Independent School District
G.O. Bonds (PSF Guaranteed)............................ 5.125 08/15/2025 4,475,000
4,050,000 Lewisville, Texas Independent School
District G.O. Bonds (PSF Guaranteed)................... 5.250 08/15/2014 3,872,813
10,000,000 Texas State Tax & Revenue Notes........................ 4.750 08/29/1997 10,027,100
1,900,000 Texas State Veterans G.O. Bonds
(Subject to 'AMT')..................................... 5.250 12/01/2026 1,736,125
7,880,000 Waco Texas Health Facilities Development
Corporation (Daughters of Charity System).............. 5.000 11/01/2020 7,062,450
7,050,000 Wylie Texas Independent School District G.O.
Bonds (PSF Guaranteed)................................. 7.000 08/15/2024 8,054,625
-------------------------------------------------------
Total Texas 35,228,113
=======================================================
Utah (2.0%)
4,670,000 Intermountain Power Agency Special
Obligation Revenue Bonds, Series 1986 A................ 5.000 07/01/2021 4,045,388
3,155,000 Intermountain Power Agency Special
Obligation Revenue Bonds, Series 1986 C................ 5.000 07/01/2018 2,776,400
1,660,000 Utah State Housing Finance Agency...................... 7.250 07/01/2011 1,759,600
-------------------------------------------------------
Total Utah 8,581,388
=======================================================
Virginia (1.1%)
3,000,000 Fairfax County, Virginia Development
Authority Revenue Bonds................................ 5.250 08/15/2019 2,793,750
2,000,000 Virginia State Housing Development
Authority Revenue Bonds, Series B...................... 6.700 01/01/2015 2,107,500
-------------------------------------------------------
Total Virginia 4,901,250
=======================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Principal Amount Municipal Bonds (93.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Washington (5.9%)
$2,875,000 Pierce County, Washington School
District G.O. Bonds (AMBAC Insured)....................... 5.450% 12/01/2013 $ 2,810,313
5,000,000 Washington State G.O. Bonds............................... 6.750 02/01/2015 5,612,500
10,000,000 Washington State Public Power Supply
System Project #2, Revenue Bonds,
Series 1994 A............................................. 6.000 07/01/2007 10,462,500
6,195,000 Washington State Public Power Supply
System Project #3, Revenue Bonds,
(AMBAC Insured)........................................... 5.700 07/01/2009 6,249,206
--------------------------------------------------
Total.Washington 25,134,519
==================================================
Wisconsin (3.1%)
10,000,000 Oshkosh, Wisconsin Water Revenue Bonds,
Anticipation Notes*....................................... 4.875 01/01/2000 9,975,000
1,990,000 Wisconsin Housing and Economic
Development Authority Home Ownership
Revenue Bonds, Series 1990D............................... 7.750 09/01/2010 2,091,988
1,000,000 Wisconsin State Health & Educational Facilities
Authority Revenue Bond, Medical
College of Wisconsin...................................... 5.400 12/01/2004 1,012,500
--------------------------------------------------
Total.Wisconsin 13,079,488
==================================================
Wyoming (2.2%)
3,930,000 Wyoming Community Development
Authority Single Family Mortgage
Revenue Bonds, Series B................................... 6.650 06/01/2013 4,097,025
5,765,000 Wyoming State Farm Loan Board
Capital Projects Facilities Revenue Bonds................. 5.750 10/01/2020 5,635,288
--------------------------------------------------
Total.Wyoming 9,732,313
==================================================
--------------------------------------------------
Total Municipal Bonds
(amortized cost basis $384,024,232) 397,368,397
==================================================
Short-Term Tax-Exempt Variable Rate Obligations (6.8%)
====================================================================================================================================
13,893,000 Strong Municipal Money Market............................................................. 13,893,000
15,000,000 Detroit, Michigan School District,
School Aid Notes.......................................... 4.500 05/01/1997 15,000,150
--------------------------------------------------
Total Short-Term Tax-Exempt
Variable Rate Obligations
(cost basis $28,893,000) 28,893,150
==================================================
--------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $412,917,232) $426,261,547
==================================================
</TABLE>
*When issued security
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL High Yield Bond Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
The Fund Seeks: High current income and secondarily capital growth by
investing primarily in high risk, high yield bonds commonly
referred to as "junk bonds."
The Fund Is: A diversified portfolio of below investment grade bonds.
Investments of this type are subject to greater risk of loss of
principal and interest.
<TABLE>
<CAPTION>
Principal Amount Corporate Obligations (94.3%) Interest Rate Maturity Date Market Value
=======================================================================================================================
<C> <S> <C> <C> <C>
Food & Beverages (7.5%)
$ 500,000 Coca-Cola Femsa SA................................... 8.950% 11/01/2006 $ 498,730
500,000 Envirodyne Industries, Inc........................... 12.000 06/15/2000 540,000
500,000 Envirodyne Industries, Inc........................... 10.250 12/01/2001 490,000
500,000 International Home Foods, Inc........................ 10.375 11/01/2006 508,750
1,000,000 Specialty Foods Corporation.......................... 10.250 08/15/2001 965,000
500,000 TLC Beatrice International Holdings, Inc............. 11.500 10/01/2005 542,500
-----------------------------------------------
Total Food & Beverages 3,544,980
===============================================
Chemicals (2.5%)
650,000 Harris Chemical North America, Inc................... 10.250 07/15/2001 653,250
500,000 Sterling Chemicals, Inc.............................. 11.750 08/15/2006 526,250
-----------------------------------------------
Total Chemicals 1,179,500
===============================================
Construction (3.3%)
500,000 Fortress Group, Inc.................................. 13.750 05/15/2003 518,750
500,000 Neenah Corporation................................... 11.125 05/01/2007 515,000
500,000 MMI Products, Inc.................................... 11.250 04/15/2007 515,000
-----------------------------------------------
Total Construction 1,548,750
===============================================
Consumer Products (3.2%)
500,000 Ekco Group, Inc...................................... 9.250 04/01/2006 493,750
500,000 Renaissance Cosmetics, Inc........................... 11.750 02/15/2004 502,500
500,000 Revlon, Inc.......................................... 10.875 07/15/2010 511,875
-----------------------------------------------
Total Consumer Products 1,508,125
===============================================
Containers (3.3%)
500,000 Anchor Glass Containers Corporation.................. 11.250 04/01/2005 517,500
500,000 Consumers International, Inc......................... 10.250 04/01/2005 518,750
500,000 Plastic Containers, Inc.............................. 10.000 12/15/2006 510,000
-----------------------------------------------
Total Containers 1,546,250
===============================================
Energy (5.3%)
500,000 Amerigas Partners, L.P............................... 10.125 04/15/2007 515,000
500,000 Dawson Production Services, Inc...................... 9.375 02/01/2007 490,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 1997
<TABLE>
<CAPTION>
Principal Amount Corporate Obligations (94.3%) Interest Rate Maturity Date Market Value
============================================================================================================================
<C> <S> <C> <C> <C>
Energy (5.3%) - continued
$500,000 Nuevo Energy Company................................. 9.500% 04/15/2006 $ 512,500
500,000 Petroleum Heat & Power Company, Inc.................. 9.375 02/01/2006 445,000
500,000 TransTexas Gas Corporation........................... 11.500 06/15/2002 555,000
----------------------------------------------------
Total Energy 2,517,500
====================================================
Financials (4.4%)
350,000 Amresco, Inc......................................... 10.000 03/15/2004 344,750
500,000 First Nationwide Holdings, Inc....................... 9.125 01/15/2003 500,000
750,000 Olympic Financial Limited............................ 11.500 03/15/2007 705,000
500,000 Penncorp Financial Group, Inc........................ 9.250 12/15/2003 517,500
----------------------------------------------------
Total Financials 2,067,250
====================================================
Food Retailers (2.7%)
500,000 Fleming Companies, Inc............................... 10.625 12/15/2001 507,500
750,000 Ralphs Grocery Company............................... 10.450 06/15/2004 795,000
----------------------------------------------------
Total Food Retailers 1,302,500
====================================================
Forest Products & Paper (8.4%)
750,000 Doman Industries Limited............................. 8.750 03/15/2004 695,625
500,000 Four M Corporation................................... 12.000 06/01/2006 492,500
500,000 Malette, Inc......................................... 12.250 07/15/2004 550,000
500,000 Maxxam Group Holdings, Inc........................... 12.000 08/01/2003 505,000
500,000 Riverwood International Corporation.................. 10.250 04/01/2006 468,750
750,000 Stone Container Corporation.......................... 10.750 10/01/2002 755,625
500,000 Sweetheart Cup Company, Inc.......................... 10.500 09/01/2003 505,000
----------------------------------------------------
Total Forest Products & Paper 3,972,500
====================================================
Health Care (2.7%)
500,000 Regency Health Services, Inc......................... 9.875 10/15/2002 503,750
500,000 Tenet Healthcare Corporation......................... 10.125 03/01/2005 536,250
250,000 Urohealth Systems, Inc............................... 12.500 04/01/2004 254,375
----------------------------------------------------
Total Health Care 1,294,375
====================================================
Leisure (7.4%)
500,000 Grand Casinos, Inc................................... 10.125 12/01/2003 508,750
500,000 HMH Properties, Inc.................................. 9.500 05/15/2005 510,000
500,000 Plitt Theaters, Inc.................................. 10.875 06/15/2004 503,750
500,000 Riviera Holdings Corporation......................... 11.000 12/31/2002 515,000
500,000 Trump Atlantic City Associates Funding, Inc.......... 11.250 05/01/2006 485,000
500,000 United Artists Theatre Circuit, Inc.................. 11.500 05/01/2002 520,000
491,576 United Artists Theatre Circuit, Inc.................. 9.300 07/01/2015 454,708
----------------------------------------------------
Total Leisure 3,497,208
====================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
<TABLE>
<CAPTION>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1997
Principal Amount Corporate Obligations (94.3%) Interest Rate Maturity Date Market Value
==============================================================================================================================
<C> <S> <C> <C> <C>
Manufacturing-Automotive (3.8%)
- -------------------------------
$500,000 Collins & Aikman Corporation.................. 11.500% 04/15/2006 $ 547,500
750,000 Exide Corporation............................. 10.000 04/15/2005 759,375
500,000 Walbro Corporation............................ 9.875 07/15/2005 497,500
----------------------------------------------
Total Manufacturing-Automotive 1,804,375
==============================================
Media (1.0%)
- ------------
500,000 Hollinger International Publishing, Inc....... 9.250 03/15/2007 496,250
----------------------------------------------
Total Media 496,250
==============================================
Media-Broadcasting (4.2%)
- -------------------------
500,000 Allbritton Communications, Inc................ 9.750 11/30/2007 477,500
500,000 SFX Broadcasting, Inc......................... 10.750 05/15/2006 522,500
500,000 Spanish Broadcasting Systems, Inc............. 11.000 03/15/2004 498,750
500,000 TV Azteca, S.A. de C.V........................ 10.500 02/15/2007 488,750
----------------------------------------------
Total Media-Broadcasting 1,987,500
==============================================
Media-Cable (6.7%)
- ------------------
750,000 Cablevision Systems Corporation............... 10.500 05/15/2016 756,562
500,000 Century Communications Corporation............ 9.500 03/01/2005 493,750
750,000 Jones Intercable, Inc......................... 8.875 04/01/2007 727,500
750,000 TCI Satellite Entertainment, Inc.............. 10.875 02/15/2007 712,500
500,000 Telewest Communications PLC................... 9.625 10/01/2006 492,500
----------------------------------------------
Total Media-Cable 3,182,812
==============================================
Metals-Diversified (3.9%)
- -------------------------
750,000 Algoma Steel Corporation...................... 12.375 07/15/2005 828,750
500,000 Bayou Steel Corporation....................... 10.250 03/01/2001 487,500
500,000 Weirton Steel Corporation..................... 11.375 07/01/2004 513,750
----------------------------------------------
Total Metals-Diversified 1,830,000
===============================================
Miscellaneous Manufacturing (7.1%)
- ----------------------------------
500,000 Atlantis Plastics, Inc........................ 11.000 02/15/2003 505,000
500,000 Interlake Corporation......................... 12.125 03/01/2002 520,000
500,000 Plastic Specialties & Technologies, Inc....... 11.250 12/01/2003 528,750
850,000 Terex Corporation............................. 13.250 05/15/2002 945,625
795,000 Wyman-Gordan Company.......................... 10.750 03/15/2003 846,675
----------------------------------------------
Total Miscellaneous Manufacturing 3,346,050
==============================================
Pollution Control (1.0%)
- ------------------------
500,000 Envirosource, Inc............................. 9.750 06/15/2003 476,250
----------------------------------------------
Total Pollution Control 476,250
==============================================
Restaurants/Food Service (1.1%)
- -------------------------------
500,000 Apple South, Inc.............................. 9.750 06/01/2006 505,000
----------------------------------------------
Total Restaurants/Food Service 505,000
==============================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 1997
<TABLE>
<CAPTION>
Principal Amount Corporate Obligations (94.3%) Interest Rate Maturity Date Market Value
============================================================================================================
<C> <S> <C> <C> <C>
Retail Stores (2.1%)
$500,000 Brown Group, Inc. ............................. 9.500% 10/15/2006 $ 502,500
500,000 Central Tractor Farm & Company, Inc. .......... 10.625 04/01/2007 507,500
--------------------------------------------
Total Retail Stores 1,010,000
============================================
Technology (2.7%)
500,000 American Banknote Corporation.................. 10.375 06/01/2002 491,250
500,000 Unisys Corporation............................. 12.000 04/15/2003 526,250
250,000 Unisys Corporation............................. 11.750 10/15/2004 263,125
--------------------------------------------
Total Technology 1,280,625
============================================
Telecommunications (5.2%)
500,000 Globalstar L.P. ............................... 11.375 02/15/2014 495,000
1,000,000 Paging Network, Inc. .......................... 10.000 10/15/2008 887,500
750,000 USA Mobile Communications, Inc. ............... 9.500 02/01/2004 626,250
500,000 Unifi Communications, Inc. .................... 14.000 03/01/2004 492,500
--------------------------------------------
Total Telecommunications 2,501,250
============================================
Textiles (2.1%)
500,000 Anvil Knitwear, Inc. .......................... 10.875 03/15/2007 485,000
500,000 Westpoint Stevens, Inc. ....................... 9.375 12/15/2005 511,250
--------------------------------------------
Total Textiles 996,250
============================================
Transportation (2.7%)
500,000 Petro Stopping Centers, L.P. .................. 10.500 02/01/2007 507,500
750,000 Statia Terminals International N.V. ........... 11.750 11/15/2003 780,000
--------------------------------------------
Total Transportation 1,287,500
============================================
--------------------------------------------
Total Corporate Obligations
(amortized cost basis $45,169,600)
44,682,800
============================================
Short-Term Variable Rate Obligations (5.7%)
================================================================
2,089,179 American Family Insurance Company *.............................. 2,089,179
609,489 Wisconsin Electric Power Company *............................... 609,489
--------------------------------------------
Total Short-Term Variable Rate
Obligations (cost basis $2,698,668)
2,698,668
============================================
--------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $47,868,268)
$47,381,468
============================================
</TABLE>
Variable rate demand notes.
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 APRIL 30, 1997
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>
Principal Amount Commercial Paper (99.8%) Interest Rate Range* Maturity Date Range Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
$8,000,000 AT&T Company................................. 5.21-5.60% 06/23-08/28/1997 $ 7,926,121
8,000,000 American Express Credit Corporation.......... 5.27-5.38 05/15-06/12/1997 7,958,692
4,000,000 American General Finance Corporation......... 5.28-5.31 05/05-06/04/1997 3,988,796
2,000,000 Aristar Incorporated......................... 5.73 05/01/1997 2,000,000
7,000,000 Associates Corporation of North America...... 5.29-5.32 05/12-06/20/1997 6,968,008
7,000,000 Beneficial Corporation....................... 5.28-5.28 05/12-06/12/1997 6,984,160
8,000,000 CIT Group Holdings Inc. ..................... 5.24-5.30 05/14-05/27/1997 7,976,657
8,000,000 CPC International............................ 5.28-5.59 05/05-08/07/1997 7,926,409
5,000,000 Cargill Incorporated......................... 5.27 06/03/1997 4,975,846
8,000,000 Coca-Cola Company............................ 5.18-5.25 05/16-05/23/1997 7,980,511
6,000,000 Countrywide Home Loans, Inc. ................ 5.58-5.65 05/07-06/16/1997 5,977,788
6,000,000 Federal National Mortgage Association........ 5.42 06/19/1997 5,955,736
8,000,000 Ford Motor Credit Corporation................ 5.27-5.61 05/15-07/14/1997 7,954,819
8,000,000 General Electric Capital Corporation......... 5.31-5.35 05/23-06/09/1997 7,965,160
8,000,000 General Motors Acceptance Corporation........ 5.26-5.67 05/09-08/21/1997 7,921,884
3,000,000 Gillette Company............................. 5.52 07/10/1997 2,967,800
8,000,000 Heller Financial, Inc. ...................... 5.38-5.70 05/13-07/29/1997 7,924,637
7,000,000 Household Finance Corporation................ 5.28-5.33 05/30-06/11/1997 6,966,505
8,000,000 International Business Machines
Credit Corporation........................... 5.25-5.60 05/29-07/23/1997 7,957,105
8,000,000 International Lease Finance Corporation...... 5.55-5.59 06/02-07/30/1997 7,906,221
4,000,000 John Deere Capital Corporation............... 5.25-5.62 05/01-09/02/1997 3,959,834
7,000,000 Lucent Technologies, Inc. ................... 5.21-5.53 05/21-06/16/1997 6,972,832
4,000,000 McGraw-Hill, Inc. ........................... 5.51-5.58 07/11-07/14/1997 3,955,326
8,000,000 Merrill Lynch & Co., Inc. ................... 5.33-5.65 05/28-08/29/1997 7,932,921
8,000,000 Norwest Financial, Inc. ..................... 5.25-5.60 05/16-09/08/1997 7,935,162
7,000,000 Philip Morris Companies, Inc. ............... 5.53-5.54 07/21-08/11/1997 6,902,787
8,000,000 Sears Roebuck Acceptance Corporation......... 5.29-5.54 05/09-06/18/1997 7,949,252
4,000,000 Toyota Motor Credit Corporation.............. 5.26-5.30 05/19-05/23/1997 3,988,836
6,000,000 Transamerica Finance Corporation............. 5.30-5.38 05/06-06/16/1997 5,989,142
---------------------------------------------------
Total Commercial Paper 189,768,947
===================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
The AAL Money Market Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1997
<TABLE>
<CAPTION>
Principal Amount Variable Rate Obligations (0.2%) Market Value
=======================================================================================================================
<S> <C> <C>
$332,938 Sara Lee Corporation **.................................................................$332,938
82,303 Wisconsin Electric Power Company **..................................................... 82,303
------------------------------------------------------
Total Variable Rate Obligations 415,241
======================================================
------------------------------------------------------
TOTAL INVESTMENTS (100%)
(amortized cost basis $190,184,188) $190,184,188
======================================================
</TABLE>
*The interest rate shown reflects the coupon rate or, for the securities
purchased at a discount, the discount rate at the date of purchase.
**Variable rate demand notes
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
Statement of Assets and Liabilities AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
The AAL The AAL The AAL
Capital Growth Fund Mid Cap Stock Fund Small Cap Stock Fund
===============================================================================================================================
<S> <C> <C> <C>
Assets
Investments, at value.......................................... $1,853,940,204 $465,680,652 $48,971,868
(Cost: $1,294,947,046, $466,580,130, $52,258,487,
$115,089,454, $119,334,012, $369,940,922, $412,917,232,
$47,868,268 and $190,184,188, respectively)
Unamortized organization & initial registration expense....... -- 8,150 30,248
Dividends and interest receivable.............................. 1,402,158 217,274 21,668
Prepaid expenses............................................... 46,032 30,002 10,354
Receivable from securities sold................................ -- 6,951,268 870,959
Receivable for forward contracts held.......................... -- -- --
Cash........................................................... 381,029 1,062 96,844
- -------------------------------------------------------------------------------------------------------------------------------
Total Assets $1,855,769,423 $472,888,408 $50,001,941
===============================================================================================================================
Liabilities
Payable for forward currency contracts held.................... $ -- $ -- $ --
Payable for investment purchased............................... 48,437,900 6,805,176 1,997,562
Income distributions payable................................... -- -- --
Redemptions payable............................................ -- 450,000 --
Payable to affiliate........................................... 1,215,042 382,787 48,398
Accrued expenses............................................... 669,197 246,915 74,047
- -------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 50,322,139 7,884,878 2,120,007
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets
Trust capital (beneficial interest)............................ 1,221,050,027 443,057,203 51,792,236
Accumulated undistributed net investment income (loss)......... -- 23,600 4,720
Accumulated net realized gain (losses) on investments.......... 25,404,099 22,822,205 (628,403)
Net unrealized appreciation (depreciation) on:
Investments.................................................. 558,993,158 899,478) (3,286,619)
Foreign currency contracts................................... -- -- --
Foreign currency related transactions........................ -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets 1,805,447,284 465,003,530 47,881,934
- -------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital $1,855,769,423 $472,888,408 $50,001,941
===============================================================================================================================
Class A share capital.......................................... $1,794,422,211 $461,732,660 $44,487,852
Shares of beneficial interest outstanding (Class A)............ 83,469,506 36,328,998 4,520,022
Net asset value per share.................................... $21.50 $12.71 $9.84
Maximum public offering price................................ $22.40 $13.24 $10.25
Class B share capital...........................................$ 11,025,073 $ 3,270,870 $ 3,394,082
Shares of beneficial interest outstanding (Class B)............ 513,913 257,783 345,827
Net asset value per share.................................... $21.45 $12.69 $9.81
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
<TABLE>
<CAPTION>
The AAL The AAL The AAL
International Fund Utilities Fund Bond Fund
=================================================================================================================
<S> <C> <C> <C>
Assets
Investments, at Value.......................................... $115,757,084 $133,878,824 $368,806,265
(Cost: $1,294,947,046, $466,580,130, $52,258,487,
$115,089,454, $119,334,012, $369,940,922, $412,917,232,
$47,868,268 and $190,184,188, respectively)
Unamortized organization & initial registration expense....... 47,830 8,353 --
Dividends and interest receivable.............................. 413,053 676,406 4,475,999
Prepaid expenses............................................... 34,593 20,286 12,920
Receivable from securities sold................................ 115,663 -- 52,301,535
Receivable for forward contracts held.......................... 32,533,780 -- --
Cash........................................................... 114,302 251,207 1,225,234
- ---------------------------------------------------------------------------------------------------------------
Total Assets $149,016,305 $134,835,076 $426,821,953
===============================================================================================================
Liabilities
Payable for forward currency contracts held.................... $ 28,941,176 $ -- $ --
Payable for investment purchased............................... 1,041,509 -- 36,249,049
Income distributions payable................................... -- -- 438,864
Redemptions payable............................................ -- -- --
Payable to affiliate........................................... 126,869 87,258 259,340
Accrued expenses............................................... 153,011 56,450 141,089
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 30,262,565 143,708 37,088,342
- ---------------------------------------------------------------------------------------------------------------
Net Assets
Trust capital (beneficial interest)............................ 111,675,805 120,052,701 411,226,158
Accumulated undistributed net investment income (loss)......... (584,861) 447,037 96,451
Accumulated net realized gain (losses) on investments.......... 3,417,724 (353,182) (20,454,341)
Net unrealized appreciation (depreciation) on:
Investments.................................................. 667,630 14,544,812 (1,134,657)
Foreign currency contracts................................... 3,592,604 -- --
Foreign currency related transactions........................ (15,162) -- --
- --------------------------------------------------------------------------------------------------------------------
Total Net Assets 118,753,740 134,691,368 389,733,611
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital $149,016,305 $134,835,076 $426,821,953
====================================================================================================================
A Share Capital................................................ $116,153,782 $134,196,399 $389,342,652
Shares of beneficial interest outstanding (Class A)............ 10,221,250 11,838,400 40,418,221
Net asset value per share.................................... $11.37 $11.34 $9.63
Maximum public offering price................................ $11.84 $11.81 $10.03
B share Capital................................................ $ 2,599,958 $ 494,969 $ 390,959
Shares of beneficial interest outstanding (Class B)............ 229,340 43,529 40,571
Net asset value per share.................................... $11.34 $11.37 $9.64
</TABLE>
<TABLE>
<CAPTION>
The AAL The AAL The AAL
Municipal Bond Fund High Yield Bond Fund Money Market Fund
==================================================================================================================================
<S> <C> <C> <C>
Assets
Investments, at Value.......................................... $426,261,547 $47,381,468 $190,184,188
(Cost: $1,294,947,046, $466,580,130, $52,258,487,
$115,089,454, $119,334,012, $369,940,922, $412,917,232,
$47,868,268 and $190,184,188, respectively)
Unamortized organization & initial registration expense....... -- 31,060 --
Dividends and interest receivable.............................. 7,216,942 1,167,691 1,585
Prepaid expenses............................................... 19,440 4,586 31,566
Receivable from securities sold................................ -- -- --
Receivable for forward contracts held.......................... -- -- --
Cash........................................................... 19,622 257,877 251,599
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets $433,517,551 $48,842,682 $190,468,938
==================================================================================================================================
Liabilities
Payable for forward currency contracts held.................... $ -- $ -- $ --
Payable for investment purchased............................... 9,996,283 1,246,269 --
Income distributions payable................................... 309,392 195,378 12,064
Redemptions payable............................................ 300,000 -- --
Payable to affiliate........................................... 271,053 32,376 31,647
Accrued expenses............................................... 207,724 27,713 239,228
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 11,084,452 1,501,736 282,939
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
Trust capital (beneficial interest)............................ 408,503,125 47,884,066 190,150,788
Accumulated undistributed net investment income (loss)......... (47,081) 2,019 35,211
Accumulated net realized gain (losses) on investments.......... 632,740 (58,339) --
Net unrealized appreciation (depreciation) on:
Investments.................................................. 13,344,315 (486,800) --
Foreign currency contracts................................... -- -- --
Foreign currency related transactions........................ -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets 422,433,099 47,340,946 190,185,999
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital $433,517,551 $48,842,682 $190,468,938
==================================================================================================================================
A Share Capital................................................ $421,668,316 $44,680,637 $189,616,902
Shares of beneficial interest outstanding (Class A)............ 38,610,424 4,522,329 189,616,902
Net asset value per share.................................... $10.92 $9.88 $1.00
Maximum public offering price................................ $11.38 $10.29 --
B share Capital................................................ $ 764,783 $ 2,660,309 $ 569,097
Shares of beneficial interest outstanding (Class B)............ 70,031 269,145 569,097
Net asset value per share.................................... $10.92 $9.88 $1.00
</TABLE>
<PAGE>
Statement of Operations FOR THE YEAR ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
The AAL The AAL The AAL
Capital Growth Fund Mid Cap Stock Fund Small Cap Stock Fund
=============================================================================================================================
<S> <C> <C> <C>
Investment Income
Dividends......................................................... $ 23,256,460 $ 1,126,616 $ 56,842
Taxable interest.................................................. 3,182,480 787,728 124,827
Tax exempt interest............................................... -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Investment Income 26,438,940 1,914,344 181,669
- -----------------------------------------------------------------------------------------------------------------------------
Expenses
Adviser fees...................................................... 9,121,422 3,188,294 159,016
Sub-Adviser fees.................................................. -- -- --
Audit and legal fees.............................................. 23,519 18,780 17,121
Custody fees...................................................... 110,250 51,536 13,777
Administrative service and pricing fees........................... 39,291 39,774 34,242
Amortization of organizational costs & registration fees.......... -- 7,333 6,018
Printing and postage expense...................................... 511,936 257,764 25,372
Distribution expense (12b-1 and service fee) Class A.............. 3,932,100 1,148,160 51,836
Distribution expense (12b-1 and service fee) Class B.............. 14,856 4,788 4,677
SEC and state registration expense................................ 95,693 65,022 2,386
Transfer agent fees............................................... 2,186,703 1,135,029 96,676
Shareholder maintenance fees Class A.............................. 591,258 297,260 22,377
Shareholder maintenance fees Class B.............................. 1,464 746 786
Trustees fees and expenses........................................ 5,261 5,261 5,261
Other expenses.................................................... 26,545 8,730 1,868
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 16,660,298 6,228,477 441,413
- -----------------------------------------------------------------------------------------------------------------------------
Less reimbursement from Adviser................................... -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 16,660,298 6,228,477 441,413
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
Net Investment Income (Loss) 9,778,642 (4,314,133) (259,744)
- -----------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on investments........................ 63,871,032 57,272,939 356,648
Net realized gains on foreign currency transactions............... -- -- --
Increase (decrease) in unrealized appreciation on investments..... 221,360,237 (105,788,808) (3,286,619)
Increase in unrealized appreciation on currency transactions...... -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Realized & Unrealized Gains (Losses)
on Investments 285,231,269 (48,515,869) (2,929,971)
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
Net Increase (Decrease) in Net Assets Resulting from Operations $295,009,911 $ (52,830,002) $(3,189,715)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
<TABLE>
<CAPTION>
The AAL The AAL The AAL The AAL
International Fund Utilities Fund Bond Fund Municipal Bond Fund
==================================================================================================================================
<S> <C> <C> <C> <C>
Investment Income
Dividends...................................................... $ 1,818,527 $4,920,466 $ -- $ --
Taxable interest............................................... 781,934 1,149,407 29,597,038 309,790
Tax Exempt interest............................................ -- -- -- 23,244,308
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 2,600,461 6,069,873 29,597,038 23,554,098
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses
Adviser fees................................................... 218,396 643,863 2,214,486 2,153,751
Sub-Adviser fees............................................... 655,189 -- -- --
Audit and legal fees........................................... 35,306 19,637 20,118 17,713
Custody fees................................................... 85,556 10,475 28,466 26,461
Administrative service and pricing fees........................ 70,723 37,691 40,701 50,519
Amortization of organizational costs & registration fees....... 14,691 9,030 -- --
Printing and postage expense................................... 90,375 52,291 108,247 72,287
Distribution expense (12b-1 and service fee) Class A........... 217,533 321,723 1,044,604 1,055,236
Distribution expense (12b-1 and service fee) Class B........... 3,452 837 587 1,318
SEC and state registration expense............................. 45,396 39,718 35,519 43,232
Transfer agent fees............................................ 314,720 270,650 455,215 246,659
Shareholder maintenance fees Class A........................... 75,220 62,009 124,778 67,625
Shareholder maintenance fees Class B........................... 444 75 30 38
Trustees fees and expenses..................................... 5,261 5,261 5,261 5,261
Other expenses................................................. 2,922 2,424 9,170 3,287
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,834,740 1,475,609 4,087,152 3,743,349
- ----------------------------------------------------------------------------------------------------------------------------------
Less reimbursement from Adviser................................ -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 1,834,740 1,475,609 4,087,152 3,743,349
- ----------------------------------------------------------------------------------------------------------------------------------
==================================================================================================================================
Net Investment Income (Loss) 765,721 4,594,264 25,509,886 19,810,749
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on investments..................... 4,041,492 487,429 (4,679,871) 2,734,930
Net realized gains on foreign currency transactions............ 843,337 -- -- --
Increase (decrease) in unrealized appreciation on investments.. (2,584,263) 4,767,805 5,711,712 4,568,598
Increase in unrealized appreciation on currency transactions... 3,285,289 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Realized & Unrealized Gains (Losses)
on Investments 5,585,855 5,255,234 1,031,841 7,303,528
- ----------------------------------------------------------------------------------------------------------------------------------
==================================================================================================================================
Net Increase (Decrease) in Net Assets Resulting from Operations $ 6,351,576 $9,849,498 $26,541,727 $27,114,277
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The AAL The AAL
High Yield Bond Fund Money Market Fund
=============================================================================================================================
<S> <C> <C>
Investment Income
Dividends...................................................... $ -- $ --
Taxable interest............................................... 1,015,669 8,517,907
Tax Exempt interest............................................ -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 1,015,669 8,517,907
- ------------------------------------------------------------------------------------------------------------------------------
Expenses
Adviser fees................................................... 60,205 780,148
Sub-Adviser fees............................................... -- --
Audit fees..................................................... 4,130 13,288
Custody fees................................................... 4,418 15,200
Administrative service and pricing fees........................ 12,156 38,783
Legal fees..................................................... 1,215 7,553
Amortization of organizational costs & registration fees....... 2,031 --
Printing and postage expense................................... 2,070 122,869
Distribution expense (12b-1 and service fee) Class A........... 24,146 194,974
Distribution expense (12b-1 and service fee) Class B 3,756 445
SEC and state registration expense............................. 21 59,064
Transfer agent fees............................................ 13,927 398,517
Shareholder maintenance fees Class A........................... 1,038 79,157
Shareholder maintenance fees Class B........................... 199 5
Trustees fees and expenses..................................... 2,926 5,261
Other expenses................................................. 427 6,676
- ------------------------------------------------------------------------------------------------------------------------------
Total Expenses 131,450 1,714,387
- ------------------------------------------------------------------------------------------------------------------------------
Less reimbursement from Adviser................................ (28,291) (854,798)
- ------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 103,159 859,589
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
Net Investment Income (Loss) 912,510 7,658,318
- ------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on investments..................... (58,339) --
Net realized gains on foreign currency transactions............ -- --
Increase (decrease) in unrealized appreciation on investments.. (486,800) --
Increase in unrealized appreciation on currency transactions... -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net Realized & Unrealized Gains (Losses)
on Investments (545,139) --
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
Net Increase (Decrease) in Net Assets Resulting from Operations $ 367,371 $7,658,318
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
The AAL Capital Growth Fund The AAL Mid Cap Stock Fund
Year Ended Year Ended Year Ended Year Ended
4/30/96 4/30/97 4/30/96 4/30/97
================================================================================================================================
<S> <C> <C> <C> <C>
Operations
- ----------
Net investment income (loss).......................... $13,985,245 $9,778,642 $(2,485,777) $(4,314,133)
Net realized gains (losses) on
investment transactions............................... 68,503,278 63,871,032 67,728,842 57,272,939
Net realized gains (losses) on
foreign currency transactions......................... -- -- -- --
Increase (decrease) in unrealized
appreciation on investments........................... 189,806,057 221,360,237 70,556,642 (105,788,808)
Increase in unrealized appreciation
on foreign currency................................... -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 272,294,580 295,009,911 135,799,707 (52,830,002)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
- -----------------------------
Distributions from net investment income
Class A............................................... (14,682,748) ( 9,778,642) -- --
Distributions from net investment income
Class B............................................... -- -- -- --
Capital gains distributions Class A................... (35,099,992) (74,870,516) -- (78,919,695)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders................... (49,782,740) (84,649,158) -- (78,919,695)
- --------------------------------------------------------------------------------------------------------------------------------
Trust Shares Transactions
- -------------------------
Purchases of trust shares............................. 171,912,068 249,270,564 100,047,117 152,186,004
Income dividends reinvested........................... 14,539,765 11,253,149 -- --
Capital gains distributions reinvested................ 34,786,821 72,686,041 -- 78,042,123
Redemption of trust shares............................ (94,566,393) (119,475,445) (31,664,066) (58,449,728)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase in Trust Capital 126,672,261 213,734,309 68,383,051 171,778,399
===============================================================================================================================
Net Increase in Net Assets 349,184,101 424,095,062 204,182,758 40,028,702
===============================================================================================================================
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 $1,805,447,284 $424,974,828 $465,003,530
===============================================================================================================================
</TABLE>
(a) Since inception July 1, 1996.
(b) Since inception August 1, 1995.
(1) Including undistributed net investment income of $3,845,698 and $0 for The
AAL Capital Growth Fund; $0 and $23,600 for The AAL Mid Cap Stock Fund; $4,720
for The AAL Small Cap Stock Fund; $1,350,310 and $(584,861) for The AAL
International Fund; $533,101 and $447,037 for The AAL Utilities Fund for each
period, respectively.
The accompanying notes to the financial statements are an integral part of this
statement.
<PAGE>
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund The AAL International Fund The AAL Utilities Fund
Period Ended Period Ended Year Ended Year Ended Year Ended
4/30/97 (a) 4/30/96 (b) 4/30/97 4/30/96 4/30/97
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Operations
- ----------
Net investment income (loss).................. $(259,744) $172,634 $765,721 $3,188,811 $4,594,264
Net realized gains (losses) on
investment transactions....................... 356,648 55,899 4,041,492 (771,932) 487,429
Net realized gains (losses) on
foreign currency transactions................. -- 322,668 843,337 -- --
Increase in unrealized appreciation
appreciation on investments................... (3,286,619) 3,251,893 (2,584,263) 10,947,842 4,767,805
Increase in unrealized appreciation
on foreign currency........................... -- 292,153 3,285,289 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (3,189,715) 4,095,247 6,351,576 13,364,721 9,849,498
====================================================================================================================================
Distributions to Shareholders
- -----------------------------
Distributions from net investment income
Class A....................................... -- (59,178) (2,818,054) (2,958,088) (4,697,577)
Distributions from net investment income
Class B....................................... -- -- -- -- (837)
Capital gains distributions Class A........... (726,525) (809) (509,864) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (726,525) (59,987) (3,327,918) (2,958,088) (4,698,414)
===================================================================================================================================
Trust Shares Transactions
- -------------------------
Purchases of trust shares..................... 53,019,419 53,745,186 63,370,618 41,504,800 32,639,353
Income dividends reinvested................... -- 56,542 2,756,776 2,809,415 4,372,914
Capital gains distributions reinvested........ 721,583 771 498,910 -- --
Redemption of trust shares.................... (1,942,828) (720,574) (8,013,407) (11,121,866) (21,932,369)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase in Trust Capital 51,798,174 53,081,925 58,612,897 33,192,349 15,079,898
====================================================================================================================================
Net Increase in Net Assets 47,881,934 57,117,185 61,636,555 43,598,982 20,230,982
====================================================================================================================================
Net Assets Beginning of Period -- -- 57,117,185 70,861,404 114,460,386
====================================================================================================================================
Net Assets End of Period (1) $47,881,934 $57,117,185 $118,753,740 $114,460,386 $134,691,368
====================================================================================================================================
</TABLE>
(a) Since inception July 1, 1996.
(b) Since inception August 1, 1995.
(1) Including undistributed net investment income of $3,845,698 and $0 for The
AAL Capital Growth Fund; $0 and $23,600 for The AAL Mid Cap Stock Fund; $4,720
for The AAL Small Cap Stock Fund; $1,350,310 and $(584,861) for The AAL
International Fund; $533,101 and $447,037 for The AAL Utilities Fund for each
period, respectively.
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
The AAL Bond Fund The AAL Municipal Bond Fund
Year Ended Year Ended Year Ended Year Ended
4/30/96 4/30/97 4/30/96 4/30/97
===============================================================================================================================
<S> <C> <C> <C> <C>
Operations
- ----------
Net investment income (loss)............... $ 25,889,466 $ 25,509,886 $ 18,870,527 $ 19,810,749
Net realized gains (losses) on
investment transactions.................... (2,338,822) (4,679,871) 9,680,486 2,734,930
Net realized gains (losses) on
foreign currency transactions.............. -- -- -- --
Increase (decrease) in unrealized
appreciation on investments................ 2,660,208 5,711,712 555,380 4,568,598
Increase in unrealized appreciation
on foreign currency........................ -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 26,210,852 26,541,727 29,106,393 27,114,277
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
- -----------------------------
Distributions from net investment income
Class A.................................... (25,889,466) (25,506,598) (18,870,527) (19,805,296)
Distributions from net investment income
Class B.................................... -- (3,288) -- (5,453)
Capital gains distributions Class A........ -- -- (2,937,391) (7,015,210)
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (25,889,466) (25,509,886) (21,807,918) (26,825,959)
- -------------------------------------------------------------------------------------------------------------------------------
Trust Shares Transactions
- -------------------------
Purchases of trust shares.................. 48,352,817 38,659,955 52,190,830 811,680
Income dividends reinvested................ 21,399,951 20,213,589 16,770,677 16,258,819
Capital gains distributions reinvested..... -- -- 2,442,657 5,824,183
Redemption of trust shares................. (68,582,631) (101,018,460) (43,691,180) (55,527,221)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Trust Capital 1,170,137 (42,144,916) 27,712,984 9,367,461
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets 1,491,523 (41,113,075) 35,011,459 9,655,779
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of Period 429,355,163 430,846,686 377,765,861 412,777,320
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets End of Period (1) $430,846,686 $ 389,733,611 $412,777,320 $422,433,099
===============================================================================================================================
</TABLE>
(a) Since inception January 8, 1997.
(1) Including undistributed net investment income of $41,051 and $96,451 for The
AAL Bond Fund; $41,917 and $(47,081) for The AAL Municipal Bond Fund; $2,019 for
The AAL High Yield Bond Fund; and $35,211 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
statement.
<PAGE>
<TABLE>
<CAPTION>
The AAL High Yield Bond Fund The AAL Money Market Fund
Period Ended Year Ended Year Ended
4/30/97 (a) 4/30/96 4/30/97
========================================================================
<S> <C> <C>
$912,510 $4,407,596 $7,658,318
(58,339) -- --
-- -- --
(486,800) -- --
-- -- --
- ------------------------------------------------------------------------
367,371 4,407,596 7,658,318
- ------------------------------------------------------------------------
(879,944) (4,407,596) (7,656,186)
(32,566) -- (2,132)
-- -- --
- ------------------------------------------------------------------------
(912,510) (4,407,596) (7,658,318)
- ------------------------------------------------------------------------
48,042,384 180,198,221 298,188,613
281,381 4,222,862 7,658,318
-- -- --
(437,680) (138,617,667) (231,675,023)
- ------------------------------------------------------------------------
47,886,085 45,803,416 74,171,908
- ------------------------------------------------------------------------
47,340,946 45,803,416 74,171,908
- ------------------------------------------------------------------------
-- 70,210,675 116,014,091
- ------------------------------------------------------------------------
$47,340,946 $ 116,014,091 $ 190,185,999
========================================================================
</TABLE>
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
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, High Yield Bond, Money Market
and U.S. Government Zero Coupon Target Funds 2001 and 2006. The eleven AAL
Mutual Funds are collectively referred to as the "Funds". On January 8, 1997,
the Trust began issuing two classes of Fund shares in The AAL Capital Growth,
Mid Cap Stock, Small Cap Stock, International, Utilities, Bond, Municipal Bond,
High Yield Bond and Money Market Funds. The Series A shares are subject to a
maximum 4.00% sales charge of the offering price and a 0.25% annual service fee.
Series B shares are offered at net asset value and a 1.00% annual 12b-1 and
service fee. In addition, Series B shares have a contingent deferred sales
charge of 5% declining 1% each year upon redemption during the first five years.
Each class of shares has identical rights and privileges except with respect to
voting matters affecting a single class of shares and the exchange privilege of
each class of shares.
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 due to changes in market prices
of the equity securities. However, for federal income tax purposes The AAL
International Fund does isolate and treat as ordinary income the effect of
changes in foreitn exchange rates arising from actual foreign currency
transactions and the effect of changes in foreign exchange rates from the
fluctuations arising from trade date and settlement date differences.
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
It is each Fund's 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 is required.
Income and Expenses
The Funds are charged for those expenses that are directly attributed to each
portfolio, such as advisory, custodian and shareholder service fees. Expenses
that are not directly attributable to a portfolio are typically allocated among
the Funds in proportion to respective net assets, number of shareholder accounts
or other reasonable basis. Net investment income for the classes' specific
expenses and realized and unrealized gains or losses are allocated directly to
each class based upon the relative net asset value of outstanding shares, or the
value of dividend eligible shares, as appropriate for each class of shares.
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, High Yield Bond and
Money Market Funds are declared daily and distributed monthly. Net realized
gains from securities transactions, if any, are distributed at least annually in
the calendar year. For The AAL Capital Growth and Utilities Fund the percentage
of income, which is eligible for the corporate dividend deduction for the fiscal
year ended April 30, 1997, is 100% and 97.6% respectively (unaudited). The AAL
Municipal Bond Fund designated 100% of the dividends declared from net
investment income as exempt from federal income tax for the year ended April 30,
1997.
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, Utilities, Bond and High Yield Bond
Funds. Realized gains or losses on sales are determined on a specific cost
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
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 Mid Cap Stock, Small Cap Stock,
International, Utilities and High Yield Bond Funds is being amortized over the
period of benefit, but not to exceed 60 months from each Fund's commencement of
operation.
Generally accepted accounting principles require that permanent financial
reporting and tax differences be reclassified to trust capital.
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 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
below.
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; .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 Mid Cap Stock and Small Cap Stock Funds; 1%
on average daily net assets for The AAL International Fund; .50 of 1% on the
first $250 million of average daily net assets and .45 of 1% on average daily
net assets over $250 million for The AAL Utilities Fund; .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; .60 of 1% on average daily net assets for The AAL High
Yield Bond Fund; .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 Fund. 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 year ended
April 30, 1997: $35,000 for The AAL Capital Growth, Mid Cap Stock, Utilities,
Bond, Municipal Bond and Money Market Funds; $29,167 for The AAL Small Cap Stock
Fund; $40,000 for The AAL International Fund; and $11,667 for The AAL High Yield
Bond Fund.
The Trust has also contracted with AAL Capital Management Corporation for
certain shareholder maintenance services. 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. On Class A shares, a service fee of 0.25% of 1% for
The AAL Capital Growth, Mid Cap Stock, Small Cap Stock, International,
Utilities, Bond, Municipal Bond and High Yield Bond Funds; and 0.125% of 1% for
The AAL Money Market Fund; the Class B shares, a service fee of 0.25% of 1% and
a 12b-1 Distribution Fee of .75% of 1% for The AAL Capital Growth, Mid Cap
Stock, Small Cap Stock, International, Utilities, Bond, Municipal Bond and High
Yield Bond Funds; a service fee of 0.125% of 1% and a 12b-1 Distribution Fee of
.75% of 1% for 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.
The Adviser voluntarily has reimbursed various Funds since inception. As of
April 30, 1997, the Adviser is waiving the AAL Money Market Fund.425% of average
daily net assets. In addition, AAL Capital Management Corporation is waiving all
expenses in excess of 1.00% for Class A and 1.75% for Class B of The AAL High
Yield Bond Fund. Voluntary waiver of expenses to these funds may be modified or
discontinued at any time by the Adviser.
AAL is the ultimate parent company for AAL Capital Management Corporation.
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
D: Security Transactions
During the years ended April 30, 1996, and 1997, purchases and sales of
securities other than short-term obligations were as follows:
<TABLE>
<CAPTION>
Purchases Sales
-------------------------- ---------------------------
Years Ended Years Ended
4/30/96 4/30/97 4/30/96 4/30/97
======================================================================================
<S> <C> <C> <C> <C>
The AAL Capital Growth Fund $557,752,827 $511,839,315 $517,205,642 $367,734,996
The AAL Mid Cap Stock Fund 326,900,164 586,304,570 253,451,798 499,728,977
The AAL Small Cap Stock Fund N/A 82,807,470 N/A 32,623,815
The AAL International Fund 46,911,078 63,954,615 267,466 13,112,616
The AAL Utilities Fund 38,069,103 33,256,370 18,309,757 6,189,126
The AAL Bond Fund 541,194,780 859,392,631 547,177,273 927,975,869
The AAL Municipal Bond Fund 507,267,650 470,376,617 500,090,847 493,033,170
The AAL High Yield Bond Fund N/A 55,060,147 N/A 9,837,171
</TABLE>
For the year ended April 30, 1996, and 1997, The AAL Bond Fund purchased
$161,637,969 and $353,792,852 , respectively, and sold $231,199,644 and
$375,639,422, respectively, in U.S. government obligations.
For the year ended April 30, 1996, and 1997, The AAL Utilities Fund purchased
$3,238,102 and $0, respectively, and sold $5,595,031 and $0, respectively, in
U.S. government obligations.
<TABLE>
<CAPTION>
As of April 30, 1997, the cost of investments for federal income tax
purposes for each of the Funds was as follows:
<S> <C>
The AAL Capital Growth Fund $1,294,947,046
The AAL Mid Cap Stock Fund 467,089,829
The AAL Small Cap Stock Fund 52,426,743
The AAL International Fund 119,734,651
The AAL Utilities Fund 119,334,012
The AAL Bond Fund 369,941,732
The AAL Municipal Bond Fund 412,934,046
The AAL High Yield Bond Fund 47,868,268
The AAL Money Market Fund 190,184,188
Any differences between book and tax are due primarily to wash sale losses.
In addition, the cost basis differences in The AAL International Fund are due to
mark to market adjustments for passive foreign investment companies and Section
1256 contracts.
The AAL Bond Fund, The AAL High Yield Bond Fund, and the AAL Small Cap Stock
Fund, realized on a tax basis, post October losses of $2,019,715, $58,339 and
$499,138 respectively. Such amounts may be used to offset future capital gains.
At April 30, 1997, The AAL Utility Fund had accumulated net realized
capital loss carry overs of $353,182 expiring in 2004. The AAL Bond Fund had
accumulated net realized capital loss carry overs of $4,972,985 expiring in
2003, $10,693,380 expiring in 2004 and $2,767,451 expiring in 2005. To the
extent The AAL Utility Fund and The AAL Bond Fund realize future net capital
gains, taxable distribution to shareholders will be offset by any unused capital
loss carry over.
</TABLE>
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
4/30/96 4/30/97
Net Unrealized Net Unrealized
Appreciation Appreciation
Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
The AAL Capital
Growth Fund $351,273,890 $(13,640,969) $337,632,921 $587,689,407 $(28,696,249) $558,993,158
The AAL Mid Cap
Stock Fund 113,186,743 (8,297,413) 104,889,330 43,560,575 (44,460,053) (899,478)
The AAL Small Cap
Stock Fund N/A N/A N/A 2,002,184 (5,288,803) (3,286,619)
The AAL
International Fund 4,211,438 (959,545) 3,251,893 13,348,307 (9,088,073) 4,260,234
The AAL Utilities Fund 11,405,167 (1,628,160) 9,777,007 18,968,225 (4,423,413) 14,544,812
The AAL Bond Fund 4,559,814 (11,406,183) (6,846,369) 1,834,241 (2,968,898) (1,134,657)
The AAL Municipal
Bond Fund 9,884,307 (1,108,590) 8,775,717 13,710,118 (365,803) 13,344,315
The AAL High Yield
Bond Fund N/A N/A N/A 211,334 (698,134) (486,800)
</TABLE>
E: Trust Transactions
Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
The AAL Capital Growth Fund
-------------------------------------------------------------
Class A Shares Class B Shares
---------------------------- ------------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
===================================================================================================
<S> <C> <C> <C>
Shares purchased 9,785,929 11,764,223 516,710
Income dividends reinvested 864,754 569,065 --
Capital gains reinvested 1,978,773 3,513,100 --
Shares redeemed (5,428,045) (5,906,836) (2,797)
---------- ---------- --------
Net increase of trust shares 7,201,411 9,939,552 513,913
========== ========== =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund
--------------------------------------------------------------
Class A Shares Class B Shares
--------------------------- -----------------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
====================================================================================================
<S> <C> <C> <C>
Shares purchased 6,940,300 9,684,073 257,913
Income dividends reinvested -- -- --
Capital gains reinvested -- 5,777,146 --
Shares redeemed (2,323,788) (3,973,092) (130)
---------- ---------- --------
Net increase of trust shares 4,616,512 11,488,127 257,783
========== ========== =======
</TABLE>
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund
----------------------------------------------
Class A Shares Class B Shares
----------------------- --------------------
Period Ended Period Ended
4/30/97 4/30/97
================================================================================
<S> <C> <C> <C>
Shares purchased 4,637,506 345,998
Income dividends reinvested -- --
Capital gains reinvested 65,191 --
Shares redeemed (182,675) (171)
--------- -------
Net increase of trust shares 4,520,022 345,827
========= =======
The AAL International Fund
----------------------------------------------
Class A Shares Class B Shares
----------------------- --------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
================================================================================
Shares purchased 5,220,133 5,486,739 229,431
Income dividends reinvested 5,611 45,809 --
Capital gains reinvested 77 252,387 --
Shares redeemed (69,174) (720,333) (92)
--------- --------- -------
Net increase of trust shares 5,156,647 5,064,602 229,339
========= ========= =======
The AAL Utilities Fund
----------------------------------------------
Class A Shares Class B Shares
----------------------- --------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
================================================================================
Shares purchased 3,811,394 2,906,152 43,457
Income dividends reinvested 261,139 393,768 74
Capital gains reinvested -- -- --
Shares redeemed (1,056,401) (1,958,613) (2)
--------- --------- ------
Net increase of trust shares 3,016,132 1,341,307 43,529
========= ========= ======
</TABLE>
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
The AAL Bond Fund
---------------------------------------------------------------
Class A Shares Class B Shares
----------------------------- ------------------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
=======================================================================================================
<S> <C> <C> <C>
Shares purchased 4,899,331 3,970,015 40,256
Income dividends reinvested 2,163,280 2,091,671 325
Capital gains reinvested -- -- --
Shares redeemed (6,934,723) (10,449,930) (10)
--------- ---------- ------
Net increase (decrease) of trust shares 127,888 (4,388,244) 40,571
======= ========= ======
</TABLE>
<TABLE>
<CAPTION>
The AAL Municipal Bond Fund
---------------------------------------------------------------
Class A Shares Class B Shares
---------------------------- -----------------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
=======================================================================================================
<S> <C> <C> <C>
Shares purchased 4,715,857 3,803,846 71,756
Income dividends reinvested 1,521,292 1,469,699 453
Capital gains reinvested 215,973 521,880 --
Shares redeemed (3,963,923) (5,033,038) (2,178)
--------- --------- -------
Net increase of trust shares 2,489,199 762,387 70,031
========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
The AAL High Yield Bond Fund
---------------------------------------------------------------
Class A Shares Class B Shares
---------------------------- -----------------------------
Period Ended Period Ended
4/30/97 4/30/97
=======================================================================================================
<S> <C> <C>
Shares purchased 4,536,334 271,056
Income dividends reinvested 26,252 2,140
Capital gains reinvested -- --
Shares redeemed (40,257) (4,051)
----------- ---------
Net increase of trust shares 4,522,329 269,145
=========== =========
</TABLE>
<PAGE>
Notes to Financial Statements - continued
AS OF APRIL 30, 1997
<TABLE>
<CAPTION>
The AAL Money Market Fund
------------------------------------------------------------
Class A Shares Class B Shares
----------------------------- ---------------------------
Years Ended Period Ended
4/30/96 4/30/97 4/30/97
============================================================================================
<S> <C> <C> <C>
Shares purchased 180,198,222 297,511,853 676,761
Income dividends reinvested 4,222,862 7,656,532 1,786
Capital gains reinvested -- -- --
Shares redeemed (138,617,668) (231,565,574) (109,450)
------------ ------------ --------
Net increase of trust shares 45,803,416 73,602,811 569,097
============ ============ ========
</TABLE>
F: Forwarded Currency Contracts
As of April 30, 1997, The AAL International Fund had entered into forward
currency contracts, as summarized below, resulting in net unrealized
depreciation of $3,592,604.
<TABLE>
<CAPTION>
Settlement Date Currency to Be Delivered U.S. Value at Currency to Be Received U.S. Value at
Through April 30, 1997 April 30, 1997
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
05/01/97 54,623 U.S. Dollar $ 54,623 78,767 New Zealand Dollar $ 54,609
05/01/97 24,282 U.S. Dollar 24,282 188,100 Hong Kong Dollar 24,284
05/01/97 80,281 U.S. Dollar 80,281 10,188,423 New Zealand Dollar 80,905
05/02/97 19,263 U.S. Dollar 19,263 149,219 Hong Kong Dollar 19,267
05/02/97 (61,836) U.S. Dollar (61,826) 107,058 Deustche Mark (62,099)
05/02/97 37,882 U.S. Dollar 37,882 4,807,615 Japanese Yen 37,951
05/05/97 97,099 U.S. Dollar 97,099 168,136 Deutsche Mark 97,550
05/05/97 54,885 U.S. Dollar 54,885 79,144 New Zealand Dollar 55,021
05/05/97 129,544 U.S. Dollar 129,544 190,871 Swiss Franc 130,261
05/06/97 92,234 U.S. Dollar 92,234 11,705,364 Japanese Yen 92,280
05/06/97 219,871 U.S. Dollar 219,871 323,958 Swiss Franc 219,706
05/07/97 5,739,000 Swiss Franc 4,448,605 3,897,189 U.S. Dollar 3,897,189
05/14/97 6,355,500 Deutsche Mark 4,279,769 3,672,426 U.S. Dollar 3,672,426
05/21/97 25,826,600 French Franc 5,131,754 4,429,645 U.S. Dollar 4,429,645
05/28/97 415,880,000 Japanese Yen 3,928,866 3,278,182 U.S. Dollar 3,278,182
05/30/97 (66,182) U.S. Dollar (66,182) (386,258) French Franc (66,396)
08/08/97 37,435,000 French Franc 7,089,589 6,453,754 U.S. Dollar 6,453,754
09/10/97 1,175,000 Swiss Franc 822,843 809,117 U.S. Dollar 809,117
09/17/97 1,241,000 Deutsche Mark 736,251 723,615 U.S. Dollar 723,615
09/24/97 537,300,000 Japanese Yen 4,752,239 4,324,694 U.S. Dollar 4,324,694
10/03/97 963,000 New Zealand Dollar 661,908 669,215 U.S. Dollar 669,215
----------- -----------
$32,533,780 $28,941,176
=========== ===========
</TABLE>
<PAGE>
This page intentionally left blank.
The AAL Mutual Funds Annual Report 82
<PAGE>
Financial Highlights
PER SHARE INFORMATION
The AAL Capital Growth Fund
<TABLE>
<CAPTION>
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
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period......................... $ 10.00 $ 8.36 $ 9.84 $ 10.72 $ 12.42
Income from Investment Operations
Net investment income (loss)................ 0.112 0.218 0.233 0.271 0.276
Net realized and unrealized gain (loss)
on investments.............................. (1.709) 1.466 0.889 1.726 1.659
- ----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.597) 1.684 1.122 1.997 1.935
- ----------------------------------------------------------------------------------------------------------------------------
Distributions from:
Net investment income....................... (0.043) (0.204) (0.242) (0.269) (0.280)
Net realized capital gains(e)............... - - - (0.028) (0.015)
- ----------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.043) (0.204) (0.242) (0.297) (0.295)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value.. (1.640) 1.480 0.880 1.700 1.640
Net asset value:
End of period............................... $ 8.36 $ 9.84 $10.72 $ 12.42 $ 14.06
============================================================================================================================
Average commission per share................ - - - - -
Total return (d)............................ (15.95)% 20.46% 11.45% 18.93% 15.77%
Net assets, end of period................... $23,672,346 $48,915,003 $119,731,099 $209,055,868 $423,231,713
Ratio of expenses to average
net assets (a) (b).......................... 1.50% 1.50% 1.44% 1.41% 1.28%
Ratio of net investment income to
average net assets (a) (c).................. 2.61% 2.80% 2.56% 2.59% 2.27%
Portfolio turnover rate..................... 1.36% 2.78% 1.43% 2.26% 1.11%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
=====================================================================================================
<S> <C> <C> <C> <C> <C>
$14.06 $14.83 $14.49 $15.56 $18.79 $20.66
0.284 0.296 0.274 0.201 0.125 (0.011)
0.761 (0.287) 1.699 3.756 3.682 0.801
- -----------------------------------------------------------------------------------------------------
1.045 0.009 1.973 3.957 3.807 0.790
- -----------------------------------------------------------------------------------------------------
(0.274) (0.286) (0.298) (0.217) (0.150) 0.000
(0.001) (0.063) (0.605) (0.510) (0.947) -
- -----------------------------------------------------------------------------------------------------
(0.275) (0.349) (0.903) (0.727) (1.097) 0.000
- -----------------------------------------------------------------------------------------------------
0.770 (0.340) 1.070 3.230 2.710 0.790
$14.83 $14.49 $15.56 $18.79 $21.50 $21.45
=====================================================================================================
- - - $0.053 $0.057 $0.057
7.52% 0.00% 14.37% 25.85% 20.55% 3.82%
$714,184,330 $868,850,190 $1,032,168,121 $1,381,352,222 $1,794,422,211 $11,025,073
1.20% 1.18% 1.17% 1.12% 1.06% 1.89%
2.15% 2.07% 1.89% 1.16% 0.62% (0.39)%
2.99% 40.60% 33.34% 44.26% 24.30% 24.30%
</TABLE>
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Mid Cap Stock Fund
<TABLE>
<CAPTION>
Class A Class B
Period Ended Year Ended Year Ended Year Ended Period Ended
4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period.............................. $10.00 $10.38 $10.92 $17.11 $13.67
Income from Investment Operations
Net investment income (loss)..................... (0.044) (0.054) (0.100) (0.119) (0.026)
Net realized and unrealized gain (loss) on
investments...................................... 0.424 0.594 6.290 (1.628) (0.954)
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................. 0.380 0.540 6.190 (1.747) (0.980)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from:
Net investment income (loss)..................... -- -- -- 0.000 0.000
Net realized capital gains (e)................... -- -- -- (2.653) -
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions.............................. 0.000 0.000 0.000 (2.653) 0.000
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value....... 0.380 0.540 6.190 (4.400) (0.980)
Net asset value:
End of period.................................... $10.38 $10.92 $17.11 $12.71 $12.69
================================================================================================================================
Average commission per share..................... -- -- $0.055 $0.060 $0.060
Total return (d)................................. 3.80% 5.20% 56.59% (11.08)% (7.17)%
Net assets, end of period........................ $142,529,469 $220,792,070 $424,974,828 $461,732,660 $3,270,870
Ratio of expenses to average net
assets (a) (b)................................... 1.72% 1.54% 1.39% 1.35% 2.29%
Ratio of net investment income to average net
assets (a) (c)................................... (1.14)% (0.77)% (0.82)% (0.94)% (1.41)%
Portfolio turnover rate.......................... 55.49% 88.18% 90.14% 112.60% 112.60%
</TABLE>
85 The AAL Mutual Funds Annual Report
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Small Cap Stock Fund
<TABLE>
<CAPTION>
Class A Class B
Period Ended Period Ended
4/30/97 4/30/97
===================================================================================================================================
<S> <C> <C>
Net asset value:
Beginning of period................................................................. $10.00 $11.17
Income from Investment Operations
- ---------------------------------
Net investment income (loss)........................................................ (0.055) (0.032)
Net realized and unrealized gain (loss) on investments.............................. 0.162 (1.328)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.107 (1.360)
===================================================================================================================================
Distributions from:
- ------------------
Net investment income............................................................... 0.000 0.000
Net realized capital gains (e)...................................................... (0.267) -
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.267) 0.000
===================================================================================================================================
Net increase (decrease) in net asset value.......................................... (0.160) (1.360)
Net asset value:
End of period....................................................................... $9.84 $9.81
===================================================================================================================================
Average commission per share........................................................ $0.059 $0.059
Total return (d).................................................................... (0.78%) (12.18)%
Net assets, end of period........................................................... $44,487,852 $3,394,082
Ratio of expenses to average net assets (a) (b)..................................... 2.06% 3.20%
Ratio of net investment income to average net assets (a) (c)........................ (1.20)% (2.39)%
Portfolio turnover rate............................................................. 138.50% 138.50%
</TABLE>
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL International Fund
<TABLE>
<CAPTION>
Class A Class B
Period Ended Year Ended Period Ended
4/30/96 4/30/97 4/30/97
====================================================================================================================
<S> <C> <C> <C>
Net asset value:
Beginning of period.............................................. $10.00 $1.08 $10.98
Income from Investment Operations
- ---------------------------------
Net investment income............................................ 0.046 0.005 0.000
Net realized and unrealized gain on investments.................. 1.058 0.68 0.360
- --------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.104 0.685 0.360
- --------------------------------------------------------------------------------------------------------------------
Distributions from:
- ------------------
Net investment income............................................ (0.024) (0.335) 0.000
Net realized capital gains (e)................................... - (0.060) -
- --------------------------------------------------------------------------------------------------------------------
Total Distributions (0.024) (0.395) 0.000
- --------------------------------------------------------------------------------------------------------------------
Net increase in net asset value.................................. 1.080 0.290 0.360
Net asset value:
End of period.................................................... $11.08 $11.37 $11.34
====================================================================================================================
Average commission per share..................................... $0.018 $0.013 $0.013
Total return (d)................................................. 11.07% 6.32% 3.28%
Net assets, end of period........................................ $57,117,185 $116,153,782 $2,599,958
Ratio of expenses to average net assets (a) (b).................. 2.15% 2.10% 2.94%
Ratio of net investment income to average net assets (a) (c)..... 0.94% 0.88% (0.03)%
Portfolio turnover rate.......................................... 1.30% 12.95% 12.95%
</TABLE>
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Utilities Fund
<TABLE>
<CAPTION>
Class A Class B
Period Ended Year Ended Year Ended Year Ended Period Ended
4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period............................. $10.00 $9.95 $9.47 $10.90 $11.40
Income from Investment Operations
Net investment income........................... 0.022 0.338 0.360 0.390 0.051
Net realized and unrealized gain (loss) on
investments..................................... (0.072) (0.498) 1.420 0.455 (0.056)
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.050) (0.160) 1.780 0.845 (0.005)
- -------------------------------------------------------------------------------------------------------------------------
Distributions from:
Net investment income........................... - (0.320) (0.350) (0.405) (0.025)
Net realized capital gains (e).................. - - - - -
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.000 (0.320) (0.350) (0.405) (0.025)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value...... (0.050) (0.480) 1.430 0.440 (0.030)
Net asset value:
End of period................................... $9.95 $9.47 $10.90 $11.34 $11.37
=========================================================================================================================
Average commission per share.................... - - $0.056 $0.060 $0.060
Total return (d)................................ (0.50)% (1.51)% 18.90% 7.88% (0.04)%
Net assets, end of period....................... $15,423,861 $70,861,404 $114,460,386 $134,196,399 $494,969
Ratio of expenses to average net assets (a) (b). 1.60% 1.19% 1.20% 1.15% 1.99%
Ratio of net investment income to average net
assets (a) (c).................................. 5.12% 4.08% 3.58% 3.57% 2.36%
Portfolio turnover rate......................... 0.00% 24.65% 21.79% 5.14% 5.14%
</TABLE>
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Bond Fund
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91
===========================================================================================================================
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period $10.00 $9.64 $9.33 $9.25
Income from Investment Operations
- ---------------------------------
Net investment income.......................................... 0.602 0.826 0.806 0.772
Net realized and unrealized gain (loss)
on investments................................................. (0.360) (0.255) (0.080) 0.510
- ---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations............................... 0.242 0.571 0.726 1.282
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from:
- ------------------
Net investment income.......................................... (0.602) (0.826) (0.806) (0.772)
Net realized capital gains (e)................................. - (0.055) - -
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions............................................ (0.602) (0.881) (0.806) (0.772)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value................................................ (0.360) (0.310) (0.080) 0.510
Net asset value:
End of period.................................................. $9.64 $9.33 $9.25 $9.76
===========================================================================================================================
Total return (d)............................................... 2.56% 6.21% 7.84% 14.34%
Net assets, end of period...................................... $20,938,863 $54,006,123 $94,937,997 $139,228,954
Ratio of expenses to average
net assets (a) (b)............................................. 0.75% 0.83% 0.98% 1.00%
Ratio of net investment income
to average net assets (a) (c).................................. 8.67% 8.86% 8.38% 8.06%
Portfolio turnover rate........................................ 85.88% 54.49% 38.00% 6.39%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$9.76 $10.02 $10.61 $9.69 $9.61 $9.62 $9.71
0.721 0.661 0.584 0.580 0.584 0.595 0.175
0.273 0.627 (0.660) (0.078) 0.010 0.010 (0.070)
- -------------------------------------------------------------------------------------------------------------------
0.994 1.288 (0.076) 0.502 0.594 0.605 0.105
===================================================================================================================
(0.721) (0.661) (0.584) (0.580) (0.584) (0.595) (0.175)
(0.013) (0.037) (0.260) (0.002) - - -
- -------------------------------------------------------------------------------------------------------------------
(0.734) (0.698) (0.844) (0.582) (0.584) (0.595) (0.175)
===================================================================================================================
0.260 0.590 (0.920) (0.080) 0.010 0.010 (0.070)
$10.02 $10.61 $9.69 $9.61 $9.62 $9.63 $9.64
==================================================================================================================
10.47% 13.22% (0.99)% 5.47% 6.18% 6.43% 0.96%
$229,309,955 $370,219,492 $442,962,543 $429,355,163 $430,846,686 $389,342,652 $390,959
1.03% 1.03% 1.02% 1.03% 1.01% 0.98% 1.86%
7.19% 6.35% 5.61% 6.12% 5.89% 6.10% 5.51%
12.18% 26.12% 27.75% 44.57% 125.77% 212.49% 212.49%
</TABLE>
The AAL Mutual Funds Annual Report 90
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Municipal Bond Fund
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91
=================================================================================================
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period.................... $10.00 $9.72 $9.74 $9.70
Income from Investment Operations
Net investment income.................. 0.398 0.599 0.608 0.616
Net realized and unrealized gain (loss)
on investments......................... (0.280) 0.020 (0.035) 0.434
- -----------------------------------------------------------------------------------------------
Total from Investment
Operations............................. 0.118 0.619 0.573 1.050
- -----------------------------------------------------------------------------------------------
Distributions from:
Net investment income.................. (0.398) (0.599) (0.608) (0.616)
Net realized capital gains (e)......... - - (0.005) (0.004)
- -----------------------------------------------------------------------------------------------
Total Distributions.................... (0.398) (0.599) (0.613) (0.620)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value........................ (0.280) 0.020 (0.040) 0.430
Net asset value:
End of period.......................... $9.72 $9.74 $9.70 $10.13
==============================================================================================
Total return (d)....................... 1.29% 6.53% 5.93% 11.12%
Net assets, end of period.............. $10,031,478 $41,217,475 $78,844,594 $114,953,939
Ratio of expenses to
average net assets (a) (b)............. 1.50% 0.94% 0.90% 0.90%
Ratio of net investment
income to
average net assets (a) (c)............. 5.72% 6.30% 6.13% 6.21%
Portfolio turnover rate................ 20.83% 29.24% 30.83% 13.63%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$10.13 $10.36 $10.99 $10.56 $10.69 $10.91 $11.02
0.598 0.571 0.539 0.523 0.521 0.521 0.147
0.234 0.631 (0.410) 0.186 0.300 0.194 (0.010)
- ------------------------------------------------------------------------------------------------------------
0.832 1.202 0.129 0.709 0.821 0.715 0.137
- ------------------------------------------------------------------------------------------------------------
(0.598) (0.571) (0.539) (0.523) (0.521) (0.521) (0.147)
(0.004) (0.001) (0.020) (0.056) (0.080) (0.184) -
- ------------------------------------------------------------------------------------------------------------
(0.602) (0.572) (0.559) (0.579) (0.601) (0.705) (0.147)
- ------------------------------------------------------------------------------------------------------------
0.230 0.630 (0.430) 0.130 0.220 0.010 (0.100)
$10.36 $10.99 $10.56 $10.69 $10.91 $10.92 $10.92
============================================================================================================
8.39% 11.84% 1.04% 7.01% 7.74% 6.64% (0.34)%
$172,494,589 $271,319,546 $370,568,847 $377,765,861 $412,777,320 $421,668,316 $764,783
0.95% 1.00% 0.99% 0.98% 0.95% 0.89% 1.69%
5.81% 5.32% 4.87% 5.01% 4.69% 4.69% 4.09%
0.74% 3.41% 10.15% 172.49% 130.52% 119.79% 119.79%
</TABLE>
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL High Yield Bond Fund
<TABLE>
<CAPTION>
Class A Class B
Period Ended Period Ended
4/30/97 4/30/97
===================================================================================================================================
<S> <C> <C>
Net asset value:
Beginning of period..................................... $10.00 $10.00
Income from Investment Operations
Net investment income.................................................... 0.270 0.251
Net realized and unrealized gain (loss) on investments................... (0.120) (0.120)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.150 0.131
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions from:
Net investment income.................................................... (0.270) (0.251)
Net realized capital gains............................................... - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.270) (0.251)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value............................... (0.120) (0.120)
Net asset value:
End of period............................................................ $9.88 $9.88
===================================================================================================================================
Total return (d)......................................................... 1.51% 1.31%
Net assets, end of period................................................ $44,680,637 $2,660,309
Ratio of expenses to average net assets (a) (b).......................... 1.00% 1.75%
Ratio of net investment income to average net assets (a) (c)............. 9.11% 8.66%
Portfolio turnover rate.................................................. 36.90% 36.90%
</TABLE>
<PAGE>
This Page Intentionally Left Blank
<PAGE>
Financial Highlights - continued
PER SHARE INFORMATION
The AAL Money Market Fund
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended Year Ended
4/30/88 4/30/89 4/30/90 4/30/91
=========================================================================================================
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period............... $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net investment income............... 0.009 0.078 0.079 0.068
Net realized and unrealized gain (loss)
on investments...................... -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.009 0.078 0.079 0.068
- ----------------------------------------------------------------------------------------------------------
Distributions from:
Net investment income............... (0.009) (0.078) (0.079) (0.068)
Net realized capital gains (e)...... -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.009) (0.078) (0.079) (0.068)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in
net asset value..................... 0.000 0.000 0.000 0.000
Net asset value:
End of period....................... $1.00 $1.00 $1.00 $1.00
=========================================================================================================
Total return (d).................... 0.91% 8.10% 8.24% 7.07%
Net assets, end of period........... $7,990,507 $143,217,501 $223,447,573 $228,465,749
Ratio of expenses to average
net assets (a) (b).................. 0.07% 0.76% 1.04% 1.07%
Ratio of net investment income to
average net assets (a) (c).......... 7.06% 8.29% 7.84% 6.85%
Portfolio turnover rate............. N/A N/A N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
0.045 0.025 0.019 0.038 0.048 0.051 0.013
-- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
0.045 0.025 0.019 0.038 0.048 0.051 0.013
=============================================================================================================================
(0.045) (0.025) (0.019) (0.038) (0.048) (0.051) (0.013)
-- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
(0.045) (0.025) (0.019) (0.038) (0.048) (0.051) (0.013)
=============================================================================================================================
0.000 0.000 0.000 0.000 0.000 0.000 0.000
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=============================================================================================================================
4.54% 2.53% 1.95% 3.92% 4.94% 5.21% 1.32%
$147,584,931 $83,274,493 $65,008,303 $70,210,675 $116,014,091 $189,616,902 $569,097
1.11% 1.13% 1.26% 1.17% 0.83% 0.55% 1.78%
4.56% 2.53% 2.00% 3.95% 4.89% 4.91% 3.81%
N/A N/A N/A N/A N/A N/A N/A
</TABLE>
<PAGE>
Financial Highlights - continued
(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
4/30/88 4/30/89 4/30/90 4/30/91
================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
The AAL Capital Growth Fund.... 1.91% 1.77% 1.49% 1.41%
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%
The AAL Municipal Bond Fund.... 2.28% 1.46% 1.14% 1.10%
The AAL High Yield Bond Fund..... -- -- -- --
The AAL Money Market Fund...... 1.76% 1.18% 1.04% 1.07%
</TABLE>
(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
4/30/88 4/30/89 4/30/90 4/30/91
================================================
<TABLE>
<S> <C> <C> <C> <C>
The AAL Capital Growth Fund.... 2.21% 2.54% 2.51% 2.59%
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%
The AAL Municipal Bond Fund.... 4.95% 5.79% 5.89% 6.01%
The AAL High Yield Bond Fund... -- -- -- --
The AAL Money Market Fund...... 5.37% 7.87% 7.84% 6.85%
</TABLE>
(d) Total return calculations are based on net amount invested. Periods
less than one year are not annualized. All returns exclude any sales charges.
(e) The respective Funds had the following per share capital
gain distributions during the fiscal year ended April 30, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Short-Term Long-Term
Capital Gain Capital Gain
------------ ------------
The AAL Mid Cap Stock Fund $0.244 The AAL Mid Cap Stock Fund $2.409
The AAL Small Cap Stock Fund $0.267 The AAL Capital Growth Fund $0.967
The International Fund $0.060 The AAL Municipal Bond Fund $0.134
The AAL Municipal Bond Fund $0.047
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
============================================================================================
<S> <C> <C> <C> <C> <C> <C>
1.28% 1.20% 1.18% 1.17% 1.12% 1.06% 1.89%
-- -- 1.73% 1.54% 1.39% 1.35% 2.29%
-- -- -- -- -- 2.06% 3.21%
-- -- -- -- 2.32% 2.10% 2.94%
-- -- 2.91% 1.19% 1.20% 1.15% 1.99%
1.08% 1.03% 1.02% 1.03% 1.01% 0.98% 1.86%
1.04% 1.00% 0.99% 0.98% 0.95% 0.89% 1.69%
-- -- -- -- -- 1.26% 2.64%
1.11% 1.27% 1.51% 1.42% 1.28% 1.10% 3.54%
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Period Ended
4/30/92 4/30/93 4/30/94 4/30/95 4/30/96 4/30/97 4/30/97
============================================================================================
<S> <C> <C> <C> <C> <C> <C>
2.27% 2.15% 2.07% 1.89% 1.16% 0.62% (0.39)%
-- -- (1.14)% (0.77)% (0.82)% (0.94)% (1.41)%
-- -- -- -- -- (1.20)% (2.40)%
-- -- -- -- 0.77% 0.88% (0.03)%
-- -- 3.81% 4.08% 3.58% 3.57% 2.36%
7.14% 6.35% 5.61% 6.12% 5.89% 6.10% 5.51%
5.72% 5.32% 4.87% 5.01% 4.69% 4.69% 4.09%
-- -- -- -- -- 8.85% 7.77%
4.56% 2.38% 1.75% 3.70% 4.46% 4.91% 3.81%
</TABLE>
<PAGE>
Report of Independent Accountants
100 East Wisconsin Avenue Telephone 414 276 9500
Suite 1500
Milwaukee, WI 53202
[LOGO OF PRICE WATERHOUSE LLP]
Price Waterhouse LLP
To the Shareholders and Trustees of
The AAL Mutual Funds
In our opinion, the accompanying statement of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The AAL Capital Growth Fund, The
AAL Mid Cap Stock Fund (formerly The AAL Smaller Company Stock Fund), The AAL
Small Cap Stock Fund, The AAL International Fund, The AAL Utilities Fund, The
AAL Bond Fund, The AAL Municipal Bond Fund, The AAL High Yield Bond Fund and The
AAL Money Market Fund (nine of the portfolios constituting The AAL Mutual Funds,
the "Funds") at April 30, 1997, the results of each of their operations, the
changes in each of their net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at April
30, 1997, by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
May 22, 1997
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Board John H. Pender - Chairman of the Board
of Richard L. Gady
Trustees Lawrence M. Woods
D.W. Russler
F. Gregory Campbell
Richard L. Gunderson
Ronald G. Anderson
Officers Ronald G. Anderson - President
Robert G. Same - Vice President & Secretary
Terrance P. Gallagher - Treasurer
Charles D. Gariboldi, Jr. - Assistant Treasurer
Joseph F. Wreschnig - Assistant Secretary
Investment AAL Capital Management Corporation
Adviser & 222 West College Avenue
Distributor Appleton, WI 54919-0007
Sub-Adviser Societe Generale Asset Management Corp.
(AAL International 1221 Avenue of the Americas
Fund Only) New York, NY 10020
Custodian, Firstar Trust Company
Transfer Agent & 615 East Michigan Street
Disbursing P.O. Box 2981
Agent Milwaukee, WI 53201-2981
Custodian The Chase Manhattan Bank, N.A.
(AAL International Chase Metro Tech Center
Fund Only) Brooklyn, NY 11245
Legal Quarles & Brady
Counsel 411 East Wisconsin Avenue
Milwaukee, WI 53202
Independent Price Waterhouse LLP
Accountants Suite 1500
100 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
This report is submitted for the information of shareholders of The AAL Mutual
Funds. It is not authorized for distribution to prospective investors unless
preceded or accompanied by the current prospectus for The AAL Mutual Funds
which contains more complete information about the Funds, including
investment policies, charges and expenses.
[INSERT LOGO]
The AAL Mutual Funds
222 West College Avenue, Appleton, WI 54919-0007
800-553-6319
World Wide Web: http://www.aal.org
e-mail address: [email protected]
