SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. N/A)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
THE AAL MUTUAL FUNDS, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Logo
THE AAL MUTUAL FUNDS
222 West College Avenue, Appleton, WI 54919-0007
June __, 1997
Re: Special Meeting of the Class A and the Class B Shareholders
("shareholders") of The AAL Utilities Fund
Dear Shareholder:
Enclosed is a notice of a Special Meeting of the Class A and Class B
Shareholders of The AAL Utilities Fund (the "Fund"), a series of The AAL Mutual
Funds, a Massachusetts business trust, to be held on August 15, 1997 ("Special
Meeting"), together with a Proxy Statement and Form of Proxy relating to the
business to be transacted at the meeting.
The Special Meeting is being called for the purpose of considering and
acting upon a change to the fundamental investment objective and policy of the
Fund. The Fund's present objective is to seek current income, long-term of
income and capital growth by investing primarily in a diversified portfolio of
public utilities securities. Deregulation and consolidation trends presently
sweeping the utilities industry have changed the fundamentals and
characteristics traditionally associated with the securities of utilities
companies. As a result, the number of utility stocks meeting the Fund's
investment criteria is dwindling. Management of the Fund anticipates this trend
will continue. In response, the Board of Trustees is recommending that the Fund
eliminate its policy of concentrating its investments in the utilities industry
and, instead, permit the Fund's investment adviser to look outside of the
utilities industry for securities appropriate to achieve the objective of
current income, long-term income growth and capital growth. In addition to
expanding the universe of stocks available for investment by the Fund, the
proposed changes will help enable the Fund to reduce its exposure to the risks
and uncertainties that the Trustees believe are developing within the utilities
industry. Those risks and uncertainties include, among others, volatility in
stock prices and less favorable prospects for long-term income growth.
If the proposed changes are approved by the shareholders, the revised
investment objective and policy would be implemented on September 1, 1997. On
that date, the name of the Fund would be changed to "The AAL Equity Income
Fund." The investment objective would remain fundamental, meaning it could be
further changed only with the approval of the Fund's shareholders.
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Thank you for your continued confidence in The AAL Mutual Funds. Your
cooperation and participation in completing and returning the enclosed proxy
will ensure that your vote is counted.
Very truly yours,
THE AAL MUTUAL FUNDS
/s/ Ronald G. Anderson
Ronald G. Anderson, President
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THE AAL MUTUAL FUNDS
222 West College Ave.
Appleton, Wisconsin 54919
800-553-6319 or 414-734-7633
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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To Be Held on August 15, 1997
To Shareholders of The AAL Utilities Fund:
The AAL Mutual Funds, a Massachusetts business Trust (the "AAL Trust"),
is holding the Special Meeting of the Shareholders ("Special Meeting") of The
AAL Utilities Fund ("Fund"), a series of the AAL Trust, at 222 West College
Avenue, Appleton, Wisconsin, on Friday, August 15, 1997, beginning at 10:00 a.m.
Central time for the following purposes:
1. To approve or disapprove a proposed change to the Fund's fundamental
investment objective and policy, as described in the accompanying Proxy
Statement; and
2. To transact such other business as properly may come before the meeting
or adjournment thereof.
The Board of Trustees has fixed the close of business on Friday, June
15, 1997, as the record date for determining shareholders entitled to notice of,
and to vote at, the Special Meeting and any adjournment thereof. Only
shareholders of record at the close of business on that date will be entitled to
vote. Your attention is invited to the Proxy Statement accompanying this Notice
for a more complete statement regarding the matters to be acted upon at the
Special Meeting.
The AAL Mutual Funds By Order of the
Board of Trustees
/s/ Robert G. Same
Robert G. Same, Secretary
Appleton, Wisconsin
June __, 1997
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE>
THE AAL MUTUAL FUNDS
The AAL Utilities Fund
222 West College Avenue, Appleton, Wisconsin 54919-0007
800-553-6319 or 414-734-7633
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PROXY STATEMENT
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The Proxy Statement was first mailed to
shareholders on or about June __, 1997.
SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees (the "Trustees") from the shareholders of
The AAL Utilities Fund (the "Fund"), a series of The AAL Mutual Funds, a
Massachusetts business trust (the "AAL Trust"), for use at a Special Meeting of
Shareholders (the "Special Meeting") to be held Friday, August 15, 1997, at
10:00 a.m. Central time at 222 West College Avenue, Appleton, Wisconsin. The
purpose of the Special Meeting and the matter to be acted upon are set forth in
the accompanying Notice of Special Meeting of Shareholders. You are encouraged
to read this Proxy Statement carefully and to mark and return the proxy or
proxies accompanying this Proxy Statement.
Quorum and Voting
The presence at the Special Meeting, in person or by proxy, of
shareholders representing one-third of all shares outstanding and entitled to
vote on the matter constitutes a quorum for the transaction of business. Holders
of the Fund's Class A and Class B shares will be counted and will vote together
on this matter. Abstentions are counted for purposes of determining whether a
quorum is present, but do not represent votes cast with respect to any proposal.
"Broker non-votes" (as described below), if any, will not be counted for quorum
purposes or as votes cast. "Broker non-votes" are shares held by a broker or
nominee for which an executed proxy is received by the Fund, but are not voted
as to one or more proposals because instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.
Shares represented by properly executed proxies received by AAL Trust
will be voted at the Special Meeting and any adjournment thereof in accordance
with the terms of such proxies. If no instructions are specified, shares will be
voted "FOR" proposal 1, and in the discretion of the person named in the proxy
on proposal 2. A shareholder may revoke his or her proxy at any time prior to
the vote at the Special Meeting by filing a written revocation notice with the
Secretary of AAL Trust prior to the Special Meeting or by delivering a duly
executed proxy bearing a later date.
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Approval of the proposed change to the Fund's fundamental investment
objective and policy requires an affirmative vote of "a majority of the
outstanding voting securities" of the Fund, including shares of Class A and
Class B common stock voting together. Under the 1940 Act the phrase "a majority
of the outstanding voting securities" is defined to mean at least a majority of
the outstanding voting shares of the Fund or, if less, 67% of the voting shares
represented at a meeting at which the holders of 50% or more of the outstanding
voting shares of the Fund are present or represented by proxy. Accordingly,
abstentions and broker non-votes will have the same effect as votes cast against
approval of the proposed change in the fundamental investment objective of the
Fund.
The Fund's shareholders of record at the close of business on June 15,
1997, will be entitled to one vote on the Proposal presented for each share so
held. On that date, there were, in the aggregate, __________ shares of the
Fund's Class A and Class B common stock.
UPON REQUEST AND AT NO COST TO A REQUESTING SHAREHOLDER, AAL TRUST WILL
MAIL, BY FIRST CLASS MAIL, COPIES OF ITS ANNUAL REPORT DATED APRIL 30, 1997.
REQUESTS SHOULD BE DIRECTED TO THE ATTENTION OF ROBERT G. SAME, SECRETARY, THE
AAL MUTUAL FUNDS, 222 WEST COLLEGE AVENUE, APPLETON, WISCONSIN 54919-0007,
TELEPHONE 800-553- 6319.
PROPOSAL ON THE FUND'S INVESTMENT PROGRAM
General
The Fund's current fundamental investment objective is to seek current
income, long-term income growth and capital growth by investing primarily in a
diversified portfolio of public utilities securities (the "Present Objective").
The Fund has a fundamental industry concentration policy to invest, under normal
circumstances, at least 65% of its total assets in the securities (stocks and
bonds) of public utilities companies. The Board of Trustees is proposing to
amend the Present Objective to seek current income, long-term income growth and
capital growth by investing in a diversified portfolio of income-producing
equity securities (the "Proposed Objective"), and to eliminate the Fund's
fundamental industry concentration policy. "Income-producing equity securities"
are equity securities, including securities exchangeable or convertible into
equity securities, that offer dividend yields which exceed the average dividend
yields on stocks comprising the S&P 500(R) Composite Stock Price Index ("S&P
500"). If these changes are approved, the investment policy of the Fund would be
to invest at least 65% of the Fund's assets in income-producing equity
securities. In selecting securities for the Fund, the Adviser would look for
income-producing equity securities that have favorable prospects for future
growth and dividends, without limitation to any particular industry or
industries, thereby diversifying the Fund's investments across many different
industries. However, as a matter of fundamental policy, the Fund would not be
permitted to invest more than 25% of its net assets in securities of issuers in
any single industry.
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Like the Present Objective, the Proposed Objective would be
fundamental, meaning it could not be further changed without shareholder
approval. If the changes are approved, the Proposed Objective and elimination of
the industry concentration policy would be implemented beginning September 1,
1997, and the Fund's name would be changed to The AAL Equity Income Fund on that
date.
If the shareholders do not approve Proposal 1, the Fund will continue
to be managed as a utilities fund in accordance with its Present Objective, its
utilities industry concentration policy and its other investment policies and
program described in the Fund's current prospectus.
Reasons for the Proposed Change
When the Fund originally was introduced, the Trustees intended for the
Fund to provide a "bridge" between the income aspects of the AAL Trust's bond
funds and the capital appreciation characteristics of its stock funds. At the
time, utilities companies operated in a somewhat monopolistic and fully
regulated environment. Their equity securities tended to offer a combination of
greater dividends, dividend growth potential and capital growth relative to
securities in other industries. The regulated nature of the utilities industry
facilitated stability and shareholder confidence, and helped insulate the Fund
from volatility in the market value of its portfolio securities and other risks
generally associated with the public securities markets.
However, the utilities industry now is undergoing dramatic change. In
particular, the utilities industry is facing extensive de-regulation and
consolidation trends. Competition, including global competition, has changed the
value and earnings potential of these securities.
Management of the Fund has observed a decline in opportunities for
favorable dividend levels and dividend growth potential offered by utilities
securities. Moreover, utilities stocks have demonstrated increased sensitivity
to market forces resulting in price volatility. In many cases, the market prices
of utilities stocks have declined. As a result of these developments, the
Trustees have determined that the Fund's fundamental industry concentration
policy is impeding the capability of the Fund to achieve its objective of
current income, long-term income growth and capital growth. Accordingly, the
Board of Trustees recommends the elimination of the Fund's fundamental industry
concentration policy and the adoption of the Proposed Objective. The Trustees
believe these changes will help to broaden the universe of stocks and other
securities appropriate to achieve the Fund's investment objective.
If these changes are approved, the Fund would, under normal
circumstances, invest at least 65% of its assets in income-producing equity
securities, including securities exchangeable or convertible into
income-producing equity securities. The Fund would be able to invest the balance
of its assets in additional income-producing equity securities, or other fixed
income securities and/or short-term securities consistent with the Fund's
investment policies.
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The Fund would expect to realize income from dividends paid on equity
investments and interest paid on debt securities. In selecting income-producing
equity securities and securities exchangeable or convertible into
income-producing equity securities, the Fund would seek securities with higher
than average dividend yields and/or favorable prospects for future growth in
dividends. The Adviser would seek stocks fitting these criteria that it believes
are under-priced relative to securities of companies with comparable
fundamentals, and therefore also offer the opportunity for capital growth. This
investment program would be non- fundamental, meaning that it could be changed
or refined by the Board of Trustees without shareholder approval.
Certain Effects of the Proposed Changes
If the proposed changes are approved, the Adviser does not plan
immediately to make drastic shifts in the Fund's present concentration in
utilities securities. Rather, the Adviser would identify securities outside of
the utilities industry that meet the Fund's investment criteria, and would draw
from those selections to meet the Fund's needs for new and additional
investments and to achieve compliance with the new investment policies. The
Adviser would sell some utilities positions in favor of non-utilities positions
that it feels would enable the Fund to better achieve the Fund's Proposed
Objective. Over time, this strategy would reduce the Fund's concentration in,
and exposure to, the utilities industry. At the same time, this strategy would
minimize the recognition of capital gains that potentially would be associated
with an immediate shift in the Fund's investments. It is anticipated that the
process of restructuring the Fund's investment portfolio to eliminate its
concentration in public utilities securities would take six months to one year.
Although the elimination of the Fund's fundamental industry
concentration policy would help reduce its exposure to risks associated with the
utilities industry, shareholders should bear in mind that stocks meeting the
Fund's investment criteria tend to be associated more with certain industries
than with others. For example, stocks offering above-average dividend yields as
represented by the S&P 500 tend to be concentrated in the services
(communications and retail), energy, utilities, financial institutions and
consumer non-cyclical industries, and occur only rarely in such industries as
technology and health services. Accordingly, it is anticipated that, even
following the implementation of the new investment policy, the Fund's assets
potentially may be concentrated from time to time in certain industries or
market sectors more than others, although significantly less so as compared to
the Fund's present concentration policy in a single industry. Moreover,
following the transitional restructuring period described in the preceding
paragraph, the Fund would comply with a fundamental restriction that would
prohibit it from investing more than 25% of its net assets in securities of
issuers within any single industry.
<PAGE>
Also, although dividend yields in the public utilities industry have
declined over the past several years due to changes within the industry, such as
deregulation, companies in the utilities industry still tend to offer higher
dividends on their equity securities than companies in other industries. As a
result, lowering the concentration in this industry may reduce the dividend
yield on the Fund, and therefore current income in the short term. However,
lowering the concentration in public utilities securities should enable the Fund
to better achieve long-term income growth and capital growth.
The proposed changes will have no effect on the Fund's current
advisory fees.
Trustees' Recommendation
For the reasons and considerations discussed above, the Trustees
unanimously recommend that you vote "FOR" the proposed change to the Fund's
fundamental investment objective and industry concentration policy.
OTHER BUSINESS
The Trustees know of no business other than that mentioned above that
will be presented for consideration at the Special Meeting. If any other matters
are properly presented, it is the intention of the persons named on the enclosed
proxy to vote proxies in accordance with their best judgment.
ADDITIONAL INFORMATION
Adviser, Administrator and Distributor
AAL Capital Management Corporation has served as Adviser for AAL Trust
since its inception in 1987. In addition to serving as Adviser to the Fund and
to each of the other series of AAL Trust, AAL Capital Management Corporation
also provides necessary administrative services to the Fund and to each of the
other series of AAL Trust under an Administrative Services Agreement dated July
1, 1990, as amended, and serves as the distributor of the Fund's shares and each
other series pursuant to its Distribution Agreement with AAL Trust, dated June
15, 1987, as amended. AAL Capital Management Corporation has its principal
executive offices located at 222 West College Avenue, Appleton, Wisconsin
54919-0007.
Principal Shareholders and Certain Beneficial Owners
As of the record date, the officers and Trustees of AAL Trust owned in
the aggregate less than one percent (1%) of all outstanding shares of the Fund,
including both Class A and Class B shares taken together, and no other person
was known to own of record or beneficially five percent (5%) or more of the
Fund's outstanding shares.
The following table shows the number of shares of the Fund as to which
each Trustee and executive officer of AAL Trust had or shared voting or
disposition power for the Fund as of the record date.
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Ownership Interests of the Trustees and Number of Shares
Executive Officers in The AAL Utilities Fund Owned
John H. Pender -0-
F. Gregory Campbell -0-
Richard L. Gady -0-
Lawrence M. Woods -0-
D.W. Russler 764.965
Richard L. Gunderson -0-
Ronald G. Anderson -0-
Robert G. Same -0-
Terrance P. Gallagher -0-
Costs of Solicitation
In addition to soliciting proxies through the mails, officers of AAL
Trust and the officers and employees of the Adviser may solicit proxies, without
special compensation, by telephone, telegraph, facsimile, personal interview or
other electronic means as provided for according to the Funds' by-laws. If AAL
Trust management determines that a professional proxy solicitation service would
be advisable, such a service also may solicit proxies in the same manner. AAL
Capital Management Corporation will bear the cost of preparing and mailing the
proxy materials for the Special Meeting (including any adjourned sessions
thereof) and of soliciting proxies for the Special Meeting.
Adjournment
In the event a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve the Proposed Objective and
related elimination of the Fund's concentration policy are not received, the
persons named as proxies may propose one or more adjournments of such Special
Meeting to permit further solicitation of proxies. The persons named as proxies,
however, must determine such an adjournment and additional solicitation is
reasonable and in the best interests of shareholders based on a consideration of
all relevant factors, including: the nature of the relevant proposals; the
percentage of votes then cast; the nature of the proposed solicitation
activities; and the nature of and the reasons for such further solicitation.
Adjournment with respect to any proposal would require the affirmative vote of a
majority of the votes cast on the question in person or by proxy at the session
of the Special Meeting to be adjourned. The persons named as proxy would vote in
favor of such adjournment where they are entitled to vote in favor of the
relevant proposal, and would vote against any such adjournment where they have
been directed to vote against the proposal.
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Shareholder Meetings
AAL Trust is organized as a Massachusetts business trust, and as such
is subject to Massachusetts law. Pursuant to Massachusetts law and AAL Trust's
Declaration of Trust, it is not required to hold a shareholders' meeting in any
year in which the shareholders do not need to act upon the approval of the
Investment Advisory Agreement (or any Sub-Advisory Agreement) or ratify the
selection of independent public accountants under the 1940 Act. The Trustees
hold AAL Trust shareholders' meetings when they are necessary in accordance with
the 1940 Act. Other than the Special Meeting to which this Proxy Statement
relates, the Trustees currently do not anticipate holding another meeting of the
Fund's shareholders in 1997.
Shareholders who wish to present a proposal for action at the next
meeting should submit the proposal or suggestions to the following address: The
AAL Mutual Funds, 222 West College Avenue, Appleton, Wisconsin 54919-0007,
Attention: Robert G. Same, Secretary.
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Please fold and detach card at perforation before mailing
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THE AAL MUTUAL FUNDS Revocable Proxy for Special Meeting of Shareholders of
The AAL Utilities Fund
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES
The undersigned hereby appoints Ronald G. Anderson and Robert G. Same,
or either of them, proxy, with full power of substitution, to represent and
vote, as designated on the reverse side, all shares of stock the undersigned is
entitled to vote at the Special Meeting of Shareholders of The AAL Utilities
Fund to be held at 222 West College Avenue, Appleton, Wisconsin 54919-0007
beginning at 10:00 a.m. Central time on Friday, August 15, 1997, or at any
adjournment thereof, with respect to the matters set forth and described in the
accompanying Notice of Special Meeting and Proxy Statement, receipt of which is
hereby acknowledged.
Date:_____________, 1997
(If stock is owned by more than one person,
all owners must sign. Persons signing as
executors, administrators, trustees or in
similar capacities must so indicate.)
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(Please sign exactly as name appears at left)
<PAGE>
PLEASE RETURN THIS PROXY TODAY!
YOUR PROMPT RESPONSE IS NEEDED
AND WILL BE APPRECIATED
Please fold and detach card at perforation before mailing
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Please indicate your voting preference by FILLING FOR AGAINST ABSTAIN
IN the appropriate box below using blue or black
ink or dark pencil, do not use red ink. Shares
represented by this Proxy will be voted as
directed by the shareholder. IF NO DIRECTION IS
SUPPLIED, THE PROXY WILL BE VOTED FOR PROPOSAL 1.
1. Proposal to change The AAL Utilities Fund's ___ ___ ___
fundamental investment objective and policy
as described in the accompanying Proxy
Statement.
2. To transact such other business as properly
may come before the meeting or any
adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD
