The AAL
Small Cap Stock Fund
The AAL
Mid Cap Stock Fund
The AAL
International Fund
The AAL
Capital Growth Fund
The AAL
Equity Income Fund
The AAL
Balanced Fund
THE AAL
MUTUAL FUNDS
Annual Report April 30, 1999
The AAL
High Yield Bond Fund
The AAL
Municipal Bond Fund
The AAL
Bond Fund
The AAL
Money Market Fund
[LOGO OF AAL]
The AAL Mutual Funds
<PAGE>
T H E A A L M U T U A L F U N D S
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<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
President's Letter................... 2
Portfolio Perspectives
The AAL Small Cap Stock Fund....... 4
The AAL Mid Cap Stock Fund......... 6
The AAL International Fund......... 8
The AAL Capital Growth Fund........ 10
The AAL Equity Income Fund......... 12
The AAL Balanced Fund.............. 14
The AAL High Yield Bond Fund....... 16
The AAL Municipal Bond Fund........ 18
The AAL Bond Fund.................. 20
The AAL Money Market Fund.......... 22
Schedule of Investments
The AAL Small Cap Stock Fund....... 24
The AAL Mid Cap Stock Fund......... 28
The AAL International Fund......... 32
The AAL Capital Growth Fund........ 35
The AAL Equity Income Fund......... 39
The AAL Balanced Fund.............. 43
The AAL High Yield Bond Fund....... 49
The AAL Municipal Bond Fund........ 54
The AAL Bond Fund.................. 66
The AAL Money Market Fund.......... 69
Statement of Assets and Liabilities.. 72
Statement of Operations.............. 74
Statement of Changes in Net Assets... 76
Notes to Financial Statements........ 80
Financial Highlights.................
The AAL Small Cap Stock Fund....... 88
The AAL Mid Cap Stock Fund......... 90
The AAL International Fund......... 92
The AAL Capital Growth Fund........ 94
The AAL Equity Income Fund......... 96
The AAL Balanced Fund.............. 98
The AAL High Yield Bond Fund....... 100
The AAL Municipal Bond Fund........ 102
The AAL Bond Fund.................. 104
The AAL Money Market Fund.......... 106
Report of Independent Accountants.... 110
A Note on Forward-Looking
Statements........................... 111
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report April 30, 1999 1
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL REPORT ... PRESIDENT'S LETTER
[PICTURE APPEARS HERE]
APRIL 30, 1999
DEAR AAL MUTUAL FUNDS SHAREHOLDER:
The Markets and Economy
in Review
As the calendar turned from 1998 to 1999, some things didn't change. Some large-
capitalization stocks were still highly sought, market volatility remained high,
inflation stayed at low levels and interest rates moved within a small range.
The result was the first months of 1999 resembled the fourth quarter of 1998,
for the most part. The Dow Jones Industrial Average (Dow) flirted with the
10,000-point milestone and finally closed in five figures on March 29
(10,006.78).
The market's robust growth continues to come as a result of fewer and fewer
success stories. Many experts point out that perhaps as few as 25 to 40
companies listed in the Standard & Poor's 500(R) (Composite Stock Price Index)
are driving the entire index's growth. While the S&P 500 is up more than 5
percent so far in 1999, this market narrowing brings questions about how long
the bull market can continue.
This "bigger is better" mentality has carried for the past six quarters and it's
likely that other asset classes--particularly small- and mid-cap stocks and
high-yield bonds--will continue to feel this effect until a correction of some
magnitude occurs.
Volatility periodically leads people to think that a correction is at hand, but
the markets recently have bounced back that same day or within a day or two.
Ignoring daily volatility, other than taking advantage of buying opportunities
it may present, is easier said than done, though.
Much of the recent volatility has been directly linked to Internet-related
issues. The "dot com syndrome" seemingly inflates any holding, whether the
security's underlying fundamentals justify rewarding the risk involved.
Increasing oil prices in March provided mixed news to financial markets. Oil-
related stocks and bonds gained on news of the Organization of Petroleum
Exporting Countries (OPEC) production cutbacks. That price increase has been
passed along, fueling fears of rising inflation.
In addition, tensions in Yugoslavia and other areas have made international
investing difficult. And in places where there are not hostilities, such as
Russia and parts of Asia, other forces are leading to economic instabilities.
With this in mind, what should investors do? You may want to think about:
. Dollar cost averaging, a strategy of continuous
- --------------------------------------------------------------------------------
2 The AAL Mutual Funds Annual Report
<PAGE>
REPORT PRESIDENT'S LETTER
investing that presents great opportunities during times of market volatility.
While dollar cost averaging doesn't assure a profit or guarantee against a loss
in declining markets, it's possible that you could enjoy a lower average price
per share over time.
. Your asset allocation. Are you invested in the various asset classes that may
help reduce your risk and help you achieve your objectives?
. A long-term focus for your investments. It's your time in the market, and not
timing the market, that will give your investments the potential to grow.
Mutual funds are long-term investments, so you should realize their values
might fluctuate.
Thank you for your continued support of The AAL Mutual Funds. Whenever we can
be of service, don't hesitate to call your AAL representative or the Mutual
Funds Service Center. You can reach the service center, as well as the
automated Capital Connection(R) system, by calling (800) 553-6319. If you're on
the information superhighway, you can get information from our web site
(www.aal.org) by going to the AAL Capital Management Corporation area.
Sincerely,
/s/ Ron Anderson
- -----------------
Ron Anderson
PRESIDENT
THE AAL MUTUAL FUNDS
Our Growth in Net Assets
[CHART APPEARS HERE]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
4/30/88 4/30/89 4/30/90 4/30/91 4/30/92 4/30/93 4/30/94 4/30/95
$62,634,194 $287,356,102 $516,961,263 $692,824,480 $975,182,233 $1,443,709,926 $1,908,532,585 $2,204,307,971
<CAPTION>
<S> <C> <C> <C> <C>
4/30/88 4/30/96 4/30/97 4/30/98 4/30/99
$62,634,194 $2,940,833,455 $3,624,635,195 $5,248,971,887 $6,500,863,313
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 3
<PAGE>
[PHOTO APPEARS HERE]
The AAL Small Cap Stock Fund
[LOGO] Has the increase in the Fund's investment universe, approved by a
shareholder vote last fall, helped?
Expanding the universe of stocks we select from has helped with the market
capitalization threshold having been expanded to $1.5 billion by an Oct.30, 1998
shareholders' vote. When we go through our screening process, it has given us
the opportunity to look at more companies. This gives us more options and more
opportunities.
[LOGO] What effect has the overall market volatility had on small-cap stocks?
It has been much worse in small-cap stocks. The liquidity factor and negative
sentiments in general have brought on small-cap volatility. The high price to
earnings (P/E) ratio, high-growth and large-cap stock mentality are not helping
small caps, either.
Relatively new trading practices and increasing numbers of day traders have made
small- and mid-cap stocks less liquid and more volatile. We also have shied away
from the Internet sector. Due to the explosive growth in some of these
companies, they don't remain in the small-cap realm for very long.
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 SMALL CAP 600 INDEX /1/
Date VALUE Date VALUE
- -------------------------------- ------------------------------
01-Jul-96 9,596.93 01-Jul-96 10,000.00
31-Jul-96 9,165.07 31-Jul-96 9,312.20
30-Aug-96 10,316.70 30-Aug-96 9,887.05
30-Sep-96 10,786.95 30-Sep-96 10,320.43
31-Oct-96 10,441.46 31-Oct-96 10,249.09
29-Nov-96 10,681.38 29-Nov-96 10,781.09
31-Dec-96 11,008.07 31-Dec-96 10,907.24
31-Jan-97 11,047.38 31-Jan-97 11,088.69
28-Feb-97 10,565.78 28-Feb-97 10,859.26
31-Mar-97 9,887.61 31-Mar-97 10,302.18
30-Apr-97 9,671.38 30-Apr-97 10,428.22
30-May-97 11,145.67 30-May-97 11,653.01
30-Jun-97 11,912.30 30-Jun-97 12,167.89
31-Jul-97 12,452.88 31-Jul-97 12,932.79
29-Aug-97 12,836.20 29-Aug-97 13,258.42
30-Sep-97 13,789.57 30-Sep-97 14,135.20
31-Oct-97 13,229.34 31-Oct-97 13,525.41
28-Nov-97 13,101.57 28-Nov-97 13,427.04
31-Dec-97 12,863.43 31-Dec-97 13,697.19
30-Jan-98 12,646.28 30-Jan-98 13,430.10
27-Feb-98 13,701.00 27-Feb-98 14,653.17
31-Mar-98 14,145.63 31-Mar-98 15,212.27
30-Apr-98 14,311.08 30-Apr-98 15,301.39
29-May-98 13,215.00 29-May-98 14,491.19
30-Jun-98 13,235.68 30-Jun-98 14,532.96
31-Jul-98 12,480.83 31-Jul-98 13,421.63
31-Aug-98 9,647.57 31-Aug-98 10,835.28
30-Sep-98 10,412.76 30-Sep-98 11,496.70
30-Oct-98 10,950.46 30-Oct-98 12,029.80
30-Nov-98 11,777.69 30-Nov-98 12,706.16
31-Dec-98 12,543.29 31-Dec-98 13,516.45
29-Jan-99 12,617.83 29-Jan-99 13,345.87
26-Feb-99 11,350.72 26-Feb-99 12,143.67
31-Mar-99 11,137.76 31-Mar-99 12,300.63
30-Apr-99 11,595.62 30-Apr-99 13,113.04
/1/ An unmanaged index comprised of 600 stocks designed to represent
performance of the small cap segment of the U.S. equity markets. It is not
possible to invest directly in the index.
% Average Annual Total Returns*
April 30, 1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
---------------------------------------------
<S> <C> <C> <C>
Class A (without sales charge) ...... (18.97)% 6.91% 7/1/96
Class A** (with sales charge) ....... (22.23)% 5.37% 7/1/96
- ----------------------------------------------------------------------------------
Class B (without CDSC) .............. (19.85)% 1.45% 1/8/97
Class B** (with CDSC) ............... (23.06)% 0.16% 1/8/97
- ----------------------------------------------------------------------------------
Class I*** (18.41)% (6.88)% 12/29/97
- ----------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge) ....... (24.41)% 4.00%
Class B** (with CDSC) ............... (25.18)% (1.62)%
Class I*** .......................... (20.48)% (10.31)%
</TABLE>
*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.
**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%, declining 1% each year during
the first five years and then converting to Class A shares after the fifth
year.
***Class I shares have no sales load and are for institutional Shareholders
only.
- --------------------------------------------------------------------------------
4 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] Can you tell us about one of the successful stocks the Fund owns?
One nice story is Biomatrix, a biotechnology company that makes an
osteoarthritis drug. The drug is injected into a joint area, such as the knee,
and acts as a lubricant in situations where the cartilage has deteriorated and
the joints are simply bone on bone. Biomatrix got approval from the U.S. Food
and Drug Administration to produce the drug at its plant; it has had good sales;
and as a result, its stock has appreciated. This is a case where modern medicine
has done well in the small-cap sector.
/s/ Kevin A. Schmitting
Kevin A. Schmitting
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] Consumer Cyclicals ........................ 22%
[*] Financials ................................ 16%
[*] Technology ................................ 16%
[*] Capital Goods ............................. 13%
[*] Health Care ............................... 10%
[*] Consumer Staples .......................... 8%
[*] Transportation ............................ 4%
[*] Cash &Cash Equivalents .................... 3%
[*] Energy .................................... 3%
[ ] Utilities ................................. 3%
[ ] Basic Materials ........................... 2%
----------
Total 100%
</TABLE>
5 Largest Holdings
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
CMAC Investment Corporation ............................... 2.30%
Acxiom Corporation ........................................ 2.14%
Emmis Communications Corporation .......................... 2.06%
Tetra Tech, Inc. .......................................... 2.00%
Lamar Advertising Company ................................. 1.82%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 5
<PAGE>
[PHOTO APPEARS HERE]
The AAL Mid Cap Stock Fund
[LOGO] Last year the upper limit for the Fund's definition of mid cap was
raised to $6 billion. How has this change affected the Fund and/or your
investment style?
The previous Fund guidelines were those initially established when the Fund
began as The AAL Smaller Company Stock Fund in 1993.Since that time, the name of
the Fund, and thus its character, have changed, and the domestic equity market
has advanced about 150 percent. Therefore, we felt now was an appropriate time
to bring those guidelines up-to-date with the current market.
The key impact this had on the Fund was to alter the universe of companies that
we consider as eligible investments for the Fund. We are simply applying our
same approach of seeking out companies with attractive growth prospects trading
at reasonable prices to a slightly different group of companies, namely those
with market capitalization between $1.5 billion and $6 billion. This has helped
the performance of the Fund. At its May 26,1999, meeting The AAL Mutual Funds
Board of Trustees approved raising the market capitalization to $7.5 billion.
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 MIDCAP 400 INDEX /1/
Date VALUE Date VALUE
- ------------------------------ ------------------------------
30-Jun-93 9,569.93 30-Jun-93 10,000.00
30-Jul-93 9,491.36 30-Jul-93 9,976.46
31-Aug-93 9,971.21 31-Aug-93 10,387.96
30-Sep-93 10,393.47 30-Sep-93 10,497.68
29-Oct-93 10,268.71 29-Oct-93 10,531.36
30-Nov-93 9,942.42 30-Nov-93 10,298.62
31-Dec-93 10,422.26 31-Dec-93 10,775.61
31-Jan-94 10,758.16 31-Jan-94 11,024.73
28-Feb-94 10,786.95 28-Feb-94 10,868.62
31-Mar-94 10,019.19 31-Mar-94 10,365.08
29-Apr-94 9,961.61 29-Apr-94 10,442.05
31-May-94 9,404.99 31-May-94 10,343.23
30-Jun-94 8,598.85 30-Jun-94 9,987.53
29-Jul-94 8,637.24 29-Jul-94 10,325.29
31-Aug-94 9,443.38 31-Aug-94 10,865.82
30-Sep-94 9,510.56 30-Sep-94 10,662.95
31-Oct-94 9,932.82 31-Oct-94 10,780.43
30-Nov-94 9,577.74 30-Nov-94 10,294.34
30-Dec-94 9,923.22 30-Dec-94 10,388.47
31-Jan-95 9,520.15 31-Jan-95 10,496.79
28-Feb-95 10,009.60 28-Feb-95 11,046.97
31-Mar-95 10,508.64 31-Mar-95 11,239.38
28-Apr-95 10,479.85 28-Apr-95 11,465.59
31-May-95 10,614.20 31-May-95 11,742.12
30-Jun-95 11,631.48 30-Jun-95 12,220.44
31-Jul-95 12,811.90 31-Jul-95 12,857.11
31-Aug-95 12,735.12 31-Aug-95 13,094.08
29-Sep-95 13,522.07 29-Sep-95 13,412.22
31-Oct-95 13,742.80 31-Oct-95 13,066.99
30-Nov-95 14,309.02 30-Nov-95 13,634.72
29-Dec-95 14,337.81 29-Dec-95 13,600.78
31-Jan-96 14,299.42 31-Jan-96 13,798.21
29-Feb-96 14,980.81 29-Feb-96 14,266.17
29-Mar-96 15,095.97 29-Mar-96 14,437.24
30-Apr-96 16,410.75 30-Apr-96 14,878.42
31-May-96 17,024.95 31-May-96 15,079.32
28-Jun-96 15,950.10 28-Jun-96 14,853.13
31-Jul-96 14,059.50 31-Jul-96 13,850.69
30-Aug-96 15,028.79 30-Aug-96 14,650.61
30-Sep-96 15,825.34 30-Sep-96 15,289.28
31-Oct-96 15,009.60 31-Oct-96 15,333.97
29-Nov-96 15,796.55 29-Nov-96 16,196.52
31-Dec-96 15,591.79 31-Dec-96 16,214.22
31-Jan-97 16,154.38 31-Jan-97 16,822.60
28-Feb-97 15,603.27 28-Feb-97 16,684.75
31-Mar-97 14,455.12 31-Mar-97 15,974.48
30-Apr-97 14,592.90 30-Apr-97 16,388.46
30-May-97 16,154.38 30-May-97 17,821.48
30-Jun-97 16,843.26 30-Jun-97 18,321.68
31-Jul-97 17,934.00 31-Jul-97 20,133.89
29-Aug-97 17,968.44 29-Aug-97 20,110.00
30-Sep-97 19,288.81 30-Sep-97 21,265.42
31-Oct-97 18,358.81 31-Oct-97 20,340.58
28-Nov-97 18,266.96 28-Nov-97 20,641.89
31-Dec-97 18,403.73 31-Dec-97 21,441.31
30-Jan-98 17,971.90 30-Jan-98 21,033.06
27-Feb-98 19,280.10 27-Feb-98 22,774.60
31-Mar-98 20,080.26 31-Mar-98 23,801.26
30-Apr-98 20,232.67 30-Apr-98 24,234.85
29-May-98 19,051.48 29-May-98 23,145.49
30-Jun-98 19,419.81 30-Jun-98 23,290.40
31-Jul-98 18,213.22 31-Jul-98 22,387.20
31-Aug-98 14,187.00 31-Aug-98 18,223.18
30-Sep-98 15,291.99 30-Sep-98 19,923.39
30-Oct-98 16,269.97 30-Oct-98 21,700.65
30-Nov-98 17,171.74 30-Nov-98 22,783.60
31-Dec-98 18,785.99 31-Dec-98 25,534.04
29-Jan-99 18,732.16 29-Jan-99 24,537.44
26-Feb-99 17,669.06 26-Feb-99 23,254.87
31-Mar-99 18,140.05 31-Mar-99 23,905.10
30-Apr-99 18,691.79 30-Apr-99 25,789.80
/1/ An unmanaged index comprised of 400 stocks designed to represent performance
of the mid-cap segment of the U.S. equity markets it is not possible to
invest directly in the index.
% Average Annual Total Returns*
April 30, 1999
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year Inception Date
------------------------------------------------
<S> <C> <C> <C> <C>
Class A (without sales charge) ....... (7.62)% 13.41% 12.10% 6/30/93
Class A** (with sales charge) ........ (11.29)% 12.50% 11.31% 6/30/93
- ---------------------------------------------------------------------------------------
Class B (without CDSC) ............... (8.70)% NA 6.77% 1/8/97
Class B** (with CDSC) ................ (12.36)% NA 5.57% 1/8/97
- ---------------------------------------------------------------------------------------
Class I*** ........................... (7.17)% NA 1.69% 12/29/97
- ---------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge) ........ (13.28)% 11.68% 10.91%
Class B** (with CDSC) ................ (14.32)% NA 4.37%
Class I*** ........................... (8.94)% NA (0.67)%
</TABLE>
*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.
**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%,declining 1% each year during the first
five years and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
6 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] Did the problems in Asia, Russia and Brazil over the past year have an
impact on your Fund?
While the impact of the foreign economies on the Fund was indirect, it was
indeed profound. The impact was indirect because very few of the companies in
the mid-cap universe conduct even minimal business in the countries which
struggled with economic problems during the year. Most mid-cap companies are
focused on domestic sales and what foreign business they do is typically
concentrated in more developed economies.
In spite of this fact, however, mid-cap stocks suffered greatly in the turmoil
of the summer and fall of 1998 (from its highest to lowest points, The AAL Mid
Cap Stock Fund was down more than 30 percent). This decline was driven by a
change in investors' perception of and appetite for risk. As these developing
economies unraveled, investors feared that the problems would continue to spread
around the globe. As a result, they sold securities perceived as being risky in
favor of those less risky. Mid-cap stocks are considered a relatively risky
asset class and suffered accordingly. As these fears abated in October, mid-cap
stocks did rebound sharply.
/s/ Michael R. Hochholzer
Michael R. Hochholzer
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] Technology ................................ 21%
[*] Consumer Cyclicals ........................ 18%
[*] Financials ................................ 16%
[*] Health Care ............................... 9%
[*] Utilities ................................. 9%
[*] Energy .................................... 6%
[*] Capital Goods ............................. 5%
[*] Basic Materials ........................... 4%
[*] Cash &Cash Equivalents .................... 4%
[*] Consumer Staples .......................... 4%
[ ] Transportation ............................ 2%
[ ] Communication Services .................... 1%
[ ] Fixed Income Investments .................. 1%
----------
Total 100%
</TABLE>
5 Largest Holdings
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
Fiserv, Inc. ..................................... 1.93%
Southdown, Inc. .................................. 1.91%
Republic Services, Inc. .......................... 1.87%
Tommy Hilfiger Corporation ....................... 1.50%
Tandy Corporation ................................ 1.49%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 7
<PAGE>
[PHOTOS APPEARS HERE]
The AAL International Fund
[LOGO] How have international markets performed over the year-ended April 30,
1999?
Over the one-year period ended April 30,1999,the Europe, Australasia and Far
East (EAFE) index has advanced 9.44 percent. The EAFE index is an unmanaged
index of more than 1,000 foreign stocks of issuers in Europe, Asia, Australia
and the Far East that reflects the common stock prices of the index companies
translated into U.S. dollars. This assumes reinvestment of all dividends paid by
the index stocks net any applicable foreign taxes. It is not possible to invest
directly in the index. The Pacific index was up 20.2 percent over that period
while the European Monetary Unit countries were up 6.5 percent. The Asia region
remained mired in deteriorating economic conditions over much of that period and
Japan was unable to kick-start its own economy.
Europe, however, had strong performance. Most of the European Monetary Unit
countries continued to benefit from falling interest rates and restructuring
reaped rewards for companies preparing for tougher competition. Equity markets
were supported by capital inflows seeking better returns than those offered in
the fixed-income markets and by growing interest in equities from private savers
and pensions.
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPH APPEARS HERE]
THE AAL INTERNATIONAL FUND EAFE INDEX /1/
Date VALUE Date VALUE
- ------------------------------------ -----------------------------------
08/01/95 9,596.93 08/01/95 10,000.00 7
08/31/95 9,616.12 08/31/95 9,605.70
09/29/95 9,577.74 09/29/95 9,780.27
10/31/95 9,558.54 10/31/95 9,504.37
11/30/95 9,558.54 11/30/95 9,755.88
12/29/95 9,735.51 12/29/95 10,135.84
01/31/96 10,149,17 01/31/96 10,164.69
02/29/96 10,110.69 02/29/96 10,185.77
03/29/96 10,264.61 03/29/96 10,388.61
04/30/96 10,659.04 04/30/96 10,677.31
05/31/96 10,601.32 05/31/96 10,467.28
06/28/96 10,649.42 06/28/96 10,512.65
07/31/96 10,293.47 07/31/96 10,191.59
08/30/96 10,322.33 08/30/96 10,200.02
09/30/96 10,514.73 09/30/96 10,457.25
10/31/96 10,610,94 10/31/96 10,336.36
11/29/96 10,986.12 11/29/96 10,733.59
12/31/96 10,923.86 12/31/96 10,581.38
01/31/97 11,123.20 01/31/97 10,197.70
02/28/97 11,372.38 02/28/97 10,350.99
03/31/97 11,352.44 03/31/97 10,374.58
04/30/97 11,352.51 04/30/97 10,415.94
05/30/97 11,850.79 05/30/97 11,079.62
06/30/97 12,209.61 06/30/97 11,676.66
07/31/97 12,289.34 07/31/97 11,851.96
08/29/97 11,890.66 08/29/97 10,953.11
09/30/97 12,060.10 09/30/97 11,552.94
10/31/97 11,372.38 10/31/97 10,650.89
11/28/97 11,183.00 11/28/97 10,528.40
12/31/97 11,030.07 12/31/97 10,606.60
01/30/98 11,324.64 01/30/98 11,077.96
02/27/98 11,728.31 02/27/98 11,774.59
03/31/98 12,088.34 03/31/98 12,122.85
04/30/98 12,164.71 04/30/98 12,204.24
05/29/98 12,284.73 05/29/98 12,130.56
06/30/98 12,131.98 06/30/98 12,207.91
07/31/98 12,011.97 07/31/98 12,317.29
08/31/98 10,975.52 08/31/98 10,776.40
09/30/98 10,615.49 09/30/98 10,431.12
10/30/98 11,171.90 10/30/98 11,503.55
11/30/98 11,771.95 11/30/98 12,078.23
12/31/98 12,250.26 12/31/98 12,539.81
01/29/99 12,765.46 01/29/99 12,488.06
02/26/99 12,330.40 02/26/99 12,175.61
03/31/99 12,525.03 03/31/99 12,668.93
04/30/99 12,994.43 04/30/99 13,167.35
/1/ An unmanaged market capitalization-weighted equity index composed of a
sample of companies representative of the market structure in 20 countries.
Constituent stocks are selected on the basis of industry representation,
liquidity and sufficient float. It is not possible to invest directly in the
index.
% Average Annual Total Returns*
April 30,1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
--------------------------------
<S> <C> <C> <C>
Class A (without sales charge) ....... 6.82% 8.42% 8/1/95
Class A** (with sales charge) ........ 2.59% 7.24% 8/1/95
- -----------------------------------------------------------------------
Class B (without CDSC) ............... 5.72% 6.67% 1/8/97
Class B** (with CDSC) ................ 1.72% 5.47% 1/8/97
- -----------------------------------------------------------------------
Class I*** ........................... 7.49% 13.81% 12/29/97
- -----------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge) ........ (0.52)% 6.33%
Class B** (with CDSC) ................ (1.49)% 3.92%
Class I*** ........................... 4.36% 11.45%
</TABLE>
*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.
**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%, declining 1% each year during the first
five years and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional Shareholders
only.
- --------------------------------------------------------------------------------
8 The AAL Mutual Funds Annual Report
<PAGE>
International investing involves additional risks including currency
fluctuations, economic and political instability, and accounting standards.
[LOGO] What impact, if any, has the introduction of the euro had on the Fund?
There has been minimal direct impact of the introduction of the euro on the
Fund. Indirect implications are, however, far reaching. First, monetary policy
management has become centralized at the European level and a new currency, the
euro, is now operational. We expect the euro to become a globally important
currency that, in the near future, may rival the dollar as more trade and
central bank reserves are denominated in euros. Second, the operating
environment for companies is changing the way business is conducted. Economies
of scale will be gained from a single currency as European pricing reduces
distortions caused by multiple currencies and transaction costs will decline as
firms operate in fewer currencies. Third, the monetary union will create a
single European capital market with the emergence of a single market in national
government debts and there will emerge a single European equity market with
greater transparency, homogeneity and thus efficiency.
[LOGO] What does the uncertain outlook in Japan, Brazil and Russia mean for The
AAL International Fund?
We think conditions in Japan may have reached a low phase and we are finding
increasing signs of significant corporate restructuring. This means Japan may
potentially gain a more prominent presence in the portfolio over the next 12
months. In Brazil, we are cautious as the level of indebtness remains high and
local confidence needs to improve in order for us to become bullish. As far as
Russia is concerned, we find better risk-adjusted return potential in other
markets at this time. The high degree of structural uncertainties makes
forecasting very difficult.
/s/ Kathleen M. Harris
Kathleen M. Harris
PORTFOLIO MANAGER
/s/ Sean Roche
L. Sean Roche
PORTFOLIO MANAGER
Distribution of Fund Holdings
<TABLE>
<CAPTION>
%of Net Assets
Country 4/30/99
- ------- -------
<S> <C>
Continental Europe ........................... 43%
United Kingdom ............................... 22%
Japan ........................................ 22%
North America ................................ 6%
Pacific Basin (excluding Japan) .............. 5%
Emerging Markets ............................. 2%
----------
Total 100%
</TABLE>
Largest Holdings
<TABLE>
<CAPTION>
%of Net Assets
Security Country 4/30/99
- -------- ------- -------
<S> <C> <C>
NTT Mobile Communications Networks, Inc. . Japan .................... 4.70%
Telecom Italia SPA ....................... Italy .................... 4.04%
Vodafone Group plc ....................... United Kingdom ........... 3.60%
Glaxo Wellcome plc ....................... United Kingdom ........... 3.00%
British Aerospace plc .................... United Kingdom ........... 2.92%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 9
<PAGE>
[PHOTO APPEARS HERE]
The AAL Capital Growth Fund
[LOGO] How has Market volatility affected the Fund?
There's large volatility only on a daily basis. There's not as much when
you look at it from a weekly or monthly standpoint. However, one percent daily
volatility can make you nervous. It's reassuring that our shareholders aren't
viewing these ups and downs as reasons to sell shares.
To the best of my ability, I try to ignore the volatility and take
advantage of it where I can. Volatility often means lower prices in companies I
may be looking at; there are some good opportunities to add growth at a
reasonable price.
[LOGO] Are there particular sectors that have been more favorable, considering
the overall market behavior?
The most favorable sector in the from a past six months has been the financials-
banks, insurance and financial services organizations, to name a few members of
the sector. They have had relatively cheap valuations and the Fund is
overweighted, compared to the S&P 500.Financials are one of the better sectors
in terms of meeting earnings estimate revisions and they have good buying
patterns by company executives. Going forward, we expect their rate of growth
will look good compared to the rest of the market.
[LOGO] Are there any particular stocks that you have been pleased with?
I couldn't be more pleased with the performance of cable stocks. It's been hard
to hold onto them, because they have performed so well. One key factor in this
area is the Internet. It's real, it's a growing
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/
Date VALUE Date VALUE
- ------------------------------------ -----------------------------------
30-Apr-89 9,600.00 30-Apr-89 10,000.00
31-May-89 10,029.27 31-May-89 10,403.08
30-Jun-89 9,951.22 30-Jun-89 10,344.53
31-Jul-89 10,826.63 31-Jul-89 11,277.71
31-Aug-89 10,905.51 31-Aug-89 11,497.45
30-Sep-89 10,767.47 30-Sep-89 11,450.63
31-Oct-89 10,698.44 31-Oct-89 11,185.09
30-Nov-89 10,895.65 30-Nov-89 11,412.26
31-Dec-89 11,238.21 31-Dec-89 11,685.92
31-Jan-90 10,619.41 31-Jan-90 10,901.80
28-Feb-90 10,629.39 28-Feb-90 11,043.25
30-Mar-90 10,829.01 30-Mar-90 11,335.66
30-Apr-90 10,699.26 30-Apr-90 11,053.29
31-May-90 11,657.40 31-May-90 12,128.68
29-Jun-90 11,637.44 29-Jun-90 12,046.92
31-Jul-90 11,680.62 31-Jul-90 12,008.42
31-Aug-90 10,649.09 31-Aug-90 10,924.30
28-Sep-90 10,254.68 28-Sep-90 10,393.38
31-Oct-90 10,345.69 31-Oct-90 10,349.44
30-Nov-90 11,023.27 30-Nov-90 11,017.12
31-Dec-90 11,331.50 31-Dec-90 11,323.84
31-Jan-91 11,577.40 31-Jan-91 11,815.76
28-Feb-91 12,294.58 28-Feb-91 12,659.74
29-Mar-91 12,704.40 29-Mar-91 12,965.99
30-Apr-91 12,724.89 30-Apr-91 12,996.46
31-May-91 13,247.41 31-May-91 13,555.57
28-Jun-91 12,796.61 28-Jun-91 12,935.00
31-Jul-91 13,275.27 31-Jul-91 13,537.39
30-Aug-91 13,555.29 30-Aug-91 13,857.17
30-Sep-91 13,451.58 30-Sep-91 13,625.20
31-Oct-91 13,669.38 31-Oct-91 13,807.62
30-Nov-91 13,223.41 30-Nov-91 13,253.10
31-Dec-91 14,752.65 31-Dec-91 14,766.21
31-Jan-92 14,396.41 31-Jan-92 14,491.41
28-Feb-92 14,459.27 28-Feb-92 14,679.00
31-Mar-92 14,239.24 31-Mar-92 14,393.79
30-Apr-92 14,731.69 30-Apr-92 14,815.84
29-May-92 14,825.99 29-May-92 14,888.29
30-Jun-92 14,616.44 30-Jun-92 14,666.90
31-Jul-92 15,144.04 31-Jul-92 15,265.96
31-Aug-92 14,964.26 31-Aug-92 14,953.77
30-Sep-92 15,080.59 30-Sep-92 15,129.55
30-Oct-92 15,260.37 30-Oct-92 15,181.49
30-Nov-92 15,588.21 30-Nov-92 15,697.01
31-Dec-92 15,594.55 31-Dec-92 15,889.60
29-Jan-93 15,327.52 29-Jan-93 16,022.32
26-Feb-93 15,754.77 26-Feb-93 16,240.61
31-Mar-93 15,936.35 31-Mar-93 16,583.25
30-Apr-93 15,840.22 30-Apr-93 16,182.44
31-May-93 16,085.89 31-May-93 16,614.05
30-Jun-93 16,032.48 30-Jun-93 16,662.57
30-Jul-93 15,894.94 30-Jul-93 16,595.53
31-Aug-93 16,347.85 31-Aug-93 17,223.92
30-Sep-93 16,164.53 30-Sep-93 17,087.96
29-Oct-93 16,563.52 29-Oct-93 17,441.15
30-Nov-93 16,412.55 30-Nov-93 17,275.67
31-Dec-93 16,539.02 31-Dec-93 17,484.60
31-Jan-94 16,659.26 31-Jan-94 18,078.46
28-Feb-94 16,232.94 28-Feb-94 17,588.18
31-Mar-94 15,620.79 31-Mar-94 16,822.74
29-Apr-94 15,839.41 29-Apr-94 17,038.27
31-May-94 15,861.28 31-May-94 17,317.17
30-Jun-94 15,514.76 30-Jun-94 16,893.07
29-Jul-94 15,890.74 29-Jul-94 17,447.39
31-Aug-94 16,344.13 31-Aug-94 18,161.47
30-Sep-94 16,122.96 30-Sep-94 17,718.15
31-Oct-94 16,521.06 31-Oct-94 18,114.90
30-Nov-94 16,023.44 30-Nov-94 17,456.06
30-Dec-94 16,311.40 30-Dec-94 17,714.46
31-Jan-95 16,718.89 31-Jan-95 18,173.48
28-Feb-95 17,266.10 28-Feb-95 18,881.04
31-Mar-95 17,568.81 31-Mar-95 19,437.30
28-Apr-95 18,116.01 28-Apr-95 20,009.28
31-May-95 18,744.72 31-May-95 20,807.43
30-Jun-95 18,985.72 30-Jun-95 21,290.37
31-Jul-95 19,630.70 31-Jul-95 21,996.02
31-Aug-95 19,548.61 31-Aug-95 22,051.09
29-Sep-95 20,475.03 29-Sep-95 22,981.19
31-Oct-95 20,369.48 31-Oct-95 22,899.12
30-Nov-95 21,131.73 30-Nov-95 23,903.36
29-Dec-95 21,367.41 29-Dec-95 24,363.79
31-Jan-96 22,253.17 31-Jan-96 25,192.04
29-Feb-96 22,289.57 29-Feb-96 25,426.25
29-Mar-96 22,253.17 29-Mar-96 25,671.10
30-Apr-96 22,799.19 30-Apr-96 26,049.19
31-May-96 23,296.67 31-May-96 26,719.93
28-Jun-96 23,278.47 28-Jun-96 26,821.76
31-Jul-96 22,230.33 31-Jul-96 25,637.31
30-Aug-96 22,693.46 30-Aug-96 26,178.87
30-Sep-96 24,314.42 30-Sep-96 27,651.01
31-Oct-96 24,606.93 31-Oct-96 28,413.38
29-Nov-96 26,556.95 29-Nov-96 30,559.19
31-Dec-96 26,079.10 31-Dec-96 29,953.81
31-Jan-97 27,766.58 31-Jan-97 31,824.12
28-Feb-97 27,485.33 28-Feb-97 32,073.94
31-Mar-97 26,168.59 31-Mar-97 30,758.59
30-Apr-97 27,485.33 30-Apr-97 32,593.25
30-May-97 29,326.21 30-May-97 34,576.32
30-Jun-97 30,651.90 30-Jun-97 36,124.54
31-Jul-97 32,868.78 31-Jul-97 38,998.07
29-Aug-97 31,254.17 29-Aug-97 36,814.96
30-Sep-97 32,612.49 30-Sep-97 38,829.99
31-Oct-97 32,253.69 31-Oct-97 37,534.62
28-Nov-97 33,727.34 28-Nov-97 39,270.71
31-Dec-97 34,833.53 31-Dec-97 39,944.63
30-Jan-98 34,927.31 30-Jan-98 40,385.98
27-Feb-98 37,687.20 27-Feb-98 43,297.12
31-Mar-98 39,254.71 31-Mar-98 45,512.55
30-Apr-98 39,710.22 30-Apr-98 45,970.27
29-May-98 38,544.64 29-May-98 45,180.96
30-Jun-98 40,984.32 30-Jun-98 47,014.77
31-Jul-98 40,447.70 31-Jul-98 46,515.47
31-Aug-98 34,303.41 31-Aug-98 39,798.64
30-Sep-98 36,624.29 30-Sep-98 42,348.41
30-Oct-98 39,495.20 30-Oct-98 45,790.03
30-Nov-98 41,708.76 30-Nov-98 48,564.12
31-Dec-98 44,653.24 31-Dec-98 51,360.84
29-Jan-99 46,835.44 29-Jan-99 53,507.77
26-Feb-99 45,867.08 26-Feb-99 51,845.28
31-Mar-99 47,503.73 31-Mar-99 53,918.99
30-Apr-99 48,922.16 30-Apr-99 56,007.06
/1/ An unmanaged index comprised of 500 common stocks representative of the
stock market as a whole. It is not possible to invest directly in the
index.
% Average Annual Total Returns
April 30,1999
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge) ... 23.20% 25.30% 17.69% 14.92% 7/16/87
Class A** (with sales charge) .... 18.25% 24.29% 17.21% 14.52% 7/16/87
- -----------------------------------------------------------------------------------------
Class B (without CDSC) ........... 21.94% NA NA 29.44% 1/8/97
Class B** (with CDSC) ............ 17.94% NA NA 28.51% 1/8/97
- -----------------------------------------------------------------------------------------
Class I*** ....................... 23.55% NA NA 29.50% 12/29/97
- -----------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge) 16.18% 23.89% 17.34% 14.34%
Class B** (with CDSC) 15.79% NA NA 28.02%
Class I*** ....................... 21.61% NA NA 28.66%
</TABLE>
*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.
**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%,declining 1% each year during the first five years
and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
10 The AAL Mutual Funds Annual Report
<PAGE>
part of the economy and you've got to find a way to make a play in it. By having
Internet involvement through the cable companies, many of whom are currently
offering or are about to offer high-speed access to the Internet, the Fund is
able to have a presence in this arena without some of the wild price swings in
other Internet stock plays.
[LOGO] Why are large-capitalization stocks still the most highly sought-after
issues?
A number of things have happened simultaneously in the market. Because of
relatively new trading procedures and increasing numbers of day traders, small-
and mid-cap stocks have become less liquid and consequently, more volatile. As a
result, large-cap stocks have become more liquid in relation to small- and mid-
cap stocks.
Large-cap stocks have been better in terms of meeting earnings estimates, on
average. With an environment of declining interest rates and low inflation,
price to earnings (P/E) ratios go up and large-cap stocks tend to deliver more
consistent earnings.
/s/ Frederick L. Plautz
- -----------------------
Frederick L. Plautz
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] Consumer Staples.................................... 23%
[*] Financials.......................................... 19%
[*] Technology.......................................... 17%
[*] Health Care......................................... 10%
[*] Communication Services.............................. 7%
[*] Consumer Cyclicals.................................. 7%
[*] Energy.............................................. 7%
[*] Capital Goods....................................... 6%
[ ] Cash &Cash Equivalents.............................. 4%
----------
Total 100%
</TABLE>
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
MediaOne Group Inc.................................... 3.74%
Microsoft Corporation................................. 3.37%
American International Group, Inc..................... 3.25%
General Electric Company.............................. 3.19%
Cox Communications, Inc. Class A...................... 3.19%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 11
<PAGE>
The AAL Equity Income Fund
Tell us about the performance of the Fund in its first full fiscal year
as an equity income fund.
I have been very pleased with the performance of the Fund during its first full
fiscal year. The primary reason for converting the Fund to an equity income fund
18 months ago was to provide greater diversification as a way to both enhance
the Fund's total return potential and to diversify its risks. The excellent
performance from the Fund's first 18 months strongly supports that original
decision to convert to an equity income fund and has greatly benefited our
shareholders.
What are some of the fundamental qualities you look for when choosing stocks
for the Fund? What processes do you follow when evaluating potential companies
for inclusion in the Fund?
First, I am a long-term investor because our clients are long-term investors.
Second, I look for value and because I am a long-term investor, I look for long-
term value. Value, to me, means a stock that has good long-term (one to two
years) fundamentals for growth and is selling at an attractive price. I define
strong fundamentals as a company with a good market position and a positive
earnings outlook. I consider a company to be selling at an attractive price when
it is selling at a discount to my alternative investment choices. So the two
primary qualities I look for are strong fundamentals for growth and an
attractive price. One without the other does not make for an appealing
investment. The process I follow is primarily a "bottom-up" process, which
depends heavily on fundamental research from both our internal research staff
and our outside research resources. "Bottom-up"
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPH APPEARS HERE]
THE AAL EQUITY INCOME FUND S&P 500(R) INDEX /1/
Date VALUE Date VALUE
- ------------------------------------- -----------------------------------
18-Mar-94 9,596.93 18-Mar-94 10,000.00
31-Mar-94 9,520.15 31-Mar-94 9,470.30
29-Apr-94 9,548.94 29-Apr-94 9,591.63
31-May-94 9,337.81 31-May-94 9,748.64
30-Jun-94 9,117.08 30-Jun-94 9,509.89
29-Jul-94 9,378.40 29-Jul-94 9,821.94
31-Aug-94 9,388.08 31-Aug-94 10,223.94
30-Sep-94 9,126.76 30-Sep-94 9,974.37
31-Oct-94 9,224.37 31-Oct-94 10,197.72
30-Nov-94 9,087.72 30-Nov-94 9,826.82
30-Dec-94 8,912.01 30-Dec-94 9,972.29
31-Jan-95 9,286.22 31-Jan-95 10,230.69
28-Feb-95 9,276.37 28-Feb-95 10,629.01
31-Mar-95 9,207.44 31-Mar-95 10,942.16
30-Apr-95 9,406.09 30-Apr-95 11,264.15
31-May-95 9,882.85 31-May-95 11,713.47
30-Jun-95 9,952.38 30-Jun-95 11,985.34
31-Jul-95 10,062.51 31-Jul-95 12,382.58
31-Aug-95 10,102.56 31-Aug-95 12,413,58
29-Sep-95 10,693.30 29-Sep-95 12,937.18
31-Oct-95 10,834.67 31-Oct-95 12,890.98
30-Nov-95 10,986.13 30-Nov-95 13,456.31
29-Dec-95 11,511.44 29-Dec-95 13,715.51
31-Jan-96 11,735.36 31-Jan-96 14,181.77
29-Feb-96 11,460.55 29-Feb-96 14,313.61
29-Mar-96 11,358.77 29-Mar-96 14,451,45
30-Apr-96 11,184.34 30-Apr-96 14.664.29
31-May-96 11,215.12 31-May-96 15,041.89
28-Jun-96 11,594.77 28-Jun-96 15,099.21
31-Jul-96 11,046.58 31-Jul-96 14,432.43
30-Aug-96 11,036.24 30-Aug-96 14,737.30
30-Sep-96 11,067.27 30-Sep-96 15,566.04
31-0ct-96 11,495.74 31-0ct-96 15,995.21
29-Nov-96 11,924.22 29-Nov-96 17,203.18
31-Dec-96 12,064.68 31-Dec-96 16,862.39
31-Jan-97 12,191.34 31-Jan-97 17,915.28
28-Feb-97 12,265,23 28-Feb-97 18,055.91
31-Mar-97 11,895.79 31-Mar-97 17,315.44
30-Apr-97 12,066.04 30-Apr-97 18,348.25
30-May-97 12,725.73 30-May-97 19,464.61
30-Jun-97 13,114.10 30-Jun-97 20,336.18
31-Jul-97 13,360.73 31-Jul-97 21,953.82
29-Aug-97 12,835.31 29-Aug-97 20,724.85
30-Sep-97 13,510.85 30-Sep-97 21,859.20
31-Oct-97 13,370.56 31-Oct-97 21,129.98
28-Nov-97 14,104.38 28-Nov-97 22,107.30
31-Dec-97 14,763.75 31-Dec-97 22,486.69
30-Jan-98 14,640.25 30-Jan-98 22,735.14
27-Feb-98 15,347.56 27-Feb-98 24,373.96
31-Mar-98 16,107.64 31-Mar-98 25,621.13
30-Apr-98 16,118.91 30-Apr-98 25,878.80
29-May-98 15,871.10 29-May-98 25,434.46
30-Jun-98 16,215.78 30-Jun-98 26,466.79
31-Jul-98 15,910.67 31-Jul-98 26,185.71
31-Aug-98 13,684.54 31-Aug-98 22,404.50
30-Sep-98 14,538.71 30-Sep-98 23,839.89
30-Oct-98 15,445.96 30-Oct-98 25,777.33
30-Nov-98 16,024.33 30-Nov-98 27,339.00
31-Dec-98 16,725.67 31-Dec-98 28,913.40
29-Jan-98 16,810.02 29-Jan-98 30.122.01
26-Feb-99 16,556.96 26-Feb-99 29,186.11
31-Mar-99 16,765.43 31-Mar-99 30,353.50
30-Apr-99 17,744.52 30-Apr-99 31,528.97
/1/ An unmanaged index composed of 500 common stocks representative of the stock
as a whole. It is not possible to invest in the index.
% Average Annual Total Returns*
--------------------------------------------
April 30, 1999
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year Inception Date
--------------------------------------------------
<S> <C> <C> <C> <C>
Class A (without sales charge)......... 10.08% 13.19% 12.75% 3/18/94
Class A** (with sales charge).......... 5.66% 12.28% 11.85% 3/18/94
- -----------------------------------------------------------------------------------------
Class B (without CDSC)................. 8.97% NA 17.21% 1/8/97
Class B** (with CDSC).................. 4.97% NA 16.15% 1/8/97
- -----------------------------------------------------------------------------------------
Class I***............................. 10.62% NA 15.39% 12/29/97
- ------------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge).......... (0.11)% 11.08% 10.80%
Class B** (with CDSC).................. (0.97)% NA 13.86%
Class I***............................. 4.52% NA 11.23%
</TABLE>
* 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.
** 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%,declining 1% each year during the first
five years and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
12 The AAL Mutual Annual Report
<PAGE>
refers to our spending a great deal of time identifying attractive companies
without regard to diversification. However, I also take a "top-down" look at the
portfolio to check on the balance within the Fund and make changes, if
necessary, to maintain proper diversification.
[LOGO] Dividend increases by companies were less frequent in 1998 for the
second year in a row and dividend cuts or omissions were more frequent. What
implications does this have for The AAL Equity Income Fund, which depends on
dividend income to provide a portion of its total return to investors?
It is true that The AAL Equity Income Fund depends on a combination of capital
appreciation and dividend income to provide an attractive total return for our
investors. However, the contribution to total return by each can vary
significantly over time. Because stocks have been appreciating much more rapidly
over the last several years than dividends have been growing, the value of
dividend income has become less and less important to the total return being
earned by investors. In other words, the rapid appreciation in stock prices has
completely overwhelmed dividend income as a contributor to investor's total
return. The equity markets cannot continue to grow so rapidly forever and, in
time, believe dividend income will again come to play an important role in the
total return earned by our investors.
/s/ Lewis A. Bohannon
- ---------------------
Lewis A. Bohannon
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] Communication Services.................... 15%
[*] Financials................................ 13%
[*] Consumer Cyclicals........................ 12%
[*] Energy.................................... 12%
[*] Capital Goods............................. 9%
[*] Consumer Staples.......................... 9%
[*] Health Care............................... 8%
[*] Utilities................................. 8%
[ ] Technology................................ 5%
[ ] Cash & Cash Equivalents................... 4%
[ ] Basic Materials........................... 3%
[ ] Fixed Income Investments.................. 2%
----------
Total 100%
</TABLE>
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
MCI WorldCom, Inc........................... 2.94%
MediaOne Group, Inc......................... 2.26%
AT&T Corporation............................ 2.06%
American Home Products Corporation.......... 2.03%
Hasbro, Inc................................. 1.98%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 13
<PAGE>
[PHOTOS APPEARS HERE]
The AAL Balanced Fund
[LOGO] What did you learn in the Fund's first year?
Trying to find the median balanced fund asset allocation target is more of an
art than a science, so that was a learning experience for us. The money that
came into the Fund throughout the first year was better than we expected. While
it was relatively easy to recreate The AAL Capital Growth Fund portion in
equities, it took us a while to get the fixed-income portion to resemble The AAL
Bond Fund.
[LOGO] Do market conditions, such as the strong bull market we've had,
impact how you target the Fund's asset allocations?
The Fund is actively managed. We've been at both ends of our normal range in
terms of asset allocation. Our investment objectives say that the Fund will be
comprised of equities that are a clone of The AAL Capital Growth Fund, bonds
that are a clone of The AAL Bond Fund and
#Asset Mix
- ----------
Common Stocks.............49%
Fixed Income Investments..38%
Money Market Instruments..13%
------
Total 100%
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPH APPEARS HERE]
THE AAL BALANCED FUND S&P 500(R) INDEX /1/ LEHMAN BROTHERS AGGREGATE
BOND INDEX /2/
Date VALUE Date VALUE Date VALUE
- --------------------------------------------------------------------------------
12/29/97 9,596.93 12/29/97 10,000.00 12/29/97 10,000.00
12/31/97 9,596.93 12/31/97 10,000.00 12/31/97 10,000.00
01/30/98 9,654.51 01/30/98 10,110.49 01/30/98 10,128.00
02/27/98 10,086.37 02/27/98 10,839.28 02/27/98 10,119.90
03/31/98 10,333.01 03/31/98 11,393.91 03/31/98 10,154.31
04/30/98 10,400.01 04/30/98 11,508.50 04/30/98 10,207.11
05/29/98 10,256.04 05/29/98 11,310.90 05/29/98 10,304.08
06/30/98 10,664.94 06/30/98 11,769.98 06/30/98 10,391.66
07/31/98 10,587.66 07/31/98 11,644.99 07/31/98 10,413.48
08/31/98 9,718.23 08/31/98 9,963.45 08/31/98 10,583.22
09/30/98 10,180.29 09/30/98 10,601.78 09/30/98 10,830.87
10/30/98 10,578.19 10/30/98 11,463.37 10/30/98 10,773.47
11/30/98 10,888.74 11/30/98 12,157.86 11/30/98 10,834.87
12/31/98 11,328.24 12/31/98 12,858.01 12/31/98 10,867.38
01/29/99 11,659.71 01/29/99 13,395.48 01/29/99 10,944.54
02/26/99 11,445.23 02/26/99 12,979.29 02/26/99 10,753.01
03/31/99 11,697.73 03/31/99 13,498.43 03/31/99 10,812.15
04/30/99 11,903.47 04/30/99 14,021.17 04/30/99 10,846.75
/1/ An unmanaged index comprised of 500 common stocks representative of the
stock market as a whole. It is not possible to invest in the index
/2/ An umnanaged index that encompasses 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.
% Average Annual Total Returns
April 30,1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception
Date
<S> <C> <C> <C>
Class A (without sales charge)....... 14.45% 17.52% 12/29/97
Class A** (with sales charge)........ 9.88% 13.95% 12/29/97
- --------------------------------------------------------------------------------
Class B (without CDSC)............... 13.47% 16.54% 12/29/97
Class B** (with CDSC)................ 9.47% 13.68% 12/29/97
- --------------------------------------------------------------------------------
Class I***........................... 14.73% 17.64% 12/29/97
- --------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge)........ 8.66% 13.34%
Class B** (with CDSC)................ 8.41% 13.15%
Class I***........................... 3.68% 17.34%
</TABLE>
* 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.
** Class A performance reflects the maximum sales charge of 4%.Class B
performance reflects the maximum contingent deferred sales charge (CDSC) of
5%,declining 1% each year for the first five years and then converting to
Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
14 The AAL Mutual Funds Report
<PAGE>
some money market instruments, so we look at the allocations to determine the
best mix. The huge rally toward the end of 1998 added value to the Fund, because
our increased holdings early last fall took advantage of the stock market's
rise.
[LOGO] How has the Fund done in the past six months?
Because of the favorable environment for large-cap stocks, the Fund has
done very well. The bond market has had its ups and downs, as well as
experiencing what is known as the "first-quarter effect." This phase involves
bond mutual fund managers acquiring bonds with more risk early in the year and
it leads to fairly unsettled conditions. Due to a slightly larger position in
money market instruments, we've been able to overcome the struggle in the bond
market.
/s/ Michael R. Hilt
- ---------------------
Michael R. Hilt
PORTFOLIO MANAGER
/s/ Frederick L. Plautz
- ---------------------
Frederick L. Plautz
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] Fixed Income Investments.................. 38%
[*] Cash & Cash Equivalents................... 13%
[*] Consumer Staples.......................... 12%
[*] Financials................................ 10%
[*] Technology................................ 9%
[*] Health Care............................... 5%
[*] Communication Services.................... 4%
[*] Capital Goods............................. 3%
[*] Consumer Cyclicals........................ 3%
[ ] Energy.................................... 3%
----------
Total 100%
</TABLE>
5 Largest Bond Holdings
-----------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
U.S. Treasury Notes......................... 2.77%
Coupon Rate:4.750%
Maturity Date:11/15/2008
Government National Mortgage Association.... 2.36%
Coupon Rate:7.500%
Maturity Date:4/15/2012
Federal National Mortgage Association....... 2.32%
Coupon Rate:6.500%
Maturity Date:6/1/2013
Government National Mortgage Association.... 2.31%
Coupon Rate:8.020%
Maturity Date:5/15/2007
</TABLE>
5 Largest Common Stock Holdings
-------------------------------
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
MediaOne Group, Inc................................ 1.89%
Microsoft Corporation.............................. 1.71%
American International Group, Inc.................. 1.64%
General Electric Company........................... 1.62%
Cox Communications, Inc. Class A................... 1.61%
</TABLE>
- --------------------------------------------------------------------------------
April 30,1999 15
<PAGE>
[PICTURE APPEARS HERE]
The AAL High Yield Bond Fund
[LOGO] How have high yield bonds performed over the year ended April 30,1999?
The high-yield bond market, as measured by the Merrill Lynch High Yield Index,
had a total return of 3.1 percent during this time period. This index is
composed of 990 bonds which are rated BB,B and CCC collectively. The bonds are
priced daily by Merrill's traders. The index is meant to track the overall high-
yield bond market. It is not possible to invest directly in the index. The
market was fairly calm through July, but took an abrupt turn for the worse in
August when the Russian government devalued the ruble and defaulted on its debt.
This event caught the markets by surprise and sparked a "flight to quality"
trade by investors. In times of great uncertainty, investors will sell so-called
"risky" assets in favor of "safe" investments. High-yield bonds are considered
one of the more risky segments within the fixed-income asset class as contrasted
with U.S. government bonds. As a result, high-yield bonds showed negative
returns for three consecutive months before recovering in November. So far in
1999,the high-yield bond market is continuing to recover from the crisis last
fall. Liquidity is improving, but still is less than desirable.
[logo] How did the Fund perform during this period and what factors affected
performance?
The Fund returned negative 3.96 percent during this period. The market turmoil
we witnessed during the fall led to expectations of a global economic slowdown.
In a period of slowing economic growth, the less cyclical sectors of the market
will usually outperform the overall market. The best performing sector over the
last year was media. This sector represents 13 percent of the portfolio, and
consists of companies in the cable TV, radio and television broadcasting and
publishing industries. These industries are somewhat defensive because their
businesses are non-cyclical and based entirely in the United States. This sector
finished the year with a return of about 10.9 percent. The Fund's
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPGH APPEARS HERE]
THE AAL HIGH YIELD BOND FUND MERRILL LYNCH HIGH YIELD
MASTER INDEX /1/
Date VALUE Date VALUE
- -------------------------------------- -----------------------------------
01/08/97 9,596.93 01/08/97 10,000.00
01/31/97 9,640.14 01/31/97 10,108.00
02/28/97 9,867.39 02/28/97 10,249.82
03/31/97 9,599.77 03/31/97 10,135.94
04/30/97 9,741.77 04/30/97 10,251.29
05/30/97 10,050.83 05/30/97 10,457.85
06/30/97 10,178.95 06/30/97 10,617.12
07/31/97 10,447.56 07/31/97 10,871.93
08/29/97 10,449,76 08/29/97 10,852.91
09/30/97 10,695.36 09/30/97 11,032.63
10/31/97 10,680.75 10/31/97 11,105.89
11/28/97 10,774.78 11/28/97 11,211.06
12/31/97 10,867.33 12/31/97 11,317.45
01/30/98 10,039.47 01/30/98 11,485.97
02/27/98 10,120.07 02/27/98 11,533.41
03/31/98 11,196.82 03/31/98 11,632.83
04/30/98 11,214.47 04/30/98 11,688.08
05/29/98 11,215.90 05/29/98 11,769.43
06/30/98 11,224.82 06/30/98 11,827.69
07/31/98 11,241.75 07/31/98 11,895.11
08/31/98 10,402.33 08/31/98 11,381.83
09/30/98 10,353.59 09/30/98 11,404.60
10/30/98 10,119.87 10/30/98 11,217.33
11/30/98 10,654.41 11/30/98 11,728.17
12/31/98 10,622.79 12/31/98 11,732.04
01/29/99 10,727.54 01/29/99 11,848.07
02/26/99 10,571.09 02/26/99 11,757.67
03/31/99 10,609.53 03/31/99 11,859.02
04/30/99 10,770.76 04/30/99 12,044.50
/1/ An unmanaged index comprised of more than 900 "cash-pay" high-yield bonds
representative of the high-yield market as a whole. It is not possible to
invest directly in the index.
% Average Annual Total Returns April 30, 1999
---------------------------------------------
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
-------------------------------------
<S> <C> <C> <C>
Class A (without sales charge)............. (3.96)% 5.13% 1/8/97
Class A** (with sales charge).............. (7.80)% 3.27% 1/8/97
- ---------------------------------------------------------------------------------
Class B (without CDSC)..................... (4.62)% 4.39% 1/8/97
Class B** (with CDSC)...................... (8.43)% 3.16% 1/8/97
- ---------------------------------------------------------------------------------
Class I***................................. (3.85)% (0.52)% 12/29/97
- ---------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge).............. (9.02)% 2.70%
Class B** (with CDSC)...................... (9.67)% 2.58%
Class I***................................. (5.16)% (1.78)%
</TABLE>
* 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.
** Class A performance reflects the maximum sales charge of 4%.Class B
performance reflects the maximum contingent deferred sales charge (CDSC) of
5%,declining 1% each year during the first five years and then converting to
Class A shares after the fifth year.
*** Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
16 The AAL Mutual Annual Report
<PAGE>
largest investment, Comcast, was acquired by an investment-grade company, SBC
Communications, in January. The bonds traded up eight points on this news. The
bonds were sold at a price of 115,which resulted in a total return of 19.6
percent over the past year. On the other hand, the basic materials sector
(steel, paper and chemicals) has been most affected by weak international
economies. This sector currently accounts for 13 percent of the portfolio. This
sector finished the year with a return of 1.2 percent. One of the Fund's
investments, Algoma Steel, has traded down 22 points over the last year, which
resulted in a negative total return of 8.2 percent. As 1999 unfolds, I believe
the basic material sector presents the most interesting opportunities. I expect
profitability to improve for basic material companies and for their bonds to
outperform the market over the next 12 months.
[LOGO] Default risk, or the risk that a bond issuer may not make interest
payments on its bonds, is inherent in the high-yield bond market. What effect,
if any, have defaults had on the portfolio during the year?
The major risk facing high-yield bond investing is default. When a company
encounters financial problems and can no longer pay the interest due on its
debt, or cannot repay debt when it is due, an event of "default" occurs. The
effect on the company's bonds can be a gradual decline in price as the bad news
slowly becomes public, or can be quite dramatic on unexpected disappointing
news. The bonds do not become worthless if the company enters bankruptcy, but
their value may decline 40 percent to 60 percent.
The portfolio did experience one default last year. Livent, a producer of
Broadway musicals such as "Ragtime" and "Showboat," filed for bankruptcy in mid-
November. The effect on the Fund was twofold. First, the decline in value of the
bonds (about 40 percent) reduced the net asset value by about four cents per
share, and secondly, the dividend rate was reduced slightly. This investment
represented only 1.0 percent of the portfolio and highlights the need for
diversification when investing in high-yield bonds.
/s/ David G. Carroll
- --------------------
David G. Carroll
PORTFOLIO MANAGER
Credit Quality
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] BB.............................................. 21%
[*] B............................................... 69%
[*] CCC............................................. 9%
. Non-Rated Bonds................................. 1%
----------
Total 100%
</TABLE>
Average Quality: B
Average Maturity:7.70 years
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
-------
<S> <C>
Charter Communications Holdings, LLC................... 1.75%
Coupon Rate:8.625%
Maturity Date:4/1/2009
CSC Holdings, Inc...................................... 1.40%
Coupon Rate:7.875%
Maturity Date:2/15/2018
Tenet Healthcare Corporation........................... 1.37%
Coupon Rate:8.000%
Maturity Date:1/15/2005
Chancellor Media Corporation........................... 1.16%
Coupon Rate:8.000%
Maturity Date:11/1/2008
Royster-Clark, Inc..................................... 1.14%
Coupon Rate:10.250%
Maturity Date:4/1/2009
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 17
<PAGE>
[PHOTO APPEARS HERE]
The AAL Municipal Bond Fund
[LOGO] Over the last 12 months there has been significant volatility in the
financial markets. How has the municipal market been impacted? How has the Fund
performed during this period?
The global economic events have led to wide swings in both stock and bond
prices. Fortunately, however, the municipal market has been a relative sea of
tranquillity through most of the turmoil. The global cash flows into the U.S.
markets as a safe haven were not directed to the municipal market--since the tax
exemption was of no value--and near-record new supply minimized the extent to
which municipal yields could fall. The divergence between the falling yields in
the taxable market and stable yields in the tax-exempt market led to an
extremely undervalued municipal market at year end. When Treasury rates rose in
early 1999, municipal yields once again held very steady. Through all of this,
our shareholders enjoyed a relatively stable net asset value and a steady stream
of tax-exempt income. As for performance, the Fund did well, returning 6.8
percent for the 12-month period ending April 30, placing it among the top 10
percent of the Lipper General Municipal Debt peer group.
[LOGO] What sectors of the municipal market have performed the best, and
where do you see the greatest opportunities going forward?
Because of the stable municipal market, generally the higher the yield the
better the performance. Some of the traditionally higher yielding sectors of the
market, such as electric utility issues, water and sewer-backed revenue issues
did very well. However, other sectors like health care and housing, which
typically offer above average yield, did not fare so well. The health care field
in particular is going through a significant transition from the way business
has traditionally been done in the past. It's a much more competitive
environment today than ever before and the cuts in Medicare and Medicaid
payments at the federal level are forcing hospitals and nursing homes to operate
much more efficiently. Housing-related issues
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPH APPEARS HERE]
THE AAL MUNICIPAL BOND FUND LEHMAN BROTHERS MUNICIPAL
BOND INDEX /1/
Date VALUE Date VALUE
- ------------------------------------- -----------------------------------
04/30/89 9,596.06 04/30/89 10,000.00
05/31/89 9,753.69 05/31/89 10,208.00
06/30/89 9,916.49 06/30/89 10,346.83
07/31/89 9,966.27 07/31/89 10,487.55
08/31/89 9,846.79 08/31/89 10,384.77
09/29/89 9,914.73 09/29/89 10,353.61
10/31/89 9,985.47 10/31/89 10,479.93
11/30/89 10,056.22 11/30/89 10,663.33
12/29/89 10,222.81 12/29/89 10,750.77
01/31/90 10,089.38 01/31/90 10,700.24
02/28/90 10,140.70 02/28/90 10,795.47
03/30/90 10,235.73 03/30/90 10,798.71
04/30/90 10,110.65 04/30/90 10,720.96
05/31/90 10,267.00 05/31/90 10,954.67
06/29/90 10,480.00 06/29/90 11,051.07
07/31/90 10,564.69 07/31/90 11,213.53
08/31/90 10,310.63 08/31/90 11,050.93
09/28/90 10,440.36 09/28/90 11,057.56
10/31/90 10,547.88 10/31/90 11,257.70
11/30/90 10,719.91 11/30/90 11,483.98
12/31/90 10,882.82 12/31/90 11,534.51
01/31/91 10,937.45 01/31/91 11,689.07
02/28/91 10,992.09 02/28/91 11,790.77
03/29/91 11,142.64 03/29/91 11,795.49
04/30/91 11,231.33 04/30/91 11,952.37
05/31/91 11,253.51 05/31/91 12,058.74
06/28/91 11,335.44 06/28/91 12,046.68
07/31/91 11,436.75 07/31/91 12,193.65
08/30/91 11,504.29 08/30/91 12,354.61
09/30/91 11,757.28 09/30/91 12,515.22
10/31/91 11,814.41 10/31/91 12,627.85
11/30/91 11,768.71 11/30/91 12,663.21
12/31/91 12,116.59 12/31/91 12,935.47
01/31/92 12,081.81 01/31/92 12,965.22
02/28/92 12,012.24 02/28/92 12,969.11
03/31/92 12,123.84 03/31/92 12,974.30
04/30/92 12,182.63 04/30/92 13,089.77
05/29/92 12,276.71 05/29/92 13,244.23
06/30/92 12,575.97 06/30/92 13,466.73
07/31/92 12,993.18 07/31/92 13,870.74
08/31/92 12,730.93 08/31/92 13,734.80
09/30/92 12,869.17 09/30/92 13,824.08
10/30/92 12,639.58 10/30/92 13,688.60
11/30/92 12,869.17 11/30/92 13,933.63
12/31/92 13,126.14 12/31/92 14,075.75
01/29/93 13,211.85 01/29/93 14,239.03
02/26/93 13,554.70 02/26/93 14,754.48
03/31/93 13,580.03 03/31/93 14,598.09
04/30/93 13,629.64 04/30/93 14,745.53
05/28/93 13,629.64 05/28/93 14,828.10
06/30/93 13,950.60 06/30/93 15,075.73
07/30/93 13,912.93 07/30/93 15,095.33
08/31/93 14,113.84 08/31/93 15,409.31
09/30/93 14,410.91 09/30/93 15,584.98
10/29/93 14,423.61 10/29/93 15,614.59
11/30/93 14,207.58 11/30/93 15,477.18
12/31/93 14,606.78 12/31/93 15,803.75
01/31/94 14,709.82 01/31/94 15,983.91
02/28/94 14,297.64 02/28/94 15,569.93
03/31/94 13,837.56 03/31/94 14,936.23
04/29/94 13,772.35 04/29/94 15,063.19
05/31/94 13,798.43 05/31/94 15,194.24
06/30/94 13,865.88 06/30/94 15,101.56
07/29/94 14,050.76 07/29/94 15,377.92
08/31/94 14,037.55 08/31/94 15,431.74
09/30/94 13,919.03 09/30/94 15,204,89
10/31/94 13,638.24 10/31/94 14,934.24
11/30/94 13,317.34 11/30/94 14,663.93
12/30/94 13,776.37 12/30/94 14,986.54
01/31/95 14,048.63 01/31/95 15,415.16
02/28/95 14,457.02 02/28/95 15,863.74
03/31/95 14,706.83 03/31/95 16,046.17
04/28/95 14,734,40 04/28/95 16,065.43
05/31/95 15,092.76 05/31/95 16,577.91
06/30/95 15,095.91 06/30/95 16,433.68
07/31/95 15,182.00 07/31/95 16,589.80
08/31/95 15,324.94 08/31/95 16,800.50
09/29/95 15,411.06 09/29/95 16,906.34
10/31/95 15,699.78 10/31/95 17,151.48
11/30/95 16,059.12 11/30/95 17,436.20
12/29/95 16,289.23 12/29/95 17,603.58
01/31/96 16,357.65 01/31/96 17,737.37
02/29/96 16,275.47 02/29/96 17,616.76
03/29/96 16,030.07 03/29/96 17,391.26
04/30/96 15,936.59 04/30/96 17,342.57
05/31/96 15,955.57 05/31/96 17,335.63
06/28/96 16,116.09 06/28/96 17,524.59
07/31/96 16,271.03 07/31/96 17,684.06
08/30/96 16,230.23 08/30/96 17,680.52
09/30/96 16,548.37 09/30/96 17,928.05
10/31/96 16,746.55 10/31/96 18,130.64
11/29/96 17,139.92 11/29/96 18,462.43
12/31/96 17,004.05 12/31/96 18,384.89
01/31/97 16,978.96 01/31/97 18,419.82
02/28/97 17,153.82 02/28/97 18,589.28
03/31/97 16,850.82 03/31/97 18,338.32
04/30/97 16,995.19 04/30/97 18,492.37
05/30/97 17,277.77 05/30/97 18,769.75
06/30/97 17,489.38 06/30/97 18,970.59
07/31/97 18,136.82 07/31/97 19,496.07
08/29/97 17,838.22 08/29/97 19,312.81
09/30/97 18,134.09 09/30/97 19,542.63
10/31/97 18,249.53 10/31/97 19,667.71
11/28/97 18,376.76 11/28/97 19,783.75
12/31/97 18,761.82 12/31/97 20,072.59
01/30/98 18,975.09 01/30/98 20,279.34
02/27/98 18,931.55 02/27/98 20,285.42
03/31/98 18,905.66 03/31/98 20,303.68
04/30/98 18,779.61 04/30/98 20,212.31
05/29/98 19,159.69 05/29/98 20,531.66
06/30/98 19,236.18 06/30/98 20,611.74
07/31/98 19,241.64 07/31/98 20,663.27
08/31/98 19,597.69 08/31/98 20,983.55
09/30/98 19,904.56 09/30/98 21,245.84
10/30/98 19,774.03 10/30/98 21,245.84
11/30/98 19,849.99 11/30/98 21,320.20
12/31/98 19,884.19 12/31/98 21,373.50
01/29/99 20,141.22 01/29/99 21,627.85
02/26/99 19,972.44 02/26/99 21,532.69
03/31/99 20,016.45 03/31/99 21,562.83
04/30/99 20,056.16 04/30/99 21,616.74
/1/ An unmanaged broad-based index that provides a performance indicator of the
overall municipal bond market. It is not possible to invest directly in the
index.
% Average Annual Total Returns*
April 30,1999
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales
charge)....................... 6.80% 7.72% 7.65% 7.13% 7/16/87
Class A** (with sales charge).. 2.48% 6.85% 7.21% 6.76% 7/16/87
- ----------------------------------------------------------------------------------------
Class B (without CDSC)......... 5.93% NA NA 6.83% 1/8/97
Class B** (with CDSC).......... 1.93% NA NA 5.63% 1/8/97
- ----------------------------------------------------------------------------------------
Class I***..................... 7.09% NA NA 5.42% 12/29/97
- ----------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge).. 1.64% 6.79% 7.39% 6.79%
Class B** (with CDSC).......... 1.01% NA NA 5.74%
Class I***..................... 6.06% NA NA 5.53%
</TABLE>
*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.
**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%,declining 1% each year during the first
five years and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
18 The AAL Mutual Funds Annual Report
<PAGE>
suffered a bit as well since falling mortgage rates led to an increase in
prepayments on many of the older bonds with higher mortgage rates. Yet, It's
within these two sectors, health care and housing, that I see the most
opportunity going forward. Because of the concerns just mentioned, for the first
time in several years you're beginning to be fairly compensated for the inherent
risks. Gradually, I hope to add to our exposure in both of these sectors over
the next several months to capitalize on this opportunity.
[LOGO]Is the year 2000,or Y2K,computer problem an issue in the municipal
market? If so, how will it impact the Fund?
Federal, state and local governments have not been on the leading edge of
preparing their computer systems for the turn of the century. There always seems
to be a shortage of time, money and staff allotted for updating computer
systems. The problem potentially is greater in the public sector where there
tends to be less accountability vs. the private sector. Having said that,
however, I expect relatively few problems and no defaults despite all the media
hype. The larger municipalities tend to be more sophiscated and further along on
correcting the problem. My confidence lies in the fact that most municipalities
rely on commercial software for their accounting systems--which is what should
matter most to bondholders. Many systems already are Y2K compliant, while others
are being tested throughout 1999.Also,property taxes will get paid one way or
another. If there are problems at some of the smaller municipalities, they will
not lead to defaults. For revenue issues, such as water, sewer, electric
utilities and hospitals, there are simpler collection systems and these
businesses tend to rely on commercial vendors to make the software Y2K
compliant. I think the concerns on this subject are overblown as they relate to
the timely payment of debt service.
/s/ Duane A. McAllister
Duane A. McAllister
PORTFOLIO MANAGER
Credit Quality
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
AAA................................................ 40%
AA................................................. 20%
A.................................................. 16%
BBB................................................ 24%
----------
Total 100%
</TABLE>
Average Quality: AA
Average Maturity:19.00 years
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
Metropolitan Pier and Exposition Center,
Illinois Revenue Bonds...................................... 2.43%
Coupon Rate:7.000% Maturity Date:7/1/2026
Washington State Public Power Supply
System Revenue Bonds........................................ 2.09%
Coupon Rate:6.000% Maturity Date:7/1/2007
Kitsap County, Washington Conservatory
Housing Authority Revenue Bonds............................. 1.91%
Coupon Rate:5.600% Maturity Date:12/1/2028
Foothill/Eastern Transportation California
Revenue Bonds............................................... 1.82%
Coupon Rate:5.000% Maturity Date:1/1/2035
New York State Thruway Authority
Revenue Bonds............................................... 1.82%
Coupon Rate:5.600% Maturity Date:4/1/2005
</TABLE>
# 5 Largest Fund Allocations
----------------------------
<TABLE>
<CAPTION>
% of Net Assets
State 4/30/99
- ----- -------
<S> <C>
Illinois................................................... 14.8%
California................................................. 14.5%
New York................................................... 10.2%
Texas...................................................... 9.3%
Washington................................................. 7.7%
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 19
<PAGE>
[PHOTO APPEARS HERE]
The AAL Bond Fund
[LOGO] There has been considerable volatility in the financial markets. How has
this affected the Fund?
It has been a very volatile 12 months in terms of corporate bonds and their
yields relative to U.S. Treasury bonds. With a slight increase in short-term
interest rates, a stronger than expected U.S. economy and low inflation, the
bond market has been a difficult environment late in 1998 and early in 1999. The
difficulties began with the Russian debt default, spread to the Southeast Asia
crisis and later were added to somewhat by the developments in Brazil.
[LOGO] Given this environment, how have you positioned the Fund?
Going forward, we will continue to carry a weighting equal to the market in
terms of mortgage-backed and asset-backed securities as well as corporate bonds.
We will probably remain slightly underweighted in government bonds in order to
increase the Fund's yield. Over a longer period of time, these sectors have
outperformed government bonds and therefore offer potentially greater yield.
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[LINE GRAPGH APPEARS HERE]
THE AAL BOND FUND LEHMAN BROTHERS AGGREGATE
BOND INDEX /1/
Date VALUE Date VALUE
- ------------------------------------ -----------------------------------
30-Apr-89 9,598.77 30-Apr-89 10,000.00
31-May-89 9,840.75 31-May-89 10,263.00
30-Jun-89 10,077.67 30-Jun-89 10,575.00
31-Jul-89 10,243.69 31-Jul-89 10,800.24
31-Aug-89 10,125.94 31-Aug-89 10,640.40
29-Sep-89 10,182.93 29-Sep-89 10,694.67
31-Oct-89 10,395.56 31-Oct-89 10,957.75
30-Nov-89 10,476.27 30-Nov-89 11,061.85
31-Dec-89 10,521.65 31-Dec-89 11,091.72
31-Jan-90 10,412.67 31-Jan-90 10,959.73
28-Feb-90 10,459.78 28-Feb-90 10,994.80
30-Mar-90 10,464.53 30-Mar-90 11,002.50
30-Apr-90 10,351.08 30-Apr-90 10,901.27
31-May-90 10,638.29 31-May-90 11,223.95
29-Jun-90 10,787.58 29-Jun-90 11,404.66
31-Jul-90 10,944.07 31-Jul-90 11,562.04
31-Aug-90 10,824.42 31-Aug-90 11,407.11
28-Sep-90 10,904.83 28-Sep-90 11,501.79
31-Oct-90 11,042.99 31-Oct-90 11,647.86
30-Nov-90 11,257.79 30-Nov-90 11,898.29
31-Dec-90 11,415.30 31-Dec-90 12,083.90
31-Jan-91 11,549.65 31-Jan-91 12,233.74
28-Feb-91 11,635.72 28-Feb-91 12,337.73
29-Mar-91 11,704.42 29-Mar-91 12,422.86
30-Apr-91 11,835.28 30-Apr-91 12,557.03
31-May-91 11,911.53 31-May-91 12,629.86
28-Jun-91 11,896.57 28-Jun-91 12,623.54
31-Jul-91 12,040.32 31-Jul-91 12,799.01
30-Aug-91 12,288.02 30-Aug-91 13,075.47
30-Sep-91 12,539.86 30-Sep-91 13,340.90
31-Oct-91 12,715.57 31-Oct-91 13,488.98
30-Nov-91 12,813.01 30-Nov-91 13,613.08
31-Dec-91 13,211.39 31-Dec-91 14,017.39
31-Jan-92 12,980.48 31-Jan-92 13,826.79
28-Feb-92 13,051.86 28-Feb-92 13,916.63
31-Mar-92 12,987.58 31-Mar-92 13,838.70
30-Apr-92 13,074.30 30-Apr-92 13,938.33
29-May-92 13,301.78 29-May-92 14,201.77
30-Jun-92 13,538.10 30-Jun-92 14,397.75
31-Jul-92 13,850.48 31-Jul-92 14,691.47
31-Aug-92 13,978.49 31-Aug-92 14,839.85
30-Sep-92 14,172.67 30-Sep-92 15,016.45
30-Oct-92 13,948.93 30-Oct-92 14,816.73
30-Nov-92 13,876.71 30-Nov-92 14,819.69
31-Dec-92 14,096.70 31-Dec-92 15,055.32
29-Jan-93 14,370.67 29-Jan-93 15,344.39
28-Feb-93 14,622.80 28-Feb-93 15,612.91
31-Mar-93 14,688.38 31-Mar-93 15,678.49
30-Apr-93 14,801.97 30-Apr-93 15,788.24
28-May-93 14,770.61 28-May-93 15,808.76
30-Jun-93 15,046.21 30-Jun-93 16,094.90
30-Jul-93 15,092.03 30-Jul-93 16,186.64
31-Aug-93 15,379.78 31-Aug-93 16,469.91
30-Sep-93 15,421.55 30-Sep-93 16,514.38
29-Oct-93 15,472.24 29-Oct-93 16,575.48
30-Nov-93 15,257.65 30-Nov-93 16,434.59
31-Dec-93 15,337.06 31-Dec-93 16,523.33
31-Jan-94 15,540.06 31-Jan-94 16,746.40
28-Feb-94 15,191.78 28-Feb-94 16,455.01
31-Mar-94 14,813.07 31-Mar-94 16,048.57
29-Apr-94 14,654.79 29-Apr-94 15,920.18
31-May-94 14,633.98 31-May-94 15,918.59
30-Jun-94 14,611.51 30-Jun-94 15,883.57
29-Jul-94 14,832.03 29-Jul-94 16,199.65
31-Aug-94 14,863.29 31-Aug-94 16,219.09
30-Sep-94 14,658.82 30-Sep-94 15,980.67
31-Oct-94 14,623.83 31-Oct-94 15,966.29
30-Nov-94 14,544.90 30-Nov-94 15,931.16
30-Dec-94 14,609.27 30-Dec-94 16,041.09
31-Jan-95 14,849.20 31-Jan-95 16,358.70
28-Feb-95 15,149.49 28-Feb-95 16,748.04
31-Mar-95 15,262.37 31-Mar-95 16,580.20
28-Apr-95 15,450.58 28-Apr-95 17,086.11
31-May-95 15,939.08 31-May-95 17,747.34
30-Jun-95 16,035.77 30-Jun-95 17,876.89
31-Jul-95 15,968.33 31-Jul-95 17,837.57
31-Aug-95 16,143.37 31-Aug-95 18,053.40
29-Sep-95 16,286.10 29-Sep-95 18,228.52
31-Oct-95 16,484.99 31-Oct-95 18,465.49
30-Nov-95 16,731.14 30-Nov-95 18,742.47
29-Dec-95 16,955.67 29-Dec-95 19,044.87
31-Jan-96 17,041.74 31-Jan-96 19,130.30
29-Feb-96 16,667.19 29-Feb-96 18,797.43
29-Mar-96 16,522.63 29-Mar-96 18,665.85
30-Apr-96 16,405.22 30-Apr-96 18,561.32
31-May-96 16,350.92 31-May-96 18,524.20
28-Jun-96 16,532.20 28-Jun-96 18,772.42
31-Jul-96 16,589.74 31-Jul-96 18,823.11
30-Aug-96 16,570.53 30-Aug-96 18,791.11
30-Sep-96 16,833.55 30-Sep-96 19,118.07
31-Oct-96 17,200.18 31-Oct-96 19,542.49
29-Nov-96 17,496.06 29-Nov-96 19,876.67
31-Dec-96 17,338.52 31-Dec-96 19,691.82
31-Jan-97 17,408.46 31-Jan-97 19,752.86
28-Feb-97 17,442.17 28-Feb-97 19,802.24
31-Mar-97 17,279.98 31-Mar-97 19,582.44
30-Apr-97 17,459.94 30-Apr-97 19,876.18
30-May-97 17,600.91 30-May-97 20,065.00
30-Jun-97 17,821.06 30-Jun-97 20,303.77
31-Jul-97 18,278.14 31-Jul-97 20,851.98
29-Aug-97 18,142.53 29-Aug-97 20,674.73
30-Sep-97 18,402.56 30-Sep-97 20,980.72
31-Oct-97 18,661.25 31-Oct-97 21,284.94
28-Nov-97 18,706.15 28-Nov-97 21,382.85
31-Dec-97 18,895.53 31-Dec-97 21,598.82
30-Jan-98 19,113.70 30-Jan-98 21,875.28
27-Feb-98 19,046.60 27-Feb-98 21,857.78
31-Mar-98 19,115.41 31-Mar-98 21,932.10
30-Apr-98 19,181.38 30-Apr-98 22,046.15
29-May-98 19,357.02 29-May-98 22,255.58
30-Jun-98 19,507.21 30-Jun-98 22,444.76
31-Jul-98 19,516.41 31-Jul-98 22,491.89
31-Aug-98 19,855.43 31-Aug-98 22,858.51
30-Sep-98 20,292.07 30-Sep-98 23,393.40
30-Oct-98 20,121.98 30-Oct-98 23,269.41
30-Nov-98 20,029.66 30-Nov-98 23.402.05
31-Dec-98 20,148.06 31-Dec-98 23,472.25
29-Jan-99 20,248.61 29-Jan-99 23,638.91
26-Feb-99 19,874.94 26-Feb-99 23,225.23
31-Mar-99 20,011.86 31-Mar-99 23,352.69
30-Apr-99 20,065.28 30-Apr-99 23,427.69
/1/ An unmanaged index that encompasses 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. It is not possible to invest directly in the index.
Average Annual Total Returns
----------------------------
<TABLE>
<CAPTION>
April 30,1999
From Inception
1-Year 5-Year 10-Year Inception Date
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)... 4.61% 6.49% 7.65% 7.22% 7/16/87
Class A** (with sales charge).... 0.39% 5.63% 7.21% 6.85% 7/16/87
- -----------------------------------------------------------------------------------------
Class B (without CDSC)........... 3.60% NA NA 5.74% 1/8/97
Class B** (with CDSC)............ (0.40)% NA NA 4.53% 1/8/97
- -----------------------------------------------------------------------------------------
Class I***....................... 5.02% NA NA 5.03% 12/29/97
- -----------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (with sales charge).... 0.47% 5.34% 7.38% 6.88%
Class B** (with CDSC)............ (0.23)% NA NA 4.66%
Class I***....................... 5.10% NA NA 5.12%
</TABLE>
*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.
**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%,declining 1% each year during the first five
years and then converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
20 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] With an uncertain international outlook, particularly in Japan, what does
this mean for the Fund and the bond market in general?
The international outlook, in my mind, does focus on Japan. If the Japanese
economy gets on solid footing and has gross domestic product (GDP) growth, there
would be interest rate increases. As the world's second-largest economy, many
countries--particularly the smaller concerns in Asia--are looking to Japan to
help spur a global comeback. This improvement in global economic growth would
benefit risky assets and corporate bonds would benefit more than would
government bonds.
/s/ Michael R. Hilt
Michael R. Hilt
PORTFOLIO MANAGER
Credit Quality
--------------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/99
-------
<S> <C>
[*] AAA................................................ 49%
[*] AA................................................. 5%
[*] A.................................................. 12%
[*] BBB................................................ 34%
-----------------
Total 100%
</TABLE>
Average Quality:
A+ Average Maturity:6.75 years
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
Pemex Finance Ltd................................ 4.68%
Coupon Rate:8.020%
Maturity Date:5/15/2007
Federal National Mortgage Association............ 4.57%
Coupon Rate:5.500%
Maturity Date:1/4/2014
Joseph E. Seagram & Sons, Inc.................... 4.36%
Coupon Rate:6.250%
Maturity Date:12/15/2001
Countrywide Home Loan Series 1997-6-A-3.......... 3.72%
Coupon Rate:6.750%
Maturity Date:11/25/2027
TCI Communications, Inc.......................... 3.64%
Coupon Rate:8.650%
Maturity Date:9/15/2004
</TABLE>
- --------------------------------------------------------------------------------
April 30, 1999 21
<PAGE>
[PHOTO APPEARS HERE]
The AAL Money Market Fund
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corp. (FDIC) or any other government agency. Although the Fund seeks
to preserve the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Fund.
[LOGO] Recently you talked about using a barbell strategy. What is this
methodand are you still employing it?
We had adopted what's known as a barbell strategy during the fourth quarter of
1998,but we've currently moved into a strategy where portions of the Fund mature
each day. In the barbell scenario, longer-term commercial paper--which can have
a maturity date of up to 397 days--and short-term obligations are held in equal
weightings. The strategy is maximized by hopefully getting higher longer-term
yields while still having liquidity through the short-term holdings. In the
Fund's current strategy, we're hoping to add value for the shareholder.
[LOGO] How does the weighted average maturity affect the Fund?
The weighted average maturity, or WAM, is the average number of days it takes a
holding in a money market mutual fund to reach maturity. Currently, The AAL
Money Market Fund's WAM is targeted at the figure used by many money market
funds,
% Average Annual Total Returns*
--------------------------------
April 30,1999
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)............. 4.68% 4.77% 4.80% 5.12% 3/10/88
- -------------------------------------------------------------------------------------------------------------------
Class B (without CDSC)..................... 3.67% NA NA 4.02% 1/8/97
Class B** (with CDSC)...................... (0.33)% NA NA 2.78% 1/8/97
- -------------------------------------------------------------------------------------------------------------------
Class I***................................. 4.99% NA NA 5.03% 12/29/97
- -------------------------------------------------------------------------------------------------------------------
SEC Standardized Returns as of 3/31/99
Class A** (without sales charge)........... 4.74% 4.73% 4.84% 5.12%
Class B** (with CDSC)...................... (0.31)% NA NA 2.76%
Class I***................................. 5.02% NA NA 5.07%
</TABLE>
*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.
**Class B performance reflects the maximum contingent deferred sales charge
(CDSC) of 5%,declining 1% each year during the first five years and then
converting to Class A shares after the fifth year.
***Class I shares have no sales load and are for institutional shareholders
only.
- --------------------------------------------------------------------------------
22 The AAL Mutual Funds Report
<PAGE>
currently 58 days. We continue to offer a competitive yield for shareholders
while adding value through strategies to increase yield and trying to maintain
the $1 per share stability.
[LOGO] What is the greatest challenge in managing this Fund?
The greatest challenge in managing the Fund is keeping it fully invested. As
stated in the prospectus, the Fund's investment policies call for at least 95
percent of the Fund's assets to be invested in primerated commercial paper.
Because there are only about 40 issuers of prime-rated commercial paper, It gets
a bit tough to find issues in which to invest as cash inflows to the Fund
continue.
/s/ Michael R. Hilt
Michael R. Hilt
PORTFOLIO MANAGER
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 4/30/99
- -------- -------
<S> <C>
Sears Roebuck Acceptance Corporation.................. 4.95%
Coupon Rate:4.780% - 4.880%
Maturity Date:5/4 - 8/18/99
Norwest Financial, Inc................................ 4.91%
Coupon Rate:4.750% - 4.820%
Maturity Date:5/10 - 8/17/99
Household Finance Corporation......................... 4.90%
Coupon Rate:4.760% - 4.880%
Maturity Date:5/7 - 8/25/99
American Express Credit Corporation................... 4.85%
Coupon Rate:4.700% - 4.810%
Maturity Date:5/4 - 8/31/99
General Electric Capital Corporation.................. 4.85%
Coupon Rate:4.790% - 4.880%
Maturity Date:5/5 - 8/30/99
Average Quality: First Tier
Average Maturity: 58 Days
</TABLE>
$ Short-Term Investment Comparison
----------------------------------
[BAR GRAPH APPEARS HERE]
The AAL Money Market Fund Salomon Brothers
30-Day Yield Short-Term Index*
(Class A shares)
4.12% 4.80%
*Salomon Brothers Short-Term Index is an unmanaged index composed of 1-month
U.S. Treasury Bills
- --------------------------------------------------------------------------------
April 30, 1999 23
<PAGE>
The AAL Small Cap Stock Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks long-term capital growth by investing primarily in a diversified
portfolio of common stocks, and securities convertible into common stocks, of
small companies.
<TABLE>
<CAPTION>
Shares Common Stocks (96.6%) Market Value
================================================================================================================
<C> <S> <C>
Basic Materials (1.6%)
- ----------------------
22,000 Cambrex Corporation............................................ $ 563,750
67,900 Gibraltar Steel Corporation* .................................. 1,591,406
---------------------------------------------------
Total Basic Materials 2,155,156
---------------------------------------------------
Capital Goods (13.3%)
- ---------------------
58,200 Applied Power, Inc. ........................................... 1,836,938
71,300 Artesyn Technologies, Inc.* ................................... 1,283,400
119,400 BE Aerospace, Inc.* ........................................... 2,037,263
27,200 Oak Industries, Inc.* ......................................... 1,135,600
46,000 Pinnacle Holdings, Inc.* ...................................... 943,000
85,900 SLI, Inc.* .................................................... 2,356,881
9,700 Sanmina Corporation* .......................................... 643,837
34,540 SpeedFam-IPEC, Inc.* .......................................... 397,210
45,600 Superior Services, Inc.* ...................................... 837,900
109,350 Tetra Tech, Inc.* ............................................. 2,644,903
77,400 Tower Automotive, Inc.* ....................................... 1,780,200
6,900 Valassis Communications, Inc.* ................................ 386,400
50,800 World Color Press, Inc.* ...................................... 1,298,575
---------------------------------------------------
Total Capital Goods 17,582,107
---------------------------------------------------
Consumer Cyclicals (22.0%)
- --------------------------
70,900 ABR Information Services, Inc.* ............................... 1,240,750
112,400 Acxiom Corporation* ........................................... 2,838,100
56,000 Applebee's International, Inc. ................................ 1,445,500
99,100 DM Management Company* ........................................ 2,353,625
20,700 DeVry, Inc.* .................................................. 545,963
17,000 Dollar Tree Stores, Inc.* ..................................... 620,500
58,700 Dura Automotive Systems, Inc.* ................................ 1,680,288
9,200 Ethan Allen Interiors, Inc. ................................... 466,325
15,800 Forrester Research, Inc.* ..................................... 537,200
63,200 Furniture Brands International, Inc.* ......................... 1,583,950
54,700 Getty Images, Inc.* ........................................... 1,422,200
77,200 ITI Technologies, Inc.* ....................................... 2,055,450
71,800 Lamar Advertising Company* .................................... 2,414,275
69,500 NOVA Corporation* ............................................. 1,807,000
98,200 Pier 1 Imports, Inc. .......................................... 724,225
49,300 Restoration Hardware, Inc.* ................................... 770,312
28,000 Ross Stores, Inc. ............................................. 1,286,250
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
24 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (96.6%) Market Value
=================================================================================================================
<C> <S> <C>
Consumer Cyclicals (22.0%) - continued
- --------------------------------------
91,400 Sonic Automotive, Inc.* ....................................... $ 1,353,862
46,900 The Wet Seal, Inc.* ........................................... 1,911,175
45,300 Watsco, Inc. .................................................. 889,013
30,100 Williams-Sonoma, Inc.* ........................................ 872,900
9,200 Zale Corporation* ............................................. 347,875
----------------------------------------------------
Total Consumer Cylicals 29,166,738
----------------------------------------------------
Consumer Staples (7.8%)
- -----------------------
37,700 American Tower Corporation..................................... 798,769
73,600 Callaway Golf Company.......................................... 1,108,600
45,900 Daisytek International Corporation* ........................... 768,825
60,600 Emmis Communications Corporation* ............................. 2,727,000
38,400 Koala Corporation* ............................................ 960,000
9,200 Linens 'n Things, Inc.* ....................................... 420,900
28,900 Steiner Leisure, Ltd.* ........................................ 917,575
22,500 TCA Cable TV, Inc. ............................................ 1,120,781
62,000 United Natural Foods, Inc.* ................................... 1,557,750
----------------------------------------------------
Total Consumer Staples 10,380,200
----------------------------------------------------
Energy (3.4%)
- -------------
124,500 Petroleum Geo-Services ASA ADR* ............................... 2,085,375
75,900 Precision Drilling Corporation* ............................... 1,309,275
58,900 Veritas DGC, Inc.* ............................................ 1,192,725
----------------------------------------------------
Total Energy 4,587,375
----------------------------------------------------
Financials (15.4%)
- ------------------
204,300 AMRESCO, Inc.* ................................................ 1,327,950
80,200 ARM Financial Group, Inc. ..................................... 1,112,775
66,500 CMAC Investment Corporation.................................... 3,050,688
11,000 Centura Banks, Inc. ........................................... 655,187
23,000 Commercial Federal Corporation................................. 557,750
67,000 Community First Bankshares, Inc. .............................. 1,369,313
11,500 Cullen/Frost Bankers, Inc.* ................................... 620,281
17,000 E.W. Blanch Holdings, Inc. .................................... 1,000,875
33,700 F & M Bancorporation, Inc. .................................... 1,331,150
33,500 FirstMerit Corporation......................................... 931,719
74,900 HCC Insurance Holdings, Inc. .................................. 1,582,262
16,100 Hudson United Bancorp.......................................... 569,538
46,200 INSpire Insurance Solutions, Inc.* ............................ 1,004,850
9,200 Legg Mason, Inc.* ............................................. 320,850
21,400 Protective Life Corporation.................................... 838,612
4,600 SEI Investments Company* ...................................... 437,000
15,400 U.S. Trust Corporation ........................................ 1,407,175
60,600 Waddell & Reed Financial, Inc. Class A......................... 1,367,287
27,600 Western Bancorp* .............................................. 991,875
----------------------------------------------------
Total Financials 20,477,137
----------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 25
<PAGE>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (96.6%) Market Value
================================================================================================================
<C> <S> <C>
Health Care (10.4%)
- -------------------
85,700 AmeriSource Health Corporation* ............................... $ 2,372,819
12,400 Biomatrix, Inc.* .............................................. 408,425
11,500 Express Scripts, Inc.* ........................................ 846,688
23,500 IDEXX Laboratories, Inc.* ..................................... 531,687
22,300 Inhale Therapeutic Systems, Inc.* ............................. 641,125
28,000 Medical Manager Corporation* .................................. 798,000
78,200 NCS Healthcare, Inc.* ......................................... 1,016,600
27,600 Omnicare, Inc. ................................................ 664,125
41,700 Orthodontic Centers of America , Inc.* ........................ 516,038
29,400 Patterson Dental Company* ..................................... 1,060,237
40,300 Pharmaceutical Product Development, Inc.* ..................... 1,173,737
37,500 Renal Care Group, Inc.* ....................................... 782,813
24,400 Sunrise Assisted Living, Inc.* ................................ 976,000
9,200 Superior Consultant Holdings Corporation* ..................... 248,400
9,200 Universal Health Services, Inc.* .............................. 476,675
6,900 VISX, Inc.* ................................................... 888,375
16,200 Vertex Pharmaceuticals, Inc.* ................................. 342,225
---------------------------------------------------
Total Health Care 13,743,969
---------------------------------------------------
Technology (15.7%)
- ------------------
40,300 American Management Systems, Inc.* ............................ 1,385,313
149,100 Amkor Technology, Inc.* ....................................... 1,453,725
120,800 Apex PC Solutions, Inc.* ...................................... 2,008,300
69,600 BEA Systems, Inc.* ............................................ 1,052,700
37,000 Burr-Brown Corporation* ....................................... 980,500
51,300 Caere Corporation* ............................................ 525,825
30,600 Check Point Software Technologies, Ltd.* ...................... 1,078,650
13,800 CIBER, Inc.* .................................................. 260,475
18,400 CommScope, Inc.* .............................................. 448,500
106,200 Corsair Communications, Inc.* ................................. 477,900
7,100 Dallas Semiconductor Corporation............................... 301,750
107,200 International Telecommunication Data Systems, Inc.* ........... 1,212,700
9,200 Lattice Semiconductor Corporation* ............................ 376,050
13,800 Legato Systems, Inc.* ......................................... 558,037
7,400 Macromedia, Inc.* ............................................. 306,638
9,200 Mercury Interactive Corporation* .............................. 259,325
34,500 National Data Corporation...................................... 1,591,312
12,300 Novellus Systems, Inc.* ....................................... 581,175
10,300 PMC-Sierra, Inc.* ............................................. 987,513
110,500 QuadraMed Corporation* ........................................ 1,070,469
13,800 SportsLine USA, Inc.* ......................................... 552,000
23,000 Synopsys, Inc.* ............................................... 1,083,875
107,500 TETRA Technologies, Inc.* ..................................... 1,007,812
24,900 The BISYS Group, Inc.* ........................................ 1,263,675
---------------------------------------------------
Total Technology 20,824,219
---------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
26 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Small Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (96.6%) Market Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Transportation (4.4%)
- ---------------------
31,400 Atlantic Coast Airlines Holdings, Inc.* ....................... $ 969,475
44,500 Atlas Air, Inc.* .............................................. 1,290,500
56,100 Coach USA, Inc.* .............................................. 1,332,375
31,600 M.S. Carriers, Inc.* .......................................... 1,007,250
11,500 SkyWest, Inc. ................................................. 299,000
18,600 Swift Transportation Company, Inc.* ........................... 341,775
51,800 U.S. Xpress Enterprises, Inc.* ................................ 589,225
---------------------------------------------------
Total Transportation 5,829,600
---------------------------------------------------
Utilities (2.6%)
- ----------------
19,400 Connecticut Energy Corporation................................. 725,075
63,600 MDU Resources Group, Inc. ..................................... 1,355,475
9,200 New Jersey Resources Corporation............................... 339,250
11,500 Piedmont Natural Gas Company, Inc. ............................ 366,563
13,800 United Water Resources, Inc. .................................. 287,212
13,800 WICOR, Inc. ................................................... 326,025
---------------------------------------------------
Total Utilities 3,399,600
---------------------------------------------------
---------------------------------------------------
Total Common Stocks
(cost basis $123,303,911) 128,146,101
---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Short-Term Investments (3.3%) Interest Rate/1/ Maturity Date
===========================================================================================================
<S> <C> <C> <C> <C>
$ 4,371,000 Merrill Lynch & Company, Inc. ............ 4.590% 5/3/99 4,369,798
---------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $4,369,798) 4,369,798
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(amortized cost basis $127,673,709) 132,515,899
---------------------------------------------------------------
---------------------------------------------------------------
Other Assets, Less Liabilities (0.1%) 72,831
---------------------------------------------------------------
---------------------------------------------------------------
Net Assets (100%) $132,588,730
---------------------------------------------------------------
</TABLE>
* Non-income producing security
/1/ The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 27
<PAGE>
The AAL Mid Cap Stock Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks long-term capital growth by investing in a diversified portfolio
of common stocks, and securities convertible into common stocks, of mid-sized
companies.
<TABLE>
<CAPTION>
Shares Common Stocks (95.7%) Market Value
===========================================================================================================
<S> <C> <C>
Basic Materials (4.4%)
- ----------------------
87,700 Minerals Technologies, Inc............................................ $4,735,800
137,600 Rayonier, Inc......................................................... 6,278,000
312,000 RPM, Inc.............................................................. 4,387,500
181,900 Southdown, Inc........................................................ 11,652,969
---------------------------------------------
Total Basic Materials
=============================================
Capital Goods (5.0%)
- --------------------
82,200 Applied Power, Inc.................................................... 2,594,438
279,400 Artesyn Technologies, Inc.*........................................... 5,029,200
113,600 Gulfstream Aerospace Corporation*..................................... 5,538,000
205,400 SLI, Inc.*............................................................ 5,635,662
85,000 SPX Corporation*...................................................... 5,551,562
258,500 Tower Automotive, Inc.*............................................... 5,945,500
---------------------------------------------
Total Capital Goods 30,294,362
=============================================
Communication Services (1.2%)
- -----------------------------
184,700 Century Telephone Enterprises, Inc.................................... 7,434,175
------------------------------------------
Total Communication Services 7,434,175
==========================================
Consumer Cyclicals (18.5%)
- --------------------------
355,900 ABR Information Services, Inc.*....................................... 6,228,250
268,400 Acxiom Corporation*................................................... 6,777,100
127,000 Best Buy Company, Inc.*............................................... 6,064,250
338,400 Cincinnati Bell, Inc.................................................. 7,656,300
245,100 Furniture Brands International, Inc.*................................. 6,142,819
181,900 Hannaford Bros. Company............................................... 7,935,387
104,700 Harley-Davidson, Inc.................................................. 6,242,738
99,600 Intimate Brands, Inc.................................................. 4,980,000
278,550 Office Depot, Inc.*................................................... 6,128,100
330,325 Outdoor Systems, Inc.*................................................ 8,320,061
216,200 Premier Parks, Inc.*.................................................. 7,472,413
554,400 Republic Services, Inc.*.............................................. 11,399,850
316,800 Saks, Inc.*........................................................... 8,969,400
70,000 The Reader's Digest Association, Inc.................................. 2,489,375
130,800 Tommy Hilfiger Corporation*........................................... 9,139,650
175,500 USA Networks, Inc.*................................................... 6,559,312
-------------------------------------------
Total Consumer Cyclicals 112,505,005
===========================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
28 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.7%) Market Value
===================================================================================================
<S> <C> <C>
Consumer Staples (3.7%)
- -----------------------
236,700 Keebler Foods Company*................................... $ 7,603,987
120,050 Outback Steakhouse, Inc.*................................ 4,299,291
78,600 TCA Cable TV, Inc........................................ 3,915,263
310,000 Tyson Foods, Inc......................................... 6,413,125
---------------------------------------
Total Consumer Staples 22,231,666
Energy (5.8%) =======================================
- -------------
97,700 Burlington Resources, Inc................................ 4,500,306
117,000 Columbia Energy Group.................................... 5,623,312
250,000 Nabors Industries, Inc.*................................. 5,140,625
310,100 Noble Drilling Corporation*.............................. 6,085,713
208,200 Petroleum Geo-Services ASA ADR*.......................... 3,487,350
238,300 Tosco Corporation........................................ 6,374,525
143,100 Transocean Offshore, Inc................................. 4,248,281
---------------------------------------
Total Energy 35,460,112
=======================================
Financials (16.0%)
- ---------------------
99,800 AFLAC, Inc............................................... 5,414,150
130,700 CCB Financial Corporation................................ 7,547,925
125,800 Charter One Financial, Inc............................... 3,931,250
262,950 Concord EFS, Inc.*....................................... 8,775,956
15,000 Dime Bancorp, Inc........................................ 345,937
50,400 E*TRADE Group, Inc.*..................................... 5,821,200
225,900 First Industrial Realty Trust, Inc....................... 6,071,063
202,700 Golden State Bancorp, Inc.*.............................. 4,978,819
249,000 HCC Insurance Holdings, Inc.............................. 5,260,125
136,800 MGIC Investment Corporation.............................. 6,643,350
14,300 M&T Bank Corporation..................................... 7,993,700
79,600 Marshall & Ilsley Corporation............................ 5,572,000
164,800 North Fork Bancorporation, Inc........................... 3,708,000
133,800 Old Kent Financial Corporation........................... 6,322,050
379,800 Peoples Heritage Financial Group, Inc.................... 7,358,625
170,500 Protective Life Corporation.............................. 6,681,469
76,500 ReliaStar Financial Corporation.......................... 2,811,375
45,200 The FINOVA Group, Inc.................................... 2,183,725
---------------------------------------
Total Financials 97,420,719
=======================================
Health Care (9.1%)
- ------------------
190,000 AmeriSource Health Corporation*.......................... 5,260,625
159,800 BioChem Pharma, Inc.*.................................... 3,315,850
43,900 Biogen, Inc.*............................................ 4,173,244
107,200 Centocor, Inc.*.......................................... 4,757,000
136,400 Forest Laboratories, Inc.*............................... 6,069,800
183,200 Genzyme Corporation*..................................... 6,915,800
278,300 Health Management Associates, Inc., Class A*............. 4,348,438
70,000 MedImmune, Inc.*......................................... 3,858,750
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 29
<PAGE>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.7%) Market Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Health Care (9.1%) - continued
- ------------------------------
330,300 Mylan Laboratories, Inc.................................................... $ 7,493,681
133,800 Omnicare, Inc.............................................................. 3,219,562
147,300 Sunrise Assisted Living, Inc.*............................................. 92,000
------------------------------------------------------
Total Health Care 55,304,750
------------------------------------------------------
Technology (20.8%)
- ------------------
170,100 ADC Telecommunications, Inc.*.............................................. 8,132,906
242,700 Analog Devices, Inc.*...................................................... 8,524,838
225,800 BEA Systems, Inc.*......................................................... 3,415,225
112,300 Comdisco, Inc.............................................................. 2,954,894
125,600 Electronic Arts, Inc.*..................................................... 6,382,050
160,000 FORE Systems, Inc.*........................................................ 5,400,000
200,200 Fiserv, Inc.*.............................................................. 11,724,213
169,100 LSI Logic Corporation*..................................................... 5,749,400
186,800 Legato Systems, Inc.*...................................................... 7,553,725
53,400 Lexmark International Group, Inc.*......................................... 6,594,900
56,400 Linear Technology Corporation.............................................. 3,207,750
25,000 Lycos, Inc.*............................................................... 2,492,187
76,500 PMC-Sierra, Inc.*.......................................................... 7,334,438
145,500 Pixar*..................................................................... 6,038,250
30,000 QUALCOMM, Inc.*............................................................ 6,000,000
164,900 Rational Software Corporation*............................................. 4,885,162
70,400 Sterling Commerce, Inc.*................................................... 2,204,400
159,500 Synopsys, Inc.*............................................................ 7,516,437
125,000 Tandy Corporation.......................................................... 9,054,687
89,900 Teradyne, Inc.*............................................................ 4,242,156
151,100 Xilinx, Inc.*.............................................................. 6,893,938
------------------------------------------------------
Total Technology 126,301,556
------------------------------------------------------
Transportation (2.5%)
- ---------------------
174,100 Coach USA, Inc.*........................................................... 4,134,875
145,700 Comair Holdings, Inc....................................................... 3,214,506
204,900 Royal Caribbean Cruises Ltd................................................ 7,568,494
------------------------------------------------------
Total Transportation 14,917,875
------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
30 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.7%) Market Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities (8.7%)
- ----------------
194,100 CMS Energy Corporation...................................................... $ 8,540,400
181,550 MDU Resources Group, Inc.................................................... 3,869,284
189,200 National Fuel Gas Company................................................... 8,277,500
245,000 New Century Energies, Inc................................................... 8,575,000
314,200 NiSource, Inc............................................................... 8,719,050
229,300 Pinnacle West Capital Corporation........................................... 9,706
124,200 The AES Corporation*........................................................ 6,210,000
----------------------------------------------------------
Total Utilities 53,090,940
----------------------------------------------------------
----------------------------------------------------------
Total Common Stocks
(cost basis $522,456,776) 582,015,429
----------------------------------------------------------
Principal Amount Long-Term Fixed Income Investments (0.7%) Interest Rate Maturity Date
- ---------------------------------------------------------------------------------------------------------
$ 4,000,000 BEA Systems, Inc., Convertible Bonds 4.000% 6/15/2005 3,140,000
1,400,000 BEA Systems, Inc., Convertible Bonds/2/ 4.000 6/15/2005 1,099,000
----------------------------------------------------------
Total Long-Term Fixed Income Investments
(amortized cost basis $3,749,987) 4,239,000
----------------------------------------------------------
Short-Term Investments (5.7%) Interest Rate/1/ Maturity Date
-----------------------------------------------------------------------------------
12,339,000 Ford Motor Credit Corporation 4.850% 5/5/99 12,332,351
22,617,000 Merrill Lynch & Company, Inc. 4.770-4.800% 5/3-5/10/99 22,600,396
----------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $34,932,747) 34,932,747
----------------------------------------------------------
----------------------------------------------------------
TOTAL INVESTMENTS (102.1%)
(amortized cost basis $561,139,510) 621,187,176
----------------------------------------------------------
----------------------------------------------------------
Other Assets, Less Liabilities (-2.1%) (12,880,631)
----------------------------------------------------------
Total Net Assets (100.0%) $608,306,545
----------------------------------------------------------
</TABLE>
* Non-Income Producing Securities
/1/ The Interest rate reflects the discount rate at the date of purchase.
/2/ 144A Security
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 31
<PAGE>
The AAL International Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks long-term capital growth by investing primarily in a diversified
portfolio of foreign stocks.
<TABLE>
<CAPTION>
Shares Common Stocks (97.3%) Industry Market Value
============================================================================================================================
<S> <C> <C> <C>
Australia (1.6%)
- ----------------
128,500 Australia & New Zealand Banking Group Ltd............. Banking & Finance $ 1,019,382
320,641 Coca-Cola Amatil Ltd.................................. Food & Beverage 1,524,049
-------------------------------------------------------------
Total Australia 2,543,431
=============================================================
Canada (2.8%)
- -------------
56,300 BCE Inc............................................... Telephone 2,570,864
33,000 The Seagram Company, Ltd............................. Food & Beverage 1,880,794
-------------------------------------------------------------
Total Canada 4,451,658
=============================================================
France (8.3%)
- -------------
12,040 Group Danone.......................................... Food & Beverage 3,222,725
23,660 Suez Lyonnaise des Eaux............................... Construction 4,030,110
29,500 Valeo SA.............................................. Automotive 2,496,826
14,710 Vivendi............................................... Utilities 3,440,945
-------------------------------------------------------------
Total France 13,190,606
=============================================================
Germany (4.9%)
- --------------
20,411 DaimlerChrysler AG.................................... Automotive 1,998,559
50,344 Hoechst AG............................................ Holding Company 2,306,280
26,450 Mannesmann AG......................................... Machinery 3,467,155
-------------------------------------------------------------
Total Germany 7,771,994
=============================================================
Greece (0.4%)
- -------------
26,710 Hellenic Telecommunication Organization SA............ Telephone 621,283
-------------------------------------------------------------
Total Greece 621,283
=============================================================
Hong Kong (2.2%)
- ----------------
206,000 Cheung Kong Holdings Ltd.............................. Holding Company 1,873,887
192,000 Hutchinson Whampoa Ltd................................ Holding Company 1,721,762
-------------------------------------------------------------
Total Hong Kong 3,595,649
=============================================================
Hungary (0.4%)
- --------------
18,400 Gedeon Richter........................................ Drugs & Medicine 676,577
-------------------------------------------------------------
Total Hungary 676,577
=============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
32 The AAL Mutual Funds Annual Report
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (97.3%) Industry Market Value
==============================================================================================================================
<S> <C> <C> <C>
Italy (10.1%)
- -------------
981,123 Banca Nazionale del Lavoro*.................................. Banking & Finance $ 3,352,759
60,000 Banca Popolare di Bergamo Credito Varesino SpA............... Banking & Finance 1,513,965
289,700 Mediaset SpA................................................. Media 2,513,267
601,300 Telecom Italia SpA........................................... Telephone 6,406,148
443,900 Unicredito Italiano SpA...................................... Banking & Finance 2,254,253
--------------------------------------------------------
Total Italy 16,040,392
========================================================
Japan (21.5%)
- -------------
118,000 Denso Corporation............................................ Automotive 2,397,343
42,000 Ito-Yokado Company, Ltd. .................................... Retail Stores 2,579,228
78,000 Kao Corporation.............................................. Retail Stores 1,980,039
126,000 Matsushita Electric Industrial Company, Ltd. ................ Media 2,396,254
20,000 Murata Manufacturing Co., Ltd. .............................. Electronics 1,144,425
127 NTT Mobile Communication Network, Inc. ...................... Telephone 7,447,975
292 Nippon Telegraph & Telephone Corporation..................... Telephone 3,180,260
162,000 Nikko Securities Company, Ltd. .............................. Banking & Finance 929,698
16,000 Rohm Company Ltd. ........................................... Electronics 1,930,274
488,000 Sakura Bank, Ltd. ........................................... Banking & Finance 1,884,765
3,040 Shohkoh Fund & Company, Ltd. ................................ Banking & Finance 1,782,822
72,000 Takeda Chemical Industries Ltd. ............................. Healthcare 3,130,663
8,200 Takefuji Corporation......................................... Banking & Finance 680,120
224,000 The Fuji Bank, Ltd. ......................................... Banking & Finance 1,749,043
127,000 Toshiba Corporation.......................................... Electronics 851,197
--------------------------------------------------------
Total Japan 34,064,106
========================================================
Netherlands (9.4%)
- ------------------
38,000 Gucci Group N.V. ............................................ Retail Stores 2,866,625
29,883 Laurus NV.................................................... Retail Stores 643,376
29,900 Royal Dutch Petroleum Company................................ International Oil 1,743,007
90,060 Royal Kpn NV................................................. Telephone 3,763,616
103,430 VNU NV....................................................... Publishing/Printing 4,191,038
66,961 Vendex NV................................................... Retail Stores 1,668,357
--------------------------------------------------------
Total Netherlands 14,876,019
========================================================
New Zealand (1.6%)
- ------------------
479,244 Telecom Corporation of New Zealand Limited................... Telephone 2,493,968
--------------------------------------------------------
Total New Zealand 2,493,968
========================================================
Portugal (1.5%)
- ---------------
57,120 Portugal Telecom SA.......................................... Telephone 2,384,029
--------------------------------------------------------
Total Portugal 2,384,029
========================================================
Spain (4.2%)
- ------------
113,524 Argentaria, Caja Postal y Banco Hipotecario de Espana, SA.... Banking & Finance 2,673,555
22,537 Banco Popular Espanol SA..................................... Banking & Finance 1,597,523
51,290 Telefonica S.A. ............................................. Telephone 2,406,593
51,290 Telefonica S.A. Rights*...................................... Telephone 47,752
--------------------------------------------------------
Total Spain 6,725,423
========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 33
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (97.3%) Industry Market Value
=============================================================================================================================
<S> <C> <C> <C>
Sweden (1.6%)
- -------------
28,889 Hennes & Mauritz AB.............................................. Retail Stores $ 2,497,064
------------------------------------------------------------
Total Sweden 2,497,064
============================================================
Switzerland (4.6%)
- ------------------
1,890 Novartis AG...................................................... Healthcare Products 2,772,000
250 Roche Holding Ltd. AG............................................ Drugs & Medicine 2,945,813
2,330 Schweizerische Lebensversicherungs-und Rentenanstalt............. Insurance 1,545,681
------------------------------------------------------------
Total Switzerland 7,263,494
============================================================
United Kingdom (22.2%)
- ----------------------
932,500 ASDA Group plc................................................... Retail Stores 3,119,093
91,450 Allied Zurich plc*............................................... Banking & Finance 1,250,057
162,950 British American Tobacco plc..................................... Holding Company 1,368,192
619,500 British Aerospace plc............................................ Manufacturing 4,638,021
272,800 British Sky Broadcasting Group plc............................... Technology 2,411,322
295,600 Diageo plc....................................................... Consumer Products 3,414,796
160,900 Glaxo Wellcome plc............................................... Drugs & Medicine 4,761,459
170,200 Imperial Chemical Industries plc................................. Chemicals 1,844,222
90,096 Railtrack Group plc.............................................. Holding Company 1,881,412
260,805 Reed International plc........................................... Holding Company 2,374,581
424,200 Somerfield plc................................................... Retail Stores 2,369,947
309,400 Vodafone Group plc............................................... Telephone 5,703,800
------------------------------------------------------------
Total United Kingdom 35,136,902
============================================================
------------------------------------------------------------
Total Common Stocks
(cost basis $128,317,090) 154,332,595
============================================================
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Short-Term Investments (3.7%) Interest Rate/1/ Maturity Date
=====================================================================================================
<S> <C> <C> <C> <C>
$ 5,900,000 Mobil Corporation 4.900% 5/3/99 5,898,394
-------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $5,898,394) 5,898,394
===================================================================
-------------------------------------------------------------------
TOTAL INVESTMENTS (101.0%)
(amortized cost basis $134,215,484) 160,230,989
===================================================================
-------------------------------------------------------------------
Other Assets, Less Liabilities (-1.0%) (1,614,584)
===================================================================
-------------------------------------------------------------------
Net Assets (100.0%) $158,616,405
===================================================================
</TABLE>
* Non-income producing securities
/1/ The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
34 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Capital Growth Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks long-term capital growth by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks.
<TABLE>
<CAPTION>
Shares Common Stocks (95.9%) Market Value
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Basic Materials (0.2%)
- ----------------------
162,500 Eastman Chemical Company.................................. $ 9,049,219
-----------------------------------------------------------
Total Basic Materials 9,049,219
-----------------------------------------------------------
Capital Goods (5.6%)
- --------------------
437,000 Cordant Technologies, Inc................................. 20,156,625
1,133,500 General Electric Company.................................. 119,584,250
617,400 Herman Miller, Inc........................................ 12,309,413
152,300 Honeywell, Inc............................................ 14,430,425
98,300 PACCAR, Inc............................................... 5,504,800
197,000 Rockwell International Corporation........................ 10,170,125
203,100 United Technologies Corporation........................... 29,424,112
-----------------------------------------------------------
Total Capital Goods 211,579,750
-----------------------------------------------------------
Communication Services (6.9%)
- -----------------------------
1,660,844 AT&T Corporation.......................................... 83,872,597
257,200 Adelphia Communications Corporation*...................... 17,553,900
661,200 Ameritech Corporation..................................... 45,250,875
671,100 Bell Atlantic Corporation................................. 38,672,138
300,000 MCI WorldCom, Inc.*....................................... 24,656,250
397,000 Motorola, Inc............................................. 31,809,625
131,000 Sprint Corporation........................................ 13,435,687
65,500 Sprint PCS Group*......................................... 2,775,562
-----------------------------------------------------------
Total Communication Services 258,026,634
-----------------------------------------------------------
Consumer Cyclicals (6.8%)
- -------------------------
207,700 AutoZone, Inc.*........................................... 6,231,000
325,000 Family Dollar Stores, Inc................................. 7,840,625
329,800 Gannett Company, Inc...................................... 23,353,963
672,700 Harley-Davidson, Inc...................................... 40,109,737
971,700 Ross Stores, Inc.......................................... 44,637,469
433,600 The New York Times Company Class A........................ 14,959,200
106,700 The Times Mirror Company.................................. 6,241,950
518,500 Tiffany and Company....................................... 43,554,000
1,471,200 Wal-Mart Stores, Inc...................................... 67,675,200
-----------------------------------------------------------
Total Consumer Cyclicals 254,603,144
-----------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 35
<PAGE>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.9%) Market Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Staples (22.9%)
- ------------------------
388,000 Alberto-Culver Company.............................................................. $ 9,651,500
260,000 Cablevision Systems Corporation, Class A*........................................... 20,117,500
1,504,000 Comcast Corporation................................................................. 98,794,000
45,150 Corn Products International, Inc.................................................... 1,303,706
1,505,700 Cox Communications, Inc. Class A*................................................... 119,514,938
109,200 Dean Foods Company.................................................................. 3,897,075
623,000 General Mills, Inc.................................................................. 45,556,875
590,300 General Nutrition Companies, Inc.*.................................................. 9,776,844
572,300 Gillette Company.................................................................... 29,866,906
848,958 Liberty Media Group*................................................................ 54,227,192
1,721,349 MediaOne Group, Inc.*............................................................... 140,397,528
231,200 MediaOne Group, Inc.`ATI' Premium Income Exchangeable Securities 6.250% 8/15/2001... 18,524,900
1,667,600 Philip Morris Companies, Inc........................................................ 58,470,225
709,600 Procter & Gamble Company............................................................ 66,569,350
539,700 Safeway, Inc.*...................................................................... 29,110,069
715,600 Time Warner, Inc.................................................................... 50,092,000
3,807,400 Walgreen Company.................................................................... 102,323,875
-----------------------------------------------------------
Total Consumer Staples 858,194,483
-----------------------------------------------------------
Energy (6.6%)
- -------------
316,600 BP Amoco Plc ADR.................................................................... 35,835,163
324,800 Baker Hughes, Inc................................................................... 9,703,400
225,500 Chevron Corporation................................................................. 22,493,625
245,100 Columbia Energy Group............................................................... 11,780,119
415,300 ENSCO International, Inc............................................................ 7,709,006
1,086,300 Exxon Corporation................................................................... 90,230,794
375,500 Halliburton Company................................................................. 16,005,687
325,500 MidAmerican Energy Holdings Company*................................................ 10,477,031
727,600 Royal Dutch Petroleum Company ADR................................................... 42,701,025
-----------------------------------------------------------
Total Energy 246,935,850
-----------------------------------------------------------
Financials (19.1%)
- ------------------
401,500 American Express Company............................................................ 52,471,031
1,036,375 American International Group, Inc................................................... 121,709,289
117,400 Associates First Capital Corporation................................................ 5,202,287
864,231 Banc One Corporation................................................................ 50,989,629
607,000 BankAmerica Corporation............................................................. 43,704,000
703,300 CIGNA Corporation................................................................... 61,318,969
669,400 Citigroup, Inc...................................................................... 50,372,350
1,903,600 Conseco, Inc........................................................................ 60,082,375
684,800 Fannie Mae.......................................................................... 48,578,000
27,300 Hartford Life, Inc.................................................................. 1,428,131
497,400 Household International, Inc........................................................ 25,025,437
391,900 J.P. Morgan & Company, Inc.......................................................... 52,808,525
959,793 MBNA Corporation.................................................................... 27,054,165
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
36 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.9%) Market Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Financials (19.1%) - continued
- ------------------------------
529,100 MGIC Investments Corporation ...................................... $ 25,694,419
362,000 Morgan Stanley Dean Witter & Company .............................. 35,905,875
481,000 National City Corporation ......................................... 34,511,750
94,500 Northern Trust Corporation ........................................ 8,800,313
234,340 Starwood Hotels & Resorts Worldwide, Inc. ......................... 8,597,349
----------------------------------------
Total Financials 714,253,894
----------------------------------------
Health Care (10.0%)
- -------------------
180,600 Elan Corporation Plc ADR* ......................................... 9,300,900
543,300 Eli Lilly & Company ............................................... 40,000,462
637,700 Johnson & Johnson ................................................. 62,175,750
210,900 Medtronic, Inc. ................................................... 15,171,619
1,511,600 Merck & Company, Inc. ............................................. 106,189,900
751,700 Pfizer, Inc. ...................................................... 86,492,481
657,600 Schering-Plough Corporation ....................................... 31,770,300
313,600 Wellpoint Health Networks, Inc.* .................................. 22,030,400
----------------------------------------
Total Health Care 373,131,812
----------------------------------------
Technology (17.5%)
- ------------------
1,380,900 ADC Telecommunications, Inc.* ..................................... 66,024,281
207,700 Arrow Electronics, Inc.* .......................................... 3,777,544
7,800 At Home Corporation* .............................................. 1,122,712
1,500,400 Automatic Data Processing, Inc. ................................... 66,767,800
475,425 Cisco Systems, Inc.* .............................................. 54,228,164
436,800 Cognos, Inc.* ..................................................... 10,510,500
238,075 Computer Associates International, Inc. ........................... 10,162,827
227,000 Computer Sciences Corporation* .................................... 13,520,688
630,866 First Data Corporation ............................................ 26,772,376
141,500 Gateway 2000, Inc.* ............................................... 9,365,531
171,600 Hewlett-Packard Company ........................................... 13,534,950
1,118,200 Intel Corporation ................................................. 68,419,862
1,643,448 Lucent Technologies, Inc. ......................................... 98,812,311
1,555,800 Microsoft Corporation* ............................................ 126,505,988
362,300 National Data Corporation ......................................... 16,711,087
229,300 Quantum Corporation* .............................................. 4,098,738
295,600 Seagate Technology, Inc.* ......................................... 8,239,850
538,600 Tellabs, Inc.* .................................................... 59,010,362
----------------------------------------
Total Technology 657,585,571
----------------------------------------
Transportation (0.1%)
86,600 CNF Transportation, Inc. .......................................... 3,783,338
----------------------------------------
Total Transportation 3,783,338
----------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 37
<PAGE>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (95.9%) Market Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities (0.2%)
- ----------------
234,300 Entergy Corporation ...................................................... $ 7,321,875
------------------------------------------------------
Total Utilities 7,321,875
------------------------------------------------------
------------------------------------------------------
Total Common Stocks
(cost basis $1,687,821,166) 3,594,465,570
------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Short-Term Investments (3.8%) Interest Rate/1/ Maturity Date
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 18,640,000 Countrywide Home Loans, Inc. ..................... 4.760% 5/17/99 18,600,566
19,331,000 General Electric Capital Corporation ............. 4.790 5/11/99 19,305,279
17,287,000 Household Finance Corporation .................... 4.730 5/5/99 17,277,915
88,758,000 Merrill Lynch & Company, Inc. .................... 4.770-4.950 5/3-5/20/99 88,669,248
------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $143,853,008) 143,853,008
------------------------------------------------------
------------------------------------------------------
TOTAL INVESTMENTS (99.7%)
(amortized cost basis $1,831,674,174) 3,738,318,578
------------------------------------------------------
------------------------------------------------------
Other Assets, Less Liabilities (0.3%) 10,702,431
-----------------------------------------------------
-----------------------------------------------------
Net Assets (100.0%) $3,749,021,009
-----------------------------------------------------
</TABLE>
* Non-income producing security
/1/ The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
38 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Equity Income Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks current income, long-term income growth and capital growth by
investing primarily in a diversified portfolio of income-producing equity
securities.
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
=================================================================================================================================
<S> <C> <C>
Basic Materials (2.9%)
- ----------------------
26,000 Crown Cork & Seal Company, Inc. ................................................ $ 845,000
40,000 E.I. du Pont de Nemours and Company ............................................ 2,825,000
48,000 Oregon Steel Mills, Inc. ....................................................... 786,000
60,000 Southdown, Inc. ................................................................ 3,843,750
-----------------------------------------------------------------
Total Basic Materials 8,299,750
=================================================================
Capital Goods (8.9%)
- --------------------
64,000 AlliedSignal, Inc. ............................................................. 3,760,000
21,000 Corning, Inc. .................................................................. 1,202,250
55,000 Emerson Electric Company ....................................................... 3,547,500
38,000 Honeywell, Inc. ................................................................ 3,600,500
34,000 Lockheed Martin Corporation .................................................... 1,464,125
20,000 Pitney-Bowes, Inc. ............................................................. 1,398,750
67,000 Tenneco, Inc. .................................................................. 1,809,000
57,000 The BFGoodrich Company ......................................................... 2,265,750
44,000 The Boeing Company ............................................................. 1,787,500
31,000 United Technologies Corporation ................................................ 4,491,125
-----------------------------------------------------------------
Total Capital Goods 25,326,500
=================================================================
Communication Services (15.2%)
- ------------------------------
116,054 AT&T Corporation................................................................ 5,860,702
55,000 Airtouch Communications, Inc.*.................................................. 5,135,625
69,740 Ameritech Corporation........................................................... 4,772,831
56,600 Bell Atlantic Corporation....................................................... 3,261,575
90,000 Cable & Wireless Plc ADR*....................................................... 3,780,000
52,000 Convergys Corporation*.......................................................... 968,500
35,000 GTE Corporation................................................................. 2,342,813
102,024 MCI WorldCom, Inc.*............................................................. 8,385,097
70,370 SBC Communications, Inc. ....................................................... 3,940,720
34,275 Telefonica S.A. ADR............................................................. 4,777,086
-----------------------------------------------------------------
Total Communication Services 43,224,949
=================================================================
Consumer Cyclicals (12.1%)
- --------------------------
61,000 AutoZone, Inc.*................................................................. 1,830,000
52,000 Cincinnati Bell, Inc. .......................................................... 1,176,500
48,000 Dayton Hudson Corporation....................................................... 3,231,000
101,000 Dollar General Corporation...................................................... 3,541,312
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 39
<PAGE>
The AAL Equity Income Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
===================================================================================================================
<S> <C> <C>
Consumer Cyclicals (12.1%) - continued
- --------------------------------------
33,000 Ford Motor Company.......................................................... $ 2,109,938
14,000 Gannett Company, Inc. ...................................................... 991,375
24,000 General Motors Corporation.................................................. 2,134,500
77,000 H&R Block, Inc. ............................................................ 3,705,625
165,500 Hasbro, Inc. ............................................................... 5,647,687
143,000 Kmart Corporation*.......................................................... 2,127,125
52,000 Lowe's Companies, Inc. ..................................................... 2,743,000
57,000 Service Corporation International........................................... 1,182,750
54,000 The Home Depot, Inc. ....................................................... 3,236,625
28,000 The New York Times Company Class A.......................................... 966,000
-------------------------------------------------------
Total Consumer Cyclicals 34,623,437
=======================================================
Consumer Staples (9.0%)
- -----------------------
44,000 Albertson's, Inc. .......................................................... 2,266,000
42,000 Campbell Soup Company....................................................... 1,722,000
71,000 Flowers Industries, Inc. ................................................... 1,508,750
105,000 Fox Entertainment Group, Inc.*.............................................. 2,690,625
43,000 H.J. Heinz Company.......................................................... 2,007,563
21,944 Liberty Media Group*........................................................ 1,401,673
78,800 MediaOne Group, Inc.*....................................................... 6,427,125
76,000 Ralston Purina Company...................................................... 2,318,000
78,000 Rite Aid Corporation........................................................ 1,818,375
86,000 Sara Lee Corporation........................................................ 1,913,500
73,000 Tyson Foods, Inc. .......................................................... 1,510,187
-------------------------------------------------------
Total Consumer Staples 25,583,798
=======================================================
Energy (12.5%)
- --------------
85,000 B J Services Company*....................................................... 2,273,750
36,524 BP Amoco Plc ADR............................................................ 4,134,060
19,500 Columbia Energy Group....................................................... 937,219
27,000 Consolidated Natural Gas Company............................................ 1,606,500
28,000 Exxon Corporation........................................................... 2,325,750
74,000 Halliburton Company......................................................... 3,154,250
36,000 Mobil Corporation........................................................... 3,771,000
169,000 Noble Drilling Corporation*................................................. 3,316,625
96,000 Questar Corporation......................................................... 1,746,000
65,000 Texaco, Inc. ............................................................... 4,078,750
73,000 The Coastal Corporation..................................................... 2,792,250
72,000 The Williams Companies, Inc. ............................................... 3,402,000
71,000 Transocean Offshore, Inc. .................................................. 2,107,813
-------------------------------------------------------
Total Energy 35,645,967
=======================================================
Financials (12.8%)
- ------------------
48,910 Associates First Capital Corporation........................................ 2,167,324
31,900 Banc One Corporation........................................................ 1,882,100
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
40 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Equity Income Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
================================================================================================================
<S> <C> <C>
Financials (12.8%) - continued
- ------------------------------
63,000 Conseco, Inc. ............................................................. $ 1,988,438
40,000 Crescent Real Estate Equities Company...................................... 895,000
52,000 Duke Realty Investments, Inc. ............................................. 1,222,000
25,000 Equity Residential Properties Trust........................................ 1,156,250
31,000 Fannie Mae................................................................. 2,199,062
35,000 First Industrial Realty Trust, Inc. ....................................... 940,625
30,000 First Union Corporation.................................................... 1,661,250
24,000 Fleet Financial Group, Inc. ............................................... 1,033,500
41,000 Freddie Mac................................................................ 2,572,750
30,000 Mellon Bank Corporation.................................................... 2,229,375
23,000 Mercantile Bankshares Corporation.......................................... 851,000
39,000 Simon Property Group, Inc. ................................................ 1,118,813
93,581 Starwood Hotels & Resorts Worldwide, Inc. ................................. 3,433,253
25,000 Summit Bancorp. ........................................................... 1,059,375
16,320 SunTrust Banks, Inc. ...................................................... 1,166,880
32,000 The Bank of New York Company, Inc. ........................................ 1,280,000
44,000 The Chase Manhattan Corporation............................................ 3,641,000
53,000 Torchmark Corporation...................................................... 1,811,937
13,000 Union Planters Corporation................................................. 556,562
27,000 XL Capital Ltd. ........................................................... 1,638,563
----------------------------------------------------
Total Financials 36,505,057
====================================================
Health Care (8.0%)
- ------------------
95,000 American Home Products Corporation......................................... 5,795,000
39,000 Baxter International, Inc. ................................................ 2,457,000
32,000 Elan Corporation Plc ADR*.................................................. 1,648,000
33,000 Eli Lilly & Company........................................................ 2,429,625
29,000 Johnson & Johnson.......................................................... 2,827,500
39,000 Medtronic, Inc. ........................................................... 2,805,563
34,000 Merck & Company, Inc. ..................................................... 2,388,500
36,000 Warner-Lambert Company..................................................... 2,445,750
----------------------------------------------------
Total Health Care 22,796,938
====================================================
Technology (5.1%)
- -----------------
31,000 ADC Telecommunications, Inc.*.............................................. 1,482,188
40,000 CIENA Corporation*......................................................... 940,000
78,000 First Data Corporation..................................................... 3,310,125
19,000 International Business Machines Corporation................................ 3,974,562
82,444 Lucent Technologies, Inc. ................................................. 4,956,946
----------------------------------------------------
Total Technology 14,663,821
====================================================
Utilities (7.6%)
- ----------------
36,000 Ameren Corporation......................................................... 1,392,750
47,400 BEC Energy................................................................. 2,014,500
64,000 CMS Energy Corporation..................................................... 2,816,000
73,000 Central and South West Corporation......................................... 1,811,313
22,650 Consolidated Edison, Inc. ................................................. 1,029,159
48,000 Dominion Resources, Inc. .................................................. 1,974,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 41
<PAGE>
The AAL Equity Income Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
===============================================================================================================================
<S> <C> <C>
Utilities (7.6%) - continued
- ----------------------------
65,000 Edison International................................................................... $ 1,592,500
73,100 New Century Energies, Inc. ............................................................ 2,558,500
56,000 PG&E Corporation....................................................................... 1,739,500
67,000 Pinnacle West Capital Corporation...................................................... 2,600,437
51,000 Texas Utilities Company................................................................ 2,027,250
-------------------------------------------------------------------
Total Utilities 21,555,909
===================================================================
-------------------------------------------------------------------
Total Common Stocks
(cost basis $204,427,430) 268,226,126
===================================================================
</TABLE>
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed Income Investments ( 2.0%) Interest Rate Maturity Date
=============================================================================================================
<S> <C> <C> <C> <C>
$ 1,650,000 Texas Utilities Electric Bonds.......................... 9.750% 5/1/2021 1,822,658
3,150,000 U.S. Treasury Notes..................................... 6.875 3/31/2000 3,205,125
500,000 U.S. Treasury Bonds..................................... 7.500 11/15/2016 585,468
-------------------------------------------------------------------
Total Long-Term Fixed Income Investments
(amortized cost basis $5,628,276) 5,613,251
===================================================================
-------------------------------------------------------------------
Total Long-Term Investments
(amortized cost basis $210,055,706) 273,839,377
===================================================================
</TABLE>
<TABLE>
<CAPTION>
Short-Term Investments ( 3.6%)/1/
====================================================
<S> <C> <C> <C> <C>
10,417,000 Ford Motor Credit Corporation....................... 4.830-4.880% 5/3-5/4/99 10,413,429
-------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $10,413,429) 10,413,429
===================================================================
-------------------------------------------------------------------
TOTAL INVESTMENTS (99.7%)
(amortized cost basis $220,469,135) 284,252,806
===================================================================
-------------------------------------------------------------------
Other Assets, Less Liabilities (0.3%) 722,557
===================================================================
-------------------------------------------------------------------
Total Net Assets (100.0%) $284,975,363
===================================================================
</TABLE>
* Non-income producing security
/1/ The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
42 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Balanced Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks long-term total return through a balance between income and the
potential for long-term capital growth by investing primarily in a diversified
portfolio of common stocks, bonds and money market instruments.
<TABLE>
<CAPTION>
Shares Common Stocks (48.5%) Market Value
============================================================================================================
<S> <C> <C>
Basic Materials (0.1%)
- ----------------------
3,800 Eastman Chemical Company.............................................. $ 211,612
------------------------------------------------
Total Basic Materials 211,612
================================================
Capital Goods (2.9%)
- --------------------
10,200 Cordant Technologies, Inc. ........................................... 470,475
26,400 General Electric Company.............................................. 2,785,200
14,400 Herman Miller, Inc. .................................................. 287,100
3,500 Honeywell, Inc. ...................................................... 331,625
2,300 PACCAR, Inc. ......................................................... 128,800
4,600 Rockwell International Corporation.................................... 237,475
4,700 United Technologies Corporation....................................... 680,912
------------------------------------------------
Total Capital Goods 4,921,587
================================================
Communication Services (3.5%)
- -----------------------------
38,644 AT&T Corporation...................................................... 1,951,497
6,000 Adelphia Communications Corporation*.................................. 409,500
15,400 Ameritech Corporation................................................. 1,053,938
15,600 Bell Atlantic Corporation............................................. 898,950
7,000 MCI WorldCom, Inc.*................................................... 575,312
9,200 Motorola, Inc. ....................................................... 737,150
3,000 Sprint Corporation.................................................... 307,688
1,500 Sprint PCS Group*..................................................... 63,562
------------------------------------------------
Total Communication Services 5,997,597
================================================
Consumer Cyclicals (3.4%)
- -------------------------
4,800 AutoZone, Inc.*....................................................... 144,000
7,600 Family Dollar Stores, Inc. ........................................... 183,350
7,700 Gannett Company, Inc. ................................................ 545,256
15,600 Harley-Davidson, Inc. ................................................ 930,150
22,600 Ross Stores, Inc. .................................................... 1,038,188
10,100 The New York Times Company Class A.................................... 348,450
2,500 The Times Mirror Company.............................................. 146,250
12,100 Tiffany and Company................................................... 1,016,400
34,200 Wal-Mart Stores, Inc. ................................................ 1,573,200
------------------------------------------------
Total Consumer Cyclicals 5,925,244
================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 43
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (48.5%) Market Value
=================================================================================================================================
<S> <C> <C>
Consumer Staples (11.6%)
- ------------------------
9,000 Alberto-Culver Company..................................................................... $ 223,875
6,000 Cablevision Systems Corporation, Class A*.................................................. 464,250
35,000 Comcast Corporation........................................................................ 2,299,062
1,000 Corn Products International, Inc. ......................................................... 28,875
35,000 Cox Communications, Inc. Class A*.......................................................... 2,778,125
2,500 Dean Foods Company......................................................................... 89,219
14,500 General Mills, Inc. ....................................................................... 1,060,313
13,700 General Nutrition Companies, Inc.*......................................................... 226,906
13,300 Gillette Company........................................................................... 694,094
19,700 Liberty Media Group*....................................................................... 1,258,337
40,000 MediaOne Group, Inc.*...................................................................... 3,262,500
5,400 MediaOne Group, Inc. `ATI' Premium Income Exchangeable Securities 6.250% 8/15/2001......... 432,675
38,800 Philip Morris Companies, Inc. ............................................................. 1,360,425
16,500 Procter & Gamble Company................................................................... 1,547,906
12,500 Safeway, Inc.*............................................................................. 674,219
16,600 Time Warner, Inc. ......................................................................... 1,162,000
88,500 Walgreen Company........................................................................... 2,378,438
---------------------------------------------------------------------
Total Consumer Staples 19,941,219
=====================================================================
Energy (3.3%)
- -------------
7,400 BP Amoco Plc ADR........................................................................... 837,587
7,600 Baker Hughes, Inc. ........................................................................ 227,050
5,200 Chevron Corporation........................................................................ 518,700
5,700 Columbia Energy Group...................................................................... 273,956
9,700 ENSCO International, Inc. ................................................................. 180,056
25,300 Exxon Corporation.......................................................................... 2,101,481
8,700 Halliburton Company........................................................................ 370,838
7,600 MidAmerican Energy Holdings Company*....................................................... 244,625
16,900 Royal Dutch Petroleum Company ADR.......................................................... 991,819
---------------------------------------------------------------------
Total Energy 5,746,112
=====================================================================
Financials (9.6%)
- -----------------
9,300 American Express Company................................................................... 1,215,394
24,100 American International Group, Inc. ........................................................ 2,830,244
2,700 Associates First Capital Corporation....................................................... 119,644
20,126 Banc One Corporation....................................................................... 1,187,434
14,100 BankAmerica Corporation.................................................................... 1,015,200
16,400 CIGNA Corporation.......................................................................... 1,429,875
15,600 Citigroup, Inc. ........................................................................... 1,173,900
44,300 Conseco, Inc. ............................................................................. 1,398,219
15,900 Fannie Mae................................................................................. 1,127,906
600 Hartford Life, Inc. ....................................................................... 31,387
11,600 Household International, Inc. ............................................................. 583,625
9,100 J.P. Morgan & Company, Inc. ............................................................... 1,226,225
22,300 MBNA Corporation........................................................................... 628,581
12,300 MGIC Investment Corporation................................................................ 597,319
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
44 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (48.5%) Market Value
============================================================================================================================
<S> <C> <C>
Financials (9.6%) continued
- ---------------------------
8,400 Morgan Stanley Dean Witter & Company................................................. $ 833,175
11,200 National City Corporation............................................................ 803,600
2,200 Northern Trust Corporation........................................................... 204,875
5,408 Starwood Hotels & Resorts Worldwide, Inc. ........................................... 198,406
----------------------------------------------------------------
Total Financials 16,605,009
================================================================
Health Care (5.0%)
- ------------------
4,200 Elan Corporation Plc ADR*............................................................ 216,300
12,600 Eli Lilly & Company.................................................................. 927,675
14,800 Johnson & Johnson.................................................................... 1,443,000
4,900 Medtronic, Inc. ..................................................................... 352,494
35,100 Merck & Company, Inc. ............................................................... 2,465,775
17,500 Pfizer, Inc. ........................................................................ 2,013,594
15,300 Schering-Plough Corporation.......................................................... 739,181
7,300 Wellpoint Health Networks, Inc.*..................................................... 512,825
----------------------------------------------------------------
Total Health Care 8,670,844
================================================================
Technology (8.9%)
- -----------------
32,100 ADC Telecommunications, Inc.*........................................................ 1,534,781
4,800 Arrow Electronics, Inc.*............................................................. 87,300
200 At Home Corporation*................................................................. 28,788
34,900 Automatic Data Processing, Inc. ..................................................... 1,553,050
11,100 Cisco Systems, Inc.*................................................................. 1,266,094
10,200 Cognos, Inc.*........................................................................ 245,437
5,500 Computer Associates International, Inc. ............................................. 234,781
5,300 Computer Sciences Corporation*....................................................... 315,681
14,700 First Data Corporation............................................................... 623,831
3,300 Gateway 2000, Inc.*.................................................................. 218,419
4,000 Hewlett-Packard Company.............................................................. 315,500
26,000 Intel Corporation.................................................................... 1,590,875
38,200 Lucent Technologies, Inc. ........................................................... 2,296,775
36,200 Microsoft Corporation*............................................................... 2,943,512
8,400 National Data Corporation............................................................ 387,450
5,300 Quantum Corporation*................................................................. 94,738
6,900 Seagate Technology, Inc.*............................................................ 192,338
12,500 Tellabs, Inc.*....................................................................... 1,369,531
----------------------------------------------------------------
Total Technology 15,298,881
================================================================
Transportation (0.1%)
- ---------------------
2,000 CNF Transportation, Inc. ............................................................ 87,375
----------------------------------------------------------------
Total Transportation 87,375
================================================================
Utilities (0.1%)
- ----------------
5,400 Entergy Corporation.................................................................. 168,750
----------------------------------------------------------------
Total Utilities 168,750
================================================================
----------------------------------------------------------------
Total Common Stocks
(cost basis $68,710,563) 83,574,230
================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 45
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (38.2%) Interest Rate Maturity Date Market Value
======================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Investments (10.5%)
- ------------------------------------------
$ 3,959,274 Federal National Mortgage Association
15 Yr. Pass Through........................... 6.500% 6/1/2013 $ 3,996,170
3,006 Federal National Mortgage Association
15 Yr. Pass Through........................... 8.500 9/1/2012 3,189
1,957,270 Federal National Mortgage Association
30 Yr. Pass Through........................... 5.500 1/1/2014 1,900,214
524,192 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 12/1/2014 549,615
115,928 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 1/1/2015 121,550
144,659 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 8/1/2023 153,495
71,525 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 2/1/2023 75,280
736,175 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 10/1/2024 779,587
421,035 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 6/1/2024 443,164
254,917 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 10/1/2026 268,147
724,591 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 12/1/2026 762,197
470,335 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 4/1/2027 494,698
115,154 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 7/1/2027 121,149
285,887 Federal National Mortgage Association
30 Yr. Pass Through........................... 8.500 2/1/2028 300,724
3,915,011 Government National Mortgage Association
15 Yr. Pass Through........................... 7.500 10/15/2013 4,068,554
3,995,263 Government National Mortgage Association
30 Yr. Pass Through........................... 6.500 3/15/2029 3,972,486
---------------------------------------------------------
Total U.S. Government Agency
Investments 18,010,219
---------------------------------------------------------
U.S. Government Investments (5.6%)
- ----------------------------------
3,000,000 U.S. Treasury Bonds........................... 5.250 11/15/2028 2,772,186
500,000 U.S. Treasury Notes........................... 4.750 2/15/2004 490,000
5,000,000 U.S. Treasury Notes........................... 4.750 11/15/2008 4,775,000
1,000,000 U.S. Treasury Notes........................... 6.125 12/31/2001 1,024,062
500,000 U.S. Treasury Notes........................... 6.625 7/31/2001 515,781
---------------------------------------------------------
Total U.S. Government Investments 9,577,029
---------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
46 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (38.2%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Asset-Backed Securities (7.2%)
- ------------------------------
$ 2,000,000 First Union Commercial Mortgage Trust Commercial
Mortgage Pass-Through Certificates Fund Series 1999-C1 ........ 6.070% 10/15/2008 $ 1,948,260
2,000,000 First Union-Lehman Brothers-Bank of America Commercial
Mortgage Trust Commercial Mortgage Pass-Through
Certificates Series 1998-C2 ................................... 6.560 11/18/2008 2,017,220
2,000,000 First USA Credit Card Master Trust 1998-9 Class A.............. 5.280 9/18/2006 1,954,240
900,000 Harley-Davidson Eaglemark Motorcycle Trust Series
1999-1 Class Certificates...................................... 6.710 8/15/2002 894,094
1,000,000 MBNA Master Credit Card Trust Series 98-J A.................... 5.250 9/15/2003 981,550
1,750,000 PECO Energy Transition Trust Series 1999-A Class A6............ 6.050 3/1/2009 1,740,463
3,000,000 Pemex Finance, Ltd./2/......................................... 8.020 5/15/2007 2,915,220
-----------------------------------------------------------------------
Total Asset-Backed Securities 12,451,047
-----------------------------------------------------------------------
Corporate Investments (14.9%)
- -----------------------------
2,000,000 AT&T Capital Corporation....................................... 6.875 1/15/2001 2,033,182
1,000,000 Arizona Public Service Company................................. 5.875 2/15/2004 992,959
500,000 CMS Panhandle Holding Company/2/............................... 7.000 7/15/2029 487,053
1,000,000 Cabot Industrial Property L.P. ................................ 7.125 5/1/2004 996,460
1,000,000 CalEnergy Company, Inc. ....................................... 7.230 9/15/2005 1,026,298
1,500,000 Comdisco, Inc. ................................................ 5.950 4/30/2002 1,495,188
1,000,000 Countrywide Home Loan, Inc. ................................... 6.250 4/15/2009 971,107
1,000,000 East Coast Power, LLC/2/....................................... 7.066 3/31/2012 986,199
2,000,000 East Coast Power, LLC/2/....................................... 7.536 6/30/2017 1,971,778
1,000,000 Ford Motor Credit Corporation.................................. 5.750 2/23/2004 988,951
1,000,000 Household Finance Corporation.................................. 5.875 2/1/2009 951,049
2,000,000 Joseph E. Seagram & Sons, Inc. ................................ 6.250 12/15/2001 2,011,998
1,745,000 Mercantile Bancorporation, Inc. ............................... 7.625 10/15/2002 1,829,617
500,000 News America Holdings, Inc. ................................... 8.625 2/1/2003 539,070
500,000 Raytheon Company............................................... 5.700 11/1/2003 491,702
1,000,000 Raytheon Company............................................... 7.000 11/1/2028 1,000,074
2,000,000 Republic of Korea.............................................. 8.875 4/15/2008 2,172,648
500,000 Sears Roebuck Acceptance Corporation........................... 6.000 3/20/2003 499,912
1,500,000 TCI Communications, Inc. ...................................... 8.650 9/15/2004 1,679,481
1,000,000 Time Warner, Inc. ............................................. 8.050 1/15/2016 1,106,131
500,000 Tyco International Group S.A. ................................. 6.125 6/15/2001 503,482
1,000,000 USX Corporation................................................ 6.650 2/1/2006 993,479
-----------------------------------------------------------------------
Total Corporate Investments 25,727,818
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Total Long-Term Fixed Income Investments
(amortized cost basis $66,476,839) 65,766,113
-----------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 47
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Short-Term Investments (13.3%)/1/ Interest Rate Maturity Date Market Value
=======================================================================================================================
<S> <C> <C> <C> <C>
$ 6,872,000 AT&T Company................................... 4.780% 5/6/99 $ 6,867,438
6,973,000 Ford Motor Credit Corporation.................. 4.880 5/4/99 6,970,164
2,664,000 General Electric Capital Corporation........... 4.790 5/11/99 2,660,455
6,500,000 Merrill Lynch & Company, Inc. ................. 4.950 5/3/99 6,498,267
----------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $22,996,324) 22,996,324
----------------------------------------------------------
----------------------------------------------------------
TOTAL INVESTMENTS (100.0%)
(amortized cost basis $158,183,726) 172,336,667
----------------------------------------------------------
----------------------------------------------------------
Other Assets, Less Liabilities (0.0%) 56,792
----------------------------------------------------------
----------------------------------------------------------
Net Assets (100.0%) $172,393,459
----------------------------------------------------------
</TABLE>
* Non-income producing
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
48 The AAL Mutual Funds Annual Report
<PAGE>
The AAL High Yield Bond Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks high current income and secondarily capital growth by investing
primarily in a diversified portfolio of high-risk, high-yield bonds commonly
referred to as "junk bonds."
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (96.5%) Interest Rate Maturity Date Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
Chemicals (2.6%)
- ---------------
$ 1,250,000 LaRoche Industries, Inc. ..................... 9.500% 9/15/2007 $ 937,500
1,500,000 PCI Chemicals Canada, Inc. ................... 9.250 10/15/2007 1,260,000
1,650,000 Royster-Clark, Inc./2/........................ 10.250 4/1/2009 1,674,750
-----------------------------------------------------------------------
Total Chemicals 3,872,250
-----------------------------------------------------------------------
Construction (5.7%)
- -------------------
1,250,000 Amatek Industries Property, Ltd./2/........... 12.000 2/15/2008 1,192,188
1,000,000 American Standard, Inc. ...................... 7.625 2/15/2010 990,000
1,650,000 Building One Services Corporation............. 10.500 5/1/2009 1,608,750
1,000,000 Fortress Group, Inc. ......................... 13.750 5/15/2003 961,250
750,000 ISG Resources, Inc. .......................... 10.000 4/15/2008 768,750
1,500,000 Omega Cabinets, Ltd. ......................... 10.500 6/15/2007 1,545,000
1,250,000 Penhall International Corporation............. 12.000 8/1/2006 1,265,625
-----------------------------------------------------------------------
Total Construction 8,331,563
-----------------------------------------------------------------------
Consumer Products (4.3%)
- -----------------------
1,000,000 Commemorative Brands, Inc. ................... 11.000 1/15/2007 670,000
1,250,000 Doskocil Manufacturing Company, Inc. ......... 10.125 9/15/2007 873,437
1,000,000 Polaroid Corporation.......................... 11.500 2/15/2006 1,052,500
1,500,000 Revlon Consumer Products Corporation.......... 8.625 2/1/2008 1,425,000
1,250,000 Salton, Inc. ................................. 10.750 12/15/2005 1,314,063
1,250,000 Samsonite Corporation......................... 10.750 6/15/2008 931,250
---------------------------------------------------------------------
Total Consumer Products 6,266,250
---------------------------------------------------------------------
Containers (0.9%)
- -----------------
1,250,000 Anchor Glass Containers Corporation........... 11.250 4/1/2005 1,320,313
---------------------------------------------------------------------
Total Containers 1,320,313
---------------------------------------------------------------------
Energy (8.3%)
- -------------
1,500,000 Abraxas Petroleum Corporation................. 11.500 11/1/2004 881,250
500,000 Abraxas Petroleum Corporation/2/.............. 12.875 3/15/2003 515,625
1,500,000 Clark Refining & Marketing Corporation........ 8.375 11/15/2007 1,402,500
1,000,000 Crown Central Petroleum Corporation........... 10.875 2/1/2005 920,000
1,250,000 KCS Energy, Inc. ............................. 11.000 1/15/2003 750,000
1,000,000 Key Energy Services, Inc./2/.................. 14.000 1/15/2009 955,000
2,500,000 Northern Offshore ASA/2/...................... 10.000 5/15/2007 1,125,000
1,000,000 P&L Coal Holding Corporation.................. 8.875 5/15/2008 1,037,500
1,250,000 Pen Holdings, Inc. ........................... 9.875 6/15/2008 1,293,750
1,000,000 RBF Finance Company/2/........................ 11.000 3/15/2006 1,045,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 49
<PAGE>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (96.5%) Interest Rate Maturity Date Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
Energy (8.3%) - continued
- -------------------------
$ 1,500,000 Statia Terminals International N.V. .......... 11.750% 11/15/2003 $ 1,653,750
1,500,000 Transamerican Energy Corporation/3/........... 11.500 6/15/2002 240,000
500,000 XCL Limited/2/................................ 13.500 5/1/2004 395,000
---------------------------------------------------------------------
Total Energy 12,214,375
---------------------------------------------------------------------
Financials (2.8%)
- -----------------
750,000 AmeriCredit Corporation/2/.................... 9.875 4/15/2006 765,000
1,300,000 AMRESCO, Inc. ................................ 10.000 3/15/2004 1,085,500
1,250,000 Arcadia Financial, Ltd. ...................... 11.500 3/15/2007 975,000
750 Arcadia Financial, Ltd. (Warrants)* .......... 1,875
1,500,000 Imperial Credit Industries, Inc. ............. 9.875 1/15/2007 1,230,000
---------------------------------------------------------------------
Total Financials 4,057,375
---------------------------------------------------------------------
Food & Beverages (3.5%)
- -----------------------
320,000 Envirodyne Industries, Inc. .................. 12.000 6/15/2000 320,400
750,000 Envirodyne Industries, Inc. .................. 10.250 12/1/2001 577,500
1,250,000 Fresh Foods, Inc. ............................ 10.750 6/1/2006 1,262,500
1,500,000 Smithfield Foods, Inc. ....................... 7.625 2/15/2008 1,440,000
1,500,000 Specialty Foods Corporation................... 11.125 10/1/2002 1,470,000
---------------------------------------------------------------------
Total Food & Beverages 5,070,400
---------------------------------------------------------------------
Food Retailers (1.4%)
- ---------------------
1,000,000 Fleming Companies, Inc. ...................... 10.625 12/15/2001 1,026,250
1,000,000 Fleming Companies, Inc. ...................... 10.500 12/1/2004 982,500
---------------------------------------------------------------------
Total Food Retailers 2,008,750
---------------------------------------------------------------------
Forest Products & Paper (4.7%)
- ------------------------------
500,000 American Pad & Paper Company.................. 13.000 11/15/2005 305,000
1,250,000 Four M Corporation............................ 12.000 6/1/2006 937,500
1,000,000 Gaylord Container Corporation................. 9.375 6/15/2007 950,000
1,500,000 Indah Kiat Finance Mauritius, Ltd. ........... 10.000 7/1/2007 1,012,500
1,650,000 Millar Western Forest Products, Ltd. ......... 9.875 5/15/2008 1,526,250
1,000,000 Sweetheart Cup Company, Inc. ................. 10.500 9/1/2003 720,000
1,500,000 Sweetheart Cup Company, Inc. ................. 9.625 9/1/2000 1,432,500
---------------------------------------------------------------------
Total Forest Products & Paper 6,883,750
---------------------------------------------------------------------
Health Care (3.7%)
- ------------------
1,500,000 ICN Pharmaceuticals, Inc. .................... 9.250 8/15/2005 1,535,625
1,500,000 Mariner Post-acute Network, Inc. ............. 9.500 11/1/2007 795,000
2,000,000 Tenet Healthcare Corporation.................. 8.000 1/15/2005 2,010,000
1,000,000 Triad Hospitals Holdings, Inc./2/............. 11.000 5/15/2009 1,010,000
500 Imagyn (Warrants)* ........................... 50
1,000,000 Vencor, Inc./3/............................... 9.875 5/1/2005 150,000
---------------------------------------------------------------------
Total Health Care 5,500,675
---------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
50 The AAL Mutual Funds Annual Report
<PAGE>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (96.5%) Interest Rate Maturity Date Market Value
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leisure (8.1%)
- --------------
$1,000,000 Booth Creek Ski Holdings, Inc. ........................... 12.500% 3/15/2007 $ 950,000
1,250,000 Circus Circus Enterprise, Inc. ........................... 7.625 7/15/2013 1,174,275
1,500,000 HMH Properties, Inc. ..................................... 7.875 8/1/2005 1,477,500
1,250,000 Harrahs Operating Company, Inc. .......................... 7.875 12/15/2005 1,260,938
1,250,000 Livent, Inc./3/........................................... 9.375 10/15/2004 562,500
1,070,000 Prime Hospitality Corporation............................. 9.250 1/15/2006 1,131,525
1,250,000 Regal Cinemas, Inc. ...................................... 9.500 6/1/2008 1,246,875
1,500,000 Riviera Holdings Corporation.............................. 10.000 8/15/2004 1,425,000
1,000,000 Silver Cinemas, Inc. ..................................... 10.500 4/15/2005 537,500
1,250,000 Trump Atlantic City Associates Funding, Inc. ............. 11.250 5/1/2006 1,100,000
1,180,594 United Artists Theatre Circuit, Inc. ..................... 9.300 7/1/2015 1,061,130
----------------------------------------------------
Total Leisure 11,927,243
====================================================
Media (2.1%)
- ------------
1,000,000 Hollinger International Publishing, Inc. ................. 8.625 3/15/2005 1,040,000
750,000 Phoenix Color Corporation/2/.............................. 10.375 2/1/2009 761,250
1,250,000 Premier Graphics, Inc./2/................................. 11.500 12/1/2005 1,237,500
----------------------------------------------------
Total Media 3,038,750
====================================================
Media-Broadcasting (2.6%)
- -------------------------
1,000,000 Allbritton Communications, Inc. .......................... 9.750 11/30/2007 1,062,500
1,650,000 Chancellor Media Corporation/2/........................... 8.000 11/1/2008 1,699,500
1,000,000 Spanish Broadcasting Systems, Inc. ....................... 11.000 3/15/2004 1,090,000
----------------------------------------------------
Total Media-Broadcasting 3,852,000
====================================================
Media-Cable (4.8%)
- ------------------
2,000,000 CSC Holdings, Inc......................................... 7.875 2/15/2018 2,050,000
1,500,000 Century Communications Corporation........................ 8.750 10/1/2007 1,560,000
2,500,000 Charter Communication Holdings, LLC./2/................... 8.625 4/1/2009 2,559,375
750,000 Jones Intercable, Inc. ................................... 8.875 4/1/2007 816,563
----------------------------------------------------
Total Media-Cable 6,985,938
====================================================
Metals-Diversified (2.6%)
- -------------------------
1,500,000 Algoma Steel Corporation.................................. 12.375 7/15/2005 1,500,000
1,650,000 Oglebay Norton Company/2/................................. 10.000 2/1/2009 1,625,250
750,000 Sheffield Steel Corporation............................... 11.500 12/1/2005 738,750
----------------------------------------------------
Total Metals-Diversified 3,864,000
====================================================
Manufacturing-Auto (2.2%)
- -------------------------
1,650,000 Breed Technologies, Inc. ................................. 9.250 4/15/2008 594,000
1,000,000 Federal Mogul Corporation................................. 7.875 7/1/2010 998,090
750,000 Talon Automotive Group, LLC. ............................. 9.625 5/1/2008 661,875
1,000,000 Trident Automotive Plc. .................................. 10.000 12/15/2005 1,035,000
----------------------------------------------------
Total Manufacturing-Auto 3,288,965
====================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 51
<PAGE>
The AAL High Yield Bond - continued SCHEDULE OF INVESTMENTS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (96.5%) Interest Rate Maturity Date Market Value
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Miscellaneous Manufacturing (10.5%)
- -----------------------------------
$ 1,500,000 Applied Extrusion Technologies, Inc............. 11.500% 4/1/2002 $ 1,556,250
1,250,000 BGF Industries, Inc./2/......................... 10.250 1/15/2009 1,275,000
1,250,000 Derlan Manufacturing, Inc....................... 10.000 1/15/2007 1,139,062
1,650,000 Global Imaging Systems, Inc./2/................. 10.750 2/15/2007 1,654,125
1,500,000 High Voltage Engineering Corporation............ 10.500 8/15/2004 1,428,750
1,000,000 IMPAC Group, Inc................................ 10.125 3/15/2008 1,002,500
1,250,000 Indesco International, Inc...................... 9.750 4/15/2008 798,438
1,250,000 Key Components, LLC............................. 10.500 6/1/2008 1,187,500
1,650,000 Morris Materials Handling Corporation........... 9.500 4/1/2008 899,250
1,750,000 Paragon Corporation Holdings.................... 9.625 4/1/2008 1,050,000
1,000,000 RBX Corporation................................. 12.000 1/15/2003 915,000
1,250,000 Russell-Stanley Holdings, Inc./2/............... 10.875 2/15/2009 1,268,750
1,250,000 W.R. Carpenter North America, Inc............... 10.625 6/15/2007 1,253,125
-------------------------------------------------
Total Miscellaneous Manufacturing 15,427,750
=================================================
Pollution Control (1.3%)
- ------------------------
2,000,000 Envirosource, Inc............................... 9.750 6/15/2003 1,040,000
940,000 HydroChem Industrial Services, Inc.............. 10.375 8/1/2007 830,725
-------------------------------------------------
Total Pollution Control 1,870,725
=================================================
Restaurants/Food Services (2.5%)
- --------------------------------
1,250,000 American Restaurant Group, Inc.................. 11.500 2/15/2003 1,126,562
1,650,000 AmeriServe Food Distribution, Inc............... 8.875 10/15/2006 1,518,000
1,000,000 Tricon Global Restaurants, Inc.................. 7.650 5/15/2008 1,028,860
-------------------------------------------------
Total Restaurants/Food Services 3,673,422
=================================================
Retail Stores (3.5%)
- --------------------
750,000 Brown Group, Inc................................ 9.500 10/15/2006 788,437
1,000,000 Frank's Nursery & Crafts, Inc................... 10.250 3/1/2008 1,000,000
1,000,000 Just for Feet, Inc./2/.......................... 11.000 5/1/2009 985,000
1,000,000 The Pantry, Inc................................. 10.250 10/15/2007 1,047,500
1,250,000 Vista Eyecare, Inc.............................. 12.750 10/15/2005 1,300,000
-------------------------------------------------
Total Retail Stores 5,120,937
=================================================
Technology (0.9%)
- -----------------
1,500,000 Viasystems, Inc................................. 9.750 6/1/2007 1,395,000
-------------------------------------------------
Total Technology 1,395,000
=================================================
Telecommunications (8.3%)
- -------------------------
750,000 BTI Telecom Corporation......................... 10.500 9/15/2007 712,500
1,250,000 Globalstar, L.P................................. 11.375 2/15/2004 887,500
1,500,000 IDT Corporation................................. 8.750 2/15/2006 1,530,000
1,500,000 Iridium Capital Corporation..................... 11.250 7/15/2005 465,000
1,250,000 Level 3 Communications, Inc..................... 9.125 5/1/2008 1,276,562
1,650,000 Metrocall, Inc./2/.............................. 11.000 9/15/2008 1,485,000
1,250,000 Pac-West Telecommunications, Inc./2/............ 13.500 2/1/2009 1,271,875
1,250,000 Paging Network, Inc............................. 10.000 10/15/2008 1,012,500
1,500,000 Primus Telecommunications Group, Inc./2/........ 11.250 1/15/2009 1,582,500
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
52 The AAL Mutual Funds Annual Report
<PAGE>
The AAL High Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (96.5%) Interest Rate Maturity Date Market Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Telecommunications (8.3%) - continued
- -------------------------------------
$ 1,750,000 Spectrasite Holdings, Inc./2/................ 0.000% 4/15/2009 $ 1,023,750
1,000,000 USA Mobile Communications, Inc............... 9.500 2/1/2004 860,000
500 Unifi Communications, Inc. (Warrants)*....... 50
-----------------------------------------------------
Total Telecommunications 12,107,237
=====================================================
Textiles (2.7%)
- ---------------
750,000 Anvil Knitwear, Inc.......................... 10.875 3/15/2007 338,437
1,250,000 Galey & Lord, Inc............................ 9.125 3/1/2008 962,500
1,650,000 Ntex, Inc.................................... 11.500 6/1/2006 1,518,000
1,250,000 WorldTex, Inc................................ 9.625 12/15/2007 1,087,500
-----------------------------------------------------
Total Textiles 3,906,437
=====================================================
Transportation (2.9%)
- ---------------------
1,000,000 Allied Holdings, Inc. 8.625 10/1/2007 970,000
1,000,000 Moran Transportation Company 11.750 7/15/2004 1,087,500
1,250,000 Petro Stopping Center, L.P. 10.500 2/1/2007 1,340,625
1,000,000 Transportation Maritima Mexicana S.A. de C.V. 10.000 11/15/2006 840,000
-----------------------------------------------------
Total Transportation 4,238,125
=====================================================
Utilities (3.6%)
- ----------------
1,000,000 CMS Energy Corporation 7.500 1/15/2009 1,003,214
1,500,000 Calpine Corporation 7.625 4/15/2006 1,503,750
1,500,000 Energy Corpration of America 9.500 5/15/2007 1,421,250
1,250,000 Niagara Mohawk Power Corporation 7.625 10/1/2005 1,283,829
-----------------------------------------------------
Total Utilities 5,212,043
=====================================================
Total Long-Term Fixed-Income Investments
(amortized cost basis $155,012,385) 141,434,273
-----------------------------------------------------
Short-Term Investments (0.9%)/1/
------------------------------------------------
1,266,000 Merrill Lynch & Company, Inc.................... 4.950 5/3/99 1,265,652
-----------------------------------------------------
Total Short-Term Investments
(amoritized cost basis $1,265,652) 1,265,652
=====================================================
-----------------------------------------------------
TOTAL INVESTMENTS (97.4%)
(amortized cost basis $156,278,037) 142,699,925
=====================================================
-----------------------------------------------------
Other Assets, Less Liabilities (2.6%) 3,840,845
=====================================================
-----------------------------------------------------
Net Assets (100%) $146,540,770
=====================================================
</TABLE>
* Non-income producing
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
/3/ Securities in default.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 53
<PAGE>
The AAL Municipal Bond Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks a high level of current income exempt from federal income taxes,
consistent with capital preservation by investing primarily in a diversified
portfolio of municipal securities.
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alabama (1.2%)
- --------------
$ $3,890,000 Courtland, Alabama Industrial Development
Board Solid Waste Disposal Industrial Revenue
Bonds (Champion International Corporation Project)
(Subject to 'AMT')................................... 7.000% 6/1/2022 $ 4,152,575
2,000,000 Jefferson County, Alabama Sewer Revenue Bonds
(Series A) (FGIC Insured)............................ 5.750 2/1/2038 2,130,000
-----------------------------------------------------------------
Total Alabama 6,282,575
-----------------------------------------------------------------
Alaska (0.9%)
- -------------
2,130,000 Alaska Industrial Development Authority Power
Revenue Bonds (Snettisham Hydroelectric Project)
(1st Series) (AMBAC Insured) (Subject to 'AMT')...... 6.000 1/1/2014 2,335,012
2,260,000 Alaska Industrial Development Authority Power
Revenue Bonds (Snettisham Hydroelectric Project)
(1st Series) (AMBAC Insured) (Subject to 'AMT')...... 6.000 1/1/2015 2,463,400
-----------------------------------------------------------------
Total Alaska 4,798,412
=================================================================
Arizona (2.3%)
- --------------
3,715,000 Maricopa County, Arizona Industrial Development
Authority Health Facilities Revenue Bonds (Pennington
Gardens Project) (Series A) (GNMA Insured) **........ 6.300 9/20/2038 4,058,636
1,205,000 Maricopa County, Arizona Industrial Development
Authority Health Facilities Revenue Bonds (Pennington
Gardens Project) (Series A) (GNMA Insured)........... 6.250 9/20/2029 1,316,463
1,000,000 Mohave County, Arizona School District #1 General
Obligation Bonds (Series A) (GNMA Insured)........... 5.900 7/1/2015 1,087,500
5,000,000 Salt River, Arizona Project Revenue Bonds............ 5.500 1/1/2019 5,150,000
450,000 University of Arizona Certificate of Participation
Bonds (Administrative and Parking Facilities)
(MBIA Insured)....................................... 6.000 7/15/2023 484,313
-----------------------------------------------------------------
Total Arizona 12,096,912
=================================================================
California (14.5%)
- ------------------
2,000,000 ABAG Finance Authority for Nonprofit Corporations,
California Certificate Participation Bonds (Channing
House Project)....................................... 5.500 2/15/2029 1,985,000
3,715,000 California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue Bonds (GNMA/FNMA/
FHLMC Insured) (Series A-2) (Subject to 'AMT') **.... 7.000 9/1/2029 4,137,581
4,065,000 California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue Bonds (Series A)
(GNMA/FNMA/FHLMC Insured) (Subject to 'AMT')......... 5.750 12/1/2029 4,481,662
1,015,000 California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue Bonds (Series A)
(GNMA/FNMA/FHLMC Insured) (Subject to 'AMT')......... 7.520 12/1/2024 1,112,694
1,015,000 California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue Bonds (Series A-3)
(GNMA/FHLMC/FNMA Insured) (Subject to 'AMT')......... 7.250 12/1/2024 1,112,694
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
54 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
California (14.5%) - continued
- -------------------------------
$ 1,725,000 California Rural Home Mortgage Finance Authority
Single Family Mortgage Revenue Bonds (Series D,
Class 5) (GNMA/ FNMA/FHLMC Insured)
(Subject to 'AMT')................................... 6.700% 5/1/2029 $ 1,940,625
4,855,000 Contra Costa County, California Home Mortgage
Revenue Bonds (Escrowed to Maturity)................. 7.500 5/1/2014 6,311,500
1,335,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2005 1,036,294
5,000,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A) **.......................... 0.000 1/1/2009 4,112,500
5,000,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2010 4,156,250
5,000,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2011 4,206,250
605,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2012 515,762
6,000,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2013 5,197,500
7,145,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 0.000 1/1/2014 6,234,013
10,135,000 Foothill/Eastern Transportation California Toll Road
Revenue Bonds (Series A)............................. 5.000 1/1/2035 9,666,256
4,200,000 Fresno, California Sewer Revenue Bonds (Series
1993 A-1) (AMBAC Insured)............................ 6.250 9/1/2014 4,935,000
580,000 Kern, California High School District General
Obligation Bonds (Series A) (MBIA Insured)........... 6.600 2/1/2016 685,850
735,000 Los Angeles, California Wastewater Revenue Bonds
(Series B) (MBIA Insured)............................ 5.700 6/1/2023 780,019
2,000,000 Modesto, California Irrigation District Certificate
Participation Bonds (Series B)....................... 5.300 7/1/2022 2,007,500
3,500,000 Orange County, California Transit Authority Sales Tax
Revenue Bonds (Series 1992-M) (MBIA Insured)......... 6.000 2/15/2009 3,968,125
4,200,000 Pomona, California Single Family Housing Revenue
Bonds (Escrowed to Maturity)......................... 7.600 5/1/2023 5,491,500
2,075,000 Pomona, California Unified School District General
Obligation Bonds (MBIA Insured) **................... 6.500 8/1/2019 2,435,531
1,505,000 Sanger, California Unified School District General
Obligation Bonds (MBIA Insured) *.................... 5.350 8/1/2015 1,570,844
-----------------------------------------------------------------------
Total California 76,968,256
=======================================================================
Colorado (2.6%)
- ---------------
2,500,000 Colorado Housing Finance Authority Single Family
Revenue Bonds (Series A-2) (Subject to 'AMT')........ 6.600 5/1/2028 2,746,875
1,000,000 Colorado Housing Finance Authority Single Family
Revenue Bonds (Series A-3)........................... 6.500 5/1/2016 1,091,250
1,750,000 Colorado Housing Finance Authority Single Family
Revenue Bonds (Series B)............................. 6.550 5/1/2025 1,911,875
3,250,000 Colorado Housing Finance Authority Single Family
Revenue Bonds (Series D-2) (Subject to 'AMT')........ 6.350 11/1/2029 3,558,750
800,000 Dawson Ridge Metropolitan District #1, Colorado
(Series A)........................................... 0.000 10/1/2012 391,000
620,000 Dawson Ridge Metropolitan District #1, Colorado
(Series B)........................................... 0.000 10/1/2012 303,025
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 55
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Colorado (2.6%) - continued
- ----------------------------
$ 1,600,000 Denver, Colorado Health and Hospital Revenue
Bonds (Series A).......................................... 5.100% 12/1/2010 $ 1,608,000
1,000,000 Denver, Colorado Health and Hospital Revenue
Bonds (Series A).......................................... 5.150 12/1/2011 1,005,000
1,390,000 Highlands Ranch Metro District #3, Colorado General
Obligation Unlimited Bonds (ACA Insured).................. 5.125 12/1/2012 1,417,800
--------------------------------------------------------------
Total Colorado 14,033,575
==============================================================
Florida (1.9%)
- ---------------
430,000 Enterprise Community Development District,
Florida Water and Sewer Revenue Bonds
(MBIA Insured)............................................ 6.125 5/1/2024 464,938
480,000 Florida State Board of Education Capital Outlay
General Obligation Bonds (Series B)....................... 5.875 6/1/2024 524,400
1,000,000 Halifax Hospital Medical Center of Florida Revenue
Bonds (ACA Insured)....................................... 5.000 4/1/2011 1,012,500
500,000 Hillsborough County, Florida Aviation Revenue Bonds
(Tampa International Airport Project) (Series B)
(FGIC Insured)............................................ 5.875 10/1/2023 541,250
1,000,000 Jacksonville, Florida Port Authority Airport Revenue
Refunding Bonds (Subject to 'AMT') (FGIC Insured)......... 5.000 10/1/2011 1,013,750
1,445,000 Manatee County, Florida Housing Finance Authority
Single Family Revenue Bonds (Series 1) (GNMA
Insured) (Subject to 'AMT')............................... 6.250 11/1/2028 1,584,081
1,670,000 Manatee County, Florida Housing Finance Authority
Single Family Revenue Bonds (Series 1)
(Subject to 'AMT')........................................ 7.200 5/1/2028 1,868,312
2,000,000 Orange County, Florida Health Facilities Authority
Bonds (MBIA Insured)...................................... 6.250 10/1/2018 2,310,000
1,000,000 Suwannee County, Florida Health Care Facilities
Revenue Bonds (Advent Christian Village Project)
(ACA Insured) *........................................... 5.250 4/1/2024 973,750
--------------------------------------------------------------
Total Florida 10,292,981
===============================================================
Georgia (2.9%)
- ---------------
565,000 Baldwin County, Georgia Hospital Authority Revenue
Bonds (Oconee Regional Medical Center).................... 5.350 12/1/2014 558,644
880,000 Baldwin County, Georgia Hospital Authority Revenue
Bonds (Oconee Regional Medical Center).................... 5.400 12/1/2015 873,400
2,000,000 Burke County, Georgia Development Authority
Pollution Control Revenue Bonds (Georgia Power
Company Plant Project) (2nd Series) *..................... 5.250 5/1/2034 1,977,500
4,000,000 Georgia Municipal Electric Authority Power Revenue
Refunding Bonds (Series Z) (FGIC Insured)................. 5.500 1/1/2012 4,315,000
4,000,000 Georgia Municipal Electric Authority Power Revenue
Bonds (Series A) (MBIA/IBC Insured)....................... 6.500 1/1/2012 4,690,000
2,690,000 Georgia Municipal Electric Authority Power Revenue
Bonds (Series DD) (AMBAC/TCRS Insured).................... 7.000 1/1/2008 3,194,375
----------------------------------------------------------
Total Georgia 15,608,919
============================================================
Illinois (14.8%)
2,245,000 Bolingbrook, Illinois Capital Appreciation General
Obligation Bonds (Series B) (MBIA Insured) *.............. 0.000 1/1/2011 1,248,781
1,000,000 Bolingbrook, Illinois Capital Appreciation General
Obligation Bonds (Series B) (MBIA Insured) *.............. 0.000 1/1/2013 490,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
56 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Illinois (14.8%) - continued
- -----------------------------
$ 2,000,000 Bolingbrook, Illinois Capital Appreciation General
Obligation Bonds (Series B) (MBIA Insured) *............. 0.000% 1/1/2029 $ 387,500
2,000,000 Broadview, Illinois Tax Increment Revenue Bonds.......... 5.250 7/1/2012 1,977,500
1,000,000 Broadview, Illinois Tax Increment Revenue Bonds.......... 5.375 7/1/2015 978,750
200,000 Chicago, Illinois Board of Education General
Obligation Bonds (Chicago School Reform Project)
(AMBAC Insured).......................................... 5.800 12/1/2017 217,750
4,000,000 Chicago, Illinois O'Hare International Airport
Special Facilities Revenue Bonds (United Airlines
Project) (Series A)...................................... 5.350 9/1/2016 3,960,000
325,000 Chicago, Illinois Public Building Authority Revenue
Bonds (Chicago Transit) (AMBAC Insured).................. 6.100 1/1/2007 355,875
5,000,000 Chicago, Illinois Revenue Bonds (O'Hare
International Airport) (MBIA Insured)
(Subject to 'AMT')....................................... 5.700 1/1/2008 5,275,000
4,750,000 Chicago, Illinois Single Family Mortgage Revenue
Bonds (Collection Series A-1) (GNMA/FNMA/
FHLMC Insured) (Subject to 'AMT')........................ 6.450 9/1/2029 5,213,125
2,280,000 Chicago, Illinois Single Family Mortgage Revenue
Bonds (GNMA Insured) (Subject to 'AMT').................. 7.250 9/1/2028 2,559,300
3,000,000 Chicago, Illinois Single Family Mortgage Revenue
Bonds (Series C-1) (Subject to 'AMT')
(FNMA/GNMA Insured)...................................... 6.300 9/1/2029 3,258,750
2,250,000 Cook County, Illinois General Obligation Bonds
(Series B) (FGIC Insured)................................ 5.500 11/15/2022 2,297,813
765,000 Cook County, Illinois School District #100 General
Obligation Unlimited Bonds (Berwyn South)
(FSA Insured)............................................ 8.200 12/1/2009 997,369
880,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured).................. 8.500 12/1/2006 1,116,500
1,250,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured).................. 8.500 12/1/2011 1,706,250
1,565,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured).................. 8.500 12/1/2014 2,194,912
1,815,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured).................. 8.500 12/1/2016 2,579,569
2,620,000 Du Page County, Illinois General Obligation Bonds
(Stormwater Project)..................................... 5.600 1/1/2021 2,787,025
9,400,000 Hoffman Estates, Illinois Tax Increment Jr. Lien
Capital Appreciation Revenue Bonds....................... 0.000 5/15/2003 7,849,000
2,225,000 Illinois Educational Facilities Authority Revenue
Bonds (Northwestern University).......................... 5.150 11/1/2032 2,319,563
3,500,000 Illinois Educational Facilities Authority Revenue
Bonds (Northwestern University).......................... 5.200 11/1/2032 3,657,500
1,500,000 Illinois Health Facilities Authority Revenue
Refunding Bonds (Silver Cross Hospital).................. 5.500 8/15/2019 1,471,875
225,000 Illinois Regional Transit Authority Revenue Bonds
(Series 94-D) (FGIC Insured)............................. 7.100 6/1/2025 257,062
585,000 Illinois Regional Transit Authority Revenue Bonds
(Series A) (AMBAC Insured)............................... 6.250 6/1/2024 645,694
3,000,000 Illinois Regional Transit Authority Revenue Bonds
(Series A) (FGIC Insured)................................ 6.700 11/1/2021 3,675,000
250,000 Illinois State General Obligation Unlimited Bonds
(MBIA Insured)........................................... 6.000 2/1/2016 267,813
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 57
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C> <C>
Illinois (14.8%) - continued
- -----------------------------
$ 450,000 Illinois State General Obligation Unlimited Bonds
(MBIA Insured)....................................... 6.100% 2/1/2019 $ 480,375
10,650,000 Metropolitan Pier and Exposition Center, Illinois
Revenue Bonds........................................ 7.000 7/1/2026 12,926,437
1,290,000 Peoria, Moline, and Freeport, Illinois Single Family
Revenue Bonds (Series A) (GNMA/FHA/VA
Insured) (Subject to 'AMT').......................... 7.600 4/1/2027 1,427,062
600,000 Southwestern Illinois Development Authority
Revenue Bonds (Anderson Hospital Project)............ 5.500 8/15/2020 592,500
2,225,000 Winnebago County, Illinois School District Capital
Appreciation General Obligation Unlimited Bonds
(FSA Insured)........................................ 0.000 1/1/2012 1,198,719
4,445,000 Winnebago County, Illinois School District Capital
Appreciation General Obligation Unlimited Bonds
(FSA Insured)........................................ 0.000 1/1/2013 2,266,950
------------------------------------------------------------
Total Illinois 78,637,319
Indiana (1.9%) ============================================================
- --------------
295,000 Indiana Health Facilities Finance Authority Hospital
Revenue Bonds (Riverview Hospital Project)........... 5.000 8/1/2010 293,525
1,500,000 Indiana Municipal Power Agency Supply System
Revenue Refunding Bonds (Series A) (MBIA Insured).... 5.300 1/1/2023 1,498,125
4,550,000 Indiana Transportation Finance Authority Revenue
Bonds (MBIA Insured)................................. 7.250 6/1/2015 5,733,000
2,000,000 Lawrence Township, Indiana Metropolitan School
District General Obligation Bonds.................... 6.875 7/5/2011 2,375,000
------------------------------------------------------------
Total Indiana 9,899,650
============================================================
Iowa (0.3%)
- ------------
400,000 Keokuk, Iowa Hospital Facility Revenue Refunding
Bonds (Keokuk Area Hospital Project)................. 4.900 12/1/2006 398,500
1,100,000 Keokuk, Iowa Hospital Facility Revenue Refunding
Bonds (Keokuk Area Hospital Project)................. 5.400 12/1/2015 1,083,500
350,000 Keokuk, Iowa Hospital Facility Revenue Refunding
Bonds (Keokuk Area Hospital Project)................. 5.500 12/1/2009 360,063
------------------------------------------------------------
Total Iowa 1,842,063
============================================================
Kansas (1.2%)
- ---------------
695,000 Labette County, Kansas Single Family Revenue
Bonds (Series A-2) (GNMA Insured).................... 7.650 12/1/2011 745,388
3,500,000 Sedgwick and Shawnee Counties, Kansas Single
Family Revenue Mortgage Bonds (Series A-1)
(GNMA Insured) (Subject to 'AMT').................... 5.500 12/1/2022 3,854,375
1,805,000 Sedgwick and Shawnee Counties, Kansas Single
Family Revenue Mortgage Bonds (Series A-1)
(Subject to 'AMT') (GNMA Insured).................... 6.950 6/1/2029 1,980,987
-----------------------------------------------------------
Total Kansas 6,580,750
============================================================
Kentucky (0.1%)
- ----------------
370,000 Ashland, Kentucky Sewer and Solid Waste Revenue
Bonds (Ashland Incorporated Project)
(Subject to 'AMT')................................... 7.125 2/1/2022 412,088
-----------------------------------------------------------
Total Kentucky 412,088
============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
58 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Louisiana (0.8%)
- -----------------
$ 1,545,000 Jefferson Parish, Louisiana Home Mortgage Revenue
Bonds (Series A) (GNMA/FNMA Insured) (Subject
to 'AMT')........................................... 5.850% 12/1/2028 $ 1,585,556
2,500,000 St. John Baptist Parish, Louisiana Environmental
Improvement Revenue Bonds (USX Corporation
Project) **......................................... 5.350 12/1/2013 2,459,375
----------------------------------------------------
Total Louisiana 4,044,931
====================================================
Massachusetts (0.6%)
- ---------------------
1,000,000 Massachusetts State Development Finance Agency
Revenue Bonds (Boston Biomedical Research
Institute Project).................................. 5.750 2/1/2029 992,500
2,000,000 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Partners Healthcare
Systems, Series B).................................. 5.125 7/1/2019 1,942,500
----------------------------------------------------
Total Massachusetts 2,935,000
====================================================
Michigan (4.7%)
- ----------------
2,580,000 Bishop International Airport Authority Revenue
Bonds (Series B) (ACA Insured)...................... 5.125 12/1/2017 2,528,400
1,085,000 Bishop International Airport Authority Revenue
Bonds (Series B) (ACA Insured)...................... 5.250 12/1/2012 1,099,919
4,165,000 Chelsea, Michigan Economic Development Corporation
Limited Obligation Revenue Refunding Bonds (United
Methodist Retirement Project)....................... 5.400 11/15/2027 3,883,862
145,000 Hillsdale, Michigan Hospital Finance Authority
Hospital Revenue Bonds (Hillsdale Community
Health Center)...................................... 4.300 5/15/2000 144,825
100,000 Hillsdale, Michigan Hospital Finance Authority
Hospital Revenue Bonds (Hillsdale Community
Health Center)...................................... 4.600 5/15/2002 99,625
260,000 Hillsdale, Michigan Hospital Finance Authority
Hospital Revenue Bonds (Hillsdale Community
Health Center)...................................... 4.700 5/15/2004 258,700
135,000 Hillsdale, Michigan Hospital Finance Authority
Hospital Revenue Bonds (Hillsdale Community
Health Center)...................................... 4.800 5/15/2005 134,156
1,775,000 Michigan Higher Education Facilities Authority
Limited Obligation Revenue Bonds (Series C)
(Asset Guaranteed).................................. 5.000 5/1/2014 1,757,250
5,500,000 Michigan Public Power Agency Revenue Refunding
Bonds (Belle River Project) (MBIA Insured).......... 5.000 1/1/2019 5,383,125
2,500,000 Michigan State Hospital Finance Authority Revenue
Bonds (Hackley Hospital Project) (Series A)......... 5.300 5/1/2013 2,503,125
2,500,000 Michigan State Strategic Fund Pollution Control
Revenue Bonds (General Motors Corporation).......... 6.200 9/1/2020 2,693,750
4,250,000 Tawas City, Michigan Hospital Finance Authority
Revenue Refunding Bonds (St. Joseph Project)
(Series A) (IBCC Guaranteed)........................ 5.750 2/15/2023 4,473,125
----------------------------------------------------
Total Michigan 24,959,862
====================================================
Mississippi (1.0%)
- -------------------
2,000,000 Mississippi Home Corporation Single Family
Revenue Bonds (Series A) (Mortgage Class 6)
(GNMA/FNMA Insured) (Subject to 'AMT').............. 5.250 6/1/2031 2,172,500
3,000,000 Mississippi Home Corporation Single Family
Revenue Bonds (Series B) (Mortgage Class 7)
(FNMA/GNMA Insured) (Subject to 'AMT').............. 5.250 6/1/2030 3,236,250
----------------------------------------------------
Total Mississippi 5,408,750
====================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of
this schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 59
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Missouri (2.2%)
- ---------------
$ 1,170,000 Missouri State Health and Educational Facilities
Authority Revenue Bonds (Lake Ozarks General
Hospital, Inc.) (Asset Guaranteed).................................. 5.250% 2/15/2011 $ 1,205,100
1,140,000 Missouri State Health and Educational Facilities
Authority Revenue Bonds (Lake Ozarks General
Hospital, Inc.) (Asset Guaranteed).................................. 5.250 2/15/2012 1,168,500
1,960,000 Missouri State Housing Development Community
Single Family Mortgage Revenue Bonds (Series C-1)
(GNMA/FNMA Insured)................................................. 6.550 9/1/2028 2,143,750
1,150,000 Missouri State Housing Development Community
Single Family Mortgage Revenue Bonds (Series D-2)
(FNMA/GNMA Insured) (Subject to 'AMT').............................. 6.300 3/1/2029 1,269,313
5,425,000 Missouri State Housing Development Community
Single Family Mortgage Revenue Bonds
(GNMA/FNMA Insured) (Subject to 'AMT').............................. 7.300 3/1/2028 6,103,125
------------------------------------------------------------
Total Missouri 11,889,788
------------------------------------------------------------
Montana (0.2%)
- --------------
1,000,000 Montana Single Family Housing Revenue Bonds
(Series RA) (FHA/VA Insured)........................................ 6.400 12/1/2012 1,055,000
-------------------------------------------------------------
Total Montana 1,055,000
-------------------------------------------------------------
Nevada (1.1%)
- -------------
6,000,000 Clark County, Nevada Industrial Development Revenue
Bonds (Nevada Power Company Project) (Series A)
(Subject to 'AMT').................................................. 5.900 11/1/2032 6,105,000
-------------------------------------------------------------
Total Nevada 6,105,000
-------------------------------------------------------------
New Mexico (0.5%)
- -----------------
2,275,000 New Mexico Mortgage Finance Authority Revenue
Bonds (Series F).................................................... 7.000 1/1/2026 2,664,594
------------------------------------------------------------
Total New Mexico 2,664,594
-------------------------------------------------------------
New York (10.2%)
- ----------------
3,500,000 New York Dormitory Authority State University
Education Facilities Revenue Bonds (Series A)....................... 5.875 5/15/2011 3,880,625
5,000,000 New York Dormitory Authority State University
Education Facilities Revenue Bonds (Series A)....................... 5.875 5/15/2017 5,518,750
2,000,000 New York Dormitory Authority State University
Education Facilities Revenue Bonds (Series A)....................... 7.500 5/15/2013 2,542,500
5,000,000 New York Dormitory Authority State University
Education Facilities Revenue Bonds (Series B)....................... 5.250 5/15/2019 5,125,000
1,000,000 New York State Dormitory Authority Revenue Bonds
(Sam Hospital Sufferen) (Asset Guaranteed).......................... 5.500 7/1/2011 1,065,000
3,000,000 New York State Local Government Assistance
Corporation Refunding Revenue Bonds
(MBIA Insured)...................................................... 5.250 4/1/2016 3,112,500
3,000,000 New York State Medical Care Facilities, Finance
Agency Revenue Bonds (Mental Health Services)
(FSA Insured)....................................................... 5.375 2/15/2014 3,093,750
9,000,000 New York State Thruway Authority Highway and
Bridge Service Contract Revenue Bonds............................... 5.600 4/1/2005 9,641,250
7,275,000 Triborough Bridge and Tunnel Authority Revenue
Bonds (New York Convention Center Project Bonds)
(Series E).......................................................... 7.250 1/1/2010 8,429,906
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
60 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
New York (10.2%) - continued
- -----------------------------
$ 6,915,000 Triborough Bridge and Tunnel Authority Revenue
Bonds (Series B)............................................. 5.000% 1/1/2020 $ 6,871,782
5,000,000 Triborough Bridge and Tunnel Authority Revenue
Bonds (Series Q)............................................. 5.000 1/1/2017 4,993,850
-----------------------------------------------------------
Total New York 54,274,913
-----------------------------------------------------------
North Carolina (0.6%)
- ----------------------
1,845,000 North Carolina Eastern Municipal Power Agency
Power Revenue Bonds (FSA Insured)............................ 7.500 1/1/2010 2,299,331
400,000 North Carolina Eastern Municipal Power Agency
Power Revenue Bonds (Series A) (FGIC Insured)................ 6.125 1/1/2011 428,500
475,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series A)........................ 6.400 1/1/2021 500,532
-----------------------------------------------------------
Total North Carolina 3,228,363
-----------------------------------------------------------
Ohio (1.4%)
- ------------
4,015,000 Akron Bath Copley, Ohio Joint Township Hospital
District Revenue Bonds (Summa Health Systems
Project) (Series A).......................................... 5.750 11/15/2008 4,140,469
1,000,000 Franklin County, Ohio Hospital Revenue Bonds
(Children's Hospital Project) *.............................. 5.200 5/1/2029 977,500
100,000 Ohio State Higher Education Facilities Revenue
Bonds (Case Western Reserve University Project).............. 6.000 10/1/2022 105,750
2,250,000 Parma, Ohio Hospital Improvement Revenue
Refunding Bonds (Parma Community General
Hospital Association)........................................ 5.250 11/1/2013 2,247,187
-----------------------------------------------------------
Total Ohio 7,470,906
-----------------------------------------------------------
Oklahoma (1.4%)
- ----------------
1,000,000 Oklahoma Development Finance Authority
Revenue Bonds (Hillcrest Healthcare Systems
Project) (Series A).......................................... 5.750 8/15/2012 1,027,500
3,075,000 Tulsa, Oklahoma Industrial Authority Educational
Facilities Revenue Bonds (Holland Hall School
Project) (Series A) *........................................ 5.250 12/1/2019 3,025,031
2,970,000 Tulsa, Oklahoma Industrial Authority Educational
Facilities Revenue Bonds (Holland Hall School
Project) (Series B) *........................................ 5.000 12/1/2014 2,940,300
100,000 Tulsa, Oklahoma Industrial Authority Hospital
Revenue Bonds (St. John's Medical Center Project)............ 6.250 2/15/2014 107,750
175,000 Tulsa, Oklahoma Industrial Authority Hospital
Revenue Bonds (St. John's Medical Center Project)............ 6.250 2/15/2017 187,906
-----------------------------------------------------------
Total Oklahoma 7,288,487
-----------------------------------------------------------
Oregon (1.0%)
- --------------
2,000,000 Cow Creek Band, Oregon Revenue Bonds
(Umpqua Tribe of Indians) (AMBAC Insured).................... 5.100 7/1/2012 2,050,000
3,000,000 Port Saint Helens, Oregon Revenue Bonds
(Portland General Electric Company)
(Subject to 'AMT')........................................... 5.250 8/1/2014 3,022,500
-----------------------------------------------------------
Total Oregon 5,072,500
-----------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 61
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
Pennsylvania (3.6%)
- --------------------
$ 900,000 Delaware County, Pennsylvania Authority School
Revenue Bonds (The Haverford School Project)..................... 5.000% 3/15/2014 $ 879,750
250,000 Media Boro, Pennsylvania Guaranteed Water
Revenue Bonds (MBIA Insured)..................................... 6.550 1/1/2017 269,687
1,405,000 Norristown, Pennsylvania Capital Appreciation
Bonds (Series A) (Asset Guaranteed).............................. 0.000 12/15/2010 804,363
1,465,000 Norristown, Pennsylvania Capital Appreciation
Bonds (Series A) (Asset Guaranteed).............................. 0.000 12/15/2012 741,656
735,000 Norristown, Pennsylvania Capital Appreciation
Bonds (Series A) (Asset Guaranteed).............................. 0.000 12/15/2013 350,963
1,465,000 Norristown, Pennsylvania Capital Appreciation
Bonds (Series A) (Asset Guaranteed).............................. 0.000 12/15/2015 620,794
1,365,000 Pennsylvania Housing Finance Agency Single Family
Revenue Bonds (Series 47) (Subject to 'AMT')..................... 6.750 10/1/2009 1,550,981
1,455,000 Pennsylvania Housing Finance Agency Single Family
Revenue Bonds (Series 47) (Subject to 'AMT')..................... 6.750 10/1/2010 1,653,244
2,100,000 Pennsylvania State Higher Education Assistance
Agency Student Loan Revenue Bonds (AMBAC
Insured) (Subject to 'AMT')...................................... 7.150 9/1/2021 2,367,750
200,000 Pennsylvania State Higher Education Facilities
Authority Health Services Revenue Bonds
(Allegheny, Delaware Project) (Obligation A)
(MBIA Insured)................................................... 4.900 11/15/2001 203,750
5,000,000 Pennsylvania State Higher Education Facilities
Authority Health Services Revenue Bonds
(Allegheny, Delaware Project) (Obligation A)
(MBIA Insured)................................................... 5.400 11/15/2007 5,075,000
1,000,000 Pennsylvania State Higher Education Facilities
Authority Revenue Bonds (State System of Higher
Education) (Series N) (MBIA Insured)............................. 5.800 6/15/2024 1,053,750
1,015,000 Philadelphia, Pennsylvania Hospital and Higher
Education Facilities Authority Revenue Bonds
(Children's Seashore House Project) (Series A)................... 7.000 8/15/2017 1,102,543
2,540,000 Philadelphia, Pennsylvania Hospital Authority
Revenue Bonds (Children's Hospital).............................. 5.000 2/15/2021 2,447,925
------------------------------------------------------------
Total Pennsylvania 19,122,156
============================================================
Rhode Island (0.5%)
- --------------------
500,000 Rhode Island State Health and Educational Building
Corporation Revenue Bonds (Newport Hospital
Project)......................................................... 5.000 7/1/2012 495,625
2,000,000 Rhode Island State Health and Educational Building
Corporation Revenue Bonds (Newport Hospital
Project)......................................................... 5.300 7/1/2029 1,920,000
------------------------------------------------------------
Total Rhode Island 2,415,625
============================================================
South Carolina (0.6%)
- ----------------------
1,250,000 Loris, South Carolina Community Hospital District
Revenue Bonds (Series A)......................................... 5.500 1/1/2016 1,234,375
2,000,000 Loris, South Carolina Community Hospital District
Revenue Bonds (Series B)......................................... 5.625 1/1/2020 1,972,500
------------------------------------------------------------
Total South Carolina 3,206,875
============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
62 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
South Dakota (0.5%)
- --------------------
$ 500,000 South Dakota Conservancy District State Revolving
Revenue Bonds (Series A)........................................ 6.200% 8/1/2015 $ 535,000
2,000,000 South Dakota State Building Authority Revenue Bonds*............ 5.125 9/1/2019 1,970,000
----------------------------------------------------------------
Total South Dakota 2,505,000
================================================================
Tennessee (0.3%)
- ----------------
615,000 Chattanooga, Tennessee Health Education and Housing
Facilities Board Revenue Bonds (Siskin Rehabilitation
Hospital Project)............................................... 5.125 6/1/2013 603,469
765,000 Chattanooga, Tennessee Health Education and Housing
Facilities Board Revenue Bonds (Siskin Rehabilitation
Hospital Project)............................................... 5.300 6/1/2018 743,006
----------------------------------------------------------------
Total Tennessee 1,346,475
================================================================
Texas (9.3%)
- -------------
2,500,000 Brazos River Authority, Texas Revenue Bonds (Reliant
Energy Inc. Project) (Series A)................................. 5.375 4/1/2019 2,484,375
800,000 Edgewood, Texas Independent School District Facilities
Corporation Lease Revenue Bonds (Southwest
Securities Insured)............................................. 5.250 8/15/2013 798,000
3,375,000 El Paso, Texas Independent School District Capital
Appreciation General Obligation Unlimited Bonds
(PSF Guaranteed)................................................ 0.000 8/15/2009 2,075,625
4,000,000 El Paso, Texas Independent School District Capital
Appreciation General Obligation Unlimited Bonds
(PSF Guaranteed)................................................ 0.000 8/15/2012 2,030,000
2,300,000 El Paso, Texas Independent School District Capital
Appreciation General Obligation Unlimited Bonds
(PSF Guaranteed)................................................ 0.000 8/15/2013 1,095,375
1,840,000 Gulf Coast, Texas Waste Disposal Authority Industrial
Revenue Bonds (Champion International Corporation
Project) (Subject to 'AMT')..................................... 7.450 5/1/2026 1,987,200
2,710,000 Harris County, Houston, Texas Sports Authority Special
Revenue Bonds (Capital Appreciation, Jr. Lien) (Series B)
(MBIA Insured).................................................. 0.000 11/15/2010 1,531,150
3,345,000 Harris County, Houston, Texas Sports Authority Special
Revenue Bonds (Capital Appreciation, Jr. Lien) (Series B)
(MBIA Insured).................................................. 0.000 11/15/2011 1,781,213
4,115,000 Harris County, Houston, Texas Sports Authority Special
Revenue Bonds (Capital Appreciation, Jr. Lien) (Series B)
(MBIA Insured).................................................. 0.000 11/15/2012 2,078,075
4,950,000 Harris County, Houston, Texas Sports Authority Special
Revenue Bonds (Capital Appreciation, Jr. Lien) (Series B)
(MBIA Insured).................................................. 0.000 11/15/2014 2,208,938
2,000,000 Houston, Texas Airport Systems Special Facilities
Revenue Bonds (FSA Insured) (Subject to 'AMT').................. 5.375 7/15/2010 2,090,000
3,300,000 Houston, Texas Airport Systems Special Facilities
Revenue Bonds (FSA Insured) (Subject to 1999 'AMT')............. 5.375 7/15/2011 3,423,750
3,000,000 Lufkin, Texas Health Facilities Development Corporation
Revenue Bonds (Memorial Health Systems of Eastern
Princ Texas Project)............................................ 6.875 2/15/2026 3,303,750
2,100,000 Richardson, Texas Hospital Authority Hospital Revenue
Refunding and Improvement Bonds (Baylor/Richardson
Project)........................................................ 5.250 12/1/2013 2,063,250
2,450,000 Richardson, Texas Hospital Authority Hospital Revenue
Refunding and Improvement Bonds (Baylor/Richardson
Project)........................................................ 5.500 12/1/2018 2,376,500
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 63
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C> <C>
Texas (9.3%) - continued
- -------------------------
$ 7,880,000 Waco, Texas Health Facilities Development
Corporation Revenue Bonds (Daughters of Charity
System)....................................................... 5.000% 11/1/2020 $ 7,574,650
5,080,000 Wylie, Texas Independent School District General
Obligation Unlimited Bonds (PSF Guaranteed)................... 7.000 8/15/2024 6,051,550
3,770,000 Wylie, Texas Independent School District Prerefunded
General Obligation Unlimited Bonds (PSF Guaranteed)........... 7.000 8/15/2024 4,651,237
------------------------------------------------------------------
Total Texas 49,604,638
==================================================================
Utah (1.1%)
- ------------
5,360,000 Intermountain Power Agency Special Obligation
Revenue Bonds (Series 1986-A) (MBIA Insured).................. 5.000 7/1/2021 5,118,800
725,000 Utah State Housing Finance Agency Revenue Bonds
(Single Family Mortgage, MEZZ-SER) (Series G-1)............... 7.250 7/1/2011 777,563
------------------------------------------------------------------
Total Utah 5,896,363
==================================================================
Vermont (0.4%)
- ---------------
1,250,000 Vermont Educational and Health Buildings Finance
Agency Revenue Bonds (Northwestern Medical
Center Project) (Series A).................................... 6.000 9/1/2006 1,331,250
850,000 Vermont State Student Assistance Revenue Bonds
(Series B) (FSA Insured) (Subject to 'AMT')................... 6.700 12/15/2012 924,375
------------------------------------------------------------------
Total Vermont 2,255,625
==================================================================
Virginia (1.0%)
- ----------------
3,000,000 Fairfax County, Virginia Industrial Development
Authority Revenue Bonds (Inova Health Systems
Project)...................................................... 5.250 8/15/2019 3,045,000
2,000,000 Fairfax County, Virginia Industrial Development
Authority Revenue Bonds (Inova Health Systems
Project)...................................................... 6.000 8/15/2026 2,175,000
------------------------------------------------------------------
Total Virginia 5,220,000
==================================================================
Washington (7.7%)
- ------------------
10,000,000 Kitsap County, Washington Conservatory Housing
Authority Revenue Bonds (ACA-CBI Insured)..................... 5.600 12/1/2028 10,125,000
2,275,000 Pierce County, Washington School District General
Obligation Bonds (AMBAC Insured).............................. 5.450 12/1/2013 2,437,094
4,000,000 Washington State General Obligation Unlimited Bonds
(Series A).................................................... 5.750 9/1/2019 4,295,000
5,000,000 Washington State General Obligation Unlimited Bonds
(Series A).................................................... 6.750 2/1/2015 5,962,500
300,000 Washington State Motor Vehicle Fuel Tax General
Obligation Unlimited Bonds (Series B) (FGIC Insured).......... 5.875 7/1/2021 316,125
6,195,000 Washington State Public Power Supply System
Revenue Refunding Bonds (Nuclear Project #3)
(Series A) (AMBAC Insured) **................................. 5.700 7/1/2009 6,737,062
10,000,000 Washington State Public Power Supply Systems
Revenue Refunding Bonds (Nuclear Project #2)
(Series A) **................................................. 6.000 7/1/2007 11,075,000
------------------------------------------------------------------
Total Washington 40,947,781
==================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
64 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (98.4%) Interest Rate Maturity Date Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Wisconsin (1.1%)
- -----------------
$ 3,000,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Aurora Health Care
Project) (Series A)..................................... 5.600% 2/15/2029 $ 2,962,500
1,000,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Children's Hospital)
(AMBAC Insured)......................................... 5.625 2/15/2015 1,077,500
1,845,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Lawrence University)........... 5.000 10/15/2013 1,838,081
----------------------------------------------------------
Total Wisconsin 5,878,081
==========================================================
Wyoming (2.0%)
- ---------------
3,930,000 Wyoming Community Development Authority Single
Family Mortgage Revenue Bonds (Series B)................ 6.650 6/1/2013 4,190,362
5,785,000 Wyoming State Farm Loan Board Capital Projects
Facilities Revenue Bonds................................ 5.750 10/1/2020 6,204,412
----------------------------------------------------------
Total Wyoming 10,394,774
==========================================================
----------------------------------------------------------
Total Municipal Bond Investments
(amortized cost basis $488,993,902) 522,644,987
==========================================================
</TABLE>
<TABLE>
<CAPTION>
Short-Term Tax-Exempt Variable Rate Investments (1.4%)
======================================================
<S> <C> <C>
7,378,992 Citifunds Institutional Tax-Free Reserves............................................ 7,378,992
----------------------------------------------------------
Total Short-Term Tax-Exempt Variable
Rate Investments (cost basis $7,378,992) 7,378,992
==========================================================
==========================================================
TOTAL INVESTMENTS (99.8%)
(amortized cost basis $496,372,894) 530,023,979
==========================================================
----------------------------------------------------------
Other Assets, Less Liabilities (0.2%) 1,118,421
==========================================================
----------------------------------------------------------
Net Assets (100%) $ 531,142,400
==========================================================
</TABLE>
* When-issued security
** Pledged as security for when-issued securities.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 65
<PAGE>
The AAL Bond Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective:
- --------------------
The Fund seeks a high level of current income, consistent with capital
preservation by investing primarily in a diversified portfolio of investment
grade bonds.
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (95.6%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Investments ( 15.4%)
- --------------------------------------------
$14,847,276 Federal National Mortgage Association
15 Yr. Pass Through............................... 6.500% 6/1/2013 $14,985,638
113,768 Federal National Mortgage Association
15 Yr. Pass Through............................... 8.500 5/1/2010 120,484
19,543,338 Federal National Mortgage Association
15 Yr. Pass Through............................... 5.500 1/1/2014 18,985,943
153,032 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 6/1/2010 161,707
111,114 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2010 117,413
154,762 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 5/1/2016 163,536
120,610 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 5/1/2017 127,891
154,338 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 5/1/2024 162,449
131,870 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 6/1/2024 138,801
142,091 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 149,559
473,524 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 498,413
146,293 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 153,982
158,180 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 166,494
138,341 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 145,612
114,855 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 7/1/2024 120,891
351,303 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 12/1/2024 369,767
150,156 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 3/1/2025 157,973
2,750,580 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 12/1/2025 2,893,772
101,130 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 11/1/2026 106,379
244,774 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 12/1/2026 257,477
346,197 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 12/1/2026 364,164
349,034 Federal National Mortgage Association
30 Yr. Pass Through............................... 8.500 6/1/2027 367,113
137,090 Federal National Mortgage Association
30 Yr. Pass Through.............................. 8.500 7/1/2027 144,192
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
66 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (95.6%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Investments(15.4%) - continued
- -----------------------------------------------------
$ 124,765 Federal National Mortgage Association
30 Yr. Pass Through..................................... 8.500% 11/1/2027 $ 131,228
149,369 Federal National Mortgage Association
30 Yr. Pass Through..................................... 8.500 11/1/2027 157,121
2,727,858 Federal National Mortgage Association
30 Yr. Pass Through..................................... 8.500 2/1/2028 2,869,431
9,570,027 Federal National Mortgage Association
15 Yr. Pass Through..................................... 7.500 10/15/2013 9,945,354
9,988,157 Government National Mortgage Association
30 Yr. Pass Through..................................... 6.500 3/15/2029 9,931,214
------------------------------------------------------------
Total U.S. Government
Agency Investments 63,893,998
===========================================================
U.S. Government Investments (4.2%)
- ----------------------------------
2,500,000 U.S. Treasury Bonds...................................... 5.250 11/15/2028 2,310,155
1,000,000 U.S. Treasury Notes...................................... 4.750 2/15/2004 980,000
4,000,000 U.S. Treasury Notes...................................... 4.750 11/15/2008 3,820,000
39,500,000 U.S. Treasury Strips..................................... 0.000 11/15/2021 10,221,731
------------------------------------------------------------
Total U.S. Government
Investments 17,331,886
============================================================
Asset-Backed Securities (20.9%)
- -------------------------------
3,000,000 Associates Manufactured Housing Pass Through
Certificates, Series 1996-1.............................. 7.900 3/15/2027 3,103,500
15,000,000 First Union Commercial Mortgage Trust Commercial
Mortgage Pass-Through Certificates Fund
Series 1999-C1........................................... 6.070 10/15/2008 14,611,950
8,000,000 First Union-Lehman Brothers-Bank of America
Commercial Mortgage Trust Commercial Mortgage
Trust Commercial Mortgage Pass-Through Certificates
Series 1998-C2........................................... 6.560 11/18/2008 8,068,880
13,000,000 First USA Credit Card Master Trust 1998-9 Class A....... 5.280 9/18/2006 12,702,560
5,000,000 Green Tree Financial Corporation
Series 1996-6 Class A-6.................................. 7.950 9/15/2027 5,384,790
5,000,000 Green Tree Financial Corporation
Series 1996-7 Class A-6.................................. 7.650 10/15/2027 5,060,450
5,250,000 Green Tree Financial Corporation
Series 1997-6 Class A-5.................................. 6.680 1/15/2029 5,341,088
5,000,000 Green Tree Financial Corporation
Series 1997-6 Class A-7.................................. 7.140 1/15/2029 5,194,230
3,000,000 Green Tree Home Improvement
Loan Trust Series 1996-D................................. 8.100 9/15/2027 3,145,530
1,179,811 Green Tree Home Improvement
Loan Trust Series 1997-C A-2............................. 6.380 8/15/2028 1,183,480
4,500,000 Harley-Davidson Eaglemark Motorcycle Trust
Series 1999-1 Class Certificates......................... 6.710 8/15/2002 4,470,469
8,500,000 MBNA Master Credit Card Trust Series 98-J A.............. 5.250 9/15/2003 8,343,175
10,000,000 PECO Energy Transition Trust
Series 1999-A Class A6................................... 6.050 3/1/2009 9,945,500
------------------------------------------------------------
Total Asset-Backed Securities 86,555,602
============================================================
Collateralized Mortgage Investments (6.6%)
- -----------------------------------------
15,360,000 Countrywide Home Loans, Inc. Series 1997-6 A-3........... 6.750 11/25/2027 15,432,653
11,813,265 PNC Mortgage Securities Corporation
Series 1997-5 A-2........................................ 6.750 10/25/2027 11,821,179
------------------------------------------------------------
Total Collateralized
Mortgage Investments 27,253,832
============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 67
<PAGE>
The AAL Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (95.6%) Interest Rate Maturity Date Market Value
===============================================================================================================================
<S> <C> <C> <C> <C>
Corporate Investments (48.5%)
- -----------------------------
$ 11,000,000 AT&T Capital Corporation...................... 6.875% 1/15/2001 $11,182,501
5,000 000 Aetna Services, Inc........................... 6.970 8/15/2036 5,063,785
5,000,000 Arizona Public Service Company................ 5.875 2/15/2004 4,964,795
5,000,000 Cabot Industrial Property, L.P................ 7.125 5/1/2004 4,982,300
5,000,000 CalEnergy Company, Inc........................ 7.230 9/15/2005 5,131,490
4,500,000 CMS Panhandle Holding Company*................ 7.000 7/15/2029 4,383,477
8,500,000 Comdisco, Inc................................. 5.950 4/30/2002 8,472,732
5,000,000 Countrywide Home Loans, Inc................... 6.250 4/15/2009 4,855,535
8,000,000 East Coast Power, LLC*........................ 7.066 3/31/2012 7,889,592
12,000,000 East Coast Power, LLC*........................ 7.536 6/30/2017 11,830,668
5,000,000 Ford Motor Credit Corporation................. 5.750 2/23/2004 4,944,755
5,000,000 Household Finance Corporation................. 5.875 2/1/2009 4,755,245
18,000,000 Joseph E. Seagram & Sons, Inc................. 6.250 12/15/2001 18,107,982
12,000,000 Mercantile Bancorporation, Inc................ 7.625 10/15/2002 12,581,892
2,500,000 News America Holdings, Inc.................... 8.625 2/1/2003 2,695,348
20,000,000 Pemex Finance, Ltd.*.......................... 8.020 5/15/2007 19,434,800
5,000,000 Petroleos de Venezuela SA Finance,
Ltd. Series 1998-1........................... 6.650 2/15/2006 4,485,745
4,500,000 Raytheon Company.............................. 5.700 11/1/2003 4,425,318
5,000,000 Raytheon Company.............................. 7.000 11/1/2028 5,000,370
10,000,000 Republic of Korea............................. 8.875 4/15/2008 10,863,240
4,500,000 Sears Roebuck Acceptance Corporation.......... 6.000 3/20/2003 4,499,212
13,500,000 TCI Communications, Inc....................... 8.650 9/15/2004 15,115,329
6,000,000 Time Warner, Inc.............................. 8.050 1/15/2016 6,636,786
10,000,000 Tyco International Group S.A.................. 6.125 6/15/2001 10,069,640
4,000,000 USX Corporation............................... 6.650 2/1/2006 3,973,916
5,000,000 Waste Management, Inc......................... 7.000 10/1/2004 5,164,860
-----------------------------------------------------
Total.Corporate Investments 201,511,313
=====================================================
-----------------------------------------------------
Total.Long-Term Fixed-Income Investments
(amortized cost basis $400,285,000) 396,546,631
-----------------------------------------------------
Short-Term Investments (2.6%) /1/
===============================================
10,895,000 Countrywide Home Loans, Inc................... 4.930 5/3/99 10,892,016
-----------------------------------------------------
Total Short-Term Investments
(amortized cost basis $10,892,016) 10,892,016
=====================================================
-----------------------------------------------------
TOTAL INVESTMENTS (98.2%)
(amortized cost basis $411,177,016) 407,438,647
=====================================================
----------------------------------------------------
Other Assets, Less Liabilities (1.8%) 7,579,063
====================================================
----------------------------------------------------
Net Assets (100.0%) $ 415,017,710
====================================================
</TABLE>
* 144A security
/1/ The interest rate reflects the discount rate at the date of
purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
68 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Money Market Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 1999
Investment Objective
- --------------------
The Fund seeks a high level of current income, consistent with liquidity and the
preservation of capital, by investing in a diversified portfolio of high-
quality, short-term money market instruments.
<TABLE>
<CAPTION>
Principal Amount Commercial Paper (99.9%) Interest Rate Range* Maturity Date Range Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
$ 15,031,000 American Express Credit Corporation................. 4.700-4.810% 5/4-8/31/99 $ 14,928,906
14,745,000 American General Finance Corporation................ 4.760-4.840 5/25-8/23/99 14,596,692
14,400,000 Associates Corporation of North America............. 4.780-4.820 5/19/99-1/10/00 4,204,909
3,716,000 Cargill, Inc. ...................................... 4.750 5/3-5/4/99 3,714,788
2,617,000 Carolina Power & Light, Inc. ....................... 4.780 7/9/99 2,593,024
14,853,000 CIT Group Holdings, Inc. ........................... 4.770-4.850 5/11-7/28/99 14,789,237
13,787,000 Coca-Cola Company **................................ 4.750-4.800 6/2-8/2/99 13,690,349
14,304,000 E.I. du Pont de Nemours & Company................... 4.770-4.840 6/2-8/13/99 14,159,521
14,964,000 Ford Motor Credit Corporation....................... 4.780-4.850 5/13-8/10/99 14,877,118
15,046,000 General Electric Capital Corporation................ 4.790-4.880 5/5-8/30/99 14,912,039
14,973,000 General Motors Acceptance Corporation............... 4.740-4.830 5/6-8/26/99 14,864,006
1,120,000 H.J. Heinz., Inc. .................................. 4.790 6/3/99 1,115,082
3,642,000 Hershey Foods Corporation........................... 4.820 6/23/99 3,616,156
15,198,000 Household Finance Corporation....................... 4.760-4.880 5/7-8/25/99 15,082,849
8,003,000 International Business Machines Credit Corporation.. 4.750-4.820 5/3-7/29/99 7,946,428
15,108,000 International Lease Finance Corporation............. 4.700-4.810 5/13-8/20/99 14,990,274
14,184,000 John Deere Capital Corporation...................... 4.700-4.820 5/28-8/19/99 4,073,801
14,776,000 McGraw-Hill, Inc. .................................. 4.800-4.840 6/8-7/30/99 4,657,724
6,099,000 Motorola, Inc. ..................................... 4.780-4.810 7/1-7/29/99 6,038,606
15,201,000 Norwest Financial, Inc. ............................ 4.750-4.820 5/10-8/17/99 5,103,846
11,013,000 Proctor & Gamble Company............................ 4.760-4.810 5/11-6/18/99 0,972,719
2,192,000 Schering Corporation................................ 4.800 7/7-7/13/99 2,171,138
15,356,000 Sears Roebuck Acceptance Corporation................ 4.780-4.880 5/4-8/18/99 5,241,322
3,443,000 Shell Oil Company................................... 4.760-4.830 5/14-6/25/99 3,433,980
6,119,000 Southern California Edison Company.................. 4.800-4.820 7/14-7/20/99 6,056,236
14,976,000 Toyota Motor Credit Corporation..................... 4.720-4.790 5/6-6/30/99 4,904,149
13,952,000 Transamerica Finance Corporation.................... 4.780-4.870 5/12/99-1/12/00 3,790,501
8,771,000 Walt Disney Company................................. 4.780-4.790 10/21-11/19/99 8,553,641
2,363,000 Xerox Corporation................................... 4.800 6/24/99 2,345,986
-------------------------------------------------------
Total Commercial Paper 307,425,027
-------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 69
<PAGE>
The AAL Money Market Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
1999
<TABLE>
<CAPTION>
Principal Amount Variable Rate Investments (0.3%) Market Value
========================================================================================================
<S> <C> <C>
$ 920,328 Fidelity Domestic Portfolio Class III $ 920,328
------------------------------------------------------
Total Variable Rate Investments 920,328
------------------------------------------------------
------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(amortized cost basis $308,345,355) 308,345,355
------------------------------------------------------
------------------------------------------------------
Other Assets, Less Liabilities (-0.2%) (648,186)
------------------------------------------------------
------------------------------------------------------
Net Assets (100.0%) $307,697,169
------------------------------------------------------
</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.
** 4(2) commercial paper
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
70 The AAL Mutual Funds Annual Report
<PAGE>
This Page Intentionally Left Blank
- -------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 71
<PAGE>
Statement of Assets and Liabilities AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
The AAL The AAL The AAL The AAL
Small Cap Mid Cap International Capital
Stock Fund Stock Fund Fund Growth Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
- ------
Investments at cost................................... $127,673,709 $561,139,510 $134,215,484 $1,831,674,174
Investments at value.................................. $132,515,899 $621,187,176 $160,230,989 $3,738,318,578
Unamortized organization & initial
registration expenses................................. 15,818 -- 18,448 --
Dividend and interest receivable...................... 2,040 560,025 513,457 2,403,451
Prepaid expenses...................................... 26,035 33,091 18,291 72,931
Receivable from securities sold....................... 3,561,806 25,727,808 605,836 9,942,775
Receivable for forward contracts held................. -- -- 5,333,487 --
Cash.................................................. 94,927 165,931 82,423 1,982,284
- ----------------------------------------------------------------------------------------------------------------------
Total Assets $136,216,525 $647,674,031 $166,802,931 $3,752,720,019
- ----------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------
Payable for forward currency contracts held........... $ -- $ -- $ 5,222,949 $ --
Payable for investment purchased...................... 3,160,386 37,313,432 2,455,385 --
Income distributions payable.......................... -- -- -- --
Redemptions payable................................... 141,948 909,626 -- --
Payable to affiliate.................................. 122,395 494,119 137,961 2,523,871
Accrued expenses...................................... 203,066 650,309 370,231 1,175,139
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 3,627,795 39,367,486 8,186,526 3,699,010
- ----------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------
Trust capital (beneficial interest)................... 140,866,597 544,035,659 149,647,585 1,809,698,719
Accumulated undistributed net investment income (loss) -- -- (110,538) 776,022
Accumulated net realized gain (loss) on investments... (13,120,057) 4,223,220 (17,042,294) 31,901,864
Net unrealized appreciation (depreciation) on:
Investments......................................... 4,842,190 60,047,666 26,015,505 1,906,644,404
Foreign currency contracts.......................... -- -- 110,538 --
Foreign currency related transactions............... -- -- (4,391) --
- ----------------------------------------------------------------------------------------------------------------------
Total Net Assets 132,588,730 608,306,545 158,616,405 3,749,021,009
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital $136,216,525 $647,674,031 $166,802,931 $3,752,720,019
- ----------------------------------------------------------------------------------------------------------------------
Class A share capital................................ $115,950,325 $584,933,939 $146,945,560 $3,594,505,333
Shares of beneficial interest outstanding (Class A).. 10,642,577 42,116,100 12,942,260 100,203,678
Net asset value per share............................ $ 10.89 $ 13.89 $ 11.35 $ 35.87
Maximum public offering price........................ $ 11.34 $ 14.47 $ 11.82 $ 37.36
Class B share capital................................ $ 15,835,964 $ 16,977,384 $ 9,808,853 $ 107,568,735
Shares of beneficial interest outstanding (Class B).. 1,474,815 1,244,530 873,749 3,048,483
Net asset value per share............................ $ 10.74 $ 13.64 $ 11.23 $ 35.29
Class I share capital................................ $ 802,441 $ 6,395,222 $ 1,861,992 $ 46,946,941
Shares of beneficial interest outstanding (Class I).. 73,255 458,845 163,708 1,307,902
Net asset value per share............................ $ 10.95 $ 13.94 $ 11.37 $ 35.89
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
72 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
The AAL The AAL The AAL The AAL The AAL
Equity Balanced High Yield Municipal Bond Fund
Income Fund Fund Bond Fund Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
- ------
Investments at cost................................... $220,469,135 $158,183,726 $156,278,037 $496,372,894 $411,177,016
Investments at value.................................. $284,252,806 $172,336,667 $142,699,925 $530,023,979 $407,438,647
Unamortized organization & initial
registration expenses................................. -- 58,345 17,773 -- --
Dividendand interest receivable....................... 447,404 754,423 4,122,106 7,983,340 3,520,988
Prepaid expenses...................................... 26,457 30,669 30,932 24,434 20,982
Receivable from securities sold....................... -- 728,010 1,005,972 9,557,379 17,736,889
Receivable for forward contracts held................. -- -- -- -- --
Cash.................................................. 563,939 682,471 277,102 676,688 517,605
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets $285,290,606 $174,590,585 $148,153,810 $548,265,820 $429,235,111
- ----------------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------
Payable for forward currency contracts held........... $ -- $ -- $ -- $ -- $ --
Payable for investment purchased...................... -- 1,976,366 1,000,000 16,326,112 13,361,957
Income distributions payable.......................... -- -- 336,113 326,132 471,650
Redemptions payable................................... -- -- -- -- --
Payable to affiliate.................................. 171,027 117,096 93,501 312,705 241,201
Accrued expenses...................................... 144,216 103,664 183,426 158,471 142,593
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 315,243 2,197,126 1,613,040 17,123,420 14,217,401
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets
- ----------
Trust capital (beneficial interest)................... 222,436,359 158,937,856 163,204,074 496,847,631 425,866,597
Accumulated undistributed net investment income (loss) 48,807 333,728 15,284 (47,081) 96,451
Accumulated net realized gain (loss) on investments... (1,293,474) (1,031,066) (3,100,476) 690,765 (7,206,969)
Net unrealized appreciation (depreciation) on:
Investments......................................... 63,783,671 14,152,941 (13,578,112) 33,651,085 (3,738,369
Foreign currency contracts.......................... -- -- -- -- --
Foreign currency related transactions............... -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets 284,975,363 172,393,459 146,540,770 531,142,400 415,017,710
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital $285,290,606 $174,590,585 $148,153,810 $548,265,820 $429,235,111
- ----------------------------------------------------------------------------------------------------------------------------------
Class A share capital................................ $262,199,370 $158,271,270 $131,941,330 $523,104,431 $367,227,488
Shares of beneficial interest outstanding (Class A).. 17,858,958 13,029,588 14,794,276 45,605,143 37,018,338
Net asset value per share............................ $ 14.68 $ 12.15 $ 8.92 $ 11.47 $ 9.92
Maximum public offering price........................ 15.29 $ 12.66 $ 9.29 $ 11.95 $ 10.33
Class B share capital................................ $ 9,618,145 $ 11,858,056 $ 12,391,007 $ 7,481,395 $ 3,100,684
Shares of beneficial interest outstanding (Class B).. 655,894 979,692 1,389,400 652,427 312,444
Net asset value per share............................ $ 14.66 $ 12.10 $ 8.92 $ 11.47 $ 9.92
Class I share capital................................ $ 13,157,848 $ 2,264,133 $ 2,208,433 $ 556,574 $ 44,689,538
Shares of beneficial interest outstanding (Class I).. 895,048 186,644 247,848 48,543 4,504,344
Net asset value per share............................ $ 14.70 $ 12.13 $ 8.91 $ 11.47 $ 9.92
<CAPTION>
The AAL
Money
Market Fund
- ---------------------------------------------------------------------------
<S> <C>
Assets
- ------
Investments at cost................................... $308,345,355
Investments at value.................................. $308,345,355
Unamortized organization & initial
registration expenses................................. --
Dividendand interest receivable....................... 3,519
Prepaid expenses...................................... 44,225
Receivable from securities sold....................... --
Receivable for forward contracts held................. --
Cash.................................................. 1,367,878
- ---------------------------------------------------------------------------
Total Assets $309,760,977
- ---------------------------------------------------------------------------
Liabilities
- -----------
Payable for forward currency contracts held........... $ --
Payable for investment purchased...................... --
Income distributions payable.......................... 100,153
Redemptions payable................................... 1,694,855
Payable to affiliate.................................. 104,818
Accrued expenses...................................... 163,982
- ----------------------------------------------------------------------------
Total Liabilities 2,063,808
- ----------------------------------------------------------------------------
Net Assets
- ----------
Trust capital (beneficial interest)................... 307,661,958
Accumulated undistributed net investment income (loss) 35,211
Accumulated net realized gain (loss) on investments... --
Net unrealized appreciation (depreciation) on:
Investments......................................... --
Foreign currency contracts.......................... --
Foreign currency related transactions............... --
- ----------------------------------------------------------------------------
Total Net Assets 307,697,169
- ----------------------------------------------------------------------------
Total Liabilities and Capital $309,760,977
- ----------------------------------------------------------------------------
Class A share capital................................ $288,143,299
Shares of beneficial interest outstanding (Class A).. 288,143,299
Net asset value per share............................ $ 1.00
Maximum public offering price........................ $ --
Class B share capital................................ $ 1,628,270
Shares of beneficial interest outstanding (Class B).. 1,628,270
Net asset value per share............................ $ 1.00
Class I share capital................................ $ 17,925,600
Shares of beneficial interest outstanding (Class I).. 17,925,600
Net asset value per share............................ $ 1.00
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 73
<PAGE>
Statement of Operations FOR THE PERIOD ENDED APRIL 30, 1999
<TABLE>
<CAPTION>
The AAL The AAL The AAL The AAL
Small Cap Stock Fund Mid Cap Stock Fund International Fund Capital Growth Fund
===================================================================================================================================
<S> <C> <C> <C> <C>
Investment Income
- -----------------
Dividends .......................... $ 560,098 $ 5,024,539 $ 2,343,764 $ 32,420,834
Taxable interest.................... 294,881 1,492,753 1,442,776 6,833,511
Tax exempt interest................. -- -- -- --
Foreign dividend withholding........ -- -- (264,350) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 854,979 6,517,292 3,522,190 39,254,345
===================================================================================================================================
Expenses
- --------
Adviser fees........................ 913,406 4,027,980 371,005 16,628,122
Sub-Adviser fees.................... -- -- 679,028 --
Audit fees and legal fees........... 25,779 29,568 34,965 29,884
Custody fees........................ 13,239 40,568 159,469 120,934
Administrative service and
pricing fees........................ 43,321 42,652 72,112 42,798
Amortization of organizational
costs & registration fees........... 7,249 817 14,691 --
Printing and postage expense........ 224,365 693,421 181,094 1,455,084
Distribution expense Class A........ 280,509 1,455,513 345,924 7,500,529
Distribution expense Class B........ 143,907 143,923 84,385 756,304
SEC and state registration
expense............................. 85,901 99,075 79,676 192,806
Transfer agent fees Class A......... 470,054 1,319,344 436,496 2,820,276
Transfer agent fees Class B......... 88,605 88,490 51,937 243,069
Transfer agent fees Class I......... 135 201 141 345
Shareholder maintenance
fees Class A........................ 127,871 371,805 121,549 821,791
Shareholder maintenance
fees Class B........................ 26,399 24,308 14,205 66,211
Shareholder maintenance
fees Class I........................ 30 56 28 96
Trustees fees and expenses.......... 9,702 9,702 9,706 9,702
Other expenses...................... 6,697 9,049 6,098 36,900
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 2,467,169 8,356,472 2,662,509 30,724,851
====================================================================================================================================
Less reimbursement from Adviser/1/.. -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 2,467,169 8,356,472 2,662,509 30,724,851
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income
(Loss) (1,612,190) (1,839,180) 859,681 8,529,494
====================================================================================================================================
Realized and Unrealized
Gains (Losses) on
Investments
- -----------------------
Net realized gains
(losses) on investments............ (12,910,797) 5,548,797 (16,079,763) 44,101,168
Net realized (losses) on
foreign currency
transactions....................... -- -- (847,376) --
Increase (decrease) in
unrealized
appreciation on investments........ (12,219,909) (57,120,248) 26,954,543 632,727,988
Decrease in unrealized
appreciation
on foreign currency................ -- -- (1,064,532) --
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized
Gains (Losses)
on Investments (25,130,706) (51,571,451) 8,962,872 676,829,156
====================================================================================================================================
Net Increase (Decrease) in
Net Assets
Resulting from Operations $(26,742,896) $(53,410,631) $ 9,822,553 $685,358,650
====================================================================================================================================
</TABLE>
/1/ During the year ended April 30, 1999, the follwing Funds had class specific
reimbursements: The AAL Balanced Fund Class A $69,503, Class B $12,747; The AAL
High Yield Bond Fund Class A $191,781, Class B $28,678; The AAL Money Market
Fund Class A $260,863, Class B $1,364.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
74 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
The AAL The AAL The AAL The AAL The AAL
Equity Balanced High Yield Municipal The AAL Money
Income Fund Fund Bond Fund Bond Fund Bond Fund Market Fund
==========================================================================================
<S> <C> <C> <C> <C> <C>
$ 4,092,245 $ 471,460 $ -- $ -- $ -- $ --
1,232,174 2,444,549 14,081,60 329,195 24,848,526 14,506,279
-- -- -- 26,353,112 -- --
-- -- -- -- -- --
- -------------------------------------------------------------------------------------------
5,324,419 2,916,009 14,081,607 26,682,307 24,848,526 14,506,279
===========================================================================================
1,091,335 478,088 736,426 2,272,533 1,858,562 1,360,362
-- -- -- -- -- --
16,770 18,241 28,115 13,333 23,483 17,240
12,161 33,454 8,477 26,932 20,248 14,719
43,271 43,508 51,836 70,708 46,588 41,375
-- 14,635 6,647 -- -- --
162,031 67,098 90,753 28,451 153,294 397,351
547,824 194,108 294,190 1,247,805 906,613 326,078
65,230 63,994 109,263 56,588 22,470 11,936
61,288 35,723 63,518 81,209 61,991 102,118
342,357 101,930 132,538 253,954 385,426 582,276
25,833 16,222 20,350 6,674 6,156 19,771
169 84 130 27 234 203
98,756 29,619 36,614 71,908 108,531 124,946
6,881 4,315 6,229 1,946 1,638 971
46 20 35 6 73 44
9,702 9,702 9,702 9,702 9,702 9,702
6,335 2,800 5,975 7,675 6,288 6,345
- -------------------------------------------------------------------------------------------
2,489,989 1,113,541 1,600,798 4,149,451 3,611,297 3,015,437
===========================================================================================
-- (82,250) (220,459) -- -- (874,825)
- -------------------------------------------------------------------------------------------
2,489,989 1,031,291 1,380,339 4,149,451 3,611,297 2,140,612
===========================================================================================
- -------------------------------------------------------------------------------------------
2,834,430 1,884,718 12,701,268 22,532,856 21,237,229 12,365,667
===========================================================================================
(1,457,948) (951,699) (2,968,117) 5,587,589 3,344,719 --
-- -- -- -- -- --
24,969,242 13,169,175 (14,351,533) 4,309,037 (6,610,062) --
-- -- -- -- -- --
- -------------------------------------------------------------------------------------------
23,511,294 12,217,476 (17,319,650) 9,896,626 (3,265,343) --
===========================================================================================
$26,345,724 $14,102,194 $ (4,618,382) $32,429,482 $17,971,886 $ 12,365,667
===========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 75
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund The AAL Mid Cap Stock Fund
Year Ended Year Ended Year Ended Year Ended
4/30/98 4/30/99 4/30/98 4/30/99
=================================================================================================================================
<S> <C> <C> <C> <C>
Operations
- ----------
Net investment income (loss)....................... $ (1,037,980) $ (1,612,190) $ (1,693,526) $ (1,839,180)
Net realized gains (losses) on
investment......................................... 9,736,718 (12,910,797) 66,674,556 5,548,797
Net realized gains (losses) on
foreign currency transactions...................... -- -- -- --
Increase (decrease) in unrealized appreciation
on investments..................................... 20,348,718 (12,219,909) 118,067,392 (57,120,248)
Increase (decrease) in unrealized appreciation on
foreign currency................................... -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 29,047,456 (26,742,896) 183,048,422 (53,410,631)
=================================================================================================================================
Distributions to Shareholders
- -----------------------------
Distributions from net investment income
Class A............................................ -- -- -- --
Capital gains distributions Class A................ (4,330,010) (3,279,485) (55,619,593) (31,399,679)
Distributions from net investment income
Class B............................................ -- -- -- --
Capital gains distributions Class B................ (429,281) (367,213) (825,701) (764,973)
Distributions from net investment income
Class I............................................ -- -- -- --
Capital gains distributions Class I................ -- (25,739) -- (104,348)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (4,759,291) (3,672,437) (56,445,294) (32,269,000)
=================================================================================================================================
Trust Shares Transactions
- -------------------------
Purchase of trust shares........................... 68,657,418 51,592,646 99,347,772 83,653,124
Income dividends reinvested........................ -- -- -- --
Capital gains distributions reinvested............. 4,741,670 3,651,227 56,185,767 32,027,978
Redemption of trust shares......................... (10,476,518) (27,332,479) (60,940,889) (107,894,234)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Trust Capital 62,922,570 27,911,394 94,592,650 7,786,868
=================================================================================================================================
Net Increase in Net Assets 87,210,735 (2,503,939) 221,195,778 (77,892,763)
=================================================================================================================================
Net Assets Beginning of Period 47,881,934 135,092,669 465,003,530 686,199,308
=================================================================================================================================
Net Assets End of Period $135,092,669 $132,588,730 $686,199,308 $ 608,306,545
=================================================================================================================================
=================================================================================================================================
Accumulated Undistributed
Net Investment Income $ 9,359 $ -- $ 27,822 $ --
=================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -------------------------------------------------------------------------------
76 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
The AAL International Fund The AAL Capital Growth Fund The AAL Equity Income Fund
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
======================================================================================================================
<S> <C> <C> <C> <C> <C>
$ 1,848,853 $ 859,681 $ 8,558,419 $ 8,529,494 $ 3,494,354 $ 2,834,430
5,389,493 (16,079,763) 107,878,390 44,101,168 19,250,254 (1,457,948)
5,840,769 (847,376) -- -- -- --
(1,606,668) 26,954,543 714,923,258 632,727,988 24,269,617 24,969,242
(2,406,763) (1,064,532) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
9,065,684 9,822,553 831,360,067 685,358,650 47,014,225 26,345,724
======================================================================================================================
(4,680,366) (5,508,439) (7,150,934) (9,039,308) (3,574,397) (2,771,066)
(6,818,663) (1,077,355) (98,647,241) (44,133,195) (5,528,978) (12,438,445)
(192,611) (270,859) (17,918) -- (21,149) (22,587)
(310,653) (68,393) (1,384,876) (1,163,264) (60,243) (394,272)
-- (81,218) -- (69,685) (26,918) (152,592)
-- (13,741) -- (187,263) -- (477,318)
- ----------------------------------------------------------------------------------------------------------------------
(12,002,293) (7,020,005) (107,200,969) (54,592,715) (9,211,685) (16,256,280)
======================================================================================================================
49,533,709 26,644,938 363,179,248 530,840,060 52,747,159 78,746,226
4,800,618 5,762,541 7,099,757 9,003,264 3,344,008 2,714,811
7,021,201 1,143,152 99,155,028 45,010,862 5,225,719 12,525,314
(24,649,658) (30,259,775) (174,444,619) (291,194,908) (25,251,474) (27,659,752)
- ----------------------------------------------------------------------------------------------------------------------
36,705,870 3,290,856 294,989,414 293,659,278 36,065,412 66,326,599
======================================================================================================================
33,769,261 6,093,404 1,019,148,512 924,425,213 73,867,952 76,416,043
======================================================================================================================
118,753,740 152,523,001 1,805,447,284 2,824,595,796 134,691,368 208,559,320
======================================================================================================================
$152,523,001 $158,616,405 $2,824,595,796 $3,749,021,009 $208,559,320 $284,975,363
======================================================================================================================
======================================================================================================================
$ 2,793,271 $ (110,538) $ 1,389,567 $ 776,022 $ 324,789 $ 48,807
======================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 77
<PAGE>
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
The AAL Balanced Fund The AAL High Yield Bond Fund
Period Ended Year Ended Year Ended Year Ended
4/30/98 (a) 4/30/99 4/30/98 4/30/99
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
- ----------
Net investment income (loss)........... $ 97,076 $ 1,884,718 $ 7,740,779 $ 12,701,268
Net realized gains (losses) on
investment transactions................ (33,572) (951,699) 1,860,676 (2,968,117)
Net realized gains (losses) on
foreign currency transactions.......... -- -- -- --
Increase (decrease) in unrealized
appreciation on investments............ 983,766 13,169,175 1,260,221 (14,351,533)
Increase (decrease) in unrealized
appreciation on foreign currency....... -- -- -- --
- -------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 1,047,270 14,102,194 10,861,676 (4,618,382)
- -------------------------------------------------------------------------------------------------------
Distributions from net investment
income Class A......................... (50,767) (1,500,115) (7,235,858) (11,543,313)
Capital gains distributions Class A.... -- (41,657) (904,721) (868,111)
Distributions from net investment
income Class B......................... (2,521) (77,069) (500,450) (992,940)
Capital gains distributions Class B.... -- (3,381) (66,779) (79,266)
Distributions from net investment
income Class I......................... (2,686) (29,552) (4,471) (165,015)
Capital gains distributions Class I.... -- (748) -- (15,776)
- -------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (55,974) (1,652,522) (8,712,279) (13,664,421)
- -------------------------------------------------------------------------------------------------------
Trust Shares Transactions
- -------------------------
Purchase of trust shares............... 30,286,303 138,049,644 85,083,040 70,417,151
Income dividends reinvested............ 54,955 1,578,142 4,442,780 8,735,599
Capital gains distributions reinvested. -- 45,128 614,901 760,946
Redemption of trust shares............. (255,487) (10,806,194) (28,909,013) (25,812,174)
- -------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in
Trust Capital 30,085,771 128,866,720 61,231,708 54,101,522
- -------------------------------------------------------------------------------------------------------
Net Increase in Net Assets 31,077,067 141,316,392 63,381,105 35,818,719
- -------------------------------------------------------------------------------------------------------
Net Assets Beginning of Period -- 31,077,067 47,340,946 110,722,051
- -------------------------------------------------------------------------------------------------------
Net Assets End of Period $31,077,067 $172,393,459 $110,722,051 $146,540,770
- -------------------------------------------------------------------------------------------------------
Accumulated Undistributed Net
Investment Income $ 41,102 $ 333,728 $ 8,630 $ 15,284
- -------------------------------------------------------------------------------------------------------
(a) Since inception December 29, 1997.
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
78 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
The AAL Municipal Bond Fund The AAL Bond Fund The AAL Money Market Fund
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$20,465,545 $ 22,532,856 $ 22,211,775 $ 21,237,229 $ 10,832,661 $ 12,365,667
7,482,803 5,587,589 9,902,653 3,344,719 -- --
-- -- -- -- -- --
15,997,733 4,309,037 4,006,350 (6,610,062) -- --
-- -- -- -- -- --
- ------------------------------------------------------------------------------------------------
43,946,081 32,429,482 36,120,778 17,971,886 10,832,661 12,365,667
- ------------------------------------------------------------------------------------------------
(20,389,290) (22,312,462) (21,676,538) (18,958,827) (10,788,522) (11,846,827)
(5,191,075) (7,691,473) -- -- -- --
(75,468) (206,793) (39,897) (96,253) (42,662) (48,170)
(26,807) (94,607) -- -- -- --
(787) (13,601) (495,340) (2,182,149) (1,477) (470,670)
-- (8,405) -- -- -- --
- ------------------------------------------------------------------------------------------------
(25,683,427) (30,327,341) (22,211,775) (21,237,229) (10,832,661) (12,365,667)
- ------------------------------------------------------------------------------------------------
58,635,631 81,733,880 62,304,932 84,626,055 332,575,912 424,973,734
16,598,508 18,276,929 17,287,957 16,241,614 10,627,301 12,076,865
4,353,818 6,555,174 -- -- -- --
(49,477,885) (48,331,549) (99,148,766) (66,671,353) (291,216,645) (371,525,997)
- ------------------------------------------------------------------------------------------------
30,110,072 58,234,434 (19,555,877) 34,196,316 51,986,568 65,524,602
- ------------------------------------------------------------------------------------------------
48,372,726 60,336,575 (5,646,874) 30,930,973 51,986,568 65,524,602
- ------------------------------------------------------------------------------------------------
422,433,099 470,805,825 389,733,611 384,086,737 190,185,999 242,172,567
- ------------------------------------------------------------------------------------------------
$470,805,825 $531,142,400 $384,086,737 $415,017,710 $ 242,172,567 $ 307,697,169
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
$ (47,081) $ (47,081) $ 96,451 $ 96,451 $ 35,211 $ 35,211
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 79
<PAGE>
Notes to Financial Statements AS OF APRIL 30, 1999
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, Small Cap Stock, International, Equity Income, Balanced, High Yield Bond,
Bond, Municipal Bond, Money Market, and U.S. Government Zero Coupon Target Funds
2001 and 2006. The 12 AAL Mutual Funds are collectively referred to as the
"Funds." The financial statements of the two U.S. Government Zero Coupon Target
Funds are included in a separate annual report.
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, Equity
Income, High Yield Bond, Bond, Municipal 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. The AAL Balanced Fund added Class B shares on its
inception date of December 29, 1997.
On December 29, 1997, the Trust began issuing a third class of fund shares
(institutional) in The AAL Capital Growth, Mid Cap Stock, Small Cap Stock,
International, Equity Income, Balanced, High Yield Bond, Bond, Municipal Bond
and Money Market Funds. The Series I shares are offered at net asset value and
have no annual 12b-1 charges. 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
sales price is available from NASDAQ is valued at that price. Interest bearing
money market instruments 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 equity
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 books and records of the Funds are maintained
in U.S. dollars. The market values of securities and other assets and
liabilities that are not traded in United States currency are recorded in the
financial statements after translation to U.S. dollars at the time net asset
value is calculated. For federal income tax purposes The AAL International Fund
does treat as ordinary income the effect of changes in foreign exchange 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.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward foreign
currency exchange contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. That portion of both realized and unrealized
gains and losses on investments that result from fluctuations in foreign
currency exchange rates is not separately disclosed.
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 International Fund may enter into
such contract to hedge certain other foreign currency denominated investments.
These contracts are recorded at market values, 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 forward
contracts, The AAL International Fund could be exposed to foreign currency
fluctuations.
Federal Income Taxes--Each Fund intends 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 anticipate paying no federal income taxes and no federal
income tax provision was required. Certain Funds also utilized earnings and
profits distributed to shareholders on redemption of shares as part of the
dividend paid deduction.
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 Fund portfolios in proportion to their respective
net assets, number of shareholder accounts or other reasonable basis. Net
investment income for the class-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. Each class is charged directly for
expenses specifically attributed to that class.
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
Equity Income and Balanced Funds are declared and paid quarterly. Dividends from
The AAL Bond, High Yield Bond, Municipal Bond and Money Market Funds are
declared daily and distributed monthly. Dividends from net realized gains from
securities transactions, if any, are distributed at least annually in the
calendar year.
Credit Risk--The Funds may be susceptible to credit risk with respect 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
80 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 1999
on municipal bonds are amortized over the life of the respective bonds.
Discounts on bonds purchased are amortized over the life of the respective bonds
in The AAL International, High Yield Bond, Bond, Equity Income, Mid Cap Stock,
and Balanced Funds. Realized gains or losses on sales are determined on a
specific cost identification basis. The Funds have no right to require
registration of unregistered securities. The cost incurred with the organization
and initial registration of shares for The AAL Small Cap Stock, Mid Cap Stock,
International, Balanced 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 Advisor"), under which each of the mutual fund
portfolios pay a fee for investment advisory services. Effective September 1,
1998, the annual rates of fees as a percent of average daily net assets under
the investment advisory agreement were as follows:
<TABLE>
<CAPTION>
(M-Millions) $0 to $50M $50 to $200M $200 to $500M $500 to $1,000 over $1,000M
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund 0.70% 0.70% 0.65% 0.65% 0.65%
The AAL Mid Cap Stock Fund 0.70% 0.70% 0.65% 0.65% 0.65%
The AAL International Fund 0.65% 0.60% 0.60% 0.60% 0.60%
The AAL Capital Growth Fund 0.65% 0.65% 0.65% 0.575% 0.50%
The AAL Equity Income Fund 0.45% 0.45% 0.45% 0.45% 0.45%
The AAL Balanced Fund 0.55% 0.55% 0.55% 0.55% 0.55%
The AAL High Yield Bond Fund 0.55% 0.55% 0.55% 0.55% 0.55%
The AAL Municipal Bond Fund 0.45% 0.45% 0.45% 0.45% 0.45%
The AAL Bond Fund 0.45% 0.45% 0.45% 0.45% 0.45%
The AAL Money Market Fund 0.50% 0.50% 0.50% 0.45% 0.45%
</TABLE>
From May 1, 1998 to August 31, 1998, the fees as a percent of average daily net
assets for The AAL Mutual Funds were as follows:
<TABLE>
<CAPTION>
(M-Millions) $0 to $200M $200 to $250M $250 to $500M $500 to $1,000M over $1,000M
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund 0.75% 0.65% 0.65% 0.65% 0.65%
The AAL Mid Cap Stock Fund 0.75% 0.65% 0.65% 0.65% 0.65%
The AAL International Fund 0.80% 0.80% 0.80% 0.80% 0.80%
The AAL Capital Growth Fund 0.70% 0.70% 0.65% 0.575% 0.50%
The AAL Equity Income Fund 0.50% 0.50% 0.45% 0.45% 0.45%
The AAL Balanced Fund 0.60% 0.60% 0.60% 0.60% 0.60%
The AAL High Yield Bond Fund 0.60% 0.60% 0.60% 0.60% 0.60%
The AAL Municipal Bond Fund 0.50% 0.50% 0.45% 0.45% 0.45%
The AAL Bond Fund 0.50% 0.50% 0.45% 0.45% 0.45%
The AAL Money Market Fund 0.50% 0.50% 0.50% 0.45% 0.45%
</TABLE>
For the period May 1, 1998, to October 30, 1998, The AAL International Fund was
entered into a sub-advisory agreement with Societe Generale Asset Management
Corporation, which was paid 0.55% of 1% on daily net assets (payable from the
0.80% Annual Advisory fee paid to the Adviser.) Effective November 1, 1998, the
Board of Trustees approved the termination of the sub-advisory agreement with
Societe Generale Asset Management Corporation and approved a new sub-advisory
agreement with Oechsle International Advisers, which is paid 0.40% of 1% on the
first $50 million of average daily net assets and 0.35% of 1% on average daily
net assets over $50 million (payable from the 0.65% annual advisory fee paid to
the advisor.)
The Trust has entered into an Administrative Services Agreement with the Adviser
pursuant to which the Adviser provides certain administrative services.
Effective January 1, 1999, these services, as well as the personnel and
management of The Adviser responsible for these functions, were transferred to
AAL. The Adviser earned the following fees from the respective Funds for the
year ended April 30, 1999: $45,000 for The AAL International Fund, $40,000 for
The AAL Capital Growth, Mid Cap Stock, Small Cap Stock, Equity Income, Balanced,
High Yield Bond, Bond, Municipal Bond and Money Market Funds, respectively.
The Trust has also contracted with AAL Capital Management Corporation for
certain shareholder maintenance services.
The AAL Mutual Funds Annual Report 83
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 1999
These shareholder services include: pre-processing and quality control of new
accounts, shareholder correspondence, account response and answering customer
inquiries regarding account status, options 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 the Class A shares, a service fee of 0.25% of 1%
of average net assets for The AAL Capital Growth, Bond, Municipal Bond, Mid Cap
Stock, Equity Income, Balanced, International, Small Cap Stock, and High Yield
Bond Funds; 0.125% of 1% of average net assets for The AAL Money Market Fund. On
the Class B Shares, a service fee of 0.25% of 1% of average net assets and a
12b-1 Distribution Fee of 0.75% of 1% of average net assets for The AAL Capital
Growth, Bond, Municipal Bond, Mid Cap Stock, Equity Income, Balanced,
International, Small Cap Stock, and High Yield Bond Funds; a service fee of
0.125% of 1% of average net assets and a 12b-1 Distribution Fee of 0.75% of 1%
of average net assets for The AAL Money Market Fund. There is no 12b-1
Distribution Fee on Class I shares. Trustees of the Trust not affiliated with
AAL or the Adviser received $106,214 in fees for fiscal 1998-99. 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, 1999, the Adviser is waiving expenses of The AAL Money Market Fund of
0.325% based on 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; and is waiving all expenses in excess
of 1.25% for Class A and 2.00% for Class B of The AAL Balanced 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.
D: Security Transactions
During the years ended April 30, 1998, and 1999, purchases and sales of
securities other than short-term obligations were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------------------------ ------------------------------
Years Ended Years Ended
4/30/98 4/30/99 4/30/98 4/30/99
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The AAL Small Cap Fund $ 147,796,741 $ 162,781,255 $ 94,896,968 $ 138,767,607
The AAL Mid Cap Fund 634,736,099 726,385,475 597,740,432 752,711,455
The AAL International Fund 37,362,229 154,642,180 22,491,590 133,011,319
The AAL Capital Growth Fund 489,194,062 501,444,062 394,294,099 259,149,531
The AAL Equity Income Fund 122,835,962 81,651,026 98,863,905 29,495,234
The AAL Balanced Fund 27,104,073 266,878,645 1,430,608 156,387,748
The AAL High Yield Bond Fund 152,446,699 119,953,262 93,287,589 68,434,062
The AAL Municipal Bond Fund 664,361,670 527,979,636 607,497,985 471,600,151
The AAL Bond Fund 1,782,756,237 2,233,070,486 1,762,774,060 2,213,905,742
</TABLE>
For the years ended April 30, 1998, and 1999, The AAL Bond Fund purchased
$985,955,124 and $1,249,352,154 and sold $1,010,603,182 and $1,246,093,792 in
U.S. government obligations.
For the year ended April 30, 1999, The AAL Municipal Bond Fund purchased
$21,568,998 and sold $21,564,850 in U.S. government obligations.
For the years ended April 30, 1998, and 1999, The AAL Balanced Fund purchased
$6,710,502 and $104,802,878 and sold $617,844 and $101,319,024 in U.S.
government obligations.
As of April 30, 1999, the cost of investments for federal income tax purposes
for each of the Funds was as follows:
The AAL Small Cap Stock Fund $ 128,194,655
The AAL Mid Cap Stock Fund 565,920,796
The AAL International Fund 134,215,484
The AAL Capital Growth Fund 1,831,674,174
The AAL Equity Income Fund 220,331,202
The AAL Balanced Fund 158,244,367
The AAL High Yield Bond Fund 156,278,037
The AAL Municipal Bond Fund 496,372,894
The AAL Bond Fund 411,436,625
The AAL Money Market Fund 308,345,355
Any differences between book and tax are due primarily to wash sale losses and
REIT return of capital distributions..
82 The AAL Mutual Annual Report
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 1999
The AAL Small Cap Stock, Balanced, High Yield Bond and Bond Funds deferred, on a
tax basis, post-October losses of $7,429,407; $970,672; $1,829,362; and
$4,701,319 respectively. Such amounts may be used to offset future capital
gains.
At April 30, 1999, The AAL Small Cap Stock Fund had accumulated a net realized
capital loss carryover of $5,169,704 expiring in 2007; The AAL International
Fund had accumulated a net realized capital loss carryover of $17,042,294
expiring in 2007; The AAL Equity Income Fund had accumulated a net realized
capital loss carryover of $1,466,623 expiring in 2007; The AAL High Yield Bond
Fund had accumulated a net realized capital loss carryover of $1,271,115
expiring in 2007; and The AAL Bond Fund had accumulated a net realized capital
loss carryover of $2,246,041 expiring in 2005. To the extent that these Funds
realize net capital gains, taxable distributions to shareholders will be offset
by any unused capital loss carryover.
The gross unrealized appreciation and depreciation on investments at years ended
April 30, 1998, and 1999, were as follows:
<TABLE>
<CAPTION>
Net Unrealized Net Unrealized
Appreciation Appreciation
Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
The AAL Small Cap
Stock Fund $ 20,805,961 $ (3,743,862) $ 17,062,099 $ 15,707,959 $(10,865,769) $ 4,842,190
The AAL Mid Cap
Stock Fund 132,609,100 (15,441,186) 117,167,914 87,065,009 (27,017,343) 60,047,666
The AAL
International Fund 23,333,826 (23,099,326) 234,500 28,491,489 (2,365,445) 26,126,043
The AAL Capital
Growth Fund 1,285,921,272 (12,004,856) 1,273,916,416 1,951,269,701 (44,625,297) 1,906,644,404
The AAL Equity
Income Fund 40,487,563 (1,673,134) 38,814,429 77,412,812 (13,629,141) 63,783,671
The AAL Balanced Fund 1,193,311 (209,545) 983,766 16,570,935 (2,417,994) 14,152,941
The AAL High Yield
Bond Fund 2,117,499 (1,344,078) 773,421 2,652,342 (16,230,454) (13,578,112)
The AAL Municipal
Bond Fund 29,840,546 (498,498) 29,342,048 34,368,583 (717,498) 33,651,085
The AAL Bond Fund 4,001,527 (1,129,834) 2,871,693 1,816,883 (5,555,252) (3,738,369)
</TABLE>
E: Trust Transactions
Transactions in trust shares for the years ended April 30, 1998, and 1999, were
as follows:
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund
----------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------ --------------------- ---------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 4,581,398 3,891,500 707,744 582,841 30,103 64,638
Income dividends reinvested -- -- -- -- -- --
Capital gains reinvested 359,191 301,427 35,879 34,300 -- 2,374
Shares redeemed (770,817) (2,240,144) (41,520) (190,256) -- (23,860)
---------- ---------- ------- ------- ------- -------
Net increase of trust shares 4,169,772 1,952,783 702,103 426,885 30,103 43,152
========== ========== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Mid Cap Stock Fund
-----------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
-------------------------- ---------------------- --------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 5,854,933 5,215,260 566,630 454,559 73,106 466,914
Income dividends reinvested -- -- -- -- -- --
Capital gains reinvested 3,957,823 2,474,310 59,255 61,459 -- 8,275
Shares redeemed (3,985,235) (7,729,989) (24,842) (130,314) (172) (89,278)
---------- ---------- ------- ------- ------- -------
Net increase of trust shares 5,827,521 (40,419) 601,043 385,704 72,934 385,911
========== ========== ======= ======= ======= =======
</TABLE>
The AAL Mutual Funds Annual Report 83
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
The ALL International Fund
------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
---------------------------- ----------------------- ----------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 3,772,173 2,076,339 479,030 232,322 41,212 154,736
Income dividends reinvested 456,456 511,948 19,125 25,527 -- 2,869
Capital gains reinvested 644,791 100,659 30,027 6,597 -- 482
Shares redeemed (2,164,121) (2,677,235) (41,612) (106,607) -- (35,591)
---------- ---------- ------- -------- ------ -------
Net increase of trust shares 2,709,299 11,711 486,570 157,839 41,212 122,496
========== ========== ======= ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Capital Growth Fund
------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
-------------------------- ------------------------ ----------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 12,378,718 14,225,458 1,344,950 1,321,138 104,072 1,311,222
Income dividends reinvested 288,468 281,631 748 -- -- 2,137
Capital gains reinvested 3,818,058 1,425,758 54,225 38,349 -- 6,025
Shares redeemed (6,622,943) (9,060,976) (45,132) (179,708) (3,420) (112,134)
---------- ---------- --------- --------- ------- ---------
Net increase of trust shares 9,862,301 6,871,871 1,354,791 1,179,779 100,652 1,207,250
========== ========== ========= ========= ======= =========
</TABLE>
<TABLE>
<CAPTION>
The AAL Equity Income Fund
-----------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
-------------------------- ---------------------- ---------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 3,285,078 4,854,885 221,116 398,839 494,961 435,407
Income dividends reinvested 258,113 193,170 1,588 1,588 87 2,545
Capital gains reinvested 401,552 916,949 4,591 29,216 -- 5,698
Shares redeemed (1,967,090) (1,922,099) (4,028) (40,545) -- (43,650)
---------- ---------- ------- ------- ------- -------
Net increase of trust shares 1,977,653 4,042,905 223,267 389,098 495,048 400,000
========== ========== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Balanced Fund
-----------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
-------------------------- ---------------------- ---------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 2,577,656 11,236,840 216,251 806,943 99,473 89,291
Income dividends reinvested 4,577 128,272 234 6,598 251 2,580
Capital gains reinvested -- 3,654 -- 298 -- 67
Shares redeemed (23,136) (898,275) (1,015) (49,617) -- (5,018)
--------- ---------- ------- ------- ------ ------
Net increase of trust shares 2,559,097 10,470,491 215,470 764,222 99,724 86,920
========= ========== ======= ======= ====== ======
</TABLE>
- --------------------------------------------------------------------------------
84 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements Continued AS OF APRIL 30 1999
<TABLE>
<CAPTION>
The AAL High Yield Bond Fund
-------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
---------------------------- ----------------------- ------------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 7,562,713 6,706,091 664,944 495,697 16,914 247,545
Income dividends reinvested 399,044 863,591 30,318 66,641 430 13,102
Capital gains reinvested 54,806 75,664 4,779 6,434 -- 1,262
Shares redeemed (2,759,953) (2,630,009) (27,277) (121,281) -- (31,405)
---------- ---------- ------- -------- ------ -------
Net increase of trust shares 5,256,610 5,015,337 672,764 447,491 17,344 230,504
========== ========== ======= ======== ====== =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Municipal Bond Fund
-------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
--------------------------- ----------------------- ------------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 4,874,442 6,657,054 244,779 340,431 4,325 44,426
Income dividends reinvested 1,447,260 1,557,452 5,354 14,626 68 1,175
Capital gains reinvested 376,282 556,748 1,982 7,148 -- 725
Shares redeemed (4,333,958) (4,140,561) (5,422) (26,502) -- (2,176)
---------- ---------- ------- ------- ------- -------
Net increase of trust shares 2,364,026 4,630,693 246,693 335,703 4,393 44,150
========== ========== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
The AAL Bond Fund
-------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
-------------------------- ----------------------- ------------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 3,202,810 6,448,271 104,248 200,975 2,928,980 1,733,386
Income dividends reinvested 1,727,721 1,565,781 3,370 8,007 11,357 37,306
Capital gains reinvested -- -- -- -- -- --
Shares redeemed (9,960,597) (6,383,869) (4,940) (39,787) (11,686) (194,999)
---------- ---------- ------- -------- --------- ---------
Net increase of trust shares (5,030,066) 1,630,183 102,678 169,195 2,928,651 1,575,693
========== ========== ======= ======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
The AAL Money Market Fund
---------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
----------------------------- ------------------------ ------------------------
4/30/98 4/30/99 4/30/98 4/30/99 4/30/98 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 328,956,368 367,653,413 3,114,103 3,041,527 505,441 54,278,795
Income dividends reinvested 10,583,981 11,608,802 41,867 47,572 1,453 420,490
Capital gains reinvested -- -- -- -- -- --
Shares redeemed (288,419,798) (331,856,369) (2,524,445) (2,661,451) (272,402) (37,008,177)
------------- ------------ ---------- ---------- -------- -----------
Net increase of trust shares 51,120,551 47,405,846 631,525 427,648 234,492 17,691,108
============= ============ ========== ========== ======== ===========
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 85
<PAGE>
F: Forward Currency Contracts
As of April 30,1999,The AAL International Fund had entered into forward currency
contracts, as summarized below, resulting in net unrealized appreciation of
$110,538.
<TABLE>
<CAPTION>
Settlement Date Currency to U.S. Value at Currency to U.S. Value at
Through Be Delivered April 30, 1999 Be Received April 30, 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5/3/99 (46,325) U.S. Dollar $ (46,921) (70,800) Australian Dollar $ (46,325)
5/4/99 (47,347) U.S. Dollar (47,637) (71,879) Australian Dollar (47,347)
5/5/99 (79,736) U.S. Dollar (79,970) (120,666) Australian Dollar (79,736)
5/7/99 (1,485,722) U.S. Dollar (1,478,622) (176,490,246) JapaneseYen (1,485,722)
5/10/99 (796,255) U.S. Dollar (797,714) (95,216,175) JapaneseYen (796,255)
5/12/99 609,158 U.S. Dollar 606,916 573,657 Euro 609,158
6/17/99 839,000,000 JapaneseYen 7,066,897 7,066,897 U.S. Dollar 7,179,714
-----------
$ 5,222,949 $ 5,333,487
===========
</TABLE>
G: Federal Income Tax Information (unaudited)
In early 1999,shareholders received information regarding all distributions paid
to them by the Funds during the calendar year 1998. The Funds hereby designate
the following amounts as long-term capital gains:
<TABLE>
<CAPTION>
The The The The The The
AAL Small Cap AAL Mid Cap AAL International AAL Capital Growth AAL Equity Income AAL Municipal
Stock Fund Stock Fund Fund Fund Fund Bond Fund
<S> <C> <C> <C> <C> <C> <C>
Total Long-term Capital Gains $1,498,502 $23,968,107 $949,380 $41,807,460 $13,310,342 $3,619,471
</TABLE>
For the AAL Capital Growth, Equity Income and Balanced Funds, the percentage of
ordinary income distributions which is eligible for the corporate dividend
received deduction for the fiscal year ended April 30,1999,was 100%,99.90% and
99.65%,respectively.
During the fiscal year ended April 30,1999,The AAL International Fund generated
$3,786,540 of foreign source income and paid $264,350 of foreign taxes. The Fund
elects to pass foreign taxes through to the Fund's shareholders for their 1999
tax returns. Updated data will be sent with 1999 Form 1099s to enable
shareholders to have information to claim either a foreign tax credit or to take
a foreign tax deduction on their 1999 income tax returns.
For the fiscal year ended April 30,1999,The AAL Municipal Bond Fund designates
98.8% of its income distributions as tax exempt income deductions.
H: Shareholder Meeting (unaudited)
On October 30,1998,a special shareholder meeting was held at which time a
majority vote of The AAL Small Cap Stock and Mid Cap Stock Funds shareholders
agreed to change the Funds' fundamental investment objective.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
The AALSmall Cap Stock Fund
For 5,230,155.505....................... 47.914% 93.998%
Against 92,370.399....................... 0.846% 1.660%
Abstained 241,606.988....................... 2.213% 4.342%
------------- ------- -------
Total 5,564,132.892....................... 50.973% 100.00%
</TABLE>
- --------------------------------------------------------------------------------
86 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements Continued AS OF APRIL 30 1999
The AAL Mid Cap Stock Fund
<TABLE>
<S> <C> <C> <C>
For 20,722,662.178......... 48.021% 93.827%
Against 317,918.803......... 0.737% 1.440%
Abstained 1,045,391.031......... 2.422% 4.733%
-------------- ------ ------
Total 22,085,972.012......... 51.180% 100.00%
</TABLE>
Also, the shareholders of The AAL International Fund agreed to a change in sub-
adviser from Societe Generale Asset Management Corporation to Oechsle
International Advisors LLC, effective November 1, 1998.
<TABLE>
<S> <C> <C> <C>
For 7,382,768.097......... 53.821% 94.646%
Against 79,092.486......... 0.577% 1.014%
Abstained 338,536.103......... 2.468% 4.340%
------------- ------ ------
Total 7,800,396.686......... 56.866% 100.00%
</TABLE>
Proposal to elect 7 candidates to serve on the Board of Trustees Votes
Votes
<TABLE>
<S> <C> <C>
John H. Pender
Affirmative 282,502,836.140 51.86%
Withhold 5,458,900.926 1.00%
Richard L. Gady
Affirmative 282,499,995.401 51.86%
Withhold 5,483,268.421 1.01%
Lawrence M. Woods
Affirmative 282,376,542.000 51.84%
Withhold 5,584,995.072 1.03%
F. Gregory Campbell
Affirmative 282,463,924.061 51.85%
Withhold 5,497,613.005 1.01%
John O. Gilbert
Affirmative 282,535,204.440 51.87%
Withhold 5,426,332.626 1.00%
Ronald G. Anderson
Affirmative 282,425,583.449 51.85%
Withhold 5,535,953.617 1.02%
Edward W. Smeds
Affirmative 282,300,409.506 51.82%
Withhold 5,661,127.569 1.04%
</TABLE>
D.W. Russler did not stand for re-election.
Proposal to ratify PricewaterhouseCoopers LLP as independent accountants for
fiscal year ending April 30, 1999.
<TABLE>
<S> <C> <C>
Affirmative 275,960,818.636 50.66%
Against 1,573,013.706 0.29%
Abstain 10,411,000.724 1.91%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 87
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Small Cap Stock Fund
<TABLE>
<CAPTION>
Class A Class B Class A Class B
Period Ended Period Ended Year Ended Year Ended
4/30/97 4/30/97 4/30/98 4/30/98
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period............................... $ 10.00 $ 11.17 $ 9.84 $ 9.81
Income from Investment Operations
- ---------------------------------
Net investment income............................. (0.06) (0.03) (0.10) (0.16)
Net realized and unrealized gain (loss)
on investments.................................... 0.16 (1.33) 4.73 4.67
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.10 (1.36) 4.63 4.51
=====================================================================================================================
Distributions from:
- ------------------
Net investment income............................. -- -- -- --
Net realized capital gains........................ (0.27) -- (0.63) (0.59)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.27) -- (0.63) (0.59)
=====================================================================================================================
Net increase (decrease) in net asset value (0.17) (1.36) 4.00 3.92
Net asset value:
End of period..................................... $ 9.84 $ 9.81 $ 13.84 $ 13.73
=====================================================================================================================
Total return (d).................................. (0.78)% (12.18)% 47.97% 46.86%
Net assets, end of period (in millions)........... $ 44.5 $ 3.4 $ 120.3 $ 14.4
Ratio of expenses to average
net assets (a) (b)................................ 2.06% 3.20% 1.71% 2.60%
Ratio of net investment income
to average net assets (a) (c)..................... (1.20)% (2.39)% (1.05)% (1.94)%
Portfolio turnover rate........................... 138.50% 138.50% 105.60% 105.60%
</TABLE>
- --------------------------------------------------------------------------------
88 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class I Class A Class B Class I
Period Ended Year Ended Year Ended Year Ended
4/30/98 (e) 4/30/99 4/30/99 4/30/99
- --------------------------------------------------------------------
<S> <C> <C> <C>
$ 12.45 $ 13.84 $ 13.73 $ 13.87
(0.01) (0.12) (0.22) (0.04)
1.43 (2.51) (2.50) (2.52)
- -------------------------------------------------------------------
1.42 (2.63) (2.72) (2.56)
===================================================================
-- -- -- --
-- (0.32) (0.27) (0.36)
- -------------------------------------------------------------------
-- (0.32) (0.27) (0.36)
===================================================================
1.42 (2.95) (2.99) (2.92)
$ 13.87 $ 10.89 $ 10.74 $ 10.95
===================================================================
11.41% (18.97)% (19.85)% (18.41)%
$ 0.4 $ 116.0 $ 15.8 $ 0.8
1.19% 1.82% 2.89% 1.08%
(0.39)% (1.15)% (2.22)% (0.40)%
105.60% 112.96% 112.96% 112.96%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 89
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Mid Cap Stock Fund
<TABLE>
<CAPTION>
Class A Class A Class A Class B Class A
Year Year Period Year Year
Ended Ended Ended Ended Ended
4/30/95 4/30/96 4/30/97 4/30/97 4/30/98
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period........................ $ 10.38 $ 10.92 $ 17.11 $ 13.67 $ 12.71
Income from Investment Operations
- ---------------------------------
Net investment income...................... (0.05) (0.10) (0.12) (0.03) (0.04)
Net realized and unrealized gain (loss)
on investments............................. 0.59 6.29 (1.63) (0.95) 4.75
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.54 6.19 (1.75) (0.98) 4.71
======================================================================================================
Distributions from:
- ------------------
Net investment income...................... -- -- -- -- --
Net realized capital gains................. -- -- (2.65) -- (1.49)
- ------------------------------------------------------------------------------------------------------
Total Distributions -- -- (2.65) -- (1.49)
======================================================================================================
Net increase (decrease) in net asset value. 0.54 6.19 (4.40) (0.98) 3.22
Net asset value:
End of period.............................. $ 10.92 $ 17.11 $ 12.71 $ 12.69 $ 15.93
======================================================================================================
Total return (d)........................... 5.20% 56.59% (11.08)% (7.17)% 38.73%
Net assets, end of period (in millions).... $ 220.8 $ 425.0 $ 461.7 $ 3.3 $ 671.5
Ratio of expenses to average
net assets (a) (b)......................... 1.54% 1.39% 1.35% 2.29% 1.30%
Ratio of net investment income to average
net assets (a) (c)......................... (0.77)% (0.82)% (0.94)% (1.41)% (0.27)%
Portfolio turnover rate.................... 88.18% 90.14% 112.60% 112.60% 104.73%
</TABLE>
- --------------------------------------------------------------------------------
90 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class B Class I Class A Class B Class I
Period Year Year Year Year
Ended Ended Ended Ended Ended
4/30/98 4/30/98 4/30/99 4/30/99 4/30/99
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 12.69 $ 14.40 $ 15.93 $ 15.78 $ 15.96
(0.12) -- (0.04) (0.17) 0.02
4.65 1.56 (1.25) (1.27) (1.25)
- ------------------------------------------------------------------------
4.53 1.56 (1.29) (1.44) (1.23)
========================================================================
-- -- -- -- --
(1.44) -- (0.75) (0.70) (0.79)
- ------------------------------------------------------------------------
(1.44) -- (0.75) (0.70) (0.79)
========================================================================
3.09 1.56 (2.04) (2.14) (2.02)
$ 15.78 $ 15.96 $ 13.89 $ 13.64 $ 13.94
========================================================================
37.41% 10.83% (7.62)% (8.70)% (7.17)%
$ 13.6 $ 1.2 $ 584.9 $ 17.0 $ 6.4
2.33% 0.86% 1.37% 2.56% 0.85%
(1.30)% 0.18% (0.28)% (1.46)% 0.33%
104.73% 104.73% 125.94% 125.94% 125.94%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 91
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights - continued PER SHARE INFORMATION
- --------------------------------------------------------------------------------
The AAL International Fund
<TABLE>
<CAPTION>
Class A Class A Class B Class A Class B
Period Ended Year Ended Period Ended Year Ended Year Ended
4/30/96 4/30/97 4/30/97 4/30/98 4/30/98
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period....................... $ 10.00 $ 11.08 $ 10.98 $ 11.37 $ 11.34
Income from Investment Operations
- ---------------------------------
Net investment income..................... 0.05 0.01 -- 0.17 0.13
Net realized and unrealized
gain (loss) on investments................ 1.05 0.68 0.36 0.56 0.49
- ------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.10 0.69 0.36 0.73 0.62
==============================================================================================================================
Distributions from:
- ------------------
Net investment income..................... (0.02) (0.34) -- (0.37) (0.33)
Net realized capital gains................ -- (0.06) -- (0.58) (0.58)
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.02) (0.40) -- (0.95) (0.91)
==============================================================================================================================
Net increase (decrease) in net asset
value.................................... 1.08 0.29 0.36 (0.22) (0.29)
Net asset value:
End of period............................. $ 11.08 $ 11.37 $ 11.34 $ 11.15 $ 11.05
==============================================================================================================================
Total return (d).......................... 11.07% 6.32% 3.28% 7.34% 6.30%
Net assets, end of period (in millions)... $ 57.1 $ 116.2 $ 2.6 $ 144.2 $ 7.9
Ratio of expenses to average net
assets (a) (b)........................... 2.15% 2.10% 2.94% 1.91% 2.90%
Ratio of net investment income to average
net assets (a) (c)....................... 0.94% 0.88% (0.03)% 1.36% 0.34%
Portfolio turnover rate................... 1.30% 12.95% 12.95% 19.90% 19.90%
</TABLE>
- --------------------------------------------------------------------------------
92 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class I Class A Class B Class I
Period Ended Year Ended Year Ended Year Ended
4/30/98(e) 4/30/99 4/30/99 4/30/99
================================================================================
<S> <C> <C> <C>
$ 10.11 $ 11.15 $ 11.05 $ 11.17
0.03 0.08 (0.03) 0.15
1.03 0.65 0.64 0.65
- ------------------------------------------------------------------------------------
1.06 0.73 0.61 0.80
====================================================================================
-- (0.44) (0.34) (0.51)
-- (0.09) (0.09) (0.09)
- ------------------------------------------------------------------------------------
-- (0.53) (0.43) (0.60)
====================================================================================
1.06 0.20 0.18 0.20
$ 11.17 $ 11.35 $ 11.23 $ 11.37
====================================================================================
10.48% 6.82% 5.72% 7.49%
$ 0.5 $ 146.9 $ 9.8 $ 1.9
1.19% 1.74% 2.85% 1.09%
2.38% 0.64% (0.52)% 1.10%
19.90% 100.90% 100.90% 100.90%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 93
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Capital Growth Fund
<TABLE>
<CAPTION>
Class A Class A Class A
Year Ended Year Ended Year Ended
4/30/95 4/30/96 4/30/97
==========================================================================================================
<S> <C> <C> <C>
Net asset value:
Beginning of period............................. $ 14.49 $ 15.56 $ 18.79
Income from Investment Operations
- ---------------------------------
Net investment income........................... 0.27 0.20 0.13
Net realized and unrealized
gain (loss) on investments...................... 1.70 3.76 3.68
- ----------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.97 3.96 3.81
==========================================================================================================
Distributions from::
- ------------------
Net investment income........................... (0.30) (0.22) (0.15)
Net realized capital gains...................... (0.60) (0.51) (0.95)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.90) (0.73) (1.10)
==========================================================================================================
Net increase (decrease) in
net asset value................................ 1.07 3.23 2.71
Net asset value:
End of period................................... $ 15.56 $ 18.79 $ 21.50
==========================================================================================================
Total return (d)................................ 14.37% 25.85% 20.55%
Net assets, end of period
(in millions).................................. $1,032.2 $1,381.4 $1,794.4
Ratio of expenses to
average net assets (a) (b)..................... 1.17% 1.12% 1.06%
Ratio of net investment
income to average
net assets (a) (c).............................. 1.89% 1.16% 0.62%
Portfolio turnover rate......................... 33.34% 44.26% 24.30%
</TABLE>
- --------------------------------------------------------------------------------
94 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class B Class A Class B Class I Class A Class B Class I
Period Year Year Period Year Year Year
Ended Ended Ended Ended Ended Ended Ended
4/30/97 4/30/98 4/30/98 4/30/98(e) 4/30/99 4/30/99 4/30/99
=================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 20.66 $ 21.50 $ 21.45 $ 26.05 $ 29.64 $ 29.38 $ 29.67
(0.01) 0.10 0.04 0.02 0.09 (0.19) 0.21
0.80 9.26 9.06 3.60 6.69 6.56 6.67
- ---------------------------------------------------------------------------------
0.79 9.36 9.10 3.62 6.78 6.37 6.88
=================================================================================
-- (0.08) (0.03) -- (0.09) -- (0.20)
-- (1.14) (1.14) -- (0.46) (0.46) (0.46)
- ---------------------------------------------------------------------------------
-- (1.22) (1.17) -- (0.55) (0.46) (0.66)
=================================================================================
0.79 8.14 7.93 3.62 6.23 5.91 6.22
$ 21.45 $ 29.64 $ 29.38 $ 29.67 $ 35.87 $ 35.29 $ 35.89
=================================================================================
3.82% 44.48% 43.25% 13.90% 23.20% 21.94% 23.55%
$ 11.0 $2,766.7 $ 54.9 $ 3.0 $3,594.5 $ 107.6 $ 46.9
1.89% 0.98% 1.90% 0.58% 0.97% 1.99% 0.60%
(0.39)% 0.39% (0.58)% 0.52% 0.30% (0.74)% 0.62%
24.30% 17.96% 17.96% 17.96% 8.74% 8.74% 8.74%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 95
<PAGE>
Financial Highlights continued PER SHARE INFORMATION
The AAL Equity Income Fund
<TABLE>
<CAPTION>
Class A Class A Class A Class B
Year Ended Year Ended Year Ended Period Ended
4/30/95 4/30/96 4/30/97 4/30/97
=======================================================================================================================
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period............................... $ 9.95 $ 9.47 $ 10.90 $ 11.40
Income from Investment Operations
- ---------------------------------
Net investment income............................. 0.34 0.36 0.39 0.05
Net realized and unrealized gain (loss)
on investments. .................................. (0.50) 1.42 0.46 (0.06)
- -----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.16) 1.78 0.85 (0.01)
=======================================================================================================================
Distributions from:
- ------------------
Net investment income............................. (0.32) (0.35) (0.41) (0.02)
Net realized capital gains........................ -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.35) (0.41) (0.02)
=======================================================================================================================
Net increase (decrease) in net asset value........ (0.48) 1.43 0.44 (0.03)
Net asset value:
End of period..................................... $ 9.47 $ 10.90 $ 11.34 $ 11.37
=======================================================================================================================
Total return (d).................................. (1.51)% 18.90% 7.88% (0.04)%
Net assets, end of period (in millions)........... $ 70.9 $ 114.5 $ 134.2 $ 0.5
Ratio of expenses to average net assets (a) (b)... 1.19% 1.20% 1.15% 1.99%
Ratio of net investment income to average
net assets (a) (c). .............................. 4.08% 3.58% 3.57% 2.36%
Portfolio turnover rate........................... 24.65% 21.79% 5.14% 5.14%
</TABLE>
- --------------------------------------------------------------------------------
96 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class I Class A Class B Class I
Year Ended Year Ended Year Ended Period Ended Year Ended Year Ended
4/30/98 4/30/98 4/30/98 (e) 4/30/99 4/30/99 4/30/99
==================================================================================
<S> <C> <C> <C> <C> <C>
$ 11.34 $ 11.37 $ 13.14 $ 14.31 $ 14.31 $ 14.32
0.27 0.19 0.08 0.16 0.02 0.21
3.44 3.41 1.16 1.17 1.17 1.19
- ----------------------------------------------------------------------------------
3.71 3.60 1.24 1.33 1.19 1.40
==================================================================================
(0.29) (0.21) (0.06) (0.17) (0.05) (0.23)
(0.45) (0.45) -- (0.79) (0.79) (0.79)
- ----------------------------------------------------------------------------------
(0.74) (0.66) (0.06) (0.96) (0.84) (1.02)
==================================================================================
2.97 2.94 1.18 0.37 0.35 0.38
$ 14.31 $ 14.31 $ 14.32 $ 14.68 $ 14.66 $ 14.70
==================================================================================
33.50% 32.42% 9.34% 10.08% 8.97% 10.62%
$ 197.7 $ 3.8 $ 7.1 $ 262.2 $ 9.6 $ 13.2
1.11% 2.04% 0.68% 1.05% 2.09% 0.60%
2.17% 0.96% 2.10% 1.22% 0.16% 1.65%
64.00% 64.00% 64.00% 13.35% 13.35% 13.35%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 97
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Balanced Fund
<TABLE>
<CAPTION>
Class A Class B Class I
Period Ended Period Ended Period Ended
4/30/98 (e) 4/30/98 (e) 4/30/98 (e)
=========================================================================================================================
<S> <C> <C> <C>
Net asset value:
Beginning of period.................................................... $ 10.00 $ 10.00 $ 10.00
Income from Investment Operations
- ---------------------------------
Net investment income.................................................. 0.04 0.03 0.04
Net realized and unrealized gain (loss) on investments................. 0.80 0.78 0.78
- -------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.84 0.81 0.82
=========================================================================================================================
Distributions From:
- ------------------
Net investment income.................................................. (0.03) (0.02) (0.03)
Net realized capital gains............................................. -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.03) (0.02) (0.03)
=========================================================================================================================
Net increase (decrease) in net asset value............................. 0.81 0.79 0.79
Net asset value:
End of period.......................................................... $ 10.81 $ 10.79 $ 10.79
=========================================================================================================================
Total return (d)....................................................... 8.37% 8.10% 8.17%
Net assets, end of period (in millions)................................ $ 27.7 $ 2.3 $ 1.1
Ratio of expenses to average net assets (a) (b)........................ 1.37% 2.11% 1.95%
Ratio of net investment income to average net assets (a) (c)........... 2.19% 1.45% 1.73%
Portfolio turnover rate................................................ 11.52% 11.52% 11.52%
</TABLE>
- --------------------------------------------------------------------------------
98 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class I
Year Ended Year Ended Year Ended
4/30/99 4/30/99 4/30/99
================================================
<S> <C> <C>
$ 10.81 $ 10.79 $ 10.79
0.21 0.14 0.23
1.34 1.31 1.35
- ------------------------------------------------
1.55 1.45 1.58
================================================
(0.20) (0.13) (0.23)
(0.01) (0.01) (0.01)
- ------------------------------------------------
(0.21) (0.14) (0.24)
================================================
1.34 1.31 1.34
$ 12.15 $ 12.10 $ 12.13
================================================
14.45% 13.47% 14.73%
$ 158.3 $ 11.9 $ 2.3
1.15% 1.98% 0.88%
2.26% 1.42% 2.50%
213.46% 213.46% 213.46%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 99
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL High Yield Bond Fund
<TABLE>
<CAPTION>
Class A Class B Class A Class B Class I
Period Ended Period Ended Year Ended Year Ended Period Ended
4/30/97 4/30/97 4/30/98 4/30/98 4/30/98 (e)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value:
Beginning of period................................ $ 10.00 $ 10.00 $ 9.88 $ 9.88 $ 10.29
Income from Investment Operations
- ---------------------------------
Net investment income.............................. 0.27 0.25 0.92 0.84 0.31
Net realized and unrealized gain (loss)
on investments..................................... (0.12) (0.12) 0.53 0.53 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.15 0.13 1.45 1.37 0.33
====================================================================================================================================
Distributions From:
- ------------------
Net investment income.............................. (0.27) (0.25) (0.92) (0.84) (0.31)
Net realized capital gains......................... -- -- (0.10) (0.10) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.25) (1.02) (0.94) (0.31)
====================================================================================================================================
Net increase (decrease) in net asset value......... (0.12) (0.12) 0.43 0.43 0.02
Net asset value:
End of period...................................... $ 9.88 $ 9.88 $ 10.31 $ 10.31 $ 10.31
====================================================================================================================================
Total return (d)................................... 1.51% 1.31% 15.12% 14.27% 3.28%
Net assets, end of period (millions)............... $ 44.7 $ 2.7 $ 100.8 $ 9.7 $ 0.2
Ratio of expenses to average
net assets (a) (b)................................. 1.00% 1.75% 0.99% 1.74% 0.75%
Ratio of net investment income
to average net assets (a) (c)...................... 9.11% 8.66% 8.94% 8.22% 9.53%
Portfolio turnover rate............................ 36.90% 36.90% 112.37% 112.37% 112.37%
</TABLE>
- --------------------------------------------------------------------------------
100 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class I
Year Ended Year Ended Year Ended
4/30/99 4/30/99 4/30/99
===================================================
<S> <C> <C>
$ 10.31 $ 10.31 $ 10.31
0.91 0.84 0.93
(1.33) (1.33) (1.34)
- ---------------------------------------------------
(0.42) (0.49) (0.41)
===================================================
(0.91) (0.84) (0.93)
(0.06) (0.06) (0.06)
- ---------------------------------------------------
(0.97) (0.90) (0.99)
===================================================
(1.39) (1.39) (1.40)
$ 8.92 $ 8.92 $ 8.91
===================================================
(3.96)% (4.62)% (3.85)%
$ 131.9 $ 12.4 $ 2.2
1.00% 1.71% 0.76%
9.81% 9.09% 10.34%
54.67% 54.67% 54.67%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 101
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Municipal Bond Fund
<TABLE>
<CAPTION>
Class A Class A Class A
Year Ended Year Ended Year Ended
4/30/95 4/30/96 4/30/97
=========================================================================================================
<S> <C> <C> <C>
Net asset value:
Beginning of period..................................... $ 10.56 $ 10.69 $ 10.91
Income from Investment Operations
- ---------------------------------
Net investment income................................... 0.52 0.52 0.52
Net realized and unrealized gain (loss) on investments.. 0.19 0.30 0.19
- ---------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.71 0.82 0.71
=========================================================================================================
Distributions From:
- -------------------
Net investment income................................... (0.52) (0.52) (0.52)
Net realized capital gains.............................. (0.06) (0.08) (0.18)
- ---------------------------------------------------------------------------------------------------------
Total Distributions (0.58) (0.60) (0.70)
=========================================================================================================
Net increase (decrease) in net asset value.............. 0.13 0.22 0.01
Net asset value
End of period........................................... $ 10.69 $ 10.91 $ 10.92
=========================================================================================================
Total return (d)........................................ 7.01% 7.74% 6.64%
Net assets, end of period (in millions)................. $ 377.8 $ 412.8 $ 421.7
Ratio of expenses to average net assets (a) (b)......... 0.98% 0.95% 0.89%
Ratio of net investment income to average
net assets (a) (c)...................................... 5.01% 4.69% 4.69%
Portfolio turnover rate................................. 172.49% 130.52% 119.79%
</TABLE>
- --------------------------------------------------------------------------------
102 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class B Class A Class B Class I Class A Class B Class I
Period Ended Year Ended Year Ended Period Ended Year Ended Year Ended Year Ended
4/30/97 4/30/98 4/30/98 4/30/98(e) 4/30/99 4/30/98 4/30/99
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 11.02 $ 10.92 $ 10.92 $ 11.59 $ 11.40 $ 11.40 $ 11.40
0.14 0.52 0.42 0.18 0.52 0.42 0.55
(0.10) 0.61 0.61 (0.19) 0.25 0.25 0.25
- -----------------------------------------------------------------------------------------------------------
0.04 1.13 1.03 (0.01) 0.77 0.67 0.80
===========================================================================================================
(0.14) (0.52) (0.42) (0.18) (0.52) (0.42) (0.55)
-- (0.13) (0.13) -- (0.18) (0.18) (0.18)
- -----------------------------------------------------------------------------------------------------------
(0.14) (0.65) (0.55) (0.18) (0.70) (0.60) (0.73)
===========================================================================================================
(0.10) 0.48 0.48 (0.19) 0.07 0.07 0.07
$ 10.92 $ 11.40 $ 11.40 $11.40 $ 11.47 $ 11.47 $ 11.47
===========================================================================================================
0.34% 10.50% 9.58% (0.09) 6.80% 5.93% 7.09%
$ 0.8 $ 467.1 $ 3.6 $ 0.0 $ 523.1 $ 7.5 $0.6
1.69% 0.85% 1.74% 0.60% 0.81% 1.64% 0.51%
4.09% 4.55% 3.67% 4.79% 4.47% 3.65% 4.78%
119.79% 131.18% 139.18% 139.18% 94.56% 94.56% 94.56%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 103
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Bond Fund
<TABLE>
<CAPTION>
Class A Class A Class A
Year Ended Year Ended Year Ended
4/30/95 4/30/96 4/30/97
====================================================================================================================
<S> <C> <C> <C>
Net asset value:
Beginning of period........................................... $ 9.69 $ 9.61 $ 9.62
Income from Investment Operations
- ---------------------------------
Net investment income......................................... 0.58 0.58 0.60
Net realized and unrealized gain (loss) on investments........ (0.08) 0.01 0.01
- --------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.50 0.59 0.61
====================================================================================================================
Distributions From:
- ------------------
Net investment income......................................... (0.58) (0.58) (0.60)
Net realized capital gains.................................... -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total Distributions (0.58) (0.58) (0.60)
====================================================================================================================
Net increase (decrease) in net asset value.................... (0.08) 0.01 0.01
Net asset value:
End of period................................................. $ 9.61 $ 9.62 $ 9.63
====================================================================================================================
Total return (d).............................................. 5.47% 6.18% 6.43%
Net assets, end of period (in millions)....................... $ 429.4 $ 430.8 $ 389.3
Ratio of expenses to average net assets (a) (b)............... 1.03% 1.01% 0.98%
Ratio of net investment income to average
net assets (a) (c)............................................ 6.12% 5.89% 6.10%
Portfolio turnover rate....................................... 44.57% 125.77% 212.49%
</TABLE>
- --------------------------------------------------------------------------------
104 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class B Class A Class B Class I Class A Class B Class I
Period Ended Year Ended Year Ended Period Ended Year Ended Year Ended Year Ended
4/30/97 4/30/98 4/30/98 4/30/98(e) 4/30/99 4/30/99 4/30/99
==================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$ 9.71 $ 9.63 $ 9.64 $ 10.06 $ 9.99 $ 9.99 $ 9.99
0.18 0.57 0.48 0.20 0.53 0.43 0.57
(0.07) 0.36 0.35 (0.07) (0.07) (0.07) (0.07)
- --------------------------------------------------------------------------------------------------
0.11 0.93 0.83 0.13 0.46 0.36 0.50
==================================================================================================
(0.18) (0.57) (0.48) (0.20) (0.53) (0.43) (0.57)
-- -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------
(0.18) (0.57) (0.48) (0.20) (0.53) (0.43) (0.57)
==================================================================================================
(0.07) 0.36 0.35 (0.07) (0.07) (0.07) (0.07)
$ 9.64 $ 9.99 $ 9.99 $ 9.99 $ 9.92 $ 9.92 $ 9.92
==================================================================================================
0.96% 9.86% 8.75% 1.24% 4.61% 3.60% 5.02%
$ 0.4 $ 353.4 $ 1.4 $ 29.3 $ 367.2 $ 3.1 $ 44.7
1.86% 0.95% 1.92% 0.56% 0.93% 1.90% 0.54%
5.51% 5.77% 4.74% 6.29% 5.23% 4.28% 5.63%
212.49% 483.76% 483.76% 483.76% 572.56% 572.56% 572.56%
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 105
<PAGE>
Financial Highlights - continued PER SHARE INFORMATION
The AAL Money Market Fund
<TABLE>
<CAPTION>
Class A Class A Class A Class B
Year Ended Year Ended Year Ended Period Ended
4/30/95 4/30/96 4/30/97 4/30/97
=====================================================================================================================
<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........................................ 0.04 0.05 0.05 0.01
Net realized and unrealized gain (loss) on investments....... -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.04 0.05 0.05 0.01
=====================================================================================================================
Distributions From:
- ------------------
Net investment income........................................ (0.04) (0.05) (0.05) (0.01)
Net realized capital gains................................... -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.04) (0.05) (0.05) (0.01)
=====================================================================================================================
Net increase (decrease) in net asset value................... -- -- -- --
Net asset value:
End of period................................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
=====================================================================================================================
Total return (d)............................................. 3.92% 4.94% 5.21% 1.32%
Net assets, end of period (in millions)...................... $ 70.2 $ 116.0 $ 189.6 $ 0.6
Ratio of expenses to average net assets (a) (b).............. 1.17% 0.83% 0.55% 1.78%
Ratio of net investment income to average
net assets (a) (c)........................................... 3.95% 4.89% 4.91% 3.81%
Portfolio turnover rate...................................... N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
106 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class I Class A Class B Class I
Year Ended Year Ended Period Ended Year Ended Year Ended Year Ended
4/30/98 4/30/98 4/30/98(e) 4/30/99 4/30/99 4/30/99
=========================================================================================
<S> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
0.05 0.04 0.02 0.05 0.04 0.05
-- -- -- -- -- --
- -----------------------------------------------------------------------------------------
0.05 0.04 0.02 0.05 0.04 0.05
=========================================================================================
(0.05) (0.04) (0.02) (0.05) (0.04) (0.05)
-- -- -- -- -- --
- -----------------------------------------------------------------------------------------
(0.05) (0.04) (0.02) (0.05) (0.04) (0.05)
=========================================================================================
-- -- -- -- -- --
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================================================================
5.12% 4.26% 1.67% 4.68% 3.67% 4.99%
$ 240.7 $ 1.2 $ 0.2 $ 288.1 $ 1.6 $ 17.9
0.68% 1.65% 0.67% 0.79% 2.79% 0.49%
4.98% 4.02% 5.11% 4.54% 2.54% 4.76%
N/A N/A N/A N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 107
<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:
<TABLE>
<CAPTION>
Class A Class A Class A Class B Class A
Year Ended Year Ended Year Ended Period Ended Year Ended
4/30/95 4/30/96 4/30/97 4/30/97 4/30/98
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund........................ -- -- 2.06% 3.21% 1.71%
The AAL Mid Cap Stock Fund.......................... 1.54% 1.39% 1.35% 2.29% 1.30%
The AAL International Fund.......................... -- 2.32% 2.10% 2.94% 1.91%
The AAL Capital Growth Fund......................... 1.17% 1.12% 1.06% 1.89% 0.98%
The AAL Equity Income Fund.......................... 1.19% 1.20% 1.15% 1.99% 1.11%
The AAL Balanced Fund............................... -- -- -- -- 1.63%
The AAL High Yield Bond Fund........................ -- -- 1.28% 2.00% 1.18%
The AAL Municipal Bond Fund......................... 0.98% 0.95% 0.89% 1.69% 0.85%
The AAL Bond Fund................................... 1.03% 1.01% 0.98% 1.86% 0.95%
The AAL Money Market Fund........................... 1.42% 1.28% 1.10% 3.54% 1.04%
</TABLE>
(c) If the Funds had paid all of their expenses the ratio of net investment
income to average net assets would have been as follows:
<TABLE>
<CAPTION>
Class A Class A Class A Class B Class A
Year Ended Year Ended Year Ended Period Ended Year Ended
4/30/95 4/30/96 4/30/97 4/30/97 4/30/98
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund........................ -- -- (1.20)% (2.40)% (1.05)%
The AAL Mid Cap Stock Fund.......................... (0.77)% (0.82)% (0.94)% (1.41)% (0.27)%
The AAL International Fund.......................... -- 0.77% 0.88% (0.03)% 1.36%
The AAL Capital Growth Fund......................... 1.89% 1.16% 0.62% (0.39)% 0.39%
The AAL Equity Income Fund.......................... 4.08% 3.58% 3.57% 2.36% 2.17%
The AAL Balanced Fund............................... -- -- -- -- 1.93%
The AAL High Yield Bond Fund........................ -- -- 8.83% 8.41% 8.75%
The AAL Municipal Bond Fund......................... 5.01% 4.69% 4.69% 4.09% 4.55%
The AAL Bond Fund................................... 6.12% 5.89% 6.10% 5.51% 5.77%
The AAL Money Market Fund........................... 3.70% 4.46% 4.36% 2.05% 4.62%
</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) Commenced operation December 29, 1997.
- -------------------------------------------------------------------------------
108 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Class B Class I Class A Class B Class I
Year Ended Period Ended Year Ended Year Ended Year Ended
4/30/98 4/30/98 4/30/99 4/30/99 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund................. 2.60% 1.19% 1.82% 2.89% 1.08%
The AAL Mid Cap Stock Fund................... 2.33% 0.86% 1.37% 2.56% 0.85%
The AAL International Fund................... 2.90% 1.19% 1.74% 2.85% 1.09%
The AAL Capital Growth Fund.................. 1.90% 0.58% 0.97% 1.99% 0.60%
The AAL Equity Income Fund................... 2.04% 0.68% 1.05% 2.09% 0.60%
The AAL Balanced Fund........................ 2.50% 1.95% 1.23% 2.18% 0.88%
The AAL High Yield Bond Fund................. 2.05% 0.75% 1.16% 1.98% 0.76%
The AAL Municipal Bond Fund.................. 1.74% 0.60% 0.81% 1.64% 0.51%
The AAL Bond Fund............................ 1.92% 0.56% 0.93% 1.90% 0.54%
The AAL Money Market Fund.................... 2.01% 1.43% 1.12% 3.11% 0.72%
</TABLE>
<TABLE>
<CAPTION>
Class B Class I Class A Class B Class I
Year Ended Period Ended Year Ended Year Ended Year Ended
4/30/98 4/30/98 4/30/99 4/30/99 4/30/99
============================================================================================================================
<S> <C> <C> <C> <C> <C>
The AAL Small Cap Stock Fund................. (1.94)% (0.39)% (1.15)% (2.22)% (0.40)%
The AAL Mid Cap Stock Fund................... (1.30)% 0.18% (0.28)% (1.46)% 0.37%
The AAL International Fund................... 0.34% 2.38% 0.64% 0.52% 1.10%
The AAL Capital Growth Fund.................. (0.58)% 0.52% 0.30% (0.74)% 0.62%
The AAL Equity Income Fund................... 0.96% 2.10% 1.22% 0.16% 1.65%
The AAL Balanced Fund........................ 1.06% 1.73% 2.17% 1.22% 2.50%
The AAL High Yield Bond Fund................. 7.90% 9.53% 9.64% 8.82% 10.34%
The AAL Municipal Bond Fund.................. 3.67% 4.79% 4.47% 3.65% 4.78%
The AAL Bond Fund............................ 4.74% 6.29% 5.23% 4.28% 5.63%
The AAL Money Market Fund.................... 3.67% 4.36% 4.22% 2.22% 4.53%
</TABLE>
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The AAL Mutual Funds Annual Report 109
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
[LOGO OF PRICEWATERHOUSECOOPERS APPEARS HERE]
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP APPEARS HERE]
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 Small Cap Stock Fund, The
AAL Mid Cap Stock Fund, The AAL International Fund, The AAL Capital Growth Fund,
The AAL Equity Income Fund, The AAL Balanced Fund, The AAL High Yield Bond Fund,
The AAL Municipal Bond Fund, The AAL Bond Fund and The AAL Money Market Fund
(ten of the portfolios constituting The AAL Mutual Funds, the "Funds") at April
30, 1999, the results of each of their operations, the changes in each of their
net assets, and the financial highlights for the periods indicated, all 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, 1999, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCooper LLP
May 22, 1999
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110 The AAL Mutual Funds Annual Report
<PAGE>
A Note on Forward-Looking Statements
Except for the historical information contained in the foregoing reports on each
of the Funds, the matters discussed in those reports may constitute forward-
looking statements that are made pursuant to the safe harbor provisions of the
Securities Litigation Reform Act of 1995. These include discussion about each
portfolio manager's predictions, assessments, analyses and outlooks for relevant
securities and investment markets, market sectors, industries and individual
stocks or other investment securities. These statements involve risks and
uncertainties. In addition to the general risks described for each Fund in its
current prospectus, other factors bearing on these reports include the accuracy
of each portfolio manager's forecasts and predictions, the appropriateness of
the investment strategies designed by the portfolio managers to capitalize on
their forecasts and predictions should they prove true, and the ability of the
portfolio managers to implement their strategies efficiently and effectively.
Any one or more of these factors, as well as other risks affecting the
securities markets and investment instruments generally, could cause the actual
results of any Fund to differ materially from the projected results for the
Fund, either on an overall basis or on a relative basis as compared to the
benchmark index selected for the particular Fund.
- --------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 111
<PAGE>
Board John H. Pender - Chairman of the Board
of Ronald G. Anderson
Trustees F. Gregory Campbell
Richard L. Gady
John O. Gilbert
Edward W. Smeds
Lawrence M. Woods
Officers Ronald G. Anderson - President
Robert G. Same - Vice President & Secretary
Charles D. Gariboldi - Treasurer
Steven J. Fredricks - Assistant Secretary
Woodrow E. Eno - Assistant Secretary
Investment AAL Capital Management Corporation
Adviser & 222 W. College Ave.
Distributor Appleton, WI 54919-0007
Sub-Adviser Oechsle International Advisors, LLC
(The AAL International One International Place
Fund Only) Boston, MA 02110
Custodian Citibank, N.A.
111 Wall Street
New York, NY 10043
Transfer Agent & Firstar Trust Company
Disbursing 615 East Michigan Street
Agent P.O. Box 2981
Milwaukee, WI 53201-2981
Custodian The Chase Manhattan Bank, N.A.
(The AAL International Chase Metro Tech Center
Fund Only) Brooklyn, NY 11245
Legal Quarles & Brady
Counsel 411 East Wisconsin Avenue
Milwaukee, WI 53202
Independent PricewaterhouseCoopers LLP
Accountants Suite 1500
100 East Wisconsin Avenue
Milwaukee, WI 53202
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.
[LOGO OF AAL]
AAL Capital Management Corporation
