SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
THE AAL MUTUAL FUNDS
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
THE AAL MUTUAL FUNDS
222 West College Avenue
Appleton, Wisconsin 54919-0007
800-553-6319 or 920-734-7633
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[Logo]
THE AAL MUTUAL FUNDS
THE AAL HIGH YIELD BOND FUND
222 West College Avenue
Appleton, Wisconsin 54919-0007
800-553-6319
May 23, 2000
Dear Shareholder:
Re: SPECIAL MEETING OF SHAREHOLDERS
Enclosed is a notice of a Special Meeting of Shareholders of The AAL
High Yield Bond Fund (the "Fund"), to be held at 10:00 a.m. on June 21, 2000,
together with a Proxy Statement and Form of Proxy relating to the business to be
transacted at the meeting. This Special Meeting of Shareholders is being called
for the reasons listed below.
PURPOSE
The purpose of the Special Meeting is to consider and vote upon the
Board of Trustees' recommendation that the Fund and its investment adviser, AAL
Capital Management Corporation ("AAL CMC"), engage Pacific Investment Management
Company ("PIMCO") as the sub-adviser to manage the investment of the Fund's
assets. Approval by Fund shareholders of the new proposed sub-advisory agreement
with PIMCO is required by applicable law. The retention of PIMCO is being
proposed primarily for the following reasons:
1. The investment performance of the AAL High Yield Bond Fund has
been below a level deemed acceptable by the Trustees and AAL CMC.
2. PIMCO is one of the country's largest money management firms and
has substantial experience in the management of high yield bond
portfolios.
3. PIMCO offers a high level of investment management services. The
engagement of PIMCO would not affect the overall fee that the
Fund pays for management services.
IF YOU HAVE ANY QUESTIONS OR CONCERNS THAT YOU WOULD LIKE TO DISCUSS
ABOUT THE MEETING AND THE MATTERS TO BE ACTED UPON, PLEASE CALL US AT
800-553-6319.
Thank you for your continued confidence in The AAL Mutual Funds. Your
cooperation and participation in completing and returning the enclosed proxy
will ensure that your vote is counted.
Very truly yours,
THE AAL MUTUAL FUNDS
/s/Robert G. Same
Robert G. Same, President
<PAGE>
THE AAL MUTUAL FUNDS
THE AAL HIGH YIELD BOND FUND
222 WEST COLLEGE AVENUE
APPLETON, WISCONSIN 54919-0007
800-553-6319
----------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
----------------------------------------------------
To Be Held on June 21, 2000
A Special Meeting of the Shareholders of The AAL High Yield Bond Fund
(the "Fund") will be held at 222 West College Avenue, Appleton, Wisconsin 54919,
on June 21, 2000, beginning at 10:00 am local time for the following purpose:
1. To approve, with respect to The AAL High Yield Bond Fund, a new
Sub-Advisory Agreement by and among The AAL Mutual Funds (on
behalf of the Fund), AAL Capital Management Corporation, the
Fund's investment adviser and Pacific Investment Management
Company ("PIMCO"), as sub-adviser to the Fund. A copy of the
proposed Sub-Advisory Agreement is attached as Appendix A to the
accompanying Proxy Statement;
2. To transact such other business as properly may come before the
meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on April 28,
2000, as the record date for determining shareholders entitled to notice of, and
to vote at, the Special Meeting and any adjournment thereof. Only shareholders
of record at the close of business on that date will be entitled to vote. Your
attention is invited to the Proxy Statement accompanying this Notice for a more
complete statement regarding the matters to be acted upon at the Special
Meeting.
By Order of the Board of Trustees
of The AAL Mutual Funds
/s/Robert G. Same
Robert G. Same, President
Appleton, Wisconsin
May 23, 2000
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTPAID PAID ENVELOPE PROVIDED FOR THAT
PURPOSE.
<PAGE>
PROXY STATEMENT
THE AAL MUTUAL FUNDS
The AAL High Yield Bond Fund
222 West College Avenue
Appleton, Wisconsin 54919-0007
1-800-553-6319
This Proxy Statement was first mailed to
Shareholders on or about May 23, 2000
SOLICITATION AND VOTING
SOLICITATION
The enclosed Proxy is being solicited by the Board of Trustees of The
AAL Mutual Funds ("AAL Trust") in connection with the Special Meeting of
Shareholders of The AAL High Yield Bond Fund (the "Fund") to be held at 10:00
a.m. on June 21, 2000 (the "Special Meeting"). As discussed in more detail in
this Proxy Statement, we are calling the Special Meeting to consider and vote on
the approval of a Sub-Advisory Agreement pursuant to which Pacific Investment
Management Company ("PIMCO") would manage the investment of the Fund's assets,
as sub-adviser to the Fund, subject to the direction and control of AAL Capital
Management Corporation ("AAL CMC") and the Board of Trustees. You are encouraged
to read carefully this Proxy Statement, including the copy of the Sub-Advisory
Agreement attached as Appendix A, and mark and return the proxy accompanying it.
QUORUM AND VOTING
The presence at the Special Meeting, in person or by proxy, of
shareholders representing one-third of all shares outstanding and entitled to
vote on a matter constitutes a quorum for the transaction of business.
Abstentions will be counted as present for purposes of determining a quorum, but
will not be counted as votes cast with respect to the proposal. "Broker
non-votes" (i.e., proxies received from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote the shares on a matter with respect to which the broker
or the nominee does not have discretionary power), will be treated the same as
abstentions.
Approval of the Sub-Advisory Agreement requires the affirmative vote of
"a majority of the outstanding voting securities" of the Fund, defined under the
Investment Company Act of 1940 (the "1940 Act") to mean at least a majority of
the outstanding voting shares of the Fund or, if less, 67% of the voting shares
represented at a meeting at which the holders of 50% or more of the outstanding
voting shares of the Fund are present or represented by proxy. Thus abstentions
and broker non-votes will have the same effect as votes cast against the
proposal.
Shares represented by properly executed proxies received by AAL Trust
will be voted at the Special Meeting and any adjournment as directed in the
proxies. However, if no instructions are specified, shares will be voted "FOR"
approval of the Sub-Advisory Agreement. A shareholder may revoke his or her
proxy at any time prior to the voting by filing a written notice of revocation
with the Secretary of AAL Trust prior to the Special Meeting or by delivering a
duly executed proxy bearing a later date.
Shareholders of record of the Fund at the close of business on April
28, 2000, will be entitled to one vote on each matter presented for each share
so held. At that date, the Fund had 19,872,713 shares outstanding.
The Board of Trustees of AAL Trust knows of no business to be
considered at the Special Meeting other than approval of the Sub-Advisory
Agreement. If any other matters are properly presented, it is the intention of
the persons named on the enclosed proxy to vote proxies in accordance with their
best judgment.
ADJOURNMENT
In the event a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve the Sub-Advisory Agreement are
not received, the persons named as proxies may propose one or more adjournments
of such Special Meeting to permit further solicitation of proxies, provided they
determine such an adjournment and additional solicitation is reasonable and in
the best interests of shareholders based on a consideration of all relevant
factors, including the percentage of votes then cast, the percentage of negative
votes then cast, the nature of the proposed solicitation activities and the
nature of the reasons for such further solicitation. Adjournment would require
the affirmative vote of a majority of the shares present in person or by proxy
at the session of the Special Meeting to be adjourned. The persons named as
proxy would vote in favor of such adjournment those proxies which they are
entitled to vote "FOR" approval of the Sub-Advisory Agreement. They would vote
against any such adjournment those proxies required to be voted "AGAINST"
approval of the Sub-Advisory Agreement.
COST OF SOLICITATION
In addition to this solicitation of proxies by use of the mails,
proxies may be solicited by officers of AAL Trust and by officers and employees
of AAL CMC personally or by telephone or telegraph, without special
compensation. Proxies may also be solicited by a professional proxy solicitation
service should management of AAL Trust determine that solicitation by such means
is advisable. The cost of preparing and mailing proxy materials for the Special
Meeting, and of soliciting proxies, will be borne by the Fund.
UPON REQUEST AND AT NO COST TO A REQUESTING SHAREHOLDER, AAL TRUST WILL
MAIL, BY FIRST CLASS MAIL, A COPY OF THE FUND'S ANNUAL AND SEMI-ANNUAL REPORTS
FOR THE FISCAL YEAR ENDED APRIL 30, 1999, AND FOR THE SIX MONTHS ENDED OCTOBER
31, 1999, RESPECTIVELY. REQUESTS SHOULD BE DIRECTED TO THE ATTENTION OF
FREDERICK D. KELSVEN, SECRETARY, AT THE AAL MUTUAL FUNDS, 222 WEST COLLEGE
AVENUE, APPLETON, WISCONSIN 54949-0007, TELEPHONE: 1-800-553-6319.
PROPOSAL - APPROVAL OF NEW SUB-ADVISORY AGREEMENT FOR THE AAL HIGH YIELD BOND
FUND
BACKGROUND
The Board of Trustees has determined that it is in the best interest of
the Shareholders of the Fund to engage PIMCO as the sub-adviser to the Fund.
Accordingly, the Board recommends that the Shareholders of the Fund approve a
Sub-Advisory Agreement (the "Sub-Advisory Agreement") among AAL Trust (on behalf
of the Fund), AAL CMC and PIMCO. The change is being recommended for the reasons
discussed below.
AAL CMC presently manages the Fund's investments. Under its management,
the investment performance of the Fund has been below a level deemed acceptable
by the Trustees and AAL CMC. The Board of Trustees and management determined
that they should investigate alternatives in an effort to improve the Fund's
performance.
The Board of Directors determined that management should search for an
outside advisory firm to assist with the management of the Fund's assets.
Management was directed to conduct a search for an outside advisory firm with a
proven track record in managing high yield bond funds.
The search focused on finding and negotiating acceptable terms with an
outside sub-adviser to manage the Fund's investments, while retaining the
services of AAL CMC to provide administrative and other services it presently
provides to the Fund under its investment advisory agreement with the Fund. AAL
CMC reviewed and analyzed a worldwide data base of investment managers published
by Lipper Inc. to identify possible candidates. Through this process, management
narrowed the field to a list of investment management firms that had personnel
with experience in the high yield bond market and investment styles that
potentially qualified them as candidates to manage the Fund's investments.
Management conducted telephone interviews with those firms, to learn more about
their experience, investment management styles and philosophy, performance and
personnel and their level of interest in managing the Fund's assets. Based on
the telephone interviews, management narrowed the field of candidates to three
firms, all of which were invited to participate in face-to-face interviews and
to give personal presentations. After follow-up discussions and further
information exchanges, management identified PIMCO as the leading candidate. AAL
CMC engaged in a further due diligence investigation of PIMCO, which confirmed
management's assessment. The parties then negotiated fee proposals and other
terms of possible engagement of PIMCO as a sub-adviser to the Fund, as reflected
in the attached Sub-Advisory Agreement.
AAL CMC kept the Board of Trustees apprised of the steps it was taking
throughout this process, and ultimately AAL CMC presented the Board with its
analyses, findings and recommendations at a special meeting of the Board called
and held for that purpose on May 1, 2000. After a thorough consideration of the
process undertaken by management and AAL CMC and the information, analyses and
recommendations presented, the Board of Trustees concluded that the retention of
PIMCO to serve as sub-adviser to the Fund under the terms of the proposed
Sub-Advisory Agreement would be in the best interests of the Fund and its
shareholders. For a detailed description of the specific factors considered by
the Board of Trustees, see the discussion under the caption "Trustees'
Considerations and Recommendation" below.
PIMCO, which was established in 1971, is a money management
organization primarily specializing in fixed income management. PIMCO is
registered as an investment adviser with the Securities and Exchange Commission.
As of December 31, 1999, PIMCO had under management in excess of $185.9 billion
in assets. PIMCO currently serves as adviser or sub-adviser to two other high
yield bond funds with assets of approximately $3.3 billion as of March 31, 2000.
Those two funds are described in more detail in Appendix C.
DESCRIPTION OF ADVISORY AGREEMENT
AAL CMC has served as investment adviser to the Fund since its
commencement of operations. AAL CMC provides these services pursuant to the
terms of an Investment Advisory Agreement with AAL Trust, dated November 28,
1990, as amended. The Investment Advisory Agreement became effective with
respect to the Fund when it commenced operations on January 8, 1997.
Continuation of the Investment Advisory Agreement from year-to-year is subject
to annual approval by the Board of Trustees, including at least a majority of
the independent Trustees. The Investment Advisory Agreement was last re-approved
by the Board of Trustees at a meeting held on August 25, 1999. The Investment
Advisory Agreement provides that AAL CMC is entitled to compensation for
services provided thereunder at the rate of 0.55% of the Fund's average daily
net assets. The fee is computed daily and paid monthly. The Fund paid AAL CMC a
total of $816,005 for services provided under the Investment Advisory Agreement
for the Fund's fiscal year ended April 30, 2000. AAL CMC waived fees and/or
reimbursed expenses to the Fund in the total amount of $263,355 for that year.
THE RETENTION OF PIMCO AS SUB-ADVISER WILL HAVE NO EFFECT ON THE TERMS
OF THE INVESTMENT ADVISORY AGREEMENT OR THE ADVISORY FEE PAID BY THE FUND.
PIMCO's sub-advisory fee will be paid by AAL CMC out of its advisory fee.
DESCRIPTION OF SUB-ADVISORY AGREEMENT
Under the Sub-Advisory Agreement, PIMCO, subject to the direction and
control of AAL CMC and the Board of Trustees, would determine the securities
that would be purchased or sold by the Fund, would arrange for their purchase
and sale and would render other assistance to AAL CMC in formulating and
implementing the investment program of the Fund. PIMCO would furnish or pay for
all facilities, equipment and supplies required for it to carry out its duties
under the Sub-Advisory Agreement, including, but not limited to, office space,
office equipment, furnishings and personnel.
Under the Sub-Advisory Agreement, PIMCO would receive a fee, calculated
daily and paid monthly, out of the fee paid to the Adviser under the Advisory
Agreement, at an annual rate of 0.25% of average daily net assets of the Fund.
Because AAL CMC would pay this fee out of the advisory fee it receives from the
Fund, the retention of PIMCO and PIMCO's receipt of this sub-advisory fee would
not increase the overall fee paid by the Fund.
Services to be Rendered by PIMCO to the Fund. Under the Sub-Advisory
Agreement, PIMCO would:
o Buy, sell, exchange, convert, lend and otherwise trade in any
stocks, bonds, currencies, and any other securities or assets;
o Place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with or
through such brokers, dealers, underwriters or issuers as PIMCO
may select;
o Enter into and execute agreements on behalf of the Fund, relating
to the acquisition or disposition of investment assets and the
execution of portfolio transactions; and
o Provide AAL CMC and the Trustees with such reports as may
reasonably be requested in connection with the discharge of the
foregoing responsibilities and the discharge of AAL CMC's
responsibilities under the Investment Advisory Agreement and
under its Distribution Agreement with the Fund.
Beyond the performance of these contractual services, PIMCO will
provide marketing and shareholder servicing assistance. In general, this
assistance will take the form of meetings and conference calls between one or
more of PIMCO's investment staff with wholesalers, brokers/dealers, and/or
shareholders.
If approved, we presently anticipate that the Sub-Advisory Agreement
would become effective on or about July 1, 2000. Unless earlier terminated as
described below, the Sub-Advisory Agreement would remain in effect from year to
year only so long as such continuance is specifically approved at least annually
by the affirmative vote of: (i) a majority of the Trustees who are not parties
to the Sub-Advisory Agreement or "interested persons" (as defined in the 1940
Act) of any such party cast in person at a meeting called for the purpose of
voting on the approval; and (ii) either a majority of the entire Board of
Trustees or of holders of a "majority" (as defined in the 1940 Act) of the
outstanding voting securities of the Fund.
The Sub-Advisory Agreement may be terminated by PIMCO at any time
without penalty upon giving AAL CMC and AAL Trust sixty (60) days written
notice, and by AAL Trust or AAL CMC at any time without penalty upon giving
PIMCO sixty (60) days written notice, provided that any termination by AAL Trust
must be directed or approved by the vote of a majority of all of its Trustees in
office at the time or by the vote of the holders of a "majority" (as defined in
the 1940 Act) of the voting securities of the Fund.
If the Sub-Advisory Agreement is not approved by the shareholders of
the Fund, AAL CMC will continue to manage the Fund's assets under the terms of
the Investment Advisory Agreement, while other options can be pursued. The
Trustees would then consider what course of action to pursue with respect to the
Fund, which could involve renewing the search for additional personnel to assist
AAL CMC with management of the Fund or seeking a different outside sub-adviser.
INFORMATION ABOUT PIMCO
GENERAL. PIMCO is a Delaware general partnership and is a wholly-owned
subsidiary of PIMCO Advisors, L.P. ("PIMCO Advisors"). PIMCO is located at 800
Newport Center Drive, Newport Beach, California 92660. PIMCO is a money
management firm and is registered as an investment adviser with the Securities
and Exchange Commission. The Principal Executive Officer and Managing Directors
of PIMCO are listed in Appendix B.
Allianz of America, Inc. ("Allianz of America") owns approximately 70%
of the outstanding partnership interests in PIMCO Advisors. The remainder of the
partnership interests in PIMCO Advisors are owned by Pacific Life Insurance
Company ("Pacific Life"). Allianz of America is a subsidiary of Allianz AG.
Allianz AG is a leading provider of financial services, particularly in Europe,
and is represented in 68 countries world-wide through subsidiaries, branch and
representative offices, and other affiliated entities.
Significant institutional shareholders of Allianz AG currently include,
among others, Dresdner Bank AG, Deutsche Bank AG, Munich Reinsurance and Hypo
Vereinsbank. Credit Lyonnais, Dresdner Bank AG and Deutsche Bank AG, as well as
certain broker-dealers that might be deemed to be affiliated with these
entities, such as DB Alex Brown LLC, Deutsche Bank Securities, Inc. and Dresdner
Kleinwort Benson North America LLC (collectively, the "Affiliated Brokers"), may
be considered to be affiliated persons of PIMCO. Absent an SEC exemption or
other relief, the Fund generally will be precluded from effecting principal
transactions with the Affiliated Brokers, and its ability to purchase securities
being underwritten by an Affiliated Broker or to utilize the Affiliated Brokers
for agency transactions is subject to restrictions. PIMCO does not believe that
the applicable restrictions on transactions with the Affiliated Brokers
described above will materially adversely affect its ability to provide services
to the Fund, the Fund's ability to take advantage of market opportunities, or
the Fund's overall performance. Other series of the AAL Trust for which PIMCO
(or an affiliate) does not serve as investment adviser or sub-adviser are not,
in general, subject to those same restrictions.
PORTFOLIO MANAGER. Mr. Benjamin Trosky, CFA, leads PIMCO's High Yield Team.
Mr. Trosky is a Managing Director and a senior member of PIMCO's portfolio
management and investment strategy groups. He also oversees the firm's credit
research team, and is the portfolio manager for the PIMCO High Yield Fund. Mr.
Trosky joined the firm 10 years ago, having been previously associated with
Merrill Lynch Asset Management as a co-manager of high yield mutual funds. He
has 20 years of investment experience in equity and credit research, and holds a
bachelor's degree in Business Administration from Drexel University.
TRUSTEES' CONSIDERATIONS AND RECOMMENDATION
In considering this matter, among other factors considered by the Board
of Trustees, the following factors were important in its decision to recommend
PIMCO as sub-adviser for the Fund and the terms of this Sub-Advisory Agreement:
o The breadth of PIMCO's experience in the high yield markets and
management of bond portfolios, and the success it has achieved
managing investments in those markets;
o PIMCO's philosophy with respect to risk management, including its
practice of focusing on relatively higher quality tiers of the
high yield market, its issuer diversification and industry
concentration limitations and its management of duration;
o The high level of consistency of PIMCO's investment philosophy
and style with the investment objective and investment program of
the Fund;
o The quality and integrity of the personnel who would be directly
responsible for attending to the Fund;
o The fee schedule under which PIMCO is willing to provide
services;
o The fact that the retention of PIMCO will not increase the
overall fee that the Fund pays for investment management
services; and
o The financial strength of PIMCO.
Based upon these considerations, the Board determined that it would be
in the best interests of the Fund's shareholders to have PIMCO serve as the
Fund's sub-adviser. The Board of Trustees has further determined that the terms
of the Sub-Advisory Agreement are fair to, and in the best interests of, the
Fund and its shareholders.
ACCORDINGLY, THE BOARD OF TRUSTEES, NONE OF WHOM IS AN "INTERESTED PERSON" OF
PIMCO OR ANY OF ITS AFFILIATES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE
FUND VOTE "FOR" APPROVAL OF THE SUB-ADVISORY AGREEMENT.
OTHER BUSINESS
Management is not aware of any other matters that will come before the
Special Meeting. However, if any other business should come before the Special
Meeting, your proxy, if signed and returned, will give discretionary authority
to the persons designated in it to vote according to their best judgment on such
matters.
ADDITIONAL INFORMATION
ADMINISTRATOR AND DISTRIBUTOR
In addition to serving as investment adviser to the Funds, AAL CMC also
provides necessary administrative services to the Fund under the terms of the
Investment Advisory Agreement, and serves as the distributor of the shares of
the Fund pursuant to a Distribution Agreement. For the fiscal year ended April
30, 2000, the Fund paid AAL CMC a total of $47,901 in AAL CMC's capacity as
distributor (including 12b-1 fees). AAL CMC's principal executive offices are
located at 222 West College Avenue, Appleton, Wisconsin 54919.
AAL CMC was organized in 1986 as a Delaware corporation. It is a
wholly-owned subsidiary of AAL Holdings Inc., which in turn is a wholly-owned
subsidiary of Aid Association for Lutherans ("AAL"). AAL is a non-profit,
non-stock membership organization licensed to do business as a fraternal benefit
society in all states. AAL has more than 1.7 million members and is the world's
largest fraternal benefit society in terms of assets and life insurance in
force. AAL ranks in the top two percent of all life insurers in the United
States in terms of ordinary life insurance (nearly $88 billion in force). AAL
offers life, health and disability income insurance and fixed and variable
annuities to its members. All members are part of one of approximately 10,000
local AAL branches throughout the United States. AAL's principal executive
offices are located at 4321 North Ballard Road, Appleton, Wisconsin 54919.
For the fiscal year ended April 30, 2000, the Funds paid AAL a fee of
$40,000 for accounting services under an Administrative Services Agreement.
PORTFOLIO TRANSACTIONS
AAL CMC directs, and, if approved as the Fund's sub-adviser, PIMCO will
direct the placement of orders for the purchase and sale of the Fund's portfolio
securities. The costs of securities transactions for the Fund consist primarily
of brokerage commissions or dealer or underwriter spreads. Bonds and money
market instruments are generally traded on a net basis and do not normally
involve either brokerage commissions or transfer taxes.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the sellers who make
a market in the securities are dealt with directly unless better prices and
execution are available elsewhere. Such dealers usually act as principals for
their own account. In placing portfolio transactions, AAL CMC seeks, and PIMCO
will seek, the best combination of price and execution.
PRINCIPAL SHAREHOLDERS AND CERTAIN BENEFICIAL OWNERS
As of April 28, 2000, the officers and Trustees of AAL Trust owned less
than 1% of the shares of the Fund. As of that date, no person was known by AAL
Trust to own of record or beneficially five percent (5%) or more of the
outstanding shares of the Fund:
The table presented in Appendix D attached to this Proxy Statement
shows shares of the Fund as to which each Trustee and the group consisting of
all Trustees and executive officers of AAL Trust had or shared power over voting
or disposition as of April 28, 2000.
SHAREHOLDER MEETINGS
AAL Trust is organized as a Massachusetts business trust, and as such
is subject to Massachusetts law. Pursuant to Massachusetts law and the
Declaration of Trust of AAL Trust, AAL Trust is not required to hold a
shareholder meeting unless the election of Trustees, approval of the investment
advisory agreement (or any sub-advisory agreement) or ratification of the
selection of independent public accountants is not required to be acted upon by
shareholders of AAL Trust under the 1940 Act. Meetings of the shareholders of
AAL Trust will be held when and as determined necessary by the Board of Trustees
of AAL Trust and in accordance with the 1940 Act. Other than the Special Meeting
to which this Proxy Statement relates, AAL Trust currently does not anticipate
that it will hold a meeting of shareholders of the Fund or of any of its other
mutual funds in 2000.
Shareholders who wish to present a proposal for action at the next
meeting or suggestions as to nominees for the Board of Trustees should submit
the proposal or suggestions to the following address: The AAL Mutual Funds, 222
West College Avenue, Appleton, Wisconsin 54919, Attention: Frederick D. Kelsven,
Secretary. Proposals must be received a reasonable time prior to the date of the
shareholder meeting to be considered at the meeting. Timely submission of a
proposal does not, however, necessarily mean that the proposal will be
considered. Persons named as proxies for any subsequent shareholders meeting
will vote in their discretion with respect to proposals submitted on an untimely
basis.
<PAGE>
THE AAL MUTUAL FUNDS
The AAL High Yield Bond Fund
Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Robert G. Same and Frederick D. Kelsven, or
either of them, proxy, with full power of substitution, to represent and vote,
as designated on the reverse side, all shares the undersigned is entitled to
vote at the Special Meeting of Shareholders of The AAL High Yield Bond Fund to
be held at 222 West College Avenue, Appleton, Wisconsin 54919 beginning at 10:00
am local time, on June 21, 2000, or at any adjournment thereof, with respect to
the matters set forth and described in the accompanying Notice of Special
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
DATED:______________________________________, 2000
- ---------------------------------------------------
(If stock is owned by more than one person, all owners should sign. Persons
signing as executors, administrators, trustees or in similar capacities should
so indicate.)
- ---------------------------------------------------
(Please sign exactly as name appears at left)
<PAGE>
* * * * *
Please place an "X" on the desired blank for each Item. Shares represented by
this proxy will be voted as directed by the shareholder. IF NO DIRECTION IS
SUPPLIED, THE PROXY WILL BE VOTED FOR THE PROPOSAL.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------- ------------- ------------------ ----------------
1. Proposal to approve the Sub-Advisory Agreement among The AAL Mutual __ FOR __ AGAINST __ ABSTAIN
Funds (on behalf of The AAL High Yield Bond Fund), AAL Capital Management
Corporation and Pacific Investment Management Company, a copy of which is
attached as Appendix A to the accompanying Proxy Statement.
---------------------------------------------------------------------------------- ------------- ------------------ ---------------
2. In their discretion on such other matters as may properly come before the meeting or any adjournment thereof.
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF THE CARD.
</TABLE>
<PAGE>
APPENDIX A
FORM OF SUB-ADVISORY AGREEMENT
THE AAL MUTUAL FUNDS
SUB-ADVISORY AGREEMENT FOR THE
AAL HIGH YIELD BOND FUND
WITH
PACIFIC INVESTMENT MANAGEMENT COMPANY
AGREEMENT made this ____ day of ______________, 2000, by and among THE
AAL MUTUAL FUNDS (the "Fund"), a Massachusetts business trust, AAL CAPITAL
MANAGEMENT CORPORATION (the "Adviser"), a Delaware corporation and PACIFIC
INVESTMENT MANAGEMENT COMPANY (the "Sub-Adviser"), a Delaware general
partnership.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. In General.
The Sub-Adviser agrees, as more fully set forth herein, to act as
Sub-Adviser to the Fund with respect to the investment and reinvestment of the
assets of the Fund's series of shares described as The AAL High Yield Bond Fund.
It is understood that the Fund has designated, and there presently exist,
several other series of the Fund's shares, and that the Fund may create one or
more additional series from time to time in the future. This Agreement may be
amended by the mutual written agreement of the parties to include any such
additional series under the terms of this Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to Investment
of Assets of the High Yield Bond Fund.
(a) Subject to the succeeding provisions of this section and subject
to the oversight and review of the Adviser and the direction and control of
the Board of Trustees ("Trustees") of the Fund, the Sub-Adviser, as agent
and attorney-in-fact with respect to the Fund, is authorized, in its
discretion and with prior consultation with the Fund, on behalf of each
series covered from time to time by this Agreement, to:
(i) Buy, sell, exchange, convert, lend and otherwise trade in
any stocks, bonds, currencies, and any other securities or
assets;
(ii) Place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with
or through such brokers, dealers, underwriters or issuers as
the Sub-Adviser may select; including brokers and dealers
that may be affiliates of the Sub-Adviser;
(iii)Enter into and execute agreements on behalf of the Fund,
relating to the acquisition or disposition of investment
assets and the execution of portfolio transactions. Nothing
contained herein, however, shall be deemed to authorize the
Sub-Adviser to take or receive physical possession of any
cash or securities held for the Fund, it being intended that
sole responsibility for safe-keeping thereof and the
consummation of all such purchases, sales, deliveries, and
investments made pursuant to the Sub-Adviser's direction
shall rest upon the Fund's Custodian; and
(iv) Provide the Adviser and the Trustees with such reports as
may reasonably be requested in connection with the discharge
of the foregoing responsibilities and the discharge of the
Adviser's responsibilities under the Investment Advisory
Agreement with the Fund and those of AAL Capital Management
Corporation under the Distribution Agreement with the Fund.
Written procedures with respect to (i), (ii) and (iii) above
may be set forth as agreed to among the Fund, the Adviser and Sub-Adviser.
(b) Any investment purchases or sales made by the Sub-Adviser under
this section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment Company Act
of 1940 (the "Act") and of any rules or regulations in force thereunder;
(2) any other applicable provisions of law; (3) the provisions of the
Articles of Incorporation and By-Laws of the Fund as amended from time to
time; (4) any policies and determinations of the Board of Trustees of the
Fund; and (5) the fundamental policies of the Fund, as reflected in its
Registration Statement under the Act, or as amended by the shareholders of
the Fund; provided that copies of the items referred to in clauses (3), (4)
and (5) shall have been furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties ("disabling conduct") hereunder on the part of
the Sub-Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated
with the Sub-Adviser) the Sub-Adviser shall not be subject to liability to
the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with rendering services hereunder, including
without limitation, any error of judgment or mistake of law or for any loss
suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36 (b) of the
Act concerning loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services. Except for such disabling
conduct, the Fund shall indemnify the Sub-Adviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any
other person or entity affiliated with the Sub-Adviser) against any
liability arising from the Sub-Adviser's conduct under this Agreement to
the extent permitted by the Articles of Incorporation and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or any
"affiliated person" (as defined in the Act) of the Sub-Adviser from acting
as investment adviser or manager for any other person, firm or corporation
and shall not in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any securities for its or
their own accounts or for the accounts of others for whom it or they may be
acting, provided, however, that the Sub-Adviser expressly represents that
it will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Fund under this Agreement.
It is agreed that the Sub-Adviser shall have no responsibility or liability
for the accuracy or completeness of the Fund's Registration Statement under
the Act and the Securities Act of 1933 except for information supplied by
the Sub-Adviser for inclusion therein. The Sub-Adviser shall be deemed to
be an independent contractor and, unless otherwise expressly provided or
authorized, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
(e) In connection with its duties to arrange for the purchase and sale
of the securities and other assets of each series covered from time to time
by this Agreement, the Sub-Adviser shall follow the principles set forth in
any investment advisory agreement in effect from time to time between the
Fund and the Adviser, provided that a copy of any such agreement shall have
been provided to the Sub-Adviser. The Sub-Adviser will promptly communicate
to the Adviser and to the officers and the Trustees of the Fund such
information relating to portfolio transactions as they may reasonably
request.
(f) The Sub-Adviser may place orders both as to sales and purchases of
assets directly through any broker or dealer it chooses. Brokers or dealers
may be selected who provide brokerage and/or research services to the Fund
and/or other accounts over which the Sub-Adviser or its affiliates exercise
investment discretion. Brokers or dealers who execute portfolio
transactions on behalf of the Fund may receive commissions which are in
excess of the amount of commissions which other brokers or dealers would
have charged for effecting such transactions. In order to cause the Fund to
pay such higher commissions, the Sub-Adviser must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and/or research services provided by such executing brokers or
dealers viewed in terms of a particular transaction or the Sub-Adviser's
overall responsibilities to the Fund or its other discretionary client
accounts.
(g) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients,
the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased in order
to obtain the best execution and lower brokerage commissions, if any. In
such event, allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the Sub-Adviser
in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Fund and to such clients.
The Sub-Adviser may purchase or sell for the Fund, pursuant to
the Fund's Rule 10f-3 Procedures, any security (including securities of the same
class as those under-written or other securities of the same or related issuer)
for which any affiliate of the Sub-Adviser acts as (1) an underwriter (either as
lead underwriter or syndicate member), both during the pendency of any
underwriting or selling syndicate and thereafter, or (2) a market maker,
provided that such security is purchased from a non-affiliated party.
(h) The Sub-Adviser shall be responsible for Schedule 13F reporting
for the securities held by the High Yield Bond Fund.
3. Allocation of Expenses.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities, and other investments (including
brokerage commissions and other transaction charges, if any) purchased for the
Fund. The Sub-Adviser agrees that it will furnish the Fund, at the Sub-Adviser's
expense, with all office space, facilities, equipment, and clerical personnel
necessary for carrying out its duties under this Agreement.
4. Certain Records.
Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 under the Act that are prepared or
maintained by the Sub-Adviser on behalf of the Fund are the property of the Fund
and will be surrendered promptly to the Fund or Adviser on request.
5. Reference to the Sub-Adviser.
Neither the Fund, the Adviser or any affiliate or agent thereof shall
make reference to or use the name of the Sub-Adviser or any of its affiliates in
any advertising or promotional materials without the prior approval of the
Sub-Adviser, which approval shall not be unreasonably withheld.
6. Compensation of the Sub-Adviser.
The Adviser agrees to pay the Sub-Adviser and the Sub-Adviser agrees to
accept as full compensation for all services rendered by the Sub-Adviser as
such, a management fee, payable monthly in arrears and computed on the average
daily net asset value of The AAL High Yield Bond Fund at rates shown on Exhibit
A attached hereto.
7. Duration and Termination.
(a) This Agreement shall go into effect for The AAL High Yield Bond
Fund on ______________, 2000, or as soon thereafter as it is approved by
shareholders of that Fund, and shall, unless terminated as hereinafter
provided, continue in effect thereafter from year to year, but only so long
as such continuance is specifically approved at least annually by a
majority of the Fund's Board of Trustees, or by the vote of the holders of
a "majority" (as defined in the Act) of the outstanding voting securities
of the Fund, with respect to the High Yield Bond Fund, and, in either case,
a majority of the Trustees who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated by the Sub-Adviser at any time
without penalty upon giving the Fund and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund and Adviser) and may
be terminated by the Fund or the Adviser at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which notice may be
waived by the Sub-Adviser), provided that such termination by the Fund
shall be directed or approved by the vote of a majority of all of the
Trustees in office at the time or by the vote of the holders of a majority
(as defined in the Act) of the voting securities of the Fund, with respect
to The AAL High Yield Bond Fund, or with respect to any other series of the
Fund covered by this Agreement, by the vote of a majority of the
outstanding shares of such series. This Agreement shall automatically
terminate in the event of its "assignment" (as defined in the Act). This
Agreement will also terminate in the event that the Investment Advisory
Agreement is terminated.
8. Agreement Binding Only On Fund Property.
The Sub-Adviser understands that the obligations of this Agreement are
not binding upon any shareholder of any series of the Fund personally, but bind
only the property of the Fund allocated to the particular series; the
Sub-Adviser represents that it has notice of the provisions of the Fund's
Declaration of Trust disclaiming shareholder liability for acts or obligations
of the Fund.
9. Action By An Individual Series.
The provisions of this Agreement and any amendments hereto with respect
to The AAL High Yield Bond Fund or any other series of the Fund covered hereby
may be approved by the shareholders of such series and become effective with
respect to the assets of such series without the necessity of approval thereof
by shareholders of any other series. The Adviser represents that the holders of
a majority (as defined in the "Act") of The AAL High Yield Bond Fund will vote
on approval of the entry into this Agreement on behalf of said series.
10. Notices.
The Sub-Adviser agrees to promptly notify the Adviser of the occurrence
of any of the following events:
(a) Any change in any of the Sub-Adviser's portfolio managers;
(b) The Sub-Adviser fails to be registered as an investment adviser
under the Advisers Act or under the laws of any jurisdiction in which the
Sub-Adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
(c) The Sub-Adviser is the subject of any action, suit, proceeding,
inquiry or investigation at law or in equity, before any court, public
board or body, involving the affairs of the Fund or another series of the
Fund covered by this Agreement, or
(d) Any change in ownership or control, or partnership structure of
the Sub-Adviser.
11. Manner of Notice.
Any notice given hereunder shall be in writing and may be served by
being sent by telex, facsimile or other electronic transmission, or sent by
registered mail or by courier to the address set forth below for the party for
which it is intended. A notice served by mail shall be deemed served seven days
after mailing and in the case of telex, facsimile or other electronic
transmission, twelve hours after confirmed receipt thereof. Addresses for notice
may be changed by written notice to the other party.
The Adviser: Robert G. Same, President
AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007
Fax: (920)730-3783
The Fund: Robert G. Same, President
The AAL Mutual Funds
222 West College Avenue
Appleton, WI 54919-0001
Fax: (920) 734-5721
The Sub-Adviser: ___________________________
Pacific Investment Management Company
800 Newport Center Drive
Suite 300
Newport Beach, CA 92660
Fax: (949) 720-1376
No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by all of the
parties.
The Adviser and the Fund acknowledges receipt of the Sub-Adviser's Part
II, Form ADV at least 48 hours in advance of signing this Agreement.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule, or
otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be governed by the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunto affixed, all as of the day and year first above written.
THE AAL MUTUAL FUNDS
Robert G. Same, President
AAL CAPITAL MANAGEMENT CORPORATION
Robert G. Same, President
PACIFIC INVESTMENT MANAGEMENT COMPANY
[Insert Name and Title of Signing Officer]
<PAGE>
EXHIBIT A TO THE AAL MUTUAL FUNDS SUB-ADVISORY AGREEMENT
(Dated _________________)
1. The AAL High Yield Bond Fund
The management fee for The AAL High Yield Bond Fund, payable to the
Sub-Adviser by the Adviser, calculated in accordance with paragraph 6 of The AAL
Mutual Funds Sub-Advisory Agreement, shall be at the annual rate of: 25 basis
points.
<PAGE>
APPENDIX B
The address of each managing director and the principal executive
officer of PIMCO is 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660.
MANAGING DIRECTORS
<TABLE>
<CAPTION>
<S> <C>
NAME AND ADDRESS PRINCIPAL OCCUPATION
William S. Thompson, Jr. Managing Director, Chief Executive Officer and Executive Committee
April 1993 to Present Member, PIMCO; Managing Director, Chief Executive Officer and
Director, PIMCO Management, Inc.; Member of Management Board and
Executive Committee, PIMCO Advisors L.P.; President, Chief Executive
Officer and Member, PIMCO Partners LLC.
William R. Benz, II Managing Director, PIMCO; Managing Director and Director, PIMCO
June 1986 to Present Management, Inc.; Member of PIMCO Partners LLC.
Robert Wesley Burns Managing Director and Executive Committee Member, PIMCO; Managing
February 1987 to Present Director and Director, PIMCO Management, Inc.; Member of PIMCO
Partners LLC.
Chris P. Dialynas Managing Director, PIMCO; Managing Director and Director, PIMCO
July 1983 to Present Management, Inc.; Member of PIMCO Partners LLC.
Mohamed A. El-Erian Managing Director, PIMCO; Managing Director and Director, PIMCO
May 1999 to Present Management, Inc.
William H. Gross Managing Director, PIMCO; Managing Director and Director, PIMCO
June 1971 to Present Management, Inc.; Director and Vice President, StocksPLUS Management,
Inc.; Member of Management Board, PIMCO Advisors L.P.; Member of
PIMCO Partners LLC.
John L. Hague Managing Director and Executive Committee Member, PIMCO; Managing
September 1987 to Present Director and Director, PIMCO Management, Inc.; Member of PIMCO
Partners LLC.
Pasi M. Hamalainen Managing Director, PIMCO; Managing Director and Director, PIMCO
January 1994 to Present Management, Inc.
Brent R. Harris Managing Director and Executive Committee Member, PIMCO; Managing
June 1985 to Present Director and Director, PIMCO Management, Inc.; Director and Vice
President, StocksPLUS Management, Inc.; Member of Management Board
and Executive Committee, PIMCO Advisors L.P.; Member of PIMCO
Partners LLC.
Brent L. Holden Managing Director, PIMCO; Managing Director and Director, PIMCO
December 1989 to Present Management, Inc.
Margaret E. Isberg Managing Director, PIMCO; Managing Director and Director, PIMCO
August 1983 to Present Management, Inc.; Member of PIMCO Partners LLC.
John S. Loftus Managing Director, PIMCO; Managing Director and Director, PIMCO
August 1986 to Present Management, Inc.
Dean S. Meiling Managing Director, PIMCO; Managing Director and Director, PIMCO
December 1976 to Present Management, Inc.; Member of PIMCO Partners LLC.
James F. Muzzy Managing Director and Executive Committee Member, PIMCO; Managing
September 1971 to Present Director and Director, PIMCO Management, Inc.; Director and Vice
President, StocksPLUS Management, Inc.; Member of PIMCO Partners LLC.
William F. Podlich, III Managing Director, PIMCO; Managing Director and Director, PIMCO
June 1966 to Present Management, Inc.; Member of Management Board, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
William C. Powers Managing Director, PIMCO; Managing Director and Director, PIMCO
January 1991 to Present Management, Inc.; Member of PIMCO Partners LLC.
Ernest L. Schmider Managing Director and Secretary, PIMCO; Managing Director, Director,
March 1994 to Present and Secretary, PIMCO Management, Inc.; Director and Assistant
Secretary, StocksPLUS Management, Inc.; Senior Vice President, PIMCO
Advisors, L.P.; Secretary PIMCO Partners, LLC.
Lee R. Thomas Managing Director, PIMCO; Managing Director and Director, PIMCO
April 1995 to Present Management, Inc.; Member of PIMCO Partners LLC.
Benjamin L. Trosky Managing Director, PIMCO; Managing Director and Director, PIMCO
October 1990 to Present Management, Inc.; Member of Management Board, PIMCO Advisors L.P.;
Member of PIMCO Partners LLC.
</TABLE>
<PAGE>
APPENDIX C
OTHER HIGH YIELD BOND FUNDS MANAGED BY
PACIFIC INVESTMENT MANAGEMENT COMPANY
MANAGEMENT FEE SCHEDULES FOR SUB-ADVISORY RELATIONSHIPS:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME OF FUND ADVISORY RATE FEE APPROXIMATE ASSETS
PIMCO FUNDS:
PACIFIC INVESTMENT MANAGEMENT SERIES:
High Yield Bond Fund Annual rate of 0.25% of average daily net $3,183,020,656
assets
PIMCO VARIABLE INSURANCE TRUST:
High Yield Bond Portfolio Annual rate of 0.25% of average daily net $141,365,884
assets
</TABLE>
<PAGE>
APPENDIX D
The table below shows shares of The AAL High Yield Bond Fund as to
which each Trustee and the group consisting of all Trustees and executive
officers of AAL Trust had or shared power over voting or disposition as of April
28, 2000.
<TABLE>
<CAPTION>
<S> <C> <C>
PERCENT OF OUTSTANDING
NAME AND ADDRESS NUMBER OF SHARES OF THE FUND(1) SHARES OF FUND
- ---------------- ------------------------------- --------------
F. Gregory Campbell 0 0.00%
Carthage College
2001 Alford Park Drive
Kenosha, WI 53140
Woodrow E. Eno(2) 0 0.00%
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
Richard L. Gady 243.66
Conagra Inc. Footnote (3)
One Conagra Drive
Omaha, NE 68102-5001
John O. Gilbert(2) 0 0.00%
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919
John H. Pender 0 0.00%
1056 S. Manzanita Avenue
Palms Springs, CA 92264
Edward W. Smeds 0 0.00%
10 Regent Woods Road
Northfield, IL 60093
Lawrence M. Woods 0 0.00%
524 Sunset Drive
Worland, WY 82401
All Trustees and Executive Officers as a 243.66 Footnote (3)
Group (a total of 14 persons)
</TABLE>
(1) These figures are based on information furnished by the respective
individuals and by Firstar Trust Company, AAL Trust's Transfer Agent,
as of April 28, 2000. Certain of the individuals listed share voting
and investment power with such individual's spouse with respect to some
or all of the shares listed.
(2) Trustees who are "interested persons" of the Funds, as defined in the
Investment Company Act of 1940. John Gilbert serves as; President, CEO
and Chairman of the Board of AAL, and Director and President of AAL
Holdings Inc. Woodrow Eno serves as Senior Vice-President, General
Counsel and Secretary of AAL, Director and Chairman of the Board of AAL
CMC, and Director and Secretary of AAL Holdings Inc.
(3) Less than 1 percent
