<PAGE>
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, 2000
The AAL
High Yield Bond Fund
The AAL
Municipal Bond Fund
The AAL
Bond Fund
The AAL
Money Market Fund
[LOGO]
The AAL Mutual Funds
<PAGE>
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<PAGE>
Table of Contents
<TABLE>
<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 ................................ 29
The AAL International Fund ................................ 33
The AAL Capital Growth Fund ............................... 37
The AAL Equity Income Fund ................................ 41
The AAL Balanced Fund ..................................... 45
The AAL High Yield Bond Fund .............................. 51
The AAL Municipal Bond Fund ............................... 55
The AAL Bond Fund ......................................... 67
The AAL Money Market Fund ................................. 70
Statement of Assets and Liabilities ......................... 72
Statement of Operations ..................................... 74
Statement of Changes in Net Assets .......................... 76
Notes to Financial Statements ............................... 80
A Note on Forward-Looking
Statements .................................................. 87
Glossary of Investment
Terms ....................................................... 87
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 ........................... 108
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report April 30, 2000 1
<PAGE>
[PHOTO APPEARS HERE]
APRIL 30, 2000
Dear AAL Mutual Funds
Shareholder:
THE AAL MUTUAL FUNDS ANNUAL
The Markets and Economy in Review
In the past year, the financial markets have been like riding a roller coaster
at an amusement park. At one moment, you're at the pinnacle of excitement,
overlooking the entire area from the top. And then at the next instant, you're
plunging downward and can feel your stomach flip-flop. Finally, the ride ends
and you come back to where you started...
But unlike a roller coaster, you can't tell where the low point is going to be
in the financial markets. Investors trying to "buy on the dips" have found
themselves seeing prices fall even further after they've made a purchase. Those
trying to sell in falling markets may find themselves following the "herd
mentality. "If everyone else is selling, they figure they should as well...even
if it may not be a good move for them.
Where am I going with this? Well, it's quite simple. You should:
. invest in things with which you're comfortable.
. diversify your portfolio among various asset classes.
. have a long-term investment outlook.
. realize that markets will go up and down.
Besides investor sentiment, what else has sent the market for such a wild ride?
New Economy issues, the dotcoms and other darlings of the technology world, have
seen huge swings in the past six months. New Economy stocks are those with lots
of excitement around them and generally not much in terms of earnings
history, while Old Economy stocks generally have a history of earnings but
little excitement around them. Some Old Economy stocks participating in New
Economy-type activities--such as Corning, the traditional glassware maker that
has now branched into making fiber optic materials--are benefiting from
"membership" in both groups!
Increasing energy prices have had a mixed effect. While it has been good for
some industries like exploration and field service concerns, it has been a
negative for utilities and others. It also has been fueling fears of inflation,
prompting rises in interest rates.
In the past six months, the Federal Reserve Board has implemented three interest
rate hikes of one-quarter percent. The Fed's attempt to cool what it considers
an overheated U.S. economy and to quell inflation has impacted financial
markets.
Because the global community looks to the U.S. for clues about where the economy
is heading, the sentiment is similar around the world. Global economic growth is
at perhaps its strongest levels since the mid-1980s, but there's uneasiness in
many areas because of interest-rate fears, inflation and volatile markets.
This is much like the anxiousness around the Y2K situation, which came and went
without much
--------------------------------------------------------------------------------
2 The AAL Mutual Funds Annual Report
<PAGE>
REPORT PRESIDENT'S LETTER
difficulty. Investors who were patient and stuck with a plan of remaining
invested did well, for the most part. That's solid advice for any time period.
Remember, it's your time in the market, and not timing the market, that is more
likely to yield solid long-term investment performance.
While the ride has been bumpy as of late, remember that short-term market
gyrations are just part of the ride. Because you've invested in The AAL Mutual
Funds, you share our commitment in long-term investing...we think it's a
philosophy that beats short-term investing and "being taken for a ride."
Sincerely,
/s/ Bob Same
Bob Same
P R E S I D E N T
THE AAL MUTUAL FUNDS
Our Growth in Net Assets
[BAR CHART APPEARS HERE]
4/30/88 - $62,634,194
4/30/89 - $287,356,102
4/30/90 - $516,961,263
4/30/91 - $692,824,480
4/30/92 - $975,182,233
4/30/93 - $1,443,709,926
4/30/94 - $1,908,532,585
4/30/95 - $2,204,307,971
4/30/96 - $2,940,833,455
4/30/97 - $3,624,635,195
4/30/98 - $5,248,971,887
4/30/99 - $6,500,863,313
4/30/00 - $7,537,298,153
--------------------------------------------------------------------------------
April 30, 2000 3
<PAGE>
[PHOTO APPEARS HERE]
The AAL Small Cap Stock Fund
[LOGO] How would you describe the Fund's investment philosophy and how did this
philosophy impact the Fund's performance?
Our fundamental investment philosophy is "growth at a right price." That means
we look for a stock that has good long-term fundamentals for growth, and is
selling at an attractive price. We define strong fundamentals as a company with
a good market opportunity and a positive earnings outlook. This positive
earnings outlook may stem from a good product or efficient production methods. A
company's stock is trading at an attractive price when it is selling at a
discount to other, similar investment alternatives.
The Fund's performance in the past year has been good, having returned 34.07
percent. Comparing the Fund to the best-known small-cap indexes, the Fund
compares favorably with the S&P SmallCap 600 Index, which returned 20.50
percent, and the Russell 2000 index, which returned 18.42 percent for the one-
year period ending April 30, 2000.
Many small-cap funds invested heavily in the technology sector in the past year
and were rewarded with high returns. With those high returns comes significant
risk. Many small companies in the technology sector did not have what we felt
were strong enough fundamentals to justify their price. As a consequence, we did
not invest in what we believed were risky and over-valued technology stocks. We
believe there are good investment opportunities in the technology sector;
however, we limit our investment in the technology sector to those stocks that
offer growth at a right price. Given the recent volatility in the technology
sector, we believe this is the correct investment philosophy.
Overall, the market for smaller-company stocks has improved during the past six
months, from its lows in 1998. The Fund has benefited from that better market
environment. Along with the better environment, the Fund benefited from a fairly
strong market for energy stocks.
$ Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[MOUNTAIN CHART APPEARS HERE]
Date The AAL Small S&P Small Cap
Cap Stock Fund 600(r) Index/1/
7/1/96 9,596.93 10,000.00
12/31/96 11,008.07 10,908.05
12/31/97 12,863.43 13,698.52
12/31/98 12,543.29 13,519.75
12/31/99 14,193.73 15,196.85
4/30/2000 15,546.02 15,805.05
-------------
/1/ An unmanaged index comprised of 600 stocks designed to represent
performance of the small-cap segment of the U.S. equity markets. "S&P
SmallCap 600 Index" is a trademark of The McGraw-Hill Companies, Inc. and
has been licensed for use by AAL. The product is not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the product.
% Average Annual Total Returns/1/
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
-----------------------------
<S> <C> <C> <C>
Class A (without sales charge)............. 34.07% 13.41% 7/1/96
Class A/2/ (with sales charge)............. 28.75% 12.20% 7/1/96
--------------------------------------------------------------------------
Class B (without CDSC)..................... 32.71% 10.02% 1/8/97
Class B/2/ (with CDSC)..................... 27.71% 9.54% 1/8/97
--------------------------------------------------------------------------
Class I/3/................................. 35.16% 10.63% 12/29/97
--------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)............. 36.79% 13.12%
Class B/2/ (with CDSC)..................... 36.09% 10.56%
Class I/3/................................. 43.77% 12.06%
</TABLE>
----------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
4 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] Lipper, a mutual fund rating company, recently changed the Fund's style
to "core" from "growth." Can you tell investors what this means for the Fund?
The change is in comparing other similar funds to The AAL Small Cap Stock Fund.
Our Fund has always been broadly diversified across almost all segments of the
economy. This means that the Fund owns stocks in the faster-growing segments of
the economy, such as technology and other "New Economy"areas. The Fund also owns
stocks in slower-growing segments, such as energy and financials, which fit into
the "Old Economy." An example of a New Economy stock would be a company that is
involved in human genetics or human genome mapping. An example of an Old Economy
stock would be a company involved in producing consumer goods, like a paper
company. In this regard, the Fund has exposure to both "growth" and "value"
stocks.
The change by Lipper means we will be compared to other funds with a similar
philosophy--of growth at a right price--toward the small-cap market. Growth at a
right price infers that if a stock has solid fundamentals and has growth
potential, it's a stock we'll look at for the Fund--provided the price is right.
Lipper's change allows investors to get a more accurate comparison of our Fund
versus similar funds. In other words, it is an "apples-to-apples" comparison.
[LOGO] There has been a dramatic increase of the number of investors in the
stock market, particularly in small-cap stocks. How does this affect the Fund?
The biggest impact of increased investors in the small-cap market is in
increased market volatility. Many "new" investors do not use the more
traditional, historical valuation measures. As a result, the parameters of how
to value stocks are sometimes stretched and the result is increased volatility,
up and down. Because of our experience and our disciplined process, we are able
to manage effectively through these volatile times.
/s/ Kevin Schmitting
Kevin A. Schmitting
PORTFOLIO MANAGER
Small Cap Stock Fund
# Fund Allocations
------------------
[PIE CHART APPEARS HERE]
% of Net Assets
4/30/00
-------
Technology ............................... 27%
Capital Goods............................. 13%
Health Care............................... 11%
Financials................................ 10%
Consumer Cyclicals........................ 10%
Basic Materials........................... 7%
Consumer Staples.......................... 7%
Cash & Cash Equivalents................... 6%
Energy.................................... 6%
Utilities................................. 2%
Transportation............................ 1%
------------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
4/30/00
-------
NOVA Corporation ........................ 2.3%
Radian Group, Inc. ...................... 1.8%
Mercury Interactive Corporation ......... 1.6%
Southdown, Inc. ......................... 1.5%
Precision Drilling Corporation .......... 1.4%
--------------------------------------------------------------------------------
April 30, 2000 5
<PAGE>
[PHOTO APPEARS HERE]
The AAL Mid Cap Stock Fund
[LOGO] How would you assess Stock the Fund's performance?
Two key comparisons are critical in assessing any fund's performance. They are:
How has the fund performed relative to absolute, historical standards? How has
the fund performed relative to an index benchmark? Overall, the Fund's
performance for the year ending April 30, 2000, was 27.29 percent, which was
above the 23.52 percent return posted by the S&P MidCap 400 Index over the same
period. Over the last five years, the Fund returned an average annual return of
17.82 percent, as compared to the 22.69 percent five-year average annual return
for the S&P MidCap 400 Index. We want to surpass the index's returns over time,
and this will continue to be a challenge through periods of extremes and great
volatility. In a more typical environment, we look for our investment process to
outperform this benchmark.
When we combine the two factors, the Fund's performance for the past year was
not as good as it could have been. However, we believe our investment philosophy
will provide consistent results and we are enthused about improving performance
in the coming year.
[LOGO] How would you describe the Fund's investment philosophy and how did this
philosophy impact the Fund's performance?
Our fundamental investment philosophy is "growth at a right price." That means
we look for a stock that has good long-term fundamentals for growth, and is
selling at an attractive price. We define strong fundamentals as a company with
a good market position and a positive earnings outlook. This positive earnings
outlook may stem from a good product or efficient production methods. A
company's stock is trading at an attractive price when it is selling at a
discount to other, similar investment alternatives.
We apply this investment philosophy to our stock selections. Many funds in our
Lipper Mid-Cap Core peer group, which returned 40.90 percent for the 12 months
ending April 30,
Value of a $10,000 Investment
In Class A Shares - Including 4% Sales Charge
[MOUNTAIN CHART APPEARS HERE]
Date The AAL Mid S&P Mid Cap
Cap Stock Fund 400(r) Index/1/
6/30/93 9596.93 10000.00
12/31/93 10422.26 10782.12
12/30/94 9923.22 10395.60
12/29/95 14337.81 13612.92
12/31/96 15591.79 16226.75
12/31/97 18403.73 21460.48
12/31/98 18785.99 25562.68
12/31/99 22228.61 29326.40
4/30/2000 23793.00 31893.16
----------------
/1/ An unmanaged index comprised of 400 stocks designed to represent performance
of the mid-cap segment of the U.S. equity markets. "S&P MidCap 400 Index" is
a trademark of The McGraw-Hill Companies, Inc. and has been licensed for use
by AAL. The product is not sponsored, endorsed, sold or promoted by Standard
& Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the product.
% Average Annual Total Returns/1/
---------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year Inception Date
---------------------------------------
<S> <C> <C> <C> <C>
Class A (without sales charge)......... 27.29% 17.82% 14.20% 6/30/93
Class A/2/ (with sales charge)......... 22.19% 16.85% 13.51% 6/30/93
------------------------------------------------------------------------------
Class B (without CDSC)................. 25.71% NA 12.16% 1/8/97
Class B/2/ (with CDSC)................. 20.71% NA 11.70% 1/8/97
------------------------------------------------------------------------------
Class I/3/............................. 28.00% NA 13.66% 12/29/97
------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)......... 29.54% 17.45% 14.17%
Class B/2/ (with CDSC)................. 28.25% NA 13.05%
Class I/3/............................. 35.72% NA 15.62%
</TABLE>
------------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
6 The AAL Mutual Funds Annual Report
<PAGE>
2000, invested heavily in technology stocks and they were commensurately
rewarded. As a result of our investment philosophy, our numbers lagged behind
our Lipper peers.
We chose not to overweight the portfolio in technology stocks, but kept a more
modest portfolio weighting in this sector. Because of our "growth at a right
price" philosophy, we selected the technology stocks we felt had solid
fundamentals and offered good growth potential. These stocks performed very well
for us. We believe there are good investment opportunities in the technology
sector, but not every technology stock is a good investment.
[LOGO] Lipper, a mutual fund rating company, recently changed the Fund's style
from "growth" to "core." What does this mean for the Fund?
The change occurred primarily as a result of Lipper's changing methodology for
classifying funds and a resulting shift in the funds considered to be our
peers. We describe our investment process as a "core"style, since it includes
considering growth characteristics and valuation parameters in selecting the
Fund's holdings.
This change really doesn't impact the Fund. The Fund continues to be managed
with the same process that it has been for the past four years. However, this
classification compares our fund to funds with similar portfolio
characteristics. This is Lipper's attempt to simplify decision processes for
investors.
[LOGO] Mid-cap stocks seem to have enjoyed a renaissance. Is this part of the
normal market cycle, or are investors just beginning to realize the potential
value of mid-cap stocks?
We see this as simply a part of the normal market cycle, although it was
slightly exaggerated by the extreme of the cycle's last segment. A market cycle
sees shifts between disparate parts of the market, be they large versus
small, growth versus value or sector versus sector.
The shift, beginning in 1998, was an extreme move from small- and mid-cap stocks
into almost exclusively the largest capitalized of all stocks. This left both a
large valuation difference between large-cap and smaller-cap stocks, and a very
large amount of money in those highly valued, large-cap stocks. As investors
began to move from larger to smaller in 1999 and 2000, mid-cap stocks enjoyed a
"renaissance" because it is difficult, if not impossible, to move such large
amounts of money into truly small-caps stocks.
/s/ Michael R. Hochholzer
Michael R.Hochholzer
PORTFOLIO MANAGER
Mid Cap Stock Fund
# Fund Allocation
-----------------
[PIE CHART APPEARS HERE]
% of Net Assets
4/30/00
-------
Technology ............................... 26%
Health Care .............................. 10%
Financials ............................... 9%
Energy ................................... 9%
Consumer Staples ......................... 9%
Utilities ................................ 8%
Capital Goods ............................ 8%
Consumer Cyclicals ....................... 7%
Cash & Cash Equivalents .................. 6%
Basic Materials .......................... 6%
Convertible Bonds ........................ 1%
Communication Services ................... 1%
------------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
Security 4/30/00
-------- -------
Siebel Systems, Inc. ..................... 2.6%
EOG Resources, Inc. ...................... 1.7%
Elan Corporation plc ADR ................. 1.7%
SPX Corporation .......................... 1.7%
National Fuel Gas Company ................ 1.6%
--------------------------------------------------------------------------------
April 30, 2000 7
<PAGE>
[PHOTOS APPEARS HERE]
The AAL International Fund
[LOGO] How would you assess the Fund's performance?
The Fund outperformed its benchmark, the Europe Australasia Far East (EAFE)
Index. For the year ending April 30, 2000, the Fund had a return of 23.91
percent in contrast with EAFE's 13.89 percent return.
Recently, the index's performance was characterized by volatility, as markets
retrenched in January from strong 1999 year-end results.
Concerns with higher interest rates and a correction in the technology, media
and telecommunications ("TMT") sectors extended this volatility throughout the
first four months of 2000. Of the major index constituents, the United
Kingdom, the Netherlands and Switzerland held back index performance, while
France, Germany and Japan helped to offset this performance. Being overweighted
in Canada and underweighted in Switzerland provided some value to the Fund.
Strong stock selection in the TMT sectors led to solid performance. This
extended 1999's strong performance, when New Economy stocks significantly
diverged from the performance of Old Economy stocks. New Economy stocks
generally have companies that are generating lots of excitement but little in
terms of earnings history. The Old Economy stocks are those with solid earnings
histories but which aren't currently experiencing the excitement of their New
Economy counterparts. An example of a New Economy stock would be a company that
is involved in human genetics or human genome mapping. An example of an Old
Economy stock would be a company involved in producing consumer goods, like a
paper company.
While the New Economy sectors experienced a serious correction in recent
months, it didn't erase all of the earlier gains. Some of the portfolio's
largest positions reflected strong performance in TMT sectors, including
Vodafone AirTouch, NTT DoCoMo, KPN, Mediaset, Bell Canada, VNU, Vivendi and
Ericsson.
[MOUNTAIN CHART APPEARS HERE]
Value of a $10,000 Investment
-----------------------------
Date International EAFE(R) Index/1/
8/1/95 9,596.93 10,000.00
12/29/95 9,735.51 10,135.84
12/31/96 10,923.86 10,581.38
12/31/97 11,030.07 10,606.60
12/31/98 12,250.26 12,539.81
12/31/99 17,108.75 15,708.11
4/30/2000 16,101.01 14,808.83
--------------
/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/1/
---------------------------------
April 30, 2000
From Inception
1-Year Inception Date
------------------------------
Class A (without sales charge)...... 23.91% 11.51% 8/1/95
Class A/2/ (with sales charge)...... 18.98% 10.55% 8/1/95
------------------------------------------------------------------
Class B (without CDSC).............. 22.44% 11.20% 1/8/97
Class B/2/ (with CDSC).............. 17.44% 10.73% 1/8/97
------------------------------------------------------------------
Class I/3/.......................... 24.69% 16.63% 12/29/97
------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)...... 34.86% 12.87%
Class B/2/ (with CDSC).............. 33.87% 14.19%
Class I/3/.......................... 41.33% 21.98%
--------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
8 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] The debate between the New Economy and Old Economy rages on. How is the
Fund positioning itself on this issue?
We've taken some profits from TMT stocks and reinvested in Old Economy and New
Economy positions. For example, when Vodafone and Mannesmann merged, we took
some profits, and we also sold some KPN to take profits. We used the money to
purchase Total Fina Elf, a recently formed European petroleum conglomerate;
Dresdner Bank; and Philips Electronics. We continue to evaluate each company
within the context of earnings growth, believing that some companies with solid
growth have been overlooked in the stampede to the New Economy.
Alternatively, some New Economy companies have achieved valuation levels that
more than fairly represent the earnings prospects. Without question, we like the
long-term earnings prospects for our holdings. Volatile markets allow us to take
advantage of price discrepancies, both on the buy and sell side.
[LOGO] How would you assess the overall global economic situation?
The outlook for economies and markets depends on U.S. Federal Reserve Chairman
Alan Greenspan and his efforts to contain monetary policy. The economy continues
to show signs of being very robust with few indications of a meaningful
slowdown.
Bond yields dropped sharply in 1998, and the Fed and other central banks cut
interest rates between September and November of that year to address the
mounting global financial crisis. This occurred at a time when the U.S. economy
was already strong and arguably needed monetary restraint, not the stimulus it
received. We believe that the global economy is still experiencing the lagged
effects of those policy changes implemented 18 months ago.
Looking ahead, we expect the Fed to tighten monetary policy further to slow the
U.S. economy. Europe and Japan, on the other hand, are in the early stages of
economic recovery that should benefit corporate profits.
[LOGO] The Fund has slightly increased its exposure to emerging markets. What do
you look for when selecting these types of stocks?
We always emphasize cash flow and earnings growth when investing in
companies. Top-down analysis, where we look at general economic trends and then
select countries where we want to invest, is combined with bottom-up company
research to search out investment values. When we talk about bottom-up research,
it's our stock selection process that emphasizes an individual company--even if
its economic sector may be out of favor at the time.
Ideally, we look for companies growing at a good rate relative to what they're
spending--especially when the consensus view is skeptical about the future
prospects of these concerns. International investing involves additional risks
including currency fluctuations, economic and political instability, and
accounting standards.
/s/ Kathleen M. Harris
Kathleen M. Harris
PORTFOLIO MANAGER
/s/ Sean Roche
L. Sean Roche
PORTFOLIO MANAGER
International Fund
5 Largest Holdings
------------------
%of Net Assets
Security Country 4/30/00
-------- ------- -------
Royal KPN NV ............................ Netherlands 4.4%
Vodafone AirTouch plc ................... Germany 4.2%
NTT DoCoMo, Inc. ........................ Japan 3.9%
Verenigde Nederlands
Uitgeversbedrijven Verenigd Bezit ...... Netherland 2.9%
BCE, Inc. ............................... Canada 2.7%
--------------------------------------------------------------------------------
April 30, 2000 9
<PAGE>
[PHOTO APPEARS HERE]
The AAL Capital Growth Fund
[LOGO] How would you describe the Fund's investment philosophy and how did this
philosophy impact the Fund's performance?
Our fundamental investment philosophy is "growth at a right price. "This means
we look for a stock that has good long-term fundamentals for growth, and is
selling at an attractive price. We define strong fundamentals as a company with
a good market position and a positive earnings outlook. This positive earnings
outlook may stem from a good product or efficient production methods. A
company's stock is trading at an attractive price when it is selling at a
discount to other, similar investment alternatives.
The Fund has underperformed the S&P 500 during this period, primarily due to our
underweighting in technology stocks. For the year ending April 30, 2000, the
Fund had a return of 9.28 percent in comparison with the S&P 500's 10.13
percent.
Many funds in our Lipper peer group were able to substantially outperform the
S&P 500 by overweighting, or investing heavily in technology stocks. We select
stocks we believe have growth potential and are fairly priced. One means of
evaluating a stock's growth potential relative to its price is a P/E ratio, or
price to earnings ratio. A P/E ratio measures a stock's price relative to its
earnings per share. A high P/E ratio generally means a stock is over-priced. A
low P/E may mean a stock is undervalued. For much of the S&P 500, the P/E ratios
average 25 to 30. Many technology stocks in the S&P 500 had P/E ratios of 100 or
more. Our fundamental investment philosophy generally prevents us from buying
stocks with high P/E ratios, because in most cases, stocks with such high
valuations have limited upside growth potential.
We believe there are good investment opportunities in the technology
sector. However, we will follow our investment philosophy and purchase those
technology stocks that offer growth at a right price. We will also apply this
investment philosophy across all market sectors. It is important to remember
that we select individual stocks based on their fundamentals and price. We will
not buy a stock simply because it is part of a hot sector.
Value of a $10,000 Investment
-----------------------------
In Class A Shares - Including 4% Sales Charge
[MOUNTAIN CHART APPEARS HERE]
Capital Growth S&P 500
4/30/90 9,597.14 10,000.00
12/31/90 10,164.25 10,244.77
12/31/91 13,232.99 13,359.11
12/31/92 13,987.43 14,375.44
12/31/93 14,834.56 15,818.45
12/30/94 14,630.40 16,026.41
12/29/95 19,165.36 22,042.11
12/31/96 23,391.48 27,099.44
12/31/97 31,243.70 36,138.22
12/31/98 40,051.42 46,466.55
12/31/99 49,106.80 56,243.11
4/30/2000 47,953.53 55,801.99
-----------------
/1/ An unmanaged index comprised of 500 stocks representative of the stock
market as a whole. "S&P 500(R)" is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by AAL. The product is not
sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in
the product.
% Average Annual Total Returns/1/
--------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)...... 9.28% 24.16% 17.45% 14.47% 7/16/87
Class A/2/ (with sales charge)...... 4.92% 23.15% 16.97% 14.10% 7/16/87
-------------------------------------------------------------------------------
Class B (without CDSC).............. 8.09% NA NA 22.55% 1/8/97
Class B/2/ (with CDSC).............. 3.09% NA NA 22.18% 1/8/97
-------------------------------------------------------------------------------
Class I/3/.......................... 9.70% NA NA 21.60% 12/29/97
-------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)...... 11.15% 24.61% 17.17% 14.45%
Class B/2/ (with CDSC).............. 9.57% NA NA 23.94%
Class I/3/.......................... 16.22% NA NA 24.02%
</TABLE>
------------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
10 The AAL Mutual Funds Annual Report
<PAGE>
REPORT EQUITY ORIENTED FUNDS
[LOGO] Does the "New Economy" appear to favor small- and mid-cap stocks or
large-cap stocks?
The New Economy concerns--stocks with lots of excitement but no earnings
history--contrast with Old Economy stocks that have solid earnings histories but
very little in the way of excitement. An example of a New Economy stock would be
a company that is involved in human genetics or human genome mapping. An example
of an Old Economy stock would be a company involved in producing consumer
goods, like a paper company.
We don't know that the New Economy favors small-, mid- or large-cap stocks.
There are many New Economy stocks in all three market capitalization ranges.
Although our Fund focuses primarily on large company stocks we will evaluate
stocks in other capitalization ranges. Once again, we will only invest in New
Economy stocks that meet our fundamental investment philosophy, which is growth
at a right price.
[LOGO] The government's battle against Microsoft has made many investors
nervous. What's your outlook for Microsoft and how do you position it within the
Fund?
We've pared back our Microsoft holding in light of recent developments
concerning the litigation. However, the case's outcome is only one of the
factors involved in our decision to reduce our position. The bigger near-term
concern is the emerging slowdown of corporate and personal computer usage
growth.
We view this trend as a sign that Microsoft's earnings may decline in the near
term. Given this potential decrease in earnings, we do not feel Microsoft
currently represents a solid investment opportunity consistent with our
fundamental philosophy. That is the main reason the Fund is underweighted,
compared to its peers, in this computer-software giant.
/s/ Frederick L. Plautz
Frederick L. Plautz
PORTFOLIO MANAGER
# Fund Allocations
------------------
[PIE CHART APPEARS HERE]
% of Net Assets
4/30/00
-------
. Technology ............................ 24%
. Consumer Staples ...................... 21%
. Financials ............................ 15%
. Health Care ........................... 9%
. Consumer Cyclicals .................... 7%
. Capital Goods ......................... 6%
. Cash & Cash Equivalents ............... 6%
. Energy ................................ 6%
. Communication Services ................ 5%
. Utilities ............................. 1%
------------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
Security 4/30/00
-------- -------
Intel Corporation...................... 4.8%
General Electric Company............... 4.3%
ADC Telecommunications, Inc............ 4.0%
Cisco Systems, Inc..................... 3.8%
American International Group, Inc...... 3.4%
Capital Growth Fund
--------------------------------------------------------------------------------
April 30, 2000 11
<PAGE>
[PHOTO APPEAR HERE]
The AAL Equity Income Fund
[LOGO] How would you assess the Fund's performance?
Despite a turbulent and difficult year in the financial markets--a time when
equity income funds struggled to keep pace with a rapidly rising,
growth-dominated stock market--our Fund experienced modest performance relative
to other equity income funds. For the year ending April 30, 2000, the Fund had a
return of -0.80 percent.
Growth stocks, particularly mid- and small-cap growth, dominated the markets
until April's "correction." Our Fund benefited from this continued dominance of
growth stocks and the strength of smaller-cap stocks. The Fund has a bias toward
reasonably priced growth stocks, "growth at a right price." When combined with a
30-percent weighting in mid- and small-cap stocks, the Fund's performance was
better than many of its Lipper Equity Income Fund peers.
[LOGO] Has the Fund found more value in small-and mid-cap stocks?
Yes! After small- and mid-cap stocks underperformed during 1998, there was
considerably more value in those areas at the start of 1999. The Fund currently
has 30 percent of its weighting in smaller stocks, and it's a position that has
been built during the past 18 months. The strongest performers in the past year
have been energy stocks, particularly small-cap companies that provide services
to drillers and other oil field concerns. Despite the greater value in smaller-
cap stocks during the past year, it's often difficult to find appropriate stocks
for our Fund because many of them pay little or no dividends. Income is an
important component to the Fund's total return, since we're not just looking at
capital appreciation.
[LOGO] What sectors have performed well? Do you see these trends continuing for
the remainder of 2000?
Energy has been the top-performing sector in the Fund in the past year. While
energy prices have fallen recently, stocks in this sector remain at attractive
and sustainable levels going forward. Energy companies haven't significantly
invested in new capacity in recent years, so the
$ Value of a $10,000 Investment
-------------------------------
In Class A Shares - Including 4% Sales Charge
[MOUNTAIN CHART APPEARS HERE]
Date Equity Income S&P 500(r) Index /1/ S&P 500(r)/BARRA
Value Index/2,3/
3/18/94 9,596.93 10,000.00 10,000.00
12/30/94 8,912.01 9,972.29 9,701.72
12/29/95 11,511.44 13,715.51 13,290.78
12/31/96 12,064.68 16,862.39 16,215.03
12/31/97 14,763.75 22,486.69 21,076.65
12/31/98 16,725.67 28,913.40 24,169.45
12/31/99 17,409.50 34,996.77 27,244.55
4/30/2000 17,602.55 34,722.29 27,125.41
---------------
/1/ An unmanaged index comprised of 500 common stocks representative of the
stock market as a whole. "S&P 500(R)"is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by AAL. The product is not
sponsored, endorsed, sold, or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in
the product.
/2/ An unmanaged capitalization weighted index composed of the lowest price-to-
book securities in the S&P 500 Index. The S&P/BARRA indices are designed so
that approximately one-half of the S&P 500 to invest directly into either
index.
/3/ The composition of the S&P 500/BARRA Value Index serves as a better
reflection of the Fund's current investment strategy than does the S&P 500
Index.
% Average Annual Total Returns/1/
---------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year Inception Date
--------------------------------------
<S> <C> <C> <C> <C>
Class A (without sales charge).... (0.80)% 13.35% 10.41% 3/18/94
Class A/2/ (with sales charge).... (4.76)% 12.44% 9.67% 3/18/94
-------------------------------------------------------------------------
Class B (without CDSC)............ (1.80)% NA 11.09% 1/8/97
Class B/2/ (with CDSC)............ (6.71)% NA 10.62% 1/8/97
-------------------------------------------------------------------------
Class I/3/........................ (0.29)% NA 8.66% 12/29/97
-------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge).... 2.53% 13.29% 10.13%
Class B/2/ (with CDSC)............ 0.67% NA 11.53%
Class I/3/........................ 7.36% NA 9.79%
</TABLE>
--------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
12 The AAL Mutual Funds Annual Report
<PAGE>
supply/demand balance is expected to remain favorable for the foreseeable
future.
Other recent top-performing sectors have been communications and capital
goods. On the other hand, the financial sector has been very weak due to the
rising interest rate environment. Our Fund has benefited from this weakness, due
to our underweighting in this sector. The Fund's strong performance has come
primarily from good stock selection across many sectors--rather than good sector
selection. Sector weightings aren't conscious decisions. They result from having
an abundance of attractive, or unattractive, stocks in a particular area. This
is the classic "chicken or the egg" question, in that the Fund's weightings are
determined by selecting attractive stocks rather than a conscious choice to
over-or underweight a particular sector.
[LOGO] Because the Fund is designed to produce income from the equity realm and
many stocks in the Standard & Poor's 500 Index have a growth orientation, can
the S&P 500 be an accurate measuring stick for the Fund or is there a more
accurate benchmark at this point?
Because part of our Fund's investment objective is long-term income and capital
growth, the S&P 500 is a decent, but not a completely accurate, measure of The
AAL Equity Income Fund. However, the Fund mainly seeks to provide current income
and many stocks in the S&P 500 don't offer dividend yields to provide that
income.
For comparison, Standard & Poor's breaks the index into two components: The S&P
500/BARRA Value Index and the S&P 500/BARRA Growth Index. Our Fund aligns much
more closely with the BARRA Value Index because its dividend yield is generally
in line with the Fund's holdings.
/s/ Lewis A. Bohannon
Lewis A. Bohannon
PORTFOLIO MANAGER
# Fund Allocations
------------------
[PIE CHART APPEARS HERE]
% of Net Assets
4/30/00
-------
Financials .............................. 17%
Communication Services .................. 12%
Energy .................................. 12%
Consumer Cyclicals ...................... 10%
Technology .............................. 10%
Capital Goods ........................... 8%
Consumer Staples ........................ 7%
Utilities ............................... 7%
Cash & Cash Equivalents ................. 6%
Basic Materials ......................... 5%
Health Care ............................. 5%
Bonds ................................... 1%
------------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
Security 4/30/00
-------- -------
Honeywell International, Inc. ............. 2.6%
Telefonica SA ADR .......................... 2.4%
Southdown, Inc. ............................ 2.3%
MediOne Group, Inc. Convertible Securities.. 2.1%
MediOne Group, Inc. ........................ 2.0%
Equity Income Fund
--------------------------------------------------------------------------------
April 30, 2000 13
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL
[PICTURES APPEAR HERE]
The AAL Balanced Fund
[LOGO] How would you describe the Fund's investment philosophy and how did this
philosophy impact the Fund's performance?
For the equity portion of the Fund we employ the same investment philosophy as
The AAL Capital Growth Fund.Our fundamental investment philosophy is "growth at
a right price." This means we look for a stock that has good long-term
fundamentals for growth, and is selling at an attractive price. We define strong
fundamentals as a company with a good market position and a positive earnings
outlook. This positive earnings outlook may stem from a good product or
efficient production methods. A company's stock is trading at an attractive
price when it is selling at a discount to other, similar investment
alternatives.
The Fund underperformed its peers--the Lipper Balanced Fund group--during the
past year, primarily due to a technology underweighting within the Fund's stock
allocation. For the year ending April 30, 2000, the Fund had a return of 4.78
percent to the peer group's return of 5.16 percent.
The stocks that comprise the equity portion of the Fund are very similar to
stocks found in The AAL Capital Growth Fund. Consequently, the equity portion of
the Fund was underweighted in technology stocks when compared to other balanced
funds in our Lipper peer group.
Many funds in our Lipper peer group were able to substantially outperform other
balanced funds by overweighting, or investing heavily in technology stocks. We
select stocks we believe have growth potential and are fairly priced. One means
of evaluating a stock's growth potential relative to its price is a P/E ratio,
or price to earnings ratio. A P/E ratio measures a stock's price relative to its
earnings per share. A high P/E ratio generally means a stock is over-priced. A
low P/E may mean a stock is undervalued. For much of the S&P 500, the P/E ratios
average 25 to 30. Many technology stocks in the S&P 500 had P/E ratios of 100 or
more. Our fundamental investment philosophy generally prevents us from buying
stocks with
[MOUNTAIN CHART APPEARS HERE]
$ Value of a $10,000 Investment
-------------------------------------------------
In Class A Shares - Including 4% Sales Charge
<TABLE>
<CAPTION>
Lehman Brothers
The AAL S&P 500(R) Aggregate Bond
Date Balanced Fund Index /1/ Index/2/
<S> <C> <C> <C>
12/29/97 9,596.93 10,000.00 10,000.00
12/31/97 9,596.93 10,180.22 10,007.90
12/31/98 11,328.24 13,089.73 10,877.16
12/31/99 12,570.40 15,843.81 10,787.81
4/30/2000 12,471.97 15,719.55 10,994.44
</TABLE>
-------------
/1/ An unmanaged index comprised of 500 stocks representative of the stock
market as a whole. "S&P 500(R)" is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by AAL. The product is not
sponsored, endorsed, sold or promoted by Standard & Poor's and Standard
& Poor's makes no representation regarding the advisability of investing in
the product.
/2/ 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.
% Average Annual Total Returns/1/
---------------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A (without sales charge)........... 4.78% 11.87% 12/29/97
Class A/2/ (with sales charge)........... 0.56% 9.91% 12/29/97
--------------------------------------------------------------------------------
Class B (without CDSC)................... 3.74% 10.86% 12/29/97
Class B/2/ (with CDSC)................... (1.26)% 9.74% 12/29/97
--------------------------------------------------------------------------------
Class I/3/............................... 5.33% 12.15% 12/29/97
--------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)........... 4.07% 11.12%
Class B/2/ (with CDSC)................... 2.27% 10.99%
Class I/3/............................... 8.91% 13.46%
</TABLE>
-------------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
14 The AAL Mutual Funds Annual Report
<PAGE>
high P/E ratios, because in most cases, stocks with such high valuations have
limited upside growth potential.
We believe there are good investment opportunities in the technology sector.
However, we will follow our investment philosophy and purchase those technology
stocks that offer growth at a right price. We will also apply this investment
philosophy across all market sectors. It is important to remember that we select
individual stocks based on their fundamentals and price. We will not buy a stock
simply because it is part of a hot sector.
[LOGO] What investment philosophy do you use when selecting bonds for the
Fund?
Our fundamental investment philosophy could be summed up with the expression,
"good yield relative to good credit and diversification." Selecting bonds for
the Fund is a balancing act between yield and credit. The yield on a particular
issue should be commensurate with the risk or credit rating of the issuer. Bonds
with a higher yield are generally riskier than bonds with a lower yield. The
high yield on a bond compensates the investor for the increased risk associated
with purchasing that bond. We endeavor to find the highest yield with the lowest
risk.
We also believe in a diversified portfolio of bonds to reduce credit risk. The
normal position size in the corporate and asset-backed portions of the Balanced
Fund bond portfolio are in the 1 percent to 2 percent range. The advantage of
many, smaller positions is reduced portfolio risk. This diversification also
provides the Fund with good industry and sector representation.
Since becoming co-portfolio manager of The AAL Balanced Fund, we have applied
the fundamental investment philosophy to the bond portfolio portion of the
Fund. We have reduced the position size of the issues in the Fund and increased
diversification. This philosophy has led to consistent returns over the past
year.
[LOGO] Given an environment of rising interest rates, have you changed the
allocations to bonds and/or cash dramatically?
The rising rate environment has not caused a dramatic change to the Fund's asset
allocation. Currently, the Fund is about 50.1 percent stocks, 35.3 percent bonds
and 14.6 percent in cash. This compares with our expected long-term allocations
of 55 percent stocks, 35 percent bonds and 10 percent in cash.
We currently have a bit more in cash and equivalents,which are money market
instruments, because we've been uncertain if more value would be gained by
purchasing stocks. The prospectus states we can have anywhere from 0 percent to
40 percent of the Fund in cash so we're still at the very low end of that
spectrum--and not far from our long-term target. The prospectus also allows us
to have between 35 percent and 75 percent in stocks and between 25 percent to 50
percent in fixed-income, or bond, investments.
/s/ Alan D. Onstad
Alan D. Onstad
PORTFOLIO MANAGER
/s/ Frederick L. Plautz
Frederick L. Plautz
PORTFOLIO MANAGER
# Fund Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/00
-------
<S> <C>
. Fixed Income Investments...................................... 35%
. Cash & Cash Equivalents....................................... 15%
COMMON STOCKS
. Technology.................................................... 13%
. Consumer Staples.............................................. 11%
. Financials.................................................... 8%
. Health Care................................................... 5%
. Consumer Cyclicals............................................ 4%
. Communication Services........................................ 3%
. Energy........................................................ 3%
. Capital Goods................................................. 3%
--------------
Total 100%
</TABLE>
5 Largest Holdings
---------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/00
-------- -------
<S> <C>
Intel Corporation .............................................. 2.5%
General Electric Company........................................ 2.3%
ADC Telecommunications, Inc..................................... 2.1%
Cisco Systems, Inc.............................................. 2.0%
U.S. Treasury Bonds............................................. 2.0%
Coupon Rate: 7.250% Maturity Date: 5/15/2016
</TABLE>
--------------------------------------------------------------------------------
April 30, 2000 15
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL
[PICTURE APPEARS HERE]
The AAL High Yield Bond Fund
[LOGO] How would you assess the Fund's performance?
For the year ending April 30, 2000, the Fund's performance was below the overall
high-yield market, returning -7.00 percent as compared to a return of -2.81
percent for the Merrill Lynch High Yield Index. Most fixed-income investments
have struggled to post positive returns during this period in the face of
several interest rate hikes by the Federal Reserve Board. The Fed has remained
vigilant in combating inflationary pressures caused by a very strong domestic
economy; in fact, most economists expect the Fed to raise rates again at its May
meeting.
The high-yield market has also been affected by a general rise in the default
rate. The default rate for the 12-month period ending March 31 was 7.3
percent, which compares to a rate of 3.7 percent for this time a year ago.* The
Fund has experienced six defaults within the last six months. These defaults,
and the subsequent decline in bond valuations, hurt Fund performance by 1.3
percent.
*Source: Merrill Lynch & Co., "This Week in High Yield," April 14, 2000.
[LOGO] High-yield bonds have been offering very attractive yields and yet
investor interest has waned. To what would you attribute this apathy?
This apathy can most likely be attributed to the recent "love affair" investors
have had with the stock market and especially with tech stocks, to the exclusion
of most other asset classes. Before the recent correction, the NASDAQ Composite
Index had advanced almost 70 percent from Nov. 1, 1999 through March 10,
2000. With these eye-popping returns, investors moved away from what they saw as
more mundane investments, like bonds, toward tech-related stocks and mutual
funds.
Investors have withdrawn funds from high-yield funds every week except one since
December. In the overall high-yield market, these redemptions have forced
portfolio managers to sell bonds into a weak market, further depressing prices.
Available yields are now approaching some of the highest yields since mid-1991,
when the U.S. economy was in a recession.
The average yield in today's market is close to 12.75 percent, or more than 6.6
percent over the yield on a 10-year U.S. Treasury bond. Eventually, long-term
investors will recognize the relative value offered by high-yield bonds. The
recent stock market volatility may act as a catalyst for investors to diversify
their
[MOUNTAIN CHART APPEARS HERE]
$ Value of a $10,000 Investment
-----------------------------------------------
In Class A Shares - Including 4% Sales Charge
<TABLE>
<CAPTION>
Date AAL High Yield Merrill Lynch High
Bond Fund Yield Master Index/1/
<S> <C> <C>
12/8/97 9596.93 10000.00
12/31/97 10867.33 11317.45
12/31/98 10622.79 11732.04
1/31/2000 10161.44 11857.42
4/30/2000 10017.12 11705.80
</TABLE>
--------------
/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/1/
---------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
---------------------------------------
<S> <C> <C> <C>
Class A (without sales charge)......... (7.00)% 1.30% 1/8/97
Class A/2/ (with sales charge)......... (10.70)% 0.05% 1/8/97
--------------------------------------------------------------------------------
Class B (without CDSC)................. (7.65)% 0.60% 1/8/97
Class B/2/ (with CDSC)................. (12.38)% (0.00)% 1/8/97
--------------------------------------------------------------------------------
Class I/3/............................. (6.67)% (3.20)% 12/29/97
--------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)......... (9.41)% 0.04%
Class B/2/ (with CDSC)................. (11.09)% (0.05)%
Class I/3/............................. (5.29)% (3.35)%
</TABLE>
----------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
16 The AAL Mutual Funds Annual Report
<PAGE>
portfolios by adding a high-yield bond component.
/s/ David G. Carroll
David G. Carroll
PORTFOLIO MANAGER
Proposed Appointment of a Sub-Adviser for The AAL High Yield Bond Fund
The Fund Board of Trustees has recommended Pacific Investment Management Company
("PIMCO") be retained as the sub-adviser to The AAL High Yield Bond Fund (the
"Fund"). In this capacity, PIMCO would manage the day-to-day investment of Fund
assets, subject to the supervision of AAL Capital Management Corporation, the
Fund's investment adviser, and the Board of Trustees.
This proposal is subject to approval by the shareholders of the Fund. The Board
of Trustees has set June 21, 2000, as the date for a Special Meeting of
Shareholders to vote on the approval of a Sub-Advisory Agreement with PIMCO.
Shareholders of record as of April 28, 2000, will be eligible to vote on this
matter. Fund shareholders will receive proxy materials describing this proposal
in detail, and soliciting their approval of the proposed sub-advisory agreement.
If approved by shareholders, we anticipate that PIMCO would begin managing the
Fund's assets on or about July 1, 2000.
Credit Quality
--------------------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/00
-------
<S> <C>
. BB........................................................ 30%
. B......................................................... 58%
. CCC....................................................... 10%
. D......................................................... 2%
---------------
Total 100%
</TABLE>
Average Quality: B
Average Maturity: 7.2 years
5 Largest Holdings
----------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/00
--------- -------
<S> <C>
CSC Holdings, Inc........................................... 2.1%
Coupon Rate: 7.875%
Maturity Date: 2/15/2018
Williams Communications Group, Inc.......................... 1.7%
Coupon Rate: 10.875%
Maturity Date: 10/1/2009
Amkor Technology, Inc....................................... 1.7%
Coupon Rate: 9.250%
Maturity Date: 5/1/2006
Global Crossing Holdings, Ltd............................... 1.6%
Coupon Rate: 9.125%
Maturity Date: 11/15/2006
Tenet Healthcare Corporation................................ 1.6%
Coupon Rate: 8.000%
Maturity Date: 1/15/2005
</TABLE>
--------------------------------------------------------------------------------
April 30, 2000 17
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL
[PICTURE APPEARS HERE]
The AAL Municipal Bond Fund
[LOGO] How would you assess the Fund's performance?
For the year ending April 30, 2000, the Fund had a return of -4.09 percent in
contrast to the Lipper General Municipal Debt peer group's return of -3.31
percent. 1999 was a very challenging period in the bond market and particularly
so in the municipal market, as Federal Reserve Board actions pushed bond prices
lower.
1999 was a classic example of rising interest rates and falling bond prices, but
we need to qualify which rates we're talking about. The exposure to interest-
rate risk is the best measure of a Fund's sensitivity to interest rates. This
risk posed to bond funds in general depends on two factors: the Fund's average
maturity and the type of interest-rate increase.
The Fed's decision to raise the federal funds rate--the overnight rates banks
charge each other when they need to borrow to meet reserve requirements--has
dramatically affected bonds and bond funds with shorter maturities. However, the
longer-term discount rate hasn't been rising as quickly as the federal funds
rate. This means that our Fund, which has had a longer average maturity, has
been less affected than some other bond funds. The declines we saw were more
attributable
In the past three months, investors realized that interest rates had made bonds
attractive. This recognition has rallied bond prices nicely since the end of
January. The Fund's longer than average maturity, which hampered performance
last year, has served us well in recent times.
[LOGO] Did you employ a particular strategy to take advantage of differing
maturities?
A strategy we have used in the past worked particularly well again during the
last four months. At the start of 2000, yield differences on municipal bonds
were dramatic and there was a substantial benefit in bonds with longer
maturities. However, it wasn't prudent to extend the overall interest rate
exposure of the Fund, so we used a "barbell" strategy.
This involves using an overweighting of long- and short-maturity bonds and a
less significant portion in bonds with intermediate maturities. As the market
rallied, the longer maturities outperformed the intermediates by a wide margin
and we were able to enhance the Fund's total return without taking much risk.
[MOUNTAIN CHART APPEARS HERE]
$ Value of a $10,000 Investment
-----------------------------------
In Class A Shares - Including 4% Sales Charge
<TABLE>
<CAPTION>
Date AAL Municipal Bond Fund Lehman Brothers Municipal Bond Index/1/
<S> <C> <C>
4/30/90 9603.96 10000
12/31/90 10283.71 10758.84
12/31/91 11449.56 12065.59
12/31/92 12403.53 13129.19
12/31/93 13802.65 14740.99
12/30/94 13017.96 13978.73
12/29/95 15392.48 16419.79
12/31/96 16067.96 17148.55
12/31/97 17728.96 18722.76
12/31/98 18789.54 19936.19
12/31/99 17730.24 19524.1
4/30/2000 18176.81 19977.76
</TABLE>
-------------------
/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/1/
-------------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)... (4.09)% 5.39% 6.59% 6.21% 7/16/87
Class A/2/ (with sales charge)... (7.94)% 4.53% 6.16% 5.87% 7/16/87
--------------------------------------------------------------------------------
Class B (without CDSC)........... (4.99)% NA NA 3.11% 1/8/97
--------------------------------------------------------------------------------
Class B/2/ (with CDSC)........... (9.74)% NA NA 2.54% 1/8/97
--------------------------------------------------------------------------------
Class I/3/....................... (3.78)% NA NA 1.36% 12/29/97
--------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)... (6.93)% 4.85% 6.17% 5.98%
Class B/2/ (with CDSC)........... (8.58)% NA NA 2.95%
Class I/3/....................... (2.64)% NA NA 1.80%
</TABLE>
----------------
/1/ 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.
/2/ Class A performance reflects the maximum sales charge of 4%. Prior to
1/1/99, 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
18 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] Has the U.S. government's decision to buy back long-term Treasuries had
any impact on the municipal market?
The U.S. Treasury's decision to repurchase some of the outstanding Treasury
debt, as well as reducing the amount of long-term debt it will issue in the
future, has definitely helped the municipal market. Long-term Treasury yields
have fallen dramatically on the belief that as long as the surplus continues,
outstanding supply will be reduced. Municipal yields were pulled down, although
much less, with the declining Treasury yields because municipal bonds had become
extremely undervalued. High-quality, long maturity municipal yields continue to
trade very closely to Treasury yields, so there's still value in the tax-exempt
bond market.
[LOGO] How has the supply of municipal bonds changed from last year?
The light supply is the second factor contributing to the Fund's improved tone
in the past three months. New issue supply is approximately 30 percent less
than a year ago at this same time. The combination of higher interest rates and
budget surpluses at the state and local levels have reduced the new supply
volume. Many entities currently issuing bonds are using shorter terms, so yields
are much lower than those of bonds with longer maturities.
/s/ Duane McAllister
Duane A. McAllister
PORTFOLIO MANAGER
Credit Quality
------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/00
-------
<S> <C>
. AAA.......................................................... 57%
. AA........................................................... 16%
. A............................................................ 12%
. BBB.......................................................... 15%
---------------
Total 100%
</TABLE>
Average Quality: AA
Average Maturity: 19.1 years
5 Largest Holdings
------------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/00
-------- -------
<S> <C>
Shelby County, Tennessee Health Educational
and Housing Facilities Board Revenue Bonds..................... 1.7%
Coupon Rate: 5.375% Maturity Date: 7/1/2029
Chicago, Illinois Single Family Mortgage
Revenue Bonds.................................................. 1.5%
Coupon Rate: 7.050% Maturity Date: 10/1/2030
DeSoto Parish, Louisiana Pollution
Control Revenue Bonds.......................................... 1.4%
Coupon Rate: 7.600% Maturity Date: 1/1/2019
Michigan Public Power Agency
Refunding Revenue Bonds........................................ 1.3%
Coupon Rate: 5.000% Maturity Date: 1/1/2019
Carroll County, Kentucky Collateralized
Pollution Control Revenue Bonds................................ 1.3%
Coupon Rate: 7.450% Maturity Date: 9/15/2016
</TABLE>
# 5 Largest Fund Allocations
--------------------------------
<TABLE>
<CAPTION>
% of Net Assets
State 4/30/00
----- -------
<S> <C>
Illinois....................................................... 14.1%
Texas.......................................................... 10.7%
California..................................................... 8.9%
North Carolina................................................. 5.5%
Michigan....................................................... 5.5%
</TABLE>
--------------------------------------------------------------------------------
April 30, 2000 19
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL
[PICTURE APPEARS HERE]
The AAL Bond Fund
[LOGO] How would you assess the Fund's performance?
During the past year, the Fund has produced returns in line with the average
Lipper Intermediate Investment Grade Debt peer group. The Fund's one-year
returns as of April 30, 2000 were -0.11 percent as compared with the Lipper peer
group average returns of 0.10 percent.
The Federal Reserve Board has raised the discount rate to 6 percent and this
normally wouldn't be good for bonds, especially if further increases were
likely. However, as a result of the U.S. Treasury buyback program, interest
rates on 30-year U.S. Treasury securities declined from 6.75 percent to 5.96
percent.
There is generally an inverse relationship between a bond's yield and price.
When bond yield increases, the price of the bonds goes down. This decrease in
the value of bonds causes a corresponding decrease in the Fund's net asset value
(NAV). When bond yields decline, the price of the bonds goes up and
consequently, so does the Fund's NAV. Because we manage the Fund to provide
total return--a combination of income and growth on your investment, without
significantly risking your capital--rising bond prices are usually beneficial to
shareholders.
[LOGO] What investment philosophy do you use when selecting bonds for the Fund?
Our fundamental investment philosophy could be summed up with the expression,
"good yield relative to good credit and diversification." Selecting bonds for
the Fund is a balancing act between yield and credit. The yield on a particular
issue should be commensurate with the risk or credit rating of the issuer. Bonds
with a higher yield are generally riskier than bonds with a lower yield. The
high yield on a bond compensates the investor for the increased risk associated
with purchasing that bond. We endeavor to find the highest yield with the lowest
risk.
We also believe in a diversified portfolio of bonds to reduce credit risk. The
normal position size in the corporate and asset-backed portions of the Bond Fund
bond portfolio are in the 1 percent to 2 percent range. The advantage of many,
smaller positions is reduced portfolio risk. This diversification also provides
the Fund with good industry representation.
Since becoming portfolio manager of The AAL Bond Fund, I have
[MOUNTAIN CHART APPEARS HERE]
$ Value of a $10,000 Investment
-------------------------------------------------
In Class A Shares - Including 4% Sales Charge
<TABLE>
<CAPTION>
Lehman Brothers
Date The AAL Bond Fund Aggregate Bond Index/1/
<S> <C> <C>
4/30/90 9,595.44 10,000.00
12/31/90 10,581.97 11,084.86
12/31/91 12,246.95 12,858.49
12/31/92 13,067.62 13,810.35
12/31/93 14,217.44 15,156.75
12/30/94 13,542.78 14,714.75
12/29/95 15,717.88 17,433.20
12/31/96 16,072.78 18,066.05
12/31/97 17,516.13 19,809.94
12/31/98 18,677.23 21,530.58
12/31/99 18,369.13 21,353.72
4/30/2000 18,580.77 21,762.71
</TABLE>
------------------
/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/1/
-----------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)... (0.11)% 5.34% 6.83% 6.63% 7/16/87
Class A/2/ (with sales charge)... (4.07)% 4.49% 6.39% 6.29% 7/16/87
--------------------------------------------------------------------------------
Class B (without CDSC)........... (1.09)% NA NA 3.63% 1/8/97
Class B/2/ (with CDSC)........... (6.03)% NA NA 3.07% 1/8/97
--------------------------------------------------------------------------------
Class I/3/....................... 0.30% NA NA 2.96% 12/29/97
--------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A/2/ (with sales charge)... (3.29)% 4.85% 6.34% 6.38%
Class B/2/ (with CDSC)........... (5.27)% NA NA 3.38%
Class I/3/....................... 1.21% NA NA 3.35%
</TABLE>
----------------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
20 The AAL Mutual Funds Annual Report
<PAGE>
applied the fundamental investment philosophy to the Fund. We have reduced the
position size of the issues in the Fund and increased diversification. This
philosophy has lead to consistent returns over the past year. The Fund is still
an intermediate-term bond fund; however, the average maturity of the Fund is
shorter now than it was a year ago.
[LOGO] How has the U.S. government's decision to repurchase Treasury securities
affected the Fund?
It has had a positive influence on the Fund's returns, for the most part. The
Fund's Treasury securities were its best-performing holdings during recent
months. This was particularly true of 10-year and longer Treasuries. As 2000
began, the yield on 2-year Treasuries was around 6.25 percent, while yields on
30-year securities were nearly 6.50 percent. By the end of April, yields on
30-year securities had fallen to 5.96 percent, while yields on 2-year Treasuries
stayed near 6.25 percent.
When short-term rates are higher than long-term rates, it has pronounced impacts
on the rest of the bond market. Contrary to Treasury yields, corporate bond
yields rise as maturities lengthen. While corporate bonds had positive total
returns in this time period, they didn't do nearly as well as Treasuries.
Treasuries, particularly the 30-year bonds, vastly outperformed every sector of
the bond market, especially since the beginning of 2000. While we like this
performance, we're not convinced that Treasuries can continue their torrid pace
for the rest of 2000. They may continue to do well over the next several
months, but corporate bonds are trading at near-recession levels.
We do not believe this valuation is appropriate. While we have reduced our
corporate exposure in favor of Treasuries and cash, it appears that corporate
bonds are approaching very inexpensive levels. Much of the Fund's corporate
exposure averages four to seven years in maturity, which has provided a buffer
in the difference between Treasury and corporate yields. These corporate bonds
have provided the Fund with solid interest income.
[LOGO] Where does the Fund go from here?
The recent past has shown it's not good to put all your eggs in one
basket. Fixed-income investments have provided steady returns so far in 2000. We
believe it's appropriate to take a long-term view of the bond market, rather
than getting caught up in short-term interest rate swings. Investment-grade
bonds can and do continue to provide attractive returns and stability in these
uncertain times.
/s/ Alan D. Onstad
Alan D. Onstad
PORTFOLIO MANAGER
Credit Quality
------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
4/30/00
-------
<S> <C>
. AAA.......................................................... 38%
. AA........................................................... 2%
. A............................................................ 13%
. BBB.......................................................... 47%
---------------
Total 100%
</TABLE>
Average Quality: A
Average Maturity: 6.9 years
5 Largest Holdings
------------------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/00
-------- -------
<S> <C>
U.S. Treasury Bonds............................................ 5.0%
Coupon Rate: 7.250%
Maturity Date: 5/15/2016
Federal National Mortgage Association.......................... 3.4%
Coupon Rate: 6.500%
Maturity Date: 6/1/2013
U.S. Treasury Bonds............................................ 2.7%
Coupon Rate: 8.750%
Maturity Date: 5/15/2017
Government National Mortgage Association....................... 2.4%
Coupon Rate: 6.500%
Maturity Date: 3/15/2029
Government National Mortgage Association....................... 2.2%
Coupon Rate: 7.500%
Maturity Date: 8/15/2029
</TABLE>
--------------------------------------------------------------------------------
April 30, 2000 21
<PAGE>
THE AAL MUTUAL FUNDS ANNUAL
[PICTURE 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] How would you assess the Fund's performance?
According to data provided by Lipper, a mutual fund rating company, The AAL
Money Market Fund's performance was in the top 40 percent for the one-year
period ending April 30, 2000. Given the Fund's strategy of having a weighted
average maturity (WAM) similar to its peers, we would expect the Fund to perform
in line with the average Lipper Money Market peer group. For the year ending
April 30, 2000, the Fund's average annual total return was 4.99 percent,
compared with 4.82 percent for its Lipper peers.
[LOGO] The Fund's weighted average maturity (WAM), or the number of days the
Fund holds a particular issue, is about 10 days less than six months ago.
What's causing this shortened maturity?
The Fund's WAM has remained close to its benchmark. The time has shortened due
to the Federal Reserve Board's continuing raising of interest rates. We
anticipate further tightening in the near future, so a shorter maturity allows
us to act more quickly if interest rates change again.
% Average Annual Total Returns/1/
---------------------------------
April 30, 2000
<TABLE>
<CAPTION>
From Inception
1-Year 5-Year 10-Year Inception Date
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (without sales charge)... 4.99% 4.99% 4.48% 5.10% 3/10/88
--------------------------------------------------------------------------------
Class B (without CDSC)........... 3.94% NA NA 3.99% 1/8/97
Class B/2/ (with CDSC)........... (1.06)% NA NA 3.44% 1/8/97
--------------------------------------------------------------------------------
Class I/3/....................... 5.36% NA NA 5.15% 12/29/97
--------------------------------------------------------------------------------
SEC Quarterly Standardized Returns as of March 31, 2000
Class A (without sales charge)... 4.88% 4.98% 4.50% 5.10%
Class B/2/ (with CDSC)........... (1.18)% NA NA 3.41%
Class I/3/....................... 5.24% NA NA 5.13%
</TABLE>
----------------
/1/ 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.
/2/ 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.
/3/ Class I shares have no sales load and are for institutional shareholders
only.
--------------------------------------------------------------------------------
22 The AAL Mutual Funds Annual Report
<PAGE>
[LOGO] Are short-term U.S. Treasuries more attractive now or is much of the
Fund still invested in commercial paper?
The Fund continues to invest primarily in top-quality commercial paper, as
yields on it are very attractive. Commercial paper is unsecured, short-term debt
issued by corporations for financing inventory and other concerns. It's usually
issued at a discount reflecting prevailing market interest rates, with
maturities of up to 270 days. Currently, commercial paper with a 90-day maturity
offers approximately 0.37 percent more yield than a three-month U.S. Treasury
Bill.
/s/ Michael R. Hilt
Michael R. Hilt
PORTFOLIO MANAGER
5 Largest Holdings
----------------------
<TABLE>
<CAPTION>
% of Net Assets
Security 4/30/00
-------- -------
<S> <C>
Toyota Motor Credit Corporation................................ 4.3%
Coupon Rate: 5.950% - 6.040%
Maturity Date: 5/18 - 6/20/2000
American General Finance Corporation........................... 4.2%
Coupon Rate: 5.890% - 6.150%
Maturity Date: 5/22 - 7/21/2000
Goldman Sachs Group, L.P....................................... 4.2%
Coupon Rate: 5.900% - 6.160%
Maturity Date: 5/1 - 7/20/2000
Merrill Lynch & Company, Inc................................... 4.2%
Coupon Rate: 5.880% - 6.170%
Maturity Date: 5/16 - 7/24/2000
General Motors Acceptance Corporation.......................... 4.2%
Coupon Rate: 5.880% - 6.260%
Maturity Date: 5/12 -7/26/2000
</TABLE>
Average Quality: First Tier
Average Maturity: 47 Days
$ Short-Term Investment Comparison
--------------------------------------
April 30, 2000
(BAR CHART APPEARS HERE)
The AAL Money Market Fund
30-Day Yield (Class A shares) 5.44%
Salomon Brothers
Short-Term Index* 6.02%
*Salomon Brothers Short-Term Index is an unmanaged index composed of 1-month
U.S. Treasury Bills
--------------------------------------------------------------------------------
April 30, 2000 23
<PAGE>
The AAL Small Cap Stock Fund SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
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 (94.6%) Market Value
===============================================================================================
<S> <C> <C>
Basic Materials (6.6%)
----------------------
27,600 Cambrex Corporation............................................... $ 1,131,600
75,600 Daisytek International Corporation*............................... 926,100
53,300 Geon Company...................................................... 1,165,937
154,100 NS Group, Inc.*................................................... 2,446,338
77,900 Pope & Talbot, Inc................................................ 1,650,506
55,900 Southdown, Inc.................................................... 3,249,188
27,600 Texas Industries, Inc............................................. 900,450
60,600 U.S.Aggregates, Inc............................................... 1,030,200
68,700 USX - US Steel Group.............................................. 1,721,794
----------------------------------------
Total Basic Materials 14,222,113
----------------------------------------
Capital Goods (13.4%)
---------------------
33,600 ACT Manufacturing, Inc.*.......................................... 1,222,200
32,600 Alliant Techsystems, Inc.*........................................ 2,269,775
12,400 Astec Industries, Inc.*........................................... 311,550
44,500 Benchmark Electronics, Inc.*...................................... 1,788,344
26,100 C-Cornet Corporation*............................................ 1,021,162
20,000 Cognex Corporation*............................................... 1,137,500
17,200 CTS Corporation................................................... 1,084,675
6,600 Dionex Corporation*............................................... 240,075
18,750 Dycom Industries, Inc.*........................................... 975,000
19,800 Electro Scientific Industries, Inc.*.............................. 1,248,637
33,100 Graco, Inc........................................................ 1,121,262
9,500 Hadco Corporation*................................................ 781,969
17,100 Harman International Industries, Inc.............................. 1,117,913
23,900 KEMET Corporation*................................................ 1,780,550
15,000 Millipore Corporation............................................. 1,075,312
25,100 Mueller Industries, Inc.*......................................... 826,731
53,200 Oshkosh Truck Corporation......................................... 1,675,800
50,000 Pentair, Inc...................................................... 1,912,500
13,300 Plexus Corporation*............................................... 1,019,113
48,500 Power Integrations, Inc.*......................................... 1,103,375
23,700 Precision Castparts Corporation*.................................. 989,475
47,500 Shaw Group, Inc.*................................................. 1,689,219
195,800 TETRA Technologies, Inc........................................... 2,790,150
----------------------------------------
Total Capital Goods 29,182,287
----------------------------------------
</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,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.6%) Market Value
===============================================================================================
<S> <C> <C>
Consumer Cyclicals (10.2%)
--------------------------
50,100 Acxiom Corporation*............................................... $ 1,352,700
10,000 Catalina Marketing Corporation*................................... 1,012,500
27,000 Columbia Sportswear Company*...................................... 784,687
45,500 DAMARK International, Inc.*....................................... 1,183,000
146,600 Dura Automotive Systems, Inc.*.................................... 2,382,250
82,600 Furniture Brands International, Inc.*............................. 1,543,587
35,600 Gentex Corporation*............................................... 1,148,100
29,500 Getty Images, Inc.*............................................... 896,062
35,900 Linens 'n Things, Inc.*........................................... 1,108,413
22,300 Management Network Group, Inc.*................................... 395,825
51,600 META Group, Inc.*................................................. 1,161,000
23,900 Michaels Stores, Inc.*............................................ 942,556
252,400 Pier 1 Imports, Inc............................................... 2,871,050
19,900 Profit Recovery Group International, Inc.*........................ 349,494
87,400 Ross Stores, Inc.................................................. 1,813,550
24,800 True North Communications, Inc.................................... 1,021,450
42,100 Williams-Sonoma, Inc.*............................................ 1,457,713
16,900 Zale Corporation*................................................. 697,125
----------------------------------------
Total Consumer Cyclicals 22,121,062
----------------------------------------
Consumer Staples (7.4%)
-----------------------
52,100 Applebee's International, Inc..................................... 1,898,394
29,600 Canandaigua Brands, Inc.*......................................... 1,491,100
32,300 CEC Entertainment, Inc.*.......................................... 969,000
15,500 Emmis Communications Corporation*................................. 658,750
121,500 Flowers Industries, Inc........................................... 1,852,875
40,600 Hall, Kinion & Associates, Inc.*.................................. 997,238
93,500 Interim Services, Inc.*........................................... 1,601,187
39,400 Jack in the Box, Inc.*............................................ 965,300
19,300 Patterson Dental Company*......................................... 928,813
39,800 Pinnacle Holdings, Inc.*.......................................... 2,236,263
17,300 Priority Healthcare Corporation,Class B*.......................... 957,987
55,737 Tetra Tech, Inc.*................................................. 1,313,303
19,500 United Natural Foods, Inc.*....................................... 294,937
----------------------------------------
Total Consumer Staples 16,165,147
----------------------------------------
Energy (5.9%)
-------------
84,700 Cross Timbers Oil Company*........................................ 1,222,856
98,100 Global Industries,Ltd.*........................................... 1,397,925
120,800 Key Energy Services, Inc.*........................................ 1,177,800
95,400 Precision Drilling Corporation*................................... 3,052,800
110,100 Pride International, Inc.*........................................ 2,491,013
42,600 UTI Energy Corporation*........................................... 1,480,350
65,400 Valero Energy Corporation......................................... 1,896,600
----------------------------------------
Total Energy 12,719,344
----------------------------------------
</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, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.6%) Market Value
===========================================================================================================
<S> <C> <C>
Financials (9.9%)
-----------------
73,300 Annuity and Life Re (Holdings), Ltd............................... $ 1,585,113
70,100 Bank United Corporation........................................... 2,326,444
30,000 Centura Banks, Inc................................................ 1,239,375
61,800 Commercial Federal Corporation.................................... 961,763
109,200 Community First Bankshares, Inc................................... 1,842,750
93,400 Cullen/Frost Bankers, Inc......................................... 2,305,813
62,700 First American Financial Corporation*............................. 967,931
90,900 FirstMerit Corporation............................................ 1,488,487
100,300 Peoples Heritage Financial Group, Inc............................. 1,310,169
75,500 Radian Group, Inc................................................. 3,845,781
9,500 SEI Investments Company........................................... 1,134,062
7,000 U.S. Trust Corporation............................................ 1,077,125
52,100 Waddell & Reed Financial, Inc..................................... 1,387,162
--------------------------------------
Total Financials 21,471,975
======================================
Health Care (11.2%)
-------------------
54,200 Alpharma, Inc..................................................... 2,093,475
27,000 Cephalon, Inc.*................................................... 1,518,750
24,500 COR Therapeutics, Inc.*........................................... 1,866,594
49,700 Cyberonics, Inc.*................................................. 1,012,637
46,000 DUSA Pharmaceuticals, Inc.*....................................... 759,000
33,000 Haemonetics Corporation*.......................................... 759,000
12,700 Human Genome Sciences, Inc.*...................................... 972,344
21,100 IDEC Pharmaceuticals Corporation*................................. 1,350,400
45,300 IDEXX Laboratories, Inc.*......................................... 1,189,125
30,450 Jones Pharma, Inc................................................. 877,340
44,200 Ligand Pharmaceuticals, Inc.*..................................... 591,175
37,100 Medicis Pharmaceutical Corporation*............................... 1,623,125
134,400 Omnicare, Inc..................................................... 2,041,200
10,200 Protein Design Labs, Inc.*........................................ 1,035,300
55,500 Renal Care Group, Inc.*........................................... 1,238,344
21,000 ResMed, Inc.*..................................................... 714,000
10,200 Techne Corporation*............................................... 725,475
34,300 Universal Health Services, Inc.Class B*........................... 1,877,925
20,800 Varian Medical Systems, Inc.*..................................... 832,000
21,700 Vertex Pharmaceuticals, Inc.*..................................... 1,133,825
--------------------------------------
Total Health Care 24,211,034
======================================
Technology (26.6%)
------------------
21,900 Adaptive Broadband Corporation*................................... 711,750
13,600 Advanced Fibre Communications, Inc.*.............................. 621,350
19,500 American Management Systems, Inc.*................................ 721,500
55,100 Apex, Inc.*....................................................... 1,628,894
26,400 Aspect Communications Corporation*................................ 937,200
93,100 AVT Corporation*.................................................. 1,029,919
24,300 Aware, Inc.*...................................................... 947,700
28,500 BISYS Group, Inc.*................................................ 1,783,031
29,200 Burr-Brown Corporation*........................................... 1,989,250
</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, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.6%) Market Value
===========================================================================================================
<S> <C> <C>
Technology (26.6%) - continued
------------------------------
19,600 C-Cube Microsystems, Inc.*....................................... $ 1,259,300
80,200 CIBER, Inc.*..................................................... 1,448,613
24,200 CommScope, Inc.*................................................. 1,149,500
94,700 Computer Network Technology Corporation*......................... 1,527,038
1,600 Cytyc Corporation*............................................... 71,600
30,000 Dallas Semiconductor Corporation................................. 1,288,125
89,400 Deltek Systems, Inc.*............................................ 1,089,562
37,700 Digital Microwave Corporation*................................... 1,392,544
11,700 HNC Software, Inc.*.............................................. 579,150
34,000 Hyperion Solutions Corporation*.................................. 1,031,155
31,200 Integrated Device Technology, Inc.*.............................. 1,499,550
22,900 International Rectifier Corporation*............................. 1,124,962
47,900 InterVoice-Brite, Inc.*.......................................... 763,406
94,800 Kent Electronics Corporation*.................................... 2,766,975
15,400 Lattice Semiconductor Corporation*............................... 1,037,575
69,200 Marchfirst, Inc.*................................................ 1,474,825
59,300 MedicaLogic, Inc.*............................................... 689,363
25,400 Mercator Software, Inc.*......................................... 935,037
37,500 Mercury Interactive Corporation*................................. 3,375,000
29,300 Methode Electronics, Inc......................................... 1,220,984
11,800 MICROS Systems, Inc.*............................................ 474,950
19,800 National Instruments Corporation*................................ 965,250
158,800 NOVA Corporation*................................................ 5,022,050
67,400 Photronics, Inc.*................................................ 2,245,262
46,100 Pinnacle Systems, Inc.*.......................................... 1,106,400
18,900 Plantronics, Inc.*............................................... 1,672,650
168,600 RAVISENT Technologies, Inc.*..................................... 1,159,125
17,000 Remedy Corporation*.............................................. 903,125
15,900 RSA Security, Inc.*.............................................. 933,131
74,300 S3, Inc.*........................................................ 1,044,844
40,500 ScanSource, Inc.*................................................ 1,397,250
13,500 Terayon Communication Systems, Inc.*............................. 1,255,500
28,800 Verity, Inc.*.................................................... 934,200
39,700 Xircom, Inc.*.................................................... 1,565,669
16,700 Zebra Technologies Corporation*.................................. 951,900
------------------------------------------------
Total Technology 57,726,164
================================================
Transportation (1.4%)
---------------------
24,300 Midwest Express Holdings, Inc.*................................... 615,094
45,100 Teekay Shipping Corporation....................................... 1,479,844
21,200 USFreightways Corporation......................................... 988,450
------------------------------------------------
Total Transportation 3,083,388
================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
-------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 27
<PAGE>
The AAL Small Cap Stock Fund - continued
SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.6%) Market Value
===========================================================================================================
<S> <C> <C>
Utilities (2.0%)
----------------
94,800 MDU Resources Group, Inc......................................... $ 2,067,825
49,000 Philadelphia Suburban Corporation................................ 1,176,000
40,200 Washington Gas Light Company..................................... 1,030,125
-------------------------------------------------
Total Utilities 4,273,950
=================================================
-------------------------------------------------
Total Common Stocks
(cost basis $177,541,806) 205,176,464
-------------------------------------------------
Principal Amount Short-Term Investments (6.0%) Interest Rate/1/ Maturity Date
===============================================================================================
$3,304,000 AT&T Corporation...................... 5.980% 5/1/2000 3,304,000
7,478,000 Ford Motor Credit Company............. 5.940-5.990 5/3-5/5/2000 7,474,389
2,294,000 General Electric Capital Corporation.. 5.900 5/2/2000 2,293,620
-------------------------------------------------
Total Short-Term Investments
(amortized cost basis $13,072,009) 13,072,009
-------------------------------------------------
-------------------------------------------------
TOTAL INVESTMENTS (100.6%)
(amortized cost basis $190,613,815) 218,248,473
-------------------------------------------------
-------------------------------------------------
Other Assets, Less Liabilities (-0.6%) (1,287,816)
-------------------------------------------------
-------------------------------------------------
Net Assets (100%) $216,960,657
-------------------------------------------------
</TABLE>
* Non-income producing security
----------------
/1/ The interest rate reflects the discount rate at the date of purchase. See
Page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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.
Mid Cap Stock Fund
<TABLE>
<CAPTION>
Shares Common Stocks (92.1%) Market Value
============================================================================================================
<S> <C> <C>
Basic Materials (5.9%)
----------------------
75,000 Bowater Inc.* ................................................... $ 4,125,000
114,900 Champion International Corporation .............................. 7,554,675
97,000 Rayonier, Inc. .................................................. 4,552,938
671,900 RPM, Inc. ....................................................... 6,802,987
105,600 Sealed Air Corporation* ......................................... 5,874,000
217,200 Southdown, Inc. ................................................. 12,624,750
230,600 USX-US Steel Group .............................................. 5,779,412
--------------------------------------------------
Total Basic Materials 47,313,762
==================================================
Capital Goods (7.7%)
--------------------
162,100 Jabil Circuit, Inc.* ............................................ 6,635,969
42,300 MasTec, Inc.* ................................................... 3,653,662
321,900 Pentair, Inc. ................................................... 12,312,675
709,300 Republic Services, Inc.* ........................................ 9,708,544
100,500 Sanmina Corporation* ............................................ 6,036,281
120,600 SPX Corporation* ................................................ 13,250,925
79,200 Symbol Technologies, Inc. ....................................... 4,415,400
69,700 Vishay Intertechnology, Inc.* ................................... 5,846,088
--------------------------------------------------
Total Capital Goods 61,859,544
==================================================
Communication Services (0.7%)
-----------------------------
54,200 Telephone and Data Systems, Inc. ................................ 5,528,400
--------------------------------------------------
Total Communication Services 5,528,400
==================================================
Consumer Cyclicals (7.0%)
-------------------------
205,800 A. H. Belo Corporation* ......................................... 3,434,287
184,300 Cintas Corporation .............................................. 7,302,887
176,000 Circuit City Stores, Inc. -Circuit City Group ................... 10,351,000
376,900 Furniture Brands International, Inc.* ........................... 7,043,319
208,000 Houghton Mifflin Company ........................................ 8,645,000
79,200 Reader's Digest Association, Inc. ............................... 2,534,400
116,000 Reader's Digest Association, Inc. Trust Automatic Common ........ 3,306,000
Exchange Securities
87,700 Tandy Corporation ............................................... 4,998,900
243,100 Tower Automotive, Inc.* ......................................... 3,798,438
138,300 Williams-Sonoma, Inc.* .......................................... 4,788,638
--------------------------------------------------
Total Consumer Cyclicals 56,202,869
==================================================
</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,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (92.1%) Market Value
============================================================================================================
<S> <C> <C>
Consumer Staples (8.9%)
-----------------------
71,800 Adelphia Communications Corporation* ............................ $ 3,558,588
495,200 Blockbuster, Inc. ............................................... 5,137,700
418,000 Keebler Foods Company ........................................... 13,140,875
66,500 Manpower, Inc.* ................................................. 2,348,281
155,050 Outback Steakhouse, Inc.* ....................................... 5,077,887
103,200 Pixar, Inc.* .................................................... 3,837,750
298,500 Starbucks Corporation* .......................................... 9,024,939
113,600 Univision Communications, Inc.* ................................. 12,410,800
502,800 USA Networks, Inc.* ............................................. 11,564,400
163,600 Valassis Communications, Inc.* .................................. 5,572,625
--------------------------------------------------
Total Consumer Staples 71,673,845
==================================================
Energy (8.8%)
-------------
131,700 Baker Hughes, Inc.* ............................................. 4,189,706
97,200 BJ Services Company* ............................................ 6,828,300
564,100 EOG Resources, Inc. ............................................. 14,031,988
161,600 Global Marine Inc.* ............................................. 3,878,400
222,000 Grant Prideco, Inc.* ............................................ 4,273,500
234,700 Nabors Industries, Inc.* ........................................ 9,255,981
237,000 Noble Drilling Corporation* ..................................... 9,465,187
273,300 Precision Drilling Corporation* ................................. 8,745,600
164,600 Tosco Corporation ............................................... 5,277,488
118,600 Weatherford International, Inc.* ................................ 4,818,125
--------------------------------------------------
Total Energy 70,764,275
==================================================
Financials (9.0%)
-----------------
143,500 Countrywide Credit Industries, Inc. ............................. 3,964,188
281,300 First Industrial Realty Trust, Inc. ............................. 8,456,581
365,800 Golden State Bancorp, Inc.* ..................................... 5,624,175
15,000 M&T Bank Corporation ............................................ 6,588,750
100,700 Marshall & Ilsley Corporation ................................... 4,676,256
159,900 MGIC Investment Corporation ..................................... 7,645,219
338,300 North Fork Bancorporation, Inc. ................................. 5,476,231
183,155 Old Kent Financial Corporation .................................. 5,517,544
554,600 Peoples Heritage Financial Group, Inc. .......................... 7,244,462
183,900 Protective Life Corporation ..................................... 4,379,119
266,300 SouthTrust Corporation .......................................... 6,357,913
156,300 Zions Bancorporation ............................................ 6,486,450
--------------------------------------------------
Total Financials 72,416,888
==================================================
Health Care (10.3%)
------------------
36,200 Affymetrix, Inc.* ............................................... 4,889,263
310,000 Elan Corporation plc ADR* ....................................... 13,291,250
103,900 Forest Laboratories, Inc.* ...................................... 8,734,094
128,400 Genzyme Corporation* ............................................ 6,267,525
389,800 Health Management Associates, Inc.* ............................. 6,212,437
205,200 IVAX Corporation* ............................................... 5,617,350
64,400 MedImmune, Inc.* ................................................ 10,299,975
</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,
2000
MidCap Stock Fund
<TABLE>
<CAPTION>
Shares Common Stocks (92.1%) Market Value
============================================================================================================
<S> <C> <C>
Health Care (10.3%)-continued
-----------------------------
78,100 Millennium Pharmaceuticals, Inc.* ............................... $ 6,199,187
64,300 MiniMed, Inc.* .................................................. 7,904,881
83,400 Sepracor, Inc.* ................................................. 7,672,800
83,000 Stryker Corporation ............................................. 5,965,625
--------------------------------------------------
Total Health Care 83,054,387
==================================================
Technology (25.7%)
------------------
48,700 Altera Corporation* ............................................. 4,979,575
52,400 Analog Devices, Inc.* ........................................... 4,024,975
187,600 Atmel Corporation* .............................................. 9,180,675
166,550 Burr-Brown Corporation* ......................................... 11,346,219
135,500 Cabletron Systems, Inc.* ........................................ 3,099,563
77,500 Carrier Access Corporation* ..................................... 3,380,938
51,800 CheckFree Holdings Corporation* ................................. 2,632,088
194,200 Comdisco, Inc. .................................................. 6,032,337
66,100 Comverse Technology, Inc.* ...................................... 5,895,294
306,575 Concord EFS, Inc.* .............................................. 6,859,616
156,000 Cypress Semiconductor Corporation* .............................. 8,102,250
45,000 Cytyc Corporation* .............................................. 2,013,750
35,300 DST Systems, Inc.* .............................................. 2,618,819
49,800 Electronic Arts, Inc.* .......................................... 3,012,900
108,000 Fiserv, Inc.* ................................................... 4,961,250
247,100 Integrated Device Technology, Inc.* ............................. 11,876,244
139,600 Intersil Holding Corporation* ................................... 4,886,000
194,900 Intuit, Inc.* ................................................... 7,004,219
144,200 LSI Logic Corporation*........................................... 9,012,500
25,000 Macromedia, Inc.* ............................................... 2,175,000
164,600 Maxim Integrated Products, Inc.* ................................ 10,668,138
110,800 Mercator Software, Inc.* ........................................ 4,078,825
18,500 Mercury Interactive Corporation*................................. 1,665,000
121,400 Network Associates, Inc.* ....................................... 3,088,112
154,200 Novellus Systems, Inc.* ......................................... 10,283,212
436,300 Parametric Technology Company* .................................. 3,558,550
84,500 Portal Software, Inc.* .......................................... 3,876,437
68,100 QLogic Corporation* ............................................. 6,831,281
52,800 Rational Software Corporation* .................................. 4,494,600
167,900 Siebel Systems, Inc.* ........................................... 20,630,712
34,100 Teradyne, Inc.* ................................................. 3,751,000
25,900 VeriSign, Inc.* ................................................. 3,609,812
116,700 Vitesse Semiconductor Corporation* .............................. 7,942,894
53,200 Waters Corporation* ............................................. 5,040,700
35,000 Westell Technologies, Inc.* ..................................... 995,312
31,700 Xilinx, Inc.* ................................................... 2,322,025
--------------------------------------------------
Total Technology 205,930,822
==================================================
Utilities (8.1%)
----------------
584,700 Azurix Corporation* ............................................. 4,092,900
55,200 Calpine Corporation* ............................................ 5,050,800
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 31
<PAGE>
The AAL Mid Cap Stock Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (92.1%) Market Value
===============================================================================================================
<S> <C> <C>
Utilities (8.1%)-continued
--------------------------
59,900 DQE, Inc. ....................................................... $ 2,291,175
126,200 Dynegy, Inc.* ................................................... 8,258,212
442,850 MDU Resources Group, Inc. ....................................... 9,659,666
91,500 Montana Power Company ........................................... 4,031,719
277,400 National Fuel Gas Company ....................................... 13,159,163
264,000 Niagara Mohawk Power Corporation* ............................... 3,663,000
167,500 NICOR, Inc. ..................................................... 5,674,062
476,300 NiSource, Inc. .................................................. 8,811,550
-----------------------------------------------
Total Utilities 64,692,247
===============================================
-----------------------------------------------
Total Common Stocks
(cost basis $657,268,149) 739,437,039
===============================================
<S> <C> <C> <C> <C>
Principal Amount Long-Term Fixed Income Investments(1.1%) Interest Rate Maturity
===============================================================================================
Industrial-Services (1.1%)
--------------------------
$ 1,160,000 BEA Systems, Inc., Convertible Bonds ............ 4.000% 6/15/2005 8,501,350
------------------------------------------------------
Total Long-Term Fixed Income Investments
(amortized cost basis $1,886,127) 8,501,350
------------------------------------------------------
------------------------------------------------------
Total Long-Term Investments
(amortized cost basis $659,154,276) 747,938,389
======================================================
Short-Term Investments (5.3%)/1/
=============================================
<S> <C> <C> <C> <C>
16,353,000 AT&T Corporation ........................... 5.970-5.980 5/1-5/2/2000 16,351,080
5,921,000 General Motors Acceptance Corporation ...... 6.050 5/30/2000 5,892,143
4,318,000 Gillette Company ........................... 6.000 5/12/2000 4,310,084
8,594,000 Ford Motor Credit Company .................. 5.940-5.990 5/3-5/5/2000 8,589,726
3,792,000 Toyota Motor Credit Corporation ............ 5.960 5/11/2000 3,785,722
3,369,000 Transamerica Finance Corporation ........... 6.170 5/31/2000 3,351,678
------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $42,280,433) 42,280,433
------------------------------------------------------
------------------------------------------------------
TOTAL INVESTMENTS (98.5%)
(amortized cost basis $701,434,709) 790,218,822
------------------------------------------------------
------------------------------------------------------
Other Assets,Less Liabilities (1.5%) 12,172,268
------------------------------------------------------
------------------------------------------------------
*Non-Income Producing Security Total Net Assets (100.0%) $802,391,090
======================================================
</TABLE>
---------------
/1/ The Interest rate reflects the discount rate at the date of purchase. See
page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] Investment Objective
---------------------------
The Fund seeks long-term capital growth by investing primarily in a diversified
portfolio of foreign stocks.
International Fund
<TABLE>
<CAPTION>
Shares Common Stocks (95.5%) Industry Market Value
================================================================================================================
<S> <C> <C> <C>
Brazil (0.8%)
-------------
85,735 Embratel Participacoes SA ADR ................... Telephone $1,929,038
-----------------------------------------------------------
Total Brazil 1,929,038
===========================================================
Canada (3.8%)
-------------
56,300 BCE, Inc. ....................................... Telephone-Cellular & Wireless 6,516,468
53,300 Seagram Company, Ltd. ........................... Entertainment 2,800,435
-----------------------------------------------------------
Total Canada 9,316,903
===========================================================
France (9.9%)
-------------
71,865 Aventis SA ...................................... Pharmaceuticals 3,961,940
32,240 Carrefour SA .................................... Retail-Food Chains 2,103,503
78,254 Rhodia SA ....................................... Chemicals 1,454,694
25,350 Suez Lyonnaise des Eaux SA ...................... Water Utilities 3,984,759
25,980 Total Fina Elf SA ............................... Oil & Gas Exploration/Production 3,951,214
45,305 Valeo SA ........................................ Auto Parts & Equipment 2,518,320
63,381 Vivendi ......................................... Services-Commercial & Consumer 6,283,810
-----------------------------------------------------------
Total France 24,258,240
===========================================================
Germany (12.3%)
---------------
49,788 Aventis SA* ..................................... Chemicals 2,708,533
103,182 Bayerische Motoren Werke (BMW) AG ............... Manufacturing-Specialized 2,707,893
64,966 Dresdner Bank AG ................................ Banks-Major Regional 2,658,077
70,867 Metallgesellschaft AG ........................... Chemicals 1,117,185
7,142 SAP AG .......................................... Computer Software/Services 4,142,412
29,690 Siemens AG ...................................... Manufacturing-Diversified 4,328,777
1,155 United Internet AG* ............................. Services-Advertising & Marketing 282,067
37,044 Veba AG ......................................... Manufacturing-Diversified 1,805,954
2,242,424 Vodafone AirTouch plc* .......................... Telephone-Cellular & Wireless 10,360,022
-----------------------------------------------------------
Total Germany 30,110,920
===========================================================
Greece (0.4%)
-------------
40,120 Hellenic Telecommunications Organization SA ..... Telephone 902,560
-----------------------------------------------------------
Total Greece 902,560
===========================================================
Hong Kong (2.9%)
----------------
604,000 China Telecom, Ltd.* ............................ Telephone-Cellular & Wireless 4,361,920
192,000 Hutchison Whampoa, Ltd. ......................... Financial-Diversified 2,797,792
-----------------------------------------------------------
Total Hong Kong 7,159,712
===========================================================
</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,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (95.5%) Industry Market Value
================================================================================================================
<S> <C> <C> <C>
Hungary (0.4%)
--------------
18,400 Gedeon Richter Rt. ................................ Pharmaceuticals $ 1,020,617
------------------------------------------------------------
Total Hungary 1,020,617
============================================================
Italy (5.8%)
------------
1,021,743 Banca Nazionale del Lavoro ........................Banks-Major Regional 3,351,809
359,700 Mediaset SpA ......................................TV, Radio, Cable 5,850,779
331,512 Telecom Italia Mobile SpA .........................Telephone-Cellular & Wireless 3,171,930
443,900 UniCredito Italiano SpA ...........................Banks-Major Regional 1,804,077
------------------------------------------------------------
Total Italy 14,178,595
============================================================
Japan (22.3%)
-------------
615,000 Fuji Bank, Ltd. ...................................Banks-Major Regional 5,121,605
87,000 Fujitsu, Ltd. .....................................Communications Equipment 2,463,367
78,000 Kao Corporation ...................................Personal Care 2,374,537
11,200 Matsushita Communication Industrial Company, Ltd. .Telephone-Cellular & Wireless 1,755,577
20,000 Murata Manufacturing Company, Ltd. ................Electronic Component Distributors 3,886,312
162,000 Nikko Securities Company, Ltd. ....................Financial-Diversified 1,911,233
186 Nippon Telegraph & Telephone Corporation ..........Telephone 2,306,249
120,000 Nomura Securities Company, Ltd. ...................Financial-Diversified 3,020,220
285 NTT DoCoMo, Inc. ..................................Telephone-Cellular & Wireless 9,520,077
77,000 Pioneer Corporation ...............................House Furnishings 2,101,847
14,100 Rohm Company, Ltd. ................................Semiconductors 4,722,980
488,000 Sakura Bank, Ltd. .................................Banks-Major Regional 3,422,768
127,000 Sanwa Bank, Ltd. ..................................Banks-Major Regional 1,226,853
5,040 Shohkoh Fund & Company, Ltd. ......................Financial-Diversified 900,070
6,300 Softbank Corporation ..............................Financial-Diversified 1,550,639
72,000 Takeda Chemical Industries, Ltd. ..................Pharmaceuticals 4,736,860
16,000 Takefuji Corporation ..............................Financial-Diversified 1,692,211
36,000 Yamanouchi Pharmaceutical Company, Ltd. ...........Pharmaceuticals 1,902,072
------------------------------------------------------------
Total Japan 54,615,477
============================================================
Mexico (1.2%)
-------------
50,430 Telefonos de Mexico SA ADR .............................Telephone 2,965,914
------------------------------------------------------
Total Mexico 2,965,914
======================================================
Netherlands (13.5%)
-------------------
43,699 Gucci Group NV ......................................... Retail-Specialty Apparel 3,829,125
65,938 ING Groep NV ........................................... Banks-Major Regional 3,606,341
98,828 Koninklijke (Royal) Philips Electronics NV ............. Electronic Component Distributors 4,419,072
56,320 KPNQwest NV* ........................................... Telephone 2,345,384
29,883 Laurus NV .............................................. Foods 319,961
107,399 Royal KPN NV* .......................................... Telephone 10,848,532
13,347 Vendex KBB NV .......................................... Retail-Department Stores 206,152
133,881 Verenigde Nederlands Uitgeversbedrijven Verenigd Bezit . Publishing 7,179,604
35,619 World Online International NV* ......................... Services-Computer Systems 480,373
-----------------------------------------------------------
Total Netherlands 33,234,544
===========================================================
Singapore (1.1%)
----------------
195,000 DBS Group Holdings, Ltd. ............................... Banks-Major Regional 2,683,905
------------------------------------------------------------
Total Singapore 2,683,905
============================================================
</TABLE>
The accompanying notes to the Financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
34 The AAL Mutual Funds Annual Report
<PAGE>
The AAL International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (95.5%) Industry Market Value
================================================================================================================
<S> <C> <C> <C>
South Korea (1.8%)
------------------
53,585 Korea Telecom Corporation ADR.................... Telephone-Cellular & Wireless $1,848,682
4,229 Samsung Electronics GDR/2/....................... Electronic Component Distributors 571,634
60,778 SK Telecom Company, Ltd. ADR..................... Telephone-Cellular & Wireless 1,948,695
-------------------------------------------------------------------
Total South Korea 4,369,011
===================================================================
Spain (1.8%)
------------
193,793 Telefonica SA*.................................. Telephone 4,322,993
-------------------------------------------------------------------
Total Spain 4,322,993
===================================================================
Sweden (2.1%)
-------------
59,448 Telefonaktiebolaget LM Ericsson AB.............. Telephone-Cellular & Wireless 5,292,264
-------------------------------------------------------------------
Total Sweden 5,292,264
===================================================================
Switzerland (1.9%)
------------------
5,753 Clariant AG..................................... Chemicals 2,103,247
1,890 Novartis AG..................................... Health Care-Drugs 2,646,330
-------------------------------------------------------------------
Total Switzerland 4,749,577
===================================================================
United Kingdom (13.5%)
----------------------
99,904 AstraZeneca Group plc.......................... Pharmaceuticals 4,206,566
619,500 British Aerospace plc.......................... Aerospace/Defense 3,860,364
283,187 Cable & Wireless Communications plc............ Telephone-Cellular & Wireless 4,719,045
436,950 Diageo plc..................................... Beverages-Non-Alcoholic 3,544,963
22,110 Energis plc*................................... Telephone-Cellular & Wireless 1,096,678
125,826 Glaxo Wellcome plc............................. Pharmaceuticals 3,910,037
177,965 Railtrack Group plc............................ Railroads 2,287,564
491,313 Reed International plc......................... Publishing 3,432,503
424,200 Somerfield plc................................. Retail-Food Chains 381,654
285,768 Telewest Communications plc*................... TV, Radio, Cable 1,759,501
828,976 Vodafone AirTouch plc.......................... Telephone-Cellular & Wireless 3,806,986
-------------------------------------------------------------------
Total United Kingdom 33,005,861
===================================================================
Total Common Stocks
(cost basis $187,379,103) 234,116,131
===================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount Short-Term Investments (4.3%) Interest Rate /1/ Maturity Date
==================================================================================================
$10,500,000 United Parcel Service of America, Inc. 5.940% 5/1/2000 10,500,000
Total Short-Term Investments
(amortized cost basis $10,500,000) 10,500,000
TOTAL INVESTMENTS (99.8%)
(amortized cost basis $197,879,103) 244,616,131
===============================================================
Other Assets, Less Liabilities (0.2%) 540,641
===============================================================
Total Net Assets (100.0%)$245,156,772
===============================================================
*Non income-producing security
--------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/144A security
See page 87 for a complete discussion of Investment Terms.
</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 International Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
AAL International Fund Stock Sector Allocations % of Net Assets
====================================================================
Telephone-Cellular & Wireless.............................22.2
Telephone.................................................10.5
Banks-Major Regional.......................................9.7
Pharmaceuticals............................................8.1
Financial-Diversified......................................4.8
Cash & Equivalents.........................................4.5
Publishing.................................................4.3
Electronic Component Distributors..........................3.6
TV, Radio, Cable...........................................3.1
Chemicals..................................................3.0
Services-Commercial & Consumer.............................2.6
Manufacturing-Diversified..................................2.5
Semiconductors.............................................1.9
Computer Software/Services.................................1.7
Water Utilities............................................1.6
Oil & Gas Exploration/Production...........................1.6
Retail-Specialty Apparel...................................1.6
Aerospace/Defense..........................................1.6
Beverages-Non-Alcoholic....................................1.5
Entertainment..............................................1.1
Manufacturing-Specialized..................................1.1
Health Care Drugs..........................................1.1
Retail-Food Chains.........................................1.0
Auto Parts & Equipment.....................................1.0
Communications Equipment...................................1.0
Personal Care..............................................1.0
House Furnishings..........................................0.9
Railroads..................................................0.9
Services-Computer Systems..................................0.2
Services-Advertising & Marketing...........................0.1
Foods......................................................0.1
Retail-Department Stores...................................0.1
--------------------------------------------------------------------------
Total 100.0
==========================================================================
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 (94.1%) Market Value
===============================================================================================================
<S> <C> <C>
Basic Materials (0.2%)
----------------------
47,250 Corn Products International, Inc. ................................ $ 1,134,000
169,900 Eastman Chemical Company ......................................... 8,887,894
----------------------------------------------------
Total Basic Materials 10,021,894
====================================================
Capital Goods (6.6%)
--------------------
457,000 Cordant Technologies, Inc. ....................................... 25,877,625
1,185,400 General Electric Company ......................................... 186,404,150
645,700 Herman Miller, Inc. .............................................. 17,676,037
298,662 Honeywell International, Inc. .................................... 16,725,072
102,800 PACCAR, Inc. ..................................................... 4,889,425
206,000 Rockwell International Corporation ............................... 8,111,250
424,800 United Technologies Corporation .................................. 26,417,250
----------------------------------------------------
Total Capital Goods 286,100,809
====================================================
Communication Services (4.8%)
-----------------------------
1,736,843 AT&T Corporation ................................................. 81,088,858
701,800 Bell Atlantic Corporation ........................................ 41,581,650
470,600 MCI WorldCom, Inc.* .............................................. 21,382,887
909,939 SBC Communications, Inc. ......................................... 39,866,702
274,000 Sprint Corporation ............................................... 16,851,000
137,000 Sprint Corporation (PCS Group)* .................................. 7,535,000
----------------------------------------------------
Total Communication Services 208,306,097
====================================================
Consumer Cyclicals (7.4%)
-------------------------
339,900 Family Dollar Stores, Inc. ....................................... 6,479,344
344,900 Gannett Company, Inc. ............................................ 22,030,488
1,407,000 Harley-Davidson, Inc. ............................................ 56,016,188
453,400 New York Times Company ........................................... 18,674,412
2,032,400 Ross Stores, Inc. ................................................ 42,172,300
1,084,500 Tiffany and Company .............................................. 78,829,594
111,600 Times Mirror Company ............................................. 10,887,975
1,538,500 Wal-Mart Stores, Inc. ............................................ 85,194,437
----------------------------------------------------
Total Consumer Cyclicals 320,284,738
====================================================
Consumer Staples (20.7%)
------------------------
269,000 Adelphia Communications Corporation* ............................. 13,332,313
405,800 Alberto-Culver Company ........................................... 9,587,025
271,900 Cablevision Systems Corporation* ................................. 18,404,231
3,145,700 Comcast Corporation* ............................................. 126,024,606
</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,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
==============================================================================================================
<S> <C> <C>
Consumer Staples (20.7%) - continued
------------------------------------
3,149,200 Cox Communications, Inc.* ........................................ $134,825,125
114,200 Dean Foods Company ............................................... 2,797,900
1,303,000 General Mills, Inc. .............................................. 47,396,625
389,000 Kimberly-Clark Corporation ....................................... 22,586,313
1,775,616 Liberty Media Group* ............................................. 88,669,824
1,800,149 MediaOne Group, Inc.* ............................................ 136,136,268
547,300 MediaOne Group, Inc. Convertible Securities ...................... 25,381,038
1,743,900 Philip Morris Companies, Inc. .................................... 38,147,812
564,400 Safeway, Inc.* ................................................... 24,904,150
748,400 Time Warner, Inc. ................................................ 67,309,225
3,981,700 Walgreen Company ................................................. 111,985,312
739,200 Walt Disney Company .............................................. 32,016,600
---------------------------------------------------
Total Consumer Staples 899,504,367
===================================================
Energy (6.3%)
-------------
324,200 Apache Corporation,Inc............................................ 15,703,437
662,200 BP Amoco plc ADR.................................................. 33,772,200
235,800 Chevron Corporation............................................... 20,072,475
434,300 ENSCO International, Inc.......................................... 14,413,331
1,059,200 EOG Resources, Inc................................................ 26,347,600
1,136,000 Exxon Mobil Corporation........................................... 88,253,000
392,700 Halliburton Company............................................... 17,352,431
400,400 Nabors Industries, Inc.*.......................................... 15,790,775
760,900 Royal Dutch Petroleum Company ADR................................. 43,656,638
---------------------------------------------------
Total Energy 275,361,887
===================================================
Financials (14.6%)
------------------
419,900 American Express Company.......................................... 63,011,244
1,354,768 American International Group,Inc.................................. 148,601,115
122,800 Associates First Capital Corporation.............................. 2,724,625
634,800 Bank of America Corporation....................................... 31,105,200
735,500 CIGNA Corporation................................................. 58,656,125
1,050,100 Citigroup, Inc.................................................... 62,415,319
716,100 Fannie Mae........................................................ 43,189,781
28,500 Hartford Life, Inc................................................ 1,403,625
520,200 Household International, Inc...................................... 21,718,350
409,800 J.P.Morgan & Company, Inc......................................... 52,608,075
1,003,693 MBNA Corporation.................................................. 26,660,595
553,300 MGIC Investment Corporation....................................... 26,454,656
757,100 Morgan Stanley Dean Witter & Company.............................. 58,107,425
1,006,000 National City Corporation......................................... 17,102,000
197,700 Northern Trust Corporation........................................ 12,677,513
245,040 Starwood Hotels & Resorts Worldwide, Inc.......................... 6,968,325
---------------------------------------------------
Total Financials 633,403,973
===================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
38 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (94.1%) Market Value
========================================================================================================
<S> <C> <C>
Health Care (9.2%)
------------------
377,700 Elan Corporation plc ADR*...................................... $ 16,193,887
568,200 Eli Lilly & Company............................................ 43,928,963
666,900 Johnson & Johnson.............................................. 55,019,250
441,100 Medtronic, Inc. ............................................... 22,909,631
1,580,800 Merck & Company, Inc. ......................................... 109,865,600
2,358,300 Pfizer, Inc. .................................................. 99,343,388
687,700 Schering-Plough Corporation.................................... 27,722,906
328,000 Wellpoint Health Networks, Inc.* .............................. 24,190,000
--------------------------------------------------------
Total Health Care 399,173,625
========================================================
Technology (23.7%)
------------------
2,888,200 ADC Telecommunications, Inc.* ................................. 175,458,150
217,200 Arrow Electronics, Inc.* ...................................... 9,516,075
16,300 At Home Corporation* .......................................... 303,588
1,569,100 Automatic Data Processing, Inc. ............................... 84,437,194
2,357,500 Cisco Systems, Inc.* .......................................... 163,440,996
248,975 Computer Associates International, Inc. ....................... 13,895,917
237,400 Computer Sciences Corporation* ................................ 19,362,937
659,766 First Data Corporation ........................................ 32,122,357
296,000 Gateway, Inc.* ................................................ 16,354,000
179,500 Hewlett-Packard Company ....................................... 24,232,500
1,633,700 Intel Corporation ............................................. 207,173,581
1,718,648 Lucent Technologies, Inc. ..................................... 106,878,422
827,000 Microsoft Corporation* ........................................ 57,683,250
415,200 Motorola, Inc. ................................................ 49,434,750
378,900 National Data Corporation ..................................... 10,514,475
1,126,500 Tellabs, Inc.* ................................................ 61,746,281
--------------------------------------------------------
Total Technology 1,032,554,473
========================================================
Transportation (0.1%)
---------------------
90,600 CNF Transportation, Inc. ...................................... 2,531,138
--------------------------------------------------------
Total Transportation 2,531,138
========================================================
Utilities (0.5%)
----------------
256,300 Columbia Energy Group ......................................... 16,082,825
245,000 Entergy Corporation ........................................... 6,232,188
--------------------------------------------------------
Total Utilities 22,315,013
========================================================
--------------------------------------------------------
Total Common Stocks
(cost basis $1,842,681,903) 4,089,558,014
========================================================
</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 Capital Growth Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
2000
<TABLE>
<CAPTION>
Principal Amount Short-Term Investments (6.4%) Interest Rate/1/ Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C>
<C>
$44,190,000 AT&T Corporation ....................................... 5.970-5.980% 5/1-5/2/2000 $ 44,186,707
12,781,000 Bell Atlantic Network Funding Corporation .............. 6.050 5/4/2000 12,774,556
25,435,000 Countrywide Home Loans, Inc. ........................... 6.170 5/24/2000 25,334,737
30,586,000 Ford Motor Credit Corporation .......................... 5.940-5.990 5/3-5/5/2000 30,572,859
23,000,000 General Motors Acceptance Corporation .................. 6.050 5/30/2000 22,887,907
29,350,000 GTE Corporation......................................... 6.070 5/10-5/12/2000 29,300,024
69,632,000 Merrill Lynch & Company, Inc. .......................... 6.000-6.100 5/23-6/12/2000 69,241,330
23,792,000 Toyota Motor Credit Corporation ........................ 5.960-6.000 5/9-5/11/2000 23,755,771
21,233,000 Transamerica Finance Corporation ....................... 6.080 5/26/2000 21,143,350
Total Short-Term Investments
(amortized cost basis$279,197,241) 279,197,241
==============================================================
TOTAL INVESTMENTS (100.5%)
(amortized cost basis $2,121,879,144) 4,368,755,255
==============================================================
Other Assets,Less Liabilities (-0.5%) (22,202,099)
==============================================================
Net Assets (100.0%) $4,346,553,156
==============================================================
</TABLE>
*Non-income producing security
----------------
/1/The interest rate reflects the discount rate at the date of purchase.
/2/See page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 (93.8%) Market Value
===========================================================================================================
<S> <C> <C>
Basic Materials (5.3%)
----------------------
28,596 E.I. du Pont de Nemours and Company............................... $ 1,356,523
55,000 International Paper Company....................................... 2,021,250
100,000 Plum Creek Timber Company, Inc.................................... 2,437,500
119,300 Southdown, Inc.................................................... 6,934,312
115,000 USX-US Steel Group................................................ 2,882,188
-----------------------------------------
Total Basic Materials 15,631,773
=========================================
Capital Goods (8.2%)
--------------------
21,000 Corning, Inc...................................................... 4,147,500
55,000 Emerson Electric Company.......................................... 3,018,125
135,250 Honeywell International, Inc...................................... 7,574,000
50,000 Pitney Bowes, Inc................................................. 2,043,750
81,000 Tyco International, Ltd........................................... 3,720,938
62,000 United Technologies Corporation................................... 3,855,625
-----------------------------------------
Total Capital Goods 24,359,938
=========================================
Communication Service (11.9%)
-----------------------------
116,053 AT&T Corporation.................................................. 5,418,225
56,600 Bell Atlantic Corporation......................................... 3,353,550
90,000 Cable & Wireless plc ADR.......................................... 4,443,750
35,000 GTE Corporation................................................... 2,371,250
103,036 MCI WorldCom, Inc.*................................................ 4,681,698
113,147 SBC Communications, Inc........................................... 4,957,253
104,881 Telefonica SA ADR*................................................ 6,948,366
62,500 Vodafone AirTouch plc ADR......................................... 2,937,500
-----------------------------------------
Total Communication Service 35,111,592
=========================================
Consumer Cyclicals (9.9%)
-------------------------
52,000 Convergys Corporation............................................. 2,288,000
154,774 Delphi Automotive Systems Corporation............................. 2,960,053
126,250 Dollar General Corporation........................................ 2,887,969
33,000 Ford Motor Company................................................ 1,804,687
14,000 Gannett Company, Inc.............................................. 894,250
24,000 General Motors Corporation........................................ 2,247,000
165,500 Hasbro, Inc....................................................... 2,637,656
68,000 Home Depot, Inc................................................... 3,812,250
66,000 Lowe's Companies, Inc............................................. 3,267,000
97,000 Masco Corporation*................................................ 2,176,438
</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,
2000
<TABLE>
<CAPTION>
Shares Common Stocks (93.8%) Market Value
===========================================================================================================
<S> <C> <C>
Consumer Cyclicals (9.9%) - continued
-------------------------------------
28,000 New York Times Company............................................. $ 1,153,250
48,000 Target Corporation*................................................ 3,195,000
-----------------------------------------
Total Consumer Cyclicals 29,323,553
=========================================
Consumer Staples (9.6%)
-----------------------
44,000 Albertson's, Inc................................................... 1,432,750
77,200 CVS Corporation.................................................... 3,358,200
25,333 Energizer Holdings, Inc.*.......................................... 432,244
71,000 Flowers Industries, Inc............................................ 1,082,750
105,000 Fox Entertainment Group, Inc.*..................................... 2,703,750
43,000 H.J. Heinz Company.................................................. 1,462,000
43,888 Liberty Media Group*............................................... 2,191,657
78,800 MediaOne Group, Inc.*.............................................. 5,959,250
135,000 MediaOne Group, Inc. Convertible Securities......................... 6,260,625
76,000 Ralston Purina Company............................................. 1,344,250
86,000 Sara Lee Corporation............................................... 1,290,000
73,000 Tyson Foods, Inc................................................... 761,938
-----------------------------------------
Total Consumer Staples 28,279,414
=========================================
Energy (10.4%)
--------------
50,000 Chevron Corporation................................................ 4,256,250
73,000 Coastal Corporation................................................ 3,663,687
109,191 Conoco, Inc., Class B............................................... 2,716,126
74,000 Halliburton Company................................................ 3,269,875
111,000 Noble Drilling Corporation*........................................ 4,433,063
96,000 Questar Corporation................................................ 1,806,000
97,000 Texaco, Inc........................................................ 4,801,500
52,000 Tosco Corporation.................................................. 1,667,250
90,000 Transocean Sedco Forex, Inc......................................... 4,230,000
-----------------------------------------
Total Energy 30,843,751
=========================================
Financials (16.8%)
------------------
48,910 Associates First Capital Corporation............................... 1,085,191
81,900 Banc One Corporation............................................... 2,497,950
54,000 Bank of America Corporation........................................ 2,646,000
74,000 Bank of New York Company, Inc...................................... 3,038,625
60,000 Chase Manhattan Corporation........................................ 4,323,750
40,000 CIGNA Corporation.................................................. 3,190,000
97,000 Citigroup, Inc..................................................... 5,765,438
40,000 Crescent Real Estate Equities Company.............................. 685,000
52,000 Duke-Weeks Realty Corporation...................................... 1,127,750
25,000 Equity Residential Properties Trust................................ 1,137,500
65,000 Fannie Mae......................................................... 3,920,312
111,000 First Industrial Realty Trust, Inc.................................. 3,336,937
77,000 FleetBoston Financial Corporation.................................. 2,728,688
84,000 Freddie Mac........................................................ 3,858,750
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
42 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Equity Income Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (93.8%) Market Value
==============================================================================================
<S> <C> <C>
Financials (16.8%) - continued
------------------------------
75,000 Mellon Bank Corporation................................ $ 2,409,375
39,000 Simon Property Group, Inc. ............................ 989,625
53,000 Torchmark Corporation.................................. 1,328,312
102,000 Wells Fargo & Company.................................. 4,188,375
27,000 XL Capital Ltd......................................... 1,285,875
------------------------------------------
Total Financials 49,543,453
==========================================
Health Care (5.4%)
------------------
39,000 Baxter International, Inc. ............................ 2,539,875
7,800 Edwards Lifesciences Corporation*...................... 117,000
64,000 Elan Corporation plc ADR*.............................. 2,744,000
29,000 Johnson & Johnson...................................... 2,392,500
78,000 Medtronic, Inc. ....................................... 4,051,125
36,000 Warner-Lambert Company................................. 4,097,250
------------------------------------------
Total Health Care 15,941,750
==========================================
Technology (7.6%)
-----------------
62,000 ADC Telecommunications, Inc.*.......................... 3,766,500
40,000 CIENA Corporation*..................................... 4,945,000
78,000 First Data Corporation................................. 3,797,625
38,000 International Business Machines Corporation............ 4,241,750
82,444 Lucent Technologies, Inc. ............................. 5,126,986
52,000 Parametric Technology Company*......................... 424,122
------------------------------------------
Total Technology 22,301,983
==========================================
Utilities (8.7%)
----------------
36,000 Ameren Corporation..................................... 1,320,750
73,000 Central and South West Corporation..................... 1,583,188
64,000 CMS Energy Corporation................................. 1,216,000
19,500 Columbia Energy Group.................................. 1,223,625
22,650 Consolidated Edison, Inc. ............................. 796,997
48,000 Dominion Resources, Inc. .............................. 2,160,000
65,000 Edison International................................... 1,239,063
60,000 National Fuel Gas Company.............................. 2,846,250
73,100 New Century Energies, Inc. ............................ 2,384,887
34,995 NSTAR.................................................. 1,541,967
56,000 PG&E Corporation....................................... 1,452,500
67,000 Pinnacle West Capital Corporation...................... 2,353,375
87,000 Texas Utilities Company................................ 2,930,812
72,000 Williams Companies, Inc. .............................. 2,686,500
------------------------------------------
Total Utilities 25,735,914
==========================================
------------------------------------------
Total Common Stocks
(cost basis $220,094,733) 277,073,121
==========================================
</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 Equity Income Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed Income Investments (0.8%) Interest Rate Maturity Date Market Value
================================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Securities (0.2%)
---------------------------------
$ 500,000 U.S. Treasury Bonds................................. 7.500% 11/15/2016 $ 559,688
-------------------------------------------------------------
Total U.S. Government Securities 559,688
=============================================================
Utilities (0.6%)
----------------
1,650,000 Texas Utilities Electric Bonds...................... 9.750 5/1/2021 1,748,104
-------------------------------------------------------------
Total Utilities 1,748,104
=============================================================
Total Long-Term Fixed Income Investments
(amortized cost basis $2,390,175) 2,307,792
=============================================================
Total Long-Term Investments
(amortized cost basis $222,484,908) 279,380,913
=============================================================
Short-Term Investments (5.3%)/1/
====================================================
4,404,000 AT&T Corporation.................................... 5.980 5/1/2000 4,404,000
3,024,000 Ford Motor Credit Company........................... 5.940 5/5/2000 3,022,004
6,595,000 General Electric Capital Corporation................ 5.900 5/2/2000 6,593,906
1,784,000 Gillette Company.................................... 6.000 5/12/2000 1,780,729
Total Short-Term Investments
(amortized cost basis $15,800,639) 15,800,639
=============================================================
TOTAL INVESTMENTS (99.9%)
(amortized cost basis $238,285,547) 295,181,552
=============================================================
Other Assets,Less Liabilities (0.1%) 209,704
=============================================================
Total Net Assets (100.0%) $295,391,256
=============================================================
</TABLE>
*Non-income producing security
---------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ See page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 (50.0%) Market Value
====================================================================================================================
<S> <C> <C>
Basic Materials (0.1%)
----------------------
1,600 Corn Products International, Inc.................................. $ 38,400
5,800 Eastman Chemical Company.......................................... 303,413
--------------------------------------------------
Total Basic Materials 341,813
==================================================
Capital Goods (3.5%)
--------------------
15,500 Cordant Technologies, Inc......................................... 877,688
40,200 General Electric Company.......................................... 6,321,450
21,900 Herman Miller, Inc................................................ 599,512
10,087 Honeywell International, Inc...................................... 564,872
3,500 PACCAR, Inc....................................................... 166,469
7,000 Rockwell International Corporation................................ 275,625
14,400 United Technologies Corporation................................... 895,500
--------------------------------------------------
Total Capital Goods 9,701,116
==================================================
Communication Services (2.5%)
-----------------------------
58,843 AT&T Corporation.................................................. 2,747,233
23,800 Bell Atlantic Corporation......................................... 1,410,150
15,900 MCI WorldCom, Inc.*............................................... 722,456
30,799 SBC Communications, Inc........................................... 1,349,381
9,300 Sprint Corporation................................................ 571,950
4,600 Sprint Corporation (PCS Group)*................................... 253,000
--------------------------------------------------
Total Communication Services 7,054,170
==================================================
Consumer Cyclicals (3.9%)
-------------------------
11,500 Family Dollar Stores, Inc......................................... 219,219
11,700 Gannett Company, Inc.............................................. 747,337
47,600 Harley-Davidson, Inc.............................................. 1,895,075
15,400 New York Times Company............................................ 634,288
68,800 Ross Stores, Inc.................................................. 1,427,600
36,700 Tiffany and Company............................................... 2,667,631
3,800 Times Mirror Company.............................................. 370,738
52,100 Wal-Mart Stores, Inc.............................................. 2,885,037
--------------------------------------------------
Total Consumer Cyclicals 10,846,925
==================================================
Consumer Staples (11.0%)
------------------------
9,100 Adelphia Communications Corporation*.............................. 451,019
13,700 Alberto-Culver Company............................................ 323,663
9,200 Cablevision Systems Corporation*.................................. 622,725
</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, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (50.0%) Market Value
=========================================================================================================
<S> <C> <C>
Consumer Staples (11.0%) - continued
------------------------------------
106,600 Comcast Corporation*....................................... $ 4,270,663
106,700 Cox Communications, Inc.*.................................. 4,568,094
3,900 Dean Foods Company......................................... 95,550
44,100 General Mills, Inc......................................... 1,604,137
13,200 Kimberly-Clark Corporation................................. 766,425
60,200 Liberty Media Group*....................................... 3,006,237
61,000 MediaOne Group, Inc.*...................................... 4,613,125
18,500 MediaOne Group, Inc.Convertible Securities................. 857,937
59,100 Philip Morris Companies, Inc............................... 1,292,812
19,100 Safeway, Inc.*............................................. 842,787
25,400 Time Warner, Inc........................................... 2,284,413
134,900 Walgreen Company........................................... 3,794,062
23,400 Walt Disney Company........................................ 1,013,512
----------------------------------
Total Consumer Staples 30,407,161
==================================
Energy (3.4%)
-------------
11,000 Apache Corporation, Inc.................................... 532,813
22,400 BP Amoco plc ADR........................................... 1,142,400
8,000 Chevron Corporation........................................ 681,000
14,700 ENSCO International, Inc................................... 487,856
35,900 EOG Resources, Inc......................................... 893,012
38,500 Exxon Mobil Corporation.................................... 2,990,969
13,300 Halliburton Company........................................ 587,694
13,600 Nabors Industries, Inc.*.................................... 536,350
25,800 Royal Dutch Petroleum Company ADR.......................... 1,480,275
----------------------------------
Total Energy 9,332,369
==================================
Financials (7.7%)
-----------------
14,200 American Express Company................................... 2,130,888
45,875 American International Group, Inc.......................... 5,031,914
4,200 Associates First Capital Corporation....................... 93,187
21,500 Bank of America Corporation................................ 1,053,500
24,900 CIGNA Corporation.......................................... 1,985,775
35,600 Citigroup, Inc............................................. 2,115,975
24,300 Fannie Mae................................................. 1,465,594
1,000 Hartford Life, Inc......................................... 49,250
17,600 Household International, Inc............................... 734,800
13,900 J.P.Morgan & Company, Inc.................................. 1,784,413
34,000 MBNA Corporation........................................... 903,125
18,700 MGIC Investment Corporation................................ 894,094
25,600 Morgan Stanley Dean Witter & Company....................... 1,964,800
34,100 National City Corporation.................................. 579,700
6,700 Northern Trust Corporation................................. 429,637
8,308 Starwood Hotels & Resorts Worldwide, Inc................... 236,259
----------------------------------
Total Financials 21,452,911
==================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
46 The AAL Mutual Funds
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Common Stocks (50.0%) Market Value
==========================================================================================================
<S> <C> <C>
Health Care (4.9%)
------------------
12,800 Elan Corporation plc ADR*........................................... $ 548,800
19,200 Eli Lilly & Company................................................. 1,484,400
22,600 Johnson & Johnson................................................... 1,864,500
14,900 Medtronic, Inc...................................................... 773,869
53,600 Merck & Company, Inc................................................ 3,725,200
79,900 Pfizer, Inc......................................................... 3,365,787
23,300 Schering-Plough Corporation......................................... 939,281
11,100 Wellpoint Health Networks, Inc.*.................................... 818,625
-----------------------------------------------
Total Health Care 13,520,462
===============================================
Technology (12.6%)
------------------
97,800 ADC Telecommunications, Inc.*....................................... 5,941,350
7,400 Arrow Electronics, Inc.*............................................ 324,213
600 At Home Corporation*................................................ 11,175
53,200 Automatic Data Processing, Inc...................................... 2,862,825
79,800 Cisco Systems, Inc.*................................................ 5,532,382
8,400 Computer Associates International, Inc.............................. 468,825
8,000 Computer Sciences Corporation*...................................... 652,500
22,300 First Data Corporation.............................................. 1,085,731
10,000 Gateway, Inc.*...................................................... 552,500
6,100 Hewlett-Packard Company............................................. 823,500
55,300 Intel Corporation................................................... 7,012,731
58,200 Lucent Technologies, Inc............................................ 3,619,313
29,100 Microsoft Corporation*.............................................. 2,029,725
14,100 Motorola, Inc....................................................... 1,678,781
12,800 National Data Corporation........................................... 355,200
38,200 Tellabs, Inc.*...................................................... 2,093,838
-----------------------------------------------
Total Technology 35,044,589
===============================================
Balanced Fund
Transportation (0.1%)
---------------------
3,100 CNF Transportation, Inc............................................. 86,606
-----------------------------------------------
Total Transportation 86,606
===============================================
Utilities (0.3%)
----------------
8,700 Columbia Energy Group............................................... 545,925
8,300 Entergy Corporation................................................. 211,131
-----------------------------------------------
Total Utilities 757,056
===============================================
-----------------------------------------------
Total Common Stocks
(cost basis $109,855,646) 138,545,178
===============================================
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (35.1%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Asset-Backed Securities (1.5%)
------------------------------
$1,000,000 EQCC Home Equity Loan Trust Series 1997-3 Class A7............ 6.930% 2/15/2029 $ 936,580
1,000,000 Green Tree Financial Corporation Series 1999-5 Class A-4...... 7.330 4/1/2031 980,080
1,500,000 Green Tree Financial Corporation Series 1998-1 Class A-6...... 6.330 11/1/2029 1,391,145
900,000 Harley-Davidson Eaglemark Motorcycle Trust Series 1999-1
Class Certificates............................................ 6.710 1/15/2007 862,830
----------------------------------------------------------------
Total Asset-Backed Securities 4,170,635
================================================================
Collateralized Mortgage Investments (1.9%)
------------------------------------------
1,000,000 First Union National Bank Commercial Mortgage Trust
Pass-Through Certificates Series 1999-C4 Class A2............. 7.390 11/15/2009 977,130
991,822 Heller Financial Commercial Mortgage Asset Series 2000-PH1
Class A1...................................................... 7.715 9/15/2008 992,947
990,748 J.P. Morgan Commercial Mortgage Finance Corporation
Series 2000-C9 Class A1....................................... 7.590 10/15/2032 987,160
1,300,000 Nationslink Funding Corporation Commercial Mortgage
Pass-Through Certificates Series 1999-2 Class A3.............. 7.181 12/20/2006 1,265,160
1,000,000 Residential Asset Securities Corporation Series 2000-KS1
Class A14..................................................... 8.040 10/25/2008 994,920
----------------------------------------------------------------
Total Collateralized Mortgage Investments 5,217,317
================================================================
Finance (5.0%)
--------------
2,000,000 Bombardier Capital, Inc....................................... 7.300 12/15/2002 1,958,934
1,000,000 Cabot Industrial Properties, L.P.............................. 7.125 5/1/2004 951,637
1,500,000 Comdisco, Inc................................................. 5.950 4/30/2002 1,443,083
1,000,000 EOP Operating, L.P............................................ 6.800 1/15/2009 890,739
2,000,000 Finova Capital Corporation.................................... 7.125 5/1/2002 1,935,066
1,000,000 Household Finance Corporation................................. 7.200 7/15/2006 961,823
1,000,000 Northern Trust Corporation.................................... 7.100 8/1/2009 951,057
1,000,000 Society National Bank......................................... 7.250 6/1/2005 966,259
1,000,000 Sun Communities Operating, L.P................................ 7.375 5/1/2001 992,291
3,000,000 US West Capital Funding, Inc.................................. 6.875 8/15/2001 2,979,840
----------------------------------------------------------------
Total Finance 14,030,729
================================================================
Industrial-Energy (4.1%)
------------------------
1,000,000 Coastal Corporation........................................... 6.500 5/15/2006 931,128
1,000,000 El Paso Energy Corporation.................................... 6.750 5/15/2009 910,254
1,500,000 Enron Corporation............................................. 6.400 7/15/2006 1,378,980
1,000,000 Enterprise Products Operating, L.P............................ 8.250 3/15/2000 993,285
2,000,000 Kinder Morgan, Inc............................................ 6.450 11/30/2001 1,964,116
1,000,000 Kinder Morgan, Inc............................................ 6.650 3/1/2005 946,423
1,000,000 Petroleum Geo-Services ASA.................................... 6.650 3/30/2008 887,297
1,000,000 Tosco Corporation............................................. 7.250 1/1/2007 950,760
1,000,000 USX Corporation............................................... 6.650 2/1/2006 931,924
1,000,000 USX Corporation............................................... 9.800 7/1/2001 1,020,096
500,000 Williams Companies, Inc....................................... 7.625 7/15/2019 465,519
----------------------------------------------------------------
Total Industrial-Energy 11,379,782
================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
48 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (35.1%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Industrial-Manufacturing (1.2%)
-------------------------------
$1,000,000 Pentair, Inc.................................................... 7.850% 10/15/2009 $ 972,345
1,500,000 Sun Microsystems, Inc........................................... 7.500 8/15/2006 1,473,819
1,000,000 Textron Financial Corporation................................... 7.370 10/15/2003 988,893
-------------------------------------------------------
Total Industrial-Manufacturing 3,435,057
=======================================================
Industrial-Services (4.7%)
--------------------------
1,765,000 CBS Corporation................................................. 7.150 5/20/2005 1,707,048
1,500,000 Comcast Cable Communications, Inc............................... 6.200 11/15/2008 1,312,384
1,000,000 Continental Cablevision, Inc.................................... 8.875 9/15/2005 1,044,783
1,000,000 Equifax, Inc.................................................... 6.300 7/1/2005 921,605
1,000,000 Erac USA Finance Company/2/..................................... 7.950 12/15/2009 950,488
1,000,000 Guidant Corporation............................................. 6.150 2/15/2006 907,441
1,500,000 Joseph E. Seagram & Sons, Inc................................... 6.625 12/15/2005 1,392,318
1,000,000 Royal Caribbean Cruises, Ltd.................................... 6.750 3/15/2008 860,379
1,000,000 Time Warner, Inc................................................ 8.110 8/15/2006 1,008,348
1,000,000 Times Mirror Company............................................ 7.450 10/15/2009 972,010
2,000,000 Waste Management, Inc........................................... 6.000 5/15/2001 1,921,180
-------------------------------------------------------
Total Industrial-Services 12,997,984
=======================================================
Industrial-Transportation (0.5%)
--------------------------------
1,400,000 American Airlines, Inc.......................................... 7.024 10/15/2009 1,316,308
-------------------------------------------------------
Total Industrial-Transportation 1,316,308
=======================================================
U.S. Government Agencies (6.2%)
-------------------------------
1,000,000 Federal National Mortgage Association........................... 7.125 1/15/2030 987,147
1,000,000 Federal National Mortgage Association........................... 7.125 3/15/2007 988,294
3,487,361 Federal National Mortgage Association
15 Yr. Pass Through............................................. 6.500 6/1/2013 3,342,455
1,856,691 Federal National Mortgage Association
15 Yr. Pass Through............................................. 5.500 1/1/2014 1,702,400
3,270,362 Government National Mortgage Association
15 Yr. Pass Through............................................. 7.500 10/15/2013 3,275,670
3,448,219 Government National Mortgage Association
30 Yr. Pass Through............................................. 7.500 8/15/2029 3,392,117
3,807,878 Government National Mortgage Association
30 Yr. Pass Through............................................. 6.500 3/15/2029 3,570,213
-------------------------------------------------------
Total U.S.Government Agencies 17,258,296
=======================================================
U.S. Treasury Securities (3.6%)
-------------------------------
1,000,000 U.S. Treasury Bonds............................................. 8.750 5/15/2017 1,249,375
5,000,000 U.S. Treasury Bonds............................................. 7.250 5/15/2016 5,465,625
1,000,000 U.S. Treasury Notes............................................. 12.375 5/15/2004 1,199,375
2,000,000 U.S. Treasury Notes............................................. 6.500 10/15/2006 1,996,250
-------------------------------------------------------
Total U.S.Treasury Securities 9,910,625
=======================================================
</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 Balanced Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (35.1%) Interest Rate Maturity Date Market Value
==============================================================================================================================
<S> <C> <C> <C> <C>
Utilities (6.4%)
----------------
$1,500,000 Alliant Energy Resources, Inc./2/.................... 7.375% 11/9/2009 $1,453,929
1,300,000 Arizona Public Service Company....................... 6.250 1/15/2005 1,209,564
1,000,000 CSW Investments/2/................................... 7.450 8/1/2006 960,342
1,000,000 Edison Mission Holdings Company/2/................... 8.137 10/1/2019 952,029
1,000,000 Enogex, Inc./2/...................................... 8.125 1/15/2010 983,410
1,999,879 Niagara Mohawk Power Corporation..................... 7.625 10/1/2005 1,931,503
1,500,000 NRG Northeast Generating LLC/2/...................... 8.842 6/15/2015 1,532,474
2,000,000 NRG Northeast Generating LLC/2/...................... 8.065 12/15/2004 2,002,838
1,500,000 Oneok, Inc............................................ 7.750 8/15/2006 1,473,994
1,500,000 PSI Energy, Inc...................................... 7.850 10/15/2007 1,447,599
1,500,000 TXU Eastern Funding Company.......................... 6.450 5/15/2005 1,384,725
1,490,000 Utilicorp United, Inc................................. 7.625 11/15/2009 1,415,299
1,000,000 Vodafone AirTouch plc/2/............................. 7.750 2/15/2010 984,506
----------------------------------------------------------
Total Utilities 17,732,212
==========================================================
Total Long-Term Fixed-Income Investments
(amortized cost basis $99,938,952) 97,448,945
==========================================================
Short-Term Investments (14.5%)/1/
==============================================
6,027,000 AT&T Corporation.................................. 5.970-5.980 5/1-5/2/2000 6,026,601
5,347,000 Ford Motor Credit Company......................... 5.990 5/3/2000 5,345,223
3,311,000 General Motors Acceptance Corporation............. 6.050 5/30/2000 3,294,864
6,752,000 GTE Corporation................................... 6.050-6.070 5/5-5/12/2000 6,742,515
4,707,000 IBM Credit Corporation............................ 5.940 5/15/2000 4,696,127
3,513,000 International Lease Finance Corporation........... 5.990 5/4/2000 3,511,246
2,149,000 MDU Resources Group, Inc.......................... 6.010 5/10/2000 2,145,771
5,454,000 Toyota Motor Credit Corporation................... 5.960-6.000 5/9-5/11/2000 5,445,897
3,100,000 Transamerica Finance Corporation.................. 6.170 5/31/2000 3,084,061
----------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $40,292,305) 40,292,305
==========================================================
TOTAL INVESTMENTS (99.6%)
(amortized cost basis $250,086,903) 6,286,428
==========================================================
Other Assets,Less Liabilities (0.4%) 1,013,570
==========================================================
Net Assets (100.0%) 7,299,998
==========================================================
</TABLE>
* Non-income producing
------------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
See page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 Obligations (92.9%) Interest Rate Maturity Date Market Value
========================================================================================================================
<S> <C> <C> <C> <C>
Finance (3.8%)
--------------
$ 1,700,000 AMRESCO, Inc........................................ 10.000% 3/15/2004 $1,122,000
1,250,000 Arcadia Financial, Ltd.............................. 11.500 3/15/2007 1,381,888
750 Arcadia Financial, Ltd. (Warrants)*................. 750
2,000,000 Imperial Credit Industries, Inc..................... 9.875 1/15/2007 1,455,000
1,650,000 Sovereign Bancorp, Inc.............................. 10.500 11/15/2006 1,629,375
-----------------------------------------------------------------
Total Finance 5,589,013
=================================================================
Industrial-Consumer Goods (6.9%)
--------------------------------
1,850,000 Doskocil Manufacturing Company, Inc................. 10.125 9/15/2007 703,000
1,650,000 Fresh Foods, Inc.................................... 10.750 6/1/2006 940,500
1,650,000 O'Sullivan Industries, Inc./2/...................... 3.375 10/15/2009 1,600,500
1,650,000 Salton, Inc......................................... 10.750 12/15/2005 1,617,000
1,650,000 Samsonite Corporation............................... 10.750 6/15/2008 1,386,000
2,000,000 SFC New Holdings, Inc............................... 12.125 10/1/2002 1,942,500
71,840 SFC New Holdings, Inc.Subordinated Notes*/7/........ 0.000 12/15/2009 0
1,900,000 Smithfield Foods, Inc............................... 7.625 2/15/2008 1,662,500
750,000 Viskase Companies, Inc.............................. 10.250 12/1/2001 397,500
-----------------------------------------------------------------
Total Industrial-Consumer Goods 10,249,500
=================================================================
Industrial-Energy (6.7%)
------------------------
500,000 Abraxas Petroleum Corporation....................... 12.875 3/15/2003 511,250
1,050,000 Abraxas Petroleum Corporation....................... 11.500 11/1/2004 892,500
89,428 Abraxas Petroleum Corporation (Warrants)*........... 894
1,500,000 Clark Refining & Marketing Corporation.............. 8.375 11/15/2007 1,147,500
1,000,000 Crown Central Petroleum Corporation................. 10.875 2/1/2005 785,000
3,100,000 Energy Corporation of America....................... 9.500 5/15/2007 2,077,000
1,250,000 KCS Energy, Inc./5/................................. 11.000 1/15/2003 937,500
1,000 Key Energy Services, Inc. (Warrants)*............... 90,000
2,500,000 Northern Offshore ASA............................... 10.000 5/15/2005 1,562,500
1,650,000 RBF Finance Company................................. 11.000 3/15/2006 1,736,625
187,162 TransTexas Gas Corporation.......................... 15.000 3/15/2005 112,297
500,000 XCL, Ltd./2,5/...................................... 13.500 5/1/2004 90,000
-----------------------------------------------------------------
Total Industrial-Energy 9,943,066
=================================================================
Industrial-Manufacturing (26.3%)
--------------------------------
1,500,000 Algoma Steel Corporation............................. 12.375 7/15/2005 1,477,500
1,000,000 American Standard, Inc............................... 7.625 2/15/2010 922,500
1,250,000 American Tissue, Inc................................. 12.500 7/15/2006 1,281,250
</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 Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Obligations (92.9%) Interest Rate Maturity Date MarketValue
=============================================================================================================================
<S> <C> <C> <C> <C>
Industrial-Manufacturing (26.3%) - continued
--------------------------------------------
$ 2,500,000 Amkor Technologies, Inc......................... 9.250% 5/1/2006 $2,450,000
2,000,000 Anchor Glass Containers Corporation............. 11.250 4/1/2005 1,360,000
1,650,000 Anvil Knitwear, Inc............................. 10.875 3/15/2007 1,402,500
1,250,000 APP China Group, Ltd./2/........................ 14.000 3/15/2010 1,000,000
1,650,000 Breed Technologies, Inc./5/..................... 9.250 4/15/2008 14,438
2,000,000 Envirosource, Inc............................... 9.750 6/15/2003 1,240,000
2,500,000 Federal-Mogul Corporation....................... 7.875 7/1/2010 1,882,637
1,250,000 Four M Corporation.............................. 12.000 6/1/2006 1,212,500
1,650,000 Galey & Lord, Inc............................... 9.125 3/1/2008 759,000
1,650,000 Global Imaging Systems, Inc..................... 10.750 2/15/2007 1,452,000
1,650,000 High Voltage Engineering Corporation............ 10.500 8/15/2004 1,262,250
2,000,000 Hydrochem Industrial Service, Inc............... 10.375 8/1/2007 1,520,000
1,650,000 IMPAC Group, Inc................................ 10.125 3/15/2008 1,650,000
1,650,000 Indah Kiat Finance Muritius, Ltd................ 10.000 7/1/2007 1,089,000
2,000,000 Indesco International, Inc...................... 9.750 4/15/2008 640,000
1,650,000 ISG Resources, Inc.............................. 10.000 4/15/2008 1,427,250
2,000,000 LaRoche Industries, Inc./5/..................... 9.500 9/15/2007 600,000
2,500,000 Lear Corporation................................ 8.110 5/15/2009 2,228,960
1,850,000 Morris Materials Handling Corporation/5/........ 9.500 4/1/2008 277,500
800,000 Ntex, Inc....................................... 11.500 6/1/2006 272,000
1,500,000 Omega Cabinets, Ltd............................. 10.500 6/15/2007 1,455,000
1,500,000 PCI Chemicals Canada, Inc....................... 9.250 10/15/2007 1,201,875
250,000 Penhall International Corporation............... 12.000 8/1/2006 245,000
1,250,000 RBX Corporation................................. 12.000 1/15/2003 775,000
1,650,000 Royster-Clark, Inc.............................. 10.250 4/1/2009 1,344,750
1,250,000 Russell-Stanley Holdings, Inc................... 10.875 2/15/2009 1,050,000
1,650,000 Sheffield Steel Corporation..................... 11.500 12/1/2005 1,287,000
2,500,000 Sweetheart Cup Company, Inc..................... 10.500 9/1/2003 2,300,000
1,250,000 Talon Automotive Group LLC...................... 9.625 5/1/2008 525,000
1,500,000 Viasystems Group, Inc........................... 9.750 6/1/2007 1,293,750
--------------------------------------------------------------------------
Total Industrial-Manufacturing 38,898,660
==========================================================================
Industrial-Services (25.6%)
---------------------------
2,900,000 Allied Waste, Inc. North America................ 7.625 1/1/2006 2,146,000
1,250,000 American Restaurant Group, Inc.................. 11.500 2/15/2003 846,875
2,500,000 AmeriServe Food Distribution, Inc./5/........... 8.875 10/15/2006 75,000
1,450,000 Brown Shoe Company, Inc......................... 9.500 10/15/2006 1,372,063
1,250,000 Carmike Cinemas, Inc............................ 9.375 2/1/2009 837,500
2,500,000 Century Communications Corporation.............. 8.750 10/1/2007 2,287,500
2,500,000 Charter Communication Holdings LLC.............. 8.625 4/1/2009 2,184,375
1,650,000 Circus Circus Enterprise, Inc................... 7.625 7/15/2013 1,311,750
1,650,000 Classic Cable, Inc./2/.......................... 10.500 3/1/2010 1,625,250
1,650,000 Comcast Cable Communications, Inc............... 6.200 11/15/2008 1,443,623
3,500,000 CSC Holdings, Inc............................... 7.875 2/15/2018 3,111,140
1,000,000 Fleming Companies, Inc.......................... 10.625 12/15/2001 987,500
1,000,000 Fleming Companies, Inc.......................... 10.500 12/1/2004 880,000
</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 Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Obligations (92.9%) Interest Rate Maturity Date Market Value
===========================================================================================================================
<S> <C> <C> <C> <C>
Industrial-Services (25.6%) - continued
---------------------------------------
$ 2,500,000 HMH Properties, Inc............................. 7.875% 8/1/2005 $2,250,000
1,500,000 ICN Pharmaceuticals, Inc........................ 9.250 8/15/2005 1,458,750
500 Imagyn, Inc.(Warrants)*........................ 5
2,100,000 Just For Feet, Inc/2, 5/........................ 11.000 5/1/2009 42,000
1,250,000 Livent, Inc/5/.................................. 9.375 10/15/2004 250,000
1,250,000 Mariner Post-Acute Network, Inc/5/.............. 9.500 11/1/2007 25,000
1,500,000 Pantry, Inc..................................... 10.250 10/15/2007 1,372,500
1,250,000 Pathmark Stores, Inc............................ 9.625 5/1/2003 890,625
1,450,000 Regal Cinemas, Inc.............................. 9.500 6/1/2008 594,500
2,100,000 Riviera Holdings Corporation.................... 10.000 8/15/2004 1,890,000
1,500,000 Silver Cinemas International, Inc/5/............ 10.500 4/15/2005 360,000
1,250,000 Spanish Broadcasting System, Inc................ 9.625 11/1/2009 1,225,000
2,500,000 Tenet Healthcare Corporation.................... 8.000 1/15/2005 2,393,750
1,250,000 Triad Hospitals Holdings, Inc................... 11.000 5/15/2009 1,300,000
1,650,000 Trump Atlantic City Associates Funding, Inc..... 11.250 5/1/2006 1,190,062
1,152,923 United Artists Theatre Circuit, Inc............. 9.300 7/1/2015 757,401
2,500,000 United Pan-Europe Communications NV/2/.......... 10.875 11/1/2007 2,275,000
1,250,000 Vista Eyecare, Inc/5/........................... 12.750 10/15/2005 400,000
----------------------------------------------------
Total Industrial-Services 37,783,169
====================================================
Industrial-Transportation (2.3%)
--------------------------------
1,000,000 Allied Holdings, Inc............................ 8.625 10/1/2007 887,500
1,650,000 Petro Stopping Centers Holdings L.P............. 10.500 2/1/2007 1,435,500
1,250,000 Transportation Maritima Mexicana S.A. de C.V.... 10.000 11/15/2006 1,031,250
----------------------------------------------------
Total Industrial-Transportation 3,354,250
====================================================
Utilities (21.3%)
-----------------
2,500,000 Call-Net Enterprises, Inc....................... 9.375 5/15/2009 1,700,000
1,500,000 Calpine Corporation............................. 7.625 4/15/2006 1,410,000
2,500,000 CMS Energy Corporation.......................... 7.500 1/15/2009 2,185,435
1,500,000 Flag Telecom Holdings, Ltd/2/................... 11.625 3/30/2010 1,387,500
2,500,000 Global Crossing Holdings, Ltd/2/................ 9.125 11/15/2006 2,425,000
1,500,000 ICG Holdings, Inc/7/............................ 0.000 5/1/2006 1,200,000
2,500,000 Level 3 Communications, Inc..................... 9.125 5/1/2008 2,175,000
2,500,000 McLeod USA, Inc/7/.............................. 0.000 3/1/2007 1,987,500
1,250,000 Metricom, Inc................................... 13.000 2/15/2010 1,026,562
1,250 Metricom, Inc. (Warrants)*...................... 100,000
2,500,000 Nextel Communications, Inc...................... 9.375 11/15/2009 2,387,500
1,250,000 Pac-West Telecommunications, Inc................ 13.500 2/1/2009 1,284,375
2,500,000 Primus Telecommunications Group, Inc............ 11.250 1/15/2009 2,256,250
2,000,000 ProNet, Inc..................................... 11.875 6/15/2005 1,580,000
2,000,000 PSINet, Inc..................................... 10.000 2/15/2005 1,770,000
2,500,000 Spectrasite Holdings, Inc/7/.................... 0.000 4/15/2009 1,375,000
500 UnifiCommunications, Inc.(Warrants)*........... 5
1,500,000 USA Mobile Communications, Inc.................. 9.500 2/1/2004 1,200,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 53
<PAGE>
The AAL High Yield Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL
30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Obligations (92.9%) Interest Rate Maturity Date Market Value
============================================================================================================================
<S> <C> <C> <C> <C>
Utilities (21.3%) - continued
-----------------------------
$ 2,500,000 Williams Communications Group, Inc......... 10.875% 10/1/2009 $2,512,500
1,650,000 Worldwide Fiber, Inc....................... 12.000 8/1/2009 1,526,250
------------------------------------------------
Total Utilities 31,488,877
================================================
Total Long-Term Fixed-Income Obligations
(amortized cost
basis $168,079,212) 137,306,535
================================================
Shares Common Stocks (0.1%)
===========================================================================================
Energy (0.1%)
-------------
89,428 Abraxas Petroleum Corporation.............. 150,909
889 TransTexas Gas Corporation................. 2,000
------------------------------------------------
Total Energy 152,909
================================================
Total Common Stocks
(cost basis $143,695) 152,909
================================================
Preferred Stocks (0.0%)
============================================================
Energy (0.0%)
-------------
201,201 TransTexas Gas Corporation................. 20,120
------------------------------------------------
Total Preferred Stocks
(cost basis$124,215) 20,120
================================================
Principal Amount Short-Term Investments (4.2%)/1/ Interest Rate Maturity Date
===============================================================================================================
$ 2,539,000 AT&T Corporation........................... 5.980% 5/1/2000 2,539,000
2,256,000 General Electric Capital Corporation....... 5.900 5/2/2000 2,255,626
1,423,000 Gillette Company........................... 6.000 5/12/2000 1,420,391
------------------------------------------------
Total Short-Term Investments
(amortized cost basis $6,215,017) 6,215,017
================================================
TOTAL INVESTMENTS (97.2%)
(amortized cost
basis $174,562,139) 143,694,581
================================================
Other Assets, Less Liabilities (2.8%) 4,113,817
================================================
Total Net Assets (100%) $147,808,398
================================================
</TABLE>
* Non-income producing security
---------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
/5/ Security in default
/7/ Step-coupon bond
See page 87 for a complete discussion of Investment Terms.
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 Schedule of Investments as of April 30, 2000
[LOGO] 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 (97.9%) Interest Rate Maturity Date Market Value
==============================================================================================================================
<S> <C> <C> <C> <C>
Alabama (0.4%)
--------------
$ 1,000,000 Birmingham, Alabama General Obligation Bonds
(Series A)........................................... 5.900% 6/1/2018 $1,007,500
1,000,000 Lauderdale County and Florence, Alabama Health Care
Authority Revenue Bonds (Coffee Health Group)
(Series A) (MBIA Insured)............................ 5.250 7/1/2024 905,000
--------------------------------------------------------------
Total Alabama 1,912,500
==============================================================
Alaska (0.9%)
-------------
2,105,000 Alaska Industrial Development Authority Power
Revenue Bonds (Snettisham Hydroelectric Project)
(1st Series) (AMBAC Insured) (Subject to `AMT')...... 6.000 1/1/2015 2,133,943
1,985,000 Alaska Industrial Development Authority Power
Revenue Bonds (Snettisham Hydroelectric Project)
(1st Series) (AMBAC Insured) (Subject to `AMT')...... 6.000 1/1/2014 2,022,219
--------------------------------------------------------------
Total Alaska 4,156,162
==============================================================
Arizona (0.9%)
--------------
1,000,000 Maricopa County, Arizona Elementary School District
#068 Alhambra General Obligation Bonds
(AMBAC Insured)...................................... 5.125 7/1/2012 980,000
750,000 Salt River, Arizona Project Agricultural Improvement
and Power District Electric System Revenue Bonds
(Series A)........................................... 5.125 1/1/2018 688,125
1,000,000 Salt River, Arizona Project Agricultural Improvement
and Power District Electric System Revenue Bonds
(Series A)........................................... 5.000 1/1/2020 891,250
2,050,000 Tucson, Arizona General Obligation Bonds............. 5.000 7/1/2017 1,868,062
--------------------------------------------------------------
Total Arizona 4,427,437
==============================================================
Arkansas (0.2%)
--------------
1,120,000 Arkansas State Development Finance Authority
Single Family Mortgage Revenue Bonds (Series F)
(GNMA Insured)(Subject to `AMT')..................... 7.450 1/1/2027 1,158,506
--------------------------------------------------------------
Total Arkansas 1,158,506
==============================================================
California (8.9%)
-----------------
1,100,000 California State Veterans Bonds General Obligation
Bonds (Subject to `AMT')............................. 6.250 2/1/2014 1,101,947
655,000 Campbell, California Union High School District
General Obligation Bonds (FSA Insured)............... 5.550 8/1/2017 653,363
2,000,000 San Bernardino County, California Single Family
Mortgage Revenue Bonds (Series A-1)
(GNMA/FNMA/AMBAC Insured) (Subject to `AMT')......... 5.000 12/1/2031 2,030,000
1,910,000 San Jose,California Unified School District Capital
Appreciation General Obligation Bonds (Santa Clara
County) (Series C) (FGIC Insured).................... 0.000 8/1/2020 541,963
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 55
<PAGE>
<TABLE>
<CAPTION>
The AAL Municipal Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,2000
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C> <C>
California (8.9%)-continued
$ 310,000 Santa Cruz, California City Elementary School
District General Obligation Bonds (Series B)
(FGIC Insured)........................................ 5.500% 8/1/2016 $ 307,675
4,855,000 Contra Costa County, California Home Mortgage
Revenue Bonds (Escrowed to Maturity).................. 7.500 5/1/2014 5,826,000
7,145,000 Foothill/Eastern Corridor Agency California Toll Road
Capital Appreciation Refunded Revenue Bonds
(Series A)/7/......................................... 0.000 1/1/2014 6,126,837
6,000,000 Foothill/Eastern Corridor Agency California Toll Road
Capital Appreciation Refunded Revenue Bonds
(Series A)/7/......................................... 0.000 1/1/2013 5,145,000
5,000,000 Foothill/Eastern Corridor Agency California Toll Road
Capital Appreciation Refunded Revenue Bonds
(Series A)/7/......................................... 0.000 1/1/2011 4,275,000
5,000,000 Foothill/Eastern Corridor Agency California Toll Road
Capital Appreciation Refunded Revenue Bonds
(Series A)/7/......................................... 0.000 1/1/2009 4,181,250
1,335,000 Foothill/Eastern Corridor Agency California Toll Road
Capital Appreciation Refunded Revenue Bonds
(Series A)............................................ 0.000 1/1/2005 1,057,987
400,000 Fresno, California Unified School District General
Obligation Bonds (Series C) (FSA Insured)
(Escrowed to Maturity)................................ 5.375 8/1/2021 380,500
1,000,000 Los Angeles, California Department of Water and
Power Electric Plant Revenue Bonds.................... 6.100 2/15/2017 1,020,000
2,100,000 Los Angeles,California Department of Water and
Power Electric Plant Revenue Bonds (2nd Issue)........ 4.750 11/15/2019 1,785,000
1,705,000 Los Angeles, California Regional Airports Improvement
Corporation Lease Revenue Bonds (Facilities Sublease-
International Airport)................................ 6.350 11/1/2025 1,615,488
1,500,000 Oxnard,California School District Capital Appreciation
General Obligation Bonds (MBIA Insured)............... 0.000 8/1/2019 476,250
4,200,000 Pomona,California Single Family Housing Revenue
Bonds (Escrowed to Maturity).......................... 7.600 5/1/2023 5,050,500
-------------------------------------------------------------
Total California 41,574,760
=============================================================
Colorado (1.7%)
---------------
1,765,000 Colorado Housing and Finance Authority Revenue
Bonds (Series A-2) (Subject to `AMT')................. 7.450 10/1/2016 1,906,200
1,100,000 Colorado Housing and Finance Authority Revenue
Bonds (Series A-3).................................... 7.250 4/1/2010 1,200,375
1,000,000 Dawson Ridge Metropolitan District #1,
Colorado General Obligation Bonds
(Series A) (Escrowed to Maturity)..................... 0.000 10/1/2012 456,250
760,000 Dawson Ridge Metropolitan District #1,
Colorado General Obligation Bonds
(Series B) (Escrowed to Maturity)..................... 0.000 10/1/2012 346,750
1,000,000 Denver, Colorado Health and Hospital Authority
Healthcare Revenue Bonds (Series A)................... 5.150 12/1/2011 885,000
2,325,000 El Paso County, Colorado School District #49
Falcon General Obligation Bonds (Series A)............ 6.000 12/1/2018 2,406,375
1,000,000 Routt County, Colorado School District #RE02
Steamboat Springs General Obligation Bonds
(MBIA Insured)........................................ 5.000 12/1/2017 905,000
------------------------------------------------------------
Total Colorado 8,105,950
============================================================
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Florida (4.1%)
--------------
$ 2,750,000 Clay County, Florida Housing Finance Authority
Single Family Mortgage Revenue Bonds
(GNMA/FNMA Insured) (Subject to `AMT')..................... 6.000% 4/1/2029 $ 2,743,125
3,000,000 Escambia County, Florida Health Facilities Authority
Revenue Bonds (Azalea Trace, Inc.)......................... 6.000 1/1/2015 2,763,750
1,500,000 Florida Rural Utility Financing Commission
Revenue Notes.............................................. 5.250 9/1/2001 1,509,375
1,050,000 Florida State Board of Education Capital Outlay
General Obligation Bonds (Series A)........................ 5.000 1/1/2018 954,187
1,080,000 Florida State Division of Bond Finance Department
General Services Revenue Bonds
(Series A) (AMBAC Insured)................................. 5.750 7/1/2013 1,100,250
1,000,000 Hillsborough County, Florida Industrial Development
Authority Revenue Bonds (Health Facilities
Project-University Community Hospital) (Series A).......... 4.500 8/15/2003 948,750
2,220,000 Manatee County, Florida Housing Finance Authority
Single Family Revenue Bonds (Series 1)
(GNMA/FNMA/FHLMC Insured) (Subject to `AMT')............... 7.200 5/1/2028 2,367,075
500,000 Miami-Dade County, Florida Aviation Revenue Bonds
(Miami International Airport) (Series A)
(FGIC Insured) (Subject to `AMT').......................... 5.550 10/1/2013 496,250
1,100,000 Orange County, Florida Health Facilities Authority
Revenue Bonds (Mayflower Retirement Project)
(Asset Guaranteed)......................................... 5.250 6/1/2019 991,375
2,000,000 Orange County, Florida Health Facilities Authority
Revenue Bonds (Orlando Regional Healthcare Project)
(Series A) (MBIA Insured).................................. 6.250 10/1/2018 2,127,500
3,000,000 Pinellas County, Florida Housing Finance Authority
Single Family Housing Revenue Bonds
(Multi-County Project) (Series A-1)
(GNMA/FNMA Insured) (Subject to `AMT')..................... 7.200 9/1/2029 3,247,500
------------------------------------------------------------------
Total Florida 19,249,137
==================================================================
Georgia (2.2%)
--------------
1,750,000 Baldwin County, Georgia Hospital Authority Revenue
Bonds (Oconee Regional Medical Center)..................... 5.250 12/1/2022 1,340,936
6,000,000 George L. Smith II Georgia World Congress Center
Authority Revenue Bonds (Domed Stadium Project)
(MBIA Insured) (Subject to `AMT').......................... 5.500 7/1/2020 5,662,500
3,400,000 Private Colleges and Universities Authority Georgia
Revenue Bonds (Emory University Project) (Series A)........ 5.500 11/1/2025 3,230,000
------------------------------------------------------------------
Total Georgia 10,233,436
==================================================================
Illinois (14.1%)
----------------
1,000,000 Broadview, Illinois Tax Increment Revenue Bonds............ 5.375 7/1/2015 921,250
2,000,000 Broadview, Illinois Tax Increment Revenue Bonds............ 5.250 7/1/2012 1,887,500
4,770,000 Chicago, Illinois O'Hare International Airport Special
Facilities Revenue Bonds (United Airlines Project)
(Series A)................................................. 5.350 9/1/2016 4,149,900
1,915,000 Chicago, Illinois Single Family Mortgage Revenue
Bonds (GNMA Insured) (Subject to `AMT').................... 7.250 9/1/2028 2,013,144
6,500,000 Chicago, Illinois Single Family Mortgage Revenue
Bonds (Series C-1999) (GNMA/FNMA/FHLMC Insured) (Subject
to `AMT').................................................. 7.050 10/1/2030 6,898,125
4,645,000 Chicago, Illinois Waterworks Revenue Bonds
(FGIC Insured)............................................. 5.500 11/1/2022 4,343,075
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
Illinois (14.1%)-continued
--------------------------
$ 2,250,000 Cook County, Illinois General Obligation Bonds
(Series B) (FGIC Insured)............................... 5.500% 11/15/2022 $ 2,123,437
3,960,000 Cook County, Illinois General Obligation Bonds
(Series B) (MBIA Insured)............................... 5.125 11/15/2017 3,638,250
1,815,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured)................. 8.500 12/1/2016 2,364,038
1,565,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured)................. 8.500 12/1/2014 2,014,937
1,250,000 Cook County, Illinois School District #99 - Cicero
General Obligation Bonds (FGIC Insured)................. 8.500 12/1/2011 1,571,875
765,000 Cook County, Illinois School District #100
General Obligation Bonds (Berwyn South Project)
(FSA Insured)........................................... 8.200 12/1/2009 926,606
1,255,000 Illinois Department of Central Management Services
Certificate of Participation Bonds (MBIA Insured)....... 5.400 7/1/2012 1,242,450
755,000 Illinois Development Finance Authority Revenue
Bonds (FSA Insured)..................................... 0.000 2/1/2020 227,444
1,800,000 Illinois Development Finance Authority Revenue
Bonds (FSA Insured)..................................... 0.000 2/1/2019 580,500
4,000,000 Illinois Development Finance Authority Hospital
Revenue Bonds (Adventist Health Systems/
Sunbelt Obligation)..................................... 5.500 11/15/2029 3,150,000
2,500,000 Illinois Educational Facilities Authority Revenue
Bonds (Northwestern University)......................... 5.250 11/1/2032 2,434,375
4,900,000 Illinois Educational Facilities Authority Revenue
Bonds (Northwestern University)......................... 5.250 11/1/2032 4,740,750
1,600,000 Illinois Health Facilities Authority Revenue Bonds
(Bethesda Home and Retirement) (Series A)............... 6.250 9/1/2014 1,536,000
4,180,000 Illinois Health Facilities Authority Revenue Bonds
(Hospital Sisters Services, Inc.) (Series A) (MBIA
Insured)................................................ 5.250 11/15/2014 3,939,650
2,500,000 Illinois Health Facilities Authority Revenue Bonds
(Swedish American Hospital)............................. 6.875 11/15/2030 2,443,750
3,000,000 Illinois Regional Transit Authority Revenue Bonds
(Series A) (FGIC Insured)............................... 6.700 11/1/2021 3,341,250
3,065,000 Illinois State Sales Tax Revenue Bonds (Series L)....... 0.000 6/15/2012 3,076,494
3,035,000 McHenry County, Illinois Community High School
District #157 General Obligation Bonds (FSA Insured).... 9.000 12/1/2017 3,683,731
1,760,000 Southwestern Illinois Development Authority Revenue
Bonds (Anderson Hospital Project)....................... 5.625 8/15/2029 1,372,800
1,600,000 Southwestern Illinois Development Authority Revenue
Bonds (Anderson Hospital Project)....................... 5.500 8/15/2020 1,282,000
----------------------------------------------------------
Total Illinois 65,903,331
==========================================================
Indiana (1.1%)
--------------
4,550,000 Indiana Transportation Finance Authority Highway
Revenue Bonds (Series A) (MBIA/IBC Insured)............. 7.250 6/1/2015 5,329,187
----------------------------------------------------------
Total Indiana 5,329,187
==========================================================
Iowa (0.2%)
-----------
1,100,000 Keokuk, Iowa Hospital Facilities Revenue Refunding
Bonds (Keokuk Area Hospital Project).................... 5.400 12/1/2015 907,500
----------------------------------------------------------
Total Iowa 907,500
==========================================================
</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,
2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments ( 97.9%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
Kansas (0.5%)
------------------
$ 2,155,000 Kansas City, Kansas Utility System Unrefunded
Balance Revenue Bonds (FGIC Insured)................... 6.375% 9/1/2023 $2,219,650
-------------------------------------------------------------------
Total Kansas 2,219,650
===================================================================
Kentucky (3.2%)
------------------
5,850,000 Carroll County, Kentucky Collateralized Pollution
Control Revenue Bonds (Kentucky Utilities Company
Project) (Series A).................................... 7.450 9/15/2016 6,171,750
2,615,000 Florence, Kentucky Housing Facilities Revenue Bonds
(Bluegrass Housing, Inc. Project) (ACA Insured)........ 6.300 8/15/2019 2,605,194
2,750,000 Jefferson County, Kentucky Capital Projects Corporation
Revenue Bonds (MBIA Insured)........................... 5.375 6/1/2022 2,564,375
2,000,000 Jefferson County, Kentucky Capital Projects Corporation
Revenue Bonds (MBIA Insured)........................... 5.375 6/1/2018 1,910,000
2,000,000 Jefferson County, Kentucky School District Finance
Corporation School Building Revenue Bonds (Series A)
(FSA Insured).......................................... 5.250 1/1/2019 1,865,000
------------------------------------------------------------------
Total Kentucky 15,116,319
==================================================================
Louisiana (2.8%)
----------------
6,000,000 DeSoto Parish, Louisiana Pollution Control Revenue
Bonds (Southwestern Electric Power Company Project) 7.600 1/1/2019 6,487,500
3,200,000 Jefferson Parish, Louisiana Home Mortgage Authority
Single Family Mortgage Revenue Bonds (Series A-2)
(GNMA/FNMA Insured) (Subject to `AMT')................. 7.500 12/1/2030 3,480,000
2,605,000 Regional Transportation Authority Louisiana
Sales Tax Revenue Bonds (Series A) (FGIC Insured)...... 8.000 12/1/2012 3,191,125
------------------------------------------------------------------
Total Louisiana 13,158,625
==================================================================
Massachusetts (2.1%)
--------------------
2,000,000 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (Milford-Whittinsville
Project) (Series C).................................... 5.750 7/15/2013 1,745,000
500,000 Massachusetts State Turnpike Authority Revenue Bonds
(Series A) (FGIC Insured).............................. 5.125 1/1/2023 472,500
4,840,000 Westford, Massachusetts General Obligation Bonds
(FGIC Insured)......................................... 5.125 4/1/2017 4,537,500
3,180,000 Westford,Massachusetts General Obligation Bonds
(FGIC Insured)......................................... 5.125 4/1/2014 3,060,750
------------------------------------------------------------------
Total Massachusetts 9,815,750
==================================================================
Michigan (5.5%)
---------------
3,965,000 Chelsea, Michigan Economic Development Corporation
Limited Obligation Revenue Bonds
(United Methodist Retirement).......................... 5.400 11/15/2027 2,879,581
2,500,000 Comstock Park, Michigan Public Schools General
Obligation Bonds (FSA/Q-SBLF Insured)................. 5.500 5/1/2021 2,378,125
2,000,000 Dickinson County, Michigan Healthcare Systems Hospital
Revenue Bonds.......................................... 5.700 11/1/2018 1,585,000
2,500,000 Dickinson County, Michigan Healthcare Systems Hospital
Revenue Bonds.......................................... 5.500 11/1/2013 2,118,750
2,100,000 East China School District, Michigan General Obligation
Bonds (FGIC Insured)................................... 5.000 5/1/2015 1,942,500
1,000,000 Grand Valley, Michigan State University Revenue
Bonds (MBIA Insured)................................... 5.250 10/1/2017 965,000
</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,
2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments ( 97.9%) Interest Rate Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C> <C>
Michigan (5.5%)-continued
-------------------------
$ 1,000,000 Hillsdale, Michigan Hospital Finance Authority Hospital
Revenue Bonds (Hillsdale Community Health
Center Hospital)............................................ 5.250% 5/15/2026 $697,500
135,000 Hillsdale, Michigan Hospital Finance Authority Hospital
Revenue Bonds (Hillsdale Community Health Center)........... 4.800 5/15/2005 125,381
260,000 Hillsdale, Michigan Hospital Finance Authority Hospital
Revenue Bonds (Hillsdale Community Health Center)........... 4.700 5/15/2004 244,400
100,000 Hillsdale, Michigan Hospital Finance Authority Hospital
Revenue Bonds (Hillsdale Community Health Center)........... 4.600 5/15/2002 96,875
145,000 Hillsdale, Michigan Hospital Finance Authority Hospital
Revenue Bonds (Hillsdale Community Health Center)........... 4.300 5/15/2000 144,913
3,000,000 John Tolfree Health Systems Corporation,
Michigan Mortgage Revenue Bonds............................. 6.000 9/15/2023 2,467,500
7,000,000 Michigan Public Power Agency Refunding Revenue
Bonds (Belle River Project) (MBIA Insured).................. 5.000 1/1/2019 6,256,250
2,500,000 Michigan State Hospital Finance Authority Revenue
Bonds (Hackley Hospital Project) (Series A)................. 5.300 5/1/2013 2,206,250
500,000 Michigan State Trunk Line Revenue Bonds (Series A)
(MBIA/IBC Insured).......................................... 5.500 10/1/2021 475,625
1,065,000 Wayne County, Michigan Downriver System Sewer
Disposal General Obligation Bonds (Series B)
(MBIA Insured).............................................. 5.125 11/1/2016 987,788
---------------------------------------------------
Total Michigan 25,571,438
===================================================
Minnesota (1.1%)
----------------
5,190,000 South Washington County, Minnesota Independent
School District #833 General Obligation Bonds
(Series A) (MBIA Insured)........................................ 5.500 2/1/2019 5,014,838
---------------------------------------------------
Total Minnesota 5,014,838
===================================================
Missouri (1.2%)
---------------
4,985,000 Missouri State Housing Development Community
Single Family Mortgage Revenue Bonds
(GNMA/FNMA Insured) (Subject to `AMT')........................... 7.300 3/1/2028 5,358,875
---------------------------------------------------
Total Missouri 5,358,875
===================================================
Montana (2.9%)
--------------
1,000,000 Forsyth, Montana Pollution Control Revenue Bonds
(Portland General Electric Company) (Series B)
(Subject to `AMT')7............................................. 4.750 5/1/2033 981,250
1,320,000 Forsyth, Montana Pollution Control Revenue Bonds
(Puget Sound Power and Light Company) (Series A)
(AMBAC Insured).................................................. 7.050 8/1/2021 1,377,750
1,000,000 Montana State Board of Housing Single Family
Mortgage Revenue Bonds (Series A-2)
(Subject to `AMT')............................................... 6.250 6/1/2019 1,006,250
265,000 Montana State Board of Housing Single Family
Mortgage Revenue Bonds (Series A-1).............................. 6.000 6/1/2016 267,319
2,250,000 Montana State Board of Investment Refunded
Balance 1996 Payroll Tax Revenue Bonds........................... 6.875 6/1/2020 2,337,975
1,840,000 Montana State Board of Regents Revenue Bonds
(Higher Education-University of Montana) (Series F)
(MBIA Insured)................................................... 5.750 5/15/2016 1,858,400
2,005,000 Montana State Health Facilities Authority Health
Care Revenue Bonds (Sidney Health Center)
(ACA Insured).................................................... 6.250 9/1/2029 1,972,419
</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 30,2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments ( 97.9%) Interest Rate Maturity Date Market Value
===================================================================================================================================
<S> <C> <C> <C> <C>
Montana (2.9%)-continued
------------------------
$ 3,480,000 Montana State Health Facilities Authority Revenue
Bonds (Hillcrest Senior Living Project)................... 7.375% 6/1/2030 $ 3,349,500
645,000 Montana State Health Facilities Authority Revenue
Bonds (Hillcrest Senior Living Project)................... 7.250 6/1/2025 620,006
-----------------------------------------------------
Total Montana 13,770,869
=====================================================
Nevada (0.7%)
-------------
3,500,000 Clark County,Nevada Industrial Development
Revenue Bonds (Nevada Power Company Project)
(Series B) (Subject to `AMT')............................. 5.900 10/1/2030 3,027,500
-----------------------------------------------------
Total Nevada 3,027,500
=====================================================
New Mexico (1.1%)
-----------------
2,000,000 Bernalillo County, New Mexico Gross Receipts Tax
Revenue Bonds............................................. 5.750 10/1/2016 2,012,500
2,525,000 New Mexico Mortgage Finance Authority Revenue
Bonds (Series F).......................................... 7.000 1/1/2026 2,777,500
1,000,000 New Mexico Mortgage Finance Authority Single
Family Mortgage Capital Appreciation Revenue Bonds
(Subject to `AMT')........................................ 0.000 9/1/2019 547,500
-----------------------------------------------------
Total New Mexico 5,337,500
=====================================================
New York (4.4%)
---------------
2,000,000 New York State Dormitory Authority State University
Educational Facilities Revenue Bonds (Series A) .......... 7.500 5/15/2013 2,347,500
5,000,000 New York State Dormitory Authority State University
Educational Facilities Revenue Bonds (Series A)/4/ ....... 5.875 5/15/2017 5,056,250
2,445,000 New York State Local Government Assistance
Corporation Revenue Bonds (Series E) (FSA Insured)........ 5.375 4/1/2019 2,295,244
3,000,000 New York State Local Government Assistance
Corporation Revenue Bonds (Series E)
(MBIA Insured)............................................ 5.250 4/1/2016 2,883,750
3,000,000 New York State Thruway Authority General
Revenue Bonds (Series E).................................. 5.000 1/1/2016 2,726,250
1,000,000 Triborough Bridge and Tunnel Authority Revenue
Bonds (General Purpose) (Series B)........................ 5.375 1/1/2019 942,500
5,000,000 Triborough Bridge and Tunnel Authority Revenue
Bonds (Series Q)/4/ ...................................... 5.000 1/1/2017 4,568,750
-----------------------------------------------------
Total New York 20,820,244
=====================================================
North Carolina (5.5%)
---------------------
750,000 Carteret County, North Carolina Certificate of
Participation Bonds (AMBAC Insured)....................... 5.625 6/1/2020 732,188
420,000 Carteret County, North Carolina Certificate of
Participation Bonds (AMBAC Insured)....................... 5.375 6/1/2014 413,175
375,000 Carteret County, North Carolina Certificate of
Participation Bonds (AMBAC Insured)....................... 5.300 6/1/2013 368,906
1,420,000 Fayetteville, North Carolina Public Works
Commission Revenue Bonds (FSA Insured).................... 5.125 3/1/2017 1,306,400
2,000,000 Northampton County, North Carolina Industrial
Facilities and Pollution Control Financing Authority
Revenue Bonds (Subject to `AMT').......................... 6.450 11/1/2029 1,952,500
3,000,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds................................ 6.000 1/1/2014 2,913,750
1,120,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series A)..................... 6.000 1/1/2026 1,164,800
</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 30,2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments ( 97.9%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
North Carolina (5.5%)-continued
-------------------------------
$ 650,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series B)................. 6.250% 1/1/2012 $ 648,375
1,200,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series B)................. 5.500 1/1/2021 1,038,000
2,000,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series D)................. 6.750 1/1/2026 2,000,000
1,530,000 North Carolina Eastern Municipal Power Agency
Power System Revenue Bonds (Series D)................. 5.875 1/1/2013 1,455,413
2,195,000 North Carolina Medical Care Commission Revenue
Bonds (North Carolina Housing Foundation,Inc.)
(ACA Insured)......................................... 6.450 8/15/2020 2,225,181
5,000,000 North Carolina Municipal Power Agency #1 Catawba
Electric Revenue Bonds (Series A)..................... 6.125 1/1/2015 4,712,500
1,000,000 North Carolina Municipal Power Agency #1 Catawba
Electric Revenue Bonds (Series B)..................... 6.250 1/1/2007 1,021,250
500,000 North Carolina Municipal Power Agency #1 Catawba
Electric Revenue Bonds (Series B)..................... 6.000 1/1/2020 476,250
885,000 Piedmont Triad Airport Authority North Carolina
Revenue Bonds (Series A) (FSA Insured)................ 6.375 7/1/2016 941,419
500,000 Pitt County,North Carolina School Facilities Project
Certificate of Participation Bonds (Series A)
(FSA Insured)/3/...................................... 5.500 4/1/2020 480,625
1,000,000 Pitt County,North Carolina School Facilities Project
Certificate of Participation Bonds (Series A)
(FSA Insured)/3/...................................... 5.250 4/1/2025 901,250
250,000 Pitt County,North Carolina School Facilities Project
Certificate of Participation Bonds (Series A)
(FSA Insured)/3/...................................... 5.250 4/1/2015 237,500
1,035,000 Wake County,North Carolina Hospital Revenue
Bonds (MBIA Insured).................................. 5.125 10/1/2026 947,025
-----------------------------------------------------
Total North Carolina 25,936,507
=====================================================
North Dakota (0.2%)
-------------------
1,055,000 North Dakota State Water Commission Revenue Bonds
(Water Development and Management Program)
(Series A) (MBIA Insured)............................. 5.750 8/1/2020 1,041,813
-----------------------------------------------------
Total North Dakota 1,041,813
=====================================================
Ohio (4.1%)
-----------
1,210,000 Cambridge,Ohio City School District General
Obligation Bonds (FSA Insured)........................ 5.750 12/1/2022 1,185,800
1,000,000 Cambridge,Ohio City School District General
Obligation Bonds (FSA Insured)........................ 5.700 12/1/2020 983,750
1,000,000 Greene County,Ohio Sewer Systems
Revenue Bonds (AMBAC Insured)......................... 5.625 12/1/2025 962,500
3,855,000 Lucas County,Ohio Hospital Revenue Bonds
(Promedia Healthcare Obligation Group)
(AMBAC Insured)....................................... 5.375 11/15/2029 3,488,775
700,000 Mansfield,Ohio City School District General
Obligation Bonds (MBIA Insured)....................... 5.750 12/1/2027 680,750
1,000,000 Mansfield,Ohio City School District General
Obligation Bonds (MBIA Insured)....................... 5.750 12/1/2022 980,000
800,000 Mansfield,Ohio City School District General
Obligation Bonds (MBIA Insured)....................... 5.750 12/1/2021 786,000
2,500,000 Montgomery County,Ohio Hospital Revenue Bonds
(Kettering Medical Center)............................ 6.750 4/1/2022 2,346,875
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
Ohio (4.1%)-continued
---------------------
$ 2,000,000 Montgomery County, Ohio Hospital Revenue Bonds
(Kettering Medical Center).......................... 6.750% 4/1/2018 $ 1,885,000
3,000,000 Ohio Housing Finance Agency Residential Mortgage
Revenue Bonds (Series A-1) (GNMA Insured)
(Subject to `AMT').................................. 5.750 9/1/2026 2,992,500
1,730,000 Ridgewood, Ohio Local School District Revenue Bonds
(FSA Insured)....................................... 6.000 12/1/2024 1,738,650
1,000,000 University of Cincinnati, Ohio General Receipts
Revenue Bonds (Series AB) (MBIA Insured)............ 5.375 6/1/2020 945,000
-----------------------------------------------------------
Total Ohio 18,975,600
===========================================================
Oklahoma (0.6%)
---------------
3,000,000 Payne County, Oklahoma Economic Development
Authority Student Housing Revenue Bonds
(Collegiate Housing Foundation) (Series A).......... 6.375 6/1/2030 2,921,250
-----------------------------------------------------------
Total Oklahoma 2,921,250
===========================================================
Oregon (1.0%)
-------------
2,000,000 Clatsop County, Oregon School District #001 Astoria
General Obligation Bonds/3/......................... 5.500 6/15/2019 1,940,000
3,000,000 Portland, Oregon Water Systems Revenue Bonds
(Series A).......................................... 5.500 8/1/2020 2,910,000
-----------------------------------------------------------
Total Oregon 4,850,000
===========================================================
Pennsylvania (1.2%)
-------------------
935,000 Montgomery County, Pennsylvania Higher Education
and Health Authority Revenue Bonds (Faulkeways at
Gwnedd Project)..................................... 6.750 11/15/2030 890,588
200,000 Pennsylvania State Higher Education Facilities
Authority Health Services Revenue Bonds
(Allegheny, Delaware Project) (Series A)
(MBIA Insured)...................................... 4.900 11/15/2001 200,500
2,540,000 Philadelphia,Pennsylvania Hospital and Higher
Education Facilities Authority Revenue Bonds
(Children's Hospital Project) (Series A)............ 5.000 2/15/2021 2,143,125
2,515,000 University of Pittsburgh,Pennsylvania Revenue Bonds
(Series B) (MBIA Insured)........................... 5.000 6/1/2017 2,279,219
-----------------------------------------------------------
Total Pennsylvania 5,513,432
===========================================================
South Carolina (1.0%)
--------------------
1,250,000 Loris, South Carolina Community Hospital
District Revenue Bonds (Series A)................... 5.500 1/1/2016 1,042,187
2,000,000 Loris, South Carolina Community Hospital
District Revenue Bonds (Series B)................... 5.625 1/1/2020 1,645,000
1,000,000 South Carolina Jobs Economic Development Authority
Hospital Facilities Revenue Bonds (Palmetto Health
Alliance) (Series A)................................ 7.375 12/15/2021 988,750
1,000,000 South Carolina Jobs Economic Development Authority
Hospital Facilities Revenue Bonds (Palmetto Health
Alliance) (Series A)................................ 7.000 12/15/2010 996,250
-----------------------------------------------------------
Total South Carolina 4,672,187
===========================================================
Tennessee (1.9%)
----------------
1,000,000 Dickson County, Tennessee General Obligation
Bonds (FGIC Insured)................................ 5.000 4/1/2018 915,000
9,000,000 Shelby County, Tennessee Health Educational and
Housing Facilities Board Revenue Bonds (St. Jude's
Children's Research Project)........................ 5.375 7/1/2029 7,818,750
-----------------------------------------------------------
Total Tennessee 8,733,750
===========================================================
</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,
2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments ( 97.9%) Interest Rate Maturity Date Market Value
=================================================================================================================================
<S> <C> <C> <C> <C>
Texas (10.7%)
-------------
$ 2,000,000 Amarillo, Texas Health Facilities Corporation
Revenue Bonds (Baptist St.Anthony's Hospital
Corporation) (FSA Insured)............................... 5.500% 1/1/2017 $ 1,942,500
745,000 Bexar County, Texas Housing Finance Corporation
Multi-Family Housing Revenue Bonds (Honey Creek
Apartments Project) (Series A) (MBIA Insured)............ 6.125 4/1/2020 728,237
1,970,000 Brazos River Authority, Texas Revenue Bonds
(Houston Industries,Inc.) (Project A).................... 5.125 5/1/2019 1,773,000
1,165,000 Carroll, Texas Independent School District Capital
Appreciation General Obligation Bonds
(PSF/GTD Insured)........................................ 0.000 2/15/2012 576,675
1,845,000 Cleburne, Texas Capital Appreciation General
Obligation Bonds (FSA Insured)........................... 0.000 2/15/2016 714,937
3,950,000 Colorado River, Texas Municipal Water District
Water Revenue Bonds (MBIA Insured)....................... 5.000 1/1/2014 3,693,250
2,355,000 Galena Park, Texas Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 5.500 8/15/2021 2,234,306
1,000,000 Gregg County, Texas Health Facilities Development
Corporation Hospital Revenue Bonds
(Good Shepherd Medical Center Project)................... 6.375 10/1/2029 982,500
1,840,000 Gulf Coast, Texas Waste Disposal Authority Revenue
Bonds (Champion International Corporation)
(Subject to `AMT')....................................... 7.450 5/1/2026 1,895,200
3,810,000 Lamar, Texas Consolidated Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 5.375 2/15/2020 3,529,012
3,000,000 Lamar, Texas Consolidated Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 5.250 2/15/2017 2,842,500
5,270,000 Leander, Texas Independent School District Capital
Appreciation General Obligation Bonds
(PSF/GTD Insured)........................................ 0.000 8/15/2017 1,837,912
4,855,000 Leander, Texas Independent School District Capital
Appreciation General Obligation Bonds
(PSF/GTD Insured)........................................ 0.000 8/15/2016 1,826,694
4,935,000 Leander, Texas Independent School District Capital
Appreciation General Obligation Bonds
(PSF/GTD Insured)........................................ 0.000 8/15/2015 1,992,506
795,000 Panhandle, Texas Regional Housing Finance Agency
Revenue Bonds (Series A)................................. 6.750 3/1/2031 788,044
1,000,000 Panhandle, Texas Regional Housing Finance Agency
Revenue Bonds (Series A)................................. 6.250 3/1/2010 1,007,500
4,260,000 Rockwall, Texas Independent School
District Capital Appreciation General Obligation
Bonds (PSF/GTD Insured).................................. 0.000 8/15/2015 1,688,025
4,500,000 San Antonio, Texas Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 5.500 8/15/2024 4,235,625
2,165,000 Southlake, Texas Tax Increment General
Obligation Bonds (Series B) (AMBAC Insured).............. 0.000 2/15/2018 660,325
2,165,000 Southlake, Texas Tax Increment General Obligation
Bonds (Series B) (AMBAC Insured)......................... 0.000 2/15/2017 711,744
1,275,000 South San Antonio, Texas Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 6.000 8/15/2019 1,289,344
1,250,000 South San Antonio, Texas Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 6.000 8/15/2018 1,267,188
1,180,000 South San Antonio, Texas Independent School District
General Obligation Bonds (PSF/GTD Insured)............... 6.000 8/15/2017 1,200,650
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
============================================================================================================================
<S> <C> <C> <C> <C>
Texas (10.7%)-continued
-----------------------
$ 2,000,000 Travis County, Texas Health Facilities Development
Corporation Revenue Bonds (Ascension Health Credit)
(Series A) (MBIA Insured).............................. 6.250 11/15/2017 $2,060,000
2,810,000 Victoria County, Texas Hospital Revenue Bonds
(Citizens Medical Center Project)...................... 5.500 2/15/2019 2,223,413
1,465,000 Victoria County, Texas Hospital Revenue Bonds
(Citizens Medical Center Project)...................... 5.500 2/15/2015 1,217,781
1,320,000 Victoria County, Texas Hospital Revenue Bonds (Citizens
Medical Center Project)................................ 5.400 2/15/2013 1,115,400
2,090,000 Wylie, Texas Independent School District Capital
Appreciation General Obligation Bonds (Collin
County Project) (PSF/GTD Insured)...................... 0.000 8/15/2020 577,363
3,280,000 Wylie, Texas Independent School District Unrefunded
Balance General Obligation Bonds (PSF/GTD Insured)..... 7.000 8/15/2024 3,628,500
---------------------------------------------------------
Total Texas 50,240,131
=========================================================
Utah (2.4%)
-----------
5,990,000 Intermountain Power Agency Utah Power Supply Revenue
Bonds (Series A)....................................... 5.000 7/1/2021 5,196,325
4,680,000 Intermountain Power Agency Utah Power Supply Revenue
Bonds (Series A) (AMBAC/TCRS Insured).................. 5.500 7/1/2020 4,446,000
915,000 Intermountain Power Agency Utah Power Supply Revenue
Bonds (Series B) (MBIA/IBC Insured).................... 5.000 7/1/2016 832,650
1,000,000 Utah Water Finance Agency Revenue Bonds (Timpanogos
Line Finding Project) (Series B) (MBIA Insured)........ 5.000 6/1/2019 890,000
---------------------------------------------------------
Total Utah 11,364,975
=========================================================
Virginia (1.2%)
---------------
3,000,000 Fairfax County, Virginia Industrial Development
Authority Revenue Bonds (Inova Health Systems
Project)............................................... 5.250 8/15/2019 2,707,500
3,180,000 Prince William County, Virginia Industrial Development
Authority Hospital Revenue Bonds (Potomac Hospital
Corporation) (FSA Insured)............................. 5.000 10/1/2018 2,873,925
---------------------------------------------------------
Total Virginia 5,581,425
=========================================================
Washington (3.3%)
-----------------
2,060,000 Clark and Skamania Counties, Washington School District
#112-6 Washougal General Obligation Bonds (FGIC
Insured)............................................... 6.000 12/1/2019 2,072,875
1,000,000 Grant County, Washington Public Utilities District #2
Priest Rapids Hydro Electric Revenue Bonds (Series A)
(MBIA Insured)......................................... 5.250 1/1/2017 923,750
4,500,000 Quinault Indian Nation, Washington Revenue Bonds
(Quinault Beach Project) (Series A) (ACA Insured)...... 5.800 12/1/2015 4,331,250
5,000,000 Washington State General Obligation Bonds (Series A)... 6.750 2/1/2015 5,487,500
2,000,000 Washington State Health Care Facilities Authority
Revenue Bonds (Swedish Health Systems) (AMBAC
Insured)............................................... 5.125 11/15/2018 1,790,000
1,000,000 Washington State Housing Finance Commission Non-profit
Housing Revenue Bonds (Crista Ministries PJS-A)........ 5.350 7/1/2014 923,750
---------------------------------------------------------
Total Washington 15,529,125
=========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 65
<PAGE>
The AAL Municipal Bond Fund - Continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
2000
<TABLE>
<CAPTION>
Principal Amount Municipal Bond Investments (97.9%) Interest Rate Maturity Date Market Value
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Wisconsin (2.9%)
---------------
$ 1,105,000 Monroe, Wisconsin School District General
Obligation Bonds (AMBAC Insured).................. 6.875% 4/1/2014 $ 1,215,500
1,450,000 Wisconsin State General Obligation Bonds
(Series C)........................................ 6.000 5/1/2020 1,466,313
1,600,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Howard Young Medical
Center, Inc. Project)............................. 5.125 8/15/2028 1,386,000
1,000,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Children's Hospital
Project) (AMBAC Insured).......................... 5.625 2/15/2015 991,250
3,250,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Mercy Health System
Corporation) (AMBAC Insured)...................... 5.375 8/15/2019 3,022,500
3,810,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Mercy Hospital of
Janesville, Inc.)................................. 6.600 8/15/2022 3,814,762
2,100,000 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Monroe Clinic,Inc.)...... 5.375 2/15/2022 1,727,250
--------------------------------------------------------------
Total Wisconsin 13,623,575
==============================================================
Wyoming (1.2%)
---------------
5,825,000 Wyoming State Farm Loan Board Capital Facilities
Revenue Bonds .................................... 5.750 10/1/2020 5,744,906
--------------------------------------------------------------
Total Wyoming 5,744,906
==============================================================
United States Territories (0.5%)
--------------------------------
2,500,000 Puerto Rico Commonwealth Highway and
Transportation Authority Revenue Bonds
(Series W) (MBIA/IBC Insured)..................... 5.250 7/1/2020 2,343,750
--------------------------------------------------------------
Total United States Territories 2,343,750
==============================================================
Total Municipal Bond Investments
(amortized cost basis $461,388,102) 459,241,940
==============================================================
Short-Term Tax-Exempt Variable Rate Investments (3.1%)
------------------------------------------------------
14,729,853 Citifunds Institutional Tax-Free Reserves......... 14,729,853
--------------------------------------------------------------
Total Short-Term Tax-Exempt Variable
Rate Investments (cost basis$14,729,853) 14,729,853
==============================================================
TOTAL INVESTMENTS (101.0%)
(amortized cost basis $476,117,955) 473,971,793
==============================================================
Other Assets, Less Liabilities(-1.0%) (4,754,501)
==============================================================
Net Assets (100.0%) $469,217,292
==============================================================
</TABLE>
-----------------------
/3/ When-issued security
/4/ Pledged as security for when-issued securities.
/7/ Step-coupon bond
See page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 (91.4%) Interest Rate Maturity Date Market Value
==================================================================================================================================
<S> <C> <C> <C> <C>
Asset Backed Securities (8.6%)
------------------------------
$ 3,000,000 Associates Manufactured Housing Pass
Through Certificates Series 1996-1....... 7.900% 3/15/2027 $ 2,976,510
2,125,000 EQCC Home Equity Loan Trust Series
1997-3 Class A7.......................... 6.930 2/15/2029 1,990,232
5,250,000 Green Tree Financial Corporation
Series 1997-6 Class A-5.................. 6.680 1/15/2029 5,190,780
5,000,000 Green Tree Financial Corporation
Series 1997-6 Class A-7.................. 7.140 1/15/2029 4,814,000
5,000,000 Green Tree Financial Corporation
Series 1996-7 Class A-6.................. 7.650 10/15/2027 4,775,200
5,000,000 Green Tree Financial Corporation
Series 1996-6 Class A-6.................. 7.950 9/15/2027 4,929,850
3,000,000 Green Tree Home Improvement Loan Trust
Series 1996-D............................ 8.100 9/15/2027 2,966,100
4,500,000 Harley-Davidson Eaglemark Motorcycle
Trust Series 1999-1 Class Certificates... 6.710 1/15/2007 4,314,150
-------------------------------------------------------------------
Total Asset Backed Securities 31,956,822
===================================================================
Collateralized Mortgage Investments (5.8%)
------------------------------------------
4,000,000 First Union National Bank Commercial
Mortgage Trust Pass-Through Certificates
Series 1999-C4 Class A2.................. 7.390 11/15/2009 3,908,520
3,967,288 Heller Financial Commercial Mortgage
Asset Series 2000-PH1 Class A1........... 7.715 9/15/2008 3,971,787
4,953,742 J.P. Morgan Commercial Mortgage Finance
Corporation Series 2000-C9 Class A1...... 7.590 10/15/2032 4,935,800
5,000,000 Nationslink Funding Corporation
Commercial Mortgage Pass-Through
Certificates Series 1999-2 Class A3...... 7.181 12/20/2006 4,866,000
4,000,000 Residential Asset Securities
Corporation Series 2000-KS1 Class A14.... 8.040 10/25/2028 3,979,680
-------------------------------------------------------------------
Total Collateralized
Mortgage Investments 21,661,787
===================================================================
Finance (7.8%)
--------------
5,000,000 Cabot Industrial Properties, L.P......... 7.125 5/1/2004 4,758,185
8,500,000 Comdisco, Inc............................ 5.950 4/30/2002 8,177,467
4,000,000 EOP Operating, L.P....................... 6.800 1/15/2009 3,562,956
5,000,000 Household Finance Corporation............ 7.200 7/15/2006 4,809,115
4,000,000 Northern Trust Corporation............... 7.100 8/1/2009 3,804,228
4,000,000 Society National Bank.................... 7.250 6/1/2005 3,865,036
-------------------------------------------------------------------
Total Finance 28,976,987
===================================================================
</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, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (91.4%) Interest Rate Maturity Date Market Value
=============================================================================================================================
<S> <C> <C> <C> <C>
Industrial-Energy (9.6%)
------------------------
$ 5,000,000 Coastal Corporation........................ 6.500% 5/15/2006 $4,655,640
4,000,000 El Paso Energy Corporation................. 6.750 5/15/2009 3,641,016
3,500,000 Enron Corporation.......................... 6.400 7/15/2006 3,217,620
4,000,000 Enterprise Products Operating, L.P......... 8.250 3/15/2005 3,973,140
5,000,000 Kinder Morgan, Inc......................... 6.650 3/1/2005 4,732,115
4,500,000 Petroleum Geo-Services ASA................. 6.625 3/30/2008 3,992,837
4,000,000 Tosco Corporation.......................... 7.250 1/1/2007 3,803,040
4,000,000 USX Corporation............................ 6.650 2/1/2006 3,727,696
4,500,000 Williams Companies, Inc.................... 7.625 7/15/2019 4,189,671
--------------------------------------------------------------------------
Total Industrial-Energy 35,932,775
==========================================================================
Industrial-Manufacturing (3.3%)
-------------------------------
4,000,000 Pentair, Inc............................... 7.850 10/15/2009 3,889,380
4,500,000 Sun Microsystems, Inc...................... 7.500 8/15/2006 4,421,457
4,000,000 Textron Financial Corporation.............. 7.370 10/15/2003 3,955,572
--------------------------------------------------------------------------
Total Industrial-Manufacturing 12,266,409
==========================================================================
Industrial-Services (14.5%)
---------------------------
5,500,000 CBS Corporation............................ 7.150 5/20/2005 5,319,413
4,500,000 Comcast Cable Communications, Inc.......... 6.200 11/15/2008 3,937,154
4,000,000 Continental Cablevision, Inc............... 8.875 9/15/2005 4,179,132
4,000,000 Equifax, Inc............................... 6.300 7/1/2005 3,686,420
4,000,000 Erac USA Finance Company/2/................ 7.950 12/15/2009 3,801,952
5,500,000 Guidant Corporation........................ 6.150 2/15/2006 4,990,925
4,500,000 Joseph E. Seagram & Sons, Inc.............. 6.625 12/15/2005 4,176,954
3,365,000 Royal Caribbean Cruises, Ltd............... 6.750 3/15/2008 2,895,175
4,000,000 Time Warner, Inc........................... 8.110 8/15/2006 4,033,392
5,000,000 Times Mirror Company....................... 7.450 10/15/2009 4,860,050
5,000,000 Waste Management, Inc...................... 7.000 10/1/2004 4,449,250
8,000,000 Waste Management, Inc...................... 6.000 5/15/2001 7,684,720
--------------------------------------------------------------------------
Total Industrial-Services 54,014,537
==========================================================================
Industrial-Transportation (1.1%)
--------------------------------
4,500,000 American Airlines, Inc..................... 7.024 10/15/2009 4,230,990
--------------------------------------------------------------------------
Total Industrial-Transportation 4,230,990
==========================================================================
U.S. Government Agencies (12.5%)
--------------------------------
4,000,000 Federal National Mortgage Association...... 7.125 1/15/2030 3,948,588
5,000,000 Federal National Mortgage Association...... 7.125 3/15/2007 4,941,470
13,077,604 Federal National Mortgage Association
15 Yr. Pass Through........................ 6.500 6/1/2013 12,534,204
7,994,219 Government National Mortgage Association
15 Yr. Pass Through........................ 7.500 10/15/2013 8,007,193
8,374,247 Government National Mortgage Association
30 Yr. Pass Through........................ 7.500% 8/15/2029 8,237,998
9,519,695 Government National Mortgage Association
30 Yr. Pass Through........................ 6.500 3/15/2029 8,925,533
--------------------------------------------------------------------------
Total U.S. Government Agencies 46,594,986
==========================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
68 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Bond Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Principal Amount Long-Term Fixed-Income Investments (91.4%) Interest Rate Maturity Date Market Value
====================================================================================================================================
<S> <C> <C> <C> <C>
U.S. Treasury Securities (10.2%)
-------------------------------
$ 8,000,000 U.S. Treasury Bonds............................... 8.750% 5/15/2017 $ 9,995,000
17,000,000 U.S. Treasury Bonds............................... 7.250 5/15/2016 18,583,125
3,000,000 U.S. Treasury Notes............................... 12.375 5/15/2004 3,598,125
6,000,000 U.S. Treasury Notes............................... 6.500 10/15/2006 5,988,750
--------------------------------------------------------------------
Total U.S.Treasury Securities 38,165,000
====================================================================
Utilities (18.0%)
----------------
5,000,000 Alliant Energy Resources, Inc/2/.................. 7.375 11/9/2009 4,846,430
5,000,000 Arizona Public Service Company.................... 6.250 1/15/2005 4,652,170
4,000,000 CSW Investments/2/................................ 7.450 8/1/2006 3,841,368
5,000,000 Edison Mission Holdings Company/2/................ 8.137 10/1/2019 4,760,145
4,500,000 Enogex, Inc/2/.................................... 8.125 1/15/2010 4,425,345
5,561,099 Niagara Mohawk Power Corporation.................. 7.625 10/1/2005 5,370,965
3,500,000 NRG Northeast Generating LLC/2/................... 8.842 6/15/2015 3,575,772
7,000,000 NRG Northeast Generating LLC/2/................... 8.065 12/15/2004 7,009,933
6,000,000 Oneok, Inc........................................ 7.750 8/15/2006 5,895,978
6,500,000 PSI Energy, Inc................................... 7.850 10/15/2007 6,272,929
8,500,000 TXU Eastern Funding Company....................... 6.450 5/15/2005 7,846,775
5,000,000 Utilicorp United, Inc............................. 7.625 11/15/2009 4,749,325
4,000,000 Vodafone AirTouch plc/2/.......................... 7.750 2/15/2010 3,938,024
-------------------------------------------------------------------
Total Utilities 67,185,159
===================================================================
Total Long-Term Fixed-Income Investments
(amortized cost basis $350,157,883) 340,985,452
-------------------------------------------------------------------
Short-Term Investments (7.3%)/1/
==================================================
4,328,000 AT&T Corporation.................................. 5.980 5/1/2000 4,328,000
5,358,000 Countrywide Home Loans, Inc....................... 6.110 5/9/2000 5,350,725
10,000,000 Ford Motor Credit Company......................... 5.970-6.000 5/2-5/4/2000 9,996,529
4,092,000 General Motors Acceptance Corporation............. 6.000 5/3/2000 4,090,636
3,657,000 Xerox Corporation................................. 6.040 5/5/2000 3,654,546
-------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $27,420,436) 27,420,436
===================================================================
TOTAL INVESTMENTS (98.7%)
(amortized cost basis $377,578,319) 368,405,888
===================================================================
Other Assets, Less Liabilities (1.3%) 4,853,901
===================================================================
Net Assets (100.0%) $373,259,789
===================================================================
</TABLE>
--------------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
See page 87 for a complete discussion of Investment Terms.
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 SCHEDULE OF INVESTMENTS AS OF APRIL 30, 2000
[LOGO] 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 (98.9%) Interest Rate Maturity Date Range* Market Value
============================================================================================================================
<S> <C> <C> <C> <C>
$ 7,500,000 American Express Credit Corporation........... 5.870-6.050% 5/30-7/7/2000 $7,435,146
15,500,000 American General Finance Corporation.......... 5.890-6.150 5/22-7/21/2000 15,381,277
15,218,000 Associates Corporation of North America....... 5.870-6.070 5/19-7/6/2000 15,090,648
6,000,000 AT&T Corporation.............................. 5.870 5/3/2000 5,998,043
767,000 Bell Atlantic Network Funding Corporation..... 6.020 5/9/2000 765,974
5,649,000 BellSouth Telecommunications, Inc............. 6.050 6/26/2000 5,595,837
11,363,000 CIT Group, Inc................................ 5.870-6.060 5/8-6/26/2000 11,307,422
10,526,000 Coca-Cola Company/6/.......................... 5.850-6.000 5/18-6/9/2000 10,483,633
5,000,000 Colgate-Palmolive Company..................... 6.120 7/19/2000 4,932,850
4,844,000 Countrywide Home Loans, Inc................... 5.970-6.060 5/2-5/12/2000 4,837,389
6,172,000 Duke Energy Corporation....................... 6.030-6.080 6/14-7/7/2000 6,113,812
15,309,000 E.I. du Pont de Nemours & Company.............. 5.880-6.070 6/2-7/13/2000 15,173,826
8,426,000 Ford Motor Credit Company..................... 6.070 6/30-7/11/2000 8,332,798
14,676,000 General Electric Capital Corporation.......... 5.900-6.240 5/2-7/26/2000 14,615,347
2,732,000 General Mills, Inc............................ 5.850 5/15/2000 2,725,785
15,500,000 General Motors Acceptance Corporation......... 5.880-6.260 5/12-7/26/2000 15,336,448
2,010,000 Gillette Company.............................. 6.270 7/27/2000 1,979,544
15,448,000 Goldman Sachs Group, L.P...................... 5.900-6.160 5/1-7/20/2000 15,363,446
9,711,000 GTE Corporation............................... 6.060-6.200 5/11-5/31/2000 9,677,133
2,500,000 Hershey Foods Corporation..................... 5.840 5/17/2000 2,493,511
14,183,000 Household Finance Corporation................. 5.930-6.050 6/6-6/19/2000 14,082,662
7,676,000 IBM Credit Corporation........................ 5.850-5.860 5/31-6/7/2000 7,633,683
14,881,000 International Lease Finance Corporation....... 5.840-6.020 5/9-6/9/2000 14,845,664
14,225,000 John Deere Capital Corporation................ 6.080-6.180 6/14-7/25/2000 14,043,746
7,649,000 McGraw-Hill Companies, Inc.................... 6.050-6.120 6/20-7/18/2000 7,567,727
15,445,000 Merrill Lynch & Company, Inc.................. 5.880-6.170 5/16-7/24/2000 15,340,515
13,401,000 Motorola, Inc................................. 5.870-6.070 5/25-7/5/2000 13,297,427
13,761,000 Norwest Financial, Inc........................ 5.870-6.080 5/8-6/23/2000 13,698,322
3,000,000 Proctor & Gamble Company...................... 5.850 5/1/2000 3,000,000
3,000,000 R.R. Donnelley & Sons Company.................. 6.000 5/16/2000 2,992,500
15,000,000 SBC Communications, Inc....................... 5.870-6.070 6/2-7/10/2000 14,884,409
5,844,000 Schering Corporation.......................... 5.950-6.060 6/27-7/12/2000 5,781,268
15,224,000 Southern California Edison Company............ 5.850-6.100 5/4-7/5/2000 15,168,909
15,523,000 Toyota Motor Credit Corporation............... 5.950-6.040 5/18-6/20/2000 15,438,205
9,837,000 Transamerica Finance Corporation.............. 5.960-6.050 6/13-6/21/2000 9,759,829
8,043,000 Wal-Mart Stores, Inc.......................... 6.010-6.040 5/8-5/31/2000 8,018,713
3,453,000 Walt Disney Company........................... 6.080 7/10/2000 3,412,178
6,868,000 Warner-Lambert Company........................ 5.960-6.000 5/24-5/26/2000 6,840,796
--------------------------------------------------------
Total Commercial Paper 359,446,422
========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
70 The AAL Mutual Funds Annual Report
<PAGE>
The AAL Money Market Fund - continued SCHEDULE OF INVESTMENTS AS OF APRIL 30,
2000.
<TABLE>
<CAPTION>
Principal Amount Variable Demand Notes (1.3%) Market Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 4,692,927 Fidelity Domestic Portfolio Class III $4,692,927
--------------------------------------------------------------
Total Variable Rate Demand Notes 4,692,927
==============================================================
TOTAL INVESTMENTS (100.2%)
(amortized cost basis $364,139,349) 364,139,349
==============================================================
Other Assets, Less Liabilities (-0.2%) (879,604)
==============================================================
Total Net Assets (100.0%) $363,259,745
==============================================================
</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.
/6/ 4(2) commercial paper
See page 87 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 71
<PAGE>
Statement of Assets and Liabilities AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
The AAL The AAL The
AAL The AAL
Smal Cap Stock Fund Mid Cap Stock Fund International Fund Capital
Growth Fund
====================================================================================================================================
<S> <C> <C> <C> <C>
Assets
------
Investments at cost......................... $190,613,815 $701,434,709 $197,879,103 $2,121,879,144
Investments at value........................ $218,248,473 $790,218,822 $244,616,131 $4,368,755,255
Cash........................................ 347 449 217,604 381
Unamortized organization & initial
registration expenses....................... 8,549 -- 3,756 --
Dividend and interest receivable............ 45,042 389,186 482,693 2,388,759
Prepaid expenses............................ 33,652 40,717 30,534 102,511
Receivable for investments sold............. 1,382,172 68,046,692 161,381 10,582,748
Receivable for trust shares purchased....... 245,947 569,469 325,211 1,420,420
Receivable for forward contracts............ -- -- 183,373 --
------------------------------------------------------------------------------------------------------------------------------------
Total Assets 219,964,182 $859,265,335 $246,022,683 $4,383,250,074
====================================================================================================================================
Liabilities
-----------
Payable for forward contracts............... $ -- $ -- $ 185,790 $ --
Payable for investments purchased........... 2,558,423 55,628,561 -- 31,820,002
Income distributions payable................ -- -- -- --
Payable for trust shares redeemed........... 63,902 166,690 258,897 1,004,513
Payable to affiliate........................ 191,565 621,491 419,828 2,923,916
Accrued expenses............................ 189,635 457,503 1,396 948,487
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 3,003,525 56,874,245 865,911 36,696,918
====================================================================================================================================
Net Assets
----------
Trust Capital (beneficial interest)......... 176,570,251 607,856,708 199,657,980 2,104,380,656
Accumulated undistributed net investment
income (loss)............................... -- -- (16,008) 3,842,038
Accumulated undistributed net realized
gain (loss) on investments.................. 12,755,748 105,750,269 (1,194,170) (8,545,649)
Net unrealized appreciation (depreciation)
on:
Investments............................... 27,634,658 88,784,113 46,737,028 2,246,876,111
Foreign currency contracts................ -- -- (417) --
Foreign currency related transactions..... -- -- (27,641) --
------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets 216,960,657 802,391,090 245,156,772 4,346,553,156
====================================================================================================================================
Total Liabilities and Capital $219,964,182 $859,265,335 $246,022,683 $4,383,250,074
====================================================================================================================================
Class A share capital....................... $191,307,977 $758,953,703 $226,699,076 $4,115,141,199
Shares of beneficial interest outstanding
(Class A)................................... 13,105,839 45,362,718 16,126,431 106,421,802
Net asset value per share................... $ 14.60 $ 16.73 $ 14.06 $ 38.67
Maximum public offering price............... $ 15.21 $ 17.43 $ 14.65 $ 40.28
Class B share capital....................... $ 24,638,530 $ 26,913,531 $ 15,617,446 $ 148,626,945
Shares of beneficial interest outstanding
(Class B)................................... 1,730,214 1,661,098 1,136,100 3,941,085
Net asset value per share................... $ 14.24 $ 16.20 $ 13.75 $ 37.71
Class I share capital....................... $ 1,014,150 $ 16,523,856 $ 2,840,250 $ 82,785,012
Shares of beneficial interest outstanding
(Class I)................................... 68,513 978,046 200,747 2,137,824
Net asset value per share................... $ 14.80 $ 16.89 $ 14.15 $ 38.72
</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 The AAL
Equity Income Fund Balanced Fund High Yield Bond Fund Municipal Bond Fund Bond Fund Money Market Fund
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
$238,285,547 $ 250,086,903 $ 174,562,139 $ 476,117,955 $377,578,319 $364,139,349
$295,181,552 $ 276,286,428 $ 143,694,581 $ 473,971,793 $368,405,888 $364,139,349
529 553 561 -- 615 (213)
-- 43,507 11,102 -- -- --
576,611 1,855,343 4,923,463 7,834,968 5,850,517 24,241
44,414 55,182 36,509 39,771 36,682 71,670
-- 358,305 -- 2,702,601 -- --
106,979 229,404 112,918 228,634 42,780 1,753,545
-- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
$295,910,085 $ 278,828,722 $ 148,779,134 $ 484,777,767 $374,336,482 $365,988,592
=========================================================================================================================
$ -- $ -- $ -- $ -- $ -- $ --
-- 1,007,308 -- 14,575,153 -- --
-- -- 501,536 506,924 577,653 120,028
232,812 75,062 261,131 80,604 184,306 2,349,789
186,108 199,532 94,561 280,509 217,003 120,951
99,909 246,822 113,508 117,285 97,731 138,079
-------------------------------------------------------------------------------------------------------------------------
518,829 1,528,724 970,736 15,560,475 1,076,693 2,728,847
=========================================================================================================================
238,614,784 258,149,327 191,351,781 483,219,438 409,323,763 363,224,534
271,830 625,529 (245,549) -- 96,451 35,211
(391,363) (7,674,383) (12,430,276) (11,855,984) (26,987,994) --
56,896,005 26,199,525 (30,867,558) (2,146,162) (9,172,431) --
-- -- -- -- -- --
-- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
295,391,256 277,299,998 147,808,398 469,217,292 373,259,789 363,259,745
=========================================================================================================================
$295,910,085 $ 278,828,722 $ 148,779,134 $ 484,777,767 $374,336,482 $365,988,592
=========================================================================================================================
$277,594,342 $ 256,088,712 $ 134,288,121 $ 461,327,957 $321,724,979 $348,046,753
19,275,494 20,643,682 18,054,559 44,163,117 34,537,744 348,046,753
$ 14.40 $ 12.41 $ 7.44 $ 10.45 $ 9.32 $ 1.00
$ 15.00 $ 12.93 $ 7.75 $ 10.88 $ 9.70 --
$ 11,639,502 $ 18,210,958 $ 11,558,484 $ 7,344,366 $ 3,620,371 $ 2,426,564
809,531 1,474,368 1,554,147 703,254 388,475 2,426,564
$ 14.38 $ 12.35 $ 7.44 $ 10.44 $ 9.32 $ 1.00
$ 6,157,412 $ 3,000,328 $ 1,961,793 $ 544,969 $ 47,914,439 $ 12,786,428
426,873 242,070 264,006 52,162 5,143,122 12,786,428
$ 14.43 $ 12.40 $ 7.43 $ 10.45 $ 9.32 $ 1.00
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 73
<PAGE>
Statement of Operations FOR THE YEAR ENDED APRIL 30, 2000
<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................................... $ 749,038 $ 5,325,463 $ 2,605,539 $ 36,408,353
Taxable interest............................ 557,699 2,360,705 366,895 14,161,420
Tax exempt interest......................... -- -- -- --
Foreign dividend withholding................ -- -- (330,196) --
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 1,306,737 7,686,168 2,642,238 50,569,773
====================================================================================================================================
Expenses
--------
Adviser fees................................ 1,139,125 4,562,263 489,629 21,248,554
Sub-Adviser fees............................ -- -- 710,481 --
Administrative service and pricing fees..... 44,450 43,428 49,124 42,849
Amortization of organizational costs &
registration fees........................... 7,269 -- 14,691 --
Audit and legal fees........................ 15,941 29,987 43,826 23,635
Custody fees................................ 19,797 37,484 132,444 127,359
Distribution expense Class A................ 356,959 1,639,421 452,941 9,590,907
Distribution expense Class B................ 191,647 209,535 122,598 1,263,419
Printing and postage expense Class A........ 187,197 264,177 110,715 739,323
Printing and postage expense Class B........ 27,745 45,907 26,722 88,566
Printing and postage expense Class I........ 86 156 116 270
SEC and state registration expense.......... 67,000 87,535 55,373 200,451
Shareholder maintenance fees Class A........ 140,159 356,418 126,330 925,710
Shareholder maintenance fees Class B........ 29,211 28,503 16,067 91,600
Shareholder maintenance fees Class I........ 40 74 34 176
Transfer Agent fees Class A................. 513,784 1,272,538 466,393 3,420,190
Transfer Agent fees Class B................. 110,551 104,444 57,501 358,198
Transfer Agent fees Class I................. 167 316 109 658
Trustees fees and expenses.................. 17,188 17,188 17,188 17,188
Other expenses.............................. 8,492 8,698 8,663 41,739
------------------------------------------------------------------------------------------------------------------------------------
Total Expenses Before Reimbursement 2,876,808 8,708,072 2,900,945 38,180,792
====================================================================================================================================
Less Reimbursement from Adviser/1/.......... (199,347) (637,522) (115,283) (697,684)
------------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 2,677,461 8,070,550 2,785,662 37,483,108
====================================================================================================================================
Net Investment Income (Loss) (1,370,724) (384,382) (143,424) 13,086,665
====================================================================================================================================
Realized and Unrealized Gains (Losses) on Investments and Foreign Currency
--------------------------------------------------------------------------
Net realized gains (losses) on investments..... 27,239,356 138,456,655 15,848,124 6,702,727
Net realized (losses) on
foreign currency transactions.................. -- -- 171,554 --
Change in net unrealized appreciation/
depreciation on investments.................... 22,792,468 28,736,447 20,721,106 340,231,707
Change in net unrealized appreciation/
depreciation on foreign currency transactions.. -- -- (133,788) --
------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (losses)
on Investments and Foreign Currency 50,031,824 167,193,102
36,606,996 346,934,434
====================================================================================================================================
Net Increase (Decrease) in Net Assets
From Operations $48,661,100 $ 166,808,720 $36,463,572 $360,021,099
====================================================================================================================================
</TABLE>
---------------------
/1/ During the year ended April 30, 2000, the following Funds had class
specific reimbursements: The AAL High Yield Bond Fund Class A $108,145,
Class B $31,587; The AAL Money Market Fund Class A $319,186, Class B
$2,108.
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 TheAAL The AAL
Equity Income Fund Balanced Fund High Yield Bond Fund Municipal Bond Fund Bond Fund Money Market Fund
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
$ 5,284,416 $ 1,092,547 $ -- $ -- $ -- $ --
1,080,440 7,886,579 17,062,514 710,466 27,578,846 18,734,456
-- -- -- 28,078,710 -- --
-- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
6,364,856 8,979,126 17,062,514 28,789,176 27,578,846 18,734,456
==============================================================================================================================
1,323,521 1,280,721 816,005 2,247,970 1,785,045 1,685,613
-- -- -- -- -- --
43,461 48,336 51,333 74,992 47,940 43,554
-- 14,838 6,665 -- -- --
16,553 17,575 17,832 49,850 24,461 15,594
12,760 17,660 8,631 22,789 17,899 17,222
676,561 535,898 335,275 1,227,495 866,067 398,983
107,306 153,343 119,439 76,870 34,899 18,446
70,431 213,003 48,403 91,083 77,040 211,261
10,687 22,126 13,812 6,089 2,886 5,917
234 68 104 92 168 223
81,846 82,249 78,848 79,481 74,219 119,937
111,319 69,607 41,493 70,121 99,223 134,570
9,876 9,933 6,557 2,470 2,186 1,269
79 34 51 12 117 85
410,475 258,441 159,994 255,445 380,080 691,265
35,489 35,784 24,532 8,940 7,960 7,005
314 140 191 57 439 411
17,188 17,188 17,188 17,188 17,187 17,188
8,719 2,903 6,695 8,794 8,494 8,594
---------------------------------------------------------------------------------------------------------------------------------
2,936,819 2,779,847 1,753,048 4,239,738 3,446,310 3,377,137
=================================================================================================================================
(174,463) (103,763) (263,355) (261,327) (300,704) (1,180,669)
---------------------------------------------------------------------------------------------------------------------------------
2,762,356 2,676,084 1,489,693 3,978,411 3,145,606 2,196,468
=================================================================================================================================
3,602,500 6,303,042 15,572,821 24,810,765 24,433,240 16,537,988
=================================================================================================================================
781,925 (6,643,070) (9,329,800) (11,809,196) (19,781,025) --
-- -- -- -- -- --
(6,887,666) 12,046,584 (17,289,446) (35,797,247) (5,434,062)
-- -- -- -- -- --
---------------------------------------------------------------------------------------------------------------------------------
(6,105,741) 5,403,514 (26,619,246) (47,606,443) (25,215,087) --
=================================================================================================================================
$(2,503,241) $11,706,556 $(11,046,425) $(22,795,678) $ (781,847) $ 16,537,988
=================================================================================================================================
</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
4/30/99 4/30/00 4/30/99 4/30/00
================================================================================================================================
<S> <C> <C> <C> <C>
Operations
----------
Net investment income (loss)...................... $ (1,612,190) $ (1,370,724) $ (1,839,180) $ (384,382)
Net realized gains (losses) on
investments....................................... (12,910,797) 27,239,356 5,548,797 138,456,655
Net realized gains (losses) on
foreign currency transactions..................... -- -- -- --
Change in net unrealized appreciation/depreciation
on investments.................................... (12,219,909) 22,792,468 (57,120,248) 28,736,447
Change in net unrealized appreciation/depreciation
on foreign currency transactions.................. -- -- -- --
================================================================================================================================
Net Increase (Decrease) in Net Assets
Resulting from Operations (26,742,896) 48,661,100 (53,410,631) 166,808,720
================================================================================================================================
Distributions to Shareholders
-----------------------------
From net investment income Class A................ -- -- -- --
From net realized gains Class A................... (3,279,485) -- (31,399,679) (34,914,468)
From net investment income Class B................ -- -- -- --
From net realized gains Class B................... (367,213) -- (764,973) (1,151,451)
From net investment income Class I................ -- -- -- --
From net realized gains Class I................... (25,739) -- (104,348) (479,306)
--------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (3,672,437) -- (32,269,000) (36,545,225)
================================================================================================================================
Trust Shares Transactions
-------------------------
Purchases of trust shares......................... 51,592,646 59,067,184 83,653,125 106,374,149
Income dividends reinvested....................... -- -- -- --
Capital gains distributions reinvested............ 3,651,227 -- 32,027,978 36,309,432
Redemption of trust shares........................ (27,332,479) (23,356,357) (107,894,235) (78,862,531)
--------------------------------------------------------------------------------------------------------------------------------
Net Increase in Trust Capital 27,911,394 35,710,827 7,786,868 63,821,050
================================================================================================================================
Net Increase (Decrease) in Net Assets (2,503,939) 84,371,927 (77,892,763) 194,084,545
================================================================================================================================
Net Assets Beginning of Period 135,092,669 132,588,730 686,199,308 608,306,545
================================================================================================================================
Net Assets End of Period $132,588,730 $216,960,657 $ 608,306,545 $802,391,090
================================================================================================================================
Accumulated Undistributed
Net Investment Income (Loss) $ -- $ -- $ -- $ --
================================================================================================================================
</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
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
=============================================================================================================
<S> <C> <C> <C> <C> <C>
$ 859,681 $ (143,424) $ 8,529,494 $ 13,086,665 $ 2,834,430 $ 3,602,500
(16,079,763) 15,848,124 44,101,168 6,702,727 (1,457,948) 781,925
(847,376) 171,554 -- -- -- --
26,954,543 20,721,106 632,727,988 340,231,707 24,969,242 (6,887,666)
(1,064,532) (133,788) -- -- -- --
------------------------------------------------------------------------------------------------------------
9,822,553 36,463,572 685,358,650 360,021,099 26,345,724 (2,503,241)
============================================================================================================
(5,508,439) (50,305) (9,039,308) (9,681,936) (2,771,066) (3,064,350)
(1,077,355) -- (44,133,195) (44,873,806) (12,438,445) --
(270,859) -- -- -- (22,587) (12,321)
(68,393) -- (1,163,264) (1,533,271) (394,272) --
(81,218) (5,210) (69,685) (338,713) (152,592) (182,620)
(13,741) -- (187,263) (743,163) (477,318) --
------------------------------------------------------------------------------------------------------------
(7,020,005) (55,515) (54,592,715) (57,170,889) (16,256,280) (3,259,291)
============================================================================================================
26,644,937 71,663,481 530,840,060 580,899,089 78,746,227 64,587,532
5,762,542 52,133 9,003,264 9,870,705 2,714,810 3,049,427
1,143,152 -- 45,010,862 46,578,713 12,525,314 --
(30,259,775) (21,583,304) (291,194,908) (342,666,570) (27,659,752) (51,458,534)
------------------------------------------------------------------------------------------------------------
3,290,856 50,132,310 293,659,278 294,681,937 66,326,599 16,178,425
============================================================================================================
6,093,404 86,540,367 924,425,213 597,532,147 76,416,043 10,415,893
============================================================================================================
152,523,001 158,616,405 2,824,595,796 3,749,021,009 208,559,320 284,975,363
============================================================================================================
$ 158,616,405 $ 245,156,772 $ 3,749,021,009 $ 4,346,553,156 $ 284,975,363 $ 295,391,256
============================================================================================================
$ (110,538) $ (16,008) $ 776,022 $ 3,842,038 $ 48,807 $ 271,830
============================================================================================================
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 77
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets - continued
The AAL Balanced Fund The AAL High Yield Bond Fund
Period Ended Year Ended Year Ended Year Ended
4/30/99 4/30/00 4/30/99 4/30/00
==========================================================================================================================
<S> <C> <C> <C> <C>
Operations
----------
Net investment income (loss)......................... $ 1,884,718 $ 6,303,042 $ 12,701,268 $15,572,821
Net realized gains (losses) on investments........... (951,699) (6,643,070) (2,968,117) (9,329,800)
Net realized gains (losses) on foreign
currency transactions................................ -- -- -- --
Change in net unrealized appreciation/depreciation
on investments....................................... 13,169,175 12,046,584 (14,351,533) (17,289,446)
Change in net unrealized appreciation/depreciation
on foreign currency transactions..................... -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 14,102,194 11,706,556 (4,618,382) (11,046,425)
==========================================================================================================================
Distributions to Shareholders
From net investment income Class A................... (1,500,115) (5,670,014) (11,543,313) (14,387,482)
From net realized gains Class A...................... (41,657) -- (868,111) --
From net investment income Class B................... (77,069) (259,063) (992,940) (1,196,399)
From net realized gains Class B...................... (3,381) -- (79,266) --
From net investment income Class I................... (29,552) (97,249) (165,015) (256,402)
From net realized gains Class I...................... (748) -- (15,776) --
--------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (1,652,522) (6,026,326) (13,664,421) (15,840,283)
==========================================================================================================================
Trust Shares Transactions
Purchases of trust shares............................ 138,049,644 131,147,830 70,417,151 51,360,947
Income dividends reinvested.......................... 1,578,143 5,923,264 8,735,598 10,472,876
Capital gains distributions reinvested............... 45,128 -- 760,947 --
Redemption of trust shares........................... (10,806,195) (37,844,785) (25,812,174) (33,679,487)
--------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Trust Capital 128,866,720 99,226,309 54,101,522 28,154,336
==========================================================================================================================
Net Increase (Decrease) in Net Assets 141,316,392 104,906,539 35,818,719 1,267,628
==========================================================================================================================
Net Assets Beginning of Period 31,077,067 172,393,459 110,722,051 146,540,770
==========================================================================================================================
Net Assets End of Period
Accumulated Undistributed $172,393,459 $ 277,299,998 $ 146,540,770 $ 147,808,398
==========================================================================================================================
Net Investment Income (Loss) $ 333,728 $ 625,529 $ 15,284 $ (245,549)
==========================================================================================================================
</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
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
===========================================================================================================
<S> <C> <C> <C> <C> <C>
$ 22,532,856 $ 24,810,765 $ 21,237,229 $ 24,433,240 $ 12,365,667 $ 16,537,988
5,587,589 (11,809,196) 3,344,719 (19,781,025) -- --
-- -- -- -- -- --
4,309,037 (35,797,247) (6,610,062) (5,434,062) -- --
-- -- -- -- -- --
------------------------------------------------------------------------------------------------------------
32,429,482 (22,795,678) 17,971,886 (781,847) 12,365,667 16,537,988
============================================================================================================
(22,312,462) (24,446,242) (18,958,827) (21,191,741) (11,846,827) (15,636,113)
(7,691,473) (678,042) -- -- -- --
(206,793) (318,581) (96,253) (179,845) (48,170) (82,120)
(94,607) (10,986) -- -- -- --
(13,601) (45,942) (2,182,149) (3,061,654) (470,670) (819,755)
(8,405) (1,444) -- -- -- --
------------------------------------------------------------------------------------------------------------
(30,327,341) (25,501,237) (21,237,229) (24,433,240) (12,365,667) (16,537,988)
============================================================================================================
81,733,880 52,506,368 84,626,055 51,732,978 424,973,735 491,464,470
18,276,929 20,019,900 16,241,614 18,435,783 12,076,864 15,935,023
6,555,174 584,946 -- -- --
(48,331,549) (86,739,407) (66,671,353) (86,711,595) (371,525,997) (451,836,917)
------------------------------------------------------------------------------------------------------------
58,234,434 (13,628,193) 34,196,316 (16,542,834) 65,524,602 55,562,576
============================================================================================================
60,336,575 (61,925,108) 30,930,973 (41,757,921) 65,524,602 55,562,576
============================================================================================================
470,805,825 531,142,400 384,086,737 415,017,710 242,172,567 307,697,169
============================================================================================================
$ 531,142,400 $ 469,217,292 $ 415,017,710 $ 373,259,789 $ 307,697,169 $ 363,259,745
============================================================================================================
$ (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, 2000
(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 Small Cap Stock, Mid Cap
Stock, International, Capital Growth, Equity Income, Balanced, High Yield Bond,
Municipal Bond, Bond, Money Market, U.S. Government Zero Coupon Target Funds
2001 and 2006, Large Company Index, Mid Cap Index, and Bond Index. On December
31, 1999 the Large Company Index, the Mid Cap Index and the Bond Index Funds
began offering institutional shares only. They are hereby referred to as the
institutional index funds. The 15 AAL Mutual Funds are collectively referred to
as the "Funds". The financial statements of the two U.S. Government Zero Coupon
Target Funds and the three institutional index funds are included in separate
annual reports.
On January 8, 1997, the Trust began issuing two classes of Fund shares in The
AAL Small Cap Stock, Mid Cap Stock, International, Capital Growth, Equity
Income, High Yield Bond, Municipal Bond, 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 Small Cap Stock, Mid Cap Stock, International,
Capital Growth, Equity Income, Balanced, High Yield Bond, Municipal Bond, Bond,
and Money Market Funds. The Series I shares are offered at net asset value and
have no annual 12b-1 or service fee 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 rates
arising from actual foreign currency transactions and the effect of changes in
foreign exchange rates from the fluctuations arising from trade date and
settlement date differences.
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 AAL International Fund may enter
into such contracts 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 counterparties fail to settle these
forward contracts, The AAL International Fund could be exposed to foreign
currency fluctuations.
Initial Public Offerings--The AAL Small Cap Stock, Mid Cap Stock, Capital
Growth, Equity Income, and Balanced Funds may invest in initial public offerings
(IPOs). IPOs and other investment techniques may have a performance impact on a
fund.
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 may utilize 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. Expenses that are not directly attributable to a
portfolio are allocated among the Fund portfolios in proportion to their
respective net assets, number of shareholder accounts or other reasonable basis.
Class specific expenses, such as 12b-1 fees, transfer agent expenses,
shareholder maintenance fees and printing and postage costs are charged to each
fund class of shares directly. Shared expenses, adviser, custodian, professional
expenses, etc. are allocated among the share classes based on asset size or by
another reasonable basis. Net investment income, nonclass-specific expenses and
realized and unrealized gains or losses are allocated directly to each class
based upon the relative net asset value of outstanding shares, or the value of
dividend eligible shares, as appropriate for each class of shares.
Distributions to Shareholders--Net investment income is distributed to each
shareholder as a dividend. Dividends to shareholders are recorded on the ex-
dividend date. Dividends from The AAL Capital Growth Fund are declared and paid
semi-annually. Dividends from The AAL Small Cap Stock, Mid 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 High Yield Bond, Municipal Bond, 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 adjust the carrying amount of
assets in anticipation of nonperformance on the instruments.
--------------------------------------------------------------------------------
80 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Other--For financial statement purposes, investment security transactions are
accounted for on the trade date. Dividend income is recognized on the ex-
dividend date, and interest income is recognized on an accrual basis. Discounts
and premiums on municipal bonds are amortized over the life of the respective
bonds. Discounts on bonds purchased are amortized over the life of the
respective bonds in The AAL Mid Cap Stock, Equity Income, Balanced, High Yield
Bond, and Bond 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, 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 "Adviser"), 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 $1,000M 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>
The AAL International Fund has entered into a sub-advisory agreement with
Oechsle International Advisors, 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 annual advisory fee paid to the adviser).
The Trust has entered into an Administrative Services Agreement with Aid
Association for Lutherans ("AAL") pursuant to which AAL provides certain
administrative services. Under the Administrative Services Agreement, AAL earned
the following fees from the respective Funds for the year ended April 30, 2000:
$45,000 for The AAL International Fund, $40,000 for The AAL Small Cap Stock, Mid
Cap Stock, Capital Growth, Equity Income, Balanced, High Yield Bond, Municipal
Bond, Bond, and Money Market Funds, respectively.
The Trust has also contracted with AAL Capital Management Corporation for
certain shareholder maintenance services. These shareholder services include:
pre-processing and quality control of new accounts, shareholder correspondence,
account response and answering customer inquires regarding account status and
option and facilitating shareholder telephone transactions. Fees and cost
reimbursements charged to the Funds under terms of the contract approximated
$3.75 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 is charged for the AAL Small Cap Stock, Mid Cap Stock,
International, Capital Growth, Equity Income, Balanced, High Yield Bond,
Municipal Bond, and 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 is charged for The AAL Small Cap Stock, Mid Cap Stock, International,
Capital Growth, Equity Income, Balanced, High Yield Bond, Municipal Bond, and
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 is charged for the AAL
Money Market Fund. There is no 12b-1 Distribution Fee or service fee on Class I
shares.
For the year ended April 30, 2000, AAL Capital Management received $5,432,434 in
commissions from the sales of Class A and B shares.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 81
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
Each Trustee of the Funds or Trust who is not affiliated with AAL or the Adviser
receives an annual fee from the Funds for services as a Trustee and is eligible
to participate in a deferred compensation plan with respect to these fees.
Participants in the plan may designate their deferred Trustee's fees as if
invested in any one of the Funds. The value of each Trustee's deferred
compensation account will increase or decrease as if it were invested in shares
of the selected Funds. Those Trustees not participating in the above plan
received $60,581 in fees for the year ended April 30, 2000. 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, 2000 the Adviser is waiving certain expenses of The AAL Money Market
Fund. In addition, AAL Capital Management Corporation is waiving all expenses in
excess of 1.00% for Class A and 1.75% for Class B of The AAL High Yield Bond
Fund. Voluntary waiver of expenses to these Funds may be modified or
discontinued at any time by the Adviser.
AAL is the ultimate parent company for AAL Capital Management Corporation.
(D) SECURITY TRANSACTIONS
During the years ended April 30, 1999, and 2000, purchases and sales of
securities other than short-term obligations were as follows:
<TABLE>
<CAPTION>
Purchases Sales
-------------------------------------- -------------------------------------
Years Ended Years Ended
4/30/99 4/30/00 4/30/99 4/30/00
==========================================================================================================================
<S> <C> <C> <C> <C>
The AAL Small Cap Fund $ 162,781,255 $ 254,904,932 $ 138,767,607 $227,906,392
The AAL Mid Cap Fund 726,385,475 929,500,735 752,711,455 934,809,515
The AAL International Fund 154,642,180 125,938,176 133,011,319 82,724,287
The AAL Capital Growth Fund 501,444,062 432,379,184 259,149,531 284,171,087
The AAL Equity Income Fund 81,651,026 88,388,561 29,495,234 75,699,225
The AAL Balanced Fund 266,878,645 208,113,894 156,387,748 126,946,055
The AAL High Yield Bond Fund 119,953,262 97,423,097 68,434,062 75,614,537
The AAL Municipal Bond Fund 527,979,636 1,042.166,113 471,600,151 1,061,161,713
The AAL Bond Fund 2,233,070,486 611,991,901 2,213,905,742 642,507,665
</TABLE>
For the years ended April 30, 1999, and 2000, The AAL Bond Fund purchased
$1,249,352,154 and $229,626,055 and sold $1,246,093,792 and $206,075,921 in U.S.
Government Obligations.
For the years ended April 30, 1999, and 2000, The AAL Municipal Bond Fund
purchased $21,568,998 and $6,286,250 and sold $21,564,850 and $6,317,344 in U.S.
Government Obligations.
For the years ended April 30, 1999, and 2000, The AAL Balanced Fund purchased
$104,802,878 and $45,203,047 and sold $101,319,024 and $44,118,281 in U.S.
Government Obligations.
As of April 30, 2000, the cost of investments for federal income tax purposes
for each of the Funds were as follows:
<TABLE>
<S> <C> <C> <C>
The AAL Small Cap Stock Fund $ 191,596,637 The AAL Balanced Fund $250,169,997
The AAL Mid Cap Stock Fund $ 704,165,984 The AAL High Yield Bond Fund $174,760,139
The AAL International Fund $ 197,693,730 The AAL Municipal Bond Fund $476,117,955
The AAL Capital Growth Fund $2,121,879,144 The AAL Bond Fund $377,698,944
The AAL Equity Income Fund $ 238,041,700 The AAL Money Market Fund $364,139,349
</TABLE>
Any differences between book and tax are due primarily to wash sale losses and
REIT return of capital distributions.
The AAL Capital Growth, Balanced, High Yield Bond, Municipal Bond, and Bond
Funds deferred, on a tax basis, post-October losses of $8,528,933; $3,339,113;
$7,583,866; $308,480; and $6,107,542 respectively. The AAL International Fund
deferred, on a tax basis, post-October currency losses of $16,425. Such amounts
may be used to offset future capital gains.
At April 30, 2000, The AAL International Fund had accumulated a net realized
capital loss carryover of $1,194,171 expiring in 2007; The AAL Equity Income
Fund had accumulated a net realized capital loss carryover of $635,210 expiring
in 2007; The AAL Balanced Fund had accumulated a net realized capital loss
carryover of $4,252,176 expiring in 2008; The AAL High Yield Bond Fund had
accumulated net realized capital loss carryovers of $1,271,115 expiring in 2007
and $3,377,296 expiring in 2008; The AAL Municipal Bond Fund had accumulated a
net realized capital loss carryover of $11,500,716 expiring in 2008; and The AAL
Bond Fund had accumulated net realized capital loss carryovers of $2,246,041
expiring in 2007 and $18,513,786 expiring in 2008.To the extent that these Funds
realize net capital gains, taxable distributions to shareholders will be offset
by any unused capital loss carryover.
--------------------------------------------------------------------------------
82 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
The gross unrealized appreciation and depreciation on investments at years ended
April 30, 1999 and 2000, were as follows:
<TABLE>
<CAPTION>
4/30/99 Net Unrealized 4/30/00 Net Unrealized
Appreciation Appreciation
Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
The AAL Small Cap
Stock Fund $ 15,707,959 $(10,865,769) $ 4,842,190 $ 43,581,020 $(15,946,362) $ 27,634,658
The AAL Mid Cap
Stock Fund 87,065,009 (27,017,343) 60,047,666 148,747,162 (59,963,049) 88,784,113
The AAL
International Fund 28,491,489 (2,365,446) 26,126,043 65,356,633 (18,620,022) 46,736,611
The AAL Capital
Growth Fund 1,951,269,701 (44,625,297) 1,906,644,404 2,304,723,137 (57,847,026) 2,246,876,111
The AAL Equity
Income Fund 77,412,812 (13,629,141) 63,783,671 78,706,730 (21,810,725) 56,896,005
The AAL Balanced Fund 16,570,935 (2,417,994) 14,152,941 34,090,041 (7,890,516) 26,199,525
The AAL High Yield
Bond Fund 2,652,342 (16,230,454) (13,578,112) 1,636,475 (32,504,033) (30,867,558)
The AAL Municipal
Bond Fund 34,368,583 (717,498) 33,651,085 8,521,573 (10,667,735) (2,146,162)
The AAL Bond Fund 1,816,883 (5,555,252) (3,738,369) 437,547 (9,609,978) (9,172,431)
</TABLE>
E: Trust Transactions
Transactions in trust shares were as follows:
<TABLE>
<CAPTION>
The AAL Small Cap Stock Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
--------------------------- ------------------------- ------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 3,891,500 4,154,530 582,841 429,368 64,638 32,456
Income dividends reinvested -- -- -- -- -- --
Capital gains reinvested 301,427 -- 34,300 -- 2,374 --
Shares redeemed (2,240,144) (1,691,268) (190,256) (173,969) (23,860) (37,198)
---------- ---------- -------- -------- ------- --------
Net increase (decrease) in
trust shares 1,952,783 2,463,262 426,885 255,399 43,152 (4,742)
========== ========== ======== ======== ======= ========
<CAPTION>
The AAL Mid Cap Stock Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
--------------------------- ------------------------- ------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 5,215,260 5,727,110 454,559 426,397 466,914 719,803
Income dividends reinvested -- -- -- -- -- --
Capital gains reinvested 2,474,310 2,368,789 61,459 80,834 8,275 32,495
Shares redeemed (7,729,989) (4,849,281) (130,314) (90,663) (89,278) (233,097)
---------- ---------- -------- -------- ------- --------
Net increase (decrease) in
trust shares (40,419) 3,246,618 385,704 416,568 385,911 519,201
========== ========== ======== ======== ======= ========
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 83
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
The AAL International Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 2,076,339 4,743,916 232,322 327,374 154,736 44,947
Income dividends reinvested 511,948 3,316 25,527 -- 2,869 154
Capital gains reinvested 100,659 -- 6,597 -- 482 --
Shares redeemed (2,677,235) (1,563,061) (106,607) (65,023) (35,591) (8,062)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 11,711 3,184,171 157,839 262,351 122,496 37,039
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Capital Growth Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 14,225,458 13,245,347 1,321,138 1,036,773 1,311,222 1,392,764
Income dividends reinvested 281,631 247,299 -- -- 2,137 7,861
Capital gains reinvested 1,425,758 1,152,379 38,349 40,529 6,025 16,564
Shares redeemed (9,060,976) (8,426,901) (179,708) (184,700) (112,134) (587,267)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 6,871,871 6,218,124 1,179,779 892,602 1,207,250 829,922
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Equity Income Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 4,854,885 4,045,299 398,839 232,818 435,407 250,597
Income dividends reinvested 193,170 205,607 1,588 842 2,545 6,445
Capital gains reinvested 916,949 -- 29,216 -- 5,698 --
Shares redeemed (1,922,099) (2,834,370) (40,545) (80,023) (43,650) (725,217)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 4,042,905 1,416,536 389,098 153,637 400,000 (468,175)
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Balanced Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 11,236,840 10,067,804 806,943 572,465 89,291 131,811
Income dividends reinvested 128,272 453,027 6,598 20,768 2,580 7,667
Capital gains reinvested 3,654 -- 298 -- 67 --
Shares redeemed (898,275) (2,906,737) (49,617) (98,557) (5,018) (84,052)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 10,470,491 7,614,094 764,222 494,676 86,920 55,426
========== ========== ========== ========== ========== ==========
</TABLE>
--------------------------------------------------------------------------------
84 The AAL Mutual Funds Annual Report
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
The AAL High Yield Bond Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 6,706,091 5,963,964 495,697 328,346 247,545 58,038
Income dividends reinvested 863,591 1,200,651 66,641 88,298 13,102 21,383
Capital gains reinvested 75,664 -- 6,434 -- 1,262 --
Shares redeemed (2,630,009) (3,904,332) (121,281) (251,897) (31,405) (63,263)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 5,015,337 3,260,283 447,491 164,747 230,504 16,158
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Municipal Bond Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 6,657,054 4,614,917 340,431 148,758 44,426 91,403
Income dividends reinvested 1,557,452 1,850,298 14,626 24,774 1,175 4,060
Capital gains reinvested 556,748 54,652 7,148 921 725 137
Shares redeemed (4,140,561) (7,961,893) (26,502) (123,626) (2,176) (91,981)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 4,630,693 (1,442,026) 335,703 50,827 44,150 3,619
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Bond Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 6,448,271 4,204,136 200,975 150,780 1,733,386 1,057,101
Income dividends reinvested 1,565,781 1,854,706 8,007 15,651 37,306 70,675
Capital gains reinvested -- -- -- -- -- --
Shares redeemed (6,383,869) (8,539,436) (39,787) (90,400) (194,999) (488,998)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
trust shares 1,630,183 (2,480,594) 169,195 76,031 1,575,693 638,778
========== ========== ========== ========== ========== ==========
<CAPTION>
The AAL Money Market Fund
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class I Shares
------------------------- ------------------------- -------------------------
4/30/99 4/30/00 4/30/99 4/30/00 4/30/99 4/30/00
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares purchased 367,653,413 430,294,001 3,041,527 3,165,036 54,278,795 58,005,433
Income dividends reinvested 11,608,802 15,198,578 47,572 80,022 420,490 656,423
Capital gains reinvested -- -- -- -- -- --
Shares redeemed (331,856,369) (385,589,125) (2,661,451) (2,446,764) (37,008,177) (63,801,028)
------------ ------------ ---------- ---------- ----------- -----------
Net increase (decrease) in
trust shares 47,405,846 59,903,454 427,648 798,294 17,691,108 (5,139,172)
============ ============ ========== ========== =========== ===========
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 85
<PAGE>
Notes to Financial Statements - continued AS OF APRIL 30, 2000
(F) Forward Currency Contracts
As of April 30, 2000 The AAL International Fund had entered into forward
currency contracts, as summarized below, resulting in net unrealized
depreciation of $(417)
<TABLE>
<CAPTION>
Settlement Date Currency to U.S. Value at Currency to U.S. Value at
Through Be Delivered April 30, 2000 Be Received April 30, 2000
===============================================================================================================================
<S> <C> <C> <C> <C>
5/1/00 52,861 EURO $ 48,169 48,193 U.S. Dollar $ 48,193
5/2/00 58,105 EURO 52,948 52,716 U.S. Dollar 52,716
5/3/00 92,920 EURO 84,673 84,464 U.S. Dollar 84,464
----------- -----------
$ 185,790 $ 185,373
=========== ===========
</TABLE>
(G) Federal Income Tax Information (unaudited)
In early 2000, shareholders received information regarding all distributions
paid to them by the Funds during the calendar year 1999. The Funds hereby
designate the following amounts as long-term capital gains:
<TABLE>
<CAPTION>
The The The
AAL Mid Cap AAL Capital Growth AAL Municipal Bond
Stock Fund Fund Fund
===============================================================================================================================
<S> <C> <C> <C>
Total Long-term Capital Gains $24,895,225 $47,150,240 $42,993
For the AAL Capital Growth, Equity $2,605,539 of foreign source income and For the fiscal year ended April 30,
Income and Balanced Funds, the paid $330,196 of foreign taxes. The Fund 2000, The AAL Municipal Bond Fund
percentage of ordinary income elects to pass foreign taxes through to the designates 97.5% of its income
distributions which is eligible for Fund's shareholders for their 2000 tax distributions as tax exempt income
the corporate dividend received deduction returns. Updated data will be sent with the deductions.
for the fiscal year ended April 30, 2000, 2000 Form 1099s to enable shareholders
was 100%, 100%, and 17.6%, respectively. to have information to claim either a
foreign tax credit or to take a foreign tax
During the fiscal year ended April 30, deduction on their 2000 income tax
2000, The International Fund generated returns.
</TABLE>
--------------------------------------------------------------------------------
86 The AAL Mutual Funds Annual Report
<PAGE>
A Note on Forward-Looking Statements (unaudited)
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.
GLOSSARY OF INVESTMENT TERMS
* Non income-producing security -- A non income-producing security is a
security which has not paid a dividend or interest payment in the past
twelve months.
/2/ 144A security -- A 144A security is a security that has not been fully
registered with the SEC. Because it has not been fully registered it is
considered a restricted security. Once the security is registered, it loses
its 144A classification and is no longer restricted. 144A securities are
for institutional or accredited investors, such as mutual funds.
/3/ When-issued security -- A when-issued security is a securities issue that
has been authorized and is sold to investors before the certificates are
ready for delivery.
/4/ Pledged as security for when-issued securities -- A pledged security is a
security that is pledged as collateral for a when-issued security. A
pledged security is no longer collateral once the when-issued security
purchased is settled.
/5/ Security in default -- A security in default is a security that has missed
its last interest payment.
/6/ 4(2) Commercial paper -- 4(2) commercial paper is a security that has not
been fully registered with the SEC. Because it has not fully registered it
is considered a restricted security. Once the security is registered, it
loses its 4(2) classification and is no longer restricted. 4(2) commercial
paper securities are for institutional or accredited investors, such as
mutual funds.
/7/ Step-coupon bond -- A debt instrument that pays a fixed rate for an initial
period, then increases to a higher rate after a period of time.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 87
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Small Cap Stock Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97
==============================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period.................................. $ 10.89 $ 13.84 $9.84 $ 10.00
Income from Investment Operations
---------------------------------
Net investment income (loss).......................................... (0.08) (0.12) (0.10) (0.06)
Net realized and unrealized gain (loss) on investments................ 3.79 (2.51) 4.73 0.17
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations...................................... 3.71 (2.63) 4.63 0.11
==============================================================================================================================
Less Distributions from:
------------------------
Net investment income................................................. -- -- -- --
Net realized capital gains............................................ -- (0.32) (0.63) (0.27)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................... -- (0.32) (0.63) (0.27)
==============================================================================================================================
Net increase (decrease) in net asset value............................ 3.71 (2.95) 4.00 (0.16)
Net asset value: End of period........................................ $ 14.60 $ 10.89 $13.84 $ 9.84
==============================================================================================================================
Total return (b)...................................................... 34.07% (18.97)% 47.97% (0.78)%
Net assets, end of period (in millions)............................... $ 191.3 $ 116.0 $120.3 $ 44.5
Ratio of expenses to average net assets (a)........................... 1.53% 1.82% 1.71% 2.06%
Ratio of net investment income (loss) to average net assets (a)....... (0.72)% (1.15)% (1.05)% (1.20)%
Portfolio turnover rate............................................... 147.01% 112.96% 105.60% 138.50%
==============================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)......................... 1.65% 1.82% 1.71% 2.06%
Ratio of net investment income (loss) to average net assets (a)..... (0.85)% (1.15)% (1.05)% (1.20)%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
</TABLE>
--------------------------------------------------------------------------------
88 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
=============================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period............................... $ 10.74 $ 13.73 $ 9.81 $11.17
Income from Investment Operations
---------------------------------
Net investment income (loss)....................................... (0.19) (0.22) (0.16) (0.03)
Net realized and unrealized gain (loss) on investments............. 3.69 (2.50) 4.67 (1.33)
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................... 3.50 (2.72) 4.51 (1.36)
=============================================================================================================================
Less Distributions from:
------------------------
Net investment income.............................................. -- -- -- --
Net realized capital gains......................................... -- (0.27) (0.59) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................ -- (0.27) (0.59) --
=============================================================================================================================
Net increase (decrease) in net asset value......................... 3.50 (2.99) 3.92 (1.36)
Net asset value: End of period..................................... $ 14.24 $ 10.74 $ 13.73 $ 9.81
=============================================================================================================================
Total return (b)................................................... 32.71% (19.85)% 46.86% (12.18)%
Net assets, end of period (in millions)............................ $ 24.6 $ 15.8 $ 14.4 $ 3.4
Ratio of expenses to average net assets (a)........................ 2.56% 2.89% 2.60% 3.20%
Ratio of net investment income (loss) to average net assets (a).... (1.76)% (2.22)% (1.94)% (2.39)%
Portfolio turnover rate............................................ 147.01% 112.96% 105.60% 138.50%
-----------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)........................ 2.68% 2.89% 2.60% 3.21%
Ratio of net investment income (loss) to average net assets (a).... (1.88)% (2.22)% (1.94)% (2.40)%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
=============================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period............................................ $ 10.95 $ 13.87 $ 12.45
Income from Investment Operations
---------------------------------
Net investment income........................................................... 0.01 (0.04) (0.01)
Net realized and unrealized gain (loss) on investments.......................... 3.84 (2.52) 1.43
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................................ 3.85 (2.56) 1.42
=============================================================================================================================
Less Distributions from:
------------------------
Net investment income (loss).................................................... -- -- --
Net realized capital gains...................................................... -- (0.36) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions............................................................. -- (0.36) --
=============================================================================================================================
Net increase (decrease) in net asset value...................................... 3.85 (2.92) 1.42
Net asset value: End of period................................................... $ 14.80 $ 10.95 $ 13.87
=============================================================================================================================
Total return (b)................................................................ 35.16% (18.41)% 11.41%
Net assets, end of period (in millions)......................................... $ 1.0 $ 0.8 $ 0.4
Ratio of expenses to average net assets (a)..................................... 0.72% 1.08% 1.19%
Ratio of net investment income (loss) to average net assets (a)................. 0.08% (0.40)% (0.39)%
Portfolio turnover rate......................................................... 147.01% 112.96% 105.60%
-----------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)................................... 0.84% 1.08% 1.19%
Ratio of net investment income (loss) to average net assets (a)............... (0.04)% (0.40)% (0.39)%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 89
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Mid Cap Stock Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period................................ $13.89 $15.93 $ 12.71 $17.11 $ 10.92
Income from Investment Operations
---------------------------------
Net investment income (loss)........................................ (0.00) (0.04) (0.04) (0.12) (0.10)
Net realized and unrealized gain (loss) on investments.............. 3.67 (1.25) 4.75 (1.63) 6.29
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................... 3.67 (1.29) 4.71 (1.75) 6.19
=============================================================================================================================
Less Distributions from:
-----------------------
Net investment income............................................... -- -- -- -- --
Net realized capital gains.......................................... (0.83) (0.75) (1.49) (2.65) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................. (0.83) (0.75) (1.49) (2.65) --
=============================================================================================================================
Net increase (decrease) in net asset value.......................... 2.84 (2.04) 3.22 (4.40) 6.19
Net asset value: End of period...................................... $16.73 $13.89 $ 15.93 $12.71 $ 17.11
Total return (b).................................................... 27.29% (7.62)% 38.73% (11.08)% 56.59%
Net assets, end of period (in millions) ............................ $759.0 $584.9 $ 671.5 $461.7 $ 425.0
Ratio of expenses to average net assets (a)......................... 1.14% 1.37% 1.30% 1.35% 1.39%
Ratio of net investment income (loss) to average net assets (a) .... (0.02)% (0.28)% (0.27)% (0.94)% (0.82)%
Portfolio turnover rate............................................. 142.26% 125.94% 104.73% 112.60% 90.14%
==================================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)....................... 1.24% 1.37% 1.30% 1.35% 1.39%
Ratio of net investment income (loss) to average net assets (a)... (0.12)% (0.28)% (0.27)% (0.94)% (0.82)%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales
charge.Periods less than one year are not annualized.
--------------------------------------------------------------------------------
90 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
=============================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period................................ $ 13.64 $ 15.78 $ 12.69 $13.67
Income from Investment Operations
---------------------------------
Net investment income (loss)........................................ (0.17) (0.17) (0.12) (0.03)
Net realized and unrealized gain (loss) on investments.............. 3.56 (1.27) 4.65 (0.95)
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................... 3.39 (1.44) 4.53 (0.98)
=============================================================================================================================
Less Distributions from:
-----------------------
Net investment income............................................... -- -- -- --
Net realized capital gains.......................................... (0.83) (0.70) (1.44) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................. (0.83) (0.70) (1.44) --
=============================================================================================================================
Net increase (decrease) in net asset value.......................... 2.56 (2.14) 3.09 (0.98)
Net asset value: End of period...................................... $ 16.20 $ 13.64 $ 15.78 $12.69
=============================================================================================================================
Total return (b)..................................................... 25.71% (8.70)% 37.41% (7.17)%
Net assets, end of period (in millions) ............................. $ 26.9 $ 17.0 $ 13.6 $ 3.3
Ratio of expenses to average net assets (a).......................... 2.46% 2.56% 2.33% 2.29%
Ratio of net investment income (loss) to average net assets (a) .... (1.33)% (1.46)% (1.30)% (1.41)%
Portfolio turnover rate............................................. 142.26% 125.94% 104.73% 112.60%
-----------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)....................... 2.55% 2.56% 2.33% 2.29%
Ratio of net investment income (loss) to average net assets (a)... (1.43)% (1.46)% (1.30)% (1.41)%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
==============================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period............................................. $ 13.94 $15.96 $ 14.40
Income from Investment Operations
---------------------------------
Net investment income............................................................ 0.05 0.02 --
Net realized and unrealized gain (loss) on investments........................... 3.73 (1.25) 1.56
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................................. 3.78 (1.23) 1.56
==============================================================================================================================
Less Distributions from:
------------------------
Net investment income (loss)..................................................... -- -- --
Net realized capital gains....................................................... (0.83) (0.79) --
------------------------------------------------------------------------------------------------------------------------------
Total Distributions.............................................................. (0.83) (0.79) --
==============================================================================================================================
Net increase (decrease) in net asset value....................................... 2.95 (2.02) 1.56
Net asset value: End of period................................................... $ 16.89 $13.94 $ 15.96
==============================================================================================================================
Total return (b)................................................................. 28.00% (7.17)% 10.83%
Net assets, end of period (in millions).......................................... $ 16.5 $ 6.4 $ 1.2
Ratio of expenses to average net assets (a)...................................... 0.62% 0.85% 0.86%
Ratio of net investment income (loss) to average net assets (a).................. 0.51% 0.33% 0.18%
Portfolio turnover rate.......................................................... 142.26% 125.94% 104.73%
------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)...................................... 0.71% 0.85% 0.86%
Ratio of net investment income (loss) to average net assets (a).................. 0.41% 0.37% 0.18%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 91
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL International Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Period Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period ............................. $11.35 $11.15 $11.37 $11.08 $10.00
Income from Investment Operations
---------------------------------
Net investment income (loss) .................................... 0.00 0.08 0.17 0.01 0.05
Net realized and unrealized gain (loss) on investments .......... 2.71 0.65 0.56 0.68 1.05
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ................................ 2.71 0.73 0.73 0.69 1.10
==============================================================================================================================
Less Distributions from:
-----------------------
Net investment income ........................................... 0.00 (0.44) (0.37) (0.34) (0.02)
Net realized capital gains ...................................... -- (0.09) (0.58) (0.06) --
------------------------------------------------------------------------------------------------------------------------------
Total Distributions ............................................. 0.00 (0.53) (0.95) (0.40) (0.02)
==============================================================================================================================
Net increase (decrease) in net asset value ...................... 2.71 0.20 (0.22) 0.29 1.08
Net asset value: End of period .................................. $14.06 $11.35 $11.15 $11.37 $11.08
==============================================================================================================================
Total return (b) ................................................ 23.91% 6.82% 7.34% 6.32% 11.07%
Net assets, end of period (in millions) ......................... $226.7 $146.9 $144.2 $116.2 $ 57.1
Ratio of expenses to average net assets (a) ..................... 1.36% 1.74% 1.91% 2.10% 2.15%
Ratio of net investment income (loss) to average net assets (a).. (0.01)% 0.64% 1.36% 0.88% 0.94%
Portfolio turnover rate ......................................... 43.59% 100.90% 19.90% 12.95% 1.30%
------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a) .................. 1.41% 1.74% 1.91% 2.10% 2.32%
Ratio of net investment income (loss) to average
net assets (a) ........................................... (0.07)% 0.64% 1.36% 0.88% 0.77%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
--------------------------------------------------------------------------------
92 The AAL Mutual Funds Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
===========================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period ................................ $11.23 $ 11.05 $11.34 $ 10.98
Income from Investment Operations
---------------------------------
Net investment income (loss) ........................................ (0.13) (0.03) 0.13 --
Net realized and unrealized gain (loss) on investments .............. 2.65 0.64 0.49 0.36
---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .................................... 2.52 0.61 0.62 0.36
===========================================================================================================================
Less Distributions from:
-----------------------
Net investment income ............................................... -- (0.34) (0.33) --
Net realized capital gains .......................................... -- (0.09) (0.58) --
---------------------------------------------------------------------------------------------------------------------------
Total Distributions ................................................. -- (0.43) (0.91) --
===========================================================================================================================
Net increase (decrease) in net asset value .......................... 2.52 0.18 (0.29) 0.36
Net asset value: End of period ...................................... $13.75 $ 11.23 $11.05 $11.34
===========================================================================================================================
Total return (b) .................................................... 22.44% 5.72% 6.30% 3.28%
Net assets, end of period (in millions) ............................. $ 15.6 $ 9.8 $7.9 $ 2.6
Ratio of expenses to average net assets (a) ......................... 2.53% 2.85% 2.90% 2.94%
Ratio of net investment income (loss) to average net assets (a)...... (1.19)% (0.52)% 0.34% (0.03)%
Portfolio turnover rate ............................................. 43.59% 100.90% 19.90% 12.95%
===========================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a) ...................... 2.59% 2.85% 2.90% 2.94%
Ratio of net investment income (loss) to average
net assets (a) ............................................... (1.25)% (0.52)% 0.34% (0.03)%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
===========================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period .......................................... $ 11.37 $ 11.17 $10.11
Income from Investment Operations
---------------------------------
Net investment income (loss) .................................................. 0.08 0.15 0.03
Net realized and unrealized gain (loss) on investments ........................ 2.73 0.65 1.03
---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .............................................. 2.81 0.80 1.06
===========================================================================================================================
Less Distributions from:
-----------------------
Net investment income ......................................................... (0.03) (0.51) --
Net realized capital gains .................................................... -- (0.09) --
---------------------------------------------------------------------------------------------------------------------------
Total Distributions ........................................................... (0.03) (0.60) --
===========================================================================================================================
Net increase (decrease) in net asset value .................................... 2.78 0.20 1.06
Net asset value: End of period ................................................ $ 14.15 $11.37 $11.17
===========================================================================================================================
Total return (b) .............................................................. 24.69% 7.49% 10.48%
Net assets, end of period (in millions) ....................................... $ 2.8 $1.9 $ 0.5
Ratio of expenses to average net assets (a) ................................... 0.73% 1.09% 1.19%
Ratio of net investment income (loss) to average net assets (a)................ 0.61% 1.10% 2.38%
Portfolio turnover rate ....................................................... 43.59% $100.90% 19.90%
===========================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a) ................................ 0.79% 1.09% 1.19%
Ratio of net investment income (loss) to average
net assets (a) ......................................................... 0.55% 1.10% 2.38%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 93
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Capital Growth Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period............................... $35.87 $29.64 $21.50 $18.79 $15.56
Income from Investment Operations
---------------------------------
Net investment income (loss)....................................... 0.13 0.09 0.10 0.13 0.20
Net realized and unrealized gain (loss) on investments............. 3.19 6.69 9.26 3.68 3.76
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................... 3.32 6.78 9.36 3.81 3.96
==============================================================================================================================
Less Distributions from:
-----------------------
Net investment income.............................................. (0.09) (0.09) (0.08) (0.15) (0.22)
Net realized capital gains......................................... (0.43) (0.46) (1.14) (0.95) (0.51)
------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................ (0.52) (0.55) (1.22) (1.10) (0.73)
===============================================================================================================================
Net increase (decrease) in net asset value......................... 2.80 6.23 8.14 2.71 3.23
Net asset value: End of period..................................... $38.67 $35.87 $29.64 $21.50 $18.79
==============================================================================================================================
Total return (b)................................................... 9.28% 23.20% 44.48% 20.55% 25.85%
Net assets, end of period (in millions)............................ $4,115.1 $3,594.5 $2,766.7 $1,794.4 $1,381.4
Ratio of expenses to average net assets (a)........................ 0.90% 0.97% 0.98% 1.06% 1.12%
Ratio of net investment income (loss) to average net assets (a).... 0.35% 0.30% 0.39% 0.62% 1.16%
Portfolio turnover rate............................................ 7.50% 8.74% 17.96% 24.30% 44.26%
==============================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a)....................... 0.92% 0.97% 0.98% 1.06% 1.12%
Ratio of net investment income (loss) to average net assets (a)... 0.33% 0.30% 0.39% 0.62% 1.16%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
--------------------------------------------------------------------------------
94 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
====================================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period.............................................. $35.29 $29.38 $21.45 $20.66
Income from Investment Operations
---------------------------------
Net investment income (loss)...................................................... (0.22) (0.19) 0.04 (0.01)
Net realized and unrealized gain (loss) on investments............................ 3.07 6.56 9.06 0.80
----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................................. 2.85 6.37 9.10 0.79
==================================================================================================================================
Less Distributions from:
-----------------------
Net investment income............................................................. -- -- (0.03) --
Net realized capital gains........................................................ (0.43) (0.46) (1.14) --
----------------------------------------------------------------------------------------------------------------------------------
Total Distributions............................................................... (0.43) (0.46) (1.17) --
==================================================================================================================================
Net increase (decrease) in net asset value........................................ 2.42 5.91 7.93 0.79
Net asset value: End of period.................................................... $37.71 $35.29 $29.38 $ 21.45
===================================================================================================================================
Total return (b).................................................................. 8.09% 21.94% 43.25% 3.82%
Net assets, end of period (in millions)........................................... $148.6 $107.6 $54.9 $11.0
Ratio of expenses to average net assets (a)....................................... 1.95% 1.99% 1.90% 1.89%
Ratio of net investment income (loss) to average net assets (a)................... (0.69)% (0.74)% (0.58)% (0.39)%
Portfolio turnover rate........................................................... 7.50% 8.74% 17.96% 24.30%
===================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)...................................... 1.96% 1.99% 1.90% 1.89%
Ratio of net investment income (loss) to average net assets (a).................. (0.71)% (0.74)% (0.58)% (0.39)%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
====================================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period........................................................... $35.89 $29.67 $ 26.05
Income from Investment Operations
---------------------------------
Net investment income (loss)................................................................... 0.27 0.21 0.02
Net realized and unrealized gain (loss) on investments......................................... 3.20 6.67 3.60
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations............................................................... 3.47 6.88 3.62
====================================================================================================================================
Less Distributions from:
-----------------------
Net investment income.......................................................................... (0.21) (0.20) --
Net realized capital gains..................................................................... (0.43) (0.46) --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions............................................................................ (0.64) (0.66) --
====================================================================================================================================
Net increase (decrease) in net asset value..................................................... 2.83 6.22 3.62
Net asset value: End of period................................................................. $38.72 $35.89 $ 29.67
===================================================================================================================================
Total return (b)............................................................................... 9.70% 23.55% $ 13.90%
Net assets, end of period (in millions)........................................................ $ 82.8 $ 46.9 $ 3.0
Ratio of expenses to average net assets (a).................................................... 0.52% 0.60% 0.58%
Ratio of net investment income (loss) to average net assets (a)................................ 0.73% 0.62% 0.52%
Portfolio turnover rate........................................................................ 7.50% 8.74% 17.96%
====================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)................................................... 0.54% 0.60% 0.58%
Ratio of net investment income (loss) to average net assets (a)............................... 0.72% 0.62% 0.52%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 95
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Equity Income Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period..................... $14.68 $14.31 $11.34 $10.90 $ 9.47
Income from Investment Operations
---------------------------------
Net investment income (loss)............................. 0.18 0.16 0.27 0.39 0.36
Net realized and unrealized gain
(loss) on investments.................................... (0.30) 1.17 3.44 0.46 1.42
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations......................... (0.12) 1.33 3.71 0.85 1.78
==============================================================================================================================
Less Distributions from:
-----------------------
Net investment income.................................... (0.16) (0.17) (0.29) (0.41) (0.35)
Net realized capital gains............................... -- (0.79) (0.45) -- --
------------------------------------------------------------------------------------------------------------------------------
Total Distributions...................................... (0.16) (0.96) (0.74) (0.41) (0.35)
==============================================================================================================================
Net increase (decrease) in net asset value............... (0.28) 0.37 2.97 0.44 1.43
Net asset value: End of period........................... $14.40 $14.68 $14.31 $11.34 $10.90
==============================================================================================================================
Total return (b)......................................... (0.80)% 10.08% 33.50% 7.88% 18.90%
Net assets, end of period (in millions).................. $277.6 $262.2 $197.7 $134.2 $114.5
Ratio of expenses to average net assets (a).............. 0.92% 1.05% 1.11% 1.15% 1.20%
Ratio of net investment income (loss)
to average net assets (a)................................ 1.24% 1.22% 2.17% 3.57% 3.58%
Portfolio turnover rate.................................. 26.93% 13.35% 64.00% 5.14% 21.79%
------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a)............ 0.98% 1.05% 1.11% 1.15% 1.20%
Ratio of net investment income (loss)
to average net assets (a).............................. 1.18% 1.22% 2.17% 3.57% 3.58%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all
dividends and distributions but does not reflect any
deduction for sales charge. Periods less than one year
are not annualized.
----------------------------------------------------------------------------
96 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
====================================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period.................................... $14.66 $14.31 $11.37 $11.40
Income from Investment Operations
---------------------------------
Net investment income (loss)............................................ 0.02 0.02 0.19 0.05
Net realized and unrealized gain (loss) on investments.................. (0.28) 1.17 3.41 (0.06)
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations........................................ (0.26) 1.19 3.60 (0.01)
====================================================================================================================================
Less Distributions from:
-----------------------
Net investment income................................................... (0.02) (0.05) (0.21) (0.02)
Net realized capital gains.............................................. -- (0.79) (0.45) --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions..................................................... (0.02) (0.84) (0.66) (0.02)
====================================================================================================================================
Net increase (decrease) in net asset value.............................. (0.28) 0.35 2.94 (0.03)
Net asset value: End of period.......................................... $14.38 $14.66 $14.31 $11.37
====================================================================================================================================
Total return (b)........................................................ (1.80)% 8.97% 32.42% (0.04)%
Net assets, end of period (in millions)................................. $ 11.6 $ 9.6 $ 3.8 $ 0.5
Ratio of expenses to average net assets (a)............................. 1.99% 2.09% 2.04% 1.99%
Ratio of net investment income (loss) to
average net assets (a).................................................. 0.17% 0.16% 0.96% 2.36%
Portfolio turnover rate................................................. 26.93% 13.35% 64.00% 5.14%
------------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)........................... 2.05% 2.09% 2.04% 1.99%
Ratio of net investment income (loss) to
average net assets (a)................................................ 0.11% 0.16% 0.96% 2.36%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
======================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period.................................... $14.70 $14.32 $13.14
Income from Investment Operations
---------------------------------
Net investment income .................................................. 0.31 0.21 0.08
Net realized and unrealized gain (loss) on investments.................. (0.35) 1.19 1.16
----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations........................................ (0.04) 1.40 1.24
======================================================================================================================
Less Distributions from:
------------------------
Net investment income(loss)............................................. (0.23) (0.23) (0.06)
Net realized capital gains.............................................. -- (0.79) --
----------------------------------------------------------------------------------------------------------------------
Total Distributions..................................................... (0.23) (1.02) (0.06)
======================================================================================================================
Net increase (decrease) in net asset value.............................. (0.27) 0.38 1.18
Net asset value: End of period.......................................... $14.43 $14.70 $14.32
======================================================================================================================
Total return (b)........................................................ (0.29)% 10.62% 9.34%
Net assets, end of period (in millions)................................. $ 6.2 $ 13.2 $ 7.1
Ratio of expenses to average net assets (a)............................. 0.46% 0.60% 0.68%
Ratio of net investment income (loss) to
average net assets (a)................................................ 1.71% 1.65% 2.10%
Portfolio turnover rate.................................................. 26.93% 13.35% 64.00%
----------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)........................... 0.52% 0.60% 0.68%
Ratio of net investment income (loss) to
average net assets (a)................................................ 1.65% 1.65% 2.10%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
-----------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 97
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Balanced Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98
============================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period.............................................. $12.15 $10.81 $10.00
Income from Investment Operations
---------------------------------
Net investment income............................................................. 0.32 0.21 0.04
Net realized and unrealized gain (loss) on investments............................ 0.25 1.34 0.80
----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................................. 0.57 1.55 0.84
============================================================================================================================
Less Distributions from:
------------------------
Net investment income............................................................. (0.31) (0.20) (0.03)
Net realized capital gains........................................................ -- (0.01) --
----------------------------------------------------------------------------------------------------------------------------
Total Distributions............................................................... (0.31) (0.21) (0.03)
============================================================================================================================
Net increase (decrease) in net asset value........................................ 0.26 1.34 0.81
Net asset value: End of period.................................................... $12.41 $12.15 $10.81
============================================================================================================================
Total return (b).................................................................. 4.78% 14.45% 8.37%
Net assets, end of period (in millions)........................................... $256.1 $158.3 $27.7
Ratio of expenses to average net assets (a)....................................... 1.09% 1.15% 1.37%
Ratio of net investment income (loss) to average net assets (a)................... 2.76% 2.26% 2.19%
Portfolio turnover rate........................................................... 64.58% 213.46% 11.52%
============================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a).................................... 1.14% 1.23% 1.63%
Ratio of net investment income (loss) to average net assets (a)................ 2.72% 2.17% 1.93%
(a) Calculated on an annualized basis
(b)Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized
</TABLE>
--------------------------------------------------------------------------------
98 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98
===========================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period................................................ $12.10 $10.79 $10.00
Income from Investment Operations
---------------------------------
Net investment income............................................................... 0.21 0.14 0.03
Net realized and unrealized gain (loss) on investments.............................. 0.24 1.31 0.78
---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................................... 0.45 1.45 0.81
===========================================================================================================================
Less Distributions from:
------------------------
Net investment income............................................................... (0.20) (0.13) (0.02)
Net realized capital gains.......................................................... -- (0.01) --
---------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................................. (0.20) (0.14) (0.02)
===========================================================================================================================
Net increase (decrease) in net asset value.......................................... 0.25 1.31 0.79
Net asset value: End of period...................................................... $12.35 $12.10 $10.79
===========================================================================================================================
Total return (b).................................................................... 3.74% 13.47% 8.10%
Net assets, end of period (in millions)............................................. $18.2 $11.9 $2.3
Ratio of expenses to average net assets (a)......................................... 2.03% 1.98% 2.11%
Ratio of net investment income (loss) to average net assets (a)..................... 1.82% 1.42% 1.45%
Portfolio turnover rate............................................................. 64.58% 213.46% 11.52%
===========================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)....................................... 2.08% 2.18% 2.50%
Ratio of net investment income (loss) to average net assets (a)................... 1.77% 1.22% 1.06%
(a) Calculated on an annualized basis
(b)Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods less
than one year are not annualized
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
=====================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period......................................... $12.13 $10.79 $10.00
Income from Investment Operations
---------------------------------
Net investment income........................................................ 0.39 0.23 0.04
Net realized and unrealized gain (loss) on investments....................... 0.25 1.35 0.78
---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations............................................. 0.64 1.58 0.82
=====================================================================================================================
Less Distributions from:
------------------------
Net investment income........................................................ (0.37) (0.23) (0.03)
Net realized capital gains................................................... -- (0.01) --
---------------------------------------------------------------------------------------------------------------------
Total Distributions.......................................................... (0.37) (0.24) (0.03)
=====================================================================================================================
Net increase (decrease) in net asset value................................... 0.27 1.34 0.79
Net asset value: End of period............................................... $12.40 $12.13 $10.79
=====================================================================================================================
Total return (b)............................................................. 5.33% 14.73% 8.17%
Net assets, end of period (in millions)...................................... $3.0 $2.3 $1.1
Ratio of expenses to average net assets (a).................................. 0.60% 0.88% 1.95%
Ratio of net investment income (loss) to average net assets (a).............. 3.25% 2.50% 1.73%
Portfolio turnover rate...................................................... 64.58% 213.46% 11.52%
=====================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)................................ 0.64% 0.88% 1.95%
Ratio of net investment income (loss) to average net assets (a)............ 3.20% 2.50% 1.73%
(a) Calculated on an annualized basis
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods less
than one year are not annualized
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 99
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL High Yield Bond Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97
=============================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period................................... $28.92 $10.31 $ 9.88 $10.00
Income from Investment Operations
---------------------------------
Net investment income.................................................. 0.87 0.91 0.92 0.27
Net realized and unrealized gain (loss) on investments................. (1.48) (1.33) 0.53 (0.12)
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations....................................... (0.61) (0.42) 1.45 0.15
=============================================================================================================================
Less Distributions from:
------------------------
Net investment income.................................................. (0.87) (0.91) (0.92) (0.27)
Net realized capital gains............................................. -- (0.06) (0.10) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions.................................................... (0.87) (0.97) (1.02) (0.27)
=============================================================================================================================
Net increase (decrease) in net asset value............................. (1.48) (1.39) 0.43 (0.12)
Net asset value: End of period......................................... $ 7.44 $ 8.92 $ 10.31 $ 9.88
=============================================================================================================================
Total return (b)....................................................... (7.00)% (3.96)% 15.12% 1.51%
Net assets, end of period (in millions)................................ $134.3 $131.9 $ 100.8 $ 44.7
Ratio of expenses to average net assets (a)............................ 0.96% 1.00% 0.99% 1.00%
Ratio of net investment income (loss) to average net assets (a)........ 10.54% 9.81% 8.94% 9.11%
Portfolio turnover rate................................................ 53.59% 54.67% 112.37% 36.90%
=============================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)......................... 1.12% 1.16% 1.18% 1.28%
Ratio of net investment income (loss) to average net assets (a)..... 10.38% 9.64% 8.75% 8.83%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
</TABLE>
--------------------------------------------------------------------------------
100 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
=============================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period.................................... $ 8.92 $ 10.31 $ 9.88 $10.00
Income from Investment Operations
---------------------------------
Net investment income................................................... 0.81 0.84 0.84 0.25
Net realized and unrealized gain (loss) on investments.................. (1.48) (1.33) 0.53 (0.12)
---------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations........................................ (0.67) (0.49) 1.37 0.13
===========================================================================================================================
Less Distributions from:
-----------------------
Net investment income................................................... (0.81) (0.84) (0.84)
(0.25)
Net realized capital gains.............................................. -- (0.06) (0.10) --
---------------------------------------------------------------------------------------------------------------------------
Total Distributions..................................................... (0.81) (0.90) (0.94) (0.25)
==========================================================================================================================
Net increase (decrease) in net asset value.............................. (1.48) (1.39) 0.43 (0.12)
Net asset value: End of period........................................... $ 7.44 $ 8.92 $ 10.31 $ 9.88
============================================================================================================================
Total return (b)........................................................ (7.65)% (4.62)% 14.27% 1.31%
Net assets, end of period (in millions)................................. $ 11.6 $ 12.4 $ 9.7 $ 2.7
Ratio of expenses to average net assets (a)............................. 1.62% 1.71% 1.74% 1.75%
Ratio of net investment income (loss) to average net assets (a)......... 9.88% 9.09% 8.22% 8.66%
Portfolio turnover rate................................................. 53.59% 54.67% 112.37% 36.90%
============================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a).......................... 1.97% 1.98% 2.05% 2.00%
Ratio of net investment income (loss) to average net assets (a)...... 9.53% 8.82% 7.90% 8.41%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
=============================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period.................................... $ 8.91 $10.31 $10.29
Income from Investment Operations
---------------------------------
Net investment income................................................... 0.89 0.93 0.31
Net realized and unrealized gain (loss) on investments.................. (1.48) (1.34) 0.02
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations........................................ (0.59) (0.41) 0.33
=============================================================================================================================
Less Distributions from:
-----------------------
Net investment income................................................... (0.89) (0.93) (0.31)
Net realized capital gains.............................................. -- (0.06) --
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions..................................................... (0.89) (0.99) (0.31)
=============================================================================================================================
Net increase (decrease) in net asset value.............................. (1.48) (1.40) 0.02
Net asset value: End of period.......................................... $ 7.43 $ 8.91 $10.31
=============================================================================================================================
Total return (b)........................................................ (6.67)% (3.85)% 3.28%
Net assets, end of period (in millions)................................. $ 2.0 $ 2.2 $ 0.2
Ratio of expenses to average net assets (a)............................. 0.53% 0.76% 0.75%
Ratio of net investment income (loss) to average net assets (a)......... 11.00% 10.34% 9.53%
Portfolio turnover rate................................................. 53.59% 54.67% 112.37%
-----------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)........................... 0.62% 0.76% 0.75%
Ratio of net investment income (loss) to average net assets (a)....... 10.92% 10.34% 9.53%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
</TABLE>
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 101
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Municipal Bond Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period ................................... $ 11.47 $11.40 $ 10.92 $10.91 $ 10.69
Income from Investment Operations
---------------------------------
Net investment income .................................................. 0.53 0.52 0.52 0.52 0.52
Net realized and unrealized gain (loss) on investments ................. (1.01) 0.25 0.61 0.19 0.30
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ....................................... (0.48) 0.77 1.13 0.71 0.82
====================================================================================================================================
Less Distributions from:
------------------------
Net investment income .................................................. (0.53) (0.52) (0.52) (0.52) (0.52)
Net realized capital gains ............................................. (0.01) (0.18) (0.13) (0.18) (0.08)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions .................................................... (0.54) (0.70) (0.65) (0.70) (0.60)
====================================================================================================================================
Net increase (decrease) in net asset value ............................. (1.02) 0.07 0.48 0.01 0.22
Net asset value: End of period ......................................... $ 10.45 $11.47 $ 11.40 $10.92 $ 10.91
====================================================================================================================================
Total return (b) ....................................................... (4.09)% 6.80% 10.50% 6.64% 7.74%
Net assets, end of period (in millions) ................................ $ 461.3 $523.1 $ 467.1 $421.7 $ 412.8
Ratio of expenses to average net assets (a) ............................ 0.78% 0.81% 0.85% 0.89% 0.95%
Ratio of net investment income (loss) to average net assets (a) ........ 4.98% 4.47% 4.55% 4.69% 4.69%
Portfolio turnover rate ................................................ 210.32% 94.56% 139.18 119.79% 130.52
====================================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a) .......................... 0.84% 0.81% 0.85% 0.89% 0.95%
Ratio of net investment income (loss) to average net assets (a) ...... 4.93% 4.47% 4.55% 4.69% 4.69%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
--------------------------------------------------------------------------------
102 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
===================================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period ........................................ $ 11.47 $ 11.40 $10.92 $ 11.02
Income from Investment Operations
---------------------------------
Net investment income ....................................................... 0.44 0.42 0.42 0.14
Net realized and unrealized gain (loss) on investments ...................... (1.02) 0.25 0.61 (0.10)
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ............................................ (0.58) 0.67 1.03 0.04
===================================================================================================================================
Less Distributions from:
------------------------
Net investment income ....................................................... (0.44) (0.42) (0.42) (0.14)
Net realized capital gains .................................................. (0.01) (0.18) (0.13) --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions ......................................................... (0.45) (0.60) (0.55) (0.14)
===================================================================================================================================
Net increase (decrease) in net asset value .................................. (1.03) 0.07 0.48 (0.10)
Net asset value: End of period .............................................. $ 10.44 $ 11.47 $11.40 $ 10.92
===================================================================================================================================
Total return (b) ............................................................ (4.99)% 5.93% 9.58% 0.34%
Net assets, end of period (in millions) ..................................... $ 7.3 $ 7.5 $ 3.6 $ 0.8
Ratio of expenses to average net assets (a) ................................. 1.59% 1.64% 1.74% 1.69%
Ratio of net investment income (loss) to average net assets (a) ............. 4.19% 3.65% 3.67% 4.09%
Portfolio turnover rate ..................................................... 210.32% 94.56% 139.18% 119.79%
===================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a) ............................... 1.64% 1.64% 1.74% 1.69%
Ratio of net investment income (loss) to average net assets (a) ........... 4.14% 3.65% 3.67% 4.09%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
====================================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period ................................................... $ 11.47 $11.40 $ 11.59
Income from Investment Operations
---------------------------------
Net investment income .................................................................. 0.57 0.55 0.18
Net realized and unrealized gain (loss) on investments ................................. (1.01) 0.25 (0.19)
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations ....................................................... (0.44) 0.80 (0.01)
====================================================================================================================================
Less Distributions from:
------------------------
Net investment income .................................................................. (0.57) (0.55) (0.18)
Net realized capital gains ............................................................. (0.01) (0.18) --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions .................................................................... (0.58) (0.73) (0.18)
====================================================================================================================================
Net increase (decrease) in net asset value ............................................. (1.02) 0.07 (0.19)
Net asset value: End of period ......................................................... $ 10.45 $11.47 $ 11.40
====================================================================================================================================
Total return (b) ....................................................................... (3.78)% 7.09% (0.09)%
Net assets, end of period (in millions) ................................................ $ 0.5 $0.6 $ 0.0
Ratio of expenses to average net assets (a) ............................................ 0.47% 0.51% 0.60%
Ratio of net investment income (loss) to average net assets (a) ........................ 5.32% 4.78% 4.79%
Portfolio turnover rate ................................................................ 210.32% 94.56% 139.18%
====================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a) ............................................ 0.52% 0.51% 0.60%
Ratio of net investment income (loss) to average net assets (a) ........................ 5.27% 4.78% 4.79%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 103
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Bond Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period.................................... $ 9.92 $9.99 $9.63 $9.62 $9.61
Income from Investment Operations
---------------------------------
Net investment income.................................................. 0.58 0.53 0.57 0.60 0.58
Net realized and unrealized gain (loss) on investments................. (0.60) (0.07) 0.36 0.01 0.01
------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations....................................... (0.02) 0.46 0.93 0.61 0.59
==============================================================================================================================
Less Distributions from:
------------------------
Net investment income.................................................. (0.58) (0.53) (0.57) (0.60) (0.58)
Net realized capital gains............................................. -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
Total Distributions.................................................... (0.58) (0.53) (0.57) (0.60) (0.58)
==============================================================================================================================
Net increase (decrease) in net asset value............................. (0.60) (0.07) 0.36 0.01 0.01
Net asset value: End of period......................................... $ 9.32 $9.92 $9.99 $9.63 $9.62
==============================================================================================================================
Total return (b)....................................................... (0.11)% 4.61% 9.86% 6.43% 6.18%
Net assets, end of period (in millions)................................ $321.7 $367.2 $353.4 $389.3 $430.8
Ratio of expenses to average net assets (a)............................ 0.83% 0.93% 0.95% 0.98% 1.01%
Ratio of net investment income (loss) to average net assets (a)........ 6.12% 5.23% 5.77% 6.10% 5.89%
Portfolio turnover rate................................................ 163.31% 572.56% 483.76% 212.49% 125.77%
==============================================================================================================================
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a).......................... 0.91% 0.93% 0.95% 0.98% 1.01%
Ratio of net investment income (loss) to average net assets (a)...... 6.04% 5.23% 5.77% 6.10% 5.89%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge.
Periods less than one year are not annualized.
</TABLE>
--------------------------------------------------------------------------------
104 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 4/30/97
==================================================================================================================================
<S> <C> <C> <C> <C>
Net asset value: Beginning of period................................................ $ 9.92 $ 9.99 $9.64 $ 9.71
Income from Investment Operations
---------------------------------
Net investment income............................................................... 0.49 0.43 0.48 0.18
Net realized and unrealized gain (loss) on investments.............................. (0.60) (0.07) 0.35 (0.07)
----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations.................................................... (0.11) 0.36 0.83 0.11
==================================================================================================================================
Less Distributions from:
------------------------
Net investment income............................................................... (0.49) (0.43) (0.48) (0.18)
Net realized capital gains.......................................................... -- -- -- --
----------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................................. (0.49) (0.43) (0.48) (0.18)
==================================================================================================================================
Net increase (decrease) in net asset value.......................................... (0.60) (0.07) 0.35 (0.07)
Net asset value: End of period...................................................... $ 9.32 $ 9.92 $9.99 $ 9.64
==================================================================================================================================
Total return (b).................................................................... (1.09)% 3.60% 8.75% 0.96%
Net assets, end of period (in millions)............................................. $ 3.6 $ 3.1 $1.4 $ 0.4
Ratio of expenses to average net assets (a)......................................... 1.80% 1.90% 1.92% 1.86%
Ratio of net investment income (loss) to average net assets (a)..................... 5.17% 4.28% 4.74% 5.51%
Portfolio turnover rate............................................................. 163.31% 572.56% 483.76% 212.49%
==================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, he ratios would have been as follows:
Ratio of expenses to average net assets (a)....................................... 1.88% 1.90% 1.92% 1.86%
Ratio of net investment income (loss) to average net assets (a)................... 5.09% 4.28% 4.74% 5.51%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
====================================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period......................................................... $ 9.92 $9.99 $ 10.06
Income from Investment Operations
---------------------------------
Net investment income........................................................................ 0.62 0.57 0.20
Net realized and unrealized gain (loss) on investments....................................... (0.60) (0.07) (0.07)
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations............................................................. 0.02 0.50 0.13
====================================================================================================================================
Less Distributions from:
------------------------
Net investment income....................................................................... (0.62) (0.57) (0.20)
Net realized capital gains.................................................................. -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions......................................................................... (0.62) (0.57) (0.20)
====================================================================================================================================
Net increase (decrease) in net asset value.................................................. (0.60) (0.07) (0.07)
Net asset value: End of period.............................................................. $ 9.32 $9.92 $ 9.99
====================================================================================================================================
Total return (b)............................................................................ 0.30% 5.02% 1.24%
Net assets, end of period (in millions)..................................................... $ 47.9 $44.7 $ 29.3
Ratio of expenses to average net assets (a)................................................. 0.43% 0.54% 0.56%
Ratio of net investment income (loss) to average net assets (a)............................. 6.55% 5.63% 6.29%
Portfolio turnover rate..................................................................... 163.31% 572.56% 483.76%
====================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a).................................................. 0.50% 0.54% 0.56%
Ratio of net investment income (loss) to average net assets (a).............................. 6.47% 5.63% 6.29%
</TABLE>
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods
less than one year are not annualized.
--------------------------------------------------------------------------------
The AAL Mutual Funds Annual Report 105
<PAGE>
Financial Highlights PER SHARE INFORMATION
The AAL Money Market Fund
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ende
CLASS A SHARES 4/30/00 4/30/99 4/30/98 4/30/97 4/30/96
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period .............................. $ 1.00 $ 1.00 $ 1.00 $1.00 $ 1.00
Income from Investment Operations
---------------------------------
Net investment income.............................................. 0.05 0.05 0.05 0.05 0.05
Net realized and unrealized gain (loss) on investments............. -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................... 0.05 0.05 0.05 0.05 0.05
================================================================================================================================
Less Distributions from:
------------------------
Net investment income.............................................. (0.05) (0.05) (0.05) (0.05) (0.05)
Net realized capital gains......................................... -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................ (0.05) (0.05) (0.05) (0.05) (0.05)
================================================================================================================================
Net increase (decrease) in net asset value......................... -- -- -- -- --
Net asset value: End of period .................................... $ 1.00 $ 1.00 $ 1.00 $1.00 $ 1.00
================================================================================================================================
Total return (b)................................................... 4.99% 4.68% 5.12% 5.21% 4.94%
Net assets, end of period (in millions)............................ $348.0 $288.1 $240.7 $189.6 $116.0
Ratio of expenses to average net assets (a)........................ 0.66% 0.79% 0.68% 0.55% 0.83%
Ratio of net investment income (loss) to average net assets (a).... 4.90% 4.54% 4.98% 4.91% 4.89%
Portfolio turnover rate............................................ N/A N/A N/A N/A N/A
--------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's
voluntary expense reimbursement, the ratios would have been as
follows:
Ratio of expenses to average net assets (a)....................... 1.02% 1.12% 1.04% 1.10% 1.28%
Ratio of net investment income (loss) to average net assets (a)... 4.54% 4.22% 4.62% 4.36% 4.46%
(a) Calculated on an annualized basis.
(b) Total return calculations assume reinvestment of all dividends
and distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized.
</TABLE>
-----------------------------------------------------------------------------
106 The AAL Mutual Funds Annual Report
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
CLASS B SHARES 4/30/00 4/30/99 4/30/98 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 0.04 0.04 0.01
Net realized and unrealized gain (loss) on investments............................. -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................................... 0.04 0.04 0.04 0.01
====================================================================================================================================
Less Distributions from:
-----------------------
Net investment income.............................................................. (0.04) (0.04) (0.04) (0.01)
Net realized capital gains......................................................... -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................................................ (0.04) (0.04) (0.04) (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 (b)................................................................... 3.94% 3.67% 4.26% 1.32%
Net assets, end of period (in millions)............................................ $ 2.4 $ 1.6 $ 1.2 $ 0.6
Ratio of expenses to average net assets (a)........................................ 1.65% 2.79% 1.65% 1.78%
Ratio of net investment income (loss) to average net assets (a).................... 3.95% 2.54% 4.02% 3.81%
Portfolio turnover rate ........................................................... N/A N/A N/A N/A
------------------------------------------------------------------------------------------------------------------------------------
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a) .................................... 2.00% 3.11% 2.01% 3.54%
Ratio of net investment income (loss) to average net assets (a) ................ 3.59% 2.22% 3.67% 2.05%
(a) Calculated on an annualized basis
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales
charge. Periods less than one year are not annualized
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
CLASS I SHARES 4/30/00 4/30/99 4/30/98
====================================================================================================================================
<S> <C> <C> <C>
Net asset value: Beginning of period............................................................. $1.00 $1.00 $1.00
Income from Investment Operations
---------------------------------
Net investment income............................................................................ 0.05 0.05 0.02
Net realized and unrealized gain (loss) on investments........................................... -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................................................. 0.05 0.05 0.02
====================================================================================================================================
Less Distributions from:
-----------------------
Net investment income............................................................................ (0.05) (0.05) (0.02)
Net realized capital gains....................................................................... -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions.............................................................................. (0.05) (0.05) (0.02)
====================================================================================================================================
Net increase (decrease) in net asset value....................................................... -- -- --
Net asset value: End of period................................................................... $1.00 $1.00 $1.00
===================================================================================================================================
Total return (b)................................................................................. 5.36% 4.99% 1.67%
Net assets, end of period (in millions).......................................................... $12.8 $17.9 $ 0.2
Ratio of expenses to average net assets (a)...................................................... 0.31% 0.49% 0.67%
Ratio of net investment income (loss) to average net assets (a).................................. 5.18% 4.76% 5.11%
Portfolio turnover rate.......................................................................... N/A N/A N/A
===================================================================================================================================
If the Fund had paid all of their expenses without the adviser's voluntary
expense reimbursement, the ratios would have been as follows:
Ratio of expenses to average net assets (a)................................................. 0.57% 0.72% 1.43%
Ratio of net investment income (loss) to average net assets (a)............................. 4.92% 4.53% 4.36%
(a) Calculated on an annualized basis
(b) Total return calculations assume reinvestment of all dividends and
distributions but does not reflect any deduction for sales charge. Periods less
than one year are not annualized
</TABLE>
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The AAL Mutual Funds Annual Report 107
<PAGE>
Report of Independent Accountants
PricewatherhouseCoopers LLP
--------------------------------------------------------------------------------
PricewatherhouseCoopers LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee WI 53202
Telphone (414) 212 1600
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, 2000, 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 accounting principles generally accepted in the United States.
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 auditing standards generally accepted in the United States 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, 2000, by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
May 19, 2000
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108 The AAL Mutual Funds Annual Report
<PAGE>
Board of Trustees
John O. Gilbert - Chairman of the Board
F. Gregory Campbell
Woodrow E. Eno
Richard L. Gady
John H. Pender
Edward W. Smeds
Lawrence M. Woods
Officers
Robert G. Same - President
James H. Abitz - Vice-President
Woodrow E. Eno - Vice-President
Charles D. Gariboldi - Treasurer
Frederick D. Kelsven - Secretary
Todd J. Kelly - Assistant Treasurer
Joseph R. Mauel - Assistant Treasurer
Steven J. Fredricks - Assistant Secretary
Investment Adviser & Distributor
AAL Capital Management Corporation
222 W. College Ave.
Appleton, WI 54919-0007
Sub-Adviser (The AAL International Fund Only)
Oechsle International Advisors, LLC
One International Place
Boston, MA 02110
Custodian
Citibank, N.A.
111 Wall Street
New York, NY 10043
Transfer Agent & Disbursing Agent
Firstar Mutual Fund Services, LLC
615 East Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
Legal Counsel
Quarles & Brady, L.L.C.
411 East Wisconsin Avenue
Milwaukee, WI 53202
Independent Accountants
PricewaterhouseCoopers LLP
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 CAPITAL MANAGEMENT CORPORATION]
