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Previous: DEAN WITTER REALTY YIELD PLUS L P, 8-K, EX-2, 2001-01-04 |
Next: AAL MUTUAL FUNDS, N-30D, 2001-01-04 |
October 31, 2000
[AAL Mutual Funds Logo]
TABLE OF CONTENTS
President's Letter.............................................................2
The Markets and Economy in Review..............................................3
Portfolio Perspectives
The AAL Mid Cap Index Fund.................................................4
The AAL Large Company Index Fund...........................................6
The AAL Bond Index Fund....................................................8
Schedule of Investments
The AAL Mid Cap Index Fund................................................10
The AAL Large Company Index Fund..........................................15
The AAL Bond Index Fund...................................................21
Statement of Assets and Liabilities...........................................25
Statement of Operations.......................................................26
Statement of Changes in Net Assets............................................27
Notes to Financial Statements.................................................28
A Note on Forward Looking Statements..........................................31
Financial Highlights
The AAL Mid Cap Index Fund................................................32
The AAL Large Company Index Fund..........................................33
The AAL Bond Index Fund...................................................34
DEAR AAL MUTUAL FUND INSTITUTIONAL INVESTOR:
We are pleased to provide the Semi-Annual Report for the passively managed AAL Mutual Fund “Class I” shares for the six months ended October 31, 2000. We have included a commentary from each of the portfolio managers reviewing past market events and performance.
The AAL Mutual Fund family offers a broad spectrum of both passively managed and actively managed long-term investment options: growth, income and international holdings. Whether your organization wants to create a new investment program or further diversify current investment assets, The AAL Mutual Fund “Class I” shares provide access to the investment choices to help meet your organization’s needs.
In addition to the passively managed “Class I” share Index Funds, The AAL Mutual Fund family also offers the following investment options to Lutheran organization:
Equity and Balanced Funds
Fixed-Income Funds
Thank you for your continued confidence in The AAL Mutual Funds.
Sincerely,
/s/Robert G. Same
Robert G. Same
President
THE ECONOMY AND MARKETS IN REVIEW
The economy and the financial markets have been on a roller coaster ride in year 2000. U.S. Gross Domestic Product (GDP) grew at a 2.7% annualized rate in the third quarter of 2000, a significant slowdown from previous quarters. The economy had been growing at a 5.5% annualized rate in the first half of the year. This slowdown in the economy has been orchestrated by the Federal Reserve Board (Fed) as they have been operating under a restrictive monetary policy over the past year and a half.
With the current economic slowdown in place, the Fed has held the federal funds target interest rate steady at 6.50% since May of this year. However, they have maintained their inflationary bias, as the labor markets remain tight. The current unemployment rate is at an extremely low 3.9% level.
Like the economy, the equity markets have experienced tremendous volatility in 2000. After years of outstanding performance, large-cap stocks have struggled in 2000. The S&P 500 Index, a good proxy for the large cap market, had a return of (1.03)% for the last six months. This should be of no surprise given the 28.56% annual returns experienced in the S&P 500 over the past five calendar years. Within the large cap universe, however, the value-oriented stocks performed better than growth stocks.
Since the beginning of 2000, mid-cap and small-cap stocks have outperformed large-cap stocks. The good performance of the mid-cap market can be seen through the S&P 400 Mid Cap Index which was up 8.60% in the six month period.
Technology stocks were challenged during the past six months due to a slowing economy and risk aversion by investors. Concerns about a worldwide economic slowdown and expectations of lower spending by business on technology infrastructure sent technology investors to the sidelines. Technology returns have been in negative territory since August.
International markets have had a difficult year in 2000. The EAFE Index was down by 9.01% during the past six months. Major factors have been slowing growth in various countries and a weak currency in the European countries.
This has been a positive environment for quality bonds. Interest rates have generally declined over the last six months, which have lead to positive returns for bonds. The Lehman Brothers Aggregate Bond Index posted returns of 5.80%. Investment grade bonds in both the taxable and tax-exempt markets have done well while the high-yield bond market has struggled.
The past several years have been great periods of economic growth and strong equity markets. The future challenges of slower growth and volatile markets will dictate the need for skilled professional investment managers. It will also be a time for everyone to carefully review their allocation of assets to be assured that it is meeting their risk tolerance and their long-term financial goals.
/s/James H. Abitz
James H. Abitz
Chief Investment Oficer
THE AAL MID CAP INDEX FUND
I Share Assets . . . $12,290,598 I Share NAV . . . $11.78 Number of Securities in Portfolio . . . 400
How would you assess the performance of the Fund for the past six months?
The Fund has performed adequately during the past six months. The Fund is up 8% (after expenses), trailing the S&P MidCap 400 Index* return of 8.5%. After adjusting for the expenses, that leaves a relatively modest tracking error in the “apples-to-apples” performance comparison. Two factors increased the tracking error during the period. First, the MidCap Index had over 8% in turnover during the period. This means that the transaction costs of selling and buying those shares impacted the Fund negatively relative to the Index. Second, the Fund experienced a modest withdrawal during the period which forced more selling and more transactions costs.
What factors influence the return of the Fund relative to the return of the Index?
Four key factors influence the return of the Fund as compared to that of the Index. Trading costs and cash flows are always a negative for the Fund. Cash levels and portfolio mismatch can be either a positive or a negative for the Fund as compared to the Index. These same factors apply to any index fund.
The Index enjoys the advantage of being simply a mathematical construction. At any time, the value of the Index is simply a weighted sum of the value of the stocks that make it up; one can arrive at that value while incurring no actual costs. The Fund, however, must own the securities that make up the Index, which is not without cost. To acquire those securities, the fund pays a commission, is impacted by the bid-ask spread, and incurs other fees, all of which come out of the value of the fund and cause it to have a return of less than the Index. When changes to the Index occur, these factors all apply twice. The Index simply replaces one security with the other and recalculates a value. The Fund must sell a security, incurring cost, and buy another incurring cost. Each time a transaction occurs, the Fund falls a little further behind its benchmark index.
Cash flows into or out of the Fund also have an impact. Cash coming into the Fund creates the need for a transaction. The greater the cash flow, either in or out, the greater the transaction costs. The extreme example of this was the startup of the Fund. One hundred percent of the Fund had to move from cash to securities. As the Fund becomes larger, cash flow has less of an impact because it represents a smaller portion of the Fund.
To facilitate cash flows in the Fund and optimize trading costs, the Fund carries a small cash position. This means that typically 99% of the Fund is invested in the securities that make up the Index, 1% of the Fund is in cash. This fact can work either for or against the Fund relative to the Index. If the Index goes down, the Fund benefits; if the Index goes up the Fund gets hurt. For example, if the Fund is 99% invested and the Index increases by 10%, the Fund increases only 9.9%. We strive very hard to balance this impact against the reduced trading costs of making fewer, larger trades.
The last, and least important, factor is portfolio mismatch. This refers to the inevitable small differences between the Fund and the Index. For example, if XYZ Co. makes up 1.375% of the index, it may be 1.378% of the Fund. While this seems meaningless, multiplied by 400 times and coupled with recent market volatility, it can add up. The systems we have in place to assist in managing the Fund minimize this factor, even at the current size of the Fund.
/s/Michael R. Hochholzer
Michael R. Hochholzer
Portfolio Manager
* 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 400Index” 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 make no representation regarding the advisability of investing in the product. It is not possible to invest directly in the Index. Index funds are subject to the same market risks associated with the stocks in their respective index.
**Since the Fund has been in existence for less than one year, mountain chart performance has not been shown.**
Average Annual Total Returns/1/
October 31, 2000
From
Inception
--------------------------------------------------------------------------------
The AAL Mid Cap Index Fund 17.80%/2/
SEC Quarterly Standardized Returns as of September 29, 2000
The AAL Mid Cap Index Fund 22.20%/2/
/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/ Cumulative performance since inception of Fund (December 31, 1999.)
THE AAL LARGE COMPANY INDEX FUND
I Share Assets . . . $28,204,547 I Share NAV . . . $9.85 Number of Securities in Portfolio . . . 500
How would you assess the Fund's performance since inception?
The Fund has performed quite well relative to its benchmark, the S&P 500 Index*. Returns are slightly in excess of the Index. Advantageous timing of purchases on the first day of trading in this Fund contributed significantly to its performance. The Fund net asset value has been flat on a year-to-date basis, as large cap stocks have been laboring this year. It appears that the bull market run over the past 5 years is taking a pause.
One of the advantages of managing an index fund is that no investment strategy needs to be implemented. This is an advantage in that, despite the best efforts of sophisticated money managers, they often invoke a strategy that is out of sync with the direction that the stock market ultimately takes, damaging their performance. Our charter is simply to hold all 500 stocks in the S&P 500 Index and to maintain their relative weights exactly in line with that of the Index at all times and the Fund’s performance will tend to follow.
What sector contributed the most to the Fund's performance?
Over the past quarter, surprisingly, the utilities sector was the top performer. This sector benefited from the changing regulatory environment and the move into unregulated businesses by many companies. The generally tight market for power has caused utility stock prices to rise. The falling interest rate environment has also contributed to the utility sector’s performance. Because utility stocks are higher yielding, they tend to be sensitive to interest rates. When interest rates fall, the stock price usually rises.
The other strong performing sector in the third quarter was the financial group. This group also benefited from declining interest rates. Various industries within the group have improving fundamentals, including the insurance industry. Insurance groups are experiencing higher rates for coverage, especially in the property/casualty area.
On a year-to-date basis, utilities are the top group, with health care, energy and financials contributing strongly. Health Care performance was driven by a mix of different companies, including drug, medical device, hospital management and health maintenance organization firms. Meanwhile, the energy sector benefited from strong prices for crude oil and natural gas.
What has the investment environment been like for the last six months?
The environment has not been conducive to strong stock gains. The environment at the beginning of the year 2000 was somewhat speculative as the boom in Internet stocks and other technology stocks reached its zenith. Some amount of air was due to be let out of this speculative bubble and this process started with a vengeance in the second quarter and continued into the third as evidenced by the collapse of the technology-heavy NASDAQ (over-the-counter) market.
The tight posture of the Federal Reserve Board has helped to keep a lid on the broad market, as the robust economy of 1999 and of the first half of 2000 brought unemployment down to record low levels. This posture has led the Federal Reserve Board to raise short-term interest rates numerous times over the past year and to slow down the growth of the money supply, a critical measure of the potential flow of money into the capital markets. With the price of oil rising dramatically over the past year, the Federal Reserve Board has maintained a cautious outlook for inflation and will likely maintain its tight posture.
High oil prices and the falling value of the Euro currency have caused some concern about corporate profits. This concern tends to dampen the outlook for all stocks. The high price of oil has put pressure on the economy due to its effect on transportation costs and raw material prices, while the falling value of the Euro currency against the dollar has raised concerns for the competitive position of U.S. manufacturers that sell into the Eurozone markets.
/s/David J. Schnarsky
David J. Schnarsky
Portfolio Manager
* An unmanaged index comprised of 500 stocks representative of the stock market as a whole. “S&P 500Index®” 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 make no representation regarding the advisability of investing in the product. It is not possible to invest directly in the Index. Index funds are subject to the same market risks associated with the stocks in their respective index.
**Since the Fund has been in existence for less than one year, mountain chart performance has not been shown.**
Average Annual Total Returns/1/
October 31, 2000
From
Inception
The AAL Large Company Index Fund (1.50)%/2/
SEC Quarterly Standardized Returns as of September 29, 2000
The AAL Large Company Index Fund (1.00)%/2/
/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/ Cumulative performance since inception of Fund (December 31, 1999.)
THE AAL BOND INDEX FUND
I Share Assets . . . $13,802,685 I Share NAV . . . $10.19 Number of Securities in Portfolio . . . 95
How has the Fund performed over the last six months?
The AAL Bond Index Fund has closely tracked its target index, the Lehman Aggregate Bond Index*. The Fund returned 5.99% after expenses over the last six months and 7.77% after expenses since its inception date of December 31, 1999.
Most fixed income securities, except for high yield junk bonds, produced modest price increases over the last six months. The price increases combined with the interest income earned resulted in solid total returns. The top performing sectors for the last six months were commercial mortgage backed securities, mortgage backed securities, and U.S. Government Agency securities; while investment grade corporate bond performance lagged. The yield curve disinverted as the market began to anticipate an end to the Federal Reserve Board’s rate hikes. Intermediate-term Treasury yields ended the six months significantly lower. By October 31, the yield on the 10-year Treasury Note fell 46 basis points, from 6.22% to 5.76%. Longer-term Treasury yields also ended the six months lower. The 30-year Treasury bond’s yield fell 17 basis points to 5.79%.
How has the rising interest rate environment impacted the Lehman Brothers Aggregate Bond Index?
The Federal Reserve Board has raised the federal funds rate 1.0 percentage point since the beginning of the year. By mid year, slower economic activity suggested that the Federal Reserve Board had accomplished its objective of slowing the growth rate of the economy. As a result, intermediate-term Treasury yields and long-term Treasury yields declined. This benefited the return on the Lehman Brothers Aggregate Bond Index, as bond prices appreciate when yields fall. Furthermore, the Index also benefited from the greater declines in intermediate-term Treasury yields over the last six months. Intermediate-term securities represent 82% of the Lehman Brothers Aggregate Bond Index. Price appreciation contributed 2.2 percentage points of the Lehman Brothers Aggregate Bond Index return of 5.8% for the last six months.
Does the Index favor one sector or type of bond over another?
The Lehman Aggregate Bond Index represents the fixed rate, U.S. domestic, taxable investment grade bond market. The Index components are Government Agency and Treasury securities (38%), mortgage backed securities (35%), corporate bonds (24%), commercial mortgage backed securities (1.5%) and asset backed securities (1.5%).
Over the next five years, Lehman Brothers projects the Index will grow 3%. Treasury securities weighting in the Index is expected to fall 12% over the next five years as the U.S. Government uses federal budget surpluses to buy back long-term Treasury bonds. The remaining components of the Index are expected to grow between 6%-9% over the next five years.
Where do you see the bond market headed?
Recent statistical evidence has confirmed that the Federal Reserve Board has been successful in slowing the growth rate of the U.S. economy. The financial markets have reacted strongly to the evidence of slower growth and the anticipated end to Federal Reserve Board rate hikes. We expect the U.S. economy to continue to enjoy low inflation with slower, but healthy economic growth. We believe the yield curve will continue to disinvert (long treasury yields flat or higher, short and intermediate yields flat or lower) with the yield on the 10-year Treasury Note remaining in the 5.5% to 6.0% range. We remain cautious on corporate credit as higher energy costs, higher leverage and increasing global competition have afflicted financial distress on many well-known companies. Credit spreads are currently at historically wide levels. We expect credit spreads to be relatively stable unless profit trends, credit trends, and economic fundamentals continue to weaken.
/s/Gregory R. Anderson
Gregory R. Anderson
Portfolio Manager
* An unmanaged index that encompasses five major classes of U.S. fixed-income securities: U.S.Treasury and Government Agency securities, corporate debt obligations, mortgage-backed securities, asset-backed securities and commercial mortgage backed securities. It is not possible to invest directly in the Index.
**Since the Fund has been in existence for less than one year, mountain chart performance has not been shown.**
Average Annual Total Returns/1/
October 31, 2000
From
Inception
The AAL Bond Index Fund 7.77%/2/
SEC Quarterly Standardized Returns as of September 29, 2000
The AAL Bond Index Fund 7.04%/2/
/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. Periods less than one year are not annualized.
/2/ Cumulative performance since inception of Fund (December 31, 1999.)
THE AAL MID CAP INDEX FUND
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 2000
The Fund seeks total returns that track the performance of the S&P MidCap 400 Index, by investing primarily in common stocks comprising the Index.
Shares Common Stocks (98.6%) Market Value
================================================================================
Basic Materials (3.4%)
795 Airgas, Inc.* $5,366
1,340 AK Steel Holding Corporation 12,395
580 Albemarle Corporation 13,449
350 A. Schulman, Inc. 3,828
645 Bowater, Inc. 34,911
775 Cabot Corporation 17,050
317 Cabot Microelectonics Corporation* 14,007
280 Carpenter Technology Corporation 8,680
1,420 Crompton Corporation 11,360
565 Cytec Industries, Inc.* 19,563
390 Ferro Corporation 7,995
210 H.B. Fuller Company 7,101
1,480 IMC Global, Inc. 19,147
620 Longview Fibre Company 8,447
670 Lubrizol Corporation 14,531
1,510 Lyondell Chemical Company 21,706
605 Martin Marietta Materials, Inc. 23,232
60 MAXXAM, Inc.* 1,140
270 Minerals Technologies, Inc. 8,454
485 Olin Corporation 8,609
540 P.H. Glatfelter Company 5,636
345 Rayonier, Inc. 12,140
1,315 RPM, Inc. 11,753
1,345 Solutia, Inc.* 17,149
1,275 Sonoco Products Company 24,623
515 Southdown, Inc. 36,501
1,010 Timber Company 28,596
570 UCAR International, Inc.* 4,703
350 Universal Corporation 9,800
620 Wausau-Mosinee Paper Corporation 5,425
--------------------------------------------------------------------------------
Total Basic Materials 417,297
--------------------------------------------------------------------------------
Capital Goods (7.1%)
710 AGCO Corporation 8,076
350 Albany International Corporation* 3,762
910 American Standard Companies, Inc.* 41,746
360 AMETEK, Inc. 7,830
465 Carlisle Companies, Inc. 19,356
755 Chubb Corporation 18,073
890 Diebold, Inc. 23,140
495 Donaldson Company, Inc. 11,199
495 Federal Signal Corporation $11,571
400 Flowserve Corporation* 8,050
320 Granite Construction, Inc. 7,300
430 Harsco Corporation 8,681
980 Herman Miller, Inc. 25,603
730 Hillenbrand Industries, Inc. 33,762
715 HON INDUSTRIES, Inc. 17,205
2,500 Jabil Circuit, Inc.* 142,656
410 Jacobs Engineering Group, Inc* 16,964
350 Kaydon Corporation 7,678
365 Kennametal, Inc. 10,722
290 MagneTek, Inc.* 3,154
370 Newport News Shipbuilding, Inc. 18,199
360 Nordson Corporation 10,327
615 Pentair, Inc. 18,335
700 Precision Castparts Corporation 26,425
955 Reynolds & Reynolds Company 17,071
300 Ryerson Tull, Inc. 2,250
1,835 SCI Systems, Inc.* 78,905
955 Sensormatic Electronics Corporation* 17,190
175 Sequa Corporation* 6,453
470 SPX Corporation* 58,104
330 Stewart & Stevenson Services, Inc. 7,920
1,797 Symbol Technologies, Inc. 81,651
285 Tecumseh Products Company 11,364
535 Teleflex, Inc. 18,491
420 Trinity Industries, Inc. 10,106
1,695 Vishay Intertechnology, Inc.* 50,850
440 Wallace Computer Services, Inc. 6,380
420 York International Corporation 11,419
--------------------------------------------------------------------------------
Total Capital Goods 877,968
--------------------------------------------------------------------------------
Communication Services (1.8%)
400 ANTEC Corporation* 4,875
2,760 Broadwing, Inc.* 77,970
800 Powerwave Technologies, Inc.* 38,500
700 Price Communications Corporation* 15,138
835 Telephone and Data Systems, Inc. 88,092
--------------------------------------------------------------------------------
Total Communication Services 224,575
--------------------------------------------------------------------------------
Consumer Cyclicals (13.5%)
1,275 Abercrombie & Fitch Company* 30,042
695 ACNielsen Corporation* $16,637
1,145 Acxiom Corporation* 46,086
1,515 A.H. Belo Corporation 29,069
605 American Eagle Outfitters, Inc.* 20,835
955 Apollo Group, Inc.* 37,364
886 ArvinMeritor, Inc. 14,840
280 Bandag, Inc. 9,992
795 Barnes & Noble, Inc.* 15,006
930 BJ's Wholesale Club, Inc.* 30,632
615 Blyth, Inc. 15,990
965 Borders Group, Inc.* 13,389
420 Borg Warner, Inc. 15,855
950 Callaway Golf Company 15,200
1,150 CDW Computer Centers, Inc.* 74,103
2,140 Cintas Corporation* 99,243
640 Claire's Stores, Inc. 12,880
1,700 Clayton Homes, Inc. 15,619
895 DeVry, Inc.* 33,059
1,403 Dollar Tree Stores, Inc.* 54,873
1,000 Dun & Bradstreet Corporation* 21,625
1,710 Electronic Arts, Inc.* 85,500
2,185 Family Dollar Stores, Inc. 42,471
535 Fastenal Company* 30,729
830 Federal-Mogul Corporation 2,697
600 Furniture Brands International, Inc.* 10,125
1,100 Galileo International, Inc. 21,725
380 GTECH Holdings Corporation* 6,579
790 Harte-Hanks, Inc. 17,479
475 Houghton Mifflin Company 17,486
944 International Game Technology* 34,574
755 International Speedway Corporation 24,254
1,455 Jones Apparel Group, Inc.* 40,467
445 Lancaster Colony Corporation 10,513
365 Lands' End, Inc.* 9,362
775 Lear Corporation* 21,119
560 Lee Enterprises, Inc. 15,470
700 Lennar Corporation 22,488
975 Mandalay Resort Group* 20,292
335 Media General, Inc. 12,730
340 Modine Manufacturing Company 8,967
620 Mohawk Industries, Inc.* 13,524
145 NCH Corporation 5,655
325 NCO Group, Inc.* 7,109
625 Nieman Marcus Group, Inc.* 23,203
1,380 OfficeMax, Inc.* 3,968
625 Ogden Corporation* 8,594
3,820 Park Place Entertainment Corporation* 48,705
375 Payless ShoeSource, Inc.* 21,727
605 Pittston Company 9,604
1,415 Readers Digest Association, Inc. $51,913
340 Rollins, Inc. 6,141
1,060 Ross Stores, Inc. 13,979
1,735 Saks, Inc.* 17,675
255 Scholastic Corporation* 20,400
1,550 Shaw Industries, Inc. 28,772
970 Six Flags, Inc.* 15,156
705 Sothebys Holdings, Inc.* 19,167
420 Superior Industries International, Inc. 14,306
400 Sylvan Learning Systems, Inc.* 6,175
745 Tech Data Corporation* 31,011
700 True North Communications, Inc. 26,381
705 Unifi, Inc.* 6,125
900 United Rentals, Inc.* 19,350
525 USG Corporation 8,958
500 Valspar Corporation 13,655
1,115 Viad Corporation 23,833
675 Warnaco Group, Inc. 1,772
160 Washington Post Company 85,460
370 Wellman, Inc. 5,550
555 WestPoint Stevens, Inc. 3,989
685 Williams-Sonoma, Inc.* 14,257
--------------------------------------------------------------------------------
Total Consumer Cyclicals 1,653,480
--------------------------------------------------------------------------------
Consumer Staples (7.0%)
310 Banta Corporation 7,149
1,655 Bergen Brunswig Corporation 14,998
420 Bob Evans Farms, Inc. 7,901
860 Brinker International, Inc.* 33,755
485 Carter-Wallace, Inc. 13,307
680 CBRL Group, Inc.* 12,155
503 Chris-Craft Industries, Inc.* 36,970
410 Church & Dwight Company, Inc. 8,098
520 Dean Foods Company 16,640
1,205 Dial Corporation 13,481
680 Dole Food Company, Inc. 8,203
320 Dreyer's Grand Ice Cream, Inc. 7,880
1,200 Energizer Holdings, Inc.* 23,700
1,260 Flowers Industries, Inc. 19,372
1,340 Hispanic Broadcasting Corporation* 41,875
1,725 Hormel Foods Corporation 29,002
1,315 IBP, Inc. 27,040
770 Interstate Bakeries Corporation 10,780
230 J.M. Smucker Company 5,118
390 Kelly Services, Inc. 8,653
500 Korn/Ferry Inernational* 17,500
340 Lance, Inc. 3,421
270 Lone Star Steakhouse & Saloon, Inc. 2,278
950 Manpower, Inc. 33,072
910 McCormick & Company, Inc. $28,836
1,225 Modis Professional Services, Inc.* 5,053
945 Outback Steakhouse, Inc.* 26,933
250 Papa John's International, Inc.* 6,281
930 Perrigo Company* 6,161
910 PSS World Medical, Inc.* 2,730
800 Quanta Services, Inc.* 24,850
1,340 R.J. Reynolds Tobacco Holdings, Inc. 47,905
2,340 Robert Half International, Inc.* 71,370
580 Ruddick Corporation 7,613
375 Suiza Foods Corporation* 17,367
2,845 Tyson Foods, Inc. 31,828
610 Universal Foods Corporation* 12,048
2,660 Univision Communications, Inc.* 101,745
675 Valassis Communications, Inc.* 18,731
1,360 Westwood One, Inc.* 25,755
1,710 Whitman Corporation* 22,230
--------------------------------------------------------------------------------
Total Consumer Staples 859,784
--------------------------------------------------------------------------------
Energy (5.6%)
1,170 BJ Services Company* 61,352
700 Cooper Cameron Corporation* 38,150
1,780 ENSCO International, Inc. 59,185
2,195 Global Marine, Inc.* 58,168
1,330 Grant Prideco, Inc.* 24,688
810 Hanover Compressor Company* 26,426
725 Helmerich & Payne, Inc. 22,792
585 Murphy Oil Corporation 33,893
790 Noble Affiliates, Inc. 28,983
1,730 Noble Drilling Corporation 71,903
2,135 Ocean Energy, Inc.* 29,623
970 Pennzoil-Quaker State Company 11,398
1,260 Pioneer Natural Resources Company* 16,459
725 Smith International, Inc.* 51,113
680 Tidewater, Inc. 31,407
1,045 Ultramar Diamond Shamrock Corporation 27,431
780 Valero Energy Corporation 25,789
1,155 Varco International, Inc.* 19,924
1,330 Weatherford International, Inc.* 48,545
--------------------------------------------------------------------------------
Total Energy 687,229
--------------------------------------------------------------------------------
Financials (11.3%)
1,075 A.G. Edwards, Inc. 54,556
765 Allmerica Financial Corporation 48,243
1,000 Ambac Financial Group, Inc. 79,813
700 American Financial Group, Inc. 15,006
815 Associated Banc-Corp 19,611
665 Astoria Financial Corporation 24,938
1,800 Banknorth Group, Inc. 32,625
610 City National Corporation $20,969
1,475 Compass Bancshares, Inc. 26,827
1,350 Dime Bancorp, Inc. 32,991
3,790 E*TRADE Group, Inc.* 55,192
605 Everest Re Group, Ltd. 35,468
1,620 First Tennessee National Corporation 37,260
625 First Virginia Banks, Inc. 25,859
1,070 FirstMerit Corporation 24,409
500 Greater Bay Bancorp 16,281
1,225 GreenPoint Financial Corporation 36,444
1,975 Hibernia Corporation 23,577
430 Horace Mann Educators Corporation 7,229
440 HSB Group, Inc. 17,407
795 Legg Mason, Inc. 41,290
1,315 Marshall & Ilsley Corporation 59,586
890 Mercantile Bankshares Corporation 33,486
600 Mony Group, Inc.* 24,675
2,544 National Commerce Bancorporation 54,060
2,215 North Fork Bancorporation, Inc. 44,715
715 Ohio Casualty Corporation 6,010
1,485 Old Republic International Corporation 38,610
985 Pacific Century Financial Corporation 12,497
585 PMI Group, Inc. 43,217
755 Protective Life Corporation 17,459
615 Provident Financial Group, Inc. 18,604
800 Roslyn Bancorp, Inc. 17,350
700 SEI Investments Company* 63,525
700 Silicon Valley Bancshares* 32,375
2,880 Sovereign Bancorp, Inc. 23,940
1,110 TCF Financial Corporation 44,886
815 Unitrin, Inc. 25,316
1,100 Waddell & Reed Financial, Inc. 35,062
670 Webster Financial Corporation 16,331
525 Westamerica Bancorporation 18,867
385 Wilmington Trust Corporation 20,261
1,135 Zions Bancorporation 65,192
--------------------------------------------------------------------------------
Total Financials 1,392,019
--------------------------------------------------------------------------------
Health Care (15.0%)
320 Acuson Corporation* 7,300
600 AmeriSource Health Corporation* 26,063
645 Apria Healthcare Group, Inc.* 12,900
455 Beckman Coulter, Inc. 31,878
2,355 Chiron Corporation* 102,001
670 Covance, Inc.* 5,779
655 DENTSPLY International, Inc. 22,720
700 Edwards Lifesciences Corporation* 9,406
535 Express Scripts, Inc.* 35,945
625 First Health Group Corporation* 24,375
1,130 Forest Laboratories, Inc.* $149,725
1,550 Foundation Health Systems, Inc.* 31,291
1,125 Genzyme Corporation* 79,875
685 Gilead Sciences, Inc.* 58,910
3,060 Health Management Associates, Inc.* 60,626
1,070 ICN Pharmaceuticals, Inc. 40,727
600 IDEC Pharmaceuticals Corporation* 117,675
900 Incyte Genomics, Inc.* 32,963
2,060 IVAX Corporation* 89,610
765 Lincare Holdings, Inc.* 32,178
2,640 Millennium Pharmaceuticals, Inc.* 191,565
840 MiniMed, Inc.* 61,268
1,610 Mylan Laboratories, Inc. 45,080
1,185 Omnicare, Inc. 20,738
1,100 Oxford Health Plans, Inc.* 37,125
375 PacifiCare Health Systems, Inc.* 3,914
600 Protein Design Labs, Inc.* 81,047
600 Quest Diagnostics, Inc.* 57,750
905 Quorum Health Group, Inc.* 12,104
970 Sepracor, Inc.* 66,081
780 STERIS Corporation* 11,700
2,570 Stryker Corporation* 121,111
1,295 Sybron International Corporation* 32,051
545 Trigon Healthcare, Inc.* 39,070
800 Vertex Pharmaceuticals, Inc.* 74,487
750 VISX, Inc.* 16,078
--------------------------------------------------------------------------------
Total Health Care 1,843,116
--------------------------------------------------------------------------------
Technology (23.2%)
4,500 3Com Corporation* 79,875
545 ADTRAN, Inc.* 20,710
625 Affiliated Computer Services, Inc.* 34,805
1,325 Arrow Electronics, Inc.* 42,400
5,890 Atmel Corporation* 87,982
1,160 Avnet, Inc. 31,175
600 Avocent Corporation* 42,563
3,080 Cadence Design Systems, Inc.* 79,117
715 Cambridge Technology Partners, Inc.* 2,771
970 CheckFree Holdings Corporation* 48,258
865 Cirrus Logic, Inc.* 37,303
1,915 Comdisco, Inc. 23,578
600 CommScope, Inc.* 15,187
2,770 Concord EFS, Inc.* 114,436
600 Credence Systems Corporation* 11,250
645 CSG Systems International, Inc.* 29,952
1,540 Cypress Semiconductor Corporation* 57,654
300 DSP Group, Inc.* 8,512
1,690 DST Systems, Inc.* 104,146
1,655 Fiserv, Inc.* 86,784
1,060 Gartner Group, Inc., Class B* $9,275
795 Harris Corporation 25,192
400 Imation Corporation* 7,925
500 InFocus Corporation* 22,094
3,615 Informix Corporation* 15,364
1,405 Integrated Device Technology, Inc.* 79,119
800 International Rectifier Corporation* 35,700
2,590 Intuit, Inc.* 159,123
475 Jeffries Group, Inc.* 17,100
815 Keane, Inc.* 10,595
475 L-3 Communciations Holdings, Inc.* 31,320
1,600 Lam Research Corporation* 31,000
1,200 Lattice Semiconductor Corporation* 35,025
1,030 Legato Systems, Inc.* 9,173
595 Litton Industries, Inc.* 30,903
700 Macromedia, Inc.* 53,944
1,900 Marchfirst, Inc.* 11,044
600 MasTec, Inc.* 17,362
750 Mentor Graphics Corporation* 17,578
1,100 Micrel, Inc.* 49,775
1,440 Microchip Technology, Inc.* 45,540
390 Mynd Corporation* 4,973
1,695 Network Associates, Inc.* 32,629
830 NOVA Corporation* 13,021
930 Nvidia Corporation* 57,791
990 Polycom, Inc.* 64,350
1,235 QLogic Corporation* 119,486
1,880 Quantum Corporation* 28,200
2,430 Rational Software Corporation* 145,041
600 Retek, Inc.* 23,662
565 Sawtek, Inc.* 28,744
800 Semtech Corporation* 25,800
1,260 Storage Technology Corporation* 12,285
390 Structural Dynamics Research Corporation* 4,022
1,705 SunGard Data Systems, Inc.* 87,168
1,100 Sybase, Inc.* 23,031
440 Sykes Enterprises, Inc.* 2,365
810 Symantec Corporation* 31,641
900 Synopsys, Inc.* 31,387
600 Titan Corporaiton* 8,025
385 Transaction Systems Architects, Inc.* 5,198
1,100 TranSwitch Corporation* 63,525
1,050 TriQuint Semiconductor, Inc.* 40,228
2,350 Vitesse Seiconductor Corporation* 164,353
1,670 Waters Corporation* 121,179
1,000 Wind River Systems, Inc.* 41,062
--------------------------------------------------------------------------------
Total Technology 2,851,775
--------------------------------------------------------------------------------
Transportation (1.4%)
615 Airborne Freight Corporation $6,227
335 Alaska Air Group, Inc.* 8,689
450 Alexander & Baldwin, Inc. 11,222
300 Arnold Industries, Inc. 5,269
500 Atlas Air, Inc.* 18,125
555 C.H. Robinson Worldwide, Inc. 30,352
615 CNF Transportation, Inc. 16,413
500 EGL, Inc.* 14,250
625 GATX Corporation 26,289
390 J.B. Hunt Transport Services, Inc.* 5,094
370 Overseas Shipholding Group, Inc. 8,880
750 Swift Transportation Company, Inc.* 10,687
620 Wisconsin Central Transportation
Corporation* 7,944
--------------------------------------------------------------------------------
Total Transportation 169,441
--------------------------------------------------------------------------------
Utilities (9.3%)
685 AGL Resources, Inc. 13,957
1,450 Allegheny Energy, Inc. 59,359
930 ALLETE 20,053
975 Alliant Energy Corporation 29,555
1,230 American Water Works Company, Inc. 29,981
370 Black Hills Corporation 11,563
1,790 Calpine Corporation* 141,298
280 Cleco Corporation 13,317
1,095 Conectiv, Inc. 19,642
1,645 DPL, Inc. 46,677
750 DQE, Inc. 26,203
1,665 Energy East Corporation 33,612
485 Hawaiian Electric Industries, Inc. $15,975
425 IDACORP, Inc. 20,958
1,035 IPALCO Enterprises, Inc. 23,223
730 Kansas City Power & Light Company 17,566
1,465 Kinder Morgan, Inc. 56,494
1,615 LG&E Energy Corporation 39,668
1,135 MCN Energy Group, Inc. 27,949
1,350 Montana Power Company 38,137
535 National Fuel Gas Company 28,689
1,475 NiSource, Inc. 36,783
1,825 Northeast Utilities 37,184
715 NSTAR, Inc. 27,662
965 OGE Energy Corporation 19,843
1,415 Potomac Electric Power Company 32,368
430 Public Service Company of New Mexico 11,852
1,025 Puget Sound Energy, Inc. 25,177
1,005 Questar Corporation 27,198
1,290 SCANA Corporation 34,185
970 Sierra Pacific Resources 16,672
1,610 TECO Energy, Inc. 44,879
1,195 UtiliCorp United, Inc. 31,742
740 Vectren Corporation 17,112
800 Western Resources Inc. 17,100
580 WGL Holdings, Inc. 14,790
1,510 Wisconsin Energy Corporation 28,407
--------------------------------------------------------------------------------
Total Utilities 1,136,830
--------------------------------------------------------------------------------
Total Common Stocks
(cost basis $11,224,474) 12,113,514
--------------------------------------------------------------------------------
Principal
Amount Short-Term Investments (2.2%) Interest Rate/1/ Maturity Date Market Value
------------------------------------------------------------------------------------------------------------------------------
$273,000 IBM Credit Corporation 6.500% 11/2/2000 $272,951
------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $272,951) 272,951
------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.8%)
(amortized cost basis $11,497,425) 12,386,465
------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities (-0.8%) (95,867)
Total Net Assets (100.0%) $12,290,598
*Non-income producing security.
/1/The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this schedule.
THE AAL LARGE COMPANY INDEX FUND
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 2000
The Fund seeks total returns that track the performance of the S&P 500 Index, by investing primarily in common stocks comprising the Index.
Shares Common Stocks (99.2%) Market Value
================================================================================
Basic Materials (2.3%)
500 Air Products and Chemicals, Inc. $18,656
800 Alcan Aluminium, Ltd. 25,250
1,924 Alcoa, Inc. 55,195
100 Allegheny Technologies, Inc. 2,025
1,365 Archer Daniels Midland Company 15,015
100 Ball Corporation 3,512
100 Bemis Company, Inc. 2,588
200 Bethlehem Steel Corporation* 575
100 Boise Cascade Corporation 2,869
200 Crown Cork & Seal Company, Inc. 1,825
1,500 Dow Chemical Company 45,937
200 Eastman Chemical Company 8,575
300 Ecolab, Inc. 11,756
2,300 E.I. du Pont de Nemours and Company 104,363
200 Engelhard Corporation 4,175
100 FMC Corporation* 7,600
300 Georgia-Pacific Group 8,062
100 Great Lakes Chemical Corporation 3,337
200 Hercules, Inc. 3,663
200 International Flavors & Fragrances, Inc. 3,350
1,012 International Paper Company 37,064
200 Louisiana-Pacific Corporation 1,700
200 Mead Corporation 5,788
200 Nucor Corporation 6,938
300 Owens-Illinois, Inc.* 1,781
300 Pactiv Corporation* 3,150
2,857 Pharmacia Corporation 157,135
100 Potlatch Corporation 3,350
400 PPG Industries, Inc. 17,850
300 Praxair, Inc. 11,175
400 Rohm and Haas Company 12,025
100 Sigma-Aldrich Corporation 3,575
100 Temple-Inland, Inc. 4,475
300 Union Carbide Corporation 12,900
100 USX-U.S. Steel Group 1,594
200 Vulcan Materials Company 8,400
200 Westvaco Corporation 5,700
500 Weyerhaeuser Company 23,469
200 Willamette Industries, Inc. 7,263
100 Worthington Industries, Inc. 956
100 W.R. Grace & Company* $381
--------------------------------------------------------------------------------
Total Basic Materials 654,997
--------------------------------------------------------------------------------
Capital Goods (10.1%)
400 Allied Waste Industries, Inc.* 3,700
400 American Power Conversion Corporation* 5,175
200 Avery Dennison Corporation 10,100
800 Barrick Gold Corporation 10,700
200 BFGoodrich Company 8,187
2,000 Boeing Company 135,625
100 Briggs & Stratton Corporation 3,569
800 Caterpillar, Inc. 28,050
200 Cooper Industries, Inc. 7,650
2,100 Corning, Inc. 160,650
100 Crane Company 2,619
300 Danaher Corporation 18,938
500 Deere & Company 18,406
500 Dover Corporation 21,219
200 Eaton Corporation 13,612
1,000 Emerson Electric Company 73,437
100 Fluor Corporation 3,500
4,200 Ford Motor Company 109,725
300 Freeport-McMoRan Copper & Gold, Inc.,
Class B* 2,381
500 General Dynamics Corporation 35,781
22,000 General Electric Company 1,205,875
1,200 General Motors Corporation 74,550
500 Homestake Mining Company* 2,063
1,800 Honeywell International, Inc. 96,863
700 Illinois Tool Works, Inc. 38,894
400 Inco, Ltd.* 6,175
400 Ingersoll-Rand Company 15,100
200 ITT Industries, Inc. 6,512
200 Johnson Controls, Inc. 11,925
900 Lockheed Martin Corporation 32,265
100 McDermott International, Inc. 969
100 Millipore Corporation 5,250
900 Minnesota Mining and Manufacturing
Company 86,963
425 Molex, Inc. 22,950
100 National Service Industries, Inc. 2,044
300 Newmont Mining Corporation $4,069
200 Northrop Grumman Corporation 16,800
200 Pall Corporation 4,312
200 Parker Hannifin Corporation 8,275
200 Phelps Dodge Corporation 9,350
600 Pitney Bowes, Inc. 17,813
700 Placer Dome, Inc. 5,687
200 Power-One, Inc.* 14,188
400 Rockwell International Corporation 15,725
400 Sanmina Corporation* 45,725
200 Sealed Air Corporation* 9,625
1,300 Solectron Corporation* 57,200
300 Textron, Inc. 15,131
300 Thermo Electron Corporation* 8,700
100 Thomas & Betts Corporation 1,512
100 Timken Company 1,406
3,893 Tyco International, Ltd. 220,684
1,100 United Technologies Corporation 76,794
1,300 Waste Management, Inc. 26,000
--------------------------------------------------------------------------------
Total Capital Goods 2,840,418
--------------------------------------------------------------------------------
Communication Services (6.4%)
700 ALLTEL Corporation 45,106
8,353 AT&T Corporation 193,685
616 Avaya, Inc.* 8,278
4,200 BellSouth Corporation 202,913
300 CenturyTel, Inc. 11,550
1,900 Global Crossing, Ltd.* 44,887
1,700 Nextel Communications, Inc.* 65,344
3,675 Qwest Communications International, Inc.* 178,697
7,500 SBC Communications, Inc. 432,656
1,900 Sprint Corporation 48,450
2,100 Sprint Corporation (PCS Group)* 80,063
6,084 Verizon Communications 351,731
6,400 WorldCom, Inc.* 152,000
--------------------------------------------------------------------------------
Total Communication Services 1,815,360
--------------------------------------------------------------------------------
Consumer Cyclicals (6.7%)
100 Adolph Coors Company 6,369
100 American Greetings Corporation 1,819
2,000 Anheuser-Busch Companies, Inc. 91,500
100 Armstrong Holdings, Inc. 287
200 AutoZone, Inc.* 5,362
600 Bed Bath & Beyond, Inc.* 15,488
500 Best Buy Company, Inc.* 25,094
200 Black & Decker Corporation 7,525
200 Brown-Forman Corporation, Class B 12,175
100 Brunswick Corporation 1,944
1,600 Cendant Corporation* 19,200
100 Centex Corporation $3,700
400 Circuit City Stores, Inc.-Circuit City Group 5,300
200 Consolidated Stores Corporation* 2,375
300 Convergys Corporation* 13,069
100 Cooper Tire & Rubber Company 1,094
1,000 Costco Wholesale Corporation* 36,625
100 Cummins Engine Company, Inc. 3,400
900 CVS Corporation 47,644
300 Dana Corporation 6,656
1,200 Delphi Automotive Systems Corporation 18,825
200 Dillard's, Inc. 2,100
725 Dollar General Corporation 11,238
200 Dow Jones & Company, Inc. 11,775
400 Federated Department Stores, Inc.* 13,025
300 Fortune Brands, Inc. 8,831
600 Gannett Company, Inc. 34,800
1,800 Gap, Inc. 46,462
300 Genuine Parts Company 6,394
300 Goodyear Tire & Rubber Company 5,550
200 H&R Block, Inc. 7,137
200 Harcourt General, Inc. 11,210
700 Harley-Davidson, Inc. 33,731
200 Harrah's Entertainment, Inc.* 5,725
300 Hasbro, Inc. 3,225
5,200 Home Depot, Inc. 223,600
600 IMS Health, Inc. 14,175
700 Interpublic Group of Companies, Inc. 30,056
500 J.C. Penney Company, Inc. 5,844
100 Kaufman and Broad Home Corporation 2,975
1,000 Kmart Corporation* 5,937
200 Knight Ridder 10,050
700 Kohl's Corporation* 37,931
400 Leggett & Platt, Inc. 6,550
900 Limited, Inc. 22,725
100 Liz Claiborne, Inc. 4,250
100 Longs Drug Stores Corporation 2,187
900 Lowe's Companies, Inc. 41,119
1,000 Masco Corporation 18,688
900 Mattel, Inc. 11,644
700 May Department Stores Company 18,375
100 Maytag Corporation 2,862
400 McGraw-Hill Companies, Inc. 25,675
100 Meredith Corporation 3,175
300 Moody's Corporation 7,894
100 Navistar International Corporation* 3,306
600 NIKE, Inc. 23,963
500 Newell Rubbermaid, Inc. 9,594
400 New York Times Company 14,700
200 Nordstrom, Inc. 3,287
600 Office Depot, Inc.* $4,988
400 Omnicom Group, Inc. 36,900
200 PACCAR, Inc. 8,413
100 Pulte Corporation 3,331
400 RadioShack Corporation 23,850
100 Reebok International, Ltd.* 2,156
100 Russell Corporation 1,600
700 Sears, Roebuck & Company 20,811
300 Sherwin-Williams Company 6,506
100 Snap-on, Inc. 2,556
100 Springs Industries, Inc. 2,356
100 Stanley Works 2,663
1,000 Staples, Inc.* 14,250
2,000 Target Corporation 55,250
300 Tiffany & Company 12,806
600 TJX Companies, Inc. 16,350
400 Toys "R" Us, Inc.* 6,875
700 Tribune Company 25,944
300 TRW, Inc. 12,600
100 Tupperware Corporation 1,713
200 VF Corporation 5,462
254 Visteon Corporation 4,484
2,200 Walgreen Company 100,375
9,900 Wal-Mart Stores, Inc. 449,213
100 Whirlpool Corporation 4,350
--------------------------------------------------------------------------------
Total Consumer Cyclicals 1,903,018
--------------------------------------------------------------------------------
Consumer Staples (9.8%)
100 Alberto-Culver Company 3,356
900 Albertson's, Inc. 21,319
500 Avon Products, Inc. 24,250
900 Campbell Soup Company 26,325
600 Cardinal Health, Inc. 56,850
1,300 Carnival Corporation 32,256
1,300 Clear Channel Communications, Inc.* 78,081
500 Clorox Company 22,312
5,500 Coca-Cola Company 332,062
900 Coca-Cola Enterprises, Inc. 16,538
1,300 Colgate-Palmolive Company 76,388
2,000 Comcast Corporation* 81,500
1,100 ConAgra Foods, Inc. 23,513
200 Darden Restaurants, Inc. 4,500
100 Deluxe Corporation 2,256
400 Fort James Corporation 13,175
600 General Mills, Inc. 25,050
2,300 Gillette Company 80,213
300 Hershey Foods Corporation 16,294
800 Hilton Hotels Corporation 7,600
800 H.J. Heinz Company 33,550
900 Kellogg Company $22,837
1,200 Kimberly-Clark Corporation 79,200
1,800 Kroger Company* 40,613
500 Marriott International, Inc. 20,250
2,900 McDonald's Corporation* 89,900
600 McKesson HBOC, Inc. 16,838
700 Nabisco Group Holdings Corporation 20,213
3,200 PepsiCo, Inc. 155,000
5,000 Phillip Morris Companies, Inc. 183,125
2,900 Procter & Gamble Company 207,169
300 Quaker Oats Company 24,469
600 Ralston Purina Company 14,550
200 R.R. Donnelley & Sons Company 4,300
1,100 Safeway, Inc.* 60,156
1,900 Sara Lee Corporation 40,969
1,000 Seagram Company, Ltd. 57,125
400 Starbucks Corporation* 17,875
200 SUPERVALU, Inc. 3,075
700 SYSCO Corporation 36,531
3,000 Time Warner, Inc. 227,730
300 TRICON Global Restaurants, Inc.* 9,000
1,300 Unilever 66,056
300 UST, Inc. 7,575
3,344 Viacom, Inc., Class B* 190,190
4,600 Walt Disney Company* 164,737
200 Wendy's International, Inc. 4,350
300 Winn-Dixie Stores, Inc. 5,775
300 Wm. Wrigley Jr. Company 23,756
--------------------------------------------------------------------------------
Total Consumer Staples 2,770,752
--------------------------------------------------------------------------------
Energy (5.8%)
200 Amerada Hess Corporation 12,400
527 Anadarko Petroleum Corporation 33,754
300 Apache Corporation* 16,594
100 Ashland, Inc. 3,275
700 Baker Hughes, Inc. 24,063
500 Burlington Resources, Inc. 18,000
1,500 Chevron Corporation 123,188
1,300 Conoco, Inc., Class B 35,344
300 Devon Energy Corporation 15,120
7,800 Exxon Mobil Corporation 695,662
1,000 Halliburton Company 37,062
200 Kerr-McGee Corporation 13,063
300 Nabors Industries, Inc.* 15,270
800 Occidental Petroleum Corporation 15,900
600 Phillips Petroleum Company 37,050
200 Rowan Companies, Inc.* 5,038
4,800 Royal Dutch Petroleum Company 285,000
1,300 Schlumberger, Ltd. 98,962
200 Sunoco, Inc. $5,988
1,200 Texaco, Inc. 70,875
300 Tosco Corporation 8,587
500 Transocean Sedco Forex, Inc. 26,500
500 Unocal Corporation 17,062
700 USX-Marathon Group 19,031
--------------------------------------------------------------------------------
Total Energy 1,632,788
--------------------------------------------------------------------------------
Financials (15.7%)
600 AFLAC, Inc. 43,838
1,600 Allstate Corporation 64,400
3,000 American Express Company 180,000
600 American General Corporation 48,300
5,200 American International Group, Inc. 509,600
800 AmSouth Bancorporation 11,150
600 Aon Corporation 24,862
1,600 Associates First Capital Corporation 59,400
3,700 Bank of America Corporation 177,831
1,600 Bank of New York Company, Inc. 92,100
2,600 BANK ONE Corporation 94,900
900 BB&T Corporation 28,687
300 Bear Stearns Companies, Inc. 18,187
400 Capital One Financial Corporation 25,250
3,100 Charles Schwab Corporation 108,888
420 Charter One Financial, Inc. 9,634
2,950 Chase Manhattan Corporation 134,225
400 Chubb Corporation 33,775
400 CIGNA Corporation 48,780
300 Cincinnati Financial Corporation 11,025
500 CIT Group, Inc. 8,719
10,033 Citigroup, Inc. 527,987
400 Comerica, Inc. 24,125
700 Conseco, Inc. 4,856
200 Countrywide Credit Industries, Inc. 7,488
2,300 Fannie Mae 177,100
1,050 Fifth Third Bancorp 53,944
2,200 First Union Corporation 66,687
2,100 Firstar Coporation 41,344
2,000 FleetBoston Financial Corporation 76,000
500 Franklin Resources, Inc. 21,420
1,500 Freddie Mac 90,000
400 Golden West Financial Corporation 22,425
500 Hartford Financial Services Group, Inc. 37,219
1,100 Household International, Inc. 55,344
540 Huntington Bancshares, Inc. 7,762
200 Jefferson-Pilot Corporation 13,750
400 J.P. Morgan & Company, Inc. 66,200
900 KeyCorp 22,219
600 Lehman Brothers Holdings, Inc. 38,700
400 Lincoln National Corporation $19,350
200 Loews Corporation 18,187
600 Marsh & McLennan Companies, Inc. 78,450
200 MBIA, Inc. 14,537
1,900 MBNA Corporation 71,369
1,100 Mellon Financial Corporation 53,075
1,800 Merrill Lynch & Company, Inc. 126,000
200 MGIC Investment Corporation 13,625
2,500 Morgan Stanley Dean Witter & Company 200,781
1,300 National City Corporation 27,787
500 Northern Trust Corporation 42,688
315 Old Kent Financial Corporation 8,722
300 Paine Webber Group, Inc. 21,375
700 PNC Financial Services Group, Inc. 46,812
200 Progressive Corporation 19,650
300 Providian Financial Corporation 31,200
400 Regions Financial Corporation 9,425
200 SAFECO Corporation 4,838
300 SouthTrust Corporation 9,713
400 State Street Corporation 49,896
500 Stilwell Financial, Inc. 22,406
500 St. Paul Companies, Inc. 25,625
400 Summit Bancorp 15,000
700 SunTrust Banks, Inc. 34,169
600 Synovus Financial Corporation 12,937
200 Torchmark Corporation 6,663
300 T. Rowe Price Associates, Inc. 14,044
300 Union Planters Corporation 10,144
500 UNUMProvident 14,125
300 USA Education, Inc. 16,762
1,600 U.S. Bancorp 38,700
500 Wachovia Corporation 27,000
1,200 Washington Mutual, Inc. 52,800
3,700 Wells Fargo & Company 171,356
--------------------------------------------------------------------------------
Total Financials 4,417,332
--------------------------------------------------------------------------------
Health Care (11.1%)
3,400 Abbott Laboratories 179,562
300 Aetna, Inc. 17,344
300 Allergan, Inc. 25,219
300 ALZA Corporation* 24,281
2,900 American Home Products Corporation 184,150
2,300 Amgen, Inc.* 133,256
100 Bausch & Lomb, Inc. 3,856
700 Baxter International, Inc.* 57,531
500 Becton, Dickinson and Company 16,750
300 Biogen, Inc.* 18,056
350 Biomet, Inc. 12,666
900 Boston Scientific Corporation* 14,344
4,400 Bristol-Myers Squibb Company $268,125
100 C.R. Bard, Inc. 4,188
2,500 Eli Lilly and Company 223,437
700 Guidant Corporation* 37,056
1,200 HCA - The Healthcare Company 47,925
800 HEALTHSOUTH Corporation* 9,600
300 Humana, Inc.* 3,638
3,100 Johnson & Johnson 285,588
400 King Pharmaceuticals, Inc.* 17,925
200 Manor Care, Inc.* 3,337
500 MedImmune, Inc.* 32,688
2,700 Medtronic, Inc. 146,644
5,100 Merck & Company, Inc. 458,681
14,000 Pfizer, Inc. 604,625
200 Quintiles Transnational Corporation* 2,787
3,300 Schering-Plough Corporation 170,569
200 St. Jude Medical, Inc.* 11,000
700 Tenet Healthcare Corporation* 27,519
400 UnitedHealth Group, Inc.* 43,750
200 Watson Pharmaceuticals, Inc.* 12,513
200 WellPoint Health Networks, Inc.* 23,387
--------------------------------------------------------------------------------
Total Health Care 3,121,997
--------------------------------------------------------------------------------
Technology (27.6%)
200 Adaptec, Inc.* 3,162
1,700 ADC Telecommunications, Inc.* 36,338
600 Adobe Systems, Inc. 45,637
700 Advanced Micro Devices, Inc.* 15,838
977 Agilent Technologies, Inc.* 45,247
900 Altera Corporation* 36,844
5,100 America Online, Inc.* 257,193
800 Analog Devices, Inc.* 52,000
100 Andrew Corporation* 2,631
700 Apple Computer, Inc.* 13,694
1,800 Applied Materials, Inc.* 95,625
100 Autodesk, Inc. 2,206
1,400 Automatic Data Processing, Inc. 91,438
500 BMC Software, Inc.* 10,156
500 Broadcom Corporation* 111,187
400 Cabletron Systems, Inc.* 10,850
300 Ceridian Corporation* 7,500
15,800 Cisco Systems, Inc.* 851,225
400 Citrix Systems, Inc.* 8,850
3,800 Compaq Computer Corporation 115,558
1,300 Computer Associates International, Inc. 41,438
400 Computer Sciences Corporation* 25,200
800 Compuware Corporation* 6,300
400 Comverse Technology, Inc.* 44,700
500 Conexant Systems, Inc.* 13,156
5,700 Dell Computer Corporation* $168,150
700 Eastman Kodak Company 31,413
1,000 Electronic Data Systems Corporation 46,938
4,900 EMC Corporation* 436,406
300 Equifax, Inc. 10,350
900 First Data Corporation 45,112
700 Gateway, Inc.* 36,127
4,400 Hewlett-Packard Company 204,325
14,900 Intel Corporation 670,500
3,900 International Business Machines
Corporation 384,150
2,100 JDS Uniphase Corporation* 171,019
400 KLA-Tencor Corporation* 13,525
300 Lexmark International, Inc.* 12,300
700 Linear Technology Corporation 45,194
700 LSI Logic Corporation* 23,013
7,400 Lucent Technologies, Inc. 172,512
600 Maxim Integrated Products, Inc.* 39,787
200 Mercury Interactive Corporation* 22,200
1,300 Micron Technology, Inc.* 45,175
11,700 Microsoft Corporation* 805,837
4,871 Motorola, Inc. 121,471
400 National Semiconductor Corporation* 10,400
200 NCR Corporation* 8,625
700 Network Appliance, Inc.* 83,300
6,700 Nortel Networks Corporation 304,850
700 Novell, Inc.* 6,300
300 Novellus Systems, Inc.* 12,281
12,600 Oracle Corporation* 415,800
1,300 Palm, Inc.* 69,631
600 Parametric Technology Corporation* 7,388
850 Paychex, Inc. 48,184
500 PE Corporation 58,500
600 PeopleSoft, Inc.* 26,184
100 PerkinElmer, Inc. 11,950
100 Polaroid Corporation 1,006
1,700 QUALCOMM, Inc.* 110,686
700 Raytheon Company 23,931
272 Sabre Holdings Corporation 9,095
300 Sapient Corporation* 10,669
400 Scientific-Atlanta, Inc. 27,375
500 Seagate Technology, Inc.* 34,938
1,000 Siebel Systems, Inc.* 104,937
3,600 Sun Microsystems, Inc.* 399,150
100 Tektronix, Inc.* 7,125
900 Tellabs, Inc.* 44,944
400 Teradyne, Inc.* 12,500
3,900 Texas Instruments, Inc. 191,344
600 Unisys Corporation* 7,650
900 VERITAS Software Corporation* $126,914
200 W.W. Grainger, Inc. 6,388
1,400 Xerox Corporation 11,812
800 Xilinx, Inc.* 57,950
1,200 Yahoo!, Inc.* 70,350
--------------------------------------------------------------------------------
Total Technology 7,771,634
--------------------------------------------------------------------------------
Transportation (0.5%)
300 AMR Corporation* 9,825
800 Burlington Northern Santa Fe Corporation 21,250
400 CSX Corporation 10,125
300 Delta Air Lines, Inc. 14,175
600 FedEx Corporation* 28,116
800 Norfolk Southern Corporation 11,300
100 Ryder System, Inc. 1,975
1,100 Southwest Airlines Company 31,350
500 Union Pacific Corporation 23,437
100 US Airways Group, Inc.* 3,775
--------------------------------------------------------------------------------
Total Transportation 155,328
--------------------------------------------------------------------------------
Utilities (3.2%)
1,000 AES Corporation* 56,500
300 Ameren Corporation 11,925
740 American Electric Power Company, Inc. 30,710
300 Cinergy Corporation 9,188
200 CMS Energy Corporation 5,400
500 Coastal Corporation 37,719
200 Columbia Energy Group 14,387
400 Consolidated Edison, Inc. 14,075
300 Constellation Energy Group, Inc. 12,506
300 CP&L Energy, Inc. 12,094
546 Donimion Resources, Inc. 32,521
300 DTE Energy Company $10,837
800 Duke Energy Corporation 69,150
700 Dynegy, Inc. 32,419
100 Eastern Enterprises 6,438
700 Edison International 16,713
500 El Paso Energy Corporation 31,344
1,700 Enron Corporation 139,506
500 Entergy Corporation 19,156
750 Exelon Corporation 45,094
500 FirstEnergy Corporation 12,937
200 Florida Progress Corporation 10,638
400 FPL Group, Inc. 26,400
200 GPU, Inc. 6,612
300 KeySpan Corporation 10,556
300 Niagara Mohawk Holdings, Inc.* 4,800
100 Nicor, Inc. 3,531
100 ONEOK, Inc. 3,962
100 Peoples Energy Corporation 3,438
800 PG&E Corporation 21,550
200 Pinnacle West Capital Corporation 8,688
300 PPL Corporation 12,356
500 Public Service Enterprise Group, Inc. 20,750
600 Reliant Energy, Inc. 24,787
411 Sempra Energy 8,503
1,400 Southern Company 41,125
600 TXU Corporation 22,238
1,000 Williams Companies, Inc. 41,812
710 Xcel Energy, Inc. 18,149
--------------------------------------------------------------------------------
Total Utilities 910,514
--------------------------------------------------------------------------------
Total Common Stocks
(cost basis $29,078,363) 27,994,138
--------------------------------------------------------------------------------
Principal
Amount Short-Term Investments (0.7%) Interest Rate/1/ Maturity Date Market Value
---------------------------------------------------------------------------------------------------------------------------------------
$196,000 BellSouth Telecommunications, Inc. 6.500% 11/1/2000 $196,000
---------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $196,000) 196,000
---------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.9%)
(amortized cost basis $29,274,363) 28,190,138
---------------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities (0.1%) 14,409
Net Assets (100.0%) $28,204,547
*Non-income producing security
/1/ The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this schedule.
THE AAL BOND INDEX FUND
SCHEDULE OF INVESTMENTS AS OF OCTOBER 31, 2000
The Fund seeks total returns approximating the total return of the Lehman Brothers Aggregate Bond Index by investing primarily in bonds and other debt securities that comprise the Index.
Principal Interest Maturity Market
Amount Long-Term Fixed-Income Investments (98.2%) Rate Date Value
---------------------------------------------------------------------------------------------------------------------------------------
Asset Backed Securities (1.6%)
$100,000 Citibank Credit Card Master Trust Series I 1999-7 Class A 6.650% 11/15/2006 $99,383
125,000 EQCC Home Equity Loan Trust Series 1997-3 Class A7 6.930 2/15/2029 119,905
---------------------------------------------------------------------------------------------------------------------------------------
Total Asset Backed Securities 219,288
---------------------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage-Backed Securities (2.2%)
$100,000 Bear Stearns Commercial Mortgage Securities Series 2000-WF2
Class A1 7.110 9/15/2009 100,463
100,000 First Union National Bank Commercial Mortgage Trust Series
1999-C4 Class A2 7.390 11/15/2009 101,678
100,000 Nationslink Funding Corporation Series 1999-2 Class A3 7.181 12/20/2006 100,771
---------------------------------------------------------------------------------------------------------------------------------------
Total Commercial Mortgage-Backed Securities 302,912
---------------------------------------------------------------------------------------------------------------------------------------
Finance (8.3%)
150,000 ABN Amro Bank Chicago 7.250 5/31/2005 150,337
100,000 Allstate Corporation 7.200 12/1/2009 97,857
100,000 Bank of America Corporation 6.625 6/15/2004 98,459
100,000 Camden Property Trust 7.000 11/15/2006 96,934
100,000 Chase Manhattan Corporation 7.000 11/15/2009 96,127
100,000 FleetBoston Financial Corporation 7.250 9/15/2005 100,403
100,000 Household Finance Corporation 7.250 5/15/2006 99,115
100,000 Merrill Lynch & Company, Inc. 6.000 2/12/2003 98,033
100,000 Morgan Stanley Dean Witter & Company 7.750 6/15/2005 102,073
100,000 Norwest Financial, Inc. 7.200 5/1/2007 99,364
100,000 Wellsford Residential Property Trust 9.375 2/1/2002 102,082
---------------------------------------------------------------------------------------------------------------------------------------
Total Finance 1,140,784
---------------------------------------------------------------------------------------------------------------------------------------
Industrial-Consumer Goods (1.4%)
100,000 Procter & Gamble Company 6.600 12/15/2004 99,596
100,000 Tyson Foods, Inc. 6.750 6/1/2005 96,953
---------------------------------------------------------------------------------------------------------------------------------------
Total Industrial-Consumer Goods 196,549
---------------------------------------------------------------------------------------------------------------------------------------
Industrial-Energy (2.1%)
100,000 Coastal Corporation 6.500 5/15/2006 96,206
100,000 TransCanada PipeLines, Ltd. 7.150 6/15/2006 98,582
100,000 Union Oil Company of California 6.700 10/15/2007 94,737
---------------------------------------------------------------------------------------------------------------------------------------
Total Industrial-Energy 289,525
---------------------------------------------------------------------------------------------------------------------------------------
Industrial-Manufacturing (3.8%)
$100,000 Aluminum Company of America 6.500% 6/15/2018 $89,701
100,000 Ford Motor Company 7.500 8/1/2026 92,658
150,000 General Motors Acceptance Corporation 6.850 6/17/2004 148,135
100,000 International Business Machines Corporation 5.370 9/22/2003 96,197
100,000 Raytheon Company 6.750 8/15/2007 95,988
---------------------------------------------------------------------------------------------------------------------------------------
Total Industrial-Manufacturing 522,679
---------------------------------------------------------------------------------------------------------------------------------------
Industrial-Services (2.9%)
100,000 Comcast Cable Communications, Inc. 8.375 5/1/2007 103,967
100,000 Safeway, Inc. 7.250 9/15/2004 99,530
100,000 Sears, Roebuck & Company 6.250 1/15/2004 97,105
100,000 Viacom, Inc. 7.700 7/30/2010 101,873
---------------------------------------------------------------------------------------------------------------------------------------
Total Industrial-Services 402,475
---------------------------------------------------------------------------------------------------------------------------------------
Industrial-Transportation (0.6%)
100,000 Burlington Northern Santa Fe Corporation 6.125 3/15/2009 90,973
---------------------------------------------------------------------------------------------------------------------------------------
Total Industrial-Transportation 90,973
---------------------------------------------------------------------------------------------------------------------------------------
U.S. Government Agencies (43.7%)
100,000 Federal Home Loan Bank 6.640 12/13/2016 96,915
150,000 Federal Home Loan Bank 6.125 8/15/2003 148,770
100,000 Federal Home Loan Mortgage Corporation 6.800 3/19/2007 101,156
150,000 Federal Home Loan Mortgage Corporation 5.750 7/15/2003 147,439
100,000 Federal Home Loan Mortgage Corporation 5.125 10/15/2008 90,393
88,997 Federal Home Loan Mortgage Corporation Gold 30 Yr. Pass Through 8.000 10/1/2029 90,232
145,701 Federal Home Loan Mortgage Corporation Gold 30 Yr. Pass Through 7.500 4/1/2030 145,635
146,214 Federal Home Loan Mortgage Corporation Gold 30 Yr. Pass Through 7.500 2/1/2030 146,148
204,915 Federal Home Loan Mortgage Corporation Gold 30 Yr. Pass Through 6.500 6/1/2029 197,177
237,373 Federal Home Loan Mortgage Corporation Gold 30 Yr. Pass Through 6.500 11/1/2025 229,460
150,000 Federal National Mortgage Association 6.660 3/5/2007 150,132
200,000 Federal National Mortgage Association 6.500 8/15/2004 199,781
100,000 Federal National Mortgage Association 6.375 6/15/2009 97,826
200,000 Federal National Mortgage Association 6.375 1/16/2002 199,649
100,000 Federal National Mortgage Association 6.210 8/6/2038 92,563
92,537 Federal National Mortgage Association 15 Yr. Pass Through 7.000 3/1/2015 92,155
163,428 Federal National Mortgage Association 15 Yr. Pass Through 7.000 3/1/2009 163,840
113,863 Federal National Mortgage Association 15 Yr. Pass Through 6.500 11/1/2014 111,650
91,275 Federal National Mortgage Association 15 Yr. Pass Through 6.500 10/1/2013 89,724
147,381 Federal National Mortgage Association 15 Yr. Pass Through 6.500 7/1/2013 145,140
183,161 Federal National Mortgage Association 15 Yr. Pass Through 6.000 1/1/2014 176,525
89,747 Federal National Mortgage Association 15 Yr. Pass Through 5.500 4/1/2014 84,783
95,084 Federal National Mortgage Association 30 Yr. Pass Through 7.500 1/1/2030 95,001
228,704 Federal National Mortgage Association 30 Yr. Pass Through 7.500 8/1/2023 229,826
240,056 Federal National Mortgage Association 30 Yr. Pass Through 7.000 11/1/2029 235,502
$175,770 Federal National Mortgage Association 30 Yr. Pass Through 7.000% 12/1/2025 $172,853
111,798 Federal National Mortgage Association 30 Yr. Pass Through 6.500 8/1/2029 107,517
565,777 Federal National Mortgage Association 30 Yr. Pass Through 6.500 3/1/2029 544,480
325,117 Federal National Mortgage Association 30 Yr. Pass Through 6.000 7/1/2029 305,533
83,803 Federal National Mortgage Association 30 Yr. Pass Through 6.000 3/1/2028 78,755
146,081 Government National Mortgage Association 30 Yr. Pass Through 8.500 12/15/2029 149,952
149,653 Government National Mortgage Association 30 Yr. Pass Through 8.000 7/15/2030 152,140
99,106 Government National Mortgage Association 30 Yr. Pass Through 8.000 5/15/2030 100,752
95,358 Government National Mortgage Association 30 Yr. Pass Through 8.000 12/15/2029 96,972
192,685 Government National Mortgage Association 30 Yr. Pass Through 7.500 12/15/2029 193,494
95,253 Government National Mortgage Association 30 Yr. Pass Through 7.500 10/15/2029 95,653
95,618 Government National Mortgage Association 30 Yr. Pass Through 7.500 9/15/2029 96,019
193,038 Government National Mortgage Association 30 Yr. Pass Through 7.000 7/15/2029 190,443
191,138 Government National Mortgage Association 30 Yr. Pass Through 6.500 6/15/2029 184,590
---------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agencies 6,026,575
---------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities (23.8%)
150,000 U.S. Treasury Bonds 11.750 11/15/2014 209,391
250,000 U.S. Treasury Bonds 8.750 5/15/2017 321,200
100,000 U.S. Treasury Bonds 8.125 8/15/2021 124,924
150,000 U.S. Treasury Bonds 8.125 5/15/2021 187,145
200,000 U.S. Treasury Bonds 8.125 8/15/2019 247,063
300,000 U.S. Treasury Bonds 6.750 8/15/2026 330,188
250,000 U.S. Treasury Bonds 6.250 8/15/2023 257,885
250,000 U.S. Treasury Notes 7.500 5/15/2002 255,143
250,000 U.S. Treasury Notes 7.250 5/15/2004 260,656
350,000 U.S. Treasury Notes 6.250 8/31/2002 351,547
200,000 U.S. Treasury Notes 6.125 12/31/2001 199,710
150,000 U.S. Treasury Notes 5.625 12/31/2002 149,000
150,000 U.S. Treasury Notes 5.500 5/15/2009 146,636
250,000 U.S. Treasury Notes 5.500 5/31/2003 247,417
---------------------------------------------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 3,287,905
---------------------------------------------------------------------------------------------------------------------------------------
Sovereign/Provincial (4.3%)
150,000 Canadian Government 6.375 11/30/2004 148,975
100,000 Inter-American Development Bank 5.750 2/26/2008 95,093
100,000 Korea Development Bank 7.250 5/15/2006 95,624
50,000 Mexico Government International Bond 9.875 1/15/2007 51,825
100,000 Quebec Province 6.500 1/17/2006 98,189
100,000 Tyco International Group SA 6.875 9/5/2002 99,712
---------------------------------------------------------------------------------------------------------------------------------------
Total Sovereign/Provincial 589,418
---------------------------------------------------------------------------------------------------------------------------------------
Utilities (3.5%)
100,000 Arizona Public Service Company 7.625 8/1/2005 101,022
100,000 AT&T Corporation 6.000 3/15/2009 87,764
100,000 MCI Communications Corporation 6.500 4/15/2010 92,448
$100,000 Niagara Mohawk Power Corporation 7.750% 5/15/2006 $101,253
100,000 Vodafone Group plc/2/ 7.625 2/15/2005 101,697
---------------------------------------------------------------------------------------------------------------------------------------
Total Utilities 484,184
---------------------------------------------------------------------------------------------------------------------------------------
Total Long-Term Fixed-Income Investments
(amortized cost basis $13,307,094) 13,553,267
---------------------------------------------------------------------------------------------------------------------------------------
Principal Interest Maturity Market
Amount Short-Term Investments (1.1%) Rate/1/ Date Value
---------------------------------------------------------------------------------------------------------------------------------------
$146,000 Countrywide Home Loans, Inc. 6.600 11/2/2000 $145,973
---------------------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $145,973) 145,973
---------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (99.3%)
(amortized cost basis $13,453,067) 13,699,240
---------------------------------------------------------------------------------------------------------------------------------------
Other Assets, Less Liabilities (0.7%) 103,445
Net Assets (100.0%) $13,802,685
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A security
The accompanying notes to the financial statements are an integral part of this schedule.
STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000
The AAL The AAL The AAL
Mid Cap Large Company Bond
Index Fund Index Fund Index Fund
---------------------------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $11,497,425 $29,274,363 $13,453,067
Investments at value 12,386,465 28,190,138 13,699,240
Cash 682 2,042 479
Dividends and interest receivable. 6,618 19,106 210,068
Prepaid expenses 36,878 42,354 37,653
Receivable for investments sold 8,614 - 50,952
Receivable fund shares sold 45,093 - -
Receivable from Investment Advisor 27,312 19,923 21,692
---------------------------------------------------------------------------------------------------------------------------------------
Total Assets $12,511,662 $28,273,563 $14,020,084
=======================================================================================================================================
Liabilities:
Payable for investments purchased $155,550 - $152,329
Income distributions payable - - 1,724
Payable for fund shares redeemed - - -
Payable to affiliate - - -
Accrued expenses 65,514 69,016 63,346
---------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities $221,064 $69,016 $217,399
=======================================================================================================================================
Net Assets:
Trust Capital (beneficial interest) $10,774,307 $29,241,287 $13,551,662
Accumulated undistributed net investment income (loss) 81,197 183,788 5,092
Accumulated undistributed net realized gain (loss) on
investments 546,054 (136,303) (242)
Net unrealized appreciation/(depreciation) on investments 889,040 (1,084,225) 246,173
---------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $12,290,598 $28,204,547 $13,802,685
=======================================================================================================================================
Total Liabilities & Capital $12,511,662 $28,273,563 $14,020,084
=======================================================================================================================================
Class I share capital $12,290,598 $28,204,547 $13,802,685
Shares of beneficial interest outstanding (Class I) 1,043,678 2,863,037 1,354,989
Net asset value per share $11.78 $9.85 $10.19
The accompanying notes to the financial statements are an integral part of this schedule.
STATEMENT OF OPERATIONS
AS OF OCTOBER 31, 2000
The AAL The AAL The AAL
Mid Cap Large Company Bond
Index Fund Index Fund Index Fund
---------------------------------------------------------------------------------------------------------------------------------------
Investment Income
Dividends $55,835 $155,897 $-
Taxable interest 4,016 3,724 450,403
---------------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 59,851 159,621 450,403
=======================================================================================================================================
Expenses
Adviser fees $13,233 $35,742 $16,123
Administrative service and pricing fees 19,268 19,769 19,462
Amortization of organizational costs 13,811 13,881 13,811
Audit and legal fees 12,557 12,557 12,557
Custody fees 10,184 10,402 1,635
Printing and postage expense 408 402 398
SEC and state registration expense 3,046 3,036 3,045
Shareholder maintenance fees 14 19 21
Transfer Agent fees 34 66 49
Trustees fees and expenses 1,750 1,750 1,750
Other expenses 116 207 47
---------------------------------------------------------------------------------------------------------------------------------------
Total Expenses Before Reimbursement $74,421 $97,831 $68,898
=======================================================================================================================================
Less Reimbursement from Advisor (63,821) (69,448) (55,459)
---------------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses $10,600 $28,383 $13,439
=======================================================================================================================================
Net Investment Income $49,251 $131,238 $436,964
=======================================================================================================================================
Realized and Unrealized Gains (Losses) on Investments
Net realized gains (losses) on investments $303,984 $(137,148) $12,370
Change in net unrealized appreciation/(depreciation) on investments 452,997 (283,709) 290,483
---------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (losses) on Investments $756,981 $(420,857) $302,853
=======================================================================================================================================
Net Increase (Decrease) in Net Assets From Operations $806,232 $(289,619) $739,817
=======================================================================================================================================
The accompanying notes to the financial statements are an integral part of this schedule.
STATEMENT OF CHANGES IN NET ASSETS
AS OF OCTOBER 31, 2000
The AAL Mid The AAL Large The AAL Bond
Cap Index Fund Company Index Fund Index Fund
Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
4/30/2000 10/31/2000 4/30/2000 10/31/2000 4/30/2000 10/31/2000
---------------------------------------------------------------------------------------------------------------------------------------
Operations
Net investment income (loss) $26,868 $49,251 $47,460 $131,238 $229,679 $436,964
Net realized gains (losses) on investments 242,070 303,984 845 (137,148) (12,612) 12,370
Change in net unrealized appreciation/
(depreciation) on investments 436,043 452,997 (800,516) (283,709) (44,310) 290,483
---------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $704,981 $806,232 $(752,211) $(289,619) $172,757 $739,817
=======================================================================================================================================
Distributions to Shareholders
From net investment income $ - $ - $ - $ - $(229,679) $(436,964)
From net realized gains - - - - - -
---------------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders $ - $ - $ - $ - $(229,679) $(436,964)
=======================================================================================================================================
Fund Share Transactions
Purchases of fund shares $8,174,365 $2,694,862 $28,377,341 $890,975 $10,886,334 $2,036,955
Income dividends reinvested - - - - 225,252 432,280
Capital gains distributions reinvested - - - - - -
Redemption of trust shares - (89,842) (675) (21,264) (684) (23,383)
---------------------------------------------------------------------------------------------------------------------------------------
Net increase (Decrease) in Trust
Capital $8,174,365 $2,605,020 $28,376,666 $869,711 $11,110,902 $2,445,852
=======================================================================================================================================
Net Increase (Decrease) in Net Assets $8,879,346 $3,411,252 $27,624,455 $580,092 $11,053,980 $2,748,705
=======================================================================================================================================
Net Assets Beginning of Period $ - $8,879,346$ - $27,624,455$ - $11,053,980
=======================================================================================================================================
Net Assets End of Period $8,879,346 $12,290,598 $27,624,455 $28,204,547 $11,053,980 $13,802,685
=======================================================================================================================================
Accumulated Undistributed Net
Investment Income $31,946 $81,197 $52,550 $183,788 $5,092 $5,092
=======================================================================================================================================
The accompanying notes to the financial statements are an integral part of this schedule.
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 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 Technology Stock Fund, The AAL Aggressive Growth Fund, 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 Small Cap Index Fund II, The AAL Mid Cap Index Fund, The AAL Mid Cap Index Fund II, The AAL Large Company Index, The AAL Large Company Index Fund II, The AAL High Yield Bond Fund, The AAL Municipal Bond Fund, The AAL Bond Fund, The AAL Bond Index Fund, The AAL Money Market Fund and U.S. Government Zero Coupon Target Funds 2001 and 2006. The 20 AAL Mutual Funds are collectively referred to as the “Funds”. The AAL Small Cap Stock, Mid Cap Stock, International, Capital Growth, Equity Income, Balanced, High Yield Bond, Municipal Bond, Bond, Money Market, Technology Stock, Aggressive Growth, Small Cap Index II, Mid Cap Index II, and Large Company Index II Funds are printed under a separate Semi-Annual Report. The AAL U.S. Government Zero Coupon Target Funds 2001 and 2006 are also printed under a separate Semi-Annual Report.
On December 31, 1999, The AAL Large Company Index, Mid Cap Index, and Bond Index Funds commenced operations. These funds are offered to institutional organizations only.
(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. Money market investments with a remaining maturity of 60 days are valued on an amortized cost basis. 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 or under supervision of the direction of Board of Trustees.
Federal Income Taxes -Each Fund intends to comply with the requirements of the Internal Revenue Code which are applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. The Funds accordingly anticipate paying no Federal income taxes and no Federal income tax provision was required. Certain funds also utilized earnings and profits distributed to shareholders on redemption of shares as part of the dividend paid deduction.
Income and Expenses- The Funds are charged for those expenses that are directly attributed to each portfolio, such as transfer agent, printing, postage, and shareholder service fees. Expenses that are not directly attributable to a portfolio are typically allocated among the Fund portfolios in proportion to their respective net assets, number of shareholder accounts or other reasonable basis.
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 Large Company Index Fund and The AAL Mid Cap Index Fund are declared and paid annually. Dividends from The AAL Bond Index Fund are accrued daily and distributed monthly. Dividends from net realized gains from securities transactions, if any, are distributed at least annually in the calendar year.
Credit Risk -The Funds may be susceptible to credit risk with respect to the extent the issuer defaults on its payment obligation. The Funds’ policy is to monitor the creditworthiness of the issuer and does not anticipate nonperformance on the instruments.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Other -For financial statement purposes, investment security transactions are accounted for on the trade date. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. Discounts on bonds purchased are amortized over the life of the respective bonds in The AAL Bond Index Fund. 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. 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 Funds pay a fee for investment advisory services. Effective September 10, 2000, the annual rates of fees as a percent of average daily net assets under the investment advisory agreement were as follows:
$0 to Over
(M - Millions) $50M $50M
--------------------------------------------------------------------------------
The AAL Large Company Index Fund 0.25% 0.175%
The AAL Mid Cap Index Fund 0.25% 0.200%
The AAL Bond Index Fund 0.25% 0.175%
The Adviser voluntarily has reimbursed The AAL Large Company Index, Mid Cap Index, and Bond Index Funds for all expenses in excess of 0.20% of 1% of average daily net assets since inception, December 31, 1999. Voluntary reimbursement of expenses to the Funds may be modified or discounted at any time by 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. AAL earned the following fees from the respective Funds for the period ended October 31, 2000: $17,500 for The AAL Large Company Index, Mid Cap Index, and the Bond Index Funds.
The Trust has also contracted with AAL Capital Management Corporation for certain shareholder maintenance services. These shareholder services include: pre-processing and quality control of new accounts, shareholder correspondence, account response and answering customer inquires regarding account status, option and facilitating shareholder telephone transactions. Fees and cost reimbursements charged to the Funds under terms of the contract approximated $3.75 per year per shareholder account.
There are no 12b-1 Distribution Fees on Class I shares.
Each Trustee of AAL who is not affiliated with the AAL or the Adviser receives an annual fee from AAL 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 $18,750 in fees for the period ended October 31, 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.
AAL is the ultimate parent company for AAL Capital Management Corporation.
(D) SECURITY TRANSACTIONS
During the period ended October 31, 2000 purchases and sales of securities other than short-term obligations were as follows:
Purchases Sales
Period Ended Period Ended Period Ended Period Ended
4/30/2000 10/31/2000 4/30/2000 10/31/2000
---------------------------------------------------------------------------------------------------------------------------------
The AAL Large Company Index Fund $28,543,434 $2,439,097 $158,010 $1,604,874
The AAL Mid Cap Index Fund 9,615,072 5,205,076 1,622,386 2,519,342
The AAL Bond Index Fund 15,260,426 4,707,773 4,322,056 2,359,990
For the period ended October 31, 2000, The AAL Bond Index Fund purchased $2,012,938 and sold $2,157,367 in U.S. Government Obligations.
The gross unrealized appreciation and depreciation on investments at period ended April 30, 2000 and the period ended October 31, 2000 were as follows:
April 30, 2000 October 31, 2000
Net Unrealized Net Unrealized
Appreciation Appreciation
Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
---------------------------------------------------------------------------------------------------------------------------------------
The AAL Large Company Index Fund $1,130,337 $(1,930,853) $(800,516) $3,092,204 $(4,176,429) $(1,084,225)
The AAL Mid Cap Index Fund 1,154,978 (718,935) 436,043 2,033,336 (1,144,296) 889,040
The AAL Bond Index Fund 50,463 (94,773) (44,310) 258,444 (12,271) 246,173
(E) TRUST TRANSACTIONS
The AAL Mid Cap Index Fund
Year Ended Period Ended
4/30/2000 10/31/2000
Shares Shares
---------------------------------------------------------------------------------------------------------------------------------------
Shares purchased 814,985 236,706
Income dividends reinvested - -
Capital gains reinvested - -
Shares redeemed - (8,013)
---------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in trust shares 814,985 228,693
The AAL Large Company Index Fund
Year Ended Period Ended
4/30/2000 10/31/2000
Shares Shares
---------------------------------------------------------------------------------------------------------------------------------------
Shares purchased 2,775,378 89,789
Income dividends reinvested - -
Capital gains reinvested - -
Shares redeemed (67) (2,063)
---------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in trust shares 2,775,311 87,726
The AAL Bond Index Fund
Year Ended Period Ended
4/30/2000 10/31/2000
Shares Shares
---------------------------------------------------------------------------------------------------------------------------------------
Shares purchased 1,088,560 203,342
Income dividends reinvested 22,623 42,838
Capital gains reinvested - -
Shares redeemed (68) (2,306)
---------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in trust shares 1,111,115 243,874
A NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained in the foregoing reports on each of the Funds, the matters discussed in those reports may constitute forward-looking statements that are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These include discussion about each portfolio manager’s predictions, assessments, analyses and outlooks for relevant securities and investment markets, market sectors, industries and individual stocks or other investment securities. These statements involve risks and uncertainties. In addition to the general risks described for each Fund in its current prospectus, other factors bearing on these reports include the accuracy of each portfolio manager’s forecasts and predictions, the appropriateness of the investment strategies designed by the portfolio managers to capitalize on their forecasts and predictions should they prove true, and the ability of the portfolio managers to implement their strategies efficiently and effectively. Any one or more of these factors, as well as other risks affecting the securities markets and investment instruments generally, could cause the actual results of any Fund to differ materially from the projected results for the Fund, either on an overall basis or on a relative basis as compared to the benchmark index selected for the particular Fund.
FINANCIAL HIGHLIGHTS
PER SHARE INFORMATION
The AAL Mid Cap Index Fund
Period Ended Year Ended
CLASS I SHARES 10/31/2000 4/30/2000(c)
---------------------------------------------------------------------------------------------------------------------------------------
Net asset value: Beginning of Period $10.90 $10.00
Income from Investment Operations
Net investment income 0.04 0.03
Net realized and unrealized gain on investments 0.84 0.87
---------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.88 0.90
=======================================================================================================================================
Less Distributions from:
Net investment income - -
Net realized capital gains - -
---------------------------------------------------------------------------------------------------------------------------------------
Total Distributions - -
=======================================================================================================================================
Net increase (decrease) in net asset value 0.88 0.90
---------------------------------------------------------------------------------------------------------------------------------------
Net asset value: End of period $11.78 $10.90
=======================================================================================================================================
Total return (b) 8.07% 9.00%
Net assets, end of period (in millions) $12.3 $8.9
Ratio of expenses to average net assets (a) 0.20% 0.20%
Ratio of net investment income to average net assets (a) 0.93% 1.02%
Portfolio turnover rate 24.33% 24.59%
=======================================================================================================================================
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% 1.27%
Ratio of net investment income (loss) to average net assets (a) (0.28)% (0.05)%
(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.
(c) Since December 31, 1999.
The AAL Large Company Index Fund
Period Ended Year Ended
CLASS I SHARES 10/31/2000 4/30/2000(c)
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Net asset value: Beginning of Period $9.95 $10.00
Income from Investment Operations
Net investment income 0.05 0.02
Net realized and unrealized gain (loss) on investments (0.15) (0.07)
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Total from Investment Operations (0.10) (0.05)
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Less Distributions from:
Net investment income - -
Net realized capital gains - -
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Total Distributions - -
=======================================================================================================================================
Net increase (decrease) in net asset value (0.10) (0.05)
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Net asset value: End of period $9.85 $9.95
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Total return (b) (1.01)% (0.50)%
Net assets, end of period (in millions) $28.2 $27.6
Ratio of expenses to average net assets (a) 0.20% 0.20%
Ratio of net investment income (loss) to average net assets (a) 0.92% 1.21%
Portfolio turnover rate 5.30% 1.57%
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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) 0.69% 0.93%
Ratio of net investment income (loss) to average net assets (a) 0.43% 0.49%
(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.
(c) Since December 31, 1999.
The AAL Bond Index Fund
Period Ended Year Ended
CLASS I SHARES 10/31/2000 4/30/2000(c)
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Net asset value: Beginning of Period $9.95 $10.00
Income from Investment Operations
Net investment income 0.35 0.22
Net realized and unrealized gain (loss) on investments 0.24 (0.05)
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Total from Investment Operations 0.59 0.17
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Less Distributions from:
Net investment income (0.35) (0.22)
Net realized capital gains - -
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Total Distributions (0.35) (0.22)
=======================================================================================================================================
Net increase (decrease) in net asset value 0.24 (0.05)
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Net asset value: End of period $10.19 $9.95
=======================================================================================================================================
Total return (b) 5.99% 1.72%
Net assets, end of period (in millions) $13.8 $11.1
Ratio of expenses to average net assets (a) 0.20% 0.20%
Ratio of net investment income to average net assets (a) 6.77% 6.85%
Portfolio turnover rate 18.87% 52.37%
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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) 1.06% 1.04%
Ratio of net investment income (loss) to average net assets (a) 5.92% 6.02%
(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.
(c) Since December 31, 1999.
Board John O. Gilbert-Chairman of the Board
Of F. Gregory Campbell
Trustees 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 AAL Capital Management Corporation
Adviser & 222 West College Avenue
Distributor Appleton, WI 54919-0007
Custodian Citibank, N.A.
111 Wall Street
New York, NY 10043
Transfer Agent & Firstar Mutual Fund Services, LLC
Disbursing Agent 615 East Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
Legal Quarles & Brady LLP
Counsel 411 East Wisconsin Avenue
Milwaukee, WI 53202
Independent PricewaterhouseCoopers LLP
Accountant 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.
[CMC LOGO]
222 W. College Ave., Appleton, WI 54919-0007
www.aal.org e-mail: [email protected] (800)553-6319
Member NASD
C-50825ISA 12-00
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