<PAGE>
[AAL LOGO]
Aid Association for Lutherans
----------------------------------------
A FRATERNAL BENEFIT SOCIETY
Semi-Annual
Report
June 30, 1996
[PHOTO APPEARS HERE]
[AAL VARIABLE ANNUITY LOGO]
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A A L V A R I A B L E A N N U I T Y
[AAL LOGO]
Aid Association for Lutherans
---------------------------------------
A FRATERNAL BENEFIT SOCIETY
DEAR CERTIFICATE OWNER:
In June of 1996, the AAL Variable Annuity marked its one-year anniversary. Since
the sale of the first certificate on June 19, 1995, an ever-growing number of
members have found this product to be a viable investment to help them provide
for a more secure financial future. We continue to be pleased by the growing
response and acceptance of the AAL Variable Annuity.
With the first half of 1996 behind us, this semi-annual report allows us to
review the performance of the AAL Variable Annuity against the backdrop of the
broader financial markets. In retrospect, financial market performance during
the first half of 1996 was dramatically different than that achieved in the
first six months of 1995. Stocks and bonds have followed divergent paths thus
far in 1996, a change from the upward performance of both markets a year
earlier. The first and second quarters of 1996 have been characterized by some
in the financial media as being "friendly to stocks and unfriendly to bonds."
The stock market has benefited from stronger than expected economic growth and
record cash inflows into equity portfolios during the first six months of the
year. The Dow Jones Industrial Average, the broader-based S&P 500(R) and NASDAQ
Composite Indexes all hit record highs in late May and early June.
Conversely, concerns about rising inflation due to stronger than expected
economic growth and higher than expected employment growth have caused fears
that the Federal Reserve may raise short-term interest rates. These concerns
have caused increased volatility in the bond market and significantly higher
interest rates in the first half of 1996. The yield on 30-year U.S. Treasury
bonds has increased from approximately 6% at the beginning of the year to around
7% currently.
Early in the third quarter, we have seen increased volatility in the financial
markets and a reversal of fortunes for both the stock and bond markets.
Increased concerns about inflation pressures from stronger than expected
economic growth, a fear of higher interest rates coupled with high valuation
levels and more earnings disappointments than earlier in the year, have caused a
swift correction in the stock market of approximately 5% in the larger company
indexes and 10% in the
1
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A A L V A R I A B L E A N N U I T Y
[LOGO]
Aid Association for Lutherans
- ---------------------------------------
A FRATERNAL BENEFIT SOCIETY
smaller company indexes. At the same time, bonds have been quite stable during
this correction in the stock market.
While this environment has made it more difficult for investors coming into the
market to allocate their funds and make choices with great confidence, given the
equity market's strong performance over the last 18 months, it is not surprising
that stocks have paused for a correction. It only helps to remind us not to lose
the focus on our long-term approach to investing. It also points out the value
of the AAL Variable Annuity, which allows members to take advantage of changing
trends in the market by making adjustments among its five Subaccounts.
The following table shows the total returns of the five Portfolios of the AAL
Variable Product Series Fund, Inc. and the corresponding Subaccounts of the AAL
Variable Annuity for the periods indicated.
TOTAL RETURNS
SIX MONTHS/1/ ONE YEAR/1/ SINCE INCEPTION/1/
FUND PORTFOLIO ENDED 6/30/96 ENDED 6/30/96 6/14/95--6/30/96
Money Market 2.56%/2/ 5.39% 5.40%
Bond -1.45% 4.39% 4.08%
Balanced 4.93% 15.71% 16.14%
Large Company Stock 9.92% 25.55% 26.54%
Small Company Stock 8.82% 19.15% 19.48%
SIX MONTHS/3/ ONE YEAR/3/ SINCE INCEPTION/3/
VARIABLE SUBACCOUNT* ENDED 6/30/96 ENDED 6/30/96 6/15/95--6/30/96
Money Market 1.94% 4.11% 4.12%
Bond -2.07% 3.10% 3.00%
Balanced 4.28% 14.28% 14.64%
Large Company Stock 9.24% 23.99% 24.70%
Small Company Stock 8.14% 17.68% 17.60%
SEC RETURNS
ONE YEAR SINCE INCEPTION
VARIABLE SUBACCOUNT ENDED 6/30/96 6/15/95--6/30/96
Money Market -2.45% -1.28%
Bond -3.40% -2.34%
Balanced 7.08% 8.70%
Large Company Stock 16.18% 18.24%
Small Company Stock 10.27% 11.51%
/1/These values reflect the deduction of a .35% annual management fee, but do
not reflect Portfolio expenses which are voluntarily paid by AAL or
reimbursed by AAL. Without the payment and reimbursement of expenses by AAL,
which can be changed on 30-days notice, these total returns would have been
lower.
/2/If reported as annualized total return, this number would be 5.12%.
/3/These values reflect the deduction of the 1.25% mortality and expense risk
fee, but do not reflect the $25 annual maintenance charge (for accounts under
$5,000) or surrender charges.
/*/For the one year and since inception periods, the SEC Standardized Average
Total Returns for the five Subaccounts, reflecting all fees and expenses and
the maximum surrender charge (7% for the one year returns, 6% for the since
inception returns), are shown on the chart at the bottom left.
Investment returns and principal values are subject to fluctuation, and
units, when redeemed, may be worth more or less than their purchase price.
Past performance is not an indication of future results.
2
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A A L V A R I A B L E A N N U I T Y
As of June 30, 1996, the net assets of the investment Portfolios totaled $200.4
million, an increase of 138.60% over the net asset values on December 31, 1995.
Asset growth is shown in the following chart.
While no one can consistently predict interest rates or market movements with a
high degree of accuracy, variable annuities continue to make sense as an
integral part of a total investment portfolio. Because the AAL Variable Annuity
is suitable for individuals with a long-term investment perspective, patience
may be rewarded as we move through inevitable changes in the financial markets.
In addition, the AAL Variable Annuity continues to offer AAL members an
opportunity for tax-deferred growth, a variety of investment options and a death
benefit guarantee.
PORTFOLIO ASSETS
NET ASSETS AS OF NET ASSETS AS OF
12/31/95 6/30/96
Money Market Portfolio $7,044,642 $12,427,818
Bond Portfolio $9,362,832 $13,866,701
Balanced Portfolio $28,758,722 $73,715,371
Large Company Stock Portfolio $23,138,378 $60,797,663
Small Company Stock Portfolio $15,665,864 $39,544,165
TOTAL $83,970,438 $200,351,718
We thank you for the confidence you have shown in the AAL Variable Annuity, and
trust we are meeting your expectations for performance, value and service.
Sincerely,
/s/ John O. Gilbert /s/ D. Charles DeVries
John O. Gilbert D. Charles DeVries
President President
Aid Association for Lutherans AAL Variable Product Series Fund, Inc.
3
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A A L V A R I A B L E A N N U I T Y
[LOGO]
Money Market Portfolio
......................
SECTOR HOLDINGS
[pie chart appears here]
[ ] FINANCE.....................34.3%
[ ] CONSUMER NON-DURABLES.......26.9%
[ ] UTILITIES...................15.1%
[ ] CONSUMER DURABLES...........10.5%
[ ] TECHNOLOGY...................9.0%
[ ] MATERIALS & SERVICES.........4.2%
THE FUND SEEKS: To achieve maximum current
income consistent with liquidity and a stable
net asset value of $1.00 per share.*
THE FUND IS: A diversified portfolio of
high-quality, short-term money market
instruments.
TOP TEN HOLDINGS
PEPSICO, INC. .......................5.320%...........07/15/96
LEHMAN BROTHERS
HOLDINGS, INC. ......................5.370%...........07/10/96
ASSOCIATES CORPORATION
OF NORTH AMERICA.....................5.270%...........07/02/96
AMERICAN EXPRESS
CREDIT CORPORATION...................5.340%...........07/05/96
GANNETT COMPANY......................5.320%...........07/19/96
HOUSEHOLD FINANCE
CORPORATION..........................5.340%...........07/09/96
BELL ATLANTIC
NETWORK FUNDING......................5.340%...........07/12/96
CARGILL, INC. .......................5.330%...........07/17/96
ALABAMA POWER COMPANY................5.260-5.290%.....08/06/96
CSFIRST BOSTON, INC. ................5.400%...........09/06/96
*Investments in this Portfolio are
neither insured nor guaranteed by
the U.S. Government. There can
be no assurance that the Portfolio
will be able to maintain a stable
net asset value of $1.00 per share.
4
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A A L V A R I A B L E A N N U I T Y
[LOGO]
Bond Portfolio
..............
SECTOR HOLDINGS
[pie chart appears here]
[ ] U.S. GOVERNMENT................45.0%
[ ] U.S. GOVERNMENT AGENCIES.......33.6%
[ ] CORPORATE......................11.6%
[ ] OTHER
OTHER GOVERNMENT SECURITIES..3.6%
UTILITY BONDS................3.3%
ASSET-BACKED SECURITIES......1.7%
MONEY MARKET SECURITIES......1.2%
-----
9.8%
THE FUND SEEKS: To achieve investment results
that approximate the total return of the
Lehman Brothers Aggregate Bond Index
(Lehman Index).
THE FUND IS: A diversified portfolio consisting
of a representative sample of fixed income and
mortgage-backed securities included in the
Lehman Index.
TOP TEN HOLDINGS
U.S. TREASURY BOND..................9.875%...........11/15/15
U.S. TREASURY BOND.................10.375%...........11/15/12
U.S. TREASURY NOTE..................6.875%...........07/31/99
PROVINCE OF QUEBEC.................11.000%...........06/15/15
U.S. TREASURY BOND..................8.125%...........08/15/19
GNMA................................9.000%...........09/15/24
BROWNING-FERRIS INDUSTRIES, INC.....7.875%...........03/15/05
U.S. TREASURY NOTE..................7.500%...........10/31/99
U.S. TREASURY NOTE..................7.250%...........05/20/16
U.S. TREASURY NOTE..................7.250%...........02/15/98
5
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
BALANCED PORTFOLIO
..................
ASSET MIX
[Pie Chart Appears Here]
[_] STOCKS............ 55.9%
[_] BONDS............. 36.7%
[_] MONEY MARKET...... 7.4%
THE FUND SEEKS: To achieve investment results that reflect investment in common
stocks, bonds and money market instruments, each of which will be selected
consistent with the investment policies of the AAL Variable Product Large
Company Stock Portfolio, Bond Portfolio and Money Market Portfolio,
respectively.
THE FUND IS: A diversified portfolio comprised of three asset classes: common
stocks, including the securities in which the AAL Variable Product Large Company
Stock Portfolio may invest; bonds and other debt securities with maturities
generally exceeding one year, including securities in which the AAL Variable
Product Bond Portfolio may invest; and money market instruments and other debt
securities with maturities generally not exceeding 397 days, including
securities in which the AAL Variable Product Money Market Portfolio may invest.
TOP TEN HOLDINGS
GENERAL ELECTRIC COMPANY
SOUTHWESTERN BELL CAPITAL
CORPORATION................... 5.300% ...07/02/96
COCA-COLA COMPANY
EXXON CORPORATION
AT&T CORPORATION
SEARS ROEBUCK ACCEPTANCE
CORPORATION................... 5.330% ...08/01/96
PHILIP MORRIS COMPANIES, INC.
FORD MOTOR CREDIT CORPORATION... 5.290% ...07/03/96
MERRILL LYNCH & COMPANY, INC.... 5.310% ...07/02/96
ROYAL DUTCH PETROLEUM COMPANY
6
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
Large Company Stock Portfolio
.............................
SECTOR HOLDINGS
[PIE CHART APPEARS HERE]
[_] CONSUMER NON-DURABLES ...32.7%
[_] FINANCE..................13.3%
[_] TECHNOLOGY...............12.2%
[_] UTILITIES................12.1%
[_] MATERIALS & SERVICES......9.3%
[_] ENERGY....................8.9%
[_] OTHER
CAPITAL GOODS...........5.6%
CONSUMER DURABLES.......2.9%
TRANSPORTATION..........1.7%
MONEY MARKET SECURITIES.1.3%
-----
11.5%
THE FUND SEEKS: To achieve investment results that approximate the performance
of the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) by
investing primarily in common stocks included in the S&P500 Index.*
THE FUND IS: A diversified portfolio of larger company common stocks held
approximately in proportion to their capitalization weight in the S&P 500 Index.
TOP TEN HOLDINGS
GENERAL ELECTRIC COMPANY
COCA-COLA COMPANY
EXXON CORPORATION
AT&T CORPORATION
PHILIP MORRIS COMPANIES, INC.
ROYAL DUTCH PETROLEUM COMPANY
MERCK & COMPANY, INC.
MICROSOFT CORPORATION
JOHNSON & JOHNSON
PROCTER & GAMBLE COMPANY
*Standard & Poor's/(R)/, "S&P/(R)/," "S&P 500/(R)/," "Standard & Poor's 500,"
and "500" are trademarks of McGraw-Hill, Inc. and have been licensed for use by
AAL and the Fund. The Fund and the Certifi-cates are not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the Fund or the
Certificates.
7
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A A L V A R I A B L E A N N U I T Y
[LOGO] Small Company Stock Portfolio
.............................
SECTOR HOLDINGS
[PIE CHART APPEARS HERE]
[_] CONSUMER NON-DURABLES .......... 25.1%
[_] MATERIALS & SERVICES ........... 20.6%
[_] FINANCE ........................ 16.8%
[_] TECHNOLOGY ..................... 11.1%
[_] UTILITIES ...................... 8.3%
[_] OTHER
CAPITAL GOODS ............... 5.3%
ENERGY ...................... 5.1%
CONSUMER DURABLES ........... 3.4%
TRANSPORTATION .............. 3.0%
MONEY MARKET SECURITIES ..... 1.3%
------
18.1%
THE FUND SEEKS: To achieve investment results that approximate the performance
of the Wilshire Small Cap Index (Wilshire Index) by investing primarily in
common stocks included in the Wilshire Index.
THE FUND IS: A diversified portfolio of smaller company common stocks held
approximately in proportion to their capitalization weight in the Wilshire
Index.
TOP TEN HOLDINGS
SHARED MEDICAL
SYSTEMS CORPORATION
NORAM ENERGY CORPORATION
BALLY ENTERTAINMENT
CORPORATION
WALLACE COMPUTER SERVICES, INC.
NABORS INDUSTRIES, INC.
COMDISCO, INC.
CHRIS CRAFT INDUSTRIES, INC.
FIRST COMMERCE CORPORATION
JONES APPAREL GROUP
FIRST AMERICAN
CORPORATION-TENNESSEE
8
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
Money Market Portfolio
......................
Schedule of Investments as of June 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
- ---------------------------------------------------------------------------------------
Commercial Paper (99.5%)
------------------------
<C> <S> <C> <C> <C>
$219,000 Alabama Power Company......... 5.260% 08/06/96 $ 217,848
281,000 Alabama Power Company......... 5.290 08/06/96 279,514
500,000 American Express
Credit Corporation............ 5.340 07/05/96 499,703
500,000 Associates Corporation
of North America............. 5.270 07/02/96 499,927
500,000 Bell Atlantic Network Funding. 5.340 07/12/96 499,184
379,000 Beneficial Corporation........ 5.270 07/01/96 379,000
500,000 Cargill, Inc.................. 5.330 07/17/96 498,816
500,000 CS First Boston, Inc.......... 5.400 09/06/96 494,975
300,000 Echlin, Inc................... 5.320 07/11/96 299,557
261,000 E.I. DuPont De Nemours
& Company.................... 5.340 07/18/96 260,342
265,000 E.I. DuPont De Nemours
& Company.................... 5.300 08/05/96 263,634
355,000 Ford Motor Credit Company..... 5.290 07/03/96 354,895
145,000 Ford Motor Credit Company..... 5.300 07/12/96 144,765
501,000 Gannett Company............... 5.320 07/19/96 499,667
362,000 General Electric Capital
Corporation.................. 5.370 07/16/96 361,190
155,000 General Electric Company...... 5.370 07/18/96 154,607
200,000 General Motors
Acceptance Corporation....... 5.310 07/26/96 199,263
300,000 General Motors
Acceptance Corporation....... 5.300 08/07/96 298,366
183,000 Hewlett-Packard Company....... 5.300 08/29/96 181,410
500,000 Household Finance
Corporation.................. 5.340 07/09/96 499,407
223,000 IBM Credit Corporation........ 5.320 08/01/96 221,978
227,000 J.C. Penney Funding
Corporation.................. 5.230 07/10/96 226,698
483,000 Kellogg Company............... 5.370 08/26/96 478,965
538,000 Lehman Brothers Holdings, Inc. 5.370 07/10/96 537,278
196,000 Massachusetts Electric
Company...................... 5.370 07/01/96 196,000
400,000 MCI Communications
Corporation.................. 5.300 07/08/96 399,586
300,000 Merrill Lynch & Company, Inc.. 5.320 08/02/96 298,581
200,000 Merrill Lynch & Company, Inc.. 5.290 08/30/96 198,237
157,000 Nordstrom Credit, Inc......... 5.330 07/11/96 156,768
312,000 Nordstrom Credit, Inc......... 5.340 07/11/96 311,537
545,000 Pepsico, Inc.................. 5.320 07/15/96 543,872
216,000 Sears Roebuck Acceptance
Corporation.................. 5.330 07/16/96 215,520
250,000 Sears Roebuck Acceptance
Corporation.................. 5.330 07/29/96 248,964
278,000 U.S. West
Communications, Inc.......... 5.470 07/02/96 277,958
150,000 Wal-Mart Stores, Inc.......... 5.310 07/08/96 149,845
473,000 Walt Disney Company........... 5.270 07/03/96 472,861
250,000 Xerox Corporation............. 5.400 08/21/96 248,088
300,000 Xerox Credit Corporation...... 5.400 09/18/96 296,445
-----------
Total Investments (99.5%)
(amortized cost $12,365,251)........................... 12,365,251
Other Assets, less
Liabilities (0.5%).................................... 62,567
-----------
NET ASSETS (100.0%)..................................... $12,427,818
===========
</TABLE>
See accompanying notes.
9
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
BOND PORTFOLIO
- --------------
Schedule of Investments as of June 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
- ----------------------------------------------------------------------------------------
U.S. Government Obligations (44.4%)
-----------------------------------
<C> <S> <C> <C> <C>
$250,000 U.S. Treasury Bond............. 10.375% 11/15/12 $ 317,422
250,000 U.S. Treasury Bond............. 9.875 11/15/15 325,547
250,000 U.S. Treasury Bond............. 8.125 08/15/19 280,390
225,000 U.S. Treasury Bond............. 7.875 02/15/21 246,516
250,000 U.S. Treasury Bond............. 7.250 05/15/16 256,094
250,000 U.S. Treasury Bond............. 7.125 02/15/23 252,500
250,000 U.S. Treasury Bond............. 6.250 08/15/23 226,484
175,000 U.S. Treasury Bond............. 7.500 11/15/24 185,500
250,000 U.S. Treasury Note............. 6.125 05/31/97 250,703
200,000 U.S. Treasury Note............. 5.875 07/31/97 199,937
255,000 U.S. Treasury Note............. 5.500 09/30/97 253,804
250,000 U.S. Treasury Note............. 7.375 11/15/97 254,375
75,000 U.S. Treasury Note............. 7.875 01/15/98 76,992
250,000 U.S. Treasury Note............. 7.250 02/15/98 254,453
125,000 U.S. Treasury Note............. 7.875 04/15/98 128,711
250,000 U.S. Treasury Note............. 5.375 05/31/98 246,640
125,000 U.S. Treasury Note............. 5.875 08/15/98 124,258
125,000 U.S. Treasury Note............. 7.125 10/15/98 127,500
250,000 U.S. Treasury Note............. 5.125 11/30/98 243,984
250,000 U.S. Treasury Note............. 6.750 05/31/99 252,890
250,000 U.S. Treasury Note............. 6.375 01/15/99 250,625
300,000 U.S. Treasury Note............. 6.875 07/31/99 304,312
250,000 U.S. Treasury Note............. 7.500 10/31/99 258,281
160,000 U.S. Treasury Note............. 7.125 02/29/00 163,650
250,000 U.S. Treasury Note............. 5.875 06/30/00 245,156
200,000 U.S. Treasury Note............. 6.250 02/15/03 196,375
250,000 U.S. Treasury Note............. 5.750 08/15/03 237,890
----------
Total U.S. Government
Obligations............................................ 6,160,989
----------
U.S. Government Agency Obligations (33.2%)
------------------------------------------
165,228 Federal Home Loan Mortgage
Corporation Gold
7-Yr. Balloon................ 7.000 06/01/02 164,660
239,200 Federal Home Loan Mortgage
Corporation 15-Yr.
Pass Through................. 7.000 02/01/11 235,836
222,985 Federal Home Loan Mortgage
Corporation 30-Yr.
Pass Though.................. 6.500 04/01/24 208,907
241,543 Federal Home Loan Mortgage
Corporation 30-Yr.
Pass Through................. 7.500 08/01/25 238,597
224,205 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through.......... 8.000 01/01/26 226,235
252,500 Federal Home Loan Mortgage
Corporation 30-Yr.
Balloon...................... 7.000 06/01/26 243,108
253,178 Federal National
Mortgage Association
15-Yr. Pass Through.......... 6.000 04/01/11 239,332
250,000 Federal National Mortgage
Association Medium-
Term Note.................... 5.200 04/30/98 244,555
220,735 Federal National
Mortgage Association
30-Yr. Pass Through.......... 10.50 08/01/20 242,600
141,799 Federal National
Mortgage Association
30-Yr. Pass Through.......... 9.000 02/01/25 147,824
225,460 Federal National
Mortgage Association
30-Yr. Pass Through.......... 8.500 11/15/25 231,337
241,462 Federal National
Mortgage Association
30-Yr. Pass Through.......... 7.500 01/01/26 238,367
249,139 Federal National
Mortgage Association
30-Yr. Pass Through.......... 7.000 02/01/26 239,716
234,337 Government National
Mortgage Association
30-Yr. Pass Through.......... 8.000 06/15/25 236,385
245,503 Government National
Mortgage Association
30-Yr. Pass Through.......... 7.500 03/15/23 241,895
250,991 Government National
Mortgage Association
30-Yr. Pass Through.......... 7.000 01/15/24 240,714
249,867 Government National
Mortgage Association
30-Yr. Pass Through.......... 9.000 09/15/24 261,422
239,063 Government National
Mortgage Association
15-Yr. Pass Through.......... 6.500 03/01/09 231,816
250,000 Private Export Funding
Corporation.................. 6.240 05/15/02 243,152
250,000 Tennessee Valley Authority..... 6.000 11/01/00 243,947
---------
Total U.S. Government
Agency Obligations..................................... 4,600,445
---------
Asset-Backed Securities (1.7%)
------------------------------
250,000 NationsBank Credit Card Trust
Certificate.................. 6.000 12/15/05 236,352
---------
Corporate Obligations (11.5%)
-----------------------------
225,000 Abbott Laboratories Note....... 6.800 05/15/05 220,884
250,000 American Express
Company Note................. 6.750 06/01/01 248,656
</TABLE>
See accompanying notes.
10
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
BOND PORTFOLIO
--------------
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
- -------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$250,000 Browning-Ferris
Industries, Inc. Note............... 7.875% 03/15/05 $ 260,879
200,000 General Motors Acceptance
Corporation Note.................... 9.625 12/15/01 222,292
250,000 Household Finance
Corporation Note.................... 6.875 03/01/03 247,693
170,000 PepsiCo Inc. Debenture................ 7.000 11/15/96 170,751
250,000 PepsiCo Inc. Note..................... 5.700 11/01/08 217,427
-----------
Total Corporate Obligations.................................. 1,588,582
-----------
Utility Bonds (3.3%)
--------------------
200,000 Baltimore Gas & Electric Company First
Refunding Mortgage Bond............. 7.500 01/15/07 203,102
250,000 Texas Utilities Company
First Mortgage Bond................. 7.375 08/01/01 253,999
-----------
Total Utility Bonds.......................................... 457,101
-----------
Other Government Securities (3.5%)
----------------------------------
200,000 Province of Ontario Senior
Global Bond......................... 6.125 06/28/00 196,808
250,000 Province of Quebec
Global Bond......................... 11.000 06/15/15 290,292
-----------
Total Other Government Securities............................ 487,100
-----------
Total Long-Term Securities
(cost basis $13,861,727)................................... 13,530,569
-----------
Short-Term Investments (1.2%)
-----------------------------
166,000 Schering Corporation.................. 5.500 07/01/96 166,000
-----------
Total Short-Term Investments
(cost basis $166,000)...................................... 166,000
Total Investments (98.8%) -----------
(cost basis $14,027,727)................................... 13,696,569
OTHER ASSETS, LESS LIABILITIES (1.2%)........................ 170,132
-----------
NET ASSETS (100.0%).......................................... $13,866,701
===========
</TABLE>
See accompanying notes.
11
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A A L V A R I A B L E A N N U I T Y
Balanced Portfolio
...........................................
[LOGO] Schedule of Investments as of June 30, 1996
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (55.4%) MARKET VALUE
<C> <S> <C>
Aerospace (1.3%)
-----------------
2,800 Boeing Company.................................... $ 243,950
600 General Dynamics Corporation...................... 37,200
400 Goodrich (B.F.) Company........................... 14,950
1,600 Lockheed Martin Corporation....................... 134,400
1,800 McDonnell Douglas Corporation..................... 87,300
500 Northrop Grumman Corporation...................... 34,063
2,000 Raytheon Company.................................. 103,250
1,800 Rockwell International Corporation................ 103,050
600 TRW, Inc.......................................... 53,925
700 Textron, Inc...................................... 55,912
1,000 United Technologies Corporation................... 115,000
----------
983,000
----------
Air Transportation (0.3%)
--------------------------
800 AMR Corporation *................................. 72,800
500 Delta Air Lines, Inc.............................. 41,500
500 Federal Express Corporation *..................... 41,000
1,100 Southwest Airlines Company........................ 32,038
500 USAir Group, Inc. *............................... 9,000
----------
196,338
----------
Apparel (0.3%)
---------------
100 Brown Group, Inc.................................. 1,738
600 Fruit of the Loom, Inc. *......................... 15,300
500 Liz Claiborne, Inc................................ 17,312
1,200 Nike, Inc......................................... 123,300
500 Reebok International, Ltd......................... 16,812
300 Russell Corporation............................... 8,288
100 Springs Industries, Inc........................... 5,050
400 Stride Rite Corporation........................... 3,300
600 V F Corporation................................... 35,775
----------
226,875
----------
Banking (3.9%)
--------------
3,570 Banc One Corporation.............................. 121,380
900 Bank of Boston Corporation........................ 44,550
1,600 Bank of New York Company Inc...................... 82,000
3,000 BankAmerica Corporation........................... 227,250
700 Bankers Trust New York Corporation................ 51,713
800 Barnett Banks, Inc................................ 48,800
1,200 Boatmen's Bancshares, Inc......................... 48,150
3,540 Chase Manhattan Corporation....................... 250,013
4,000 Citicorp.......................................... 330,500
900 Comerica, Inc..................................... 40,162
1,800 Corestates Financial Corporation.................. 69,300
900 Fifth Third Bancorp............................... 48,600
1,200 First Bank System, Inc............................ 69,600
2,543 First Chicago NBD Corporation..................... 99,495
2,305 First Union Corporation........................... 140,317
2,056 Fleet Financial Group, Inc........................ 89,436
1,800 Keycorp........................................... 69,750
1,600 J.P. Morgan & Company, Inc........................ 135,400
1,100 Mellon Bank Corporation........................... 62,700
1,700 National City Corporation......................... 59,712
2,500 NationsBank Corporation........................... 206,562
2,900 Norwest Corporation............................... 101,138
2,700 PNC Bank Corporation.............................. 80,325
500 Republic New York Corporation..................... 31,125
1,800 Suntrust Banks, Inc............................... 66,600
1,300 U S Bancorp....................................... 46,963
1,300 Wachovia Corporation.............................. 56,875
766 Wells Fargo & Company............................. 182,978
----------
2,861,394
----------
Brokerage (0.2%)
-----------------
1,400 Merrill Lynch & Company, Inc...................... 91,175
1,200 Morgan Stanley Group, Inc......................... 58,950
800 Salomon, Inc...................................... 35,200
----------
185,325
----------
Business Machines (3.1%)
-------------------------
1,300 3Com Corporation *................................ 59,475
900 Amdahl Corporation *.............................. 9,675
900 Apple Computer, Inc............................... 18,900
300 Autodesk, Inc..................................... 8,962
1,500 Bay Networks, Inc. *.............................. 38,625
600 Cabletron Systems, Inc. *......................... 41,175
600 Ceridian Corporation *............................ 30,300
4,600 Cisco Systems, Inc. *............................. 260,475
2,100 Compaq Computers, Inc. *.......................... 103,425
300 Data General Corporation *........................ 3,900
1,200 Digital Equipment Corporation *................... 54,000
1,000 Honeywell, Inc.................................... 54,500
4,400 International Business Machines Corporation....... 435,600
300 Intergraph Corporation *.......................... 3,638
4,800 Microsoft Corporation *........................... 576,600
2,900 Novell, Inc. *.................................... 40,238
5,200 Oracle Systems Corporation *...................... 205,075
1,200 Pitney-Bowes, Inc................................. 57,300
1,300 Silicon Graphics, Inc. *.......................... 31,200
1,500 Sun Microsystems, Inc. *.......................... 88,312
900 Tandem Computers, Inc. *.......................... 11,138
1,300 Unisys Corporation *.............................. 9,262
2,700 Xerox Corporation................................. 144,450
----------
2,286,225
----------
Business Services (1.2%)
------------------------
2,300 Automatic Data Processing, Inc.................... 88,838
800 Block (H.R.), Inc................................. 26,100
1,700 Browning-Ferris Industries, Inc................... 49,300
2,000 Computer Associates International, Inc............ 142,500
500 Computer Sciences Corporation *................... 37,375
600 Deluxe Corporation................................ 21,300
700 Dial Corporation.................................. 20,037
500 Ecolab, Inc....................................... 16,500
</TABLE>
See accompanying notes.
12
<PAGE>
==============================================================================
A A L V A R I A B L E A N N U I T Y
Balanced Portfolio
..................
[LOGO] Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
<C> <S> <C>
Business Services--Continued
----------------------------
1,800 First Data Corporation............................ $ 143,325
600 Interpublic Group of Companies, Inc............... 28,125
200 John H. Harland Company........................... 4,925
2,300 Laidlaw, Inc...................................... 23,288
800 Moore Corporation Limited......................... 15,100
400 National Service Industries, Inc.................. 15,650
400 Ogden Corporation................................. 7,250
400 Safety Kleen Corporation.......................... 7,000
200 Shared Medical Systems Corporation................ 12,850
1,400 The Dun & Bradstreet Corporation.................. 87,500
3,900 WMX Technologies, Inc............................. 127,725
----------
874,688
----------
Chemicals (1.9%)
----------------
900 Air Products & Chemicals, Inc..................... 51,975
4,600 E.I. Du Pont De Nemours and Company............... 363,975
700 Eastman Chemical Company.......................... 42,612
600 Great Lakes Chemical Corporation.................. 37,350
900 Hercules, Inc..................................... 49,725
3,400 Minnesota Mining & Manufacturing Co............... 234,600
4,700 Monsanto Company.................................. 152,750
1,200 Morton International, Inc......................... 44,700
500 Nalco Chemical Company............................ 15,750
1,600 PPG Industries, Inc............................... 78,000
1,200 Praxair, Inc...................................... 50,700
600 Rohm & Haas Company............................... 37,650
400 Sigma-Aldrich Corporation......................... 21,400
2,100 The Dow Chemical Company.......................... 159,600
1,000 Union Carbide Corporation......................... 39,750
800 W.R. Grace & Company.............................. 56,700
----------
1,437,237
----------
Construction (0.3%)
-------------------
300 Armstrong World Industries, Inc................... 17,288
200 Centex Corporation................................ 6,225
200 Crane Company..................................... 8,200
700 Fluor Corporation................................. 45,762
300 Kaufman & Broad Home Corporation.................. 4,350
1,200 Masco Corporation................................. 36,300
400 Owens-Corning Fiberglass Corporation *............ 17,200
200 Pulte Corporation................................. 5,350
700 Sherwin-Williams Company.......................... 32,550
800 Stanley Works..................................... 23,800
----------
197,025
----------
Consumer Durables (0.2%)
-------------------------
700 Black & Decker Corporation........................ 27,038
800 Maytag Corporation................................ 16,700
1,200 Newell Company.................................... 36,750
100 Outboard Marine Corporation....................... 1,812
500 Tupperware Corporation *.......................... 21,125
600 Whirlpool Corporation............................. 29,775
----------
133,200
----------
Containers (0.1%)
-----------------
200 Ball Corporation.................................. 5,750
400 Bemis Company, Inc................................ 14,000
1,000 Crown Cork & Seal Company, Inc.................... 45,000
800 Stone Container Corporation....................... 11,000
----------
75,750
----------
Cosmetics (1.3%)
----------------
200 Alberto-Culver Company............................ 9,275
1,100 Avon Products, Inc................................ 49,638
500 Clorox Company.................................... 44,312
1,200 Colgate-Palmolive Company......................... 101,700
3,600 Gillette Company.................................. 224,550
900 International Flavors and Fragrances, Inc......... 42,862
5,600 Procter & Gamble Company.......................... 507,500
----------
979,837
----------
Drugs & Medicine (5.8%)
-----------------------
6,300 Abbott Laboratories............................... 274,050
500 Allergan, Inc..................................... 19,625
600 Alza Corporation *................................ 16,425
5,200 American Home Products Corporation................ 312,650
2,200 Amgen, Inc. *..................................... 118,800
400 Bard (C.R.), Inc.................................. 13,600
400 Bausch & Lomb, Inc................................ 17,000
2,200 Baxter International, Inc......................... 103,950
600 Becton, Dickinson and Company..................... 48,150
800 Beverly Enterprises, Inc. *....................... 9,600
900 Biomet, Inc. *.................................... 12,938
1,400 Boston Scientific Corporation *................... 63,000
4,100 Bristol-Myers Squibb Company...................... 369,000
3,600 Columbia/HCA Healthcare Corporation............... 192,150
300 Community Psychiatric Centers *................... 2,850
4,500 Eli Lilly & Company............................... 292,500
1,300 Humana, Inc. *.................................... 23,238
10,700 Johnson & Johnson................................. 529,650
600 Mallinckrodt Group, Inc........................... 23,325
500 Manor Care, Inc................................... 19,687
1,900 Medtronic, Inc.................................... 106,400
10,000 Merck & Company, Inc.............................. 646,250
5,200 Pfizer, Inc....................................... 371,150
4,080 Pharmacia & Upjohn, Inc........................... 181,050
3,000 Schering-Plough Corporation....................... 188,250
650 St. Jude Medical, Inc. *.......................... 21,775
1,700 Tenet Healthcare Corporation *.................... 36,337
1,300 U S Healthcare, Inc............................... 71,500
400 U S Surgical Corporation.......................... 12,400
1,400 United Healthcare Corporation..................... 70,700
</TABLE>
See accompanying notes.
13
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
Balanced Portfolio
..................
[LOGO] Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
<C> <S> <C>
Drugs & Medicine--Continued
---------------------------
2,200 Warner-Lambert Company........................... $ 121,000
----------
4,289,000
----------
Electronics (2.5%)
------------------
1,728 AMP, Inc.......................................... 69,336
1,000 Advanced Micro Devices, Inc. *.................... 13,625
500 Andrew Corporation *.............................. 26,875
1,400 Applied Materials Inc. *.......................... 42,700
900 DSC Communications Corporation *.................. 27,112
300 EG&G, Inc......................................... 6,412
1,800 EMC Corporation *................................. 33,525
1,000 General Instrument Corporation *.................. 28,875
400 General Signal Corporation........................ 15,150
300 Harris Corporation................................ 18,300
4,100 Hewlett-Packard Company........................... 408,462
6,600 Intel Corporation................................. 484,688
1,000 LSI Logic Corporation *........................... 26,000
1,600 Micron Technology, Inc............................ 41,400
4,800 Motorola, Inc..................................... 301,800
1,000 National Semiconductor Corporation *.............. 15,500
2,100 Northern Telecom, Limited......................... 114,188
400 Perkin Elmer Corporation.......................... 19,300
600 Scientific-Atlanta, Inc........................... 9,300
200 Tektronix, Inc.................................... 8,950
400 Teledyne, Inc..................................... 14,450
1,500 Texas Instruments, Inc............................ 74,813
300 Thomas & Betts Corporation........................ 11,250
----------
1,812,011
----------
Energy & Utilities (2.3%)
--------------------------
1,500 American Electric Power Company................... 63,938
1,100 Baltimore Gas & Electric Company.................. 31,212
1,200 CINergy Corporation............................... 38,400
1,200 Carolina Power & Light Company.................... 45,600
1,600 Central & Southwest Corporation................... 46,400
800 Coastal Corporation............................... 33,400
400 Columbia Gas System, Inc.......................... 20,850
1,800 Consolidated Edison Company of New York........... 52,650
800 Consolidated Natural Gas Company.................. 41,800
1,100 DTE Energy Company................................ 33,962
1,700 Duke Power Company................................ 87,125
1,400 Dominion Resources, Inc........................... 56,000
3,500 Edison International.............................. 61,688
2,000 Enron Corporation................................. 81,750
500 Enserch Corporation............................... 10,875
1,800 Entergy Corporation............................... 51,075
1,500 FPL Group, Inc.................................... 69,000
900 General Public Utilities Corporation.............. 31,725
2,100 Houston Industries, Inc........................... 51,712
1,100 Niagara Mohawk Power Corporation.................. 8,525
400 Nicor, Inc........................................ 11,350
1,000 NorAm Energy Corporation.......................... 10,875
500 Northern States Power Company..................... 24,688
200 ONEOK, Inc........................................ 5,000
1,200 Ohio Edison Company............................... 26,250
1,200 P P & L Resources, Inc............................ 28,350
2,300 PacifiCorp........................................ 51,175
600 Pacific Enterprises............................... 17,775
3,300 Pacific Gas & Electric Company.................... 76,725
1,200 PanEnergy Corporation............................. 39,450
1,700 Peco Energy Company............................... 44,200
200 Peoples Energy Corporation........................ 6,700
1,900 Public Service Enterprise......................... 52,012
700 Sonat Incorporated................................ 31,500
5,400 Southern Company.................................. 132,975
1,800 Texas Utilities Company........................... 76,950
1,700 Unicom Corporation................................ 47,388
800 Union Electric Company............................ 32,200
800 Williams Companies, Inc........................... 39,600
----------
1,672,850
----------
Energy-Raw Materials (0.6%)
---------------------------
1,100 Baker Hughes, Inc................................. 36,162
1,000 Burlington Resources, Inc......................... 43,000
1,400 Dresser Industries, Inc........................... 41,300
100 Eastern Enterprises............................... 3,325
900 Halliburton Company............................... 49,950
200 Helmerich & Payne, Inc............................ 7,325
300 Louisiana Land and Explorations Company........... 17,288
400 McDermott International, Inc...................... 8,350
100 NACCO Industries Inc.............................. 5,538
2,500 Occidental Petroleum Corporation.................. 61,875
2,000 Schlumberger, Ltd................................. 168,500
----------
442,613
----------
Food & Agriculture (3.7%)
-------------------------
4,150 Archer-Daniels-Midland Company.................... 79,369
1,200 CPC International Inc............................. 86,400
2,100 Campbell Soup Company............................. 148,050
20,100 Coca-Cola Company................................. 982,388
1,900 ConAgra, Inc...................................... 86,213
3,000 Fleming Companies, Inc............................ 4,313
1,300 General Mills, Inc................................ 70,850
2,950 H.J. Heinz Company................................ 89,606
600 Hershey Foods Corporation......................... 44,025
1,700 Kellogg Company................................... 124,525
12,600 PepsiCo, Inc...................................... 445,725
700 Pioneer Hi-Bred International, Inc................ 37,012
1,000 Quaker Oats Company............................... 34,125
900 Ralston Purina Corporation........................ 57,712
3,900 Sara Lee Corporation.............................. 126,262
500 Supervalu, Inc.................................... 15,750
1,400 Sysco Corporation................................. 47,950
1,300 Unilever N.V...................................... 188,662
</TABLE>
See accompanying notes.
14
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL] Balanced Portfolio
..................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
Food & Agriculture--Continued
-----------------------------
800 Whitman Corporation...................... $ 19,300
1,000 Wrigley (Wm) Jr. Company................. 50,500
----------
2,738,737
----------
Gold (0.3%)
-----------
2,800 Barrick Gold Corporation................. 75,950
1,100 Homestake Mining Company................. 18,838
800 Newmont Mining Corporation............... 39,500
1,900 Placer Dome, Inc......................... 45,362
1,000 Santa Fe Pacific Gold Corporation........ 14,125
----------
193,775
----------
Insurance (1.9%)
----------------
1,000 Aetna Life & Casualty Company............ 71,500
300 Alexander & Alexander Services, Inc...... 5,925
3,548 Allstate Corporation..................... 161,877
1,600 American General Corporation............. 58,200
3,800 American International Group, Inc........ 374,775
900 Aon Corporation.......................... 45,675
1,400 Chubb Corporation........................ 69,825
600 Cigna Corporation........................ 70,725
700 General Re Corporation................... 106,575
1,000 ITT Hartford Group, Inc.................. 53,250
600 Jefferson-Pilot Corporation.............. 30,975
800 Lincoln National Corporation............. 37,000
600 Marsh & McLennan Companies, Inc.......... 57,900
700 Providian Corporation.................... 30,012
1,000 Safeco Corporation....................... 35,375
700 St. Paul Companies, Inc.................. 37,450
500 Torchmark Corporation.................... 21,875
600 Transamerica Corporation................. 48,600
900 USF&G Corporation........................ 14,738
250 USLIFE Corporation....................... 8,219
600 Unum Corporation......................... 37,350
----------
1,377,821
----------
Liquor (0.4%)
-------------
2,100 Anheuser-Busch Companies, Inc............ 157,500
500 Brown-Foreman Corporation................ 20,000
300 Coors (Adolph) Company................... 5,362
3,000 Seagram Company, Ltd..................... 100,875
----------
283,737
----------
Media (0.9%)
------------
1,900 Comcast Corporation...................... 35,150
1,200 Donnelley (R.R.) & Sons Company.......... 41,850
800 Dow Jones & Company, Inc................. 33,400
1,200 Gannett Company, Inc..................... 84,900
300 King World Productions, Inc. *........... 10,912
400 Knight-Ridder Inc........................ 29,000
800 McGraw-Hill, Inc......................... 36,600
200 Meredith Corporation..................... 8,350
700 New York Times Company................... 22,838
5,200 Tele-Communications, Inc. *.............. 94,250
3,100 Time Warner, Inc......................... 121,675
800 Times Mirror Company..................... 34,800
500 Tribune Company.......................... 36,313
3,000 Viacom, Inc. *........................... 116,625
----------
706,663
----------
Miscellaneous Finance (1.5%)
----------------------------
900 Ahmanson (H.F.) & Company................ 24,300
3,900 American Express Company................. 174,038
500 Beneficial Corporation................... 28,063
1,400 Dean Witter Discover and Company......... 80,150
8,800 Federal National Mortgage Association.... 294,800
1,500 Federal Home Loan Mortgage Corporation... 128,250
500 Golden West Financial Corporation........ 28,000
1,100 Great Western Financial Corporation...... 26,262
1,100 Green Tree Financial Corporation......... 34,375
800 Household International Corporation...... 60,800
1,700 MBNA Corporation......................... 48,450
3,850 Travelers Group, Inc..................... 175,656
----------
1,103,144
----------
Motor Vehicles (1.3%)
---------------------
3,100 Chrysler Corporation..................... 192,200
300 Cummins Engine Company, Inc.............. 12,112
800 Dana Corporation......................... 24,800
700 Eaton Corporation........................ 41,038
500 Echlin, Inc.............................. 18,938
300 Fleetwood Enterprises, Inc............... 9,300
9,400 Ford Motor Company....................... 304,325
1,000 Genuine Parts Company.................... 45,750
6,100 General Motors Corporation............... 319,488
900 ITT Industries, Inc...................... 22,612
----------
990,563
----------
Non-Durables (0.7%)
-------------------
600 American Greetings Corporation, Class A.. 16,425
400 Bally Entertainment Corporation *........ 11,000
1,200 Darden Restaurants, Inc.................. 12,900
500 Harcourt General Corporation............. 25,000
700 Hasbro, Inc.............................. 25,025
300 Jostens, Inc............................. 5,925
100 Luby's Cafeterias, Inc................... 2,350
2,225 Mattel, Inc.............................. 63,691
5,600 McDonald's Corporation................... 261,800
1,200 Rubbermaid, Inc.......................... 32,700
400 Ryans Family Steak House *............... 3,700
900 Service Corporation International........ 51,750
300 Shoneys, Inc. *.......................... 3,262
1,000 Wendy's International, Inc............... 18,625
----------
534,153
----------
</TABLE>
See accompanying notes.
15
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL] Balanced Portfolio
..................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
..........................................................................
<C> <S> <C>
Non-Ferrous Metals (0.4%)
-------------------------
1,800 Alcan Aluminum, Ltd...................... $ 54,900
1,500 Aluminum Company of America.............. 86,062
300 Asarco, Inc.............................. 8,288
700 Cyprus Minerals Company.................. 15,838
1,000 Echo Bay Mines, Ltd...................... 10,750
1,150 Engelhard Corporation.................... 26,450
1,500 Freeport-McMoran Copper & Gold, Class B.. 47,812
900 Inco, Ltd................................ 29,025
600 Phelps Dodge Corporation................. 37,425
600 Reynolds Metals Company.................. 31,275
-----------
347,825
-----------
Oil-Domestic (0.7%)
--------------------
800 Amerada Hess Corporation................. 42,900
500 Ashland Oil, Inc......................... 19,812
1,300 Atlantic Richfield Company............... 154,050
400 Kerr-McGee Corporation................... 24,350
800 Oryx Energy Company *.................... 13,000
300 Pennzoil Corporation..................... 13,875
2,100 Phillips Petroleum Company............... 87,938
600 Rowan Companies, Inc. *.................. 8,850
700 Santa Fe Energy Resources, Inc. *........ 8,312
500 Sun Company, Inc......................... 15,188
2,300 USX-Marathon Group, Inc.................. 46,288
1,900 Unocal Corporation....................... 64,125
-----------
498,688
-----------
Oil-International (3.7%)
------------------------
4,100 Amoco Corporation........................ 296,738
5,300 Chevron Corporation...................... 312,700
10,100 Exxon Corporation........................ 877,437
3,200 Mobil Corporation........................ 358,800
4,300 Royal Dutch Petroleum Company............ 661,125
2,200 Texaco, Inc.............................. 184,525
500 Western Atlas, Inc. *.................... 29,125
-----------
2,720,450
-----------
Optical & Photo (0.4%)
----------------------
1,800 Corning, Inc............................. 69,075
2,800 Eastman Kodak Company.................... 217,700
300 Polaroid Corporation..................... 13,688
-----------
300,463
-----------
Paper & Forest Products (0.9%)
------------------------------
1,000 Alco Standard Corporation................ 45,250
400 Boise Cascade Corporation................ 14,650
700 Champion International Corporation....... 29,225
800 Georgia-Pacific Corporation.............. 56,800
2,402 International Paper Company.............. 88,574
600 James River Corporation of Virginia...... 15,825
2,290 Kimberly-Clark Corporation............... 176,902
800 Louisiana-Pacific Corporation............ 17,700
400 Mead Corporation......................... 20,750
200 Potlatch Corporation..................... 7,825
400 Temple-Inland, Inc....................... 18,700
600 Union Camp Corporation................... 29,250
800 Westvaco Corporation..................... 23,900
1,600 Weyerhaeuser Company..................... 68,000
500 Willamette Industries.................... 29,750
-----------
643,101
-----------
Producers Goods (3.2%)
----------------------
2,300 Allied-Signal Inc........................ 131,388
500 Avery Dennison Corporation............... 27,438
200 Briggs & Stratton Corporation............ 8,225
600 Case Corporation......................... 28,800
1,600 Caterpillar, Inc......................... 108,400
300 Cincinnati Milacron, Inc................. 7,200
800 Cooper Industries, Inc................... 33,200
2,100 Deere & Company.......................... 84,000
1,000 Dover Corporation........................ 46,125
1,800 Emerson Electric Company................. 162,675
400 FMC Corporation *........................ 26,100
300 Foster Wheeler Corporation............... 13,462
13,500 General Electric Company................. 1,167,750
200 Giddings & Lewis, Inc.................... 3,250
300 Harnischfeger Industries, Inc............ 9,975
1,000 Illinois Tool Works, Inc................. 67,625
800 Ingersoll-Rand Company................... 35,000
400 Johnson Controls, Inc.................... 27,800
300 Millipore Corporation.................... 12,562
600 Navistar International Corporation *..... 5,925
900 Pall Corporation......................... 21,712
600 Parker Hannifin Corporation.............. 25,425
400 Raychem Corporation...................... 28,750
300 Snap-On, Inc............................. 14,212
1,400 Tenneco, Inc............................. 71,575
200 Timken Company........................... 7,750
200 Trinova Corporation...................... 6,675
1,200 Tyco International Ltd................... 48,900
300 Varity Corporation *..................... 14,438
500 W.W. Grainger, Inc....................... 38,750
3,300 Westinghouse Electric Company............ 61,875
-----------
2,346,962
-----------
Railroad & Shipping (0.6%)
--------------------------
1,264 Burlington Northern, Inc................. 102,226
1,700 CSX Corporation.......................... 82,025
700 Conrail, Inc............................. 46,462
1,100 Norfolk Southern Corporation............. 93,225
1,700 Union Pacific Corporation................ 118,788
-----------
442,726
-----------
</TABLE>
See accompanying notes.
16
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Balanced Portfolio
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
................................................................................
Retail (2.8%)
--------------
<C> <S> <C>
2,000 Albertson's, Inc. .................................. $ 82,750
1,200 American Stores Company............................. 49,500
1,500 CUC International, Inc. *........................... 53,250
800 Charming Shoppes, Inc. *............................ 5,650
700 Circuit City Stores, Inc. .......................... 25,288
600 Dayton Hudson Corporation........................... 61,875
900 Dillard Department Stores, Inc. .................... 32,850
1,600 Federated Department Stores, Inc. *................. 54,600
2,300 GAP, Inc. .......................................... 73,888
400 Giant Food, Inc., Class A........................... 14,350
300 Great Atlantic & Pacific Tea Company, Inc. ......... 9,862
3,800 Home Depot, Inc. ................................... 205,200
1,800 J.C. Penney Company, Inc. .......................... 94,500
3,800 Kmart Corporation *................................. 47,025
1,000 Kroger Corporation *................................ 39,500
100 Long's Drug Stores, Inc. ........................... 4,462
1,300 Lowe's Companies, Inc. ............................. 46,962
2,000 May Department Stores Company....................... 87,500
800 Melville Corporation................................ 32,400
300 Mercantile Stores Company, Inc. .................... 17,588
700 Nordstrom, Inc. .................................... 31,150
500 Pep Boys-Manny, Moe, & Jack......................... 17,000
1,500 Price/Costco, Inc. *................................ 32,438
600 Rite Aid Corporation................................ 17,850
3,100 Sears Roebuck & Company............................. 150,737
500 TJX Companies, Inc.................................. 16,875
500 Tandy Corporation *................................. 23,687
2,170 The Limited, Inc. .................................. 46,655
2,200 Toys "R" Us, Inc. *................................. 62,700
18,500 Wal-Mart Stores, Inc. .............................. 469,438
1,900 Walgreen Company.................................... 63,650
1,200 Winn-Dixie Stores, Inc. ............................ 42,450
1,000 Woolworth Corporation *............................. 22,500
-----------
2,036,130
-----------
Steel (0.1%)
-------------
800 Armco, Inc. *....................................... 4,000
800 Bethlehem Steel Corporation *....................... 9,500
300 Inland Steel Industries, Inc. ...................... 5,888
700 Nucor Corporation................................... 35,438
600 USX-US Steel Group, Inc. ........................... 17,025
700 Worthington Industries, Inc. ....................... 14,611
-----------
86,462
-----------
Telephone (4.5%)
----------------
1,500 ALLTEL Corporation.................................. 46,125
13,000 AT&T Corporation.................................... 806,000
4,000 Airtouch Communications, Inc. *..................... 113,000
4,500 Ameritech Corporation............................... 267,188
3,600 Bell Atlantic Corporation........................... 229,500
8,000 BellSouth Corporation............................... 339,000
7,800 GTE Corporation..................................... 349,050
5,500 MCI Communications Corporation...................... 140,937
3,500 Nynex Corporation................................... 166,250
3,400 Pacific Telesis Group............................... 114,750
4,900 SBC Communications, Inc. ........................... 241,325
3,500 Sprint Corporation.................................. 147,000
800 Tellabs, Inc. *..................................... 53,500
3,800 U S West, Inc. ..................................... 121,125
3,800 U S West, Media Group *............................. 69,350
1,600 WorldCom, Inc. *.................................... 88,600
-----------
3,292,700
-----------
Tires & Rubber (0.1%)
---------------------
600 Cooper Tire & Rubber Company........................ 13,350
1,200 Goodyear Tire & Rubber.............................. 57,900
-----------
71,250
-----------
Tobacco (1.2%)
--------------
1,400 American Brands, Inc. .............................. 63,525
1,000 Loews Corporation................................... 78,875
6,700 Philip Morris Companies, Inc. ...................... 696,800
1,600 UST, Inc. .......................................... 54,800
-----------
894,000
-----------
Travel & Recreation (0.7%)
---------------------------
700 Brunswick Corporation............................... 14,000
5,429 Disney (Walt) Company............................... 341,348
800 Harrah's Entertainment *............................ 22,600
400 Hilton Hotels Corporation........................... 45,000
1,000 ITT Corporation *................................... 66,250
1,100 Marriott International, Inc. ....................... 59,125
-----------
548,323
-----------
Trucking & Freight (0.1%)
-------------------------
300 Caliber Systems, Inc. .............................. 10,200
300 Consolidated Freightways, Inc. ..................... 6,337
400 PACCAR, Inc. ....................................... 19,600
600 Ryder Systems, Inc. ................................ 16,875
200 Yellow Corporation *................................ 2,650
-----------
55,662
-----------
Total Common Stocks (cost basis $37,273,540)........ $40,866,703
-----------
</TABLE>
*Non-income producing securities
See accompanying notes.
-----
17
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] BALANCED PORTFOLIO
..................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT LONG-TERM DEBT SECURITIES (36.5%) RATE DATE VALUE
..............................................................................................
U.S. Government Obligations (16.7%)
-----------------------------------
<C> <S> <C> <C> <C>
$200,000 U.S. Treasury Bond............... 10.375% 11/15/12 $ 253,937
200,000 U.S. Treasury Bond............... 9.875 11/15/15 260,437
250,000 U.S. Treasury Bond............... 8.500 02/15/20 291,406
250,000 U.S. Treasury Bond............... 8.125 08/15/19 280,390
250,000 U.S. Treasury Bond............... 7.875 02/15/21 273,906
200,000 U.S. Treasury Bond............... 7.625 11/15/22 213,938
250,000 U.S. Treasury Bond............... 7.500 11/15/16 262,578
250,000 U.S. Treasury Bond............... 7.500 11/15/24 265,000
250,000 U.S. Treasury Bond............... 7.250 08/15/22 256,172
250,000 U.S. Treasury Bond............... 7.250 05/15/16 256,094
250,000 U.S. Treasury Bond............... 7.125 02/15/23 252,500
250,000 U.S. Treasury Bond............... 6.875 08/15/25 247,344
250,000 U.S. Treasury Bond............... 6.250 08/15/23 226,484
50,000 U.S. Treasury Note............... 10.750 02/15/03 60,953
250,000 U.S. Treasury Note............... 8.750 10/15/97 258,515
250,000 U.S. Treasury Note............... 8.250 07/15/98 259,921
250,000 U.S. Treasury Note............... 8.000 05/15/01 265,625
200,000 U.S. Treasury Note............... 7.875 01/15/98 205,312
250,000 U.S. Treasury Note............... 7.875 04/15/98 257,421
250,000 U.S. Treasury Note............... 7.750 11/30/99 260,312
250,000 U.S. Treasury Note............... 7.750 12/31/99 260,546
250,000 U.S. Treasury Note............... 7.750 02/15/01 262,578
50,000 U.S. Treasury Note............... 7.750 01/31/00 52,125
250,000 U.S. Treasury Note............... 7.500 11/15/01 260,938
250,000 U.S. Treasury Note............... 7.500 10/31/99 258,281
300,000 U.S. Treasury Note............... 7.375 11/15/97 305,250
250,000 U.S. Treasury Note............... 7.250 02/15/98 254,453
250,000 U.S. Treasury Note............... 7.125 10/15/98 255,000
250,000 U.S. Treasury Note............... 7.000 04/15/99 254,609
250,000 U.S. Treasury Note............... 6.875 07/31/99 253,594
250,000 U.S. Treasury Note............... 6.750 05/31/99 252,890
150,000 U.S. Treasury Note............... 6.750 04/30/00 151,595
230,000 U.S. Treasury Note............... 6.500 05/15/05 226,765
250,000 U.S. Treasury Note............... 6.250 02/15/03 245,469
250,000 U.S. Treasury Note............... 6.125 05/15/98 250,078
250,000 U.S. Treasury Note............... 6.125 05/31/97 250,703
250,000 U.S. Treasury Note............... 6.125 07/31/00 247,188
250,000 U.S. Treasury Note............... 6.000 11/30/97 250,156
250,000 U.S. Treasury Note............... 6.000 12/31/97 250,000
250,000 U.S. Treasury Note............... 6.000 08/31/97 250,156
250,000 U.S. Treasury Note............... 5.875 04/30/98 249,062
250,000 U.S. Treasury Note............... 5.875 07/31/97 249,922
250,000 U.S. Treasury Note............... 5.875 08/15/98 248,515
250,000 U.S. Treasury Note............... 5.875 02/15/04 143,203
150,000 U.S. Treasury Note............... 5.750 08/15/03 237,890
250,000 U.S. Treasury Note............... 5.625 10/31/97 248,906
250,000 U.S. Treasury Note............... 5.500 11/15/98 246,094
250,000 U.S. Treasury Note............... 5.500 09/30/97 248,828
250,000 U.S. Treasury Note............... 5.500 02/28/99 245,312
250,000 U.S. Treasury Note............... 5.250 07/31/98 245,703
250,000 U.S. Treasury Note............... 5.125 12/31/98 243,671
-----------
Total U.S. Government Obligations........................... 12,307,725
-----------
U.S. Government Agency Obligations (13.1%)
------------------------------------------
$243,368 Federal Home Loan
Mortgage Corporation Gold
15-Yr. Pass Through............ 7.500% 08/01/10 $ 244,357
246,884 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 7.000 09/01/25 237,701
132,182 Federal Home Loan Mortgage
Corporation Gold
7-Yr. Balloon.................. 7.000 06/01/02 131,728
250,000 Federal Home Loan Mortgage
Corporation Medium
Term Note...................... 6.395 05/16/00 247,862
238,022 Federal Home Loan Mortgage
Corporation Gold
5-Yr. Balloon.................. 5.500 12/01/99 229,320
252,313 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 7.000 05/01/26 242,928
203,281 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 9.000 04/01/25 211,729
193,207 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 6.500 04/01/24 181,009
190,444 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 8.500 09/01/25 195,560
254,540 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 8.000 01/01/26 256,845
248,410 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through............ 7.500 11/01/25 245,380
247,051 Federal Home Loan Mortgage
Corporation Gold
15-Yr. Pass Through............ 6.500 04/01/09 238,790
228,349 Federal Home Loan Mortgage
Corporation
15-Yr. Pass Through............ 7.000 11/10/10 225,137
100,014 Federal National
Mortgage Association
15-Yr. Pass Through............ 9.000 04/01/10 104,139
246,799 Federal National
Mortgage Association
15-Yr. Pass Through............ 8.000 05/01/11 251,581
250,000 Federal National
Mortgage Association
15-Yr. Pass Through............ 7.500 06/01/11 251,016
60,897 Federal National
Mortgage Association
15-Yr. Pass Through............ 9.000 04/01/10 63,409
</TABLE>
See accompanying notes.
18
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] BALANCED PORTFOLIO
..................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT LONG-TERM DEBT SECURITIES RATE DATE VALUE
..............................................................................................
<C> <S> <C> <C> <C>
U.S. Government Agency Obligations-Continued
--------------------------------------------
$246,331 Federal National
Mortgage Association
15-Yr. Pass Through............ 6.000% 02/01/11 $ 232,859
247,411 Federal National
Mortgage Association
30-Yr. Pass Through............ 7.500 09/01/25 244,239
249,120 Federal National
Mortgage Association
30-Yr. Pass Through............ 6.500 03/01/26 233,003
245,510 Federal National
Mortgage Association
30-Yr. Pass Through............ 8.000 01/01/26 247,426
250,000 Federal National
Mortgage Association
30-Yr. Pass Through............ 8.500 05/01/26 256,561
251,306 Federal National
Mortgage Association
30-Yr. Pass Through............ 7.000 03/01/26 241,802
247,281 Federal National
Mortgage Association
30-Yr. Pass Through............ 6.000 05/01/26 224,560
250,000 Federal National
Mortgage Association
10-Yr. Pass Through............ 6.700 11/10/05 239,458
175,000 Federal National
Mortgage Association
30-Yr. Pass Through............ 8.100 08/12/19 189,037
220,734 Federal National
Mortgage Association
30-Yr. Pass Through............ 10.500 08/01/20 242,600
245,496 Federal National
Mortgage Association
30-Yr. Pass Through............ 7.000 01/01/26 236,210
200,000 Federal National
Mortgage Association
Medium Term Note............... 5.200 04/30/98 195,644
204,060 Federal National
Mortgage Association
30-Yr. Pass Through............ 7.500 10/01/24 201,443
247,401 Government National
Mortgage Association
30-Yr. Pass Through............ 7.000 02/15/26 237,271
244,489 Government National
Mortgage Association
30-Yr. Pass Through............ 8.000 04/15/26 246,626
249,773 Government National
Mortgage Association
30-Yr. Pass Through............ 6.000 05/15/26 225,730
249,801 Government National
Mortgage Association
30-Yr. Pass Through............ 7.000 05/15/26 239,572
252,500 Government National
Mortgage Association
30-Yr. Pass Through............ 8.500 06/15/26 259,600
218,000 Government National
Mortgage Association
30-Yr. Pass Through............ 9.500 12/15/24 232,918
254,657 Government National
Mortgage Association
30-Yr. Pass Through............ 7.500 04/15/26 250,914
198,524 Government National
Mortgage Association
30-Yr. Pass Through............ 7.500 06/01/25 195,606
179,090 Government National
Mortgage Association
15-Yr. Pass Through............ 6.500 05/15/09 173,661
194,098 Government National
Mortgage Association
30-Yr. Pass Through............ 8.000 06/01/25 195,795
250,000 Private Export Funding
Corporation.................... 8.400 07/31/01 267,840
150,000 Private Export Funding
Corporation.................... 6.240 05/15/02 145,892
250,000 Student Loan Marketing
Corporation.................... 6.050 09/14/00 244,704
250,000 Tennessee Valley Authority....... 6.375 06/15/05 239,564
-----------
Total U.S. Government
Agency Obligations........................................ 9,699,026
-----------
Asset-Backed Securities (0.6%)
------------------------------
216,808 Western Financial
Grantor Trust.................. 7.100 01/01/00 219,138
200,000 NationsBank Credit Card
Trust Certificate.............. 6.000 12/15/05 189,082
-----------
Total Asset Backed Securities............................... 408,220
-----------
Corporate Obligations (4.1%)
----------------------------
200,000 Abbott Laboratories Notes........ 6.800 05/15/05 196,341
250,000 American General Finance
Corporation Senior Notes....... 6.875 07/01/99 251,864
250,000 Associates Corporation
N.A. Senior Notes.............. 6.000 12/01/02 237,090
250,000 Browning-Ferris Industries Inc.
Senior Notes................... 6.375 01/15/08 231,464
250,000 Commercial Credit Company
Notes.......................... 6.750 05/15/00 249,464
125,000 Eaton Corporation Notes.......... 6.375 04/01/99 124,631
250,000 General Motors Acceptance
Corporation Notes.............. 9.625 12/15/01 277,865
250,000 Honeywell, Inc. Debentures....... 8.625 04/15/06 273,140
250,000 J.C. Penney & Company, Inc.
Notes.......................... 6.375 09/15/00 244,615
250,000 Norwest Financial, Inc.
Senior Notes................... 7.000 01/15/03 249,533
</TABLE>
See accompanying notes.
19
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] BALANCED PORTFOLIO
..................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
..............................................................................................
<C> <S> <C> <C> <C>
Corporate Obligations-Continued
-------------------------------
$250,000 Rhone-Poulenc SA Notes........... 7.750% 01/15/02 $ 255,604
250,000 Warner-Lambert Notes............. 6.625 09/15/02 246,000
200,000 Weyerhaeuser Company
Debentures..................... 9.050 02/01/03 221,015
-----------
Total Corporate Obligations................................. 3,058,626
-----------
Utility Bonds (1.0%)
--------------------
250,000 Baltimore Gas & Electric
Company First Refunding
Mortgage Bonds................. 7.500 01/15/07 253,877
250,000 Pacificorp First Mortgage
Bonds.......................... 6.750 04/01/05 239,790
250,000 Texas Utilities Company
First Mortgage Bonds........... 7.375 08/01/01 253,999
-----------
Total Utility Bonds......................................... 747,666
-----------
Other Government Securities (0.6%)
----------------------------------
250,000 Manitoba Province Canada......... 6.125 01/19/04 236,568
200,000 Province of Ontario
Senior Global Bonds............ 6.125 06/28/00 196,808
-----------
Total Other Government
Securities................................................ 433,376
-----------
Canadian Corporate Securities (0.4%)
------------------------------------
250,000 Petro-Canada Ltd................. 8.600 01/15/10 285,242
-----------
Total Long-Term Debt
Securities (cost basis $27,495,743)....................... 26,939,881
-----------
Short-Term Investments (8.0%)
-----------------------------
225,000 C. S. First Boston, Inc.......... 5.400 09/05/96 222,773
664,000 C. S. First Boston, Inc.......... 5.320 08/01/96 660,958
308,000 Ford Motor Credit Corporation.... 5.400 07/05/96 307,815
379,000 Ford Motor Credit Corporation.... 5.280 08/02/96 377,221
690,000 Ford Motor Credit Corporation.... 5.290 07/03/96 689,797
253,000 General Electric Capital
Corporation.................... 5.370 07/02/96 252,962
229,000 General Motors Acceptance
Corporation.................... 5.380 07/02/96 228,966
355,000 General Motors Acceptance
Corporation.................... 5.310 08/02/96 353,324
100,000 GTE-North, Inc................... 5.400 07/01/96 100,000
250,000 Merrill Lynch & Company, Inc..... 5.400 09/05/96 247,525
676,000 Merrill Lynch & Company, Inc..... 5.310 07/02/96 675,900
758,000 Sears Roebuck Acceptance
Corporation.................... 5.330 08/01/96 754,521
995,000 Southwestern Bell Capital
Corporation.................... 5.300 07/02/96 994,854
-----------
Total Short-Term Investments
(cost basis $5,866,616)................................... 5,866,616
-----------
Total Investments (99.9%)
(cost basis $70,635,899).................................. 73,673,200
Other Assets, less
Liabilities (0.1%)........................................ 42,171
-----------
NET ASSETS (100.0%)........................................ $73,715,371
===========
</TABLE>
See accompanying notes.
20
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO AAL VARIABLE ANNUITY]
Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (99.1%) MARKET VALUE
....................................................................
Aerospace (2.3%)
-----------------
<C> <S> <C>
4,100 Boeing Company............................... $ 357,213
800 General Dynamics Corporation................. 49,600
600 Goodrich (B.F.) Company...................... 22,425
2,400 Lockheed Martin Corporation.................. 201,600
2,600 McDonnell Douglas Corporation................ 126,100
700 Northrop Grumman Corporation................. 47,688
2,900 Raytheon Company............................. 149,712
2,600 Rockwell International Corporation........... 148,850
800 TRW, Inc..................................... 71,900
1,000 Textron, Inc................................. 79,875
1,500 United Technologies Corporation.............. 172,500
-----------
1,427,463
-----------
Air Transportation (0.5%)
--------------------------
1,100 AMR Corporation *........................... 100,100
800 Delta Air Lines, Inc........................ 66,400
700 Federal Express Corporation *.............. 57,400
1,700 Southwest Airlines Company.................. 49,512
700 USAir Group, Inc. *......................... 12,600
-----------
286,012
-----------
Apparel (0.5%)
---------------
200 Brown Group, Inc.............................. 3,475
900 Fruit of the Loom, Inc. *..................... 22,950
800 Liz Claiborne, Inc............................ 27,700
1,700 Nike, Inc..................................... 174,675
800 Reebok International, Ltd..................... 26,900
400 Russell Corporation........................... 11,050
200 Springs Industries, Inc....................... 10,100
500 Stride Rite Corporation....................... 4,125
800 V F Corporation............................... 47,700
-----------
328,675
-----------
Banks (6.9%)
-------------
5,350 Banc One Corporation........................ 181,900
1,300 Bank of Boston Corporation.................. 64,350
2,400 Bank of New York Company, Inc............... 123,000
4,400 BankAmerica Corporation..................... 333,300
1,000 Bankers Trust New York Corporation.......... 73,875
1,100 Barnett Banks, Inc.......................... 67,100
1,800 Boatmen's Bancshares, Inc................... 72,225
5,156 Chase Manhattan Corporation................. 364,142
5,800 Citicorp.................................... 479,225
1,400 Comerica, Inc............................... 62,475
2,600 Corestates Financial Corporation............ 100,100
1,300 Fifth Third Bancorp......................... 70,200
1,700 First Bank System, Inc...................... 98,600
3,724 First Chicago NBD Corporation............... 145,702
3,440 First Union Corporation..................... 209,410
3,135 Fleet Financial Group, Inc.................. 136,372
2,700 Keycorp..................................... 104,625
2,300 J. P. Morgan & Company, Inc................. 194,638
1,600 Mellon Bank Corporation..................... 91,200
2,600 National City Corporation................... 91,325
3,600 NationsBank Corporation..................... 297,450
4,300 Norwest Corporation......................... 149,962
4,000 PNC Bank Corporation........................ 119,000
700 Republic New York Corporation............... 43,575
2,700 Suntrust Banks, Inc......................... 99,900
1,900 U S Bancorp................................. 68,638
2,000 Wachovia Corporation........................ 87,500
1,200 Wells Fargo & Company....................... 286,650
-----------
4,216,439
-----------
Brokerage (0.4%)
-----------------
2,000 Merrill Lynch & Company, Inc................ 130,250
1,800 Morgan Stanley Group, Inc................... 88,425
1,200 Salomon, Inc................................ 52,800
-----------
271,475
-----------
Business Machines (5.5%)
-------------------------
2,000 3Com Corporation *.......................... 91,500
1,400 Amdahl Corporation *........................ 15,050
1,400 Apple Computer, Inc......................... 29,400
500 Autodesk, Inc............................... 14,938
2,200 Bay Networks, Inc. *........................ 56,650
900 Cabletron Systems, Inc. *................... 61,762
800 Ceridian Corporation *...................... 40,400
6,800 Cisco Systems, Inc. *....................... 385,050
3,200 Compaq Computers, Inc. *.................... 157,600
400 Data General Corporation *.................. 5,200
1,800 Digital Equipment Corporation *............. 81,000
1,500 Honeywell, Inc.............................. 81,750
6,500 International Business Machines Corporation. 643,500
500 Intergraph Corporation *.................... 6,062
7,100 Microsoft Corporation *..................... 852,888
4,300 Novell, Inc. *.............................. 59,662
7,750 Oracle Systems Corporation *................ 305,641
1,800 Pitney-Bowes, Inc........................... 85,950
1,900 Silicon Graphics, Inc. *.................... 45,600
2,200 Sun Microsystems, Inc. *.................... 129,525
1,300 Tandem Computers, Inc. *.................... 16,088
2,000 Unisys Corporation *........................ 14,250
3,800 Xerox Corporation........................... 203,300
-----------
3,382,766
-----------
Business Services (2.1%)
------------------------
3,400 Automatic Data Processing, Inc.............. 131,325
1,200 Block (H.R.), Inc........................... 39,150
2,500 Browning-Ferris Industries, Inc............. 72,500
2,950 Computer Associates International, Inc...... 210,187
700 Computer Sciences Corporation *............. 52,325
900 Deluxe Corporation.......................... 31,950
1,100 Dial Corporation............................ 31,488
</TABLE>
See accompanying notes.
21
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Business Services--Continued
----------------------------
700 Ecolab, Inc..................................... $ 23,100
2,700 First Data Corporation.......................... 214,988
900 Interpublic Group of Companies, Inc............. 42,188
300 John H. Harland Company......................... 7,388
3,400 Laidlaw, Inc.................................... 34,425
1,100 Moore Corporation, Ltd.......................... 20,762
500 National Service Industries, Inc................ 19,562
500 Ogden Corporation............................... 9,062
600 Safety Kleen Corporation........................ 10,500
300 Shared Medical Systems Corporation.............. 19,275
2,100 The Dun & Bradstreet Corporation................ 131,250
5,800 WMX Technologies, Inc........................... 189,950
----------
1,291,375
----------
Chemicals (3.5%)
----------------
1,400 Air Products & Chemicals, Inc................... 80,850
6,700 E. I. Du Pont De Nemours and Company............ 530,137
1,000 Eastman Chemical Company........................ 60,875
800 Great Lakes Chemical Corporation................ 49,800
1,300 Hercules, Inc................................... 71,825
5,000 Minnesota Mining & Manufacturing Co............. 345,000
7,000 Monsanto Company................................ 227,500
1,700 Morton International, Inc....................... 63,325
700 Nalco Chemical Company.......................... 22,050
2,300 PPG Industries, Inc............................. 112,125
1,800 Praxair, Inc.................................... 76,050
800 Rohm & Haas Company............................. 50,200
600 Sigma-Aldrich Corporation....................... 32,100
3,000 The Dow Chemical Company........................ 228,000
1,600 Union Carbide Corporation....................... 63,600
1,200 W. R. Grace & Company........................... 85,050
----------
2,098,487
----------
Construction (0.5%)
-------------------
500 Armstrong World Industries, Inc................. 28,812
300 Centex Corporation.............................. 9,338
300 Crane Company................................... 12,300
1,000 Fluor Corporation............................... 65,375
400 Kaufman & Broad Home Corporation................ 5,800
1,900 Masco Corporation............................... 57,475
600 Owens-Corning Fiberglass Corporation *.......... 25,800
300 Pulte Corporation............................... 8,025
1,000 Sherwin-Williams Company........................ 46,500
1,000 Stanley Works................................... 29,750
----------
289,175
----------
Consumer Durables (0.3%)
-------------------------
1,000 Black & Decker Corporation...................... 38,625
1,200 Maytag Corporation.............................. 25,050
1,800 Newell Company.................................. 55,125
200 Outboard Marine Corporation..................... 3,625
700 Tupperware Corporation *........................ 29,575
900 Whirlpool Corporation........................... 44,662
----------
196,662
----------
Containers (0.2%)
-----------------
300 Ball Corporation................................ 8,625
600 Bemis Company, Inc.............................. 21,000
1,500 Crown Cork & Seal Company, Inc.................. 67,500
1,100 Stone Container Corporation..................... 15,125
----------
112,250
----------
Cosmetics (2.4%)
----------------
300 Alberto-Culver Company.......................... 13,912
1,600 Avon Products, Inc.............................. 72,200
700 Clorox Company.................................. 62,038
1,800 Colgate-Palmolive Company....................... 152,550
5,300 Gillette Company................................ 330,588
1,300 International Flavors and Fragrances, Inc....... 61,912
8,200 Procter & Gamble Company........................ 743,125
----------
1,436,325
----------
Drugs & Medicine (10.4%)
------------------------
9,300 Abbott Laboratories............................. 404,550
700 Allergan, Inc................................... 27,475
1,000 Alza Corporation *.............................. 27,375
7,600 American Home Products Corporation.............. 456,950
3,200 Amgen, Inc. *................................... 172,800
600 Bard (C.R.), Inc................................ 20,400
600 Bausch & Lomb, Inc.............................. 25,500
3,300 Baxter International, Inc....................... 155,925
800 Becton, Dickinson and Company................... 64,200
1,100 Beverly Enterprises, Inc. *..................... 13,200
1,300 Biomet, Inc. *.................................. 18,687
2,100 Boston Scientific Corporation *................. 94,500
6,000 Bristol-Myers Squibb Company.................... 540,000
5,400 Columbia/HCA Healthcare Corporation............. 288,225
500 Community Psychiatric Centers *................. 4,750
6,600 Eli Lilly & Company............................. 429,000
1,900 Humana, Inc. *.................................. 33,962
15,800 Johnson & Johnson............................... 782,100
800 Mallinckrodt Group, Inc......................... 31,100
700 Manor Care, Inc................................. 27,562
2,800 Medtronic, Inc.................................. 156,800
14,700 Merck & Company, Inc............................ 949,988
7,600 Pfizer, Inc..................................... 542,450
6,015 Pharmacia & Upjohn, Inc......................... 266,916
4,400 Schering-Plough Corporation..................... 276,100
900 St. Jude Medical, Inc. *........................ 30,150
2,500 Tenet Healthcare Corporation *.................. 53,438
1,900 U S Healthcare, Inc............................. 104,500
700 U S Surgical Corporation........................ 21,700
</TABLE>
See accompanying notes.
22
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Drugs & Medicine--Continued
---------------------------
2,200 United Healthcare Corporation................... $ 111,100
3,300 Warner-Lambert Company.......................... 181,500
----------
6,312,903
----------
Electronics (4.4%)
------------------
2,528 AMP, Inc........................................ 101,436
1,600 Advanced Micro Devices, Inc. *.................. 21,800
750 Andrew Corporation *............................ 40,312
2,100 Applied Materials, Inc. *....................... 64,050
1,300 DSC Communications Corporation *................ 39,162
500 EG&G, Inc....................................... 10,688
2,700 EMC Corporation *............................... 50,288
1,500 General Instrument Corporation *................ 43,312
600 General Signal Corporation...................... 22,725
500 Harris Corporation.............................. 30,500
6,100 Hewlett-Packard Company......................... 607,713
9,800 Intel Corporation............................... 719,688
1,500 LSI Logic Corporation *......................... 39,000
2,400 Micron Technology, Inc.......................... 62,100
7,000 Motorola, Inc................................... 440,125
1,600 National Semiconductor Corporation *............ 24,800
3,000 Northern Telecom, Ltd........................... 163,125
600 Perkin Elmer Corporation........................ 28,950
900 Scientific-Atlanta, Inc......................... 13,950
400 Tektronix, Inc.................................. 17,900
600 Teledyne, Inc................................... 21,675
2,200 Texas Instruments, Inc.......................... 109,725
400 Thomas & Betts Corporation...................... 15,000
----------
2,688,024
----------
Energy & Utilities (4.1%)
-------------------------
2,200 American Electric Power Company................. 93,775
1,700 Baltimore Gas & Electric Company................ 48,237
1,800 CINergy Corporation............................. 57,600
1,800 Carolina Power & Light Company.................. 68,400
2,400 Central & Southwest Corporation................. 69,600
1,200 Coastal Corporation............................. 50,100
600 Columbia Gas System, Inc........................ 31,275
2,700 Consolidated Edison Company of New York......... 78,975
1,100 Consolidated Natural Gas Company................ 57,475
1,700 DTE Energy Company.............................. 52,487
2,500 Duke Power Company.............................. 128,125
2,100 Dominion Resources, Inc......................... 84,000
5,200 Edison International............................ 91,650
3,000 Enron Corporation............................... 122,625
800 Enserch Corporation............................. 17,400
2,700 Entergy Corporation............................. 76,612
2,200 FPL Group, Inc.................................. 101,200
1,400 General Public Utilities Corporation............ 49,350
3,100 Houston Industries, Inc......................... 76,337
1,700 Niagara Mohawk Power Corporation................ 13,175
500 Nicor, Inc...................................... 14,188
1,600 NorAm Energy Corporation........................ 17,400
800 Northern States Power Company................... 39,500
300 ONEOK, Inc...................................... 7,500
1,800 Ohio Edison Company............................. 39,375
1,800 PP&L Resources, Inc............................. 42,525
3,400 PacifiCorp...................................... 75,650
900 Pacific Enterprises............................. 26,662
4,900 Pacific Gas & Electric Company.................. 113,925
1,700 PanEnergy Corporation........................... 55,888
2,600 Peco Energy Company............................. 67,600
400 Peoples Energy Corporation...................... 13,400
2,900 Public Service Enterprise....................... 79,388
1,000 Sonat, Inc...................................... 45,000
7,900 Southern Company................................ 194,538
2,700 Texas Utilities Company......................... 115,425
2,500 Unicom Corporation.............................. 69,688
1,200 Union Electric Company.......................... 48,300
1,200 Williams Companies, Inc......................... 59,400
----------
2,493,750
----------
Energy--Raw Materials (1.1%)
----------------------------
1,600 Baker Hughes, Inc............................... 52,600
1,500 Burlington Resources, Inc....................... 64,500
2,100 Dresser Industries, Inc......................... 61,950
200 Eastern Enterprises............................. 6,650
1,400 Halliburton Company............................. 77,700
300 Helmerich & Payne, Inc.......................... 10,988
400 Louisiana Land and Exploration Company.......... 23,050
600 McDermott International, Inc.................... 12,525
200 NACCO Industries, Inc........................... 11,075
3,700 Occidental Petroleum Corporation................ 91,575
2,900 Schlumberger, Ltd............................... 244,325
----------
656,938
----------
Food & Agriculture (6.7%)
-------------------------
6,165 Archer-Daniels-Midland Company.................. 117,906
1,800 CPC International, Inc.......................... 129,600
3,000 Campbell Soup Company........................... 211,500
29,700 Coca-Cola Company............................... 1,451,587
2,900 ConAgra, Inc.................................... 131,587
400 Fleming Companies, Inc.......................... 5,750
1,900 General Mills, Inc.............................. 103,550
4,300 H.J. Heinz Company.............................. 130,612
900 Hershey Foods Corporation....................... 66,038
2,600 Kellogg Company................................. 190,450
18,600 PepsiCo, Inc.................................... 657,975
1,000 Pioneer Hi-Bred International, Inc.............. 52,875
1,600 Quaker Oats Company............................. 54,600
1,300 Ralston Purina Corporation...................... 83,362
5,700 Sara Lee Corporation............................ 184,538
800 Supervalu, Inc.................................. 25,200
</TABLE>
See accompanying notes.
23
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Food & Agriculture--Continued
-----------------------------
2,100 Sysco Corporation............................... $ 71,925
1,900 Unilever N. V................................... 275,738
1,200 Whitman Corporation............................. 28,950
1,400 Wrigley (Wm) Jr. Company........................ 70,700
----------
4,044,443
----------
Gold (0.5%)
-----------
4,200 Barrick Gold Corporation........................ 113,925
1,700 Homestake Mining Company........................ 29,112
1,200 Newmont Mining Corporation...................... 59,250
2,800 Placer Dome, Inc................................ 66,850
1,500 Santa Fe Pacific Gold Corporation............... 21,188
----------
290,325
----------
Insurance (3.3%)
----------------
1,400 Aetna Life & Casualty Company................... 100,100
500 Alexander & Alexander Services, Inc............. 9,875
5,341 Allstate Corporation............................ 243,683
2,400 American General Corporation.................... 87,300
5,700 American International Group, Inc............... 562,163
1,300 Aon Corporation................................. 65,975
2,100 Chubb Corporation............................... 104,738
900 Cigna Corporation............................... 106,088
1,000 General Re Corporation.......................... 152,250
1,400 ITT Hartford Group, Inc......................... 74,550
800 Jefferson-Pilot Corporation..................... 41,300
1,200 Lincoln National Corporation.................... 55,500
900 Marsh & McLennan Companies, Inc................. 86,850
1,100 Providian Corporation........................... 47,162
1,500 Safeco Corporation.............................. 53,062
1,000 St. Paul Companies, Inc......................... 53,500
800 Torchmark Corporation........................... 35,000
800 Transamerica Corporation........................ 64,800
1,400 USF&G Corporation............................... 22,925
350 USLIFE Corporation.............................. 11,506
900 Unum Corporation................................ 56,025
----------
2,034,352
----------
Liquor (0.7%)
-------------
3,100 Anheuser-Busch Companies, Inc................... 232,500
800 Brown-Foreman Corporation....................... 32,000
400 Coors (Adolph) Company.......................... 7,150
4,400 Seagram Company, Ltd............................ 147,950
----------
419,600
----------
Media (1.7%)
------------
2,800 Comcast Corporation............................. 51,800
1,800 Donnelley (R.R.) & Sons Company................. 62,775
1,100 Dow Jones & Company, Inc........................ 45,925
1,700 Gannett Company, Inc............................ 120,275
400 King World Productions, Inc. *.................. 14,550
600 Knight-Ridder, Inc.............................. 43,500
1,200 McGraw-Hill, Inc................................ 54,900
300 Meredith Corporation............................ 12,525
1,100 New York Times Company.......................... 35,888
7,700 Tele-Communications, Inc. *..................... 139,562
4,600 Time Warner, Inc................................ 180,550
1,200 Times Mirror Company............................ 52,200
800 Tribune Company................................. 58,100
4,400 Viacom, Inc. *.................................. 171,050
----------
1,043,600
----------
Miscellaneous Finance (2.7%)
----------------------------
1,300 Ahmanson (H.F.) & Company....................... 35,100
5,700 American Express Company........................ 254,362
700 Beneficial Corporation.......................... 39,288
2,000 Dean Witter Discover and Company................ 114,500
12,900 Federal National Mortgage Association........... 432,150
2,200 Federal Home Loan Mortgage Corporation.......... 188,100
700 Golden West Financial Corporation............... 39,200
1,600 Great Western Financial Corporation............. 38,200
1,600 Green Tree Financial Corporation................ 50,000
1,200 Household International Corporation............. 91,200
2,650 MBNA Corporation................................ 75,525
5,650 Travelers Group, Inc............................ 257,781
----------
1,615,406
----------
Motor Vehicles (2.4%)
---------------------
4,400 Chrysler Corporation............................ 272,800
400 Cummins Engine Company, Inc..................... 16,150
1,200 Dana Corporation................................ 37,200
1,000 Eaton Corporation............................... 58,625
700 Echlin, Inc..................................... 26,513
500 Fleetwood Enterprises, Inc...................... 15,500
13,900 Ford Motor Company.............................. 450,012
1,400 Genuine Parts Company........................... 64,050
9,000 General Motors Corporation...................... 471,375
1,300 ITT Industries, Inc............................. 32,662
----------
1,444,887
----------
Non-Durables (1.3%)
-------------------
800 American Greetings Corporation, Class A......... 21,900
500 Bally Entertainment Corporation *............... 13,750
1,800 Darden Restaurants, Inc......................... 19,350
800 Harcourt General, Inc........................... 40,000
1,000 Hasbro, Inc..................................... 35,750
400 Jostens, Inc.................................... 7,900
200 Luby's Cafeterias, Inc.......................... 4,700
3,250 Mattel, Inc..................................... 93,031
8,300 McDonald's Corporation.......................... 388,025
1,800 Rubbermaid, Inc................................. 49,050
600 Ryans Family Steak House *...................... 5,550
1,400 Service Corporation International............... 80,500
</TABLE>
See accompanying notes.
24
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Non-Durables--Continued
-----------------------
400 Shoneys, Inc. *................................. $ 4,350
1,500 Wendy's International, Inc...................... 27,938
----------
791,794
----------
Non-Ferrous Metals (0.8%)
-------------------------
2,600 Alcan Aluminum, Ltd............................. 79,300
2,100 Aluminum Company of America..................... 120,488
500 Asarco, Inc..................................... 13,812
1,100 Cyprus Minerals Company......................... 24,888
1,500 Echo Bay Mines, Ltd............................. 16,125
1,700 Engelhard Corporation........................... 39,100
2,300 Freeport-McMoran Copper & Gold, Class B......... 73,312
1,300 Inco, Ltd....................................... 41,925
800 Phelps Dodge Corporation........................ 49,900
800 Reynolds Metals Company......................... 41,700
----------
500,550
----------
Oil--Domestic (1.2%)
--------------------
1,100 Amerada Hess Corporation........................ 58,987
700 Ashland Oil, Inc................................ 27,738
1,900 Atlantic Richfield Company...................... 225,150
600 Kerr-McGee Corporation.......................... 36,525
1,200 Oryx Energy Company*............................ 19,500
500 Pennzoil Corporation............................ 23,125
3,100 Phillips Petroleum Company...................... 129,812
1,000 Rowan Companies, Inc. *......................... 14,750
1,000 Santa Fe Energy Resources, Inc. *............... 11,875
800 Sun Company, Inc................................ 24,300
3,400 USX-Marathon Group, Inc......................... 68,425
2,900 Unocal Corporation............................. 97,875
----------
738,062
----------
Oil--International (6.6%)
-------------------------
6,000 Amoco Corporation............................... 434,250
7,800 Chevron Corporation............................. 460,200
14,800 Exxon Corporation............................... 1,285,750
4,700 Mobil Corporation............................... 526,988
6,400 Royal Dutch Petroleum Company................... 984,000
3,200 Texaco, Inc..................................... 268,400
700 Western Atlas, Inc. *........................... 40,775
----------
4,000,363
----------
Optical & Photo (0.7%)
----------------------
2,700 Corning, Inc.................................... 103,613
4,200 Eastman Kodak Company........................... 326,550
500 Polaroid Corporation............................ 22,812
----------
452,975
----------
Paper & Forest Products (1.6%)
------------------------------
1,600 Alco Standard Corporation....................... 74,400
500 Boise Cascade Corporation....................... 18,313
1,100 Champion International Corporation.............. 45,925
1,100 Georgia-Pacific Corporation..................... 78,100
3,503 International Paper Company..................... 129,173
1,000 James River Corporation of Virginia............. 26,375
3,346 Kimberly-Clark Corporation...................... 258,478
1,200 Louisiana-Pacific Corporation................... 26,550
600 Mead Corporation................................ 31,125
300 Potlatch Corporation............................ 11,738
600 Temple-Inland, Inc.............................. 28,050
900 Union Camp Corporation.......................... 43,875
1,200 Westvaco Corporation............................ 35,850
2,300 Weyerhaeuser Company............................ 97,750
700 Willamette Industries........................... 41,650
----------
945,352
----------
Producers Goods (5.7%)
----------------------
3,400 Allied-Signal Inc............................... 194,225
700 Avery Dennison Corporation...................... 38,412
300 Briggs & Stratton Corporation................... 12,338
900 Case Corporation................................ 43,200
2,400 Caterpillar, Inc................................ 162,600
400 Cincinnati Milacron, Inc........................ 9,600
1,300 Cooper Industries, Inc.......................... 53,950
3,100 Deere & Company................................. 124,000
1,300 Dover Corporation............................... 59,962
2,700 Emerson Electric Company........................ 244,012
500 FMC Corporation *............................... 32,625
500 Foster Wheeler Corporation...................... 22,438
19,800 General Electric Company........................ 1,712,700
400 Giddings & Lewis, Inc........................... 6,500
500 Harnischfeger Industries, Inc................... 16,625
1,400 Illinois Tool Works, Inc........................ 94,675
1,300 Ingersoll-Rand Company.......................... 56,875
500 Johnson Controls, Inc........................... 34,750
500 Millipore Corporation........................... 20,938
800 Navistar International Corporation *............ 7,900
1,300 Pall Corporation................................ 31,362
900 Parker Hannifin Corporation..................... 38,138
600 Raychem Corporation............................. 43,125
500 Snap-On, Inc.................................... 23,688
2,000 Tenneco, Inc.................................... 102,250
300 Timken Company.................................. 11,625
300 Trinova Corporation............................. 10,012
1,800 Tyco International, Ltd......................... 73,350
400 Varity Corporation *............................ 19,250
600 W.W. Grainger, Inc.............................. 46,500
4,900 Westinghouse Electric Company................... 91,875
----------
3,439,500
----------
</TABLE>
See accompanying notes.
25
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Railroad & Shipping (1.1%)
--------------------------
1,864 Burlington Northern, Inc....................... $ 150,751
2,500 CSX Corporation................................ 120,625
1,000 Conrail, Inc................................... 66,375
1,600 Norfolk Southern Corporation................... 135,600
2,500 Union Pacific Corporation...................... 174,687
-----------
648,038
-----------
Retail (5.0%)
-------------
3,000 Albertson's, Inc............................... 124,125
1,700 American Stores Company........................ 70,125
2,200 CUC International, Inc. *...................... 78,100
1,200 Charming Shoppes, Inc. *....................... 8,475
1,100 Circuit City Stores, Inc....................... 39,738
900 Dayton Hudson Corporation...................... 92,812
1,300 Dillard Department Stores, Inc................. 47,450
2,400 Federated Department Stores, Inc. *............ 81,900
3,400 Gap, Inc....................................... 109,225
700 Giant Food, Inc., Class A...................... 25,112
400 Great Atlantic & Pacific Tea Company, Inc...... 13,150
5,700 Home Depot, Inc................................ 307,800
2,700 J.C. Penney Company, Inc....................... 141,750
5,700 Kmart Corporation *............................ 70,538
1,400 Kroger Corporation*............................ 55,300
200 Long's Drug Stores, Inc........................ 8,925
1,900 Lowe's Companies, Inc.......................... 68,638
2,900 May Department Stores Company.................. 126,875
1,200 Melville Corporation........................... 48,600
500 Mercantile Stores Company, Inc................. 29,312
1,000 Nordstrom, Inc................................. 44,500
700 Pep Boys-Manny, Moe, & Jack.................... 23,800
2,300 Price/Costco, Inc.*............................ 49,738
900 Rite Aid Corporation........................... 26,775
4,600 Sears Roebuck & Company........................ 223,675
700 Tandy Corporation.............................. 33,162
3,205 The Limited, Inc............................... 68,908
800 TJX Companies, Inc............................. 27,000
3,200 Toys "R" Us, Inc. *............................ 91,200
27,200 Wal-Mart Stores, Inc........................... 690,200
2,900 Walgreen Company............................... 97,150
1,800 Winn-Dixie Stores, Inc......................... 63,675
1,500 Woolworth Corporation *........................ 33,750
-----------
3,021,483
-----------
Steel (0.2%)
------------
1,200 Armco, Inc. *.................................. 6,000
1,300 Bethlehem Steel Corporation *.................. 15,437
500 Inland Steel Industries, Inc................... 9,812
1,100 Nucor Corporation.............................. 55,688
900 USX-US Steel Group, Inc........................ 25,538
1,000 Worthington Industries, Inc.................... 20,875
-----------
133,350
-----------
Telephone (8.0%)
-----------------
2,200 ALLTEL Corporation............................. 67,650
19,200 AT&T Corporation............................... 1,190,400
5,900 Airtouch Communications, Inc. *................ 166,675
6,700 Ameritech Corporation.......................... 397,813
5,300 Bell Atlantic Corporation...................... 337,875
11,800 BellSouth Corporation.......................... 500,025
11,600 GTE Corporation................................ 519,100
8,200 MCI Communications Corporation................. 210,125
5,200 Nynex Corporation.............................. 247,000
5,100 Pacific Telesis Group.......................... 172,125
7,200 SBC Communications, Inc........................ 354,600
5,200 Sprint Corporation............................. 218,400
1,100 Tellabs, Inc. *................................ 73,562
5,600 U.S. West, Inc................................. 178,500
5,600 U.S. West Media Group *........................ 102,200
2,300 WorldCom, Inc. *............................... 127,362
-----------
4,863,412
-----------
Tires & Rubber (0.2%)
---------------------
900 Cooper Tire & Rubber Company................... 20,025
1,800 Goodyear Tire & Rubber......................... 86,850
-----------
106,875
-----------
Tobacco (2.2%)
--------------
2,100 American Brands, Inc........................... 95,288
1,400 Loews Corporation.............................. 110,425
9,900 Philip Morris Companies, Inc................... 1,029,600
2,400 UST, Inc....................................... 82,200
-----------
1,317,513
-----------
Travel & Recreation (1.3%)
--------------------------
1,100 Brunswick Corporation.......................... 22,000
8,149 Disney (Walt) Company.......................... 512,368
1,200 Harrah's Entertainment *....................... 33,900
600 Hilton Hotels Corporation...................... 67,500
1,400 ITT Corporation *.............................. 92,750
1,600 Marriott International, Inc.................... 86,000
-----------
814,518
-----------
Trucking & Freight (0.1%)
-------------------------
400 Caliber System, Inc............................ 13,600
500 Consolidated Freightways, Inc.................. 10,563
500 PACCAR, Inc.................................... 24,500
900 Ryder Systems, Inc............................. 25,312
300 Yellow Corporation *........................... 3,975
-----------
77,950
-----------
TOTAL COMMON STOCKS
(cost basis $55,264,827).................... $60,233,067
-----------
*Non-income producing security
</TABLE>
See accompanying notes.
26
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] Large Company Stock Portfolio
.............................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
....................................................................
Short-Term Investments (1.3%)
------------------------------
<C> <S> <C>
$100,000 AT&T Corporation
5.42%, due 07/02/96.................... $ 99,985
264,000 Ford Motor Credit Company
5.40%, due 07/05/96.................... 263,842
142,000 General Electric Capital Corporation
5.37%, due 07/02/96.................... 141,979
177,000 General Motors Acceptance Corporation
5.38%, due 07/02/96.................... 176,973
100,000 GTE North, Inc.
5.40%, due 07/01/96.................... 100,000
Total Short-Term Investments
-----------
(cost basis $782,779).................. 782,779
-----------
Total Investments (100.4%)
(cost basis $56,047,606)............... 61,015,846
Liabilities, less other Assets (-0.4%).. (218,183)
-----------
NET ASSETS (100.0%)..................... $60,797,663
===========
</TABLE>
See accompanying notes.
27
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
SMALL COMPANY STOCK PORTFOLIO
.....................................................
Schedule of Investments as of June 30, 1996
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (98.8%) MARKET VALUE
....................................................................
<C> <S> <C>
Aerospace (0.8%)
----------------
8,100 Gencorp, Inc.................................. $ 122,512
4,500 Kaman Corporation............................. 45,563
4,400 Thiokol Corporation........................... 173,800
----------
341,875
----------
Air Transportation (1.3%)
-------------------------
5,100 Airborne Freight Corporation.................. 132,600
3,400 Alaska Airgroup, Inc. *....................... 93,075
15,400 USAir Group, Inc. *........................... 277,200
----------
502,875
----------
Apparel (1.5%)
--------------
4,300 Brown Group, Inc.............................. 74,713
6,600 Cone Mills Corporation *...................... 74,250
6,400 Jones Apparel Group *......................... 314,400
5,100 Kellwood Corporation.......................... 93,712
5,400 The Dress Barn Corporation *.................. 56,700
----------
613,775
----------
Banks (6.2%)
------------
5,300 Astoria Financial Corporation................. 143,762
10,700 City Steel National Corporation............... 168,525
9,100 Compass Bancshares, Inc....................... 298,025
7,400 Dauphin Deposit Corporation................... 210,900
7,400 First American Corporation - Tennessee........ 311,725
9,100 First Commerce Corporation.................... 321,913
6,100 Long Island Bancorp, Inc...................... 186,431
6,700 Magna Group, Inc.............................. 160,800
3,300 ONBANCORP, Inc................................ 108,075
9,200 Peoples Bank of Bridgeport, Connecticut....... 204,700
7,200 Riggs National Corp. - Washington............. 87,300
9,105 Valley National Bancorp....................... 232,178
----------
2,434,334
----------
Brokerage (0.5%)
-----------------
3,900 Alex Brown, Inc............................ 220,350
----------
Business Machines (3.8%)
-------------------------
10,800 AST Research, Inc. *......................... 72,900
14,500 Aura Systems, Inc. *......................... 51,656
9,100 Cheyenne Software, Inc. *.................... 175,175
12,450 Comdisco, Inc................................. 331,481
4,600 Cyrix Corporation *........................... 79,350
9,400 Data General Corporation *.................... 122,200
5,200 Exabyte Corporation *......................... 67,925
12,800 Quantum Corporation *......................... 187,200
7,600 Structural Dynamic Research *................. 167,200
6,100 Verifone, Inc. *.............................. 257,725
----------
1,512,812
----------
Business Services (11.0%)
-------------------------
7,900 Cerner Corporation *.......................... 168,862
15,200 Computervision Corporation *.................. 152,000
5,200 Credence Systems Corporation *................ 69,875
11,000 Credit Acceptance Corporation *............... 231,000
6,500 FTP Software, Inc. *.......................... 53,625
7,200 Hon Industries, Inc........................... 205,200
6,600 Information Resources, Inc. *................. 80,850
5,400 Integrated Health Services, Inc............... 128,250
2,900 Medic Computer Systems, Inc. *................ 235,263
10,100 NetManage, Inc. *............................. 111,100
10,600 Network General Corporation *................. 227,900
3,600 New England Business Service, Inc............. 70,200
9,500 Oak & Technology, Inc. *...................... 89,062
4,200 PHH Group, Inc................................ 239,400
10,100 Pittston Company.............................. 294,163
9,300 Pixar, Inc.*.................................. 181,350
9,200 PsiNet, Inc. *................................ 105,800
7,600 Quarterdeck Corporation *..................... 71,250
11,400 S3, Inc. *.................................... 140,362
5,600 Shared Medical Systems Corporation............ 359,800
6,900 Standard Register Company..................... 169,913
12,900 Symantec Corporation *........................ 161,250
4,200 The Profit Recovery Group
International, Inc.*.......................... 85,050
5,600 Wallace Computer Services, Inc................ 334,600
7,800 Westpoint Stevens, Inc. *..................... 186,225
8,200 World Color Press, Inc. *..................... 208,075
----------
4,360,425
----------
Chemicals (2.8%)
----------------
6,700 ACX Technologies, Inc. *...................... 133,162
9,800 Calgon Carbon Corporation..................... 132,300
3,300 H.B. Fuller Company........................... 119,625
10,900 Lawter International, Inc..................... 136,250
1,900 NCH Corporation............................... 122,075
2,700 Petrolite Corporation......................... 84,881
8,700 Rollins, Inc.................................. 204,450
13,500 Sterling Chemicals, Inc. *.................... 156,938
----------
1,089,681
----------
Construction (2.3%)
-------------------
6,900 Centex Corporation............................ 214,762
9,400 Kaufman & Broad Home Corporation.............. 136,300
2,700 Lawson Products, Inc.......................... 68,175
8,700 Lennar Corporation............................ 217,500
6,600 Pulte Corporation............................. 176,550
4,200 Southdown, Inc................................ 98,700
----------
911,987
----------
</TABLE>
See accompanying notes.
28
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL]
Small Company Stock Portfolio
......................................................
Schedule of Investments as of June 30, 1996--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Consumer Durables (1.1%)
------------------------
3,000 Bassett Furniture Industries, Inc.............. $ 80,250
5,100 Kimball International, Inc..................... 140,888
4,500 La Z Boy Chair Company......................... 135,562
4,400 Shorewood Packaging Corporation *.............. 67,650
----------
424,350
----------
Containers (0.3%)
-----------------
13,100 Gaylord Container Corporation *................ 102,344
----------
Cosmetics (0.2%)
----------------
2,400 Chemed Corporation............................. 89,700
----------
Drugs & Medicine (8.7%)
-----------------------
6,600 Acuson Corporation *........................... 105,600
3,400 Advanced Technology Labs, Inc. *............... 124,100
9,000 Advanced Tissue Sciences *..................... 145,125
6,600 Alliance Pharmaceutical Corp. *................ 108,900
6,600 Ballard Medical Products....................... 126,225
7,100 Beckman Instruments, Inc....................... 269,800
9,800 Bergen Brunswig Corporation.................... 271,950
4,954 Block Drug Company............................. 208,068
5,700 Cephalon, Inc. *............................... 112,575
7,900 Coventry Corporation *......................... 124,425
3,300 Diagnostic Products Corporation................ 127,050
4,000 Foxmeyer Health Corporation *.................. 59,500
6,900 Gilead Sciences, Inc. *........................ 174,225
6,600 Haemonetics Corporation *...................... 120,450
7,200 Herbalife International, Inc................... 106,200
7,600 ICN Pharmaceuticals, Inc....................... 176,700
6,800 Lincare Holdings, Inc. *....................... 266,900
7,200 Liposome Company, Inc. *....................... 135,000
11,300 Mid Atlantic Medical Services *................ 161,025
18,500 Perrigo Company *.............................. 208,125
7,250 Summit Technology, Inc. *...................... 101,500
5,500 Ventritex *.................................... 85,625
4,100 West, Inc...................................... 123,000
----------
3,442,068
----------
Electronics (6.4%)
------------------
5,100 Avid Technology, Inc. *........................ 94,350
5,100 DSP Communications, Inc. *..................... 262,012
8,600 ESS Technology, Inc. *......................... 159,100
13,900 Geotek Industries, Inc. *...................... 190,256
5,500 Gerber Scientific, Inc......................... 88,688
3,600 Global Village Communication *................. 29,700
6,500 IMP, Inc. *.................................... 73,125
9,300 Kemet Corporation *............................ 186,000
8,600 Macromedia, Inc. *............................. 188,125
7,200 SCI Systems, Inc. *............................ 292,500
8,000 Sequent Computer *............................. 108,000
7,100 Silicon Valley Group, Inc. *................... 133,125
6,200 Symbol Technologies, Inc. *.................... 275,900
11,100 VLSI Technology *.............................. 154,013
10,900 Western Digital Corporation *.................. 284,762
----------
2,519,656
----------
Energy & Utilities (6.3%)
-------------------------
4,300 Central Hudson Gas & Electric Corporation...... 134,375
3,300 Cilcorp, Inc................................... 141,075
4,900 Eastern Utilities Associates................... 96,162
7,200 IES Industries, Inc............................ 215,100
6,900 MDU Resources Group............................ 148,350
32,700 NorAm Energy Corporation....................... 355,612
6,600 ONEOK, Inc..................................... 165,000
3,400 Orange & Rockland Utilities, Inc............... 124,950
10,100 Public Service Company of New Mexico........... 207,050
8,800 Seagull Energy Corporation *................... 220,000
7,300 Sierra Pacific Resources....................... 185,238
3,600 Southern Indiana Gas & Electric................ 124,650
6,200 Southwest Gas Corporation...................... 99,200
7,720 Tucson Electric Power *........................ 104,220
8,000 UGI Corporation................................ 176,000
----------
2,496,982
----------
Energy--Raw Materials (2.5%)
----------------------------
6,900 BJ Services Corporation *...................... 242,362
2,100 Maxxam, Inc. *................................. 82,425
2,200 NACCO Industries, Inc.......................... 121,825
20,400 Nabors Industries, Inc. *...................... 331,500
5,900 Southwestern Energy Company.................... 83,338
5,800 Washington Energy Corporation.................. 114,550
----------
976,000
----------
Food & Agriculture (2.7%)
-------------------------
13,400 Chiquita Brands International, Inc............. 174,200
3,200 Dreyers Grand Ice Cream, Inc................... 100,800
14,050 Flowers Industries, Inc........................ 226,556
4,300 International Multifoods Corporation........... 78,475
9,100 Interstate Bakeries Corporation................ 243,425
8,000 Ralcorp Holding, Inc. *........................ 165,000
6,300 Savannah Foods and Industries, Inc............. 81,113
----------
1,069,569
----------
Gold (0.3%)
-----------
8,400 Pegasus Gold, Inc. *........................... 102,900
----------
</TABLE>
See accompanying notes.
29
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
SMALL COMPANY STOCK PORTFOLIO
...................................................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Insurance (5.3%)
----------------
12,500 20th Century Industries - California*......... $ 207,813
5,000 American Bankers Insurance Group, Inc......... 218,125
2,500 Foremost Corporation of America............... 141,875
3,800 Integon Corporation........................... 76,475
6,100 John Alden Financial Corporation.............. 134,962
4,900 Liberty Corporation........................... 155,575
3,400 Life Re Corporation........................... 104,975
4,700 NAC Re Corporation............................ 157,450
27,600 Reliance Group Holdings....................... 207,000
6,800 United Companies Financial Corporation........ 231,200
3,000 Washington National Corporation............... 77,250
15,100 Western National Corporation.................. 277,463
4,300 Zenith National Insurance Corporation......... 117,712
----------
2,107,875
----------
Media (2.9%)
-----------
7,500 Banta George, Inc............................. 189,375
7,326 Chris Craft Industries, Inc. *................ 322,344
5,100 Golden Books Family Entertainment, Inc. *..... 61,200
3,500 Houghton Mifflin Company...................... 174,125
4,000 Pulitzer Publishing Company................... 237,000
5,700 TCA Cable TV.................................. 172,425
----------
1,156,469
----------
Miscellaneous Finance (4.8%)
----------------------------
6,900 Americredit Corporation *..................... 107,812
6,400 Amersco, Inc. *............................... 109,600
11,900 California Federal Bank FSB *................. 217,175
4,800 Collective Bancorp, Inc....................... 113,400
9,800 Glendale Federal Bank FSB *................... 177,625
3,700 Great Financial Corporation................... 95,738
6,000 Home Financial Corporation.................... 78,000
6,800 Life Partners Group, Inc...................... 154,700
7,500 Olympic Financial, Ltd. *..................... 172,500
10,000 Roosevelt Financial Group, Inc................ 192,500
1,600 Seafield Capital Corporation.................. 60,000
11,700 Sovereign Bancorp, Inc........................ 117,000
7,600 Standard Federal Bancorporation............... 292,600
----------
1,888,650
----------
Motor Vehicles (1.8%)
---------------------
5,400 Arvin Industries, Inc......................... 120,150
6,200 Donaldson Company, Inc........................ 159,650
8,500 Federal Mogul Corporation..................... 156,188
4,100 Standard Products Corporation................. 95,325
7,000 Superior Industries International............. 185,500
----------
716,813
----------
Non-Durables (3.7%)
-------------------
4,000 A.T. Cross Company............................. 71,000
12,100 Acclaim Entertainment, Inc. *.................. 116,462
12,200 Bally Entertainment Corporation *.............. 335,500
6,600 Duty Free International, Inc................... 100,650
3,800 Gibson Greetings, Inc. *....................... 52,250
5,400 International Dairy Queen, Inc. *.............. 118,800
5,700 Luby's Cafeterias, Inc......................... 133,950
4,250 Ruby Tuesday, Inc.............................. 96,156
5,200 Russ Berrie & Company.......................... 95,550
4,900 Sbarro, Inc.................................... 123,113
13,500 Sothebys Holdings, Inc......................... 195,750
----------
1,439,181
----------
Non-Ferrous Metals (0.8%)
--------------------
3,800 Brush Wellman, Inc............................ 72,200
5,300 Coeur D'Alene Mines Corporation............... 97,388
12,400 Helco Mining Company *........................ 86,800
46,600 Sunshine Mining Company *..................... 58,250
----------
314,638
----------
Oil--Domestic (2.6%)
--------------------
8,100 Pogo Producing Corporation.................... 308,813
7,900 Quaker State Corporation...................... 118,500
20,600 Rowan Companies, Inc. *....................... 303,850
9,700 Smith International, Inc. *................... 292,212
----------
1,023,375
----------
Optical & Photo (0.7%)
----------------------
6,600 Dentsply International, Inc................... 280,500
----------
Paper & Forest Products (1.5%)
------------------------------
5,700 Chesapeake Corporation........................ 149,625
9,100 Pentair Industries, Inc....................... 273,000
8,850 Wausau Paper Mills Corporation................ 174,788
----------
597,413
----------
Producers Goods (5.3%)
----------------------
7,300 Albany International Corporation, Class A..... 165,162
7,900 Ametek, Inc................................... 171,825
5,700 BWIP Holding, Inc............................. 108,300
6,300 Baldor Electric Company....................... 141,750
9,600 Cincinnati Milacron, Inc...................... 230,400
3,600 Clarcor, Inc.................................. 89,100
8,300 Giddings & Lewis, Inc......................... 134,875
5,100 Goulds Pumps, Inc............................. 130,688
3,400 Handy & Harman................................ 57,800
6,500 Kennametal, Inc............................... 221,000
</TABLE>
See accompanying notes.
30
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
Small Company Stock Portfolio
.....................................................
Schedule of Investments as of June 30, 1996-Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Producers Goods-Continued
-------------------------
5,300 Lattice Semiconductor Corporation *........... $ 127,862
3,800 Measurex Corporation.......................... 111,150
4,300 Teleflex, Inc................................. 205,325
7,400 Tencor Instruments *.......................... 139,675
3,000 Zurn Industries, Inc.......................... 62,250
-----------
2,097,162
-----------
Railroad & Shipping (0.6%)
--------------------------
7,500 OMI Corporation *............................. 64,688
8,800 Overseas Shipholding Group, Inc............... 159,500
-----------
224,188
Real Property (0.4%)
--------------------
18,000 Catellus Development Corporation *............ 164,250
-----------
Retail (3.8%)
-------------
2,200 Blair Corporation............................. 51,975
6,900 Cato Corporation.............................. 41,400
24,900 Charming Shoppes, Inc. *...................... 175,856
5,500 Eagle Hardware & Garden, Inc. *............... 83,875
22,000 Home Shopping Network, Inc. *................. 264,000
8,300 Intelligent Electronics, Inc. *............... 70,550
8,100 Lands End, Inc. *............................. 200,475
6,100 MacFrugals Bargains Close-Outs, Inc. *........ 108,275
6,500 Meyer Fred, Inc. *............................ 190,938
5,900 Ross Stores, Inc.............................. 205,025
4,500 Stanhome, Inc................................. 119,250
-----------
1,511,619
-----------
Steel (1.2%)
------------
6,300 AK Steel Holding Corporation.................. 246,487
6,900 Birmingham Steel Corporation.................. 112,988
4,100 Carpenter Technology Corporation.............. 131,200
-----------
490,675
-----------
Telephone (2.0%)
----------------
7,333 International Cabletel, Inc. *................ 216,324
12,300 Octel Communications Corporation *............ 242,925
3,500 U.S. Long Distance Corporation *.............. 124,250
10,000 Vanguard Cellular Systems, Inc. *............. 217,500
-----------
800,999
-----------
Tires & Rubber (0.5%)
---------------------
3,700 Carlisle Corporation.......................... 196,562
-----------
Travel & Recreation (1.0%)
--------------------------
10,100 Grand Casinos, Inc. *......................... 260,075
8,500 Station Casinos, Inc. *....................... 122,187
-----------
382,262
-----------
Trucking & Freight (1.2%)
-------------------------
6,300 Arnold Industries, Inc........................ 89,775
9,200 J.B. Hunt Transport Services, Inc............. 192,050
10,700 Rollins Truck Leasing Corporation............. 111,012
6,800 Yellow Corporation *.......................... 90,100
-----------
482,937
-----------
Total Common Stocks
(cost basis $38,380,057).................... 39,087,251
-----------
PRINCIPAL
AMOUNT
....................................................................
Short-Term Investments (1.4%)
-----------------------------
$249,000 General Electric
Capital Corporation
5.37%, due 07/02/96........................ 248,962
116,000 General Motors
Acceptance Corporation
5.38%, due 07/02/96........................ 115,983
169,000 Merrill Lynch & Company, Inc.
5.40%, due 07/01/96........................ 169,000
-----------
Total Short-Term Investments
(cost basis $533,945)...................... 533,945
-----------
Total Investments (100.2%)
(cost basis $38,914,002)................... 39,621,196
Liabilities, less other Assets (-0.2%)....... (77,031)
-----------
NET ASSETS (100.0%)......................... $39,544,165
===========
</TABLE>
*Non-income producing security
See accompanying notes.
31
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Statement of Assets and Liabilities
......................................
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
.................................................................................................................
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost: $12,365,251,
$14,027,727, $70,635,899, $56,047,606
and $38,914,002, respectively)............. $12,365,251 $13,696,569 $73,673,200 $61,015,846 $39,621,196
Dividends and interest receivable............ 9 177,307 464,005 84,873 35,675
Receivable for investments sold.............. - - - - -
Receivable for fund shares sold.............. 167,156 5,402 149,711 177,743 124,697
Cash......................................... 252 163 (51,804) 543 767
----------------------------------------------------------------
TOTAL ASSETS................................. $12,532,668 $13,879,441 $74,235,112 $61,279,005 $39,782,335
================================================================
LIABILITIES:
Payable for investments purchased............ $ - $ - $ 445,385 $ 417,862 $ 195,806
Income distributions payable................. 5,154 - - - -
Payable for fund shares reacquired........... 96,161 8,854 54,360 47,069 31,474
Investment advisory fee payable.............. 3,535 3,886 19,996 16,411 10,890
----------------------------------------------------------------
TOTAL LIABILITIES............................ 104,850 12,740 519,741 481,342 238,170
----------------------------------------------------------------
NET ASSETS:
Capital stock - par value ($0.001/share)..... 12,427 1,417 6,543 4,846 3,323
Capital stock - additional paid-in capital... 12,415,391 14,193,438 70,631,900 55,787,698 37,159,570
Undistributed net investment income.......... - 8,941 32,075 20,404 5,831
Undistributed net realized gain (loss)....... - (5,937) 7,552 16,475 1,668,247
Net unrealized appreciation (depreciation)
on investments............................. - (331,158) 3,037,301 4,968,240 707,194
----------------------------------------------------------------
TOTAL NET ASSETS............................. 12,427,818 13,866,701 73,715,371 60,797,663 39,544,165
----------------------------------------------------------------
TOTAL LIABILITIES AND NET ASSETS............. $12,532,668 $13,879,441 $74,235,112 $61,279,005 $39,782,335
================================================================
CAPITAL SHARES OUTSTANDING
(2 BILLION SHARES AUTHORIZED).............. 12,427,818 1,417,352 6,543,170 4,846,460 3,322,452
----------------------------------------------------------------
NET ASSET VALUE PER SHARE.................... $ 1.00 $ 9.78 $ 11.27 $ 12.54 $ 11.90
================================================================
</TABLE>
See accompanying notes.
32
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Statement of Operations
..........................................
Six Months Ended June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
............................................................................................................................
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $ - $ - $ 318,817 $ 459,888 $ 177,647
Interest.................................................. 281,277 399,816 733,365 23,082 17,666
Other Income.............................................. - - - - -
-----------------------------------------------------------
TOTAL INVESTMENT INCOME................................... 281,277 399,816 1,052,182 482,970 195,313
-----------------------------------------------------------
EXPENSES:
Adviser fees.............................................. 18,017 20,654 85,618 68,774 46,096
Audit fees................................................ 5,221 5,967 5,967 5,470 5,470
Custody fees.............................................. 4,161 2,053 15,706 21,448 27,887
Registration fees......................................... 560 560 560 560 560
Legal fees................................................ 6,143 7,152 28,738 23,072 15,437
Printing and postage expense.............................. 7,098 8,186 33,593 26,983 18,070
Pricing of investments.................................... 364 1,814 9,490 8,280 4,140
Director fees............................................. 1,173 1,401 5,317 4,263 2,846
Director and Officer Insurance fees....................... 317 375 1,448 1,161 776
Fidelity Bond Insurance fees.............................. 233 279 1,057 848 566
Other fees................................................ 155 178 738 593 397
-----------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT....................... 43,442 48,619 188,232 161,452 122,245
-----------------------------------------------------------
Less expenses reimbursed by Adviser (See Note 3)......... (25,425) (27,965) (102,614) (92,678) (76,149)
-----------------------------------------------------------
NET EXPENSES.............................................. 18,017 20,654 85,618 68,774 46,096
-----------------------------------------------------------
NET INVESTMENT INCOME..................................... 263,260 379,162 966,564 414,196 149,217
-----------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investments................ - (3,750) 6,718 15,041 1,656,548
Change in net unrealized appreciation (depreciation)
on investments.......................................... - (521,775) 1,384,079 3,079,358 1,134
-----------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS................................. - (525,525) 1,390,797 3,094,399 1,657,682
-----------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................... $263,260 $(146,363) $2,357,361 $3,508,595 $1,806,899
===========================================================
</TABLE>
See accompanying notes.
33
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets
......................................
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO BOND PORTFOLIO
PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS
DECEMBER 31, ENDED DECEMBER 31, ENDED
1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996
..................................................................................................................
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................ $ 138,514 $ 263,260 $ 235,838 $ 379,162
Net realized gains on investments............ - - (2,187) (3,750)
Change in net unrealized appreciation
(depreciation) on investments.............. - - 190,617 (521,775)
---------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................. 138,514 263,260 424,268 (146,363)
---------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................... (138,514) (263,260) (234,068) (371,991)
From net realized gains...................... - - - -
---------------------------------------------------------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS............................... (138,514) (263,260) (234,068) (371,991)
---------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold................ 20,659,662 42,024,827 9,354,566 5,609,352
Reinvested distributions..................... 75,601 220,195 65,068 245,991
Cost of shares redeemed...................... (13,690,621) (36,861,846) (247,002) (833,120)
---------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS.................... 7,044,642 5,383,176 9,172,632 5,022,223
---------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS................. 7,044,642 5,383,176 9,362,832 4,503,869
NET ASSETS BEGINNING OF PERIOD............... - 7,044,642 - 9,362,832
---------------------------------------------------------------
NET ASSETS END OF PERIOD..................... $ 7,044,642 $ 12,427,818 $9,362,832 $13,866,701
---------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED NET INVESTMENT
INCOME .................... $ - $ - $ 1,770 $ 8,941
===============================================================
</TABLE>
(1) Commencement of operations.
See accompanying notes.
34
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets
......................................
June 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
LARGE COMPANY SMALL COMPANY
BALANCED PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO
PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS
DECEMBER 31, ENDED DECEMBER 31, ENDED DECEMBER 31, ENDED
1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996
..................................................................................................
<S> <C> <C> <C> <C> <C>
$ 412,819 $ 966,564 $ 171,427 $ 414,196 $ 70,494 $ 149,217
1,254 6,718 4,092 15,041 17,344 1,656,548
1,653,222 1,384,079 1,888,882 3,079,358 706,061 1,134
- ------------------------------------------------------------------------------------------------
2,067,295 2,357,361 2,064,401 3,508,595 793,899 1,806,899
- ------------------------------------------------------------------------------------------------
(409,743) (937,565) (170,454) (394,765) (70,275) (143,605)
(420) - (2,658) - (5,645) -
- ------------------------------------------------------------------------------------------------
(410,163) (937,565) (173,112) (394,765) (75,920) (143,605)
- ------------------------------------------------------------------------------------------------
27,118,805 43,842,520 21,420,587 34,867,545 15,020,586 22,530,747
141,211 728,815 82,106 320,515 36,908 114,605
(158,426) (1,034,482) (255,604) (642,605) (109,609) (430,345)
- ------------------------------------------------------------------------------------------------
27,101,590 43,536,853 21,247,089 34,545,455 14,947,885 22,215,007
- ------------------------------------------------------------------------------------------------
28,758,722 44,956,649 23,138,378 37,659,285 15,665,864 23,878,301
- 28,758,722 - 23,138,378 - 15,665,864
- ------------------------------------------------------------------------------------------------
$28,758,722 $73,715,371 $23,138,378 $60,797,663 $15,665,864 $39,544,165
- ------------------------------------------------------------------------------------------------
$ 3,076 $ 32,075 $ 973 $ 20,404 $ 219 $ 5,831
================================================================================================
</TABLE>
See accompanying notes.
35
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
AAL Variable Product Series Fund, Inc.
[LOGO] Notes to Financial Statements
......................................
June 30, 1996
NOTE 1: DESCRIPTION OF FUND
The AAL Variable Product Series Fund, Inc. (the "Fund") is a corporation
organized under the laws of the State of Maryland and registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company. The Fund is a "series" fund consisting of five
separate investment portfolios (known as the Money Market, the Bond, the
Balanced, the Large Company Stock, and the Small Company Stock Portfolios,
collectively the "Portfolios"). Shares of the Fund are currently sold only to
the AAL Variable Annuity Account I (the "Variable Account") to fund benefits
under certificates of membership and the flexible premium deferred variable
annuity issued by Aid Association for Lutherans ("AAL"). The Fund commenced
operations on June 14, 1995, with the sale of 2,000,000, 500,000, 1,250,000,
750,000 and 500,000 shares of the Money Market, Bond, Balanced, Large Company
Stock and Small Company Stock Portfolios, respectively to AAL.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Valuation of Investments
Securities traded on national securities exchanges and NASDAQ are valued at
the last reported sales price. Fixed income securities are valued at market
using quotations provided by an independent pricing service. The Money
Market Portfolio, and other Portfolios which hold money market instruments
with a remaining maturity of 60 days or less, value securities at amortized
cost, which approximates market value. Securities for which market
quotations are not readily available are valued at fair value as determined
in good faith by the Investment Adviser under the supervision of the Board
of Directors.
(b) Federal Income Taxes
No provision for federal income taxes has been made since the Fund has
elected to be taxed as a regulated investment company under the Internal
Revenue Code and intends to distribute to shareholders as dividends,
substantially all the net investment income and net realized capital gains,
if any, of the Fund. As of June 30, 1996, the Bond Portfolio has capital
loss carryforwards of $2,187 expiring in 2003. It is management's intention
to make no distribution of any future realized capital gains until the
Federal income tax capital loss carryforwards are exhausted.
(c) Distributions to Shareholders
All of the Portfolios intend to distribute all their net investment income
and net realized capital gains, if any, as dividends. The Bond, Balanced,
Large and Small Company Stock Portfolios expect to pay any net investment
income dividends monthly and net realized capital gains, if any, annually.
The Money Market Portfolio declares a daily dividend equal to its net
investment income for that day, payable monthly. Dividends to shareholders
are recorded on the ex-dividend date.
(d) Other
Investment transactions are accounted for on the trade date. Dividend
income is recognized on the ex-dividend date, and interest income is
recognized on the accrual basis and includes amortization of premiums and
discounts. Realized gains and losses from investment transactions are
determined on a specific cost identification basis.
36
<PAGE>
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANUITY]
AAL Variable Product Series Fund, Inc.
Notes to Financial Statements--Continued
........................................
June 30, 1996
NOTE 3: INVESTMENT ADVISORY FEES AND TRANSACTIONS WITH RELATED PARTIES
The Fund has entered into an Investment Advisory Agreement with AAL
relating to the management of the portfolios and the investment of their
assets. Pursuant to this agreement, the Fund pays AAL an investment
advisory fee as compensation for its services to the Fund. The fee is a
daily charge equal to an annual rate of .35% of the average daily net
assets of each Portfolio up to $250,000,000 and .30% of the average daily
net assets of each Portfolio in excess of that amount. In addition, AAL has
agreed to either pay on behalf of the Fund or reimburse the Fund for
substantially all of its operating expenses, other than the aforementioned
investment advisory fees, brokerage commissions, and certain extraordinary
items such as litigation expenses or income tax liabilities. AAL may
withdraw this reimbursement agreement on 30 days' written notice to the
Fund.
The Investment Advisory Agreement anticipates that AAL will provide certain
administrative and accounting services to the Fund, or that AAL will
arrange for such services to be provided by a third party. AAL has entered
into an Administrative Services Agreement with AAL Capital Management
Corporation ("CMC"), an affiliate of AAL, pursuant to which CMC agrees to
provide these administrative and accounting services on behalf of the Fund.
Fees which CMC is entitled to receive for providing such services under the
terms of the Administrative Services Agreement are paid by AAL out of the
advisory fees it receives from the Fund, and therefore do not result in any
additional expense to the Fund.
Certain officers and directors of the Fund are also officers of AAL and
CMC. For the period ended June 30, 1996, directors of the Fund not
affiliated with AAL or CMC received directors fees in the amount of
$15,000. No remuneration has been paid by the Fund to any of the officers
or directors of the Fund affiliated with AAL or CMC. At June 30, 1996, all
of the shares of each Portfolio are owned by AAL and the Variable Account
I.
NOTE 4: CAPITAL SHARE TRANSACTIONS
Transactions in Fund shares for the period June 14, 1995 to December 31,
1995, and the six months ended June 30, 1996, were as follows:
<TABLE>
<CAPTION>
MONEY MARKET BOND BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
Period Six Months Period Six Months Period Six Months
Ended Ended Ended Ended Ended Ended
12/31/95 6/30/96 12/31/95 6/30/96 12/31/95 6/30/96
.................................................................................................
<S> <C> <C> <C> <C> <C> <C>
Shares sold................ 20,659,662 42,024,827 932,861 561,867 2,634,240 3,938,387
Reinvested distributions... 75,601 220,195 6,453 24,854 13,209 62,101
Shares redeemed............ (13,690,621) (36,861,846) (24,555) (84,128) (15,089) (89,678)
---------------------------------------------------------------------
Net Increase............... 7,044,642 5,383,176 914,759 502,593 2,632,360 3,910,810
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LARGE COMPANY STOCK SMALL COMPANY STOCK
PORTFOLIO PORTFOLIO
Period Six Months Period Six Months
Ended Ended Ended Ended
12/31/95 6/30/96 12/31/95 6/30/96
..............................................................................
<S> <C> <C> <C> <C>
Shares sold................ 2,026,389 2,863,653 1,432,409 1,924,372
Reinvested distributions... 7,351 25,337 3,406 9,700
Shares redeemed............ (23,746) (52,524) (10,249) (37,186)
--------------------------------------------------
Net Increase............... 2,009,994 2,836,466 1,425,566 1,896,886
--------------------------------------------------
</TABLE>
37
<PAGE>
===============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
AAL Variable Product Series Fund, Inc.
Notes to Financial Statements-Continued
........................................
June 30, 1996
NOTE 5: INVESTMENT TRANSACTIONS
For the period June 14, 1995 to December 31, 1995 and the six months ended
June 30, 1996, the cost of investment securities purchased and the proceeds
from investment securities sold (not including short-term investments) were
as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
Period Six Months Period Six Months
Ended Ended Ended Ended
Portfolio 12/31/95 6/30/96 12/31/95 6/30/96
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Portfolio................. $ 9,356,037 $ 5,397,770 $375,015 $ 513,655
Balanced Portfolio............. 25,153,155 40,556,019 348,713 651,106
Large Company Stock Portfolio.. 20,990,242 34,540,673 60,562 224,658
Small Company Stock Portfolio.. 14,870,911 27,890,142 239,912 5,814,975
</TABLE>
The gross unrealized appreciation and depreciation on investments for the
period June 14, 1995 to December 31, 1995 and the six months ended June 30,
1996, were as follows:
<TABLE>
<CAPTION>
12/31/95 6/30/96
---------------------------------------------- -----------------------------------------------
Net Unrealized Net Unrealized
Appreciation Appreciation
Portfolio Appreciation (Depreciation) (Depreciation) Appreciation (Depreciation) (Depreciation)
.............................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
Bond Portfolio................ $ 192,892 $ (2,275) $ 190,617 $ 6,492 $ (337,650) $ (331,158)
Balanced Portfolio............ 1,921,119 (267,897) 1,653,222 3,991,248 (953,947) 3,037,301
Large Company Stock Portfolio. 2,299,731 (410,849) 1,888,882 5,549,738 (581,498) 4,968,240
Small Company Stock Portfolio. 1,587,283 (881,222) 706,061 2,944,205 (2,237,011) 707,194
</TABLE>
The book and federal income tax basis of securities were the same for all
Portfolios.
38
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
39
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Financial Highlights
......................................
The following table presents per share information for each portfolio of the AAL
Variable Product Series Fund, Inc. for the period presented, which should be
read in conjunction with the financial statements and the related notes.
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO BOND PORTFOLIO
PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS
DECEMBER 31, ENDED DECEMBER 31, ENDED
1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996
.....................................................................................................
<S> <C> <C> <C> <C>
Net asset value: Beginning of period.. $ 1.00 $ 1.00 $ 10.00 $ 10.23
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................. 0.03 0.03 0.34 0.30
Net realized and unrealized gains
(losses) on investments............. 0.00 0.00 0.23 (0.45)
---------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS.......................... 0.03 0.03 0.57 (0.15)
---------------------------------------------------------
LESS DISTRIBUTIONS:
From investment income................ (0.03) (0.03) (0.34) (0.30)
From realized gains................... 0.00 0.00 0.00 0.00
---------------------------------------------------------
TOTAL DISTRIBUTIONS................... (0.03) (0.03) (0.34) (0.30)
---------------------------------------------------------
Net increase (decrease)
in net asset value.................. 0.00 0.00 0.23 (0.45)
Net asset value: End of period........ $ 1.00 $ 1.00 $ 10.23 $ 9.78
=========================================================
Total Return (a)...................... 3.02% 2.56% 5.80% -1.45%
Net assets, End of period............. $7,044,642 $12,427,818 $9,362,832 $13,866,701
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets (b) (c).................. 0.35% 0.35% 0.35% 0.35%
Ratio of net investment income to
average net assets (b) (c).......... 5.71% 5.11% 6.54% 6.43%
Portfolio turnover rate............... N/A N/A 6.51% 4.45%
Average commission rate paid (d)...... N/A N/A N/A N/A
</TABLE>
(1) From commencement of operations on June 14, 1995.
(a) Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total return for the
period shown. The portfolios are reported as period-to-date cumulative
total returns.
(b) Calculated on an annualized basis.
(c) Without reimbursements the above ratios, on an annualized basis, would have
been:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Ratio of expenses to average net assets............... 1.40% 0.84% 1.25% 0.82%
Ratio of net investment income to average net assets.. 4.66% 4.62% 5.64% 5.95%
</TABLE>
(d) Amount shown reflects the average brokerage commission paid on each share
of stock traded by the Portfolio during the period presented.
40
<PAGE>
================================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO] AAL Variable Product Series Fund, Inc.
Financial Highlights
......................................
<TABLE>
<CAPTION>
LARGE COMPANY SMALL COMPANY
BALANCED PORTFOLIO STOCK PORTFOLIO STOCK PORTFOLIO
PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS PERIOD ENDED SIX MONTHS
DECEMBER 31, ENDED DECEMBER 31, ENDED DECEMBER 31, ENDED
1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996 1995 (1) JUNE 30, 1996
..................................................................................................
<C> <C> <C> <C> <C> <C>
$ 10.00 $ 10.92 $ 10.00 $ 11.51 $ 10.00 $ 10.99
0.22 0.20 0.11 0.11 0.08 0.06
0.92 0.35 1.52 1.03 0.99 0.91
- ------------------------------------------------------------------------------------------------
1.14 0.55 1.63 1.14 1.07 0.97
- ------------------------------------------------------------------------------------------------
(0.21) (0.20) (0.11) (0.11) (0.07) (0.06)
(0.01) 0.00 (0.01) 0.00 (0.01) 0.00
- ------------------------------------------------------------------------------------------------
(0.22) (0.20) (0.12) (0.11) (0.08) (0.06)
- ------------------------------------------------------------------------------------------------
0.92 0.35 1.51 1.03 0.99 0.91
$ 10.92 $ 11.27 $ 11.51 $ 12.54 $ 10.99 $ 11.90
================================================================================================
11.46% 4.93% 16.39% 9.92% 10.70% 8.82%
$28,758,722 $73,715,371 $23,138,378 $60,797,663 $15,665,864 $39,544,165
0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
4.07% 3.95% 2.27% 2.11% 1.43% 1.13%
2.29% 1.43% 0.47% 0.57% 2.85% 21.96%
$ 0.0400 $ 0.0400 $ 0.0400 $ 0.0400 $ 0.0400 $ 0.0400
</TABLE>
<TABLE>
<C> <C> <C> <C> <C> <C>
1.15% 0.77% 1.26% 0.82% 1.37% 0.93%
3.27% 3.53% 1.37% 1.64% 0.41% 0.55%
</TABLE>
See accompanying notes.
41
<PAGE>
[AAL VARIABLE ANNUITY LOGO]
Service Center
AAL Variable Annuity Service Center
P.O. Box 419108
Kansas City, Missouri 64141-6108
Telephone 800-778-1762
.....
Investment Adviser and Transfer Agent
Aid Association for Lutherans
4321 North Ballard Road
Appleton, Wisconsin 54919-0001
.....
Custodian
Citibank, N.A.
111 Wall Street
New York, New York 10043
.....
Independent Accountants
Ernst & Young LLP
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
[AAL LOGO]
AAL Capital Management Corporation
---------------------------------------------
222 West College Avenue, Appleton, WI 54919-0007
800-778-1762 414-734-7633
AAL Capital Management Corporation
is the distributor of the AAL Variable Annuity
and is a wholly-owned subsidiary of:
Aid Association for Lutherans
4321 North Ballard Road, Appleton, WI 54919-0001
13017SAR 8/96
