<PAGE> 1
[LOGO OF AAL VARIABLE ANNUITY]
Aid Association for Lutherans
----------------------------------
A FRATERNAL BENEFIT SOCIETY
Annual
Report
December 31, 1995
[PICTURE]
[LOGO OF AAL VARIABLE ANNUITY]
<PAGE> 2
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AID ASSOCIATION FOR LUTHERANS]
- ---------------------------------------
A FRATERNAL BENEFIT SOCIETY
DEAR CERTIFICATE OWNER:
We are pleased to report positive news on performance, the economy and the
outlook for 1996 as we provide this first annual report for the AAL Variable
Annuity. Since the sale of the first certificate on June 19, 1995, we have been
encouraged by the response for this product from AAL members. During this
period, we have also seen both the stock and bond markets reach new all-time
highs.
By all measures, 1995 will go down as a year of record-breaking performance.
Investors enjoyed generally positive performance in both the fixed income and
stock markets during the year. After hitting new highs and showing considerable
strength early in the year, the stock market, as measured by the Dow Jones
Industrial Average (DJIA), declined severely during the summer. The market's
down period was brief, however. It recovered quickly and gained ground for the
remainder of the year, with the DJIA breaking the 5100 level in December. In
addition, the Wilshire Small Cap Index and the S&P 500 Index, utilized by two of
the AAL Variable Product Series Fund Portfolios, also reached all-time highs.
The bond market also reacted favorably during 1995, staging a strong comeback
from its poor performance in 1994. The Lehman Brothers Aggregate Bond Index,
utilized by The AAL Variable Product Bond Portfolio, reached an all-time high
during the year.
Each of the five subaccounts of the AAL Variable Annuity participated in the
stock and bond markets' record performances in 1995. The investment portfolios
also did well when measured against their benchmark indices.
The table on the next page shows the total return of the five Subaccounts of the
AAL Variable Annuity and the corresponding Portfolios of the AAL Variable
Product Series Fund, Inc. for the period June 14, 1995 (commencement of
operations) to December 31, 1995.*
1
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A A L V A R I A B L E A N N U I T Y
<TABLE>
<CAPTION>
TOTAL RETURNS
FUND PERCENT CHANGE/1/ VARIABLE PERCENT CHANGE/2*/
PORTFOLIO SINCE INCEPTION SUBACCOUNT SINCE INCEPTION
<S> <C> <C> <C>
Money Market 3.02%/3/ Money Market 2.32%
Bond 5.80% Bond 5.31%
Balanced 11.46% Balanced 10.60%
Large Company Stock 16.39% Large Company Stock 15.26%
Small Company Stock 10.70% Small Company Stock 9.52% [AAL LOGO]
</TABLE>
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 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.
3 If reported as annualized total return, this number would be 5.58%.
*For the same period, June 14, 1995 (commencement of operations) to December 31,
1995, the SEC Standardized Average Total Returns for the five Subaccounts,
reflecting all fees and expenses and the maximum surrender charge of 7%, were as
follows:
VARIABLE PERCENT CHANGE
SUBACCOUNT SINCE INCEPTION
Money Market..............-4.13%
Bond......................-1.33%
Balanced.................. 3.63%
Large Company Stock....... 8.00%
Small Company Stock....... 2.62%
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.
At year-end, net assets of the investment portfolios totaled $83.9 million,
broken down on the chart on the next page:
Looking to 1996, the economy's growth without a corresponding increase in
inflation is encouraging. Slow growth and low inflation bode well for both the
stock and fixed-income markets. For investors willing to adopt a long-term
perspective, investment opportunities will continue to exist.
2
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A A L V A R I A B L E A N N U I T Y
[LOGO OF AID ASSOCIATION FOR LUTHERANS]
- ---------------------------------------
A FRATERNAL BENEFIT SOCIETY
While no one can consistently predict interest rates or market movements, we
believe variable annuities make sense as an integral part of many investment
portfolios. For long-term investors, the AAL Variable Annuity combines the
opportunity for tax-deferred growth, a variety of investment options and a
guaranteed death benefit.
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
John O. Gilbert
President
Aid Association for Lutherans
/s/ D. Charles DeVries
D. Charles DeVries
President
AAL Variable Product Series Fund, Inc.
PORTFOLIO ASSETS
<TABLE>
<CAPTION>
NET ASSETS AS OF 12/31/95
<S> <C>
Money Market Portfolio $ 7,044,642
Bond Portfolio $ 9,362,832
Balanced Portfolio $28,758,722
Large Company Stock Portfolio $23,138,378
Small Company Stock Portfolio $15,665,864
TOTAL $83,970,438
</TABLE>
3
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A A L V A R I A B L E A N N U I T Y
THE FINANCIAL MARKETS -- 1995:
1995 was a tremendous year for the U.S. economy as well as for domestic
investors. The "soft landing" that the Federal Reserve was trying to orchestrate
through its monetary policy appears to be occurring as the Gross Domestic
Product (GDP) growth was approximately 2.6% in 1995. This was a slowing in the
growth rate from the 4.1% increase registered in 1994 and was very close to the
Federal Reserve's stated target of 2.5% GDP growth. Inflation remained subdued
with the Consumer Price Index increasing approximately 2.9% in 1995, compared to
only 2.6% in the prior year. The improving productivity of U.S. workers,
continuing strong global competition, and a disciplined monetary policy all
contributed to this positive economic environment.
The favorable economic setting and expectations for more restrained fiscal
policies from Washington resulted in declining interest rates. Long-term
Treasury rates began 1995 at 7.9% and ended the year just below 6.0%. Bond
prices, which rise with declining interest rates, registered their third largest
annual gain on record in 1995.
Stocks also had a banner year in 1995 as falling interest rates combined with
rising profits to push most indices to record levels. Continued cost containment
measures drove profits for companies in the S&P 500 up approximately 24% in
1995, and the resulting 37.6% annual return was the S&P 500's best since 1958.
From virtually any investment perspective, 1995 was an exceptional year.
Discussion of the investment performance for each of the Portfolios for the AAL
Variable Product Series Fund, Inc. (the "Fund" or the "Portfolio") is contained
on the following pages of the report.
[LOGO OF AAL VARIABLE ANNUITY]
From virtually any
investment perspective,
1995 was an exceptional
year. Discussion of the
investment performance
for each of the Funds is
contained on the following
pages of the report.
4
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A A L V A R I A B L E A N N U I T Y
Money Market Portfolio
......................
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.
The Federal Reserve adopted an accommodative monetary policy in 1995 as a result
of limited inflationary pressures and moderate economic growth. Inflation, as
measured by the Consumer Price Index, was 2.9% for the year while the economy
grew approximately 2.6% for the same period. This environment provided the
opportunity for the Federal Reserve to lower the Federal Funds interest rate
from 6% at the inception of the Portfolio in June, to 5.5% at year end. This
action resulted in declining money market rates. For the six and one-half months
of its existence, the Money Market Portfolio had a total return of 3.02%.
[GRAPH APPEARS HERE - PLOT POINTS TO COME]
RETURN ON A $10,000 INVESTMENT
*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.
5
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A A L V A R I A B L E A N N U I T Y
[GRAPH APPEARS HERE - PLOT POINTS TO COME]
TOTAL RETURNS
[PHOTO APPEARS HERE]
PORTFOLIO MANAGER:
Alan D. Onstad
CFA - 1993
BBA - 1973, Concordia College
Al began his investment career with AAL in 1973.
SECTOR HOLDINGS
[PIE CHART APPEARS HERE]
UTILITIES.................22.1%
FINANCE...................21.9%
U.S. GOVERNMENT AGENCIES..21.5%
CONSUMER NON-DURABLES.....11.7%
OTHER.....................22.8%
CONSUMER DURABLES.......8.2%
TECHNOLOGY..............5.5%
CAPITAL GOODS...........3.5%
MATERIALS & SERVICES....2.8%
ENERGY..................2.8%
TOP TEN HOLDINGS
FEDERAL HOME LOAN MORTGAGE CORPORATION....5.550%, 01/04/96
FEDERAL NATIONAL MORTGAGE ASSOCIATION.....5.450%, 01/03/96
FEDERAL HOME LOAN BANK....................5.520%, 01/08/96
FEDERAL FARM CREDIT BANK..................5.520%, 01/10/96
JOHNSON CONTROLS..........................5.870%, 01/02/96
MASSACHUSETTS ELECTRIC....................5.900%, 01/03/96
R.R. DONNELLEY............................5.900%, 01/05/96
AMERICAN EXPRESS CREDIT CORP. ............5.600%, 01/02/96
IBM CORP. ................................5.750%, 01/03/96
ASSOCIATES CORP. OF NA....................5.600%, 01/04/96
6
[AAL LOGO]
<PAGE> 8
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A A L V A R I A B L E A N N U I T Y
Bond Portfolio
..............
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.
Interest rates declined in 1995 as a result of low inflation and direct action
by the Federal Reserve. Lower interest rates resulted in price appreciation of
bonds. This, along with the income from the debt securities held in the
Portfolio, and the Lehman Index, resulted in positive performance numbers.
The Bond Portfolio provided a total rate of return of 5.8% since its inception
in June versus the Lehman Index return of 6.2% over the same period.
Although comprising fewer securities, the Portfolio is structured to match the
Lehman Index in terms of quality, maturities, cash flows, sector distribution
and other criteria. As the graph indicates, the Portfolio met its objective and
tracked the Lehman Index closely.
[GRAPH APPEARS HERE - PLOT POINTS TO COME]
RETURN ON A $10,000 INVESTMENT
7
<PAGE> 9
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A A L V A R I A B L E A N N U I T Y
TOTAL RETURNS
AAL BOND LEHMAN
PORTFOLIO INDEX
9%
6%
3%
FROM INCEPTION--JUNE 14, 1995
PORTFOLIO MANAGER:
R. Jerry Scheel
BBA - Univ. of Wisconsin-Oshkosh
Jerry has 25 years of investment
experience with AAL.
SECTOR HOLDINGS
U.S. GOVERNMENT 44.5%
U.S. GOVERNMENT AGENCIES 33.4%
CORPORATE 14.5%
OTHER 7.6%
UTILITY 2.8%
ASSET BACKED 2.7%
CANADIAN GOVERNMENT 2.0%
MONEY MARKET INSTRUMENTS 0.1%
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%, 07/31/94
U.S. TREASURY BOND 7.125%, 02/15/23
U.S. TREASURY NOTE 7.500%, 10/31/99
TEXAS UTILITIES 7.375%, 08/01/01
FEDERAL HOME LOAN MORTGAGE CORPORATION 5.500%, 01/02/96
FEDERAL NATIONAL MORTGAGE ASSOCIATION CONVENTIONAL 10.500%, 08/01/20
HOUSEHOLD FINANCE 6.875%, 03/01/03
U.S. TREASURY NOTE 7.250%, 02/15/98
[AAL VARIABLE ANNUITY LOGO]
8
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A A L V A R I A B L E A N N U I T Y
Balanced Portfolio
..................
THE FUND SEEKS: To achieve investment results that reflect investment in common
stocks, bond 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.
Buoyed by solid returns in all three inception in mid-June to the end of
asset classes, the Balanced Portfolio 1995. The Portfolio benefitted from a
provided an 11.5% return from its modest overweighting in stocks which
performed very well due to falling
interest rates, rising
corporate profits and
a sound economy during
the period. In addition,
bond values rose as a
result of the Federal
Reserve's decision to
lower interest rates.
[CHART GOES HERE] At the end of the year,
the Portfolio continued
to deviate slightly from
its 55% stocks, 35%
bonds, 10% money market
benchmark with 56% in
stocks, 36% in bonds and
8% in money market
instruments.
RETURN ON A $10,000 INVESTMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$11,500
$11,000
$10,500
$10,000
JUNE JUNE JULY AUG. SEP. 0CT. NOV. DEC.
14 30 31 31 30 31 30 31
1995
AAL BALANCED PORTFOLIO $11,146 LEHMAN INDEX $10,617
BLENDED INDEX* $11,142 SALOMON INDEX $10,292
S&P 500 INDEX $11,631
</TABLE>
*This Index is a blend of the S&P 500 Index (55%), Lehman Index (35%)
and Salomon Index (10%).
9
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A A L V A R I A B L E A N N U I T Y
TOTAL RETURNS
[PLOT POINTS TO COME]
PORTFOLIO MANAGER:
John A. Larson
MBA - 1995, Univ. of Wisconsin-Oshkosh
CFA - 1984
BA - 1969, Luther College
John began his investment
career with AAL in 1978.
ASSET MIX
The following shows the asset mix of the
Balanced Portfolio, on a dollar weighted
basis, over the period June 14, 1995
(inception) through December 31, 1995.
For this period, the range for each asset
sector was stocks 53-58%; bonds 31-36%;
money market 7-13%. At year end, the
asset mix was stocks 56%; bonds 36%;
money market 8%.
<TABLE>
<S> <C>
STOCKS........................................... 56.5%
BONDS............................................ 34.1%
MONEY MARKET..................................... 9.4%
TOP TEN HOLDINGS
GENERAL ELECTRIC COMPANY
AT&T CORPORATION
EXXON CORPORATION
COCA-COLA COMPANY
LEHMAN BROS. HOLDINGS CP.............. 6.05%, 01/03/96
GENERAL MOTORS ACCEPTANCE CORP. CP.... 5.72%, 01/12/96
PACIFICORP CP......................... 5.72%, 01/18/96
U.S. TREASURY BOND....................9.875%, 11/15/15
MERCK & COMPANY
U.S. TREASURY BOND....................7.125%, 02/15/23
</TABLE>
10
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A A L V A R I A B L E A N N U I T Y
Large Company Stock Portfolio
.............................
THE FUND SEEKS: To achieve investment results that approximate the performance
of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index")
by investing primarily in common stocks included in the S&P 500 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.
The Large Company Stock Portfolio experienced very strong returns during its
inaugural period in 1995 with the fund returning 16.4% over its six and one-half
months of operation. Investor confidence was buoyed in 1995 as the Federal
Reserve Board took steps to control the economy by lowering interest rates.
This, along with rising corporate profits, provided the stimulus for rising
stock prices. The result was a solid economic environment and exceptional stock
market performance, with most major equity indices reaching new all-time highs
during the year.
*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 Certificates
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.
RETURN ON A $10,000 INVESTMENT
[PLOT POINTS TO COME]
11
<PAGE> 13
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A A L V A R I A B L E A N N U I T Y
TOTAL RETURNS
[PLOT POINTS TO COME]
PORTFOLIO MANAGER:
David Schnarsky
CFA - 1983
MBA - 1979, Univ. of
Wisconsin-Madison
BBA - 1975, Univ. of
Wisconsin-Madison
Dave has 16 years of investment
experience and has been with
AAL four years.
SECTOR HOLDINGS
CONSUMER NON-DURABLES...........32.8%
TECHNOLOGY......................13.6%
FINANCE.........................13.2%
UTILITIES.......................12.7%
OTHER...........................27.7%
ENERGY...................... 9.7%
MATERIALS & SERVICES........ 8.7%
CAPITAL GOODS............... 4.9%
CONSUMER DURABLES........... 2.8%
TRANSPORTATION.............. 1.6%
TOP TEN HOLDINGS
GENERAL ELECTRIC COMPANY
AT&T CORPORATION
EXXON CORPORATION
COCA-COLA COMPANY
MERCK & COMPANY, INC
ROYAL DUTCH PETROLEUM COMPANY
PHILLIP MORRIS COMPANIES, INC
PROCTOR & GAMBLE COMPANY
JOHNSON & JOHNSON
INTERNATIONAL BUSINESS MACHINES CORPORATION
12
<PAGE> 14
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A A L V A R I A B L E A N N U I T Y
Small Company Stock Portfolio
.............................
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.
The Small Company Stock Portfolio returned 10.7% since its inception in mid-
June. Small capitalization stocks benefitted from the solid economic
environment, falling interest rates and rising corporate profits, but
performance of the Wilshire Index, and this portfolio, were tempered somewhat by
substantial exposure to the technology sector which was very volatile during the
second half of 1995. The graph below shows performance of the Portfolio as
compared with the performance of the Index.
RETURN ON A $10,000 INVESTMENT
$11,500
$11,000
$10,500
$10,000
JUNE JUNE JULY AUG. SEP. OCT. NOV. DEC.
14 30 31 31 30 31 30 31
1995
AAL SMALL COMPANY STOCK PORTFOLIO $11,070
WILSHIRE INDEX $11,181
13
<PAGE> 15
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A A L V A R I A B L E A N N U I T Y
TOTAL RETURNS
AAL SMALL COMPANY WILSHIRE
STOCK PORTFOLIO INDEX
15%
12%
9%
6%
3%
FROM INCEPTION--JUNE 14, 1995
PORTFOLIO MANAGER:
Michael R. Hochholzer
MBA - 1995, Univ. of Chicago
CFA - 1992
BBA - 1989, Univ. of
Wisconsin-Oshkosh
Mike began his investment career with AAL in 1989.
SECTOR HOLDINGS
CONSUMER NON-DURABLES 22.8%
MATERIALS & SERVICES 20.9%
FINANCE 18.4%
TECHNOLOGY 14.3%
OTHER 23.6%
UTILITIES 7.2%
CAPITAL GOODS 5.8%
ENERGY 5.4%
CONSUMER DURABLES 2.9%
TRANSPORTATION 2.3%
TOP TEN HOLDINGS
LEHMAN BROS. HOLDINGS CP 6.05%, 01/23/96
CENTOCOR, INC.
MACROMEDIA, INC.
FORE SYSTEMS, INC.
CORDIS CORPORATION
STARBUCKS CORPORATION
GLOBAL MARINE, INC.
T. ROWE PRICE & ASSOCIATES
SURGICAL CARE AFFILIATES, INC.
PRESSTEK, INC.
[LOGO OF AAL VARIABLE ANNUITY]
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This Page Intentionally Left Blank
..................................
15
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This Page Intentionally Left Blank
..................................
16
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This report is submitted for the information of the certificate owners of the
AAL Variable Annuity Account I. It is not authorized for distribution to
prospective certificate owners unless preceded or accompanied by a current
prospectus for the AAL Variable Annuity Account I and the AAL Variable Product
Series Fund, Inc.
17
<PAGE> 19
<TABLE>
<CAPTION>
=================================================================================================
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 December 31, 1995
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
.................................................................................................
<C> <S> <C> <C> <C>
Commercial Paper (80.6%)
$200,000 American Express
Credit Corporation........................... 5.600% 01/02/96 $ 199,969
200,000 Associates Corporation
of North America............................. 5.600 01/04/96 199,907
190,000 AT&T Corporation............................... 5.820 01/02/96 189,969
200,000 Beneficial Corporation......................... 5.700 01/10/96 199,715
200,000 Cargill, Inc................................... 5.720 01/08/96 199,778
200,000 CS First Boston................................ 5.740 01/17/96 199,490
200,000 Dresser Industries, Inc........................ 5.700 01/30/96 199,082
200,000 DuPont (E.I.) De Nemours
& Company.................................... 5.700 01/09/96 199,747
200,000 Echlin, Inc.................................... 5.750 01/29/96 199,105
100,000 Ford Motor Credit Company...................... 5.700 01/02/96 99,984
100,000 Ford Motor Credit Company...................... 5.720 01/16/96 99,762
200,000 General Motors
Acceptance Corporation....................... 5.680 02/09/96 198,769
200,000 GTE South, Inc................................. 5.620 02/07/96 198,844
200,000 Hewlett-Packard Company........................ 5.850 01/11/96 199,675
200,000 Household Finance
Corporation.................................. 5.710 01/24/96 199,270
200,000 International Business
Machines Corporation......................... 5.750 01/03/96 199,936
250,000 Johnson Controls, Inc.......................... 5.870 01/02/96 249,959
200,000 KN Energy, Inc................................. 5.750 01/03/96 199,489
200,000 Lehman Brothers Holdings, Inc.................. 5.950 01/12/96 199,636
250,000 Massachusetts Electric
Company 5.900 01/03/96 249,918
200,000 McDonald's Corporation......................... 5.600 01/08/96 199,782
190,000 Merrill Lynch & Company, Inc................... 5.850 01/16/96 189,537
165,000 New England Power Company...................... 5.750 01/22/96 164,447
200,000 Nordstrom Credit, Inc.......................... 5.770 01/16/96 199,519
200,000 Pacific Bell................................... 5.750 01/09/96 199,744
250,000 R.R. Donnelley & Sons
Company...................................... 5.900 01/05/96 249,836
200,000 Sears Roebuck Acceptance
Corporation.................................. 5.650 01/16/96 199,529
200,000 Southern California Edison
Company...................................... 5.750 01/12/96 199,649
200,000 U.S. West
Communications, Inc. ........................ 5.750 01/19/96 199,425
----------
Total Commercial Paper................................................ 5,683,472
----------
U.S. Government Agency Obligations (22.1%)
$300,000 Federal Farm Credit Bank....................... 5.520% 01/10/96 $ 299,586
300,000 Federal Home Loan Bank......................... 5.520 01/08/96 299,678
606,000 Federal Home Loan
Mortgage Corporation......................... 5.550 01/04/96 605,721
350,000 Federal National
Mortgage Association......................... 5.450 01/03/96 349,894
----------
Total U.S. Government
Agency Obligations........................... 1,554,879
----------
Short-Term Investments (0.1%)
2,177 Harris Insight Government
Assets Fund......................................................... 2,177
----------
Total Investments (102.8%)
(amortized cost $7,240,528)......................................... 7,240,528
Liabilities, less
other Assets (-2.8%)................................................ (195,886)
----------
NET ASSETS (100.0%)................................................... $7,044,642
==========
</TABLE>
See accompanying notes.
18
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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 December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
...................................................................................................
<S> <C> <C> <C> <C>
U.S. Government Obligations (44.8%)
-----------------------------------
$ 250,000 U.S. Treasury Bond ........................... 6.250% 08/15/23 $ 256,953
250,000 U.S. Treasury Bond ........................... 9.875 11/15/15 361,953
250,000 U.S. Treasury Bond ........................... 10.375 11/15/12 345,781
250,000 U.S. Treasury Bond ........................... 5.375 05/31/98 250,781
185,000 U.S. Treasury Bond ........................... 8.125 08/15/19 232,638
250,000 U.S. Treasury Bond ........................... 7.125 02/15/23 285,546
50,000 U.S. Treasury Note ........................... 7.375 11/15/97 51,891
160,000 U.S. Treasury Note ........................... 5.125 11/30/98 159,400
250,000 U.S. Treasury Note ........................... 7.250 02/15/98 259,921
250,000 U.S. Treasury Note ........................... 6.125 05/31/97 253,125
300,000 U.S. Treasury Note ........................... 6.875 07/31/99 314,906
250,000 U.S. Treasury Note ........................... 6.375 01/15/99 257,734
255,000 U.S. Treasury Note ........................... 5.500 09/30/97 256,275
250,000 U.S. Treasury Note ........................... 5.875 06/30/00 255,156
250,000 U.S. Treasury Note ........................... 7.500 01/31/97 256,015
125,000 U.S. Treasury Note ........................... 6.250 02/15/03 130,469
250,000 U.S. Treasury Note ........................... 7.500 10/31/99 268,438
----------
Total U.S. Government Obligations .................................... 4,196,982
----------
U.S. Government Agency Obligations (30.9%)
------------------------------------------
198,658 Federal Home Loan Mortgage Corporation
Gold 7-Yr. Balloon ......................... 7.000 06/01/02 202,507
238,478 Federal Home Loan Mortgage Corporation
Gold 30-Yr. Pass Through ................... 6.500 04/01/24 235,869
252,915 Federal Home Loan Mortgage Corporation
Gold 30-Yr. Pass Through ................... 7.500 08/01/25 259,317
247,590 Federal National Mortgage Association
30-Yr. Pass Through ........................ 8.500 11/15/25 258,267
219,596 Federal National Mortgage Association
Conventional 30-Yr. Pass Through ........... 9.000 02/01/25 231,262
236,085 Federal National Mortgage Association
Conventional 30-Yr. Pass Through ........... 10.500 08/01/20 261,169
250,000 Federal National Mortgage Association
Medium Term Note ........................... 5.200 04/30/98 247,282
247,079 Government National Mortgage Association
30-Yr. Pass Through ........................ 7.500 03/15/23 254,028
246,021 Government National Mortgage Association
30-Yr. Pass Through ........................ 8.000 06/15/25 256,170
249,074 Government National Mortgage Association
15-Yr. Pass Through ........................ 6.500 03/01/09 251,410
175,000 Private Export Funding Corporation ........... 6.240 05/15/02 179,452
250,000 Tennessee Valley Authority ................... 6.000 11/01/00 253,627
----------
Total U.S. Government Agency Obligations ............................. 2,890,360
----------
Asset Backed Securities (2.7%)
------------------------------
250,000 Nations Bank Credit Card Trust ............... 6.000 12/15/05 251,320
----------
Corporate Obligations (14.6%)
-----------------------------
225,000 Abbott Laboratories Note ..................... 6.800 05/15/05 239,050
200,000 Baltimore Gas & Electric Company
First Refunding Mortgage Bond .............. 7.500 01/15/07 219,740
200,000 General Motors Acceptance Corporation Note ... 9.625 12/15/01 232,657
250,000 Household Finance Corporation Note ........... 6.875 03/01/03 260,126
250,000 PepsiCo Inc. Note ............................ 5.700 11/01/08 239,235
170,000 PepsiCo Inc. Debenture ....................... 7.000 11/15/96 172,419
----------
Total Corporate Obligations .......................................... 1,363,227
----------
Utility Bonds (2.8%)
--------------------
250,000 Texas Utilities Company First Mortgage Bond .. 7.375 08/01/01 264,796
----------
Canadian Government (2.2%)
--------------------------
200,000 Province of Ontario Senior Global Bond ....... 6.125 06/28/00 202,767
----------
Total Long-Term Securities
(cost basis $8,978,835) ............................................ 9,169,452
----------
Short-Term Investments (2.8%)
-----------------------------
264,000 Federal Home Loan Mortgage Corporation
5.5%, due 01/02/96 ................................................. 263,960
440 Harris Insight Government Assets Fund ................................ 440
----------
Total Short Term Securities
(cost basis $264,400) .............................................. 264,400
----------
Total Investments (100.8%)
(cost basis $9,243,235) ............................................ 9,433,852
Liabilities, less other Assets (-0.8%) ............................... (71,020)
----------
NET ASSETS (100.0%) .................................................. $9,362,832
==========
</TABLE>
See accompanying notes.
.........
19
<PAGE> 21
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (56.2%) MARKET VALUE
<C> <S> <C>
Aerospace (1.4%)
-----------------
1,200 Boeing Company.................................... $ 94,050
200 General Dynamics Corporation...................... 11,825
100 Goodrich (B.F.) Company........................... 6,813
700 Lockheed Martin Corporation....................... 55,300
600 Loral Corporation................................. 21,225
400 McDonnell Douglas Corporation..................... 36,800
200 Northrop Grumman Corporation...................... 12,800
900 Raytheon Company.................................. 42,525
800 Rockwell International Corporation................ 42,300
200 TRW, Inc.......................................... 15,500
300 Textron, Inc...................................... 20,250
500 United Technologies Corporation................... 47,437
---------
406,825
---------
Air Transportation (0.2%)
--------------------------
300 AMR Corporation *................................. 22,275
200 Delta Air Lines, Inc.............................. 14,775
200 Federal Express Corporation *..................... 14,775
500 Southwest Airlines Company........................ 11,625
200 USAir Group, Inc. *............................... 2,650
---------
66,100
---------
Apparel (0.2%)
---------------
100 Brown Group, Inc.................................. 1,425
200 Fruit of the Loom, Inc. *......................... 4,875
200 Liz Claiborne, Inc................................ 5,550
500 Nike, Inc......................................... 34,813
200 Reebok International, Ltd......................... 5,650
100 Russell Corporation............................... 2,775
100 Springs Industries, Inc........................... 4,137
100 Stride Rite Corporation........................... 750
200 V F Corporation................................... 10,550
---------
70,525
---------
Banking (3.7%)
--------------
1,400 Banc One Corporation.............................. 52,850
400 Bank of Boston Corporation........................ 18,500
700 Bank of New York Company Inc...................... 34,125
1,300 BankAmerica Corporation........................... 84,175
300 Bankers Trust New York Corporation................ 19,950
300 Barnett Banks, Inc................................ 17,700
400 Boatmen's Bancshares, Inc......................... 16,350
600 Chase Manhattan Corporation....................... 36,375
900 Chemical Banking Corporation...................... 52,875
1,500 Citicorp.......................................... 100,875
400 Comerica, Inc..................................... 16,050
600 Corestates Financial Corporation.................. 22,725
500 First Bank System, Inc............................ 24,813
1,143 NBD First Chicago Corporation..................... 45,148
300 First Fidelity Bancorporation..................... 22,612
300 First Interstate Bankcorp......................... 40,950
600 First Union Corporation........................... 33,375
856 Fleet Financial Group, Inc........................ 34,882
800 Keycorp........................................... 29,000
700 J.P. Morgan & Company, Inc........................ 56,175
500 Mellon Bank Corporation........................... 26,875
500 National City Corporation......................... 16,563
1,000 Nationsbank Corporation........................... 69,625
1,300 Norwest Corporation............................... 42,900
800 PNC Bank Corporation.............................. 25,800
200 Republic N.Y. Corporation......................... 12,425
400 Suntrust Banks, Inc............................... 27,400
600 U S Bancorp....................................... 20,175
600 Wachovia Corporation.............................. 27,450
200 Wells Fargo & Company............................. 43,200
---------
1,071,918
---------
Brokerage (0.2%)
-----------------
600 Merrill Lynch & Company........................... 30,600
300 Morgan Stanley Group, Inc......................... 24,188
300 Salomon, Inc...................................... 10,650
---------
65,438
---------
Business Machines (2.8%)
-------------------------
400 Amdahl Corporation *.............................. 3,400
400 Apple Computer, Inc............................... 12,750
100 Autodesk, Inc..................................... 3,425
300 Cabletron Systems, Inc. *......................... 24,300
300 Ceridian Corporation *............................ 12,375
1,000 Cisco Systems, Inc. *............................. 74,625
900 Compaq Computers, Inc. *.......................... 43,200
100 Cray Research, Inc. *............................. 2,475
100 Data General Corporation *........................ 1,375
500 Digital Equipment Corporation *................... 32,063
400 Honeywell, Inc.................................... 19,450
2,000 International Business Machines Corporation....... 183,500
100 Intergraph Corporation *.......................... 1,575
2,100 Microsoft Corporation *........................... 184,275
1,300 Novell, Inc. *.................................... 18,525
1,600 Oracle Systems Corporation *...................... 67,800
500 Pitney-Bowes, Inc................................. 23,500
500 Silicon Graphics, Inc. *.......................... 13,750
700 Sun Microsystems, Inc. *.......................... 31,937
400 Tandem Computers, Inc. *.......................... 4,250
600 Unisys Corporation *.............................. 3,375
400 Xerox Corporation................................. 54,800
---------
816,725
---------
Business Services (1.2%)
------------------------
500 Automatic Data Processing, Inc.................... 37,125
300 Block (H.R.), Inc................................. 12,150
700 Browning-Ferris Industries, Inc................... 20,650
900 Computer Associates International, Inc............ 51,188
200 Computer Sciences Corporation *................... 14,050
200 Deluxe Corporation................................ 5,800
</TABLE>
See accompanying notes.
20
<PAGE> 22
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
<C> <S> <C>
Business Services-Continued
---------------------------
300 Dial Corporation............................... $ 8,888
200 Ecolab, Inc. .................................. 6,000
800 First Data Corporation......................... 53,500
300 Interpublic Group of Companies, Inc. .......... 13,013
100 John H. Harland Company........................ 2,087
1,000 Laidlaw, Inc. ................................. 10,250
300 Moore Corporation Limited...................... 5,587
100 National Service Industries.................... 3,238
100 Ogden Corporation.............................. 2,137
100 Pittston Company............................... 3,138
200 Safety Kleen Corporation....................... 3,125
100 Shared Medical Systems Corporation............. 5,437
600 The Dun & Bradstreet Corporation............... 38,850
1,800 WMX Technologies, Inc. ........................ 53,775
-----------
349,988
-----------
Chemicals (1.9%)
----------------
400 Air Products & Chemicals, Inc. ................ 21,100
2,000 E.I. Du Pont De Nemours and Company............ 139,750
300 Eastman Chemical Company....................... 18,788
200 Great Lakes Chemical Corporation............... 14,400
400 Hercules, Inc. ................................ 22,550
1,500 Minnesota Mining & Manufacturing............... 99,375
400 Monsanto Company............................... 49,000
500 Morton International, Inc. .................... 17,938
300 Nalco Chemical Company......................... 9,037
700 PPG Industries, Inc. .......................... 32,025
500 Praxair, Inc. ................................. 16,812
200 Rohm & Haas Company............................ 12,875
200 Sigma-Aldrich Corporation...................... 9,900
900 The Dow Chemical Company....................... 63,337
500 Union Carbide Corporation...................... 18,750
300 W.R. Grace & Company........................... 17,738
-----------
563,375
-----------
Consumer Durables (0.2%)
-------------------------
300 Black & Decker Corporation..................... 10,575
300 Maytag Corporation............................. 6,075
500 Newell Company................................. 12,938
100 Outboard Marine Corporation.................... 2,037
300 Whirlpool Corporation.......................... 15,975
-----------
47,600
-----------
Construction (0.3%)
-------------------
100 Armstrong World Industries, Inc. .............. 6,200
100 Centex Corporation............................. 3,475
100 Crane Company.................................. 3,688
300 Fluor Corporation.............................. 19,800
100 Kaufman & Broad Home Corporation............... 1,487
500 Masco Corporation.............................. 15,687
200 Owens-Corning Fiberglass Corporation*.......... 8,975
100 Pulte Corporation.............................. 3,363
300 Sherwin-Williams Company....................... 12,225
200 Stanley Works.................................. 10,300
-----------
85,200
-----------
Containers (0.1%)
-----------------
100 Ball Corporation............................... 2,750
100 Bemis Company, Inc. ........................... 2,563
300 Crown Cork & Seal Company, Inc.* .............. 12,525
300 Stone Container Corporation.................... 4,312
-----------
22,150
-----------
Cosmetic (1.3%)
---------------
100 Alberto-Culver Company......................... 3,437
300 Avon Products, Inc. ........................... 22,613
200 Clorox Company................................. 14,325
500 Colgate-Palmolive Company...................... 35,125
1,600 Gillette Company............................... 83,400
400 International Flavors and Fragrances, Inc. .... 19,200
2,400 Procter & Gamble Company....................... 199,200
-----------
377,300
-----------
Drugs & Medicine (6.0%)
-----------------------
2,800 Abbott Laboratories............................ 116,900
200 Allergan, Inc. ................................ 6,500
200 Alza Corporation* ............................. 4,950
1,100 American Home Products Corporation............. 106,700
900 Amgen, Inc.* .................................. 53,438
300 Bard (C.R.), Inc. ............................. 9,675
200 Bausch & Lomb, Inc............................. 7,925
1,000 Baxter International, Inc. .................... 41,875
200 Becton, Dickinson and Company.................. 15,000
300 Beverly Enterprises, Inc.* .................... 3,188
400 Biomet, Inc.* ................................. 7,150
600 Boston Scientific Corporation* ................ 29,400
1,800 Bristol-Myers Squibb Company................... 154,575
1,600 Columbia/HCA Healthcare Corporation............ 81,200
100 Community Psychiatric Centers* ................ 1,225
2,000 Eli Lilly & Company............................ 112,500
600 Humana, Inc.*.................................. 16,425
2,300 Johnson & Johnson.............................. 196,937
200 Mallinckrodt Group, Inc........................ 7,275
200 Manor Care, Inc. .............................. 7,000
800 Medtronic, Inc. ............................... 44,700
4,400 Merck & Company, Inc. ......................... 289,300
2,200 Pfizer Inc. ................................... 138,600
1,780 Pharmacia & Upjohn, Inc. ...................... 68,975
1,300 Schering-Plough................................ 71,175
250 St. Jude Medical, Inc.* ....................... 10,750
700 Tenet Healthcare Corporation*.................. 14,525
500 U S Health Care Inc. .......................... 23,250
200 U S Surgical Corporation....................... 4,275
600 United Healthcare Corporation.................. 39,300
</TABLE>
See accompanying notes.
21
<PAGE> 23
<TABLE>
<CAPTION>
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
SHARES COMMON STOCKS MARKET VALUE
................................................................
<C> <S> <C>
Drugs & Medicine-Continued
--------------------------
500 Warner-Lambert Company.................... $ 48,562
----------
1,733,250
----------
Electronics (2.3%)
------------------
728 AMP, Inc.................................. 27,937
300 Advanced Micro Devices, Inc.* ............ 4,950
100 Andrew Corporation* ...................... 3,825
600 Applied Materials, Inc.* ................. 23,625
100 EG&G, Inc................................. 2,425
100 General Signal Corporation................ 3,237
100 Harris Corporation........................ 5,463
1,800 Hewlett-Packard Company................... 150,750
3,000 Intel Corporation......................... 170,250
500 LSI Logic Corporation*.................... 16,375
700 Micron Technology, Inc.................... 27,737
2,100 Motorola, Inc............................. 119,700
400 National Semiconductor Corporation* ...... 8,900
900 Northern Telecom Limited.................. 38,700
100 Perkin Elmer Corporation.................. 3,775
200 Scientific-Atlanta, Inc................... 3,000
100 Tektronix, Inc............................ 4,913
100 Teledyne, Inc............................. 2,563
700 Texas Instruments, Inc.................... 36,225
100 Thomas & Betts Corporation................ 7,375
----------
661,725
----------
Energy-Raw Materials (0.6%)
---------------------------
400 Baker Hughes, Inc......................... 9,750
400 Burlington Resources, Inc................. 15,700
700 Dresser Industries, Inc................... 17,063
100 Eastern Enterprises....................... 3,525
400 Halliburton Company....................... 20,250
100 Helmerich & Payne, Inc.................... 2,975
100 Louisiana Land and Explorations Company... 4,287
100 McDermott International, Inc.............. 2,200
100 NACCO Industries.......................... 5,550
1,100 Occidental Petroleum Corporation.......... 23,513
900 Schlumberger, Ltd......................... 62,325
----------
167,138
----------
Food & Agriculture (3.7%)
-------------------------
1,850 Archer-Daniels-Midland Company............ 33,300
500 CPC International, Inc.................... 34,312
900 Campbell Soup Company..................... 54,000
4,400 Coca-Cola Company......................... 326,700
800 ConAgra, Inc.............................. 33,000
100 Fleming Companies, Inc.................... 2,063
600 General Mills, Inc........................ 34,650
1,250 H.J. Heinz Company........................ 41,407
300 Hershey Foods Corporation................. 19,500
800 Kellogg Company........................... 61,800
2,800 PepsiCo, Inc.............................. 156,450
300 Pioneer Hi-Bred International, Inc........ 16,687
400 Quaker Oats Company....................... 13,800
400 Ralston Purina Corporation................ 24,950
1,800 Sara Lee Corporation...................... 57,375
200 Supervalu, Inc............................ 6,300
1,000 Sysco Corporation......................... 32,500
600 Unilever N.V.............................. 84,450
300 Whitman Corporation....................... 6,975
400 Wrigley (Wm) Jr. Company.................. 21,000
----------
1,061,219
----------
Forest Products (1.0%)
----------------------
400 Alco Standard Corporation................. 18,250
100 Boise Cascade Corporation................. 3,462
300 Champion International Corporation........ 12,600
200 Federal Paper Board Company, Inc.......... 10,375
300 Georgia-Pacific Corporation............... 20,588
900 International Paper Company............... 34,087
200 James River Corp. of Virginia............. 4,825
990 Kimberly-Clark Corporation................ 81,923
300 Louisiana-Pacific Corporation............. 7,275
200 Mead Corporation.......................... 10,450
100 Potlatch Corporation...................... 4,000
200 Temple-Inland, Inc........................ 8,825
200 Union Camp Corporation.................... 9,525
300 Westvaco Corporation...................... 8,325
700 Weyerhaeuser Company...................... 30,275
200 Willamette Industries..................... 11,250
----------
276,035
----------
Gold (0.3%)
-----------
1,300 Barrick Gold Corporation.................. 34,288
400 Homestake Mining Company.................. 6,250
300 Newmont Mining Corporation................ 13,575
800 Placer Dome, Inc.......................... 19,300
400 Santa Fe Pacific Gold Corporation......... 4,850
----------
78,263
----------
Insurance (2.0%)
----------------
400 Aetna Life & Casualty Company............. 27,700
100 Alexander & Alexander Services, Inc....... 1,900
1,648 Allstate Corporation...................... 67,774
800 American General Corporation.............. 27,900
1,700 American Int'l Group, Inc................. 157,250
300 Chubb Corporation......................... 29,025
300 Cigna Corporation......................... 30,975
300 General Re Corporation.................... 46,500
400 ITT Hartford Group, Inc.*................. 19,350
300 Jefferson-Pilot Corporation............... 13,950
400 Lincoln National Corporation.............. 21,500
300 Marsh & McLennan Companies, Inc........... 26,625
300 Providian Corporation..................... 12,225
</TABLE>
See accompanying notes.
22
<PAGE> 24
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
- ------ ------------- ------------
<C> <S> <C>
Insurance-Continued
-------------------
400 Safeco Corporation.............................. $ 13,800
300 St. Paul Companies, Inc......................... 16,688
200 Torchmark Corporation........................... 9,050
300 Transamerica Corporation........................ 21,863
300 USF&G Corporation............................... 5,062
150 U S Life Corporation............................ 4,481
300 Unum Corporation................................ 16,500
----------
570,118
----------
Liquor (0.4%)
-------------
900 Anheuser-Busch Companies, Inc................... 60,188
200 Brown-Foreman Corporation....................... 7,300
100 Coors (Adolph) Company.......................... 2,212
1,300 Seagram Company, Ltd............................ 45,013
----------
114,713
----------
Media (1.3%)
------------
600 Capital Cities/ABC, Inc......................... 74,025
800 Comcast Corporation............................. 14,550
500 Donnelley (R.R.) & Sons Company................. 19,688
300 Dow Jones & Company............................. 11,963
500 Gannett Company, Inc............................ 30,688
100 King World Productions, Inc.*................... 3,887
200 Knight-Ridder Inc............................... 12,500
200 McGraw-Hill, Inc................................ 17,425
100 Meredith Corporation............................ 4,187
300 New York Times Company.......................... 8,888
2,300 Tele-Communications, Inc.*...................... 45,712
1,300 Time Warner, Inc................................ 49,237
400 Times Mirror Company............................ 13,550
200 Tribune Company................................. 12,225
1,300 Viacom, Inc.*................................... 61,588
----------
380,113
----------
Miscellaneous Finance (1.6%)
----------------------------
400 Ahmanson (H.F.) & Company....................... 10,600
1,700 American Express Company........................ 70,338
200 Beneficial Corporation.......................... 9,325
600 Dean Witter Discover and Company................ 28,200
1,000 Federal National Mortgage Association........... 124,125
700 Federal Home Loan Mortgage Corporation.......... 58,450
200 Golden West Financial Corporation............... 11,050
400 Great Western Financial Corporation............. 10,200
300 Household International Corporation............. 17,737
400 ITT Corporation................................. 21,200
500 MBNA Corporation................................ 18,438
1,100 Travelers Group, Inc............................ 69,162
----------
448,825
----------
Motor Vehicles (1.3%)
---------------------
1,300 Chrysler Corporation............................ 71,988
100 Cummins Engine Company, Inc..................... 3,700
400 Dana Corporation................................ 11,700
300 Eaton Corporation............................... 16,087
200 Echlin, Inc..................................... 7,300
100 Fleetwood Enterprises, Inc...................... 2,575
3,800 Ford Motor Company.............................. 110,200
400 Genuine Parts Company........................... 16,400
2,600 General Motors Corporation...................... 137,475
----------
377,425
----------
Non-Durables (0.8%)
-------------------
200 American Greetings Corp. Cl. A.................. 5,525
100 Bally Entertainment Corporation*................ 1,400
500 Darden Restaurants, Inc......................... 5,937
100 Handleman Company............................... 575
200 Harcourt General Incorporated................... 8,375
400 Hasbro, Inc..................................... 12,400
100 Jostens, Inc.................................... 2,425
100 Luby's Cafeterias, Inc.......................... 2,225
700 Mattel, Inc..................................... 21,525
2,500 McDonald's Corporation.......................... 112,813
200 Premark International, Inc...................... 10,125
500 Rubbermaid Inc.................................. 12,750
100 Ryans Family Steak House*....................... 700
500 Service Corporation International............... 22,000
100 Shoneys Incorporated*........................... 1,025
300 Wendy's International, Inc...................... 6,375
----------
226,175
----------
Non-Ferrous Metals (0.5%)
-------------------------
800 Alcan Aluminum, Ltd............................. 24,900
600 Aluminum Company of America..................... 31,725
100 Asarco, Inc..................................... 3,200
300 Cyprus Minerals Company......................... 7,837
400 Echo Bay Mines, Ltd............................. 4,150
450 Engelhard Corporation........................... 9,788
800 Freeport-McMoran Copper & Gold.................. 22,500
400 Inco, Ltd....................................... 13,300
200 Phelps Dodge Corporation........................ 12,450
200 Reynolds Metals Company......................... 11,325
----------
141,175
----------
Oil-Domestic (0.7%)
-------------------
300 Amerada Hess Corporation........................ 15,900
200 Ashland Oil, Inc................................ 7,025
600 Atlantic Richfield Company...................... 66,450
200 Kerr-McGee Corporation.......................... 12,700
</TABLE>
See accompanying notes.
23
<PAGE> 25
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
...............................................................
<C> <S> <C>
Oil--Domestic--Continued
------------------------
300 Oryx Energy Company*.................... $ 4,013
100 Pennzoil Corporation.................... 4,225
1,000 Phillips Petroleum Company.............. 34,125
200 Rowan Companies, Inc.*.................. 1,975
300 Santa Fe Energy Resources, Inc.*........ 2,887
200 Sun Company, Inc........................ 5,475
1,000 USX-Marathon Group, Inc................. 19,500
800 Unocal Corporation...................... 23,300
----------
197,575
----------
Oil International (3.9%)
------------------------
1,800 Amoco Corporation....................... 129,375
2,300 Chevron Corporation..................... 120,750
4,400 Exxon Corporation....................... 352,550
1,400 Mobil Corporation....................... 156,800
1,900 Royal Dutch Petroleum Company*.......... 268,138
900 Texaco, Inc............................. 70,650
200 Western Atlas, Inc.*.................... 10,100
----------
1,108,363
----------
Photo & Optical (0.4%)
----------------------
800 Corning, Inc............................ 25,600
1,200 Eastman Kodak Co........................ 80,400
200 Polaroid Corporation.................... 9,475
----------
115,475
----------
Producers Goods (3.0%)
----------------------
1,000 Allied-Signal Inc....................... 47,500
200 Avery Dennison Corporation.............. 10,025
100 Briggs & Stratton Corporation........... 4,338
700 Caterpillar, Inc........................ 41,125
100 Cincinnati Milacron..................... 2,625
400 Cooper Industries, Inc.................. 14,700
900 Deere & Company......................... 31,725
400 Dover Corporation....................... 14,750
800 Emerson Electric Company................ 65,400
100 FMC Corporation*........................ 6,763
100 Foster Wheeler Corporation.............. 4,250
5,900 General Electric Company................ 424,800
100 Giddings & Lewis Incorporated........... 1,650
100 Harnischfeger Industries, Inc........... 3,325
400 Illinois Tool Works, Inc................ 23,600
400 Ingersoll-Rand Company.................. 14,050
200 Johnson Controls, Inc................... 13,750
200 Millipore Corporation................... 8,225
200 Navistar International Corp.*........... 2,100
400 Pall Corporation........................ 10,750
200 Parker Hannifin......................... 6,850
200 Raychem Corporation..................... 11,375
100 Snap-on, Inc............................ 4,525
600 Tenneco, Inc............................ 29,775
100 Timken Company.......................... 3,825
100 Trinova Corporation..................... 2,863
500 Tyco International...................... 17,812
100 Varity Corporation*..................... 3,712
200 W.W. Grainger, Inc...................... 13,250
1,300 Westinghouse Electric Company........... 21,450
----------
860,888
----------
Railroad & Shipping (0.7%)
--------------------------
564 Burlington Northern, Inc................ 43,992
800 CSX Corporation......................... 36,500
300 Conrail, Inc............................ 21,000
500 Norfolk Southern Corporation............ 39,688
700 Union Pacific Corporation............... 46,200
----------
187,380
----------
Retail Stores (2.6%)
---------------------
900 Albertson's, Inc........................ 29,587
500 American Stores Company................. 13,375
600 CUC International, Inc.*................ 20,475
300 Charming Shoppes, Inc................... 863
300 Circuit City Stores, Inc................ 8,287
300 Dayton Hudson Corporation............... 22,500
300 Dillard Department Stores, Inc.......... 8,550
700 Federated Department Stores, Inc.*...... 19,250
500 GAP, Inc................................ 21,000
200 Giant Food, Inc., Class A............... 6,300
100 Great Atlantic & Pacific Tea Co., Inc... 2,300
1,700 Home Depot, Inc......................... 81,388
800 J.C. Penney Company, Inc................ 38,100
1,600 Kmart Corporation....................... 11,600
400 Kroger Corporation*..................... 15,000
100 Long's Drug Stores, Inc................. 4,787
500 Lowe's Companies, Inc................... 16,750
900 May Department Stores Company........... 38,025
400 Melville Corporation.................... 12,300
100 Mercantile Stores Company, Inc.......... 4,625
300 Nordstrom, Inc.......................... 12,150
200 Pep Boys - Manny, Moe, & Jack........... 5,125
600 Price/Costco, Inc.*..................... 9,150
300 Rite Aid Corporation.................... 10,275
1,400 Sears Roebuck & Company................. 54,600
200 Tandy Corporation*...................... 8,300
1,200 The Limited, Inc........................ 20,850
200 TJX Companies, Inc...................... 3,775
900 Toys "R" Us, Inc.*...................... 19,575
8,000 Wal-Mart Stores, Inc.................... 179,000
800 Walgreen Company........................ 23,900
500 Winn-Dixie Stores, Inc.................. 18,438
400 Woolworth Corporation*.................. 5,200
----------
745,400
----------
</TABLE>
See accompanying notes.
24
<PAGE> 26
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
..................................................................
<C> <S> <C>
Steel (0.1%)
-------------
300 Armco, Inc.*............................. $ 1,763
300 Bethlehem Steel Corporation*............. 4,200
100 Inland Steel Industries, Inc............. 2,513
300 Nucor Corporation........................ 17,137
300 USX-US Steel Group, Inc.................. 9,225
300 Worthington Industries, Inc.............. 6,244
-----------
41,082
-----------
Telephone (5.0%)
----------------
600 ALL/TEL Corporation...................... 17,700
5,600 AT&T Corporation......................... 362,600
1,800 Airtouch Communications, Inc.*........... 50,850
2,000 Ameritech Corporation.................... 118,000
1,500 Bell Atlantic Corporation................ 100,313
3,500 BellSouth Corporation.................... 152,250
400 DSC Communications Corporation*.......... 14,750
3,400 GTE Corporation.......................... 149,600
2,400 MCI Communications Corporation........... 62,700
1,500 Nynex Corporation........................ 81,000
1,600 Pacific Telesis Group.................... 53,800
2,200 SBC Communications, Inc.................. 126,500
1,300 Sprint Corporation....................... 51,837
300 Tellabs, Inc.*........................... 11,100
1,700 U S West, Inc............................ 60,775
1,600 U S West Media Group..................... 30,400
-----------
1,444,175
-----------
Tires & Rubber (0.1%)
---------------------
200 Cooper Tire & Rubber Company............. 4,925
500 Goodyear Tire & Rubber................... 22,688
-----------
27,613
-----------
Tobacco (1.3%)
--------------
600 American Brands, Inc..................... 26,775
600 Loews Corporation........................ 47,025
3,000 Philip Morris Companies, Inc............. 271,500
700 UST, Inc................................. 23,363
-----------
368,663
-----------
Travel & Recreation (0.5%)
---------------------------
300 Brunswick Corporation.................... 7,200
1,800 Disney (Walt) Company.................... 106,200
300 Harrah's Entertainment................... 7,275
200 Hilton Hotels Corporation................ 12,300
400 Marriott International, Inc.............. 15,300
-----------
148,275
-----------
Trucking & Freight (0.1%)
-------------------------
100 Consolidated Freightways, Inc............ 2,650
400 ITT Corporation.......................... 9,600
100 PACCAR, Inc.............................. 4,213
100 Roadway Services, Inc.................... 4,887
200 Ryder Systems, Inc....................... 4,950
100 Yellow Corporation....................... 1,238
-----------
27,538
-----------
Utilities & Energy (2.5%)
--------------------------
600 American Electric Power Company.......... 24,300
500 Baltimore Gas & Electric Company......... 14,250
500 CINergy Corporation*..................... 15,313
500 Carolina Power & Light Company........... 17,250
600 Central & Southwest Corporation.......... 16,725
400 Coastal Corporation...................... 14,900
200 Columbia Gas System, Inc.*............... 8,775
800 Consolidated Edison Company of New York.. 25,600
300 Consolidated Natural Gas Company......... 13,613
500 DTE Energy Company....................... 17,250
700 Duke Power Company....................... 33,162
700 Dominion Resources, Inc.................. 28,875
900 Enron Corporation........................ 34,312
200 Enserch Corporation...................... 3,250
900 Entergy Corporation...................... 26,325
600 FPL Group, Inc........................... 27,825
500 General Public Utilities Corporation..... 17,000
900 Houston Industries, Inc.................. 21,825
500 Niagara Mohawk Power Corporation......... 4,813
100 Nicor, Inc............................... 2,750
400 NorAm Energy Corp........................ 3,550
200 Northern States Power Company............ 9,825
100 ONEOK, Inc............................... 2,287
500 Ohio Edison Company...................... 11,750
500 P P & L Resources, Inc................... 12,500
1,000 Pacificorp............................... 21,250
200 Pacific Enterprises...................... 5,650
1,400 Pacific Gas & Electric Company........... 39,725
500 Panhandle Eastern Corporation............ 13,938
700 Peco Energy Company...................... 21,087
100 Peoples Energy Corporation............... 3,175
800 Public Service Enterprise................ 24,500
1,500 SCE Corporation.......................... 26,625
300 Sonat Incorporated....................... 10,688
2,300 Southern Company......................... 56,638
800 Texas Utilities Company.................. 32,900
800 Unicom Corporation....................... 26,200
300 Union Electric Company................... 12,525
300 Williams Companies, Inc.................. 13,162
-----------
716,088
-----------
Total Common Stocks (cost basis $14,727,660)....... $16,167,825
</TABLE> ===========
*Non-income producing securities
See accompanying notes.
25
<PAGE> 27
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT LONG-TERM DEBT SECURITIES (35.8%) RATE DATE VALUE
.....................................................................................
<S> <C> <C> <C> <C>
U.S. Government Securities (17.1%)
----------------------------------
$125,000 U.S. Treasury Bond ..................... 7.500% 11/15/16 $ 146,641
250,000 U.S. Treasury Bond ..................... 6.250 08/15/03 256,953
200,000 U.S. Treasury Bond ..................... 10.380 11/15/12 276,625
250,000 U.S. Treasury Bond ..................... 7.125 02/15/23 285,547
125,000 U.S. Treasury Bond ..................... 7.875 02/15/21 153,867
200,000 U.S. Treasury Bond ..................... 9.875 11/15/15 289,562
150,000 U.S. Treasury Note ..................... 5.875 07/31/97 151,547
230,000 U.S. Treasury Note ..................... 6.500 05/15/05 245,094
200,000 U.S. Treasury Note ..................... 7.500 01/31/97 204,812
250,000 U.S. Treasury Note ..................... 6.125 05/31/97 253,125
225,000 U.S. Treasury Note ..................... 6.875 07/31/99 236,179
200,000 U.S. Treasury Note ..................... 6.250 02/15/03 208,750
100,000 U.S. Treasury Note ..................... 5.125 12/31/98 99,656
250,000 U.S. Treasury Note ..................... 7.750 12/31/99 271,406
200,000 U.S. Treasury Note ..................... 7.250 02/15/98 207,937
250,000 U.S. Treasury Note ..................... 7.375 11/15/97 259,453
250,000 U.S. Treasury Note ..................... 5.750 08/15/03 253,047
170,000 U.S. Treasury Note ..................... 8.750 10/15/97 180,094
190,000 U.S. Treasury Note ..................... 7.500 11/15/01 209,415
250,000 U.S. Treasury Note ..................... 5.875 08/15/98 253,906
215,000 U.S. Treasury Note ..................... 5.500 02/28/99 216,410
250,000 U.S. Treasury Note ..................... 6.125 07/31/00 257,422
-----------
Total U.S. Government Obligations .......................... 4,917,448
-----------
U.S. Government Agency Securities (11.2%)
-----------------------------------------
158,926 Federal Home Loan Mortgage
Corporation Gold
7-Yr. Balloon ........................ 7.000 06/01/02 162,005
194,731 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through .................. 6.500 04/01/24 192,602
225,914 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through .................. 8.500 09/01/25 235,727
249,825 Federal Home Loan Mortgage
Corporation Gold
30-Yr. Pass Through .................. 7.500 11/01/25 256,149
249,240 Federal National
Mortgage Association
15-Yr. Pass Through .................. 7.000 11/10/10 253,913
101,987 Federal National
Mortgage Association
15-Yr. Pass Through .................. 9.000 04/01/10 107,277
90,915 Federal National
Mortgage Association
15-Yr. Pass Through .................. 9.000 04/01/10 95,631
175,000 Federal National
Mortgage Association ................. 8.100 08/12/19 211,303
236,084 Federal National
Mortgage Association
30-Yr. Pass Through .................. 10.500 08/01/20 261,168
200,000 Federal National
Mortgage Association
Medium Term Note ..................... 5.200 04/30/98 197,826
205,456 Federal National
Mortgage Association
30-Yr. Pass Through .................. 7.500 10/01/24 210,463
245,034 Government National
Mortgage Association
30-Yr. Pass Through .................. 9.500 12/15/24 262,876
199,429 Government National
Mortgage Association
30-Yr. Pass Through ................. 7.500 06/01/25 205,038
191,708 Government National
Mortgage Association
15-Yr. Pass Through .................. 6.500 05/15/09 193,506
203,200 Government National
Mortgage Association
30-Yr. Pass Through .................. 8.000 06/01/25 211,582
150,000 Private Export Funding
Corporation 6.240 05/15/02 153,816
-----------
Total U.S. Government
Agency Obligations ........................................ 3,210,882
-----------
Asset Backed Securities (0.7%)
------------------------------
200,000 Nations Bank Credit Card Trust ......... 6.000 12/15/05 201,056
-----------
Corporate Securities (5.2%)
---------------------------
200,000 Abbott Laboratories Notes .............. 6.800 05/15/05 212,489
250,000 Rhone-Poulenc SA Notes ................. 7.750 01/15/02 268,206
150,000 Baltimore Gas & Electric
Company First Refunding
Mortgage Bonds ....................... 7.500 01/15/07 164,805
250,000 American General Finance
Corporation Senior Notes ............. 6.875 07/01/99 258,544
125,000 Eaton Corporation Notes ................ 6.375 04/01/99 128,017
175,000 General Motors Acceptance
Corporation Notes .................... 9.625 12/15/01 203,575
250,000 J.C. Penney Company, Inc.
Notes ................................ 6.375 09/15/00 255,100
-----------
Total Corporate Securities ................................. 1,490,736
-----------
Utility Bonds (0.9%)
--------------------
250,000 Texas Utilities Company
First Mortgage Bonds ................. 7.375 08/01/01 264,796
-----------
Canadian Government (0.7%)
--------------------------
200,000 Province of Ontario
Senior Global Bonds .................. 6.125 06/28/00 202,767
-----------
Total Long-Term Debt
Securities (cost basis
$10,074,629).............................................. $10,287,685
</TABLE>
See accompanying notes.
26
<PAGE> 28
===============================================================================
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
..................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY MARKET
AMOUNT RATE DATE VALUE
.......................................................................
<C> <S> <C> <C> <C>
Short-Term Investments (7.7%)
-----------------------------
$100,000 AT&T Corporation.............. 5.70% 01/05/96 $ 99,937
100,000 American Express Credit
Corporation................. 5.70 01/08/96 99,889
275,000 Echlin, Inc................... 5.75 01/29/96 273,770
50,000 Federal National Mortgage
Association................. 5.52 01/05/96 49,969
190,000 Ford Motor Credit Company..... 5.70 01/02/96 189,970
300,000 General Motors Acceptance
Corporation................. 5.72 01/12/96 299,476
150,000 IBM Credit Corporation........ 5.78 01/26/96 149,398
140,000 KN Energy, Inc................ 5.75 02/06/96 139,195
320,000 Lehman Brothers Holdings, Inc. 6.05 01/03/96 319,892
100,000 Merrill Lynch & Company, Inc.. 5.82 01/23/96 99,644
300,000 PacifiCorp.................... 5.72 01/18/96 299,190
200,000 Xerox Corporation............. 5.72 01/12/96 199,651
2,087 Harris Insight Government
Assets Fund...................................... 2,087
-----------
Total Short-Term Investments
(cost basis $2,222,068)........................... 2,222,068
-----------
Total Investments (99.7%)
(cost basis $27,024,356).......................... $28,677,578
Other Assets, less
Liabilities (0.3%)................................ 81,144
-----------
NET ASSETS (100.0%)............................... $28,758,722
===========
</TABLE>
See accompanying notes.
27
<PAGE> 29
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (98.6%) MARKET VALUE
....................................................................
<C> <S> <C>
Aerospace (2.4%)
-----------------
1,700 Boeing Company ................................... $133,237
300 General Dynamics Corporation ..................... 17,738
100 Goodrich (B.F.) Company .......................... 6,812
1,000 Lockheed Martin Corporation ...................... 79,000
800 Loral Corporation ................................ 28,300
600 McDonnell Douglas Corporation .................... 55,200
300 Northrop Grumman Corporation .................... 19,200
1,200 Raytheon Company ................................. 56,700
1,100 Rockwell International Corporation ............... 58,163
300 TRW, Inc. ........................................ 23,250
400 Textron, Inc. .................................... 27,000
600 United Technologies Corporation .................. 56,925
---------
561,525
---------
Air Transportation (0.4%)
--------------------------
400 AMR Corporation* ................................. 29,700
300 Delta Air Lines, Inc. ............................ 22,162
300 Federal Express Corporation* .................... 22,163
700 Southwest Airlines Company ....................... 16,275
300 USAir Group, Inc.* ............................... 3,975
---------
94,275
---------
Apparel (0.4%)
---------------
100 Brown Group, Inc. ................................ 1,425
300 Fruit of the Loom, Inc.* ......................... 7,312
300 Liz Claiborne, Inc. .............................. 8,325
700 Nike, Inc. ....................................... 48,738
300 Reebok International, Ltd. ....................... 8,475
100 Russell Corporation .............................. 2,775
100 Springs Industries, Inc. ......................... 4,137
200 Stride Rite Corporation ......................... 1,500
300 V F Corporation .................................. 15,825
---------
98,512
---------
Banking (6.6%)
---------------
1,900 Banc One Corporation ............................. 71,725
600 Bank of Boston Corporation ....................... 27,750
1,000 Bank of New York Company, Inc. ................... 48,750
1,900 BankAmerica Corporation .......................... 123,025
400 Bankers Trust New York Corporation ............... 26,600
500 Barnett Banks, Inc. .............................. 29,500
600 Boatmen's Bancshares, Inc. ....................... 24,525
900 Chase Manhattan Corporation ...................... 54,562
1,300 Chemical Banking Corporation ..................... 76,375
2,100 Citicorp ......................................... 141,225
600 Comerica, Inc. ................................... 24,075
700 Corestates Financial Corporation ................. 26,513
600 First Bank System, Inc. .......................... 29,775
1,624 NBD First Chicago Corporation .................... 64,148
400 First Fidelity Bancorporation .................... 30,150
400 First Interstate Bancorp ......................... 54,600
900 First Union Corporation ......................... 50,062
1,235 Fleet Financial Group, Inc. ...................... 50,339
1,200 Keycorp .......................................... 43,500
1,000 J. P. Morgan & Company, Inc. ..................... 80,250
700 Mellon Bank Corporation .......................... 37,625
700 National City Corporation ........................ 23,188
1,400 Nationsbank Corporation .......................... 97,475
1,700 Norwest Corporation .............................. 56,100
1,100 PNC Bank Corporation ............................. 35,475
300 Republic NY Corporation .......................... 18,638
600 Suntrust Banks, Inc. ............................. 41,100
800 U S Bancorp ...................................... 26,900
800 Wachovia Corporation ............................. 36,600
300 Wells Fargo & Company ............................ 64,800
---------
1,515,350
---------
Business Machines (5.1%)
-------------------------
500 Amdahl Corporation* .............................. 4,250
600 Apple Computer, Inc. ............................. 19,125
200 Autodesk, Inc. ................................... 6,850
400 Cabletron Systems, Inc.* ......................... 32,400
400 Ceridian Corporation* ............................ 16,500
1,400 Cisco Systems, Inc.* ............................. 104,475
1,300 Compaq Computers, Inc. ........................... 62,400
100 Cray Research, Inc.* ............................. 2,475
100 Data General Corporation* ........................ 1,375
800 Digital Equipment Corporation* ................... 51,300
600 Honeywell, Inc. .................................. 29,175
2,900 International Business Machines Corporation ...... 266,075
200 Intergraph Corporation* .......................... 3,150
3,000 Microsoft Corporation* ........................... 263,250
1,800 Novell, Inc.* .................................... 25,650
2,200 Oracle Systems Corporation* ...................... 93,225
700 Pitney-Bowes, Inc. ............................... 32,900
800 Silicon Graphics, Inc. ........................... 22,000
1,000 Sun Microsystems, Inc.* .......................... 45,625
500 Tandem Computers, Inc.* .......................... 5,312
800 Unisys Corporation* .............................. 4,500
600 Xerox Corporation ................................ 82,200
---------
1,174,212
---------
Business Services (2.2%)
------------------------
700 Automatic Data Processing, Inc. ................. 51,975
500 Block (H.R.), Inc. ............................... 20,250
1,000 Browning-Ferris Industries, Inc. ................. 29,500
1,250 Computer Associates International, Inc. .......... 71,094
300 Computer Sciences Corporation* ................... 21,075
400 Deluxe Corporation ............................... 11,600
400 Dial Corporation ................................. 11,850
300 Ecolab, Inc. ..................................... 9,000
1,100 First Data Corporation ........................... 73,562
400 Interpublic Group of Companies, Inc. ............. 17,350
100 John H. Harland Company .......................... 2,088
</TABLE>
See accompanying notes.
28
<PAGE> 30
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
......................................................................
<C> <S> <C>
Business Services-Continued
---------------------------
1,400 Laidlaw, Inc.................................... $ 14,350
400 Moore Corp. Ltd.................................. 7,450
200 National Service Industries...................... 6,475
200 Ogden Corporation................................ 4,275
200 Pittston Company................................. 6,275
200 Safety Kleen Corporation......................... 3,125
100 Shared Medical Systems Corporation............... 5,437
900 The Dun & Bradstreet Corporation................. 58,275
2,500 WMX Technologies, Inc............................ 74,688
----------
499,694
----------
Chemicals (3.5%)
----------------
600 Air Products & Chemicals, Inc.................... 31,650
2,800 E. I. Du Pont De Nemours and Company............. 195,650
400 Eastman Chemical Company......................... 25,050
300 Great Lakes Chemical Corporation................. 21,600
600 Hercules, Inc.................................... 33,825
2,100 Minnesota Mining & Manufacturing................. 139,125
600 Monsanto Company................................. 73,500
700 Morton International, Inc........................ 25,112
300 Nalco Chemical Company........................... 9,038
1,000 PPG Industries, Inc.............................. 45,750
700 Praxair, Inc..................................... 23,537
300 Rohm & Haas Company.............................. 19,313
200 Sigma-Aldrich Corporation........................ 9,900
1,300 The Dow Chemical Company......................... 91,487
700 Union Carbide Corporation........................ 26,250
500 W. R. Grace & Company............................ 29,563
----------
800,350
----------
Construction (0.5%)
-------------------
200 Armstrong World Industries, Inc.................. 12,400
100 Centex Corporation............................... 3,475
100 Crane Company.................................... 3,687
400 Fluor Corporation................................ 26,400
100 Kaufman & Broad Home Corporation................. 1,488
800 Masco Corporation................................ 25,100
200 Owens-Corning Fiberglass Corporation*............ 8,975
100 Pulte Corporation................................ 3,363
400 Sherwin-Williams Company......................... 16,300
200 Stanley Works.................................... 10,300
----------
111,488
----------
Consumer Durables (0.3%)
-------------------------
400 Black & Decker Corporation....................... 14,100
500 Maytag Corporation............................... 10,125
700 Newell Company................................... 18,112
100 Outboard Marine Corporation...................... 2,038
400 Whirlpool Corporation............................ 21,300
----------
65,675
----------
Containers (0.1%)
-----------------
100 Ball Corporation................................. 2,750
200 Bemis Company, Inc............................... 5,125
400 Crown Cork & Seal Company, Inc.*................. 16,700
400 Stone Container Corporation...................... 5,750
----------
30,325
----------
Cosmetics (2.3%)
----------------
100 Alberto-Culver Company........................... 3,437
400 Avon Products, Inc............................... 30,150
300 Clorox Company................................... 21,488
700 Colgate-Palmolive Company........................ 49,175
2,200 Gillette Company................................. 114,675
500 International Flavors and Fragrances, Inc........ 24,000
3,400 Procter & Gamble Company......................... 282,200
----------
525,125
----------
Drugs & Medicine (10.6%)
------------------------
3,900 Abbott Laboratories.............................. 162,825
300 Allergan, Inc.................................... 9,750
400 Alza Corporation*................................ 9,900
1,600 American Home Products Corporation............... 155,200
1,300 Amgen, Inc.*..................................... 77,187
200 Bard (C.R.), Inc................................. 6,450
300 Bausch & Lomb, Inc............................... 11,888
1,400 Baxter International, Inc........................ 58,625
300 Becton, Dickinson and Company.................... 22,500
400 Beverly Enterprises, Inc.*....................... 4,250
500 Biomet, Inc.*.................................... 8,937
800 Boston Scientific Corporation*................... 39,200
2,500 Bristol-Myers Squibb Company..................... 214,688
2,200 Columbia/HCA Healthcare Corporation.............. 111,650
200 Community Psychiatric Centers.................... 2,450
2,800 Eli Lilly & Company.............................. 157,500
800 Humana, Inc.*.................................... 21,900
3,200 Johnson & Johnson................................ 274,000
400 Mallinckrodt Group, Inc.......................... 14,550
300 Manor Care, Inc.................................. 10,500
1,200 Medtronic, Inc................................... 67,050
6,200 Merck & Company, Inc............................. 407,650
3,200 Pfizer, Inc...................................... 201,600
2,515 Pharmacia & Upjohn, Inc.......................... 97,456
1,800 Schering-Plough.................................. 98,550
300 St. Jude Medical, Inc.*.......................... 12,900
900 Tenet Healthcare Corporation*.................... 18,675
800 U S HealthCare, Inc.............................. 37,200
200 U S Surgical Corporation......................... 4,275
900 United Healthcare Corporation.................... 58,950
700 Warner-Lambert Company........................... 67,988
----------
2,446,244
----------
</TABLE>
See accompanying notes.
29
<PAGE> 31
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
................................................................
<S> <C> <C>
Electronics (4.1%)
------------------
1,028 AMP, Inc.................................. $ 39,449
500 Advanced Micro Devices, Inc.*............. 8,250
200 Andrew Corporation*....................... 7,650
900 Applied Materials, Inc.*.................. 35,438
200 EG&G, Inc................................. 4,850
200 General Signal Corporation................ 6,475
200 Harris Corporation........................ 10,925
2,600 Hewlett-Packard Company................... 217,750
4,100 Intel Corporation......................... 232,675
700 LSI Logic Corporation*.................... 22,925
1,000 Micron Technology, Inc.................... 39,625
2,900 Motorola, Inc............................. 165,300
600 National Semiconductor Corporation*....... 13,350
1,300 Northern Telecom, Ltd..................... 55,900
200 Perkin Elmer Corporation.................. 7,550
300 Scientific-Atlanta, Inc................... 4,500
200 Tektronix, Inc............................ 9,825
200 Teledyne, Inc............................. 5,125
900 Texas Instruments, Inc.................... 46,575
100 Thomas & Betts Corporation................ 7,375
----------
941,512
----------
Energy--Raw Materials (1.0%)
----------------------------
800 Baker Hughes, Inc......................... 19,500
600 Burlington Resources, Inc................. 23,550
1,000 Dresser Industries, Inc................... 24,375
100 Eastern Enterprises....................... 3,525
600 Halliburton Company....................... 30,375
100 Helmerich & Payne, Inc.................... 2,975
200 Louisiana Land and Explorations Company... 8,575
200 McDermott International, Inc.............. 4,400
100 NACCO Industries, Inc..................... 5,550
1,500 Occidental Petroleum Corporation.......... 32,062
1,200 Schlumberger, Ltd......................... 83,100
----------
237,987
----------
Food & Agriculture (6.3%)
-------------------------
2,565 Archer-Daniels-Midland Company............ 46,170
700 CPC International, Inc.................... 48,037
1,200 Campbell Soup Company..................... 72,000
6,300 Coca-Cola Company......................... 467,775
1,200 ConAgra, Inc.............................. 49,500
100 Fleming Companies, Inc.................... 2,063
800 General Mills, Inc........................ 46,200
1,800 H.J. Heinz Company........................ 59,625
400 Hershey Foods Corporation................. 26,000
1,100 Kellogg Company........................... 84,975
3,900 PepsiCo, Inc.............................. 217,912
400 Pioneer Hi-Bred International, Inc........ 22,250
600 Quaker Oats Company....................... 20,700
500 Ralston Purina Corporation................ 31,188
2,400 Sara Lee Corporation...................... 76,500
300 Supervalu, Inc............................ 9,450
900 Sysco Corporation......................... 29,250
800 Unilever N. V............................. 112,600
500 Whitman Corporation....................... 11,625
600 Wrigley (Wm) Jr. Company.................. 31,500
----------
1,465,320
----------
Forest Products (1.8%)
----------------------
600 Alco Standard Corporation................. 27,375
200 Boise Cascade Corporation................. 6,925
500 Champion International Corporation........ 21,000
200 Federal Paper Board Company, Inc.......... 10,375
500 Georgia-Pacific Corporation............... 34,312
1,200 International Paper Company............... 45,450
400 James River Corporation of Virginia....... 9,650
1,446 Kimberly-Clark Corporation................ 119,657
600 Louisiana-Pacific Corporation............. 14,550
300 Mead Corporation.......................... 15,675
100 Potlatch Corporation...................... 4,000
300 Temple-Inland, Inc........................ 13,237
300 Union Camp Corporation.................... 14,288
500 Westvaco Corporation...................... 13,875
1,000 Weyerhaeuser Company...................... 43,250
300 Willamette Industries..................... 16,875
----------
410,494
----------
Gold (0.5%)
-----------
1,800 Barrick Gold Corporation.................. 47,475
600 Homestake Mining Company.................. 9,375
500 Newmont Mining Corporation................ 22,625
1,100 Placer Dome, Inc.......................... 26,537
600 Santa Fe Pacific Gold Corporation......... 7,275
----------
113,287
----------
Insurance (3.4%)
----------------
600 Aetna Life & Casualty Company............. 41,550
200 Alexander & Alexander Services, Inc....... 3,800
2,241 Allstate Corporation...................... 92,161
1,000 American General Corporation.............. 34,875
2,400 American International Group, Inc......... 222,000
500 Chubb Corporation......................... 48,375
400 Cigna Corporation......................... 41,300
400 General RE Corporation.................... 62,000
600 ITT Hartford Group, Inc.*................. 29,025
300 Jefferson-Pilot Corporation............... 13,950
500 Lincoln National Corporation.............. 26,875
400 Marsh & McLennan Companies, Inc........... 35,500
500 Providian Corporation..................... 20,375
600 Safeco Corporation........................ 20,700
400 St. Paul Companies, Inc................... 22,250
300 Torchmark Corporation..................... 13,575
400 Transamerica Corporation.................. 29,150
</TABLE>
See accompanying notes.
30
<PAGE> 32
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
..................................................................
<C> <S> <C>
Insurance-Continued
-------------------
500 USF&G Corporation........................... $ 8,438
150 USLIFE Corporation.......................... 4,481
400 Unum Corporation............................ 22,000
-----------
792,380
-----------
Liquor (0.7%)
-------------
1,300 Anheuser-Busch Companies, Inc. ............. 86,937
300 Brown-Foreman Corporation................... 10,950
100 Coors (Adolph) Company...................... 2,213
1,800 Seagram Company, Ltd. ...................... 62,325
-----------
162,425
-----------
Media (2.3%)
------------
800 Capital Cities/ABC, Inc. ................... 98,700
1,100 Comcast Corporation......................... 20,006
700 Donnelley (R.R.) & Sons Company............. 27,563
500 Dow Jones & Company, Inc. .................. 19,937
700 Gannett Company, Inc. ...................... 42,963
200 King World Productions, Inc.*............... 7,775
300 Knight-Ridder Inc. ......................... 18,750
300 McGraw-Hill, Inc. .......................... 26,137
100 Meredith Corporation........................ 4,188
400 New York Times Company...................... 11,850
3,200 Tele-Communications Inc.* .................. 63,600
1,900 Time Warner, Inc. .......................... 71,962
500 Times Mirror Company........................ 16,938
300 Tribune Company............................. 18,337
1,800 Viacom, Inc.*............................... 85,275
-----------
533,981
-----------
Miscellaneous Finance (3.0%)
----------------------------
500 Ahmanson (H.F.) & Company................... 13,250
2,400 American Express Company.................... 99,300
300 Beneficial Corporation...................... 13,988
800 Dean Witter Discover and Company............ 37,600
1,400 Federal National Mortgage Association....... 173,775
900 Federal Home Loan Mortgage Corporation...... 75,150
300 Golden West Financial Corporation........... 16,575
700 Great Western Financial Corporation......... 17,850
500 Household International Corporation......... 29,562
700 MBNA Corporation............................ 25,813
900 Merrill Lynch & Company..................... 45,900
400 Morgan Stanley Group, Inc. ................. 32,250
500 Salomon, Inc. .............................. 17,750
1,600 Travelers Group, Inc. ...................... 100,600
-----------
699,363
-----------
Motor Vehicles (2.4%)
---------------------
1,900 Chrysler Corporation........................ 105,212
200 Cummins Engine Company, Inc. ............... 7,400
500 Dana Corporation............................ 14,625
400 Eaton Corporation........................... 21,450
300 Echlin, Inc. ............................... 10,950
200 Fleetwood Enterprises, Inc. ................ 5,150
5,400 Ford Motor Company.......................... 156,600
600 Genuine Parts Company....................... 24,600
3,700 General Motors Corporation.................. 195,638
600 ITT Industries, Inc. ....................... 14,400
-----------
556,025
-----------
Non-Durables (1.3%)
-------------------
300 American Greetings Corporation, Class A..... 8,287
200 Bally Entertainment Corporation*............ 2,800
700 Darden Restaurants, Inc. ................... 8,313
100 Handleman Company........................... 575
300 Harcourt General Inc. ...................... 12,562
400 Hasbro, Inc. ............................... 12,400
100 Jostens, Inc. .............................. 2,425
100 Luby's Cafeterias, Inc...................... 2,225
1,100 Mattel, Inc................................. 33,825
3,400 McDonald's Corporation...................... 153,425
300 Premark International Inc................... 15,188
700 Rubbermaid, Inc. ........................... 17,850
200 Ryans Family Steak House*................... 1,400
600 Service Corporation International........... 26,400
200 Shoneys, Inc.*.............................. 2,050
500 Wendy's International....................... 10,625
-----------
310,350
-----------
Non-Ferrous Metals (0.9%)
-------------------------
1,100 Alcan Aluminum, Ltd. ....................... 34,237
900 Aluminum Company of America................. 47,588
200 Asarco, Inc. ............................... 6,400
400 Cyprus Minerals Company..................... 10,450
600 Echo Bay Mines, Ltd. ....................... 6,225
700 Engelhard Corporation....................... 15,225
1,000 Freeport-McMoran Copper & Gold, Class B..... 28,125
600 Inco, Ltd. ................................. 19,950
400 Phelps Dodge Corporation.................... 24,900
300 Reynolds Metals Company..................... 16,988
-----------
210,088
-----------
Oil-Domestic (1.2%)
-------------------
500 Amerada Hess Corporation.................... 26,500
300 Ashland Oil, Inc. .......................... 10,537
800 Atlantic Richfield Company.................. 88,600
300 Kerr-McGee Corporation...................... 19,050
500 Oryx Energy Company*........................ 6,688
200 Pennzoil Corporation........................ 8,450
1,300 Phillips Petroleum Company.................. 44,362
400 Rowan Companies, Inc.*...................... 3,950
400 Santa Fe Energy Resources, Inc.*............ 3,850
300 Sun Company, Inc. .......................... 8,213
</TABLE>
See accompanying notes.
31
<PAGE> 33
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
....................................................................
<C> <S> <C>
Oil-Domestic-Continued
----------------------
1,400 USX-Marathon Group, Inc........................ $ 27,300
1,200 Unocal Corporation............................. 34,950
-----------
282,450
-----------
Oil-International (6.8%)
------------------------
2,500 Amoco Corporation.............................. 179,687
3,200 Chevron Corporation............................ 168,000
6,200 Exxon Corporation.............................. 496,775
2,000 Mobil Corporation.............................. 224,000
2,700 Royal Dutch Petroleum Company.................. 381,038
1,300 Texaco, Inc.................................... 102,050
300 Western Atlas, Inc.*........................... 15,150
-----------
1,566,700
-----------
Optical & Photo (0.7%)
----------------------
1,100 Corning, Inc................................... 35,200
1,700 Eastman Kodak Co............................... 113,900
200 Polaroid Corporation........................... 9,475
-----------
158,575
-----------
Producers Goods (5.2%)
----------------------
1,400 Allied-Signal Inc.............................. 66,500
300 Avery Dennison Corporation..................... 15,037
100 Briggs & Stratton Corporation.................. 4,338
1,000 Caterpillar, Inc............................... 58,750
100 Cincinnati Milacron............................ 2,625
500 Cooper Industries, Inc......................... 18,375
1,300 Deere & Company................................ 45,825
500 Dover Corporation.............................. 18,437
1,100 Emerson Electric Company....................... 89,925
200 FMC Corporation*............................... 13,525
200 Foster Wheeler Corporation..................... 8,500
8,400 General Electric Company....................... 604,800
100 Giddings & Lewis Inc........................... 1,650
200 Harnischfeger Industries, Inc.................. 6,650
600 Illinois Tool Works, Inc....................... 35,400
500 Ingersoll-Rand Company......................... 17,563
200 Johnson Controls, Inc.......................... 13,750
200 Millipore Corporation.......................... 8,225
300 Navistar International Corporation*............ 3,150
500 Pall Corporation............................... 13,437
300 Parker Hannifin Corporation.................... 10,275
200 Raychem Corporation............................ 11,375
200 Snap-on, Inc................................... 9,050
900 Tenneco Inc................................... 44,663
100 Timken Company................................. 3,825
100 Trinova Corporation............................ 2,862
700 Tyco International Ltd......................... 24,938
200 Varity Corporation*............................ 7,425
300 W.W. Grainger, Inc............................. 19,875
1,900 Westinghouse Electric Company.................. 31,350
-----------
1,212,100
-----------
Railroad & Shipping (1.1%)
--------------------------
764 Burlington Northern, Inc....................... 59,592
1,000 CSX Corporation................................ 45,625
400 Conrail, Inc................................... 28,000
700 Norfolk Southern Corporation................... 55,562
1,000 Union Pacific Corporation...................... 66,000
-----------
254,779
-----------
Retail Stores (4.6%)
--------------------
1,200 Albertson's Inc................................ 39,450
800 American Stores Company........................ 21,400
900 CUC International, Inc.*....................... 30,712
500 Charming Shoppes, Inc.......................... 1,438
400 Circuit City Stores, Inc....................... 11,050
400 Dayton Hudson Corporation...................... 30,000
500 Dillard Department Stores, Inc................. 14,250
1,100 Federated Department Stores, Inc.*............. 30,250
700 GAP, Inc....................................... 29,400
300 Giant Food, Inc., Class A...................... 9,450
100 Great Atlantic & Pacific Tea Company, Inc...... 2,300
2,400 Home Depot, Inc................................ 114,900
1,100 J.C. Penney Company, Inc....................... 52,387
2,200 Kmart Corporation.............................. 15,950
600 Kroger Corporation*............................ 22,500
100 Long's Drug Stores, Inc........................ 4,788
800 Lowe's Companies, Inc.......................... 26,800
1,200 May Department Stores Company.................. 50,700
500 Melville Corporation........................... 15,375
200 Mercantile Stores Company, Inc................. 9,250
400 Nordstrom, Inc................................. 16,200
400 Pep Boys-Manny, Moe & Jack..................... 10,250
900 Price/Costco, Inc.*............................ 13,725
400 Rite Aid Corporation........................... 13,700
1,900 Sears Roebuck & Company........................ 74,100
300 Tandy Corporation.............................. 12,450
1,700 The Limited, Inc............................... 29,538
300 TJX Companies, Inc............................. 5,662
1,300 Toys "R" Us, Inc.*............................. 28,275
11,500 Wal-Mart Stores, Inc........................... 257,313
1,200 Walgreen Company............................... 35,850
700 Winn-Dixie Stores, Inc......................... 25,812
600 Woolworth Corporation*......................... 7,800
-----------
1,063,025
-----------
</TABLE>
See accompanying notes.
32
<PAGE> 34
<TABLE>
<CAPTION>
===============================================================================
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
..........................................................
Schedule of Investments as of December 31, 1995--Continued
SHARES COMMON STOCKS MARKET VALUE
...........................................................
<C> <S> <C>
Steel (0.3%)
------------
500 Armco, Inc.*............................ $ 2,937
500 Bethlehem Steel Corporation*............ 7,000
300 Inland Steel Industries, Inc............ 7,538
400 Nucor Corporation....................... 22,850
400 USX-US Steel Group, Inc................. 12,300
400 Worthington Industries, Inc............. 8,325
-----------
60,950
-----------
Telephone (8.8%)
-----------------
1,000 ALL/TEL Corporation..................... 29,500
8,000 AT&T Corporation........................ 518,000
2,400 Airtouch Communications, Inc.*.......... 67,800
2,800 Ameritech Corporation................... 165,200
2,200 Bell Atlantic Corporation............... 147,125
4,900 BellSouth Corporation................... 213,150
600 DSC Communications Corporation*......... 22,125
4,800 GTE Corporation......................... 211,200
3,400 MCI Communications...................... 88,825
2,100 Nynex Corporation....................... 113,400
2,100 Pacific Telesis Group................... 70,613
3,000 SBC Communications, Inc................. 172,500
1,700 Sprint Corporation...................... 67,787
400 Tellabs, Inc.*.......................... 14,800
2,300 U S West, Inc........................... 82,225
2,300 U S West Media Group.................... 43,700
-----------
2,027,950
-----------
Tires & Rubber (0.2%)
---------------------
400 Cooper Tire & Rubber Company............ 9,850
800 Goodyear Tire & Rubber.................. 36,300
-----------
46,150
-----------
Tobacco (2.1%)
--------------
900 American Brands, Inc.................... 40,162
600 Loews Corporation....................... 47,025
4,200 Phillip Morris Companies, Inc........... 380,100
900 UST, Inc................................ 30,038
-----------
497,325
-----------
Travel & Recreation (1.0%)
--------------------------
400 Brunswick Corporation................... 9,600
2,600 Disney (Walt) Company................... 153,400
500 Harrah's Entertainment.................. 12,125
200 Hilton Hotels Corporation............... 12,300
600 ITT Corporation*........................ 31,800
600 Marriott International, Inc............. 22,950
-----------
242,175
-----------
Trucking & Freight (0.1%)
-------------------------
200 Consolidated Freightways, Inc........... 5,300
200 PACCAR, Inc............................. 8,425
200 Roadway Services, Inc................... 9,775
300 Ryder Systems, Inc...................... 7,425
100 Yellow Corporation...................... 1,238
-----------
32,163
-----------
Utilities & Energy (4.4%)
-------------------------
900 American Electric Power Company......... 36,450
800 Baltimore Gas & Electric Company........ 22,800
700 CINergy Corporation..................... 21,437
700 Carolina Power & Light Company.......... 24,150
900 Central & Southwest Corporation......... 25,088
500 Coastal Corporation..................... 18,625
200 Columbia Gas System, Inc.*.............. 8,775
1,100 Consolidated Edison Company of New York. 35,200
500 Consolidated Natural Gas Company........ 22,687
700 DTE Energy Company...................... 24,150
1,000 Duke Power Co........................... 47,375
900 Dominion Resources, Inc................. 37,125
1,200 Enron Corporation....................... 45,750
300 Enserch Corporation..................... 4,875
1,100 Entergy Corporation..................... 32,175
900 FPL Group, Inc.......................... 41,737
600 General Public Utilities Corporation.... 20,400
1,400 Houston Industries, Inc................. 33,950
700 Niagara Mohawk Power Corporation........ 6,738
200 Nicor, Inc.............................. 5,500
600 NorAm Energy Corporation................ 5,325
300 Northern States Power Company........... 14,737
100 ONEOK, Inc.............................. 2,288
700 Ohio Edison Company..................... 16,450
700 PP&L Resources, Inc..................... 17,500
1,400 Pacificorp.............................. 29,750
400 Pacific Enterprises..................... 11,300
2,100 Pacific Gas & Electric Company.......... 59,587
700 Panhandle Eastern Corporation........... 19,513
1,100 Peco Energy Company..................... 33,137
100 Peoples Energy Corporation.............. 3,175
1,200 Public Service Enterprise............... 36,750
2,200 SCE Corporation......................... 39,050
400 Sonat Inc............................... 14,250
3,400 Southern Company........................ 83,725
1,100 Texas Utilities Company................. 45,238
1,000 Unicom Corporation...................... 32,750
500 Union Electric Company.................. 20,875
500 Williams Companies, Inc................. 21,938
-----------
1,022,325
-----------
Total Common Stocks
(cost basis $20,933,772).............. $22,822,654
-----------
</TABLE>
*Non-income producing security
See accompanying notes.
33
<PAGE> 35
===============================================================================
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
.............................
Schedule of Investments as of December 31, 1995--Continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
....................................................................
<S> <C> <C>
Short-Term Investments (2.3%)
------------------------------
$100,000 Federal Home Loan Mortgage Corporation,
5.50%, due 01/02/96......................... $ 99,984
265,000 Lehman Brothers Holdings, Inc.,
6.05%, due 01/03/96......................... 264,911
155,000 Massachusetts Electric Company,
5.90%, due 01/03/96......................... 154,949
2,138 Harris Insight Government Assets Fund........ 2,138
Total Short-Term Investments -----------
(cost basis $521,982)....................... 521,982
-----------
Total Investments (100.9%)
(cost basis $21,455,754).................... 23,344,636
Liabilities, less other Assets (-0.9%)....... (206,358)
-----------
NET ASSETS (100.0%).......................... $23,138,278
===========
</TABLE>
See accompanying notes.
34
<PAGE> 36
===============================================================================
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 December 31, 1995
<TABLE>
<CAPTION>
SHARES COMMON STOCKS (98.1%) MARKET VALUE
............................................................
<C> <S> <C>
Aerospace (0.8%)
----------------
3,300 Gencorp, Inc............................ $ 40,425
1,700 Kaman Corporation....................... 18,912
1,900 Thiokol Corporation..................... 64,363
-----------
123,700
-----------
Air Transportation (0.5%)
-------------------------
2,000 Airborne Freight Corporation............ 53,250
1,300 Alaska Airgroup, Inc.*.................. 21,125
-----------
74,375
-----------
Apparel (1.6%)
--------------
1,700 Brown Group, Inc........................ 24,225
2,700 Cone Mills Corporation*................. 30,375
2,300 The Dress Barn Corporation*............. 22,712
2,600 Jones Apparel Group*.................... 102,375
2,100 Kellwood Corporation.................... 42,788
1,100 Oshkosh B' Gosh......................... 19,250
2,900 Tultex Corporation*..................... 11,962
-----------
253,687
-----------
Banking (7.2%)
--------------
1,200 Astoria Financial Corporation........... 54,750
900 Bell Bancorp, Inc....................... 32,175
4,500 City Steel National Corporation......... 63,000
3,700 Compass Bancshares, Inc................. 122,100
3,200 Dauphin Deposit Corporation............. 92,000
2,500 First American Corporation - Tenn....... 118,437
3,400 First Commerce Corporation.............. 108,800
2,700 Fourth Financial Corporation............ 110,531
2,700 Long Island Bancorp, Inc................ 71,213
1,500 ONBANCORP, Inc.......................... 50,063
3,800 Peoples Bank of Bridgeport, Conn........ 72,200
2,900 Rigs National Corp - Washington......... 37,700
3,300 Summit Bancorporation................... 103,950
3,600 Valley National Bancorp................. 90,000
-----------
1,126,919
-----------
Business Machines (4.2%)
-------------------------
4,300 AST Research, Inc.*..................... 36,550
5,500 Aura Systems, Inc.*..................... 30,937
3,800 Cheyenne Software, Inc.*................ 99,275
5,150 Comdisco, Inc........................... 116,519
1,900 Cyrix Corporation....................... 43,700
4,000 Data General Corporation*............... 55,000
2,100 Exabyte Corporation*.................... 30,712
5,200 Quantum Corporation*.................... 83,850
3,100 Structural Dynamic Research*............ 91,063
2,200 Verifone, Inc.*......................... 62,975
-----------
650,581
-----------
Business Services (9.2%)
------------------------
3,000 Air & Water Technologies, Inc.*......... 18,375
4,000 Allwaste, Inc.*......................... 19,000
900 Angelica Corporation.................... 18,450
2,200 Credence Systems Corporation*........... 50,325
2,300 FTP Software, Inc....................... 66,700
2,800 Fore Systems, Inc....................... 166,600
2,900 Hon Industries, Inc..................... 67,425
2,700 Information Resources, Inc.*............ 33,412
2,100 Integrated Health Services, Inc......... 52,500
1,300 Medic Computer Systems, Inc.*........... 78,650
4,000 NetManage, Inc.*........................ 93,000
2,300 Network General Corporation*............ 76,763
1,400 New England Business Service, Inc....... 30,450
1,700 PHH Group, Inc.......................... 79,475
4,200 Pittston Company........................ 131,775
4,500 S3, Inc.*............................... 79,312
2,300 Shared Medical Systems Corporation...... 125,063
2,800 Standard Register Corporation........... 56,350
2,300 Wallace Computer Services............... 125,637
3,200 Westpoint Stevens, Inc.*................ 64,200
-----------
1,433,462
-----------
Chemicals (2.5%)
----------------
2,700 ACX Technologies, Inc.*................. 40,837
4,100 Calgon Carbon Corporation............... 49,200
1,400 H.B. Fuller Company..................... 48,650
4,500 Lawter International, Inc............... 52,313
800 NCH Corporation......................... 46,200
1,000 Petrolite Corporation................... 28,500
3,500 Rollins, Inc............................ 77,437
5,500 Sterling Chemicals, Inc.*............... 44,688
-----------
387,825
-----------
Construction (2.6%)
-------------------
2,900 Centex Corporation...................... 100,775
3,300 Kaufman & Broad Home Corporation........ 49,087
1,200 Lawson Products Inc..................... 29,400
3,600 Lennar Corporation...................... 90,450
3,200 Morrison Knudsen Corporation*........... 13,600
2,700 Pulte Corporation....................... 90,788
1,700 Southdown, Inc.*........................ 33,150
-----------
407,250
-----------
Consumer Durables (1.1%)
------------------------
1,300 Bassett Furniture Industries, Inc....... 30,225
2,100 Kimball International, Inc.............. 53,025
1,900 La Z Boy Chair Company.................. 58,663
1,900 Shorewood Packaging*.................... 27,075
-----------
168,988
-----------
</TABLE>
See accompanying notes.
35
<PAGE> 37
===============================================================================
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 December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
................................................................
<C> <S> <C>
Containers (0.3%)
-----------------
5,200 Gaylord Container Corporation............... $ 41,925
-----------
Cosmetics (0.2%)
----------------
1,000 Chemed Corporation.......................... 38,875
-----------
Domestic Oil (1.9%)
-------------------
3,000 Pogo Producing Corporation.................. 84,750
3,100 Quaker State Corporation.................... 39,137
8,400 Rowan Companies, Inc.*...................... 82,950
4,000 Smith International, Inc.*.................. 94,000
-----------
300,837
-----------
Drugs & Medicine (9.8%)
-----------------------
2,700 Acuson Corporation*......................... 33,412
1,200 Advanced Technology*........................ 29,400
3,400 Advanced Tissue Sciences*................... 34,425
3,100 Amsco International, Inc.*.................. 46,113
2,700 Ballard Medical Products.................... 48,262
2,800 Beckman Instruments, Inc.................... 99,050
4,000 Bergen Brunswig Corporation................. 99,500
2,054 Block Drug Company.......................... 71,377
6,000 Centocor, Inc.*............................. 185,250
1,600 Cordis Corporation.......................... 160,800
1,300 Diagnostic Products Corporation............. 49,237
1,700 Foxmeyer Health Corporation*................ 45,475
2,800 Haemonetics Corporation..................... 49,700
2,900 Herbalife International, Inc................ 25,013
4,500 Mid Atlantic Medical Services............... 109,125
3,500 Pyxis Corporation........................... 51,187
7,600 Perrigo Company*............................ 90,250
2,850 Summit Technology, Inc.*.................... 96,188
4,000 Surgical Care Affiliates, Inc............... 136,000
2,100 Ventritex*.................................. 36,488
1,800 West, Inc................................... 42,300
-----------
1,538,552
-----------
Electronics (6.0%)
------------------
2,100 Avid Technology, Inc........................ 39,900
2,500 Electronics for Imaging, Inc................ 109,375
5,200 Geotek Industries, Inc.*.................... 32,825
2,300 Gerber Scientific, Inc...................... 37,375
1,400 Global Village Communication................ 27,125
6,200 LCI International, Inc.*.................... 127,100
3,300 Macromedia, Inc.*........................... 172,425
3,200 Sequent Computer*........................... 46,400
2,800 Silicon Valley Group, Inc.*................. 70,700
2,600 Symbol Technologies*........................ 102,700
4,700 VLSI Technology*............................ 85,187
5,000 Western Digital Corporation*................ 89,375
-----------
940,487
-----------
Energy--Raw Materials (3.0%)
----------------------------
2,900 BJ Services Corporation*.................... 84,100
16,300 Global Marine, Inc.*........................ 142,625
800 Maxxam, Inc.*............................... 28,200
900 NACCO Industries, Inc....................... 49,950
8,400 Nabors Industries, Inc.*.................... 93,450
2,500 Southwestern Energy Company................. 31,875
2,300 Washington Energy Corporation............... 42,838
-----------
473,038
-----------
Food & Agriculture (2.8%)
-------------------------
5,500 Chiquita Brands International............... 75,625
1,200 Dreyers Grand Ice Cream, Inc................ 39,900
5,850 Flowers Industries, Inc..................... 70,931
1,700 International Multifoods, Corporation....... 34,213
3,700 Interstate Bakeries......................... 82,787
2,100 Michael Foods, Inc.......................... 24,413
3,400 Ralcorp Holding, Inc.*...................... 82,450
2,600 Savannah Foods and Industries............... 29,575
-----------
439,894
-----------
Gold (0.3%)
-----------
3,400 Pegasus Gold, Inc.*......................... 47,175
-----------
Insurance (5.3%)
----------------
5,100 20th Century Industries - California*....... 101,362
2,000 American Bankers Insurance Group............ 78,000
1,000 Foremost Corporation of America............. 50,750
1,600 Integon Corporation......................... 33,000
2,600 John Alden Financial Corporation............ 54,275
2,000 Liberty Corporation......................... 67,500
1,400 Life Re Corporation......................... 35,000
1,800 NAC Re Corporation.......................... 64,800
11,300 Reliance Group Holdings..................... 97,463
2,900 United Companies Financial Corporation...... 76,487
1,200 Washington National Corporation............. 33,150
6,100 Western National Corporation................ 98,363
1,900 Zenith National Insurance Corporation....... 40,612
-----------
830,762
-----------
Liquor (0.1%)
-------------
900 Midwest Grain Products...................... 12,600
-----------
Media (2.8%)
------------
2,100 Banta George, Inc........................... 92,400
</TABLE>
See accompanying notes.
36
<PAGE> 38
===============================================================================
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 December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
......................................................................
<C> <S> <C>
Media-Continued
---------------
2,800 Chris Craft Industries, Inc.* ............... $ 121,100
1,400 Houghton Mifflin Company .................... 60,200
1,600 Pulitzer Publishing Company ................. 76,400
2,500 TCA Cable TV ................................ 69,063
2,000 Western Publishing Group, Inc.* ............. 15,750
----------
434,913
----------
Miscellaneous Finance (5.2%)
----------------------------
1,500 Alex Brown, Inc. ............................ 63,000
4,900 California Federal Bank* .................... 77,175
2,000 Collective Bancorp, Inc. .................... 50,750
4,100 Glendale Federal Bank FSB* .................. 71,750
1,400 Great Financial Corporation ................. 32,900
2,400 Home Financial Corporation .................. 37,200
2,700 Life Partners Group ......................... 36,787
1,900 Life USA Holding, Inc.* ..................... 15,200
3,100 Premier Bancorp, Inc.* ...................... 72,463
3,900 Roosevelt Financial Group, Inc. ............. 75,562
600 Seafield Capital Corporation ................ 20,400
3,100 Standard Federal Bancorporation ............. 122,063
2,800 T. Rowe Price and Associates ................ 137,900
----------
813,150
----------
Motor Vehicles (1.7%)
---------------------
2,200 Arvin Industries, Inc. ...................... 36,300
2,600 Donaldson Company, Inc. ..................... 65,325
3,200 Federal Mogul Corporation ................... 62,800
1,800 Standard Products Corporation ............... 31,725
2,900 Superior Industries International ........... 76,487
----------
272,637
----------
Non-Durables & Entertainment (4.0%)
-----------------------------------
1,600 A.T. Cross Company .......................... 24,200
4,600 Acclaim Entertainment, Inc. ................. 56,925
2,700 Duty Free International, Inc. ............... 43,200
1,500 Gibson Greetings, Inc.* ..................... 24,000
3,400 Handleman Company ........................... 19,550
2,100 International Dairy Queen, Inc.* ............ 47,775
2,500 Luby's Cafeterias, Inc. ..................... 55,625
3,400 Morrison Restaurants ........................ 47,600
2,100 Russ Berrie & Company ....................... 26,513
2,000 Sbarro, Inc. ................................ 43,000
2,700 Sizzler International, Inc. ................. 11,475
5,600 Sothebys Holdings, Inc. ..................... 79,800
7,100 Starbucks Corporation* ...................... 149,100
----------
628,763
----------
Non-Ferrous Metals (0.5%)
-------------------------
1,600 Brush Wellman, Inc. ......................... 27,600
4,800 Hecla Mining Company* ....................... 33,000
18,700 Sunshine Mining Company* .................... 25,712
----------
86,312
----------
Optical & Photo (0.7%)
----------------------
2,600 Dentsply International, Inc.* ............... 104,000
----------
Paper & Forest Products (1.5%)
------------------------------
2,300 Chesapeake Corporation VA ................... 68,137
1,900 Pentair Industries, Inc. .................... 94,525
3,000 Wausau Paper Mills Corporation .............. 81,750
----------
244,412
----------
Producers Goods (5.6%)
----------------------
3,000 Albany International Corporation, Class A ... 54,375
3,000 Ametek, Inc. ................................ 56,250
2,300 BWIP Holding, Inc. .......................... 37,950
2,900 Baldor Electric Company ..................... 58,363
3,500 Cincinnati Milacron ......................... 91,875
1,400 Clarcor, Inc. ............................... 28,525
3,400 Giddings & Lewis, Inc. ...................... 56,100
2,200 Goulds Pumps, Inc. .......................... 55,000
1,300 Handy & Harman .............................. 21,450
2,600 Kennametal, Inc. ............................ 82,550
2,200 Lattice Semiconductor Corporation* .......... 71,775
1,400 Measurex Corporation ........................ 39,550
1,400 Presstek, Inc.* ............................. 132,300
1,600 Teleflex, Inc. .............................. 65,600
1,200 Zurn Industries, Inc. ....................... 25,650
----------
877,313
----------
Railroad & Shipping (0.6%)
--------------------------
3,000 OMI Corporation* ............................ 19,500
3,600 Overseas Shipholding Group, Inc. ............ 68,400
----------
87,900
----------
Real Property (0.3%)
--------------------
7,200 Catellus Development Corporation* ........... 43,200
----------
Retail Stores (4.1%)
--------------------
3,400 Bed, Bath, & Beyond, Inc.* .................. 131,962
900 Blair Corporation ........................... 28,350
2,800 Cato Corporation ............................ 21,700
10,100 Charming Shoppes, Inc. ...................... 29,038
2,100 CompUSA Incorporated ........................ 65,362
2,100 Eagle Hardware & Garden, Inc.* .............. 15,750
9,000 Home Shopping Network* ...................... 81,000
3,400 Intelligent Electronics ..................... 20,400
3,300 Lands End, Inc. ............................. 44,963
2,500 MacFrugals Bargains Close-Outs, Inc.* ....... 35,000
2,900 Merisel, Inc.* .............................. 12,687
</TABLE>
See accompanying notes.
..........
37
<PAGE> 39
===============================================================================
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 December 31, 1995--Continued
<TABLE>
<CAPTION>
SHARES COMMON STOCKS MARKET VALUE
..............................................................
<C> <S> <C>
Retail Stores-Continued
-----------------------
2,700 Meyer Fred, Inc.*....................... $ 60,750
2,500 Ross Stores, Inc........................ 47,813
1,700 Stanhome, Inc........................... 49,512
-----------
644,287
-----------
Steel (1.3%)
------------
2,800 AK Steel Holding Corporation*........... 95,900
2,800 Birmingham Steel Corporation............ 41,650
1,700 Carpenter Technology.................... 69,913
-----------
207,463
-----------
Telephone (1.6%)
----------------
3,033 International Cabletel, Inc.*........... 74,308
2,300 Octel Communications Corporation*....... 74,175
1,200 U.S. Long Distance Corporation*......... 16,800
4,100 Vanguard Cellular Systems, Inc.*........ 83,025
-----------
248,308
-----------
Tires & Rubber (0.4%)
---------------------
1,500 Carlisle Corporation.................... 60,563
-----------
Travel & Recreation (1.2%)
--------------------------
2,400 Argosy Gaming Corporation*.............. 18,300
1,900 Cobra Golf, Inc.*....................... 67,688
4,200 Grand Casinos, Inc.*.................... 97,650
-----------
183,638
-----------
Trucking & Freight (1.2%)
-------------------------
2,600 Arnold Industries, Inc.................. 45,175
3,800 J.B. Hunt Transport Services, Inc....... 63,650
4,300 Rollins Truck Leasing Corporation....... 47,838
2,700 Yellow Corporation...................... 33,412
-----------
190,075
-----------
Utilities & Energy (6.0%)
-------------------------
1,700 Central Hudson Gas & Electric........... 52,487
1,300 Cilcorp, Inc............................ 55,088
2,000 Eastern Utilities Association........... 47,250
3,000 IES Industries, Inc..................... 79,500
2,800 MDU Resources Group..................... 55,650
12,300 NorAm Energy Corporation................ 109,163
2,600 ONEOK, Inc.............................. 59,475
1,300 Orange and Rockland Utilities, Inc...... 46,475
4,000 Public Service Company of N. Mexico*.... 70,500
3,300 Seagull Energy Corporation*............. 73,425
3,000 Sierra Pacific Resources................ 70,125
1,600 Southern Indiana Gas & Electric......... 55,600
2,400 Southwest Gas Corporation............... 42,300
15,700 Tucson Electric Power*.................. 51,025
3,300 UGI Corporation......................... 68,475
-----------
936,538
-----------
Total Common Stocks
(cost basis $14,648,343).............. $15,354,404
===========
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
....................................................................
<S> <C> <C>
Short-Term Investments (3.1%)
-----------------------------
$ 87,000 Federal Home Loan
Mortgage Corporation,
5.52%, due 01/05/96....................... $ 86,947
405,000 Lehman Brothers Holdings, Inc.,
6.05%, due 01/03/96....................... 404,864
929 Harris Insight Government Assets Fund....... 929
-----------
Total Short-Term Investments
(cost basis $492,740)...................... 492,740
-----------
Total Investments (101.2%)
(cost basis $15,141,083)................... 15,847,144
Liabilities, less other Assets (-1.2%)....... (181,280)
-----------
NET ASSETS (100.0%).......................... $15,665,864
===========
</TABLE>
*Non-income producing security
See accompanying notes.
38
<PAGE> 40
<TABLE>
<CAPTION>
=======================================================================================================================
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.
Statement of Assets and Liabilities
....................................................................................................................
December 31, 1995
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: $7,240,528,
$9,243,235, $27,024,356, $21,455,754
and $15,141,083, respectively)............... $7,240,528 $9,433,852 $28,677,578 $23,344,636 $15,847,144
Dividends and interest receivable............... 6 124,369 187,683 40,454 16,794
Receivable for investments sold................. - - 2,554 - -
Receivable for fund shares sold................. 158,442 53,875 232,433 134,240 155,498
--------------------------------------------------------------
TOTAL ASSETS.................................... $7,398,976 $9,612,096 $29,100,248 $23,519,330 $16,019,436
==============================================================
LIABILITIES
Payable for investments purchased............... $ - $ 242,974 $ 320,452 $ 361,452 $ 340,300
Income distributions payable.................... 3,237 - - - -
Payable for fund shares reacquired.............. 349,150 3,677 13,113 13,046 8,971
Investment advisory fee payable................. 1,947 2,613 7,961 6,454 4,301
--------------------------------------------------------------
TOTAL LIABILITIES............................... 354,334 249,264 341,526 380,952 353,572
--------------------------------------------------------------
NET ASSETS
Capital stock - par value ($0.001/share)........ 7,045 915 2,632 2,010 1,426
Capital stock - additional paid-in capital...... 7,037,597 9,171,717 27,098,958 21,245,079 14,946,459
Undistributed net investment income............. - 1,770 3,076 973 219
Undistributed net realized gain (loss).......... - (2,187) 834 1,434 11,699
Net unrealized appreciation on investments...... - 190,617 1,653,222 1,888,882 706,061
--------------------------------------------------------------
TOTAL NET ASSETS................................ 7,044,642 9,362,832 28,758,722 23,138,378 15,665,864
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL LIABILITIES AND NET ASSETS................ $7,398,976 $9,612,096 $29,100,248 $23,519,330 $16,019,436
==============================================================
CAPITAL SHARES OUTSTANDING --------------------------------------------------------------
(2 BILLION SHARES AUTHORIZED)................ 7,044,642 914,759 2,632,360 2,009,994 1,425,566
--------------------------------------------------------------
NET ASSET VALUE PER SHARE....................... $ 1.00 $ 10.23 $ 10.92 $ 11.51 $ 10.99
==============================================================
</TABLE>
See accompanying notes.
39
<PAGE> 41
<TABLE>
<CAPTION>
========================================================================================================================
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.
Statement of Operations
........................................................................................................................
For the Period June 14, 1995(1) to December 31, 1995
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
........................................................................................................................
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ - $ - $ 137,978 $ 183,070 $ 75,798
Interest............................................... 147,234 248,582 310,789 15,273 12,337
---------------------------------------------------------------
TOTAL INVESTMENT INCOME................................ 147,234 248,582 448,767 198,343 88,135
---------------------------------------------------------------
EXPENSES:
Adviser fees........................................... 8,720 12,744 35,948 26,916 17,641
Audit fees............................................. 10,170 12,430 12,430 10,735 10,735
Custody fees........................................... 1,658 1,015 6,931 9,023 8,874
Registration fees...................................... 1,745 1,445 5,024 4,750 3,451
Legal fees............................................. 5,887 7,508 24,635 18,302 11,997
Printing and postage expense........................... 2,474 3,684 10,353 7,691 5,043
Pricing of investments................................. 395 1,814 9,490 8,280 4,140
Director fees.......................................... 2,634 3,924 10,024 8,190 5,368
Director and officer insurance fees.................... 321 478 1,344 999 655
Other fees............................................. 50 50 50 50 50
---------------------------------------------------------------
TOTAL EXPENSES BEFORE REIMBURSEMENT.................... 34,054 45,092 116,229 94,936 67,954
---------------------------------------------------------------
Less expenses reimbursed by Adviser (See Note 3)....... (25,334) (32,348) (80,281) (68,020) (50,313)
---------------------------------------------------------------
NET EXPENSES........................................... 8,720 12,744 35,948 26,916 17,641
---------------------------------------------------------------
---------------------------------------------------------------
NET INVESTMENT INCOME.................................. 138,514 235,838 412,819 171,427 70,494
---------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investments............. - (2,187) 1,254 4,092 17,344
Change in net unrealized appreciation on investments... - 190,617 1,653,222 1,888,882 706,061
---------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS........................................ - 188,430 1,654,476 1,892,974 723,405
---------------------------------------------------------------
---------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................. $138,514 $424,268 $2,067,295 $2,064,401 $793,899
===============================================================
</TABLE>
(1) Commencement of operations.
See accompanying notes.
40
<PAGE> 42
===============================================================================
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.
Statement of Changes in Net Assets
......................................
For the Period June 14, 1995(1) to December 31, 1995
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
..................................................................................................................................
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................................ $ 138,514 $ 235,838 $ 412,819 $ 171,427 $ 70,494
Net realized gains (losses) on investments................... - (2,187) 1,254 4,092 17,344
Change in net unrealized appreciation
on investments............................................ - 190,617 1,653,222 1,888,882 706,061
NET INCREASE IN NET ASSETS -------------------------------------------------------------------
RESULTING FROM OPERATIONS................................. 138,514 424,268 2,067,295 2,064,401 793,899
-------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................... (138,514) (234,068) (409,743) (170,454) (70,275)
From net realized gains...................................... - - (420) (2,658) (5,645)
TOTAL DISTRIBUTIONS TO -------------------------------------------------------------------
SHAREHOLDERS.............................................. (138,514) (234,068) (410,163) (173,112) (75,920)
-------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................... 20,659,662 9,354,566 27,118,805 21,420,587 15,020,586
Reinvested distributions..................................... 75,601 65,068 141,211 82,106 36,808
Cost of shares redeemed...................................... (13,690,621) (247,002) (158,426) (255,604) (109,609)
NET INCREASE IN NET ASSETS FROM -------------------------------------------------------------------
FUND SHARE TRANSACTIONS................................... 7,044,642 9,172,632 27,101,590 21,247,089 14,947,885
-------------------------------------------------------------------
-------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS................................. 7,044,642 9,362,832 28,758,722 23,138,378 15,665,864
-------------------------------------------------------------------
NET ASSETS BEGINNING OF PERIOD............................... - - - - -
-------------------------------------------------------------------
NET ASSETS END OF PERIOD..................................... $ 7,044,642 $9,362,832 $28,758,722 $23,138,378 $15,665,864
-------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT
INCOME AT DECEMBER 31, 1995............................... $ - $ 1,770 $ 3,076 $ 973 $ 219
===================================================================
</TABLE>
(1) Commencement of operations.
See accompanying notes.
41
<PAGE> 43
===============================================================================
A A L V A R I A B L E A N N U I T Y
[Logo of A A L Variable Annuity]
AAL Variable Product Series Fund, Inc.
Notes to Financial Statements
December 31, 1995
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 securities 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 December 31, 1995, 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.
42
<PAGE> 44
===============================================================================
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
.......................................
December 31, 1995
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 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 from June 14, 1995 through December 31, 1995, directors of the
Fund not affiliated with AAL or CMC received directors fees and expenses
totaling $31,140. No remuneration has been paid by the Fund to any of the
officers or directors of the Fund affiliated with AAL or CMC. At December 31,
1995, 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,
were as follows:
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
...........................................................................................................
<S> <C> <C> <C> <C> <C>
Shares sold........................................ 20,659,662 932,861 2,634,240 2,026,389 1,432,409
Reinvested distributions........................... 75,601 6,453 13,209 7,351 3,406
Shares redeemed.................................... 13,690,621 24,555 15,089 23,746 10,249
-------------------------------------------------------
Net Increase....................................... 7,044,642 914,759 2,632,360 2,009,994 1,425,566
-------------------------------------------------------
SHARES OUTSTANDING................................. -------------------------------------------------------
AT DECEMBER 31, 1995............................. 7,044,642 914,759 2,632,360 2,009,994 1,425,566
=======================================================
</TABLE>
43
<PAGE> 45
===============================================================================
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
.......................................
December 31, 1995
NOTE 5: INVESTMENT TRANSACTIONS
For the period June 14, 1995 to December 31, 1995, the cost of investment
securities purchased and the proceeds from investment securities sold (not
including short-term investments) were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
......................................................................
<S> <C> <C>
Bond....................................... $ 9,356,037 $375,015
Balanced................................... 25,153,155 348,713
Large Company Stock........................ 20,990,242 60,562
Small Company Stock........................ 14,870,911 239,912
</TABLE>
At December 31, 1995, net unrealized appreciation (depreciation) on investments
by portfolio were as follows:
<TABLE>
<CAPTION>
Net
Unrealized
Cost Gross Unrealized Appr. (Depr.)
Portfolio Basis Appreciation Depreciation Investments
..............................................................................................................
<S> <C> <C> <C> <C>
Bond........................................ $ 9,243,235 $ 192,892 $ (2,275) $ 190,617
Balanced.................................... 27,024,356 1,921,119 (267,897) 1,653,222
Large Company Stock......................... 21,455,754 2,299,731 (410,849) 1,888,882
Small Company Stock......................... 15,141,083 1,587,283 (881,222) 706,061
</TABLE>
The book and federal income tax basis of securities were the same for all
Portfolios.
44
<PAGE> 46
===============================================================================
A A L V A R I A B L E A N N U I T Y
[AAL VARIABLE ANNUITY LOGO]
AAL Variable Product Series Fund, Inc.
Financial Highlights
......................................
For the Period June 14, 1995(1) to December 31, 1995
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>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
....................................................................................................................
<S> <C> <C> <C> <C> <C>
Net asset value: Beginning of period............. $1.00 $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.03 0.34 0.22 0.11 0.08
Net realized and unrealized gains
on investments................................. 0.00 0.23 0.92 1.52 0.99
-----------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS................. 0.03 0.57 1.14 1.63 1.07
-----------------------------------------------------------------
LESS DISTRIBUTIONS:
From net investment income....................... (0.03) (0.34) (0.21) (0.11) (0.07)
From net realized capital gains.................. 0.00 0.00 (0.01) (0.01) (0.01)
-----------------------------------------------------------------
TOTAL DISTRIBUTIONS.............................. (0.03) (0.34) (0.22) (0.12) (0.08)
-----------------------------------------------------------------
Net increase in net asset value.................. 0.00 0.23 0.92 1.51 0.99
Net Asset value: End of period................... $1.00 $10.23 $10.92 $11.51 $10.99
-----------------------------------------------------------------
Total Return (a)................................. 5.58% 5.80% 11.46% 16.39% 10.70%
Net Assets, End of Period........................ $7,044,642 $9,362,832 $28,758,722 $23,138,378 $15,665,864
RATIOS AND SUPPLEMENTAL DATA:
Ratio of expenses to average net assets (b) (c).. 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of net investment income to
average net assets (b) (c)..................... 5.71% 6.54% 4.07% 2.27% 1.43%
Portfolio turnover rate.......................... N/A 6.51% 2.29% 0.47% 2.85%
Average commission rate paid (d)................. N/A N/A $0.04 $0.04 $0.04
</TABLE>
(1) Commencement of operations.
45
<PAGE> 47
===============================================================================
A A L V A R I A B L E A N N U I T Y
[AAL Variable Annuity Logo]
AAL Variable Product Series Fund, Inc.
Financial Highlights--Continued
......................................
For the Period June 14, 1995(1) to December 31, 1995
(a) The Bond, Balanced, Large Company Stock and Small Company Stock Portfolios
are reported as period-to-date cumulative total returns, while the Money
Market Portfolio is reported on an annualized total return basis.
(b) Calculated on an annualized basis.
(c) Without reimbursements the above ratios, on an annualized basis, would have
been:
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
.................................................................................................................
<S> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets............... 1.40% 1.25% 1.15% 1.26% 1.37%
Ratio of net investment income to average net assets.. 4.66% 5.64% 3.27% 1.37% 0.41%
</TABLE>
(d) Amounts shown reflect the average brokerage commission paid on each share of
equity securities traded by the Portfolio during the period presented.
(1) Commencement of operations.
See accompanying notes.
46
<PAGE> 48
==============================================================================
A A L V A R I A B L E A N N U I T Y
[LOGO OF AAL VARIABLE ANNUITY]
Report of Independent Auditors
.......................................
The Board of Directors and Shareholders
AAL Variable Product Series Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedules of investments, of the AAL Variable Product Series Fund, Inc.
(comprised of the Money Market, Bond, Balanced, Large Company Stock and Small
Company Stock Portfolios) as of December 31, 1995, and the related statement of
operations, statement of changes in net assets and financial highlights for the
period June 14, 1995 (commencement of operations) to December 31, 1995. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios of the AAL Variable Product Series Fund, Inc. at December 31,
1995, and the results of their operations, changes in their net assets and
financial highlights for the period June 14, 1995 to December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
February 2, 1996
47
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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]
AAL VARIABLE ANNUITY ACCOUNT I
STATEMENT OF NET ASSETS
..............................
December 31, 1995
<TABLE>
<CAPTION>
ASSETS
Investments in AAL Variable Product Series Fund, Inc.:
<S> <C>
Money Market Subaccount:
Money Market Portfolio, 5,044,642 shares at net asset value of
$1.00 per share (cost $5,044,642)............................... $ 5,045,423
Bond Subaccount:
Bond Portfolio, 414,759 shares at net asset value of $10.23
per share (cost $4,173,323)..................................... 4,244,412
Balanced Subaccount:
Balanced Portfolio, 1,382,360 shares at net asset value of $10.92
per share (cost $14,601,735).................................... 15,100,546
Large Company Stock Subaccount:
Large Company Stock Portfolio, 1,259,994 shares at net asset
value of $11.51 per share (cost $13,747,729).................... 14,505,273
Small Company Stock Subaccount:
Small Company Stock Portfolio, 925,566 shares at net asset
value of $10.99 per share (cost $9,947,972)..................... 10,171,538
-----------
TOTAL INVESTMENTS (cost $47,515,401).............................. $49,067,192
LIABILITIES....................................................... -
-----------
NET ASSETS........................................................ $49,067,192
===========
</TABLE>
<TABLE>
<CAPTION>
UNIT EXTENDED
UNITS VALUE VALUE
..............................
<S> <C> <C> <C>
Net Assets are represented by:
Money Market Subaccount........................ 4,931,298 $ 1.02 $ 5,045,423
Bond Subaccount................................ 402,927 10.53 4,244,412
Balanced Subaccount............................ 1,364,855 11.06 15,100,546
Large Company Stock Subaccount................. 1,258,237 11.53 14,505,273
Small Company Stock Subaccount................. 928,755 10.95 10,171,538
-----------
TOTAL NET ASSETS....................................................$49,067,192
===========
</TABLE>
See accompanying notes.
48
<PAGE> 50
===============================================================================
A A L V A R I A B L E A N N U I T Y
[Logo of A A L Variable Annuity]
AAL Variable Annuity Account I
Statement of Operations
For the Period June 15, 1995(1) to December 31, 1995
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
COMBINED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
...................................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ....................................... $ 396,171 $ 76,382 $ 65,068 $140,993 $ 80,453 $ 33,275
Capital gain distributions ...................... 5,505 - - 218 1,653 3,634
----------------------------------------------------------------------
TOTAL INVESTMENT INCOME ......................... 401,676 76,382 65,068 141,211 82,106 36,909
EXPENSES:
Mortality and expense
risk charges ................................... 133,383 17,461 11,062 38,393 40,262 26,205
----------------------------------------------------------------------
NET INVESTMENT INCOME ........................... 268,293 58,921 54,006 102,818 41,844 10,704
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from
investment transactions ........................ 1,564 - 692 146 639 87
Change in net unrealized
appreciation of investments .................... 1,551,010 - 71,089 498,811 757,544 223,566
----------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS ............................ 1,552,574 - 71,781 498,957 758,183 223,653
----------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... $1,820,867 $ 58,921 $125,787 $601,775 $800,027 $234,357
======================================================================
</TABLE>
(1) Commencement of operations.
See accompanying notes.
49
<PAGE> 51
===============================================================================
A A L V A R I A B L E A N N U I T Y
[Logo of A A L Variable Annuity]
AAL Variable Annuity Account I
Statement of Changes in Net Assets
For the Period June 15, 1995(1) to
December 31, 1995
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
COMBINED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
...................................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ....................... $ 268,293 $ 58,921 $ 54,006 $ 102,818 $ 41,844 $ 10,704
Net realized gain from
investment transactions .................... 1,564 - 692 146 639 87
Change in unrealized
appreciation of investments ................ 1,551,010 - 71,089 498,811 757,544 223,566
NET INCREASE IN NET ASSETS ----------------------------------------------------------------------------------
RESULTING FROM OPERATIONS .................. 1,820,867 58,921 125,787 601,775 800,027 234,357
CAPITAL SHARE TRANSACTIONS:
Transfers of net premiums ................... 47,610,113 18,249,874 2,841,432 9,540,542 9,985,987 6,992,278
Transfers of surrenders ..................... (136,290) (64,439) (18,376) (25,229) (13,024) (15,222)
Transfers between subaccounts ............... (227,498) (13,198,933) 1,295,569 4,983,458 3,732,283 2,960,125
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL SHARE ----------------------------------------------------------------------------------
TRANSACTIONS ............................... 47,246,325 4,986,502 4,118,625 14,498,771 13,705,246 9,937,181
----------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS AND
NET ASSETS AT END OF PERIOD ................ $49,067,192 $ 5,045,423 $4,244,412 $15,100,546 $14,505,273 $10,171,538
==================================================================================
</TABLE>
(1) Commencement of operations.
See accompanying notes.
50
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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]
AAL Variable Annuity Account I
Notes to Financial Statements
..............................
December 31, 1995
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The AAL Variable Annuity Account I (the Account) is a unit investment trust
registered under the Investment Company Act of 1940. The Account was
established as a separate investment account within Aid Association for
Lutherans (AAL) to fund flexible premium deferred variable annuity insurance
certificates. The Account commenced operations on June 15, 1995.
The Account has five separate subaccounts, each of which invests solely, as
directed by contract owners, in a different portfolio of the AAL Variable
Product Series Fund, Inc. (the Fund), an open-end, diversified management
investment company sponsored by AAL. Contract owners also may direct
investments to a guaranteed interest subaccount held in the general account of
AAL.
Investments in shares of the Fund are stated at market value, which is the
closing net asset value per share as determined by the Fund. The first-in,
first-out basis has been used in determining the net realized gain or loss from
investment transactions and the cost basis for determining unrealized
appreciation or depreciation on investments. Dividends and capital gain
distributions paid to the Account are automatically reinvested in shares of the
Fund on the payment date.
NOTE 2: EXPENSE CHARGES
The Account pays AAL certain amounts relating to the distribution and
administration of the certificates funded by the Account and as reimbursement
for certain mortality and other risks assumed by AAL. The following summarizes
those amounts.
Mortality and Expense Risk Charge
AAL deducts a daily mortality and expense risk charge from the Account at an
annual rate of 1.25% of the average daily net asset value of the Account. These
charges are deducted by AAL in return for its assumption of risks associated
with adverse mortality experience or excess administrative expenses in
connection with certificates issued.
Certificate Maintenance Charge
Prior to the annuity payment period, AAL deducts a certificate maintenance
charge of $25 per certificate year to reimburse it for administrative expenses
related to the contract, unless the sum of premiums received by AAL less the
sum of any withdrawals and withdrawal charges from the certificate is $5,000 or
more at the time the deduction would be made. A portion of this charge may be
deducted from funds held outside of the Account (i.e., in the Fixed Account).
Withdrawal and Surrender Charges
A withdrawal and surrender charge is imposed in the event of a full or partial
surrender in excess of 10% of the accumulated value during the first seven
contract years. The amount charged is 7% of the amount surrendered during the
first contract year and declines by 1% in each of the next six contract years.
No surrender charge is deducted if the partial surrender or surrender occurs
after seven full contract years.
51
<PAGE> 53
===============================================================================
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 Annuity Account I
Notes to Financial Statements-Continued
.......................................
December 31, 1995
NOTE 2: EXPENSE CHARGES (CONTINUED)
Transfer Charge
Owners may request transfers of all or part of a certificate's accumulated
value among the subaccounts and/or the fixed annuity, prior to the annuity
commencement date. The owner may make two transfers from one or more
subaccounts to other subaccounts or the fixed annuity in each certificate year
without charge. Thereafter, each transfer will be subject to a $10 transfer
charge.
NOTE 3: FEDERAL INCOME TAXES
The operations of the Account form a part of the operations of AAL. AAL, a
fraternal benefit society, qualifies as a tax-exempt organization under the
Internal Revenue Code. Under current law, no federal income taxes are payable
with respect to the Account's net investment income and net realized gain on
investments. Accordingly, no charge for income taxes is currently being made to
the Account. If such taxes are incurred by AAL in the future, a charge to the
Account may be assessed.
NOTE 4: INVESTMENT TRANSACTIONS
The aggregate cost of investment securities purchased and proceeds from
investment securities sold by subaccount for the period June 15, 1995 to
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
......................................................................
<S> <C> <C>
Money Market Subaccount...................... $ 9,339,134 $4,294,492
Bond Subaccount.............................. 4,345,071 171,748
Balanced Subaccount.......................... 14,615,015 13,280
Large Company Stock Subaccount............... 13,774,864 27,135
Small Company Stock Subaccount............... 9,952,580 4,608
-----------------------
Combined..................................... $52,026,664 $4,511,263
=======================
</TABLE>
52
<PAGE> 54
===============================================================================
A A L V A R I A B L E A N N U I T Y
[Logo of A A L Variable Annuity]
AAL Variable Annuity Account I
Notes to Financial Statements--Continued
December 31, 1995
NOTE 5: SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Transactions in units of each subaccount of the Account for the period June 15,
1995 to December 31, 1995, were as follows:
<TABLE>
<CAPTION>
UNITS SOLD UNITS REDEEMED NET INCREASE
UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT
........................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
Money Market Subaccount .................... 17,995,748 $18,249,874 13,064,450 $13,263,372 4,931,298 $ 4,986,502
Bond Subaccount ............................. 404,717 4,137,001 1,790 18,376 402,927 4,118,625
Balanced Subaccount ......................... 1,367,146 14,524,000 2,291 25,229 1,364,855 14,498,771
Large Company Stock Subaccount .............. 1,259,381 13,718,270 1,144 13,024 1,258,237 13,705,246
Small Company Stock Subaccount .............. 930,171 9,952,403 1,416 15,222 928,755 9,937,181
...........................................................................
Combined .................................... 21,957,163 $60,581,548 13,071,091 $13,335,223 8,886,072 $47,246,325
===========================================================================
</TABLE>
NOTE 6: NET ASSETS
The Account has an unlimited number of accumulation units authorized with no
par value. Net assets as of December 31, 1995 consisted of:
<TABLE>
<CAPTION>
LARGE SMALL
MONEY COMPANY COMPANY
MARKET BOND BALANCED STOCK STOCK
COMBINED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
........................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
Paid-in Capital ............................ $47,246,325 $4,986,502 $4,118,625 $14,498,771 $13,705,246 $ 9,937,181
Undistributed net investment income ........ 268,293 58,921 54,006 102,818 41,844 10,704
Undistributed net realized gain from
investment transactions ................. 1,564 - 692 146 639 87
Net unrealized appreciation of investments . 1,551,010 - 71,089 498,811 757,544 223,566
...........................................................................
Net Assets ................................. $49,067,192 $5,045,423 $4,244,412 $15,100,546 $14,505,273 $10,171,538
===========================================================================
</TABLE>
53
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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]
Report of Independent Auditors
..............................
The Board of Directors and Certificateowners
Aid Association for Lutherans
We have audited the accompanying statement of net assets of the AAL Variable
Annuity Account I (comprising, respectively, the Money Market, Bond, Balanced,
Large Company Stock and Small Company Stock Subaccounts) as of December 31,
1995, and the related statements of operations and changes in net assets for the
period from June 15, 1995 (commencement of operations) to December 31, 1995.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the transfer agent. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the AAL Variable Annuity Account I at December 31,
1995, and the results of their operations and changes in their net assets for
the period June 15, 1995 to December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Milwaukee, Wisconsin
February 2, 1996
54
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..................................
<PAGE> 57
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..................................
<PAGE> 58
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..................................
<PAGE> 59
[LOGO OF AAL VARIABLE ANNUITY]
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
Harris Trust & Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
.......
Independent Accountants
Ernst & Young, LLP
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
[LOGO OF AAL]
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
13017AR 2/96
