[AAL LOGO APPEARS HERE]
Aid Association For Lutherans
A Fraternal Benefit Society
AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1999
[AAL LOGO APPEARS HERE]
AAL VARIABLE PRODUCT
MONEY MARKET PORTFOLIO
AAL VARIABLE PRODUCT
BOND PORTFOLIO
AAL VARIABLE PRODUCT
HIGH YIELD BOND PORTFOLIO
AAL VARIABLE PRODUCT
BALANCED PORTFOLIO
AAL VARIABLE PRODUCT
LARGE COMPANY STOCK PORTFOLIO
AAL VARIABLE PRODUCT
INTERNATIONAL STOCK PORTFOLIO
AAL VARIABLE PRODUCT
SMALL COMPANY STOCK PORTFOLIO
<PAGE>
YOUR LINK TO AID ASSOCIATION FOR LUTHERANS
800-CALL AAL
(800)225-5225
Calls May Be Recorded
Greeting
Hello and welcome to aid association for Lutherans. Please select from the
following three options:
<TABLE>
<S> <C>
To speak with a Customer Service Representative............................. PRESS 1
If you know the 4-digit extension number of the person you are calling...... PRESS 2
For daily unit values....................................................... PRESS 3
</TABLE>
Customer Service
Representative
PRESS 1
Insurance or Fixed Annuity
PRESS 1
Variable Annuity
& Variable Universal Life
Products
PRESS 2
Mutual Funds &
Brokerage Services
PRESS 3
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PRESS 4
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PRESS 5
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in the Office
PRESS 2
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Please be prepared to give your name, certificate
number and Social Security number. Thank you!
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Table of Contents
<TABLE>
<S> <C>
President's Letter.......................................... 2
Portfolio Perspectives
AAL Variable Product Money Market Portfolio............ 4
AAL Variable Product Bond Portfolio.................... 6
AAL Variable Product High Yield Bond Portfolio......... 8
AAL Variable Product Balanced Portfolio................10
AAL Variable Product Large Company Stock Portfolio.....12
AAL Variable Product International Stock Portfolio.....14
AAL Variable Product Small Company Stock Portfolio.....16
Schedule of Investments
AAL Variable Product Money Market Portfolio............18
AAL Variable Product Bond Portfolio....................20
AAL Variable Product High Yield Bond Portfolio.........25
AAL Variable Product Balanced Portfolio................29
AAL Variable Product Large Company Stock Portfolio.....46
AAL Variable Product International Stock Portfolio.....55
AAL Variable Product Small Company Stock Portfolio.....58
Statement of Assets and Liabilities.........................68
Statement of Operations.....................................70
Statement of Changes in Net Assets..........................72
Notes to Financial Statements...............................75
Financial Highlights
AAL Variable Product Money Market Portfolio............78
AAL Variable Product Bond Portfolio....................79
AAL Variable Product High Yield Bond Portfolio.........79
AAL Variable Product Balanced Portfolio................80
AAL Variable Product Large Company Stock Portfolio.....81
AAL Variable Product International Stock Portfolio.....82
AAL Variable Product Small Company Stock Portfolio.....82
A Note on Forward-Looking Statements........................83
</TABLE>
Table of Contents 1
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
June 30, 1999
Dear Member:
We're pleased to provide you with this semi-annual report. It offers insightful
performance, holdings and financial information for each Portfolio of the AAL
Variable Product Series Fund, Inc., the underlying investment vehicle for the
AAL Variable Annuity and AAL Variable Universal Life products. Take a few
minutes to read and reflect on this information.
[PHOTO APPEARS HERE]
WALTER S. RUGLAND
For the past three years, people have become accustomed to and have received
returns of more than 20 percent in many aspects of the stock market. While the
financial markets remain relatively strong, past performance is no guarantee of
future results.
Market volatility easily can create conditions with less desirable short-term
effects, so it's important to maintain a diversified, long-term approach.
Markets will fluctuate, but we feel positive about the long-term prospects for
you and other members who have purchased the AAL Variable Annuity or AAL
Variable Universal Life.
2 President's Letter
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Speaking of members, we're pleased to offer the AAL Variable Annuity and AAL
Variable Universal Life in New Jersey. These recent approvals give us the
opportunity to help more members meet more needs, multiplying the good we do.
AAL appreciates your continued loyalty. We look forward to continuing our
relationship and we encourage you to take full advantage of the services and
benefits we offer to Lutherans and their families. If you have questions about
your variable annuity or variable universal life certificate, call your AAL
representative or the AAL Variable Products Service Center at (800) 225-5225.
Best regards,
/s/ Walter S. Rugland
- -----------------------------
Walter S. Rugland
President
AAL Variable Product Series Fund, Inc.
Executive Vice President and Chief Operating Officer
Aid Association for Lutherans
June 30, 1999 3
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Money Market Portfolio
How did the Portfolio perform so far in 1999?
The return on the Portfolio for the first half of 1999 was 2.31 percent. In
general, money market returns were stable so far this year. The federal funds
rate was cut to 4.75 percent in November 1998 and then remained stable until
June 30 when it was increased to 5 percent. The federal funds rate is the most
sensitive indicator for the direction of interest rates, because it is set daily
by banks, which may lend federal funds to each other on an overnight basis.
How are individual commercial paper issuers selected for inclusion in the
Portfolio?
All issuers in the Portfolio are of the highest quality and are monitored
regularly to ensure safety of principal. An extensive financial analysis is
conducted on each issuer before adding its securities to the Portfolio. Issuers
are continually monitored thereafter. This analysis includes investigation and
consideration of the issuer's profitability, leverage and liquidity ratios.
Issuers deemed appropriate for the Portfolio are placed on an "approved list"
from which investments can be made. The Portfolio will purchase securities only
from issuers on the approved list.
What factors do you see affecting performance in the coming months?
Any action by the Federal Reserve Board to raise or lower interest rates can
have an impact on the Portfolio. If the U.S. economy slows
[PHOTO APPEARS HERE]
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C>
Money Salmon Brothers
Market Short-Term Index*
- ----------------------------------
6/14/95 10000 10000
- ----------------------------------
12/31/95 10302 10295
- ----------------------------------
6/30/96 10566 10543
- ----------------------------------
12/31/96 10841 10805
- ----------------------------------
6/30/97 11116 11063
- ----------------------------------
12/31/97 11419 11328
- ----------------------------------
6/30/98 11721 11602
- ----------------------------------
12/31/98 12024 11848
- ----------------------------------
6/30/99 12302 12105
- ----------------------------------
*An unmanaged index composed of 1-month Treasury bills.
</TABLE>
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
----------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/ 2.31% 4.95% 5.25% 6/14/95
- ---------------------------------------------------------------------------
Variable Annuity
Subaccount/3/ 1.68% 3.67% 3.96% 6/15/95
- ---------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/ (4.73%) (2.86%) 3.26% 6/15/95
- ---------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/ (1.37%) 0.61% 1.05% 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.35%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
4 Money Market Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
down, the Fed would likely consider lowering rates. Lower rates could lead to
lower rates of return in the Portfolio. If the economy and inflation grow too
rapidly, the Fed would likely consider raising rates. This could lead to higher
returns in the Portfolio.
On June 30, the Federal Reserve increased the Federal Funds rate from 4.75
percent to 5 percent. This should cause the interest rate in the Portfolio to
increase by approximately the same amount over time. The next Federal Reserve
Board meeting is August 24 and rates are likely to be stable until then.
/s/ Alan D. Onstad
- -------------------------
Alan D. Onstad
PORTFOLIO MANAGER
An investment in the Money Market Portfolio is not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Although the Portfolio seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Portfolio.
Sector Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Portfolio
6/30/99 12/31/98
<S> <C> <C>
Utilities.....................33% 34%
Consumer Non-Durables.........28% 26%
Finance.......................18% 19%
Consumer Durables............. 8% 10%
Materials & Services.......... 5% 3%
Energy........................ 4% 3%
Technology.................... 4% 5%
Total 100% 100%
</TABLE>
Credit Quality
Average Quality: First Tier
Maturity
Average Maturity: 16 Days
5 Largest Holdings
<TABLE>
<CAPTION>
Interest Maturity % of Portfolio
Security Rate* Date 6/30/99
<S> <C> <C> <C>
General Motors.....................5.000% 7/27/99 4.1%
Acceptance Corporation
American Express...................4.940% 7/20/99 4.0%
Credit Corporation
Household Finance Corporation......4.970% 7/26/99 4.0%
Shell Oil Company..................4.760% 7/8/99 3.9%
Wisconsin Electric.................4.830% 7/1/99 3.7%
Power Company
</TABLE>
* The interest rate shown reflects the coupon rate, or, for the securities
purchased at a discount, the discount rate at the date of purchase.
June 30, 1999 5
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Bond Portfolio
How did the Portfolio perform through June 30, 1999, and what factors affected
performance?
The Bond Portfolio for the first six months of 1999 generated a total return of
negative 1.89 percent. The negative return for the Portfolio, as well as for the
bond market in general, was the result of increasing concern by bond investors
that the Federal Reserve Board would raise interest rates. The action to raise
interest rates on June 30 was a preemptive move to stem inflation resulting from
the economy continuing to grow at too rapid a pace. This fear of higher rates
resulted in the 10-year U.S. Treasury benchmark security yield increasing by
1.14 percent from the start of the year.
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C>
Bond Lehman Brothers
Aggregate Bond Index*
- ------------------------------
6/14/95 10000 10000
- ------------------------------
12/31/95 10580 10616
- ------------------------------
6/30/96 10427 10486
- ------------------------------
12/31/96 10909 10999
- ------------------------------
6/30/97 11232 11341
- ------------------------------
12/31/97 11930 12062
- ------------------------------
6/30/98 12397 12537
- ------------------------------
12/31/98 12955 13111
- ------------------------------
6/30/99 12709 12929
- ------------------------------
</TABLE>
*An unmanaged index that encompasses four major classes of fixed-income
securities in the United States:U.S. Treasury and U.S. government agency
securities, corporate debt obligations, mortgaged-backed securities and asset-
backed securities.
[PHOTO APPEARS HERE]
Is the financial turmoil experienced in Asia, Russia and Brazil still affecting
the U.S. bond market?
Concerns about Asia, Russia and Brazil, as a whole, are less pronounced now than
they were six months ago. There are positive signs of economic recovery in the
Asian economies, particularly in Japan and Southeast Asia in general. Economic
conditions in foreign markets have been less of a contributing factor to the
recent volatility in interest rates.
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
------------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/.............(1.89%) 2.52% 6.10% 6/14/95
- ----------------------------------------------------------------------------
Variable Annuity
Subaccount/3..................(2.50%) 1.25% 4.84% 6/15/95
- ----------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/.........(8.64%) (5.13%) 4.14% 6/15/95
- ----------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/.................(5.44%) (1.78%) (0.22%) 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.35%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
6 Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
With the stock markets enjoying continued success, why should investors devote
money to a bond portfolio?
The stock market has had several years of excellent performance, and this trend
may continue. Investing in a bond portfolio, however, provides a way of
diversifying investment risks. In addition, with the price-earnings ratio of the
stock market near an all-time high, bond market exposure in an investment
portfolio is wise, in case the stock market should experience a correction.
/s/ R. Jerry Scheel
- ---------------------------------
R. Jerry Scheel
PORTFOLIO MANAGER
Asset Mix
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Portfolio
<S> <C> <C>
6/30/99 12/31/98
------- --------
U.S. Government Agency
Obligations.........................40% 37%
U.S. Government Obligations.........33% 37%
Corporate Obligations...............20% 19%
Short-Term Obligations...............3% 3%
Other Government Securities..........2% 2%
Asset-Backed Securities..............1% 1%
Utility Bonds........................1% 1%
----------------------
Total 100% 100%
</TABLE>
Maturity
Average Maturity: 8.5 Years
5 Largest Holdings
<TABLE>
<CAPTION>
Interest Maturity % of Portfolio
Security Rate Date 6/30/99 12/31/98
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Bond..........7.875% 2/15/21 1.3% 1.29%
U.S. Treasury Notes.........5.875% 2/15/04 1.1% NA
U.S. Treasury Notes.........7.250% 8/15/04 1.0% NA
U.S. Treasury Notes.........6.125% 9/30/00 1.0% NA
Ford Motor Credit...........8.875% 4/1/06 1.0% NA
Corporation Notes
Credit Quality
Average Quality: AAA
[PIE CHART APPEARS HERE]
% of Portfolio
6/30/99 12/31/98
------- --------
AAA.....................77% 79%
AA.......................6% 4%
A.......................11% 10%
BBB......................6% 7%
------------------------
Total 100% 100%
</TABLE>
June 30, 1999 7
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
High Yield Bond Portfolio
How did the high-yield bond market perform during the first half of the year,
and what factors affected performance?
The first six months of 1999 were not kind to fixed-income investors. A healthy
domestic economy and recovering international economies gave rise to fears of
increasing inflationary pressures. As a result, interest rates rose steadily
and reduced the value of all fixed-income investments. Within the high-yield
market, bonds most closely linked to interest rates (the higher quality "BB"
rated bonds) faired the poorest, while bonds having larger "equity" components
(bonds rated "CCC") faired the best. So far in 1999, the high-yield bond market
is continuing to recover from the crisis last fall. Liquidity is improving, but
still is less than desirable. Liquidity refers to the time and cost in which a
certain bond can be sold or bought.
The best performing sector, year-to-date, has been basic materials. This sector
represents 11 percent of the Portfolio and consists of companies in the steel,
paper and chemical industries. As the balance of 1999 unfolds, the recent
increase in interest rates is expected to result in slower economic growth. In
this environment, better quality high-yield bonds (those rated "BB") should
perform well. This sector currently represents 25 percent of the Portfolio.
[PHOTO APPEARS HERE]
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
High Yield Merrill Lynch High
Bond Bond Index*
3/2/98 10000 10000
12/31/98 9675 10273
6/30/99 9628 10351
* An unmanaged index comprised of over 900 "cash-pay" high yield bonds
representative of the high-yield market as a whole.
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
-----------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/..............(0.49%) (5.79%) (2.81%) 3/2/98
- ---------------------------------------------------------------------------
Variable Annuity
Subaccount/3/..................(1.10%) (6.96%) (4.03%) 3/3/98
- ---------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/..........(7.33%) (12.82%) (7.96%) 3/3/98
- ---------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/..................(4.08%) (9.78%) (8.19%) 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.40%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
8 High Yield Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
What is the main type of risk associated with this Portfolio?
The major risk of high-yield bond investing is default by an issuer. When a
company encounters financial problems and no longer can pay the interest due on
its debt or cannot repay debt when it is due, a "default" occurs. The effect on
the company's bonds can be a gradual decline in price as the bad news slowly
becomes public, or it can be quite dramatic on unexpected disappointing news.
Bonds do not become worthless if a company enters bankruptcy, but their value
may decline by 40 percent to 60 percent. Talking with management, research
analysts and industry experts helps minimize this risk, as does taking a
diversified approach to the market. With 100 positions in the Portfolio, the
effect of one default will not devastate the performance of the entire
Portfolio.
/s/ David G. Carroll
- -------------------------------------
David G. Carroll
PORTFOLIO MANAGER
Asset Mix
[PIE CHART APPEARS HERE]
% of Portfolio
6/30/99
-------
Long-Term Obligations..............99%
Short-Term Obligations..............1%
-----------
Total 100%
Credit Quality
Average Quality: B+
% of Portfolio
6/30/99
-------
BB......................26%
B.......................64%
CCC......................9%
D........................1%
-----------
Total 100%
5 Largest Holdings
<TABLE>
<CAPTION>
% of % of
Interest Maturity Portfolio Portfolio
Security Rate Date 6/30/99 12/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sweetheart Cup Company, Inc......... 9.625% 9/1/00 1.8% 1.6%
Statia Terminals International N.V.. 11.750% 11/15/03 1.7% 0.9%
Applied Extrusion
Technologies, Inc................. 11.500% 4/1/02 1.6% 1.0%
The Pantry, Inc..................... 10.250% 10/15/07 1.6% 1.9%
Primus Telecommunications
Group, Inc........................ 11.250% 1/15/09 1.6% N/A
</TABLE>
Maturity
Average Maturity: 7.7 Years
June 30, 1999 9
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Balanced Portfolio
How did the U.S. stock and bond markets perform through June 30, 1999?
Concerns about a continued strong economy, along with a tightening labor market
and fears of an increase in the rate of inflation, weighed heavily on fixed-
income investments. Interest rates increased by more than 1.10 percent for
intermediate maturity (five- to 10-year) bonds since the beginning of the year,
resulting in a negative return for the Lehman Brothers Aggregate Bond Index. The
U.S. stock market continued upward, propelled by particularly strong gains in
Internet, technology, utility and financial company stocks.
[PHOTO APPEARS HERE]
Because the Balanced Portfolio contains stocks (indexed to the S&P 500(R)),
bonds (indexed to the Lehman Brothers Aggregate Bond Index), and money market
instruments, how is the asset allocation determined?
The asset allocation mix is established by forecasting the expected return of
each asset class over short-term (one-year) and longer (five- to 10-year) time
horizons, and considering the variability of these expected returns based on
historical performance as well as future
[PHOTO APPEARS HERE]
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
----------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/...............6.03% 13.80% 17.94% 6/14/95
- -------------------------------------------------------------------------
Variable Annuity
Subaccount/3/...................5.37% 12.39% 16.46% 6/15/95
- -------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/..........(1.27%) 5.31% 15.67% 6/15/95
- -------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/...................2.24% 9.15% 9.90% 5/15/98
- -------------------------------------------------------------------------
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.33%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Balanced S&P 500 Lehman Brothers
Index* Aggregate Bond**
<S> <C> <C> <C>
6/14/95 10000 10000 10000
12/31/95 11146 11630 10616
6/30/96 11695 12803 10486
12/31/96 12667 14298 10999
6/30/97 14225 17244 11341
12/31/97 15416 19067 12062
6/30/98 17131 22443 12537
12/31/98 18387 24515 13111
6/30/99 19495 27550 12929
</TABLE>
* An unmanaged index comprised of 500 common stocks representative of the stock
market as a whole. "S&P 500" is a trademark of The McGraw-Hill Companies, Inc.
and has been licensed for use by AAL. The product is not sponsored, endorsed,
sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the product.
**An unmanaged index that encompasses four major classes of fixed-income
securities in the United States: U.S. Treasury and U.S. government agency
securities, corporate debt obligations, mortgage-backed securities and asset-
backed securities.
10 Balanced Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
expectations. The objective is to have a larger weighting in those asset classes
that will provide the highest potential returns during specified time horizons.
The goal is to maintain a well-balanced asset mix, (generally, 55 percent
stocks, 35 percent bonds and 10 percent money market instruments) so that if
return forecasts are inaccurate, the Portfolio will be cushioned against the
risk of being too heavily invested in any single asset class.
Have you adjusted this mix during the course of this year, and how is the
Portfolio currently positioned?
During the first six months, the Portfolio remained fairly neutral in its asset
allocation. Recently, the decision was made to overweight both stocks and bonds
because it is believed that S&P 500 earnings growth will rebound during 1999
compared to 1998 and we don't expect interest-rate levels to increase
dramatically during the remainder of the year. If interest rates stabilize or
begin to decline, this change may have a positive impact on the returns for
stocks and bonds for the balance of 1999.
/s/ Reginald L. Pfeifer
- ----------------------------------
Reginald L. Pfeifer
PORTFOLIO MANAGER
Asset Mix
---------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Portfolio
6/30/99 12/31/98
------- --------
<S> <C> <C>
Common Stocks....................56% 55%
Long-Term Obligations............36% 35%
Short-Term Obligations............8% 10%
----------------------
Total 100% 100%
</TABLE>
5 Largest Bond Holdings
------------------------
<TABLE>
<CAPTION>
Interest Maturity % of Portfolio
Security Rate Date 6/30/99 12/31/98
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury Notes......5.500% 12/31/00 0.37% 0.28%
U.S. Treasury Bonds......8.875% 2/15/19 0.36% 0.27%
U.S. Treasury Notes......5.875% 2/15/04 0.35% 0.29%
U.S. Treasury Notes......7.750% 2/15/01 0.33% NA
U.S. Treasury Notes......5.250% 1/31/01 0.33% 0.42%
</TABLE>
5 Largest Common Stock Holdings
-------------------------------
<TABLE>
<CAPTION>
% of Portfolio
Security 6/30/99 12/31/98
- -----------------------------------------------
<S> <C> <C>
Microsoft Corporation..........2.3% 1.9%
General Electric Company.......1.9% 1.9%
International Business
Machines Corporation...........1.2% 1.0%
Wal-Mart Stores, Inc...........1.1% 1.0%
Cisco Systems, Inc.............1.0% 0.8%
</TABLE>
June 30, 1999 11
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Large Company Stock Portfolio
How did large-cap stocks perform during the first half of the year, and what
factors affected their performance?
Large-cap stocks were reasonably strong in the first half of 1999. Investors
have been optimistic toward a recovery in many foreign economies, such as the
Far East, and less fearful of major economic slowdowns in other economies, such
as South America. The resilience of the U.S. economy was also a factor as gross
domestic product growth was strong. This occurred as a result of the confident
and aggressive spending habits of American consumers coupled with better
business in parts of the manufacturing sector. Manufacturing stocks and many
cyclical groups such as paper, steel and chemical stocks did well in this
economic environment.
[PHOTO APPEARS HERE]
What are the two main types of risk to which this Portfolio is subject?
The two primary types of risk are: normal price-volatility risk and unexpected
event-driven risk. Normal price volatility refers to the fact that stock prices
and the index that measures prices, such as the S&P 500, move up and down over
time as investors and the financial system invests money in, or withdraw funds
from, investment markets. This drives the price of stocks up or down, which
results in Portfolio fluctuations.
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Large Co S&P 500*
<S> <C> <C>
6/14/95 10000 10000
12/31/95 11639 11630
6/30/96 12793 12803
12/31/96 14254 14298
6/30/97 17150 17244
12/31/97 18900 19067
6/30/98 22182 22443
12/31/98 24259 24515
6/30/99 27189 27550
</TABLE>
* An unmanaged index comprised of 500 common stocks representative of the stock
market as a whole. It is not possible to invest directly in the index.
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
---------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/ 12.08% 22.57% 28.04% 6/14/95
- ------------------------------------------------------------------------
Variable Annuity
Subaccount/3/ 11.38% 21.05% 26.38% 6/15/95
- ------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/ 4.37% 13.42% 25.53% 6/15/95
- ------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/ 8.10% 17.65% 17.93% 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their
original value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate
account expenses or charges. However, these values reflect the deduction of
a 0.33% 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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1%
each year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative
charge, and a 3% charge on all premiums paid during the reporting period.
Actual total returns experienced by the certificate owner will be reduced
by cost of insurance charges and other charges and expenses related to the
certificate's insurance coverage. Surrender charges will be assessed if the
certificate is surrendered or decreased within the first 10 years after
issue or increase in coverage.
12 Large Company Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Unexpected event-driven risk refers to new or unexpected information that
affects the stocks of individual companies. Theoretically, all known information
is incorporated into a stock's price. As information that was not previously
known becomes available, a company's stock price reacts to it. This can have a
major effect on a portfolio's performance, particularly in one that is not well-
diversified.
Did a specific sector perform particularly well during the first half of the
year?
The most exciting sector in the first half of 1999 was the basic industries
sector. Major upward price spikes were seen in aluminum, chemical and paper
companies. Signs of some commodity price recoveries and the outlook for strong
foreign and domestic economies contributed to this move. Oil investors also were
excited because, as the Organization of Petroleum Exporting Countries (OPEC)
found a way to agree on oil production cuts and the price of crude oil took a
major leap upward. Natural gas stocks came alive as the price of this commodity
showed remarkable strength.
/s/ David J. Schnarsky
- -------------------------------------
David J. Schnarsky
PORTFOLIO MANAGER
<TABLE>
<CAPTION>
Sector Allocations
[PIE CHART APPEARS HERE]
% of Portfolio
6/30/99 12/31/98
------- --------
<S> <C> <C>
Consumer Non-Durables...... 30% 33%
Utilities.................. 19% 14%
Finance.................... 16% 15%
Technology................. 13% 17%
Materials & Services....... 7% 6%
Energy..................... 6% 6%
Capital Goods.............. 5% 5%
Consumer Durables.......... 2% 2%
Transportation............. 1% 1%
Short-Term Obligations..... 1% 1%
----------------------
Total 100% 100%
</TABLE>
<TABLE>
<CAPTION>
5 Largest Holdings
------------------
% of Portfolio
Security 6/30/99 12/31/98
- -----------------------------------------------
<S> <C> <C>
Microsoft Corporation....... 4.0% 3.5%
General Electric Company.... 3.3% 3.4%
International Business
Machines Corporation........ 2.1% 0.9%
Wal-Mart Stores, Inc. ...... 1.9% 1.8%
Cisco Systems, Inc. ........ 1.8% 1.5%
</TABLE>
June 30, 1999 13
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
International Stock Portfolio
How did the international markets perform during the first half of the year?
For the first half of 1999, international markets produced mixed results. Japan
is up 20 percent while Europe, for the most part, is flat or down. Japan
initially benefited from investor perception that corporations are finally
shifting to management practices that address shareholder concerns. Regarding
large-cap international stocks, a growth environment is unfolding better than
expected. Europe, on the other hand, suffered when growth took a downturn,
particularly in Germany. The new euro currency steadily weakened since its
introduction in January as interest-rate expectations, in relation to the U.S.
dollar, shifted in favor of a stronger dollar.
[PHOTO APPEARS HERE]
[PHOTO APPEARS HERE]
How did the Portfolio perform during the first half of 1999?
The Portfolio advanced 6.7 percent for the first half of 1999. The strength of
our stock selection appears to have outweighed our country allocation. In Japan
and Italy, we managed to outperform the local market by being in the
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
----------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/...............6.70% 7.59% 13.13% 3/2/98
- --------------------------------------------------------------------------
Variable Annuity
Subaccount/3/...................6.04% 6.25% 11.75% 3/3/98
- --------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/..........(0.64%) (0.44%) 7.17% 3/3/98
- --------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/...................2.89% 3.16% 4.25% 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.80%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
Value of a $10,000 Investment
Initial Net Asset Value $10,000
[GRAPH APPEARS HERE]
International MSCI EAFE
Index*
3/2/98 10,000 10,000
12/31/98 11,041 10,746
6/30/99 11,781 11,208
* The Morgan Stanley Capital International Europe, Australasia, Far East Index
is a stock index designed to measure the investment returns of the developed
countries outside of North America. The index currently includes stocks from 21
countries.
14 International Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
right stocks. Additionally, being underweighted in Germany and Switzerland
proved to be positive.
What impact did the introduction of the euro have on the Portfolio?
The introduction of the euro was an historic event that will likely change the
way business is conducted in Europe. Equity markets in Europe, however, have
responded more to fundamental economic events rather than simply the new
currency. Weak economic growth has led to revised corporate-earning expectations
and equity markets have adjusted accordingly. Reflecting expectations, the euro
has weakened since its inception.
/s/ Kathleen M. Harris
- ------------------------------
Kathleen M. Harris
PORTFOLIO MANAGER
/s/ L. Sean Roche
- -------------------------------
L. Sean Roche
PORTFOLIO MANAGER
Region Allocation
[PIE CHART APPEARS HERE]
% of Net Assets
6/30/99
-------
Continental Europe................38%
Japan.............................22%
United Kingdom....................20%
North America.....................11%
Emerging Markets...................5%
Pacific Basin (excluding Japan)....4%
-----------
Total 100%
International investing involves additional risks including currency
fluctuations, economic and political instability, and accounting standards.
Asset Mix
[PIE CHART APPEARS HERE]
% of Portfolio
6/30/99
-------
Common Stocks.....................95%
Short-Term Obligations.............5%
-----------
Total 100%
5 Largest Holdings
<TABLE>
<CAPTION>
% of % of
Portfolio Portfolio
Security Country Industry 6/30/99 12/31/98
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Vodafone Group plc..........United Kingdom Telephone 4.0% 2.8%
NTT Mobile Communication
Network, Inc..............Japan Telephone 3.5% 3.2%
Royal PTT Nederland.........Netherlands Telephone 3.5% 2.9%
Telecom Italia SpA..........Italy Telephone 3.4% 3.0%
British Aerospace plc.......United Kingdom Manufacturing 3.2% 3.3%
</TABLE>
June 30, 1999 15
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Small Company Stock Portfolio
How did small-cap stocks perform the first half of 1999?
After a slow start, small-cap stocks rebounded as the world economies began to
recover and the U.S. economy remained strong.
The S&P SmallCap 600 was down 9 percent for the first three months of 1999.
However, a complete reversal took place in the second quarter as small-caps were
up more than 15 percent, helping the S&P SmallCap 600 finish up more than 5
percent for the first half of the year.
Value of a $10,000 Investment
[GRAPH APPEARS HERE]
Small S&P 600*
Company
6/14/95 10,000 10,000
12/31/95 11,070 11,510
6/30/96 12,047 12,801
12/31/96 13,084 13,962
6/30/97 14,779 15,576
12/31/97 16,403 17,533
6/30/98 17,628 18,603
12/31/98 16,425 17,301
6/30/99 17,250 18,171
* An unmanaged index comprised of 600 stocks designed to represent performance
of the small-cap segment of the U.S. equity markets. "S&P 600" is a trademark
of The McGraw-Hill Companies, Inc. and has been licensed for use by AAL. The
product is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the product.
What are the major benefits and risks that small-cap stocks provide investors?
Small-cap stocks offer people the ability to invest in companies that are
developing new technologies, products and markets. As the companies succeed in
these new areas, the return to investors is potentially large. While these
companies offer higher potential returns, they also have higher risks. Small
companies usually compete against larger companies with established market
shares and greater financial resources. Many
Average Annual Total Returns/1/
As of June 30, 1999
<TABLE>
<CAPTION>
From Inception
Year-To-Date 1-Year Inception Date
-----------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/...............5.02% (2.14%) 14.42% 6/14/95
- ---------------------------------------------------------------------------
Variable Annuity
Subaccount/3/...................4.37% (3.36%) 12.90% 6/15/95
- ---------------------------------------------------------------------------
SEC Variable
Annuity Subaccount/4/..........(2.20%) (9.45%) 12.14% 6/15/95
- ---------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/...................1.28% (6.19%) (7.85%) 5/15/98
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their original
value. Periods less than one year are not annualized.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gains distributions but do not reflect separate account
expenses or charges. However, these values reflect the deduction of a 0.35%
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.
/3/ Variable Annuity Subaccount - Total returns 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.
/4/ SEC Variable Annuity Subaccount - Reflects all fees and expenses and the
maximum surrender charge of 7% for the first contract year, declining by 1% each
year through the seventh.
/5/ Variable Universal Life Subaccount - Total returns reflect the deduction of
a 0.75% mortality and expense risk charge, a $4 monthly administrative charge,
and a 3% charge on all premiums paid during the reporting period. Actual total
returns experienced by the certificate owner will be reduced by cost of
insurance charges and other charges and expenses related to the certificate's
insurance coverage. Surrender charges will be assessed if the certificate is
surrendered or decreased within the first 10 years after issue or increase in
coverage.
16 Small Company Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
smaller companies rely on capital from the equity- or fixed-income markets to
continue growing their businesses.
The higher potential returns and risks of small-cap stocks offer investors a
good diversification vehicle to include in their portfolios.
Given that large-cap stocks have outperformed small-cap stocks during the past
few years, why should investors allocate some of their money to the Small
Company Stock Portfolio?
While large-cap stocks have outperformed small-cap stocks during the past few
years and early in 1999, small-caps have recently reversed this trend.
Historically, small-cap stocks have performed well in an accelerating economic
and profit cycle. As growth around the world has shown recent signs of strength,
and the U.S. market remains strong, we may be entering an accelerating economic
and profit cycle. If this trend continues, small-caps should continue their
recent outperformance. However, past performance is no guarantee of future
results.
/s/ Brian J. Flanagan
- ----------------------------
Brian J. Flanagan
PORTFOLIO MANAGER
Sector Allocations
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Portfolio
6/30/99 12/31/98
------- --------
<S> <C> <C>
Consumer Non-Durables..........28% 27%
Materials & Services...........19% 19%
Finance........................17% 15%
Technology.....................11% 16%
Capital Goods...................6% 6%
Consumer Durables...............6% 5%
Utilities.......................5% 5%
Energy..........................3% 3%
Transportation..................3% 3%
Short-Term Obligations..........2% 1%
----------------------
Total 100% 100%
</TABLE>
5 Largest Holdings
<TABLE>
<CAPTION>
% of Portfolio % of Portfolio
Security 6/30/99 12/31/98
- ------------------------------------------------------------
<S> <C> <C>
Novellus Systems, Inc...............0.7%............0.5%
FirstMerit Corporation..............0.7%............0.6%
American Bankers
Insurance Group, Inc................0.7%............0.6%
Express Scripts, Inc................0.6%............0.6%
Legg Mason, Inc.....................0.6%............0.5%
</TABLE>
June 30, 1999 17
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
AAL Variable Product Money Market Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
Investment Objective
The portfolio strives for maximum current income, while maintaining liquidity
and a constant net asset value of $1.00 per share, by investing in high-quality,
short-term money market instruments.
<TABLE>
<CAPTION>
Principal Commercial Interest Maturity Market
Amount Paper (99.1%) Rate(a) Date Value
==========================================================================================
<S> <C> <C> <C> <C>
$1,387,000 Alabama Power
Company.................. 4.850% 7/6/99 $1,386,066
1,613,000 American Express
Credit Corporation....... 4.940 7/20/99 1,608,352
1,488,000 AT&T Corporation......... 5.180 7/9/99 1,486,287
718,000 Bell Atlantic
Network Funding.......... 4.840 7/15/99 716,649
489,000 Bell Atlantic
Network Funding.......... 4.950 7/7/99 488,597
288,000 Bell South
Telecommunications....... 4.820 7/16/99 287,422
690,000 Bell South
Telecommunications....... 5.180 7/12/99 688,908
1,455,000 Coca Cola Company........ 4.840 7/30/99 1,449,327
1,400,000 Colgate-Palmolive
Company.................. 5.030 7/28/99 1,394,718
638,000 Consolidated Natural
Gas Company.............. 4.930 7/15/99 636,777
962,000 Consolidated Natural
Gas Company.............. 5.040 8/2/99 957,690
1,500,000 Countrywide Home
Loans, Inc............... 4.930 7/13/99 1,497,540
1,400,000 Duke Energy
Corporation.............. 4.930 7/23/99 1,395,782
931,000 E.I. DuPont de Nemours
& Company................ 4.870 7/20/99 928,607
227,000 Ford Motor Credit
Corporation.............. 4.880 7/16/99 226,538
1,300,000 Gannett Company.......... 4.850 7/19/99 1,296,848
1,002,000 General Electric Capital
Corporation.............. 4.880 7/14/99 1,000,234
455,000 General Electric Capital
Corporation.............. 4.820 7/16/99 454,086
1,215,000 General Mills, Inc....... 4.920 7/16/99 1,212,509
1,664,000 General Motors Acceptance
Corporation.............. 5.000 7/27/99 1,657,991
1,043,000 H.J. Heinz Company, Inc.. 5.080 8/13/99 1,036,671
1,000,000 Hershey Foods
Corporation.............. 5.070 7/7/99 999,155
1,600,000 Household Finance
Corporation.............. 4.970 7/26/99 1,594,478
637,000 International Lease
Finance Corporation...... 4.780 7/6/99 636,577
364,000 International Lease
Finance Corporation...... 5.050 7/28/99 362,621
1,240,000 Lucent Technologies, Inc. 4.810 7/21/99 1,236,687
1,200,000 McGraw-Hill
Companies, Inc........... 4.900 7/2/99 1,199,837
1,500,000 Motorola, Inc............ 4.780 7/29/99 1,494,423
1,500,000 New Jersey Natural
Gas Company.............. 5.350 7/2/99 1,499,777
140,000 Schering-Plough
Corporation.............. 4.770 7/21/99 139,629
952,000 Schering-Plough
Corporation.............. 4.780 7/7/99 951,240
1,561,000 Shell Oil Company........ 4.760 7/8/99 1,559,555
1,070,000 Southern California
Edison Company........... 4.850 7/12/99 1,068,414
305,000 Toyota Motor Credit
Corporation.............. 4.940 7/20/99 304,205
1,227,000 Toyota Motor Credit
Corporation.............. 5.020 7/21/99 1,223,578
</TABLE>
The accompanying notes to the financial statements are
an integral part of this schedule.
18 Money Market Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Money Market Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Commercial Interest Maturity Market
Amount Paper (99.1%) Rate(a) Date Value
================================================================================
<S> <C> <C> <C> <C>
$1,409,000 Warner-Lambert
Company.........................4.770% 7/9/99 $1,407,506
1,500,000 Wisconsin Electric
Power Company...................4.830 7/1/99 1,500,000
1,213,000 Xerox Credit
Corporation.....................5.250 7/12/99 1,211,055
-----------------------------------------------------------------
Total Commercial Paper (99.1%)
(amortized cost $40,196,336)...........................40,196,336
=================================================================
-----------------------------------------------------------------
Other Assets,
less Liabilities (0.9%)...................................373,596
=================================================================
-----------------------------------------------------------------
Net Assets (100.0%)...................................$40,569,932
=================================================================
</TABLE>
(a) The interest rate shown reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 19
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
AAL Variable Product Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
Investment Objective
The portfolio strives for investment results similar to the total return of the
Lehman Brothers Aggregate Bond Index by investing primarily in bonds and other
debts securities included in the index.
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (96.3%) Rate Date Value
========================================================================
U.S. Government Obligations (32.5%)
- -----------------------------------
<S> <C> <C> <C> <C>
$350,000 U.S. Treasury Notes........ 5.875% 6/30/00 $351,859
250,000 U.S. Treasury Notes........ 6.125 7/31/00 251,875
300,000 U.S. Treasury Notes........ 6.250 8/31/00 302,719
525,000 U.S. Treasury Notes........ 6.125 9/30/00 529,101
350,000 U.S. Treasury Notes........ 5.750 10/31/00 351,312
375,000 U.S. Treasury Notes........ 8.500 11/15/00 389,882
450,000 U.S. Treasury Notes........ 5.500 12/31/00 450,140
425,000 U.S. Treasury Notes........ 5.250 1/31/01 423,539
365,000 U.S. Treasury Notes........ 7.750 2/15/01 377,547
200,000 U.S. Treasury Notes........ 6.375 3/31/01 202,812
385,000 U.S. Treasury Notes........ 8.000 5/15/01 401,603
390,000 U.S. Treasury Notes........ 5.625 6/30/01 397,921
300,000 U.S. Treasury Notes........ 7.875 8/15/01 313,687
450,000 U.S. Treasury Notes........ 5.875 11/30/01 452,672
175,000 U.S. Treasury Notes........ 6.500 5/31/02 178,938
350,000 U.S. Treasury Notes........ 6.000 7/31/02 353,500
300,000 U.S. Treasury Notes........ 6.250 8/31/02 304,781
250,000 U.S. Treasury Notes........ 5.750 10/31/02 250,547
175,000 U.S. Treasury Notes........ 5.250 1/31/03 173,797
250,000 U.S. Treasury Notes........ 6.250 2/15/03 254,219
300,000 U.S. Treasury Notes........ 5.500 5/31/03 297,563
450,000 U.S. Treasury Notes........ 5.750 8/15/03 450,000
200,000 U.S. Treasury Notes........ 11.875 11/15/03 245,875
550,000 U.S. Treasury Notes........ 5.875 2/15/04 552,922
390,000 U.S. Treasury Notes........ 7.250 5/15/04 413,765
500,000 U.S. Treasury Notes........ 7.250 8/15/04 531,094
160,000 U.S. Treasury Notes........ 7.500 2/15/05 172,300
280,000 U.S. Treasury Notes........ 7.000 7/15/06 296,625
250,000 U.S. Treasury Notes........ 6.500 10/15/06 257,969
200,000 U.S. Treasury Notes........ 6.250 2/15/07 203,750
250,000 U.S. Treasury Notes........ 6.125 8/15/07 252,734
300,000 U.S. Treasury Notes........ 4.750 11/15/08 275,344
250,000 U.S. Treasury Bonds........ 10.375 11/15/12 318,203
250,000 U.S. Treasury Bonds........ 9.875 11/15/15 340,469
250,000 U.S. Treasury Bonds........ 7.250 5/15/16 274,375
275,000 U.S. Treasury Bonds........ 7.500 11/15/16 309,117
350,000 U.S. Treasury Bonds........ 8.750 5/15/17 440,453
375,000 U.S. Treasury Bonds........ 8.125 8/15/19 451,875
350,000 U.S. Treasury Bonds........ 8.250 2/15/20 437,719
575,000 U.S. Treasury Bonds........ 7.875 2/15/21 681,016
280,000 U.S. Treasury Bonds........ 8.125 5/15/21 340,025
100,000 U.S. Treasury Bonds........ 8.125 8/15/21 121,656
290,000 U.S. Treasury Bonds........ 7.625 11/15/22 337,306
250,000 U.S. Treasury Bonds........ 7.125 2/15/23 276,172
250,000 U.S. Treasury Bonds........ 6.250 8/15/23 250,234
260,000 U.S. Treasury Bonds........ 7.500 11/15/24 300,950
250,000 U.S. Treasury Bonds........ 6.875 8/15/25 269,921
300,000 U.S. Treasury Bonds........ 6.750 8/15/26 320,063
300,000 U.S. Treasury Bonds........ 6.625 2/15/27 315,844
200,000 U.S. Treasury Bonds........ 6.375 8/15/27 204,312
-----------------------------------------------------------
Total U.S. Government
Obligations......................................16,652,102
===========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
20 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (96.3%) Rate Date Value
========================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations (40.0%)
- ------------------------------------------
$250,000 Federal Home Loan
Bank Debentures..................... 5.625% 3/19/01 $249,256
495,000 Federal Home Loan
Bank Debentures..................... 5.440 10/15/03 481,327
250,000 Federal Home Loan
Bank Debentures..................... 6.500 11/29/05 252,889
300,000 Federal Home Loan
Mortgage Corporation................ 5.750 4/30/01 299,588
475,000 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon.................. 5.125 10/15/00 430,983
255,000 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon.................. 6.520 1/2/02 258,496
54,996 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon.................. 7.000 7/1/02 55,616
98,956 Federal Home Loan
Mortgage Corporation
15-Yr. Pass Through................. 7.000 1/1/11 99,492
210,285 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through............ 6.500 1/1/13 207,696
177,126 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through............ 7.500 8/15/13 180,162
233,998 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through............ 6.000 9/1/13 226,286
229,652 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through............ 6.500 1/15/14 226,878
494,336 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through............ 5.500 3/1/14 468,383
144,990 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.500 4/1/24 141,146
211,394 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 5/1/24 209,850
93,324 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.500 8/1/25 94,542
188,163 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 8.500 11/1/25 196,661
80,441 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 8.000 1/1/26 82,665
136,896 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 6/1/26 135,779
173,973 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 4/1/27 172,534
157,769 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.500 7/1/27 159,809
140,385 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.500 10/1/27 142,165
9,185 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 9.000 3/15/28 9,753
200,255 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 5/1/28 198,539
248,413 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.500 7/1/28 240,508
244,851 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.000 8/1/28 230,870
248,022 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.500 10/1/28 240,129
245,797 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.500 12/1/28 237,976
248,168 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.500 1/15/29 240,271
446,280 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 2/15/29 442,589
498,770 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.000 3/1/29 470,045
498,334 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 6.000 3/1/29 469,635
500,000 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through............ 7.000 6/16/29 495,156
250,000 Federal National
Mortgage Association
Notes............................... 4.720 12/11/00 246,394
250,000 Federal National
Mortgage Association
Notes............................... 6.450 4/23/01 252,437
</TABLE>
The accompanying notes to the financial statements are
an integral part of this schedule.
June 30, 1999 21
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (96.3%) Rate Date Value
========================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$450,000 Federal National
Mortgage Association
Notes............................... 7.500% 2/11/02 $466,752
500,000 Federal National
Mortgage Association
Notes............................... 6.000 5/15/08 483,505
165,685 Federal National
Mortgage Association
7-Yr. Balloon....................... 6.500 10/1/03 166,063
161,455 Federal National
Mortgage Association
15-Yr. Pass Through................. 6.000 4/1/11 156,324
129,128 Federal National
Mortgage Association
15-Yr. Pass Through................. 7.500 7/1/11 131,252
125,850 Federal National
Mortgage Association
15-Yr. Pass Through................. 8.000 7/1/12 129,716
62,634 Federal National
Mortgage Association
15-Yr. Pass Through................. 7.000 9/1/12 62,923
218,991 Federal National
Mortgage Association
15-Yr. Pass Through................. 6.500 12/1/12 216,076
224,139 Federal National
Mortgage Association
15-Yr. Pass Through................. 6.500 6/1/13 221,118
495,504 Federal National
Mortgage Association
15-Yr. Pass Through................. 6.000 12/1/13 478,711
93,051 Federal National
Mortgage Association
30-Yr. Pass Through................. 10.500 8/1/20 101,564
163,762 Federal National
Mortgage Association
30-Yr. Pass Through................. 8.000 12/1/24 168,719
47,522 Federal National
Mortgage Association
30-Yr. Pass Through................. 9.000 2/1/25 50,492
68,176 Federal National
Mortgage Association
30-Yr. Pass Through................. 8.500 12/1/25 71,210
137,298 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.500 1/1/26 139,067
144,748 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 2/1/26 143,475
185,155 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 5/1/26 179,828
108,690 Federal National
Mortgage Association
30-Yr. Pass Through................. 8.000 9/1/26 111,612
101,335 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.500 2/1/27 102,599
149,885 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 3/1/27 148,568
230,381 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 8/1/27 223,112
166,248 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.500 11/1/27 168,272
213,873 Federal National
Mortgage Association
30-Yr. Pass Through................. 9.000 11/1/27 227,242
166,528 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 1/1/28 165,037
238,493 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.000 5/1/28 224,572
245,511 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 9/1/28 237,632
239,257 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 9/1/28 231,579
500,000 Federal National
Mortgage Association
30-Yr. Pass Through................. 5.960 9/11/28 452,930
248,708 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 10/1/28 246,333
190,635 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 12/1/28 188,814
206,990 Federal National
Mortgage Association
30-Yr. Pass Through................. 7.000 1/15/29 205,247
241,815 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 2/1/29 234,055
498,363 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.000 3/1/29 469,273
500,000 Federal National
Mortgage Association
30-Yr. Pass Through................. 6.500 7/1/29 483,614
</TABLE>
The accompanying notes to the financial statements are
an integral part of this schedule.
22 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (96.3%) Rate Date Value
========================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$151,821 Government National
Mortgage Association
15-Yr. Pass Through................. 6.500% 6/15/09 $151,355
248,459 Government National
Mortgage Association
15-Yr. Pass Through................. 7.000 1/15/14 250,531
137,963 Government National
Mortgage Association
30-Yr. Pass Through................. 7.500 3/15/23 139,798
153,861 Government National
Mortgage Association
30-Yr. Pass Through................. 7.000 1/15/24 152,278
102,579 Government National
Mortgage Association
30-Yr. Pass Through................. 9.000 9/15/24 108,988
91,074 Government National
Mortgage Association
30-Yr. Pass Through................. 8.000 6/15/25 93,663
207,026 Government National
Mortgage Association
30-Yr. Pass Through................. 6.000 5/15/26 195,035
119,278 Government National
Mortgage Association
30-Yr. Pass Through................. 8.000 9/15/26 122,651
164,822 Government National
Mortgage Association
30-Yr. Pass Through................. 8.000 10/15/26 169,482
96,063 Government National
Mortgage Association
30-Yr. Pass Through................. 8.500 12/15/26 100,664
134,363 Government National
Mortgage Association
30-Yr. Pass Through................. 7.500 3/15/27 135,964
179,433 Government National
Mortgage Association
30-Yr. Pass Through................. 7.500 10/15/27 181,572
220,464 Government National
Mortgage Association
30-Yr. Pass Through................. 7.000 11/15/27 217,933
225,813 Government National
Mortgage Association
30-Yr. Pass Through................. 7.000 1/15/28 223,194
239,665 Government National
Mortgage Association
30-Yr. Pass Through................. 6.500 7/15/28 231,125
239,551 Government National
Mortgage Association
30-Yr. Pass Through................. 7.000 8/15/28 236,771
249,977 Government National
Mortgage Association
30-Yr. Pass Through................. 6.500 12/15/28 241,070
498,679 Government National
Mortgage Association
30-Yr. Pass Through................. 7.000 3/15/29 492,954
499,117 Government National
Mortgage Association
30-Yr. Pass Through................. 6.500 3/15/29 481,134
250,000 Private Export
Funding Corporation................. 6.240 5/15/02 251,706
250,000 Tennessee Valley
Authority........................... 6.000 11/1/00 250,887
-----------------------------------------------------------------------------------
Total U.S. Government
Agency Obligations..................................................... 20,462,546
===================================================================================
Asset-Backed Securities (0.5%)
- ------------------------------
250,000 NationsBank Credit
Card Trust Certificate.............. 6.000 12/15/05 246,410
-----------------------------------------------------------------------------------
Total Asset-Backed Securities.......................................... 246,410
===================================================================================
Corporate Obligations (20.5%)
- -----------------------------
300,000 ABN-AMRO Bank
Notes............................... 8.250 8/1/09 313,487
225,000 Abbott Laboratories
Notes............................... 6.800 5/15/05 228,260
250,000 American Express
Company Senior Notes................ 6.750 6/1/01 251,802
250,000 Archer-Daniels-Midland
Company............................. 8.125 6/1/12 271,371
250,000 Associates Corporation
N.A. Senior Notes................... 7.500 4/15/02 256,577
250,000 Associates Corporation
N.A. Senior Notes................... 6.250 11/1/08 237,358
250,000 Browning-Ferris Industries,
Inc. Senior Notes................... 6.375 1/15/08 214,031
250,000 Caterpillar, Inc.................... 9.000 4/15/06 275,683
250,000 Chase Credit Card
Master Trust........................ 6.194 8/15/05 249,303
250,000 Columbia Gas Systems
Notes............................... 7.320 11/28/10 246,072
250,000 Commercial Credit
Company Notes....................... 6.625 11/15/06 244,157
468,000 Countrywide Home
Loans, Inc. Medium
Term Notes.......................... 7.450 9/16/03 477,760
250,000 Crown Cork & Seal
Notes............................... 6.750 4/15/03 247,316
250,000 Enron Corporation
Notes............................... 6.875 10/15/07 244,545
500,000 Enterprise Oil Notes................ 6.500 5/1/05 475,521
</TABLE>
The accompanying notes to the financial statements are
an integral part of this schedule.
June 30, 1999 23
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (96.3%) Rate Date Value
========================================================================================
<S> <C> <C> <C> <C>
Corporate Obligations -- continued
- ----------------------------------
$250,000 First Bank System Notes...........7.625% 5/1/05 $260,815
465,000 Ford Motor Credit
Corporation Notes.................8.875 4/1/06 509,050
250,000 Ford Motor Credit
Corporation Notes.................8.200 2/15/02 260,804
250,000 Foster Wheeler
Corporation Notes.................6.750 11/15/05 224,972
250,000 General Electric
Corporation Notes.................8.750 5/21/07 280,210
200,000 General Motors
Acceptance Corporation
Notes.............................9.625 12/15/01 214,505
250,000 Hanson Overseas BV
Senior Notes......................6.750 9/15/05 247,804
250,000 Heller Financial, Inc.
Notes.............................6.500 11/1/01 250,539
250,000 Household Finance
Corporation Notes.................6.875 3/1/03 250,606
300,000 IBM Corporation Notes.............7.250 11/1/02 309,042
500,000 Kimberly-Clark
Corporation.......................6.375 1/1/28 454,659
250,000 PepsiCo, Inc. Notes...............5.700 11/1/08 230,184
250,000 PG&E Gas
Transmission, NW..................7.100 6/1/05 252,846
250,000 Republic New York
Corporation.......................8.250 11/1/01 260,277
250,000 Service Corporation
International Notes...............6.300 3/15/03 241,364
250,000 TCI Communications,
Inc...............................6.375 5/1/03 248,596
250,000 Tenneco, Inc......................8.075 10/1/02 257,447
250,000 Tennessee Valley
Authority.........................6.000 3/15/13 236,496
350,000 Thermo Electron
Corporation.......................7.625 10/30/08 336,660
200,000 Tosco Corporation First
Mortgage Bonds....................9.625 3/15/02 212,410
500,000 Union Pacific
Corporation.......................7.000 2/1/06 470,945
250,000 MCI Worldcom, Inc.
Senior Notes......................6.950 8/15/28 235,659
-------------------------------------------------------------------------
Total Corporate Obligations....................................10,479,133
=========================================================================
Utility Bonds (.0.9%)
- ---------------------
<S> <C> <C> <C>
200,000 Baltimore Gas & Electric
Company First Refunding
Mortgage Bonds.....................7.500 1/15/07 206,873
250,000 Texas Utilities Company
First Mortgage Bonds...............7.375 8/1/01 254,958
--------------------------------------------------------------------------
Total Utility Bonds................................................461,831
==========================================================================
Other Government Securities (1.9%)
250,000 Province of Manitoba
Debentures.........................6.125 1/19/04 245,052
250,000 Province of Nova Scotia
Debentures.........................7.250 7/27/13 249,482
200,000 Province of Ontario
Senior Global Bond.................6.125 6/28/00 200,682
250,000 Province of Quebec
Global Bond........................11.000 6/15/15 269,720
--------------------------------------------------------------------------
Total Other Government Securities..................................964,936
==========================================================================
--------------------------------------------------------------------------
Total Long-Term Fixed Income Securities
(amortized cost basis $50,447,908)..............................49,266,958
==========================================================================
Short-Term
Investments (3.4%) (a)
=========================================================================================
1,254,000 Consolidated Natural
Gas Company........................5.750 7/1/1999 1,254,000
500,000 Ford Motor Credit
Corporation........................4.970 7/14/1999 499,103
--------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $1,753,103)................................1,753,103
==========================================================================
--------------------------------------------------------------------------
Total Investments (99.7%)
(amortized cost basis $52,201,011)..............................51,020,061
==========================================================================
--------------------------------------------------------------------------
Other Assets,
Less Liabilities (0.3%)............................................140,868
==========================================================================
--------------------------------------------------------------------------
Net Assets (100.0%)............................................$51,160,929
==========================================================================
(a) The interest rate reflects the discount rate at the date of purchase.
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
24 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
AAL Variable Product High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
Investment Objective
- --------------------
The portfolio strives for high current income and secondarily capital growth by
investing primarily in high-risk, high-yield bonds commonly referred to as "junk
bonds."
<TABLE>
<CAPTION>
Principal Long-Term Interest Maturity Market
Amount Obligations (96.4%) Rate Date Value
=========================================================================================================
<S> <C> <C> <C> <C>
Food & Beverages (4.2%)
- -----------------------
$250,000 Fresh Foods, Inc............... 10.750% 6/1/06 $ 248,125
250,000 Smithfield Foods, Inc.......... 7.625 2/15/08 226,250
500,000 Speciality Foods
Corporation.................... 11.125 10/1/02 490,000
500,000 Viskase Companies, Inc......... 10.250 12/1/01 358,750
-------------------------------------------------------------------------------
Total Food & Beverages............................................. 1,323,125
===============================================================================
Business Services (0.7%)
- ------------------------
250,000 Allied Waste
North America, Inc............. 7.875 1/1/09 231,875
-------------------------------------------------------------------------------
Total Business Services............................................ 231,875
===============================================================================
Chemicals (3.0 %)
- -----------------
250,000 LaRoche Industries, Inc........ 9.500 9/15/07 197,500
500,000 PCI Chemicals Canada, Inc...... 9.250 10/15/07 405,000
350,000 Royster-Clark, Inc.*........... 10.250 4/1/09 344,750
-------------------------------------------------------------------------------
Total Chemicals.................................................... 947,250
===============================================================================
Construction (5.6%)
- -------------------
250,000 Amatek Industries
Property Ltd.*................. 12.000 2/15/08 240,000
500,000 American Standard, Inc......... 7.625 2/15/10 465,000
350,000 Building One
Services Corporation*.......... 10.500 5/01/09 334,250
250,000 ISG Resources, Inc............. 10.000 4/15/08 256,250
250,000 Omega Cabinets, Ltd............ 10.500 6/15/07 251,250
250,000 Penhall International, Inc..... 12.000 8/1/06 252,500
-------------------------------------------------------------------------------
Total Construction................................................. 1,799,250
===============================================================================
Consumer Products (3.6 %)
- -------------------------
400,000 Doskocil Manufacturing
Company, Inc................... 10.125 9/15/07 204,000
500,000 Revlon Consumer
Products....................... 8.625 2/1/08 467,500
250,000 Salton, Inc.*.................. 10.750 12/15/05 258,750
250,000 Samsonite Corporation.......... 10.750 6/15/08 201,250
-------------------------------------------------------------------------------
Total Consumer Products............................................ 1,131,500
========================================== =====================================
Containers (0.8%)
- -----------------
250,000 Anchor Glass
Container Corporation.......... 11.250 4/1/05 260,559
-------------------------------------------------------------------------------
Total Containers................................................... 260,559
===============================================================================
Energy (6.3%)
- -------------
500,000 Abraxas Petroleum
Corporation.................... 11.500 11/1/04 315,000
500,000 Clark Refining &
Marketing, Inc................. 8.375 11/15/07 456,875
250,000 Crown Central
Petroleum Corporation.......... 10.875 2/1/05 217,500
250,000 KCS Energy, Inc................ 11.000 1/15/03 157,500
500,000 Northern Offshore ASA*......... 10.000 5/15/05 275,000
500,000 Statia Terminals
International N.V.............. 11.750 11/15/03 528,750
500,000 Transamerican Energy
Corporation/(1)/............... 11.500 6/15/02 58,750
--------------------------------------------------------------------------------
Total Energy....................................................... 2,009,375
================================================================================
</TABLE>
The accompanying notes to the financial statements are an
integral part of this schedule.
June 30, 1999 25
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Interest Maturity Market
Amount Obligations (96.4%) Rate Date Value
====================================================================================================
<S> <C> <C> <C> <C>
Financial (2.8%)
- -----------------
$250,000 AmeriCredit Corporation*....... 9.875% 4/15/06 $ 257,500
300,000 AMRESCO, Inc................... 10.000 3/15/04 228,000
500,000 Imperial Credit
Industries, Inc................ 9.875 1/15/07 405,000
-----------------------------------------------------------------
Total Financial...........................................890,500
=================================================================
Food Retailers (1.5%)
- ----------------------
500,000 Fleming Companies, Inc......... 10.500 12/1/04 470,000
-----------------------------------------------------------------
Total Food Retailers......................................470,000
=================================================================
Forest Products & Paper (3.9%)
- -------------------------------
250,000 Four M Corporation............. 12.000 6/1/06 192,500
250,000 Gaylord Container
Corporation.................... 9.375 6/15/07 233,750
250,000 Millar Western Forest
Products, Ltd.................. 9.875 5/15/08 240,938
600,000 Sweetheart Cup
Company, Inc................... 9.625 9/1/00 586,500
-----------------------------------------------------------------
Total Forest Products & Paper...........................1,253,688
=================================================================
Health Care (3.4%)
- -------------------
500,000 ICN Pharmaceuticals, Inc....... 9.250 8/15/05 496,250
500,000 Mariner Post-Acute
Network, Inc................... 9.500 11/1/07 95,000
500,000 Tenet Healthcare
Corporation*................... 8.000 1/15/05 486,875
-----------------------------------------------------------------
Total Health Care.......................................1,078,125
=================================================================
Leisure (6.8%)
- ---------------
250,000 Booth Creek Ski
Holdings, Inc.................. 12.500 3/15/07 220,000
500,000 HMH Properties, Inc............ 7.875 8/1/05 472,500
250,000 Harrah's Operating
Company, Inc................... 7.875 12/15/05 241,875
250,000 Livent, Inc.(1)................ 9.375 10/15/04 92,500
250,000 Mandalay Resort Group.......... 7.625 7/15/13 225,485
250,000 Regal Cinemas, Inc............. 9.500 6/1/08 233,750
500,000 Riviera Holdings
Corporation.................... 10.000 8/15/04 467,500
236,119 United Artists Theatre
Circuit, Inc................... 9.300 7/1/15 217,012
-----------------------------------------------------------------
Total Leisure...........................................2,170,622
=================================================================
Media (0.7%)
- -------------
250,000 Premier Graphics, Inc.*........ 11.500 12/1/05 240,000
-----------------------------------------------------------------
Total Media...............................................240,000
=================================================================
Media -- Broadcasting (3.1%)
- ----------------------------
250,000 Allbritton Communications
Company........................ 9.750 11/30/07 253,125
500,000 Chancellor Media
Corporation*................... 8.000 11/1/08 490,000
250,000 Susquehanna Media
Company*....................... 8.500 5/15/09 246,250
-----------------------------------------------------------------
Total Media -- Broadcasting...............................989,375
=================================================================
Media -- Cable (4.5%)
- ----------------------
500,000 CSC Holdings, Inc.............. 7.875 2/15/18 473,750
500,000 Century Communications
Corporation.................... 8.750 10/1/07 496,250
500,000 Charter Communication
Holdings, LLC*................. 8.625 4/1/09 480,000
-----------------------------------------------------------------
Total Media -- Cable....................................1,450,000
=================================================================
Metals -- Diversified (3.3%)
- ----------------------------
500,000 Algoma Steel, Inc.............. 12.375 7/15/05 490,000
350,000 Oglebay Norton
Company........................ 10.000 2/1/09 334,250
250,000 Sheffield Steel
Corporation.................... 11.500 12/1/05 230,312
-----------------------------------------------------------------
Total Metals -- Diversified.............................1,054,562
=================================================================
Manufacturing -- Auto (1.9%)
- ----------------------------
350,000 Breed Technologies, Inc.*...... 9.250 4/15/08 56,000
350,000 Federal-Mogul
Corporation.................... 7.875 7/1/10 327,410
250,000 Talon Automotive
Group, LLC..................... 9.625 5/1/08 210,000
-----------------------------------------------------------------
Total Manufacturing -- Auto...............................593,410
=================================================================
Misc. Manufacturing (10.6%)
- ---------------------------
500,000 Applied Extrusion
Technologies, Inc.............. 11.500 4/1/02 508,125
250,000 BGF Industries, Inc.*.......... 10.250 1/15/09 227,500
250,000 Delran Manufacturing........... 10.000 1/15/07 237,500
250,000 Fairfield Manufacturing
Company, Inc................... 9.625 10/15/08 245,625
</TABLE>
The accompanying notes to the financial statements are an integral part of the
schedule.
26 High Yield Bond Portfolio Schedule of Investments (Unauditied)
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Interest Maturity Market
Amount Obligations (96.4%) Rate Date Value
====================================================================================================
<S> <C> <C> <C> <C>
Misc. Manufacturing--continued
- ------------------------------
$350,000 Global Imaging Systems,
Inc.*.......................... 10.750% 2/15/07 $ 343,000
250,000 High Voltage Engineering
Corporation.................... 10.500 8/15/04 232,188
250,000 IMPAC Group, Inc............... 10.125 3/15/08 237,500
250,000 Indesco International, Inc..... 9.750 4/15/08 182,500
250,000 Key Components, LLC............ 10.500 6/1/08 234,375
400,000 Morris Material Handling....... 9.500 4/1/08 154,000
500,000 Paragon Corporate
Holdings, Inc.................. 9.625 4/1/08 290,000
250,000 Russell-Stanley Holdings,
Inc.*.......................... 10.875 2/15/09 247,500
250,000 W.R. Carpenter North
America, Inc................... 10.625 6/15/07 237,500
-----------------------------------------------------------------
Total Misc. Manufacturing...............................3,377,313
=================================================================
Pollution Control (1.2%)
- ------------------------
250,000 Envirosource, Inc.............. 9.750 6/15/03 152,500
250,000 HydroChem Industrial
Services, Inc.................. 10.375 8/1/07 225,000
-----------------------------------------------------------------
Total Pollution Control...................................377,500
=================================================================
Restaurants/Food Service (3.3%)
- -------------------------------
350,000 AmeriServe Food
Distribution, Inc.............. 8.875 10/15/06 322,000
250,000 American Restaurant
Group, Inc..................... 11.500 2/15/03 227,500
500,000 Tricon Global
Restaurants, Inc............... 7.650 5/15/08 495,129
-----------------------------------------------------------------
Total Restaurants/Food Service..........................1,044,629
=================================================================
Retail Stores (2.9%)
- --------------------
250,000 Just For Feet, Inc.*........... 11.000 5/1/09 161,250
500,000 The Pantry, Inc................ 10.250 10/15/07 503,750
250,000 Vista Eyecare, Inc............. 12.750 10/15/05 248,750
-----------------------------------------------------------------
Total Retail Stores.......................................913,750
=================================================================
Technology (3.2%)
- -----------------
250,000 Amkor Technology,
Inc.*.......................... 10.500 5/1/09 240,625
350,000 Amkor Technology, Inc.*........ 9.250 5/1/06 341,250
500,000 Viasystems Group, Inc.......... 9.750 6/1/07 437,500
-----------------------------------------------------------------
Total Technology........................................1,019,375
=================================================================
Telecommunications (9.0%)
- -------------------------
500,000 Alestra SA*.................... 12.125 5/15/06 476,875
500,000 Call-Net Enterprises, Inc...... 9.375 5/15/09 476,250
250,000 Iridium, LLC................... 11.250 7/15/05 52,500
250,000 Level 3 Communications,
Inc............................ 9.125 5/1/08 245,625
500,000 Metrocall, Inc.*............... 11.000 9/15/08 385,000
250,000 Pac-West
Telecommunications, Inc.*...... 13.500 2/1/20 248,750
250,000 Paging Network, Inc............ 10.000 10/15/08 192,500
500,000 Primus Telecommunications
Group, Inc.*................... 11.250 1/15/09 500,000
500,000 Spectrasite Holdings*.......... 0.000 4/15/09 280,000
-----------------------------------------------------------------
Total Telecommunications................................2,857,500
=================================================================
Textile (2.6%)
- --------------
250,000 Anvil Knitwear, Inc............ 10.875 3/15/07 162,500
250,000 Galey & Lord, Inc.............. 9.125 3/1/08 163,750
350,000 Ntex, Inc...................... 11.500 6/1/06 297,500
250,000 Worldtex, Inc.................. 9.625 12/15/07 212,500
-----------------------------------------------------------------
Total Textile.............................................836,250
=================================================================
Transportation (2.3%)
- ---------------------
500,000 Allied Holdings, Inc........... 8.625 10/1/07 470,000
250,000 Petro Stopping
Centers, L.P................... 10.500 2/1/07 262,500
-----------------------------------------------------------------
Total Transportation......................................732,500
=================================================================
Utilities (5.2%)
- ----------------
500,000 CMS Energy
Corporation.................... 7.500 1/15/09 465,447
500,000 Calpine Corporation............ 7.625 4/15/06 470,625
500,000 Energy Corporation of
America........................ 9.500 5/15/07 457,500
250,000 Niagara Mohawk Power
Corporation.................... 7.625 10/1/05 253,050
-----------------------------------------------------------------
Total Utilities.........................................1,646,622
=================================================================
-----------------------------------------------------------------
Total Long-Term Fixed Income Obligations
(amortized cost basis $34,787,365).....................30,698,655
=================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of the
schedule.
June 30, 1999 27
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Short-Term Interest Maturity Market
Amount Obligations (0.9%) Rate(a) Date Value
====================================================================================================
<S> <C> <C> <C> <C>
$299,000 Gillette Company....................5.650% 7/1/99 $ 299,000
-----------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $299,000)...........................299,000
=================================================================
-----------------------------------------------------------------
Total Investments (97.3%)
(amortized cost basis $35,086,365).....................30,997,655
=================================================================
-----------------------------------------------------------------
Other Assets, Less Liabilities (2.7%).....................853,462
=================================================================
-----------------------------------------------------------------
Net Assets (100.0%)...................................$31,851,117
=================================================================
</TABLE>
*144A security
(a) The interest rate shown reflects the discount rate at the date of
purchase.
(1) Security in default.
The accompanying notes to the financial statements are an integral part of this
schedule.
28 High Yield Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
AAL Variable Product Balanced Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
Investment Objective
- --------------------
The portfolio seeks capital growth and income by investing in a mix of common
stocks, bonds and money market instruments. Securities are selected consistent
with the policies of the Large Company Stock, Bond and Money Market Portfolios.
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
==============================================================================
<S> <C> <C>
Aerospace (0.8%)
----------------
2,500 BF Goodrich Company.......................... $ 106,250
32,028 Boeing Company............................... 1,415,237
4,400 General Dynamics Corporation................. 301,400
13,400 Lockheed Martin Corporation.................. 499,150
2,400 Northrop Grumman Corporation................. 159,150
11,600 Raytheon Company............................. 816,350
6,500 Rockwell International Corporation........... 394,875
4,000 TRW, Inc..................................... 219,500
5,500 Textron, Inc................................. 452,719
16,600 United Technologies Corporation.............. 1,190,013
-------------------------------------------------------------
Total Aerospace...... 5,554,644
=============================================================
Air Transportation (0.3%)
-------------------------
6,300 AMR Corporation*............................. 429,975
4,800 Delta Air Lines, Inc......................... 276,600
10,040 FDX Corporation.............................. 544,670
11,425 Southwest Airlines Company................... 355,603
2,900 US Air Group, Inc.*.......................... 126,331
-------------------------------------------------------------
Total Air Transportation.......... 1,733,179
=============================================================
Apparel (0.1%)
--------------
2,400 Fruit of the Loom, Inc.*..................... 23,400
2,200 Liz Claiborne, Inc........................... 80,300
9,600 NIKE, Inc.................................... 607,800
1,900 Reebok International, Ltd.................... 35,388
1,200 Russell Corporation.......................... 23,400
600 Springs Industries, Inc...................... 26,175
4,100 VF Corporation............................... 175,275
-------------------------------------------------------------
Total Apparel........ 971,738
=============================================================
Banking (4.9%)
--------------
6,100 AmSouth BanCorporation....................... 141,444
24,890 Associates First Capital Corporation......... 1,102,938
10,600 BB&T Corporation............................. 388,887
40,232 Banc One Corporation......................... 2,396,319
26,000 Bank of New York Company, Inc................ 953,875
59,285 BankAmerica Corporation...................... 4,346,332
10,100 BankBoston Corporation....................... 516,363
28,980 Chase Manhattan Corporation.................. 2,510,392
115,872 Citigroup, Inc............................... 5,503,920
5,400 Comerica, Inc................................ 320,963
3,800 Countrywide Credit Industries, Inc........... 162,450
9,200 Fifth Third Bancorp.......................... 612,375
33,910 First Union Corporation...................... 1,593,770
23,600 Firstar Corporation.......................... 660,800
19,412 Fleet Financial Group, Inc................... 861,408
8,600 Franklin Resources, Inc...................... 349,375
7,140 Huntington Bancshares, Inc................... 249,900
6,000 J.P. Morgan & Company, Inc................... 843,000
15,500 KeyCorp...................................... 497,938
17,800 Mellon Bank Corporation...................... 647,475
5,300 Mercantile Bancorporation, Inc............... 302,762
11,200 National City Corporation.................... 733,600
3,900 Northern Trust Corporation................... 378,300
10,300 PNC Bank Corporation......................... 593,538
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 29
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
====================================================================================
<S> <C> <C>
Banking--continued
- ------------------
4,850 Providian Financial Corporation.............. $ 453,475
7,500 Regions Financial Corporation................ 288,281
3,700 Republic New York Corporation................ 252,294
5,600 SouthTrust Corporation....................... 214,900
5,900 Summit Bancorp............................... 246,694
11,000 SunTrust Banking, Inc........................ 763,812
9,150 Synovus Financial Corporation................ 181,856
24,889 U.S. Bancorp................................. 846,226
4,700 Union Planters Corporation................... 210,031
7,000 Wachovia Corporation......................... 598,937
20,217 Washington Mutual, Inc....................... 715,176
56,260 Wells Fargo & Company........................ 2,405,115
-------------------------------------------------------------
Total Banking................................ 33,844,921
=============================================================
Brokerage (0.7%)
- ----------------
13,775 Charles Schwab Corporation................... 1,513,528
3,800 Lehman Brothers Holdings, Inc................ 236,550
12,200 Merrill Lynch & Company, Inc................. 975,238
19,795 Morgan Stanley Dean Witter & Co.............. 2,028,987
4,800 Paine Webber Group, Inc...................... 224,400
3,770 The Bear Stearns Companies, Inc.............. 176,248
-------------------------------------------------------------
Total Brokerage.............................. 5,154,951
=============================================================
Business Machines (6.4%)
- ------------------------
12,200 3Com Corporation*............................ 325,587
5,400 Apple Computer, Inc.......................... 250,088
2,000 Autodesk, Inc................................ 59,125
5,800 Cabletron Systems, Inc.*..................... 75,400
4,800 Ceridian Corporation*........................ 156,900
108,250 Cisco Systems, Inc.*......................... 6,982,125
57,700 Compaq Computers, Inc........................ 1,366,769
1,700 Data General Corporation*.................... 24,756
87,100 Dell Computer Corporation*................... 3,222,700
5,400 Gateway, Inc.*............................... 318,600
4,400 Honeywell, Inc............................... 509,850
5,000 Ikon Office Solutions, Inc................... 75,000
63,200 International Business Machines Corporation.. 8,168,600
172,800 Microsoft Corporation*....................... 15,584,400
11,500 Novell, Inc.*................................ 304,750
49,225 Oracle Systems Corporation*.................. 1,827,478
9,100 Parametric Technology Company*............... 126,263
9,400 Pitney Bowes, Inc............................ 603,950
8,300 Seagate Technology, Inc.*.................... 212,687
6,400 Silicon Graphics, Inc.*...................... 104,800
26,400 Sun Microsystems, Inc.*...................... 1,818,300
8,900 Unisys Corporation*.......................... 346,544
22,500 Xerox Corporation............................ 1,328,903
-------------------------------------------------------------
Total Business Machines...................... 43,793,575
=============================================================
Business Services (1.7%)
- ------------------------
35,200 America Online, Inc.......................... 3,889,600
21,000 Automatic Data Processing, Inc............... 924,000
3,300 Block (H.R.), Inc............................ 165,000
5,378 Browning-Ferris Industries, Inc.............. 231,254
18,375 Computer Associates International, Inc....... 1,010,625
5,500 Computer Sciences Corporation................ 380,531
12,500 Compuware Corporation........................ 397,656
2,700 Deluxe Corporation........................... 105,131
5,600 Dun & Bradstreet Corporation................. 198,450
4,400 Ecolab, Inc.................................. 191,950
15,100 First Data Corporation....................... 738,956
5,700 General Instrument Corporation*.............. 242,250
4,800 Interpublic Group of Companies, Inc.......... 415,800
11,300 Laidlaw, Inc................................. 83,338
9,480 Mckesson HBOC, Inc........................... 304,545
1,400 National Service Industries, Inc............. 50,400
5,800 Omnicom Group, Inc........................... 464,000
8,400 Paychex, Inc................................. 267,750
1,000 Shared Mediacal Systems Corporation.......... 65,250
5,500 State Street Corporation..................... 469,563
20,430 Waste Management, Inc........................ 1,098,113
-------------------------------------------------------------
Total Business Services...................... 11,694,162
=============================================================
Chemicals (1.1%)
- ----------------
7,800 Air Products and Chemicals, Inc.............. 313,950
38,600 E.I. du Pont de Nemours and Company.......... 2,636,862
2,700 Eastman Chemical Company..................... 139,725
2,000 Great Lakes Chemical Corporation............. 92,125
3,400 Hercules, Inc................................ 133,663
13,800 Minnesota Mining and Manufacturing Company... 1,199,737
21,400 Monsanto Company............................. 843,963
2,200 Nalco Chemical Company....................... 114,125
6,100 PPG Industries, Inc.......................... 360,281
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
30 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
====================================================================================
<S> <C> <C>
Chemicals--continued
- --------------------
5,400 Praxair, Inc................................. $ 264,263
7,212 Rohm and Haas Company........................ 309,214
2,864 Sealed Air Corporation*...................... 185,802
3,400 Sigma-Aldrich Corporation.................... 117,087
7,600 The Dow Chemical Company..................... 964,250
4,500 Union Carbide Corporation.................... 219,375
2,500 W.R. Grace & Company......................... 45,938
-------------------------------------------------------------
Total Chemicals.............................. 7,940,360
=============================================================
Construction (0.1%)
- -------------------
1,400 Armstrong World Industries, Inc.............. 80,937
2,000 Centex Corporation........................... 75,125
2,250 Crane Company................................ 70,734
2,500 Fluor Corporation............................ 101,250
1,600 Kaufman and Broad Home Corporation........... 39,800
11,600 Masco Corporation............................ 334,950
1,800 Owens Corning Fiberglass Corporation......... 61,875
1,400 Pulte Corporation............................ 32,288
5,800 Sherwin-Williams Company..................... 160,950
3,000 Stanley Works................................ 96,563
-------------------------------------------------------------
Total Construction........................... 1,054,472
=============================================================
Consumer Durables (0.2%)
- ------------------------
3,000 Black & Decker Corporation................... 189,375
3,100 Maytag Corporation........................... 216,031
9,526 Newell Company............................... 442,959
1,900 Tupperware Corporation....................... 48,450
2,700 Whirlpool Corporation........................ 199,800
-------------------------------------------------------------
Total Consumer Durables...................... 1,096,615
=============================================================
Containers (0.1%)
- -----------------
1,100 Ball Corporation............................. 46,475
1,700 Bemis Company, Inc........................... 67,575
4,100 Crown Cork & Seal Company, Inc............... 116,850
5,300 Owens-Illinois, Inc.*........................ 173,244
-------------------------------------------------------------
Total Containers............................. 404,144
=============================================================
Cosmetics (1.1%)
- ----------------
1,900 Alberto-Culver Company....................... 50,588
8,900 Avon Products, Inc........................... 493,950
4,100 Clorox Company............................... 437,931
10,100 Colgate-Palmolive Company.................... 997,375
37,900 Gillette Company............................. 1,553,900
3,600 International Flavors & Fragrances, Inc...... 159,750
45,500 Procter & Gamble Company..................... 4,060,875
-------------------------------------------------------------
Total Cosmetics.............................. 7,754,369
=============================================================
Credit Cards (0.2%)
- -------------------
6,900 Capital One Financial Corporation............ 384,244
5,000 Equifax, Inc................................. 178,437
27,437 MBNA Corporation............................. 840,258
-------------------------------------------------------------
Total Credit Cards........................... 1,402,939
=============================================================
Drugs & Medicine (5.9%)
- -----------------------
51,900 Abbott Laboratories.......................... 2,361,450
2,300 Allergan, Inc................................ 255,300
3,400 Alza Corporation*............................ 172,975
45,100 American Home Products Corporation........... 2,593,250
17,400 Amgen, Inc................................... 1,059,225
1,800 Baird (C.R.), Inc............................ 86,063
2,000 Bausch & Lomb, Inc........................... 153,000
9,800 Baxter International, Inc.................... 594,125
8,500 Becton, Dickinson and Company................ 255,000
3,800 Biomet, Inc.................................. 151,050
13,400 Boston Scientific Corporation*............... 588,762
68,100 Bristol-Myers Squibb Company................. 4,796,794
9,350 Cardinal Health Inc.......................... 599,569
22,050 Columbia/HCA Healthcare Corporation.......... 503,016
37,700 Eli Lilly & Company.......................... 2,700,262
10,300 Guidant Corporation.......................... 529,806
46,100 Johnson & Johnson............................ 4,517,800
2,400 Mallinckrodt, Inc............................ 87,300
20,000 Medtronic, Inc............................... 1,557,500
81,600 Merck & Company, Inc......................... 6,038,400
44,500 Pfizer, Inc.................................. 4,883,875
17,380 Phamacia & Upjohn, Inc....................... 987,401
50,300 Schering-Plough Corporation.................. 2,665,900
2,795 St. Jude Medical, Inc.*...................... 99,572
28,200 Warner-Lambert Company....................... 1,956,375
3,200 Watson Pharmaceuticals, Inc.................. 112,200
-------------------------------------------------------------
Total Drugs & Medicine....................... 40,305,970
=============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 31
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
====================================================================================
<S> <C> <C>
Electronics (3.0%)
- ------------------
2,100 Adobe Systems, Inc........................... $ 172,528
4,900 Advanced Micro Devices, Inc.*................ 88,506
12,700 Applied Materials, Inc.*..................... 938,213
1,500 EG&G, Inc.................................... 53,438
34,300 EMC Corporation*............................. 1,886,500
2,700 Harris Corporation........................... 105,806
34,800 Hewlett-Packard Company...................... 3,497,400
114,100 Intel Corporation............................ 6,788,950
4,800 LSI Logic Corporation*....................... 221,400
8,400 Micron Technology, Inc....................... 338,625
20,600 Motorola, Inc................................ 1,951,850
5,700 National Semiconductor Corporation*.......... 144,281
1,800 PE Corp-PE Biosystems Group.................. 206,550
2,500 Scientific-Atlanta, Inc...................... 90,000
8,700 Solectron Corporation........................ 580,181
1,550 Tektronix, Inc............................... 46,791
13,400 Tellabs, Inc.*............................... 905,338
13,400 Texas Instruments, Inc....................... 1,943,000
5,400 Thermo Electron Corporation*................. 108,337
1,900 Thomas & Betts Corporation................... 89,775
-------------------------------------------------------------
Total Electronics............................ 20,157,469
=============================================================
Energy & Utilities (1.6%)
- -------------------------
6,500 AES Corporation*............................. 377,812
4,600 Ameren Corporation........................... 176,525
6,500 American Electric Power Company.............. 244,156
5,400 CINergy Corporation.......................... 172,800
4,000 CMS Energy Corporation....................... 167,500
5,100 Carolina Power & Light Company............... 218,344
7,200 Central and South West Corporation........... 168,300
7,200 Coastal Corporation.......................... 288,000
2,950 Columbia Energy Group........................ 184,928
7,900 Consolidated Edison, Inc..................... 357,475
3,300 Consolidated Natural Gas Company............. 200,475
5,100 Constellation Energy Group................... 151,087
4,900 DTE Energy Company........................... 196,000
6,600 Dominion Resources, Inc...................... 285,862
12,411 Duke Energy Corporation...................... 674,848
12,000 Edison International......................... 321,000
12,100 Enron Corporation............................ 989,175
8,400 Entergy Corporation.......................... 262,500
8,100 FirstEnergy Corporation...................... 251,100
6,200 FPL Group, Inc............................... 338,675
4,300 General Public Utilities Corporation......... 181,406
3,900 New Century Energies, Inc.................... 151,369
6,400 Niagara Mohawk Holdings, Inc................. 102,800
1,600 Nicor, Inc................................... 60,900
5,200 Northern States Power Company................ 125,775
1,000 ONEOK, Inc................................... 31,750
5,100 PP&L Resources, Inc.......................... 156,825
10,100 PacifiCorp................................... 185,588
13,000 Pacific Gas & Electric Company............... 422,500
7,600 Peco Energy Company.......................... 318,250
1,200 Peoples Energy Corporation................... 45,225
7,600 Public Service Enterprise.................... 310,650
9,724 Reliant Energy, Inc.......................... 268,626
8,208 Sempra Energy................................ 185,706
3,700 Sonat, Inc................................... 122,563
23,800 Southern Company............................. 630,700
9,570 Texas Utilities Company...................... 394,763
7,400 Unicom Corporation........................... 285,363
14,600 Williams Companies, Inc...................... 621,412
-------------------------------------------------------------
Total Energy & Utilities..................... 10,628,733
=============================================================
Energy--Raw Materials (0.4%)
- ----------------------------
11,120 Baker Hughes, Inc............................ 372,520
6,067 Burlington Resources, Inc.................... 262,398
700 Eastern Enterprises.......................... 27,825
15,000 Halliburton Company.......................... 678,750
2,000 McDermott International, Inc................. 56,500
11,800 Occidental Petroleum Corporation............. 249,275
18,700 Schlumberger, Ltd............................ 1,190,956
8,532 Union Pacific Resources Group, Inc........... 139,178
-------------------------------------------------------------
Total Energy--Raw Materials.................. 2,977,402
==============================================================
Food & Agriculture (1.1%)
- -------------------------
20,185 Archer-Daniels-Midland Company............... 311,606
9,700 Bestfoods.................................... 480,150
15,200 Campbell Soup Company........................ 704,900
16,700 ConAgra, Inc................................. 444,637
5,300 General Mills, Inc........................... 425,988
12,350 H.J. Heinz Company........................... 619,044
4,900 Hershey Foods Corporation.................... 290,938
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
32 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
==============================================================================
<S> <C> <C>
Food & Agriculture-continued
- ----------------------------
13,800 Kellogg Company............................ $ 455,400
11,100 Nabisco Group Holdings Corporation......... 217,144
8,100 Pioneer Hi-Bred International, Inc......... 315,394
4,700 Quaker Oats Company........................ 311,972
11,200 Ralston Purina Corporation................. 340,900
31,200 Sara Lee Corporation....................... 707,850
4,100 Supervalu, Inc............................. 105,319
11,300 Sysco Corporation.......................... 336,881
19,582 Unilever N.V............................... 1,365,844
4,000 Wrigley (Wm) Jr. Company................... 360,000
-----------------------------------------------------------
Total Food & Agriculture................... 7,793,967
===========================================================
Food & Beverage (1.1%)
- ----------------------
84,400 Coca-Cola Company.......................... 5,275,000
14,500 Coca-Cola Enterprises, Inc................. 445,875
50,200 PepsiCo, Inc............................... 1,942,113
-----------------------------------------------------------
Total Food & Beverage...................... 7,662,988
===========================================================
Gold (0.1%)
- -----------
12,700 Barrick Gold Corporation................... 246,062
7,800 Battle Mountain Gold Company............... 19,013
8,900 Homestake Mining Company................... 72,869
5,717 Newmont Mining Corporation................. 113,625
11,100 Placer Dome, Inc........................... 131,119
-----------------------------------------------------------
Total Gold................................. 582,688
===========================================================
Health Care (0.2%)
- ------------------
3,700 HCR Manor Health Care, Inc.*............... 89,494
14,400 HEALTHSOUTH Corporation*................... 215,100
5,700 Humana, Inc.*.............................. 73,744
10,900 IMS Health Inc............................. 340,625
10,600 Tenet Healthcare Corporation*.............. 196,762
6,400 United Healthcare Corporation.............. 400,800
2,400 Wellpoint Health Care Networks, Inc........ 203,700
-----------------------------------------------------------
Total Health Care.......................... 1,520,225
===========================================================
Insurance (1.9%)
- ----------------
9,000 AFLAC Inc.................................. 430,875
4,914 Aetna Life & Casualty Company.............. 439,496
27,996 Allstate Corporation....................... 1,004,356
8,708 American General Corporation............... 656,365
42,068 American International Group, Inc.......... 4,924,585
8,650 Aon Corporation............................ 356,813
5,600 Chubb Corporation.......................... 389,200
7,100 Cigna Corporation.......................... 631,900
5,700 Cincinnati Financial Corporation........... 214,106
10,899 Conseco, Inc............................... 331,738
8,000 ITT Hartford Group, Inc.................... 466,500
3,700 Jefferson-Pilot Corporation................ 244,894
7,000 Lincoln National Corporation............... 366,188
3,500 MBIA, Inc.................................. 226,625
3,700 MGIC Investment Corporation................ 179,913
8,850 Marsh & McLennan Companies, Inc............ 668,175
2,500 Progressive Corporation.................... 362,500
4,600 Provident Companies, Inc................... 184,000
4,600 Safeco Corporation......................... 202,975
8,022 St. Paul Companies, Inc.................... 255,200
4,800 Torchmark Corporation...................... 163,800
4,300 Transamerica Corporation................... 322,500
4,800 Unum Corporation........................... 262,800
-----------------------------------------------------------
Total Insurance............................ 13,285,504
===========================================================
Liquor (0.3%)
- -------------
1,300 Adolph Coors Company....................... 64,350
16,400 Anheuser-Busch Companies, Inc.............. 1,163,375
2,400 Brown-Foreman Corporation.................. 156,450
13,600 Seagram Company, Ltd....................... 685,100
-----------------------------------------------------------
Total Liquor............................... 2,069,275
===========================================================
Media (1.4%)
- ------------
24,100 CBS Corporation............................ 1,046,844
11,100 Clear Channel Communications, Inc.*........ 765,206
25,300 Comcast Corporation, Class A............... 972,469
3,200 Dow Jones & Company, Inc................... 169,800
9,700 Gannett Company, Inc....................... 692,338
2,400 King World Products, Inc................... 83,550
2,600 Knight Ridder, Inc......................... 142,837
6,700 McGraw-Hill, Inc........................... 361,381
1,700 Meredith Corporation....................... 58,863
6,200 New York Times Company..................... 228,238
4,500 R. R. Donnelley & Sons Company............. 166,781
42,100 Time Warner, Inc........................... 3,094,350
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 33
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
==============================================================================
<S> <C> <C>
Media--continued
- ----------------
2,500 Times Mirror Company....................... $ 148,125
4,100 Tribune Company............................ 357,212
23,800 Viacom, Inc.*.............................. 1,047,200
-----------------------------------------------------------
Total Media................................ 9,335,194
===========================================================
Miscellaneous Finance (1.0%)
- ----------------------------
15,500 American Express Company................... 2,016,937
23,200 Federal Home Loan Mortgage Corporation..... 1,345,600
35,500 Federal National Mortgage Association...... 2,427,313
2,000 Golden West Financial Corporation.......... 196,000
16,499 Household International Corporation........ 781,640
5,600 SLM Holding Corporation.................... 256,550
-----------------------------------------------------------
Total Miscellaneous Finance................ 7,024,040
===========================================================
Motor Vehicles (0.8%)
- ---------------------
1,400 Cummins Engine Company, Inc................ 79,975
5,679 Dana Corporation........................... 261,589
19,276 Delphi Automotive Systems Corporation...... 357,811
2,500 Eaton Corporation.......................... 230,000
1,100 Fleetwood Enterprises, Inc................. 29,081
41,400 Ford Motor Company......................... 2,336,512
22,500 General Motors Corporation................. 1,485,000
6,100 Genuine Parts Company...................... 213,500
3,300 ITT Industries, Inc........................ 125,813
2,200 Navistar International Corporation*........ 110,000
2,600 PACCAR, Inc................................ 138,775
-----------------------------------------------------------
Total Motor Vehicles....................... 5,368,056
===========================================================
Non-Durables & Entertainment (0.1%)
- -----------------------------------
2,300 American Greetings Corporation, Class A.... 69,288
2,400 Harcourt General, Inc...................... 123,750
6,700 Hasbro, Inc................................ 187,181
1,200 Jostens, Inc............................... 25,275
14,225 Mattel, Inc................................ 376,073
9,300 Service Corporation International.......... 179,025
-----------------------------------------------------------
Total Non-Durables &
Entertainment.............................. 960,592
===========================================================
Non-Ferrous Metals (0.2%)
- -------------------------
7,700 Alcan Aluminium, Ltd....................... 245,919
12,600 Alcoa Inc.................................. 779,625
1,300 Asarco, Inc................................ 24,456
3,100 Cyprus Minerals Company.................... 47,081
4,550 Engelhard Corporation...................... 102,944
5,600 Freeport-McMoran Copper & Gold, Class B.... 100,450
6,100 Inco, Ltd.................................. 109,800
2,000 Phelps Dodge Corporation................... 123,875
2,300 Reynolds Metals Company.................... 135,700
-----------------------------------------------------------
Total Non-Ferrous Metals................... 1,669,850
===========================================================
Oil--Domestic (0.4%)
- --------------------
3,100 Amerada Hess Corporation................... 184,450
4,300 Anadarko Petroleum Corporation............. 158,294
3,700 Apache Corporation......................... 144,300
2,500 Ashland Oil, Inc........................... 100,312
11,200 Atlantic Richfield Company................. 935,900
1,600 Helmerich & Payne, Inc..................... 38,100
2,880 Kerr-McGee Corporation..................... 144,540
8,700 Phillips Petroleum Company................. 437,719
2,800 Rowan Companies, Inc.*..................... 51,625
3,200 Sunoco, Inc................................ 96,600
10,500 USX-Marathon Group, Inc.................... 341,906
8,200 Unocal Corporation......................... 324,925
-----------------------------------------------------------
Total Oil-Domestic......................... 2,958,671
===========================================================
Oil--International (2.5%)
- -------------------------
22,400 Chevron Corporation........................ 2,132,200
83,300 Exxon Corporation.......................... 6,424,513
26,700 Mobil Corporation.......................... 2,643,300
73,500 Royal Dutch Petroleum Company.............. 4,428,375
18,300 Texaco, Inc................................ 1,143,750
-----------------------------------------------------------
Total Oil-International.................... 16,772,138
===========================================================
Optical & Photo (0.2%)
- ----------------------
8,400 Corning, Inc............................... 589,050
11,100 Eastman Kodak Company...................... 752,025
1,500 Polaroid Corporation....................... 41,438
-----------------------------------------------------------
Total Optical & Photo...................... 1,382,513
===========================================================
Paper & Forest Products (0.6%)
- ------------------------------
1,900 Boise Cascade Corporation.................. 81,700
3,200 Champion International Corporation......... 153,200
7,500 Fort James Corporation..................... 284,063
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
34 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
==============================================================================
<S> <C> <C>
Paper & Forest Products--continued
- ---------------------------------
6,000 Georgia-Pacific Corporation................ $ 284,250
14,017 International Paper Company................ 707,858
18,580 Kimberly-Clark Corporation................. 1,059,060
3,700 Louisiana-Pacific Corporation.............. 87,875
3,400 Mead Corporation........................... 141,950
1,000 Potlatch Corporation....................... 43,938
2,000 Temple-Inland, Inc......................... 136,500
3,400 Westvaco Corporation....................... 98,600
6,900 Weyerhaeuser Company....................... 474,375
3,700 Willamette Industries, Inc................. 170,431
-----------------------------------------------------------
Total Paper & Forest Products.............. 3,723,800
===========================================================
Producers Goods (3.2%)
- ----------------------
19,100 Allied Signal, Inc......................... 1,203,300
4,000 Avery Dennison Corporation................. 241,500
900 Briggs & Stratton Corporation.............. 51,975
2,500 Case Corporation........................... 120,312
12,300 Caterpillar, Inc........................... 738,000
3,300 Cooper Industries, Inc..................... 171,600
8,100 Deere & Company............................ 320,962
7,600 Dover Corporation.......................... 266,000
15,000 Emerson Electric Company................... 943,125
1,200 FMC Corporation*........................... 81,975
1,300 Foster Wheeler Corporation................. 18,363
112,200 General Electric Company................... 12,678,600
8,600 Illinois Tool Works, Inc................... 705,200
5,700 Ingersoll-Rand Company..................... 368,362
3,000 Johnson Controls, Inc...................... 207,937
3,000 KLA Instruments Corporation*............... 194,625
1,300 Milacron, Inc.............................. 24,050
1,500 Millipore Corporation...................... 60,844
305 NACCO Industries, Inc...................... 22,418
4,200 Pall Corporation........................... 93,188
3,700 Parker Hannifin Corporation................ 169,275
2,600 Raychem Corporation........................ 96,200
2,200 Snap-On, Inc............................... 79,613
5,800 Tenneco, Inc............................... 138,475
2,100 Timken Company............................. 40,950
28,014 Tyco International, Ltd.................... 2,654,326
3,200 W.W. Grainger, Inc......................... 172,200
-----------------------------------------------------------
Total Producers Goods...................... 21,863,375
===========================================================
Railroad & Shipping (0.3%)
- --------------------------
15,992 Burlington Northern, Inc................... $ 495,752
7,400 CSX Corporation............................ 335,313
3,700 Kansas City Southern Industries, Inc....... 236,106
12,900 Norfolk Southern Corporation............... 388,613
8,500 Union Pacific Corporation.................. 495,656
-----------------------------------------------------------
Total Railroad & Shipping.................. 1,951,440
===========================================================
Restaurants/Food Service (0.4%)
- -------------------------------
4,700 Darden Restaurants, Inc.................... 102,519
46,300 McDonald's Corporation..................... 1,912,769
5,130 Tricon Global Restaurants, Inc.*........... 277,661
4,200 Wendy's International, Inc................. 118,912
-----------------------------------------------------------
Total Restaurants/Food Service............. 2,411,861
===========================================================
Retail Stores (3.6%)
- --------------------
14,322 Albertson's, Inc........................... 738,478
5,100 Autozone, Inc.*............................ 153,638
13,300 CVS Corporation............................ 679,962
27,560 Cendant Corporation*....................... 564,980
3,500 Circuit City Stores, Inc................... 325,500
3,700 Consolidated Stores Corporation*........... 99,900
7,500 Costco Companies, Inc.*.................... 600,469
15,100 Dayton Hudson Corporation.................. 981,500
3,600 Dillard's, Inc............................. 126,450
7,518 Dollar General Corporation................. 218,022
7,100 Federated Department Stores, Inc.*......... 375,856
1,300 Great Atlantic & Pacific Tea Company, Inc.. 43,956
50,500 Home Depot, Inc............................ 3,254,094
9,000 J.C. Penney Company, Inc................... 437,062
16,800 Kmart Corporation.......................... 276,150
5,500 Kohl's Corporation......................... 424,531
28,000 Kroger Corporation*........................ 782,250
1,300 Long's Drug Stores, Inc.................... 44,931
12,700 Lowe's Companies, Inc...................... 719,931
11,900 May Department Stores Company.............. 486,413
4,800 Nordstrom, Inc............................. 160,800
1,751 Pep Boys-Manny, Moe, & Jack................ 37,865
8,800 Rite Aid Corporation....................... 216,700
16,600 Safeway, Inc.*............................. 821,700
13,100 Sears, Roebuck and Company................. 583,769
15,700 Staples, Inc.*............................. 485,719
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 35
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (56.0%) Market Value
==============================================================================
<S> <C> <C>
Retail Stores-continued
- -----------------------
11,000 TJX Companies, Inc......................... $ 366,438
6,800 Tandy Corporation.......................... 332,350
29,400 The Gap, Inc............................... 1,481,025
7,181 The Limited, Inc........................... 325,838
8,500 Toys "R" Us, Inc.*......................... 175,844
152,200 Wal-Mart Stores, Inc....................... 7,343,650
34,100 Walgreen Company........................... 1,001,687
5,000 Winn-Dixie Stores, Inc..................... 184,688
-----------------------------------------------------------
Total Retail Stores........................ 24,852,146
===========================================================
Steel (0.1%)
- ------------
6,662 Allegheny Teledyne, Inc.................... 150,728
4,400 Bethlehem Steel Corporation*............... 33,825
2,900 Nucor Corporation.......................... 137,569
3,000 USX-US Steel Group, Inc.................... 81,000
3,100 Worthington Industries, Inc................ 50,956
-----------------------------------------------------------
Total Steel................................ 454,078
===========================================================
Technology (0.2%)
- -----------------
8,000 BMC Software, Inc.*........................ 432,000
16,900 Electronic Data Systems Corporation........ 955,906
7,900 Peoplesoft, Inc.*.......................... 136,275
-----------------------------------------------------------
Total Technology........................... 1,524,181
===========================================================
Telephone (6.3%)
- ----------------
9,500 ALLTEL Corporation......................... 679,250
107,713 AT&T Corporation........................... 6,011,732
37,700 Ameritech Corporation...................... 2,770,950
2,800 Andrew Corporation*........................ 53,025
53,180 Bell Atlantic Corporation.................. 3,476,643
66,700 BellSouth Corporation...................... 3,126,562
4,650 CenturyTel, Inc............................ 184,838
5,900 Frontier Corporation....................... 348,100
33,100 GTE Corporation............................ 2,507,325
102,875 Lucent Technologies, Inc................... 6,937,633
62,814 MCI Worldcom Inc........................... 5,417,708
20,800 Mediaone Group, Inc.*...................... 1,547,000
9,800 Nextel Communication, Inc.*................ 491,837
22,740 Nortel Networks Corporation................ 1,974,116
66,922 SBC Communications, Inc.................... 3,881,476
30,500 Sprint Corporation......................... 1,610,781
15,050 Sprint PCS Group*.......................... 859,731
17,226 U S West, Inc.............................. 1,012,027
-----------------------------------------------------------
Total Telephone............................ 42,890,734
===========================================================
Tires & Rubber (0.1%)
- ---------------------
2,500 Cooper Tire & Rubber Company............... 59,062
4,600 Danaher Corporation........................ 267,375
5,400 Goodyear Tire & Rubber Company............. 317,588
-----------------------------------------------------------
Total Tires & Rubber....................... 644,025
===========================================================
Tobacco (0.6%)
- --------------
5,800 Fortune Brands, Inc........................ 239,975
3,900 Loews Corporation.......................... 308,587
83,300 Phillip Morris Companies, Inc.............. 3,347,619
6,300 UST, Inc................................... 184,275
-----------------------------------------------------------
Total Tobacco.............................. 4,080,456
===========================================================
Travel & Recreation (0.6%)
- --------------------------
3,100 Brunswick Corporation...................... 86,412
20,900 Carnival Corporation....................... 1,013,650
4,300 Harrah's Entertainment*.................... 94,600
8,900 Hilton Hotels Corporation.................. 126,269
8,300 Marriott International, Inc................ 310,213
6,700 Mirage Resorts, Inc.*...................... 112,225
70,287 Walt Disney Company........................ 2,165,718
-----------------------------------------------------------
Total Travel & Recreation.................. 3,909,087
===========================================================
Trucking & Freight (0.1%)
- -------------------------
2,400 Ryder System, Inc.......................... 62,400
-----------------------------------------------------------
Total Trucking & Freight................... 62,400
===========================================================
Total Common Stocks
(cost basis $264,144,196).................. 383,222,927
===========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
36 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
<S> <C> <C> <C> <C>
U.S. Government Obligations (12.6%)
- -----------------------------------
$1,500,000 U.S. Treasury Notes........................ 5.875% 6/30/00 $1,507,968
2,000,000 U.S. Treasury Notes........................ 6.125 7/31/00 2,015,000
1,375,000 U.S. Treasury Notes........................ 5.375 7/31/00 1,374,570
1,950,000 U.S. Treasury Notes........................ 6.000 8/15/00 1,962,187
2,200,000 U.S. Treasury Notes........................ 6.125 9/30/00 2,217,186
1,775,000 U.S. Treasury Notes........................ 5.750 10/31/00 1,781,656
1,175,000 U.S. Treasury Notes........................ 8.500 11/15/00 1,221,632
2,500,000 U.S. Treasury Notes........................ 5.500 12/31/00 2,500,780
2,275,000 U.S. Treasury Notes........................ 5.250 1/31/01 2,267,179
2,200,000 U.S. Treasury Notes........................ 7.750 2/15/01 2,275,625
2,000,000 U.S. Treasury Notes........................ 6.375 3/31/01 2,028,124
1,325,000 U.S. Treasury Notes........................ 6.250 4/30/01 1,341,148
1,500,000 U.S. Treasury Notes........................ 8.000 5/15/01 1,564,688
2,000,000 U.S. Treasury Notes........................ 6.625 6/30/01 2,040,624
1,500,000 U.S. Treasury Notes........................ 6.625 7/31/01 1,531,405
1,500,000 U.S. Treasury Notes........................ 7.875 8/15/01 1,568,437
2,005,000 U.S. Treasury Notes........................ 7.500 11/15/01 2,088,332
1,500,000 U.S. Treasury Notes........................ 6.125 12/31/01 1,517,813
1,225,000 U.S. Treasury Notes........................ 6.250 1/31/02 1,242,992
1,125,000 U.S. Treasury Notes........................ 6.625 4/30/02 1,153,125
1,225,000 U.S. Treasury Notes........................ 7.500 5/15/02 1,284,335
2,000,000 U.S. Treasury Notes........................ 6.500 5/31/02 2,045,000
1,500,000 U.S. Treasury Notes........................ 5.750 11/30/02 1,501,875
1,500,000 U.S. Treasury Notes........................ 10.750 2/15/03 1,740,000
350,000 U.S. Treasury Notes........................ 10.750 5/15/03 409,281
1,500,000 U.S. Treasury Notes........................ 5.750 8/15/03 1,500,000
1,200,000 U.S. Treasury Notes........................ 11.875 11/15/03 1,475,250
2,400,000 U.S. Treasury Notes........................ 5.875 2/15/04 2,412,749
2,125,000 U.S. Treasury Notes........................ 7.250 5/15/04 2,254,491
1,400,000 U.S. Treasury Notes........................ 7.500 2/15/05 1,507,625
650,000 U.S. Treasury Notes........................ 5.875 11/15/05 649,594
1,100,000 U.S. Treasury Notes........................ 9.375 2/15/06 1,305,906
1,375,000 U.S. Treasury Notes........................ 7.000 7/15/06 1,456,641
875,000 U.S. Treasury Notes........................ 6.500 10/15/06 902,891
1,200,000 U.S. Treasury Notes........................ 6.125 8/15/07 1,213,124
2,150,000 U.S. Treasury Notes........................ 5.500 2/15/08 2,090,875
2,400,000 U.S. Treasury Notes........................ 4.750 11/15/08 2,202,749
200,000 U.S. Treasury Bonds........................ 10.375 11/15/12 254,562
500,000 U.S. Treasury Bonds........................ 9.875 11/15/15 680,938
1,500,000 U.S. Treasury Bonds........................ 8.750 5/15/17 1,887,655
1,925,000 U.S. Treasury Bonds........................ 8.875 2/15/19 2,474,226
2,350,000 U.S. Treasury Bonds........................ 8.125 8/15/19 2,831,750
1,225,000 U.S. Treasury Bonds........................ 8.500% 2/15/20 $1,532,016
1,200,000 U.S. Treasury Bonds........................ 7.875 2/15/21 1,421,250
700,000 U.S. Treasury Bonds........................ 8.125 8/15/21 851,593
300,000 U.S. Treasury Bonds........................ 8.000 11/15/21 360,938
400,000 U.S. Treasury Bonds........................ 7.250 8/15/22 446,875
250,000 U.S. Treasury Bonds........................ 7.625 11/15/22 290,781
625,000 U.S. Treasury Bonds........................ 7.125 2/15/23 690,429
1,500,000 U.S. Treasury Bonds........................ 6.250 8/15/23 1,501,405
1,100,000 U.S. Treasury Bonds........................ 7.500 11/15/24 1,273,250
1,500,000 U.S. Treasury Bonds........................ 7.625 2/15/25 1,762,031
1,500,000 U.S. Treasury Bonds........................ 6.875 8/15/25 1,619,530
1,500,000 U.S. Treasury Bonds........................ 6.000 2/15/26 1,458,750
1,500,000 U.S. Treasury Bonds........................ 6.750 8/15/26 1,600,312
2,075,000 U.S. Treasury Bonds........................ 6.125 11/15/27 2,055,547
--------------------------------------------------------------------------------
Total U.S. Government Obligations.......... 86,146,695
================================================================================
U.S. Government Agency Obligations (15.3%)
- ------------------------------------------
550,000 Federal Home Loan Bank
Notes Debentures........................... 7.260 9/6/01 565,306
1,725,000 Federal Home Loan Bank
Notes Debentures........................... 6.220 3/24/03 1,732,290
500,000 Federal Home Loan Bank
Notes Debentures........................... 5.865 6/2/03 495,596
2,020,000 Federal Home Loan Bank
Notes Debentures........................... 6.625 8/27/07 2,037,259
1,330,000 Federal Home Loan
Mortgage Corporation
15-Yr. Pass Through........................ 5.990 12/1/03 1,319,364
98,933 Federal Home Loan
Mortgage Corporation
15-Yr. Pass Through........................ 7.000 11/1/10 99,469
398,635 Federal Home Loan
Mortgage Corporation
15-Yr. Pass Through........................ 6.500 11/1/12 393,819
271,422 Federal Home Loan
Mortgage Corporation
30-Yr. Pass Through........................ 8.000 6/1/12 279,939
263,126 Federal Home Loan
Mortgage Corporation
30-Yr. Pass Through........................ 7.500 4/1/27 266,463
359,069 Federal Home Loan
Mortgage Corporation
30-Yr. Pass Through........................ 7.000 5/1/27 356,099
611,596 Federal Home Loan
Mortgage Corporation
30-Yr. Pass Through........................ 8.000 6/1/27 628,078
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 37
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
===================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$152,238 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.500% 4/1/09 $150,911
83,426 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...7.500 8/1/10 84,850
424,769 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.000 5/1/12 412,093
306,106 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...7.000 8/1/12 307,759
729,586 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.500 8/1/13 720,604
989,718 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.000 2/1/14 956,848
995,503 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...5.500 4/1/14 943,239
989,746 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.000 4/1/14 957,123
1,000,000 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...6.500 6/1/14 987,369
921,144 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 2/1/11 926,136
155,507 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 4/1/24 151,641
810,353 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...9.000 11/1/24 861,655
55,852 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...9.000 4/1/25 59,384
140,714 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 9/1/25 139,606
72,885 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.500 9/1/25 76,176
180,879 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 11/1/25 183,242
93,198 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.000 1/1/26 95,776
164,124 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 5/1/26 162,785
212,323 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.000 7/1/26 200,978
75,246 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 7/1/26 76,219
136,573 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 8/1/26 138,339
180,469 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 11/1/26 175,317
84,745 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.000 11/1/26 87,048
124,118 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 1/1/27 125,723
409,261 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 2/1/27 396,398
337,170 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 2/1/27 334,381
197,997 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.000 3/1/27 203,378
219,504 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.500 7/1/27 229,277
337,786 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 9/1/27 334,992
244,568 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...8.000 10/1/27 251,159
303,086 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 11/1/27 306,929
446,799 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 12/1/27 432,755
372,105 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 1/15/28 376,823
430,835 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 3/1/28 427,143
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
38 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
===================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$966,673 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.000 5/1/28 $911,475
477,889 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.500 5/1/28 483,948
967,500 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 6/1/28 936,713
801,451 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 7/1/28 794,582
798,993 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 10/1/28 792,145
993,823 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 10/15/28 962,199
989,434 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 1/1/29 957,949
1,004,811 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 1/1/29 972,837
994,125 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.000 3/1/29 936,872
990,178 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 3/1/29 958,670
999,116 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.000 5/1/29 941,576
999,282 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...7.000 5/1/29 990,538
1,000,000 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.000 6/15/29 941,875
2,000,000 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...6.500 7/14/29 1,934,374
14,193 Federal Home Loan
Mortgage Corporation
Gold 5-Yr. Balloon.........5.500 12/1/99 13,762
43,997 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon.........7.000 7/1/02 44,493
969,389 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon.........6.000 4/1/06 946,453
765,000 Federal Home Loan
Mortgage Corporation
Gold REMIC Trust...........7.750 11/7/01 795,520
250,000 Federal National
Mortgage Association
10-Yr. Pass Through........6.700 11/10/05 248,552
900,000 Federal National
Mortgage Association
15-Yr. Pass Through........5.800 2/22/06 861,184
29,043 Federal National
Mortgage Association
15-Yr. Pass Through........9.000 4/1/10 30,496
40,894 Federal National
Mortgage Association
15-Yr. Pass Through........9.000 4/1/10 42,940
139,455 Federal National
Mortgage Association
15-Yr. Pass Through........6.000 2/1/11 135,023
143,096 Federal National
Mortgage Association
15-Yr. Pass Through........8.000 5/1/11 147,547
164,864 Federal National
Mortgage Association
15-Yr. Pass Through........7.000 6/1/11 165,620
118,932 Federal National
Mortgage Association
15-Yr. Pass Through........7.500 6/1/11 120,894
143,261 Federal National
Mortgage Association
15-Yr. Pass Through........6.500 7/1/11 141,381
947,362 Federal National
Mortgage Association
15-Yr. Pass Through........6.500 5/1/12 934,752
355,012 Federal National
Mortgage Association
15-Yr. Pass Through........6.500 7/1/12 350,286
760,696 Federal National
Mortgage Association
15-yr. Pass Through........7.000 10/1/12 764,202
387,345 Federal National
Mortgage Association
15-Yr. Pass Through........7.000 12/1/12 389,130
930,547 Federal National
Mortgage Association
15-Yr. Pass Through........6.000 3/1/13 899,010
929,094 Federal National
Mortgage Association
15-Yr. Pass Through........6.500 6/1/13 916,569
968,486 Federal National
Mortgage Association
15-Yr. Pass Through........5.500 12/1/13 917,136
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 39
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
===================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$960,744 Federal National
Mortgage Association
15-Yr. Pass Through........6.000% 12/1/13 $928,760
93,051 Federal National
Mortgage Association
30-Yr. Pass Through.......10.500 8/1/20 101,563
124,581 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 10/1/24 126,206
57,393 Federal National
Mortgage Association
30-Yr. Pass Through........9.500 4/1/25 61,266
133,783 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 9/1/25 135,506
93,575 Federal National
Mortgage Association
30-Yr. Pass Through........8.500 11/1/25 97,739
129,248 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 1/1/26 128,159
112,928 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 1/1/26 115,992
174,292 Federal National
Mortgage Association
30-Yr. Pass Through........6.500 2/1/26 169,277
184,762 Federal National
Mortgage Association
30-Yr. Pass Through........6.500 3/1/26 179,446
136,399 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 3/1/26 135,200
226,722 Federal National
Mortgage Association
30-Yr. Pass Through........6.000 5/1/26 214,348
58,586 Federal National
Mortgage Association
30-Yr. Pass Through........8.500 5/1/26 61,187
123,174 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 7/1/26 124,710
829,884 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 8/1/26 840,232
85,686 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 8/1/26 87,990
102,824 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 9/1/26 104,106
149,459 Federal National
Mortgage Association
30-Yr. Pass Through........9.000 9/1/26 158,707
164,212 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 11/1/26 162,769
101,962 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 11/1/26 104,703
86,262 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 12/1/26 87,338
265,427 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 1/1/27 263,093
111,474 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 2/1/27 112,864
319,646 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 3/1/27 316,836
197,536 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 5/1/27 199,942
391,567 Federal National
Mortgage Association
30-Yr. Pass Through........6.500 7/1/27 379,213
380,458 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 7/1/27 377,052
112,237 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 7/1/27 115,242
571,232 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 8/1/27 578,189
1,000,100 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 9/1/27 1,026,872
329,197 Federal National
Mortgage Association
30-Yr. Pass Through........7.000 10/1/27 326,251
389,085 Federal National
Mortgage Association
30-Yr. Pass Through........7.500 12/1/27 393,824
642,327 Federal National
Mortgage Association
30-Yr. Pass Through........8.000 12/1/27 659,522
934,526 Federal National
Mortgage Association
30-Yr. Pass Through........6.500 2/1/28 905,041
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
40 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
=====================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations-continued
- --------------------------------------------
$702,798 Federal National
Mortgage Association
30-Yr. Pass Through... 7.000% 2/1/28 $ 696,508
916,458 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 3/1/28 887,048
1,500,000 Federal National
Mortgage Association
30-Yr. Pass Through... 5.625 4/17/28 1,295,912
904,708 Federal National
Mortgage Association
30-Yr. Pass Through... 6.000 7/1/28 851,899
832,057 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 7/1/28 805,355
996,722 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 8/1/28 964,736
963,226 Federal National
Mortgage Association
30-Yr. Pass Through... 7.000 8/1/28 954,026
977,955 Federal National
Mortgage Association
30-Yr Pass Through... 6.500 11/1/28 946,571
881,602 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 11/1/28 853,310
733,221 Federal National
Mortgage Association
30-Yr. Pass Through... 7.000 11/1/28 726,218
156,804 Federal National
Mortgage Association
30-Yr. Pass Through... 7.000 11/1/28 155,307
981,257 Federal National
Mortgage Association
30-Yr. Pass Through... 6.000 12/1/28 923,980
995,554 Federal National
Mortgage Association
30-Yr. Pass Through... 7.000 3/1/29 986,046
1,067,118 Federal National
Mortgage Association
30-Yr. Pass Through... 7.500 3/1/29 1,080,114
990,591 Federal National
Mortgage Association
30-Yr. Pass Through... 6.000 4/1/29 932,303
998,948 Federal National
Mortgage Association
30-Yr. Pass Through... 6.000 4/1/29 940,169
1,000,000 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 6/1/29 967,229
1,000,000 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 7/1/29 967,229
1,000,000 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 7/14/29 966,561
1,700,000 Federal National
Mortgage Corporation
Notes................. 8.250 12/18/00 1,758,670
1,500,000 Federal National
Mortgage Association
5-Yr. Pass Through.... 6.800 1/10/03 1,534,825
151,454 Federal National
Mortgage Association
7-Yr. Balloon......... 6.500 10/1/03 151,799
282,515 Federal National
Mortgage Association
7-Yr. Balloon......... 6.000 12/1/03 278,879
1,750,000 Federal National
Mortgage Association
Medium Term Note...... 5.125 2/13/04 1,676,806
232,846 Federal National
Mortgage Association
7-Yr. Balloon......... 7.000 6/1/04 234,455
2,000,000 Federal National
Mortgage Association
Medium Term Note...... 7.120 7/3/06 2,051,438
1,000,000 Federal National
Mortgage Association
Conventional.......... 6.000 6/15/14 965,311
990,654 Federal National
Mortgage Association
30-Yr. Pass Through... 6.500 10/1/28 958,863
1,000,000 Federal National
Mortgage Association
Conventional.......... 7.000 6/15/29 989,375
90,068 Government National
Mortgage Association
15-Yr. Pass Through... 6.500 5/15/09 89,791
182,614 Government National
Mortgage Association
15-Yr. Pass Through... 6.000 4/15/11 177,827
178,370 Government National
Mortgage Association
15-Yr. Pass Through... 6.500 6/15/11 177,260
135,206 Government National
Mortgage Association
15-Yr. Pass Through... 7.500 7/15/11 138,805
341,513 Government National
Mortgage Association
15-Yr. Pass Through... 7.000 4/15/12 344,952
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
=====================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$31,580 Government National
Mortgage Association
30-Yr. Pass Through--------9.500% 12/15/24 $34,039
276,161 Government National
Mortgage Association
30-Yr. Pass Through........9.000 3/15/25 293,258
75,906 Government National
Mortgage Association
30-Yr. Pass Through........8.000 6/1/25 78,064
127,432 Government National
Mortgage Association
30-Yr. Pass Through........7.500 8/15/25 129,077
381,641 Government National
Mortgage Association
30-Yr. Pass Through........7.000 1/15/26 377,305
177,446 Government National
Mortgage Association
30-Yr. Pass Through........7.000 1/15/26 175,430
194,206 Government National
Mortgage Association
30-Yr. Pass Through........6.500 3/15/26 188,022
388,335 Government National
Mortgage Association
30-Yr. Pass Through........7.000 4/15/26 383,923
99,400 Government National
Mortgage Association
30-Yr. Pass Through........7.500 4/15/26 100,650
66,585 Government National
Mortgage Association
30-Yr. Pass Through........8.000 4/15/26 68,468
231,223 Government National
Mortgage Association
30-Yr. Pass Through........6.000 5/15/26 217,830
155,089 Government National
Mortgage Association
30-Yr. Pass Through........7.000 5/15/26 153,327
160,325 Government National
Mortgage Association
30-Yr. Pass Through........7.500 5/15/26 162,341
782,884 Government National
Mortgage Association
30-Yr. Pass Through........7.000 6/15/26 773,990
142,690 Government National
Mortgage Association
30-Yr. Pass Through........8.500 6/15/26 149,524
96,171 Government National
Mortgage Association
30-Yr. Pass Through........8.500 7/15/26 100,777
64,354 Government National
Mortgage Association
30-Yr. Pass Through........9.000 8/15/26 68,305
138,482 Government National
Mortgage Association
30-Yr. Pass Through........7.500 10/15/26 140,224
228,750 Government National
Mortgage Association
30-Yr. Pass Through........7.500 10/15/26 231,627
236,906 Government National
Mortgage Association
30-Yr. Pass Through........8.000 11/15/26 243,605
52,585 Government National
Mortgage Association
30-Yr. Pass Through........8.500 11/15/26 55,103
178,526 Government National
Mortgage Association
30-Yr. Pass Through........9.000 12/15/26 189,487
159,818 Government National
Mortgage Association
30-Yr. Pass Through........7.500 1/15/27 161,723
612,438 Government National
Mortgage Association
30-Yr. Pass Through........7.500 4/15/27 619,738
236,590 Government National
Mortgage Association
30-Yr. Pass Through........8.000 6/20/27 241,492
246,228 Government National
Mortgage Association
30-Yr. Pass Through........8.000 8/15/27 253,176
478,991 Government National
Mortgage Association
30-Yr. Pass Through........6.500 10/15/27 462,308
26,455 Government National
Mortgage Association
30-Yr. Pass Through........7.000 10/15/27 26,152
822,783 Government National
Mortgage Association
30-Yr. Pass Through........7.000 10/15/27 813,337
787,598 Government National
Mortgage Association
30-Yr. Pass Through........7.000 11/15/27 778,556
180,688 Government National
Mortgage Association
30-Yr. Pass Through........7.000 11/15/27 178,614
399,361 Government National
Mortgage Association
30-Yr. Pass Through........7.500 11/15/27 404,121
229,546 Government National
Mortgage Association
30-Yr. Pass Through........9.500 2/15/28 247,407
522,004 Government National
Mortgage Association
30-Yr. Pass Through........8.000 3/15/28 536,641
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
42 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
=====================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency Obligations--continued
- ---------------------------------------------
$999,900 Government National
Mortgage Association
30-Yr. Pass Through........7.000 4/15/29 $ 988,070
999,900 Government National
Mortgage Association
30-Yr. Pass Through........6.000 6/15/29 937,185
969,666 Government National
Mortgage Association
30-Yr. Pass Through........6.500 7/15/28 935,115
941,249 Government National
Mortgage Association
30-Yr. Pass Through........7.000 7/15/28 930,330
966,522 Government National
Mortgage Association
30-Yr. Pass Through........7.500 7/15/28 977,656
993,051 Government National
Mortgage Association
30-Yr. Pass Through........6.500 11/1/28 957,668
733,986 Government National
Mortgage Association
30-Yr. Pass Through........8.000 11/15/28 754,742
1,005,779 Government National
Mortgage Association
30-Yr. Pass Through........6.000 12/15/28 943,158
999,074 Government National
Mortgage Association
30-Yr. Pass Through........6.500 1/15/29 963,077
997,729 Government National
Mortgage Association
30-Yr. Pass Through........6.500 3/15/29 961,780
845,000 Private Export Funding
Corporation................8.400 7/31/01 886,600
150,000 Private Export Funding
Corporation................6.240 5/15/02 151,024
500,000 Student Loan Marketing
Association................6.050 9/14/00 501,975
1,500,000 Student Loan Marketing
Association................7.300 8/1/12 1,598,306
2,000,000 Tennesee Valley
Authority..................6.375 6/15/05 2,005,870
---------------------------------------------------------
Total U.S. Government
Agency Obligations............................104,567,360
=========================================================
Asset-Backed Securities (0.4%)
- ------------------------------
2,000,000 Chase Manhattan Auto
Owner Trust 1998-A.........5.800 12/16/02 1,989,100
250,000 Chemical Mastercard Trust
Series 1996-1 Class A......5.550 9/15/03 248,790
200,000 NationsBank Credit Card
Trust Certificate..........6.000 12/15/05 197,128
421,437 Premier Auto Trust.........6.750 11/6/00 423,350
---------------------------------------------------------
Total Asset-Backed Securities...................2,858,368
=========================================================
Corporate Obligations (6.8%)
- ----------------------------
200,000 Abbott Laboratories
Notes......................6.800 5/15/05 202,898
1,000,000 Allstate Corporation.......6.750 5/15/18 962,204
250,000 American Express Credit
Corporation Notes..........6.125 11/15/01 248,495
1,250,000 Associates Corporation.....6.250 11/1/08 1,186,790
375,000 Associates Corporation
N.A. Senior Notes..........6.000 12/1/02 368,991
500,000 Avco Financial Services
Notes......................6.000 8/15/02 492,613
325,000 Baker Hughes, Inc.
Notes......................8.000 5/15/04 341,281
2,000,000 Bank One Corporation.......8.000 4/29/27 2,073,134
2,000,000 BankAmerica
Corporation................5.875 2/15/09 1,834,572
500,000 BankAmerica
Corporation Notes..........6.625 8/1/07 488,512
500,000 Boeing Company Notes.......8.100 11/15/06 531,393
1,000,000 Browning-Ferris Industries,
Inc. Senior Notes..........6.375 1/15/08 856,125
1,000,000 Burlington Northern
Santa Fe Railway
Company Notes..............6.050 3/15/01 995,985
1,000,000 Cable & Wireless
Communications Notes.......6.375 3/6/03 983,441
2,000,000 Cia De Telecom
De Chile...................8.375 1/1/06 1,960,818
500,000 CIT Group Holdings, Inc.
Notes......................6.375 10/1/02 496,893
2,000,000 Coca-Cola Enterprise.......6.750 9/15/23 1,852,610
250,000 Columbia Gas Systems
Notes......................7.320 11/28/10 246,072
1,250,000 Countrywide Home
Loans, Inc. Medium
Term Notes.................6.935 7/16/07 1,224,576
1,000,000 Cox Communications
Inc. Notes.................6.400 8/1/08 941,338
500,000 Crown Cork & Seal
Notes......................6.750 4/15/03 494,631
550,000 E.I. Dupont de Nemours
and Company Notes..........8.125 3/15/04 586,954
510,000 Eli Lilly & Company
Notes......................6.570 1/1/16 490,478
650,000 Enron Corporation
Notes......................7.125 5/15/07 646,547
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 43
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Interest Maturity Market
Amount Income Securities (36.1%) Rate Date Value
=====================================================================
<S> <C> <C> <C> <C>
Corporate Obligations--continued
- --------------------------------
$1,000,000 Enterprise Oil Notes.......6.500% 5/1/05 $ 951,042
1,000,000 First Bank System Notes....7.625 5/1/05 1,043,261
1,000,000 Ford Motor Credit
Corporation Notes..........7.750 11/15/02 1,037,177
500,000 General Electric Capital
Corporation Notes..........8.090 4/1/04 534,919
500,000 General Motors Acceptance
Corporation Notes..........9.625 12/15/01 536,261
500,000 Hertz Corporation
Notes......................7.000 7/1/04 503,721
250,000 Honeywell, Inc.
Debentures.................8.625 4/15/06 272,077
250,000 Household Finance
Corporation Notes..........7.250 7/15/03 253,832
1,500,000 Household Finance
Corporation Notes..........6.400 6/17/08 1,416,390
500,000 Houston Industries, Inc.
Notes......................9.375 6/1/01 525,742
500,000 IBM Corporation
Notes......................7.500 6/15/13 524,608
250,000 J.C. Penney & Company,
Inc. Notes.................6.375 9/15/00 249,046
340,000 J.P. Morgan Notes..........6.250 12/15/05 328,472
500,000 Johnson Controls Notes.....7.125 7/15/17 486,163
2,000,000 Matsushita Electric
Industries.................7.250 8/1/02 2,044,924
2,000,000 MCI Worldcom, Inc..........6.950 8/15/28 1,885,274
250,000 NorAm Energy
Corporation Notes..........7.500 8/1/00 252,818
250,000 Noranda, Inc. Notes........8.000 6/1/03 253,037
500,000 Northern Trust
Company Notes..............6.700 9/15/05 487,252
250,000 Norwest Financial, Inc.
Senior Notes...............7.000 1/15/03 255,023
250,000 Pennzoil Company
Notes.....................10.125 11/15/09 275,121
250,000 Pepsico, Inc. Medium
Term Notes.................5.875 6/1/00 249,535
1,000,000 Raytheon Company...........6.750 3/15/28 939,095
250,000 Rhone-Poulenc SA
Notes......................7.750 1/15/02 255,713
420,000 Service Corporation
International Notes........6.875 10/1/07 398,501
1,000,000 Temple-Inland, Inc. Notes..7.250 9/15/04 1,004,944
1,400,000 Texaco Capital, Inc.
Notes......................8.500 2/15/03 1,499,915
500,000 Texas Utilities Company
First Mortgage Bond........8.250 4/1/04 534,090
1,500,000 Thermo Electron
Corporation................7.625 10/30/08 1,442,827
1,000,000 Tosco Corporation First
Mortgage Bonds.............9.625 3/15/02 1,062,053
1,500,000 Tyco International
Group SA Notes.............6.250 6/15/03 1,476,303
2,000,000 Union Pacific
Corporation................6.340 11/25/03 1,951,280
1,000,000 Virginia Electric & Power
Company Notes..............6.625 4/1/03 1,006,351
---------------------------------------------------------
Total Corporate Obligations....................46,444,118
=========================================================
Utility Bonds (0.4%)
- --------------------
500,000 Baltimore Gas & Electric
Company First Refunding
Mortgage Bonds.............7.500 1/15/07 517,182
1,000,000 California Infrastructure
PG&E Bonds.................6.480 12/26/09 984,520
250,000 Pacificorp First
Mortgage Bonds.............6.750 4/1/05 248,980
1,000,000 Public Service Electric &
Gas Mortgage Bonds.........6.375 5/1/08 962,295
---------------------------------------------------------
Total Utility Bonds.............................2,712,977
=========================================================
Canadian Government (0.5%)
- --------------------------
200,000 Province of Ontario
Senior Global Bond.........6.125 6/28/00 200,682
500,000 Province of
Saskatchewan...............8.000 7/15/04 527,845
500,000 British Columbia
Government Notes...........7.250 9/1/36 506,084
1,000,000 Ontario Hydro..............7.450 3/31/13 1,032,619
500,000 Province of
Newfoundland...............8.650 10/22/22 562,775
500,000 Province Of Quebec.........7.500 7/15/02 513,430
---------------------------------------------------------
Total Canadian Government.......................3,343,435
=========================================================
Canadian Corporate Securities (0.1%)
- ------------------------------------
250,000 Petro-Canada, Ltd..........8.600 1/15/10 287,192
---------------------------------------------------------
Total Canadian Corporate Securities...............287,192
=========================================================
---------------------------------------------------------
Total Long-Term Fixed Income
Securities Investments
(amortized cost basis $252,400,480)...........246,360,145
=========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
44 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Short-Term Interest Maturity Market
Amount Investments (7.8%) Rate Date Value
=====================================================================
<S> <C> <C> <C> <C>
$1,585,000 Alabama Power
Company....................4.900% 7/9/99 $1,583,274
450,000 AT&T Corporation...........5.370 7/2/99 449,937
1,142,000 Baltimore Gas & Electric
Company....................5.000 7/13/99 1,140,097
1,673,000 Bell Atlantic Network
Funding....................4.950 7/6/99 1,671,850
1,283,000 Cargill, Inc...............5.200 7/1/99 1,283,000
3,340,000 Countrywide Home
Loans, Inc.................4.920 7/8/99 3,336,805
383,000 Countrywide Home
Loans, Inc.................4.930 7/13/99 382,371
3,540,000 Countrywide Home
Loans, Inc.................4.920 7/15/99 3,533,227
7,957,000 Exxon Asset
Management.................5.060 7/14/99 7,942,461
1,178,000 Ford Motor Credit
Corporation................4.900 7/2/99 1,177,840
9,118,000 Ford Motor Credit
Corporation................5.250 7/6/99 9,111,351
2,010,000 Ford Motor Credit
Corporation................4.800 7/8/99 2,008,124
3,803,000 Ford Motor Credit
Corporation................4.810 7/13/99 3,796,902
2,475,000 General Motors Credit
Card Acceptance
Corporation................4.900 7/19/99 2,468,936
561,000 General Motors Credit
Card Acceptance
Corporation................4.900 7/20/99 559,549
3,031,000 General Motors Credit
Card Acceptance
Corporation................4.900 7/22/99 3,022,336
4,850,000 Sears Roebuck
Acceptance
Corporation................4.850 7/12/99 4,842,813
4,698,000 Southern California
Edison.....................4.850 7/7/99 4,694,202
---------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $53,005,075).............53,005,075
=========================================================
---------------------------------------------------------
Total Investments (99.9%)
(amortized cost basis $569,549,751)...........682,588,147
=========================================================
---------------------------------------------------------
Other Assets,
Less Liabilities (0.1%)...........................521,339
=========================================================
---------------------------------------------------------
Net Assets (100.0%)..........................$683,109,486
=========================================================
(a) The interest rate reflects the
discount rate at the date of purchase.
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 45
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
AAL Variable Product Large Company
Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
Investment Objective
- --------------------
The portfolio strives for investment results that approximate the performance
of the S&P 500 Index, by investing primarily in common stocks of the index.
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
==========================================================================
<C> <S> <C>
*Aerospace (1.4%)
- -----------------
4,800 BFGoodrich Company.......................... $ 204,000
61,360 Boeing Company.............................. 2,711,345
8,300 General Dynamics Corporation................ 568,550
25,600 Lockheed Martin Corporation................. 953,600
4,600 Northrop Grumman Corporation................ 305,038
22,100 Raytheon Company............................ 1,555,288
12,400 Rockwell International Corporation.......... 753,300
10,400 Textron, Inc................................ 856,050
7,800 TRW, Inc.................................... 428,025
31,500 United Technologies Corporation............. 2,258,156
--------------------------------------------------------
Total Aerospace............................. 10,593,352
========================================================
Air Transportation (0.4%)
- -------------------------
12,000 AMR Corporation*............................ 819,000
9,200 Delta Air Lines, Inc........................ 530,150
19,360 Federal Express Corporation*................ 1,050,280
22,000 Southwest Airlines Company.................. 684,750
5,700 USAir Group, Inc.*.......................... 248,306
--------------------------------------------------------
Total Air Transportation.................... 3,332,486
========================================================
Apparel (0.3%)
- --------------
4,700 Fruit of the Loom, Inc.*.................... 45,825
4,200 Liz Claiborne, Inc.......................... 153,300
18,400 Nike, Inc................................... 1,164,950
3,600 Reebok International, Ltd................... 67,050
2,300 Russell Corporation......................... 44,850
1,200 Springs Industries, Inc..................... 52,350
7,800 V F Corporation............................. 333,450
--------------------------------------------------------
Total Apparel............................... 1,861,775
========================================================
Banking (8.7%)
- --------------
11,650 AmSouth Bancorporation...................... 270,134
47,600 Associates First Capital Corporation........ 2,109,275
20,300 BB&T Corporation............................ 744,756
76,853 Banc One Corporation........................ 4,577,557
49,700 Bank of New York Company, Inc............... 1,823,369
113,289 Bank America Corporation.................... 8,305,500
19,300 BankBoston Corporation...................... 986,713
55,412 Chase Manhattan Corporation................. 4,800,065
221,612 Citigroup, Inc.............................. 10,526,570
10,150 Comerica, Inc............................... 603,291
7,300 Countrywide Credit Industries, Inc.......... 312,075
17,475 Fifth Third Bancorp......................... 1,163,180
64,732 First Union Corporation..................... 3,042,404
45,100 Firstar Corporation......................... 1,262,800
37,170 Fleet Financial Group, Inc.................. 1,649,419
16,500 Franklin Resources, Inc..................... 670,312
13,720 Huntington Bancshares, Inc.................. 480,200
29,700 Keycorp..................................... 954,113
34,100 Mellon Bank Corporation..................... 1,240,387
10,200 Mercantile Bancorporation, Inc.............. 582,675
11,500 J.P. Morgan & Company, Inc.................. 1,615,750
21,400 National City Corporation................... 1,401,700
7,300 Northern Trust Corporation.................. 708,100
19,600 PNC Bank Corporation........................ 1,129,450
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
46 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Large Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
===============================================================================
<C> <S> <C>
Banking--continued
- ------------------
9,350 Providian Financial Corporation............. $ 874,225
14,400 Regions Financial Corporation............... 553,500
7,100 Republic New York Corporation............... 484,131
10,800 SouthTrust Corporation...................... 414,450
11,300 Summit Bancorp.............................. 472,481
21,000 Suntrust Banks, Inc......................... 1,458,187
17,400 Synovus Financial Corp...................... 345,825
47,597 U.S. Bancorp................................ 1,618,298
8,900 Union Planters Corporation.................. 397,719
13,300 Wachovia Corporation........................ 1,137,981
38,729 Washington Mutual, Inc...................... 1,370,038
107,500 Wells Fargo & Company....................... 4,595,625
------------------------------------------------------------
Total Banking............................... 64,682,255
============================================================
Brokerage (1.4%)
- ----------------
26,325 Charles Schwab Corporation.................. 2,892,459
7,400 Lehman Brothers Holding, Inc................ 460,650
23,300 Merrill Lynch & Company, Inc................ 1,862,544
37,825 Morgan Stanley, Dean Witter & Co............ 3,877,062
9,300 Paine Webber Group, Inc..................... 434,775
7,225 The Bear Stearns Companies, Inc............. 337,769
------------------------------------------------------------
Total Brokerage............................. 9,865,259
============================================================
Business Machines (11.2%)
- ------------------------
23,400 3Com Corporation*........................... 624,488
10,400 Apple Computer, Inc......................... 481,650
3,800 Autodesk, Inc............................... 112,338
11,200 Cabletron Systems, Inc.*.................... 145,600
9,300 Ceridian Corporation*....................... 303,994
206,700 Cisco Sytems, Inc.*......................... 13,332,150
110,293 Compaq Computers, Inc....................... 2,612,565
3,200 Data General Corporation*................... 46,600
166,400 Dell Computer Corporation*.................. 6,156,800
10,300 Gateway, Inc.*.............................. 607,700
8,300 Honeywell, Inc.............................. 961,763
9,600 Ikon Office Solutions....................... 144,000
120,800 International Business Machines
Corporation................................. 15,613,400
330,300 Microsoft Corporation*...................... 29,788,931
22,000 Novell, Inc.*............................... 583,000
94,187 Oracle Systems Corporation*................. 3,496,692
17,400 Parametric Technology Company*.............. 241,425
17,900 Pitney-Bowes, Inc........................... 1,150,075
15,900 Seagate Technology, Inc.*................... 407,438
12,200 Silicon Graphics, Inc.*..................... 199,775
50,400 Sun Microsystems, Inc.*..................... 3,471,300
17,000 Unisys Corporation*......................... 661,937
42,900 Xerox Corporation........................... 2,533,781
------------------------------------------------------------
Total Business Machines..................... 83,677,402
============================================================
Business Services (3.0%)
- ------------------------
67,300 American Online, Inc........................ 7,436,650
40,300 Automatic Data Processing, Inc.............. 1,773,200
6,300 Block (H.R.), Inc........................... 315,000
10,583 Browning-Ferris Industries, Inc............. 455,069
35,212 Computer Associates International, Inc...... 1,936,660
10,400 Computer Sciences Corporation............... 719,550
24,000 Compuware Corporation....................... 763,500
5,200 Deluxe Corporation.......................... 202,475
10,800 Dun & Bradstreet Corporation................ 382,725
8,400 Ecolab, Inc................................. 366,450
28,900 First Data Corporation...................... 1,414,294
10,900 General Instrument Corporation*............. 463,250
9,100 Interpublic Group of Companies, Inc......... 788,288
21,600 Laidlaw, Inc................................ 159,300
18,042 Mckesson HBOC, Inc.......................... 579,599
2,700 National Service Industries, Inc............ 97,200
11,100 Omnicom Group, Inc.......................... 888,000
16,000 Paychex, Inc................................ 510,000
1,800 Shared Medical Systems Corporation.......... 117,450
10,600 State Street Corporation.................... 904,975
39,099 Waste Management, Inc....................... 2,101,571
------------------------------------------------------------
Total Business Services..................... 22,375,206
============================================================
Chemicals (2.0%)
- ----------------
15,000 Air Products & Chemicals, Inc............... 603,750
73,700 E.I. Du Pont de Nemours & Company........... 5,034,631
5,200 Eastman Chemical Company.................... 269,100
3,900 Great Lakes Chemical Corporation............ 179,644
6,500 Hercules, Inc............................... 255,531
26,400 Minnesota Mining and
Manufacturing Company....................... 2,295,150
40,900 Monsanto Company............................ 1,612,994
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 47
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
===================================================================================
<C> <S> <C>
Chemicals--continued
- --------------------
4,300 Nalco Chemical Company...................... $ 223,063
11,600 PPG Industries, Inc......................... 685,125
10,300 Praxair, Inc................................ 504,056
13,813 Rohm & Haas Company......................... 592,248
5,476 Sealed Air Corporation*..................... 355,255
6,500 Sigma-Aldrich Corporation................... 223,844
14,500 The Dow Chemical Company.................... 1,839,687
8,600 Union Carbide Corporation................... 419,250
4,800 W.R. Grace & Company........................ 88,200
------------------------------------------------------------
Total Chemicals............................. 15,181,528
============================================================
Construction (0.3%)
- -------------------
2,600 Armstrong World Industries, Inc............. 150,312
3,900 Centex Corporation.......................... 146,494
4,450 Crane Company............................... 139,897
4,900 Fluor Corporation........................... 198,450
3,100 Kaufman & Broad Home Corporation............ 77,113
22,100 Masco Corporation........................... 638,138
3,500 Owens-Corning Fiberglass Corporation........ 120,312
2,800 Pulte Corporation........................... 64,575
11,200 Sherwin-Williams Company.................... 310,800
5,800 Stanley Works............................... 186,687
------------------------------------------------------------
Total Construction.......................... 2,032,778
============================================================
Consumer Durables (0.3%)
- ------------------------
5,700 Black & Decker Corporation.................. 359,813
5,900 Maytag Corporation.......................... 411,156
18,373 Newell Company.............................. 854,344
3,700 Tupperware Corporation...................... 94,350
5,000 Whirlpool Corporation....................... 370,000
------------------------------------------------------------
Total Consumer Durables..................... 2,089,663
============================================================
Containers (0.1%)
- -----------------
2,000 Ball Corporation............................ 84,500
3,400 Bemis Company, Inc.......................... 135,150
8,000 Crown Cork & Seal Company, Inc.............. 228,000
10,100 Owens-Illinois, Inc.*....................... 330,144
------------------------------------------------------------
Total Containers............................ 777,794
============================================================
Cosmetics (2.0%)
- ----------------
3,700 Alberto-Culver Company...................... 98,512
17,100 Avon Products, Inc.......................... 949,050
7,700 Clorox Company.............................. 822,456
19,200 Colgate-Palmolive Company................... 1,896,000
72,500 Gillette Company............................ 2,972,500
6,900 International Flavors and Fragrances, Inc... 306,188
86,900 Procter & Gamble Company.................... 7,755,825
------------------------------------------------------------
Total Cosmetics............................. 14,800,531
============================================================
Credit Cards (0.4%)
- -------------------
12,900 Capital One Financial Corporation........... 718,369
9,600 Equifax, Inc................................ 342,600
52,368 MBNA Corporation............................ 1,603,770
------------------------------------------------------------
Total Credit Cards.......................... 2,664,739
============================================================
Drugs & Medicine (10.4%)
- ------------------------
99,300 Abbott Laboratories......................... 4,518,150
4,400 Allergan, Inc............................... 488,400
6,500 Alza Corporation*........................... 330,688
86,200 American Home Products Corporation.......... 4,956,500
33,300 Amgen, Inc.................................. 2,027,138
3,500 Bard (C.R.), Inc............................ 167,344
3,700 Bausch & Lomb, Inc.......................... 283,050
18,800 Baxter International, Inc................... 1,139,750
16,200 Becton, Dickinson and Company............... 486,000
7,300 Biomet, Inc................................. 290,175
25,700 Boston Scientific Corporation*.............. 1,129,194
130,100 Bristol-Myers Squibb Company................ 9,163,919
17,750 Cardinal Health Inc......................... 1,138,219
42,200 Columbia/HCA Healthcare Corporation......... 962,687
72,000 Eli Lilly & Company......................... 5,157,000
19,700 Guidant Corporation......................... 1,013,319
88,000 Johnson & Johnson........................... 8,624,000
4,600 Mallinckrodt Group, Inc..................... 167,325
38,300 Medtronic, Inc.............................. 2,982,612
155,900 Merck & Company, Inc........................ 11,536,600
85,000 Pfizer, Inc................................. 9,328,750
33,215 Pharmacia & Upjohn, Inc..................... 1,887,027
96,100 Schering-Plough Corporation................. 5,093,300
5,421 St. Jude Medical, Inc.*..................... 193,123
53,700 Warner-Lambert Company...................... 3,725,437
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
48 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
================================================================================
<S> <C> <C>
Drugs & Medicine--continued
- ---------------------------
6,200 Watson Pharmaceuticals, Inc.................... $ 217,387
------------------------------------------------------------
Total Drugs & Medicine......................... 77,007,094
============================================================
Electronics (5.2%)
- ------------------
4,000 Adobe Systems, Inc.......................... 328,625
9,400 Advanced Micro Devices, Inc.*............... 169,788
24,200 Applied Materials, Inc.*.................... 1,787,775
2,900 EG&G, Inc................................... 103,313
65,600 EMC Corporation*............................ 3,608,000
5,100 Harris Corporation.......................... 199,856
66,500 Hewlett-Packard Company..................... 6,683,250
218,100 Intel Corporation........................... 12,976,950
9,200 LSI Logic Corporation*...................... 424,350
16,200 Micron Technology, Inc...................... 653,062
39,300 Motorola, Inc............................... 3,723,675
10,900 National Semiconductor Corporation*......... 275,906
3,300 PE Corp--PE Biosystems Group................ 378,675
4,900 Scientific-Atlanta, Inc..................... 176,400
16,400 Solectron Corporation....................... 1,093,675
3,050 Tektronix, Inc.............................. 92,072
25,400 Tellabs, Inc.*.............................. 1,716,087
25,600 Texas Instruments, Inc...................... 3,712,000
10,300 Thermo Electron Corporation*................ 206,644
3,700 Thomas & Betts Corporation.................. 174,825
------------------------------------------------------------
Total Electronics........................... 38,484,928
============================================================
Energy & Utilities (2.7%)
- -------------------------
12,400 AES Corporation*............................ 720,750
8,900 Ameren Corporation.......................... 341,538
12,500 American Electric Power Company............. 469,531
10,300 CINergy Corporation......................... 329,600
7,600 CMS Energy Corporation...................... 318,250
9,900 Carolina Power & Light Company.............. 423,844
13,900 Central & Southwest Corporation............. 324,913
13,900 Coastal Corporation......................... 556,000
5,550 Columbia Gas System, Inc.................... 347,916
15,200 Consolidated Edison, Inc.................... 687,800
6,200 Consolidated Natural Gas Company............ 376,650
9,700 Constellation Energy Group.................. 287,363
9,400 DTE Energy Company.......................... 376,000
12,700 Dominion Resources, Inc..................... 550,069
23,608 Duke Energy Corporation..................... 1,283,685
23,000 Edison International........................ 615,250
23,000 Enron Corporation........................... 1,880,250
16,100 Entergy Corporation......................... 503,125
15,500 FirstEnergy Corporation..................... 480,500
11,800 FPL Group, Inc.............................. 644,575
8,300 General Public Utilities Corporation........ 350,156
7,400 New Century Energies, Inc................... 287,213
12,200 Niagara Mohawk Power Corporation............ 195,962
3,100 Nicor, Inc.................................. 117,994
9,900 Northern States Power Company............... 239,456
2,000 ONEOK, Inc.................................. 63,500
9,800 P P & L Resources, Inc...................... 301,350
25,000 Pacific Gas & Electric Company.............. 812,500
19,400 PacifiCorp.................................. 356,475
14,600 Peco Energy Company......................... 611,375
2,300 Peoples Energy Corporation.................. 86,681
14,600 Public Service Enterprise................... 596,775
18,573 Reliant Energy, Inc......................... 513,079
15,666 Sempra Energy............................... 354,443
7,100 Sonat, Inc.................................. 235,187
45,600 Southern Company............................ 1,208,400
18,417 Texas Utilities Company..................... 759,701
14,200 Unicom Corporation.......................... 547,587
27,900 Williams Companies, Inc..................... 1,187,494
------------------------------------------------------------
Total Energy & Utilities.................... 20,342,937
============================================================
Energy Raw Materials (0.8%)
- ---------------------------
21,300 Baker Hughes, Inc........................... 713,550
11,535 Burlington Resources, Inc................... 498,889
1,500 Eastern Enterprises......................... 59,625
28,700 Halliburton Company......................... 1,298,675
3,800 McDermott International, Inc................ 107,350
22,600 Occidental Petroleum Corporation............ 477,425
35,800 Schlumberger, Ltd........................... 2,280,013
16,372 Union Pacific Resources Group Inc........... 267,068
------------------------------------------------------------
Total Energy Raw Materials.................. 5,702,595
============================================================
Food & Agriculture (2.0%)
- -------------------------
38,680 Archer-Daniels-Midland Company.............. 597,123
18,600 BestFoods................................... 920,700
29,000 Campbell Soup Company....................... 1,344,875
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 49
<PAGE>
AAL Variable Product Large Company Stock Portfolio-Continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
===========================================================================
<C> <S> <C>
Food & Agriculture--continued
- -----------------------------
32,000 ConAgra, Inc................................ $ 852,000
10,100 General Mills, Inc.......................... 811,788
23,600 H.J. Heinz Company.......................... 1,182,950
9,300 Hershey Foods Corporation................... 552,188
26,500 Kellogg Company............................. 874,500
21,200 Nabisco Group Holdings Corporation.......... 414,725
15,600 Pioneer Hi-Bred International, Inc.......... 607,425
9,000 Quaker Oats Company......................... 597,385
21,400 Ralston Purina Corporation.................. 651,362
59,600 Sara Lee Corporation........................ 1,352,175
7,800 Supervalu, Inc.............................. 200,362
21,700 Sysco Corporation........................... 646,931
37,471 Unilever N.V................................ 2,613,602
7,600 Wrigley (Wm) Jr. Company.................... 684,000
------------------------------------------------------------
Total Food & Agriculture.................... 14,904,091
============================================================
Food & Beverages (2.0%)
- -----------------------
161,300 Coca-Cola Company........................... 10,081,250
27,700 Coca-Cola Enterprises, Inc.................. 851,775
96,000 PepsiCo, Inc................................ 3,714,000
------------------------------------------------------------
Total Food & Beverages...................... 14,647,025
============================================================
Gold (0.2%)
- -----------
24,400 Barrick Gold Corporation.................... 472,750
15,000 Battle Mountain Gold Company................ 36,563
17,000 Homestake Mining Company.................... 139,187
10,848 Newmont Mining Corporation.................. 215,604
21,200 Placer Dome, Inc............................ 250,425
------------------------------------------------------------
Total Gold.................................. 1,114,529
============================================================
Health Care (0.4%)
- ------------------
7,200 HCR Manor Health Care, Inc.*................ 174,150
27,600 HEALTHSOUTH Corporation*.................... 412,275
10,900 Humana, Inc.*............................... 141,019
20,800 IMS Health, Inc............................. 650,000
20,200 Tenet Healthcare Corporation*............... 374,963
12,200 United Healthcare Corporation............... 764,025
4,500 Wellpoint Health Networks, Inc.............. 381,937
------------------------------------------------------------
Total Health Care........................... 2,898,369
============================================================
Insurance (3.4%)
- ----------------
17,300 AFLAC, Inc.................................. 828,238
9,449 Aetna Life & Casualty Company............... 845,095
53,682 Allstate Corporation........................ 1,925,842
16,562 American General Corporation................ 1,248,361
80,369 American International Group, Inc........... 9,408,196
16,625 Aon Corporation............................. 685,781
10,700 Chubb Corporation........................... 743,650
13,600 Cigna Corporation........................... 1,210,400
10,900 Cincinnati Financial Corporation............ 409,431
20,907 Conseco, Inc................................ 636,357
15,200 ITT Hartford Group, Inc..................... 886,350
7,000 Jefferson-Pilot Corporation................. 463,313
13,400 Lincoln National Corporation................ 700,987
6,600 MBIA, Inc................................... 427,350
7,100 MGIC Investment Corporation................. 345,237
16,850 Marsh & McLennan Companies, Inc............. 1,272,175
4,800 Progressive Corporation..................... 696,000
8,800 Provident Companies, Inc.................... 352,000
8,900 Safeco Corporation.......................... 392,712
15,346 St. Paul Companies, Inc..................... 488,195
9,100 Torchmark Corporation....................... 310,537
8,200 Transamerica Corporation.................... 615,000
9,000 Unum Corporation............................ 492,750
------------------------------------------------------------
Total Insurance............................. 25,383,957
============================================================
Liquor (0.5%)
- -------------
2,400 Adolph Coors Company........................ 118,800
31,300 Anheuser-Busch Companies, Inc............... 2,220,344
4,500 Brown-Foreman Corporation................... 293,344
26,100 Seagram Company, Ltd........................ 1,314,787
------------------------------------------------------------
Total Liquor................................ 3,947,275
============================================================
Media (2.4%)
- ------------
46,200 CBS Corporation............................. 2,006,812
21,200 Clear Channel Communications, Inc.*......... 1,461,475
48,300 Comcast Corporation, Class A................ 1,856,531
6,100 Dow Jones & Company, Inc.................... 323,681
18,500 Gannett Company, Inc........................ 1,320,438
4,700 King World Productions, Inc................. 163,619
5,100 Knight Ridder, Inc.......................... 280,181
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
50 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Large Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
======================================================================
<C> <S> <C>
Media--continued
- ----------------
12,800 McGraw-Hill, Inc......................... $ 690,400
3,400 Meredith Corporation..................... 117,725
11,900 New York Times Company................... 438,069
8,700 R.R. Donnelley & Sons Company............ 322,444
80,300 Time Warner, Inc......................... 5,902,050
5,000 Times Mirror Company..................... 296,250
7,800 Tribune Company.......................... 679,575
45,500 Viacom, Inc.*............................ 2,002,000
------------------------------------------------------
Total Media.............................. 17,861,250
======================================================
Miscellaneous Finance (1.8%)
- ----------------------------
29,700 American Express Company................. 3,864,713
44,400 Federal Home Loan Mortgage Corporation... 2,575,200
67,900 Federal National Mortgage Association.... 4,642,662
3,800 Golden West Financial Corporation........ 372,400
31,586 Household International Corporation...... 1,496,387
10,800 SLM Holding Corporation.................. 494,775
------------------------------------------------------
Total Miscellaneous Finance.............. 13,446,137
======================================================
Motor Vehicles (1.4%)
- ---------------------
2,800 Cummins Engine Company, Inc.............. 159,950
10,766 Dana Corporation......................... 495,909
36,894 Delphi Automotive Systems Corporation.... 684,845
4,700 Eaton Corporation........................ 432,400
2,200 Fleetwood Enterprises, Inc............... 58,163
79,100 Ford Motor Company....................... 4,464,206
42,800 General Motors Corporation............... 2,824,800
11,700 Genuine Parts Company.................... 409,500
6,500 ITT Industries, Inc...................... 247,813
4,300 Navistar International Corporation*...... 215,000
5,100 PACCAR, Inc.............................. 272,212
------------------------------------------------------
Total Motor Vehicles..................... 10,264,798
======================================================
Non-Durables & Entertainment (0.2%)
- -----------------------------------
4,500 American Greetings Corporation, Class A.. 135,563
4,600 Harcourt General, Inc.................... 237,187
12,750 Hasbro, Inc.............................. 356,203
2,300 Jostens, Inc............................. 48,444
27,250 Mattel, Inc.............................. 720,422
17,800 Service Corporation International........ 342,650
------------------------------------------------------
Total Non-Durables & Entertainment....... 1,840,469
======================================================
Non-Ferrous Metals (0.4%)
- -------------------------
14,800 Alcan Aluminium, Ltd..................... 472,675
24,100 Alcoa, Inc............................... 1,491,188
2,500 Asarco, Inc.............................. 47,031
5,900 Cyprus Minerals Company.................. 89,606
9,000 Engelhard Corporation.................... 203,625
10,800 Freeport-McMoran Copper & Gold, Class B.. 193,725
11,800 Inco, Ltd................................ 212,400
3,800 Phelps Dodge Corporation................. 235,363
4,200 Reynolds Metals Company.................. 247,800
------------------------------------------------------
Total Non-Ferrous Metals................. 3,193,413
======================================================
Oil--Domestic (0.8%)
- --------------------
5,900 Amerada Hess Corporation................. 351,050
8,200 Anadarko Petroleum Corporation........... 301,863
7,200 Apache Corporation....................... 280,800
4,800 Ashland Oil, Inc......................... 192,600
21,400 Atlantic Richfield Company............... 1,788,238
3,200 Helmerich & Payne, Inc................... 76,200
5,624 Kerr-McGee Corporation................... 282,254
16,600 Phillips Petroleum Company............... 835,188
5,400 Rowan Companies, Inc.*................... 99,562
6,100 Sunoco, Inc.............................. 184,144
20,100 USX-Marathon Group, Inc.................. 654,506
15,700 Unocal Corporation....................... 622,112
------------------------------------------------------
Total Oil--Domestic...................... 5,668,517
======================================================
Oil--International (4.3%)
- -------------------------
42,700 Chevron Corporation...................... 4,064,506
159,100 Exxon Corporation........................ 12,270,588
51,100 Mobil Corporation........................ 5,058,900
140,300 Royal Dutch Petroleum Company............ 8,453,075
35,000 Texaco, Inc.............................. 2,187,500
------------------------------------------------------
Total Oil--International................. 32,034,569
======================================================
Optical & Photo (0.4%)
- ----------------------
15,900 Corning, Inc............................. 1,114,988
21,200 Eastman Kodak Company.................... 1,436,300
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 51
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
==========================================================================
<C> <S> <C>
Optical & Photo--continued
- --------------------------
2,800 Polaroid Corporation........................ $ 77,350
---------------------------------------------------------
Total Optical & Photo....................... 2,628,638
=========================================================
Paper & Forest Products (1.0%)
- ------------------------------
3,700 Boise Cascade Corporation................... 159,100
6,200 Champion International Corporation.......... 296,825
14,400 Fort James Corporation...................... 545,400
11,500 Georgia-Pacific Corporation................. 544,813
26,737 International Paper Company................. 1,350,218
35,392 Kimberly-Clark Corporation.................. 2,017,344
7,100 Louisiana-Pacific Corporation............... 168,625
6,600 Mead Corporation............................ 275,550
1,900 Potlatch Corporation........................ 83,481
3,700 Temple-Inland, Inc.......................... 252,525
6,500 Westvaco Corporation........................ 188,500
13,100 Weyerhaeuser Company........................ 900,625
7,200 Willamette Industries, Inc.................. 331,650
---------------------------------------------------------
Total Paper & Forest Products............... 7,114,656
=========================================================
Producers Goods (5.6%)
- ----------------------
36,400 Allied Signal, Inc.......................... 2,293,200
7,700 Avery Dennison Corporation.................. 464,888
1,600 Briggs & Stratton Corporation............... 92,400
4,800 Case Corporation............................ 231,000
23,400 Caterpillar, Inc............................ 1,404,000
6,500 Cooper Industries, Inc...................... 338,000
15,600 Deere & Company............................. 618,150
14,500 Dover Corporation........................... 507,500
28,700 Emerson Electric Company.................... 1,804,513
2,200 FMC Corporation*............................ 150,287
2,600 Foster Wheeler Corporation.................. 36,725
214,500 General Electric Company.................... 24,238,500
16,400 Illinois Tool Works, Inc.................... 1,344,800
10,850 Ingersoll-Rand Company...................... 701,181
5,600 Johnson Controls, Inc....................... 388,150
5,700 KLA Instruments Corporation*................ 369,787
2,500 Milacron, Inc............................... 46,250
2,800 Millipore Corporation....................... 113,575
610 NACCO Industries, Inc....................... 44,835
8,100 Pall Corporation............................ 179,719
7,050 Parker Hannifin Corporation................. 322,537
5,000 Raychem Corporation......................... 185,000
4,300 Snap-On, Inc................................ 155,606
11,100 Tenneco, Inc................................ 265,013
4,000 Timken Company.............................. 78,000
53,513 Tyco International Ltd...................... 5,070,357
6,200 W.W. Grainger, Inc.......................... 333,638
---------------------------------------------------------
Total Producers Goods....................... 41,777,611
=========================================================
Railroad & Shipping (0.5%)
- --------------------------
30,692 Burlington Northern, Inc.................... 951,452
14,200 CSX Corporation............................. 643,438
7,100 Kansas City Southern Industries, Inc........ 453,069
24,800 Norfolk Southern Corporation................ 747,100
16,100 Union Pacific Corporation................... 938,831
---------------------------------------------------------
Total Railroad & Shipping................... 3,733,890
=========================================================
Restaurants/Food Services (0.6%)
- --------------------------------
9,000 Darden Restaurants, Inc..................... 196,313
88,500 McDonald's Corporation...................... 3,656,156
9,920 Trican Global Restaurants, Inc.*............ 536,920
8,100 Wendy's International, Inc.................. 229,331
---------------------------------------------------------
Total Restaurants/Food Services............. 4,618,720
=========================================================
Retail Stores (6.4%)
- --------------------
27,277 Albertson's, Inc............................ 1,406,470
9,800 Autozone, Inc.*............................. 295,225
25,500 CVS Corporation............................. 1,303,688
53,860 Cendant Corporation*........................ 1,104,130
6,600 Circuit City Stores, Inc.................... 613,800
7,100 Consolidated Stores Corporation*............ 191,700
14,300 Costco Companies, Inc.*..................... 1,144,894
28,800 Dayton Hudson Corporation................... 1,872,000
6,900 Dillard's Inc............................... 242,363
14,412 Dollar General Corporation.................. 417,948
13,700 Federated Department Stores, Inc.*.......... 725,244
2,500 Great Atlantic & Pacific Tea Company, Inc... 84,531
96,400 Home Depot, Inc............................. 6,211,775
17,200 J.C. Penney Company, Inc.................... 835,275
32,200 Kmart Corporation........................... 529,288
10,400 Kohl's Corporation.......................... 802,750
53,800 Kroger Corporation*......................... 1,503,038
2,600 Long's Drug Stores, Inc..................... 89,862
24,200 Lowe's Companies, Inc....................... 1,371,838
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
52 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stock (98.7%) Market Value
===============================================================================
<C> <S> <C>
Retail Stores--continued
22,900 May Department Stores Company............... $ 936,037
9,200 Nordstrom, Inc.............................. 308,200
3,397 Pep Boys-Manny, Moe, & Jack................. 73,460
16,900 Rite Aid Corporation........................ 416,162
31,800 Safeway, Inc................................ 1,574,100
25,000 Sears, Roebuck & Company.................... 1,114,062
30,150 Staples, Inc................................ 932,766
21,100 TJX Companies, Inc.......................... 702,894
13,000 Tandy Corporation........................... 635,375
56,063 The Gap, Inc................................ 2,824,148
13,752 The Limited, Inc............................ 623,997
16,400 Toys "R" Us, Inc.*.......................... 339,275
290,900 Wal-Mart Stores, Inc........................ 14,035,925
65,300 Walgreen Company............................ 1,918,187
9,700 Winn-Dixie Stores, Inc...................... 358,294
----------------------------------------------------------
Total Retail Stores......................... 47,538,701
==========================================================
Steel (0.1%)
- ------------
12,739 Allegheny Teledyne, Inc..................... 288,220
8,500 Bethlehem Steel Corporation*................ 65,344
5,700 Nucor Corporation........................... 270,393
5,700 USX-US Steel Group, Inc..................... 153,900
6,000 Worthington Industries, Inc................. 98,625
----------------------------------------------------------
Total Steel................................. 876,482
==========================================================
Technology (0.4%)
- -----------------
15,400 BMC Software, Inc.*......................... 831,600
32,200 Electronic Data Systems Corporation......... 1,821,313
15,200 Peoplesoft, Inc.*........................... 262,200
----------------------------------------------------------
Total Technology............................ 2,915,113
==========================================================
Telephone (11.0%)
- -----------------
18,000 ALLTEL Corporation.......................... 1,287,000
205,846 AT&T Corporation............................ 11,488,780
72,000 Ameritech Corporation....................... 5,292,000
5,375 Andrew Corporation*......................... 101,789
101,492 Bell Atlantic Corporation................... 6,635,040
127,500 BellSouth Corporation....................... 5,976,562
9,000 CenturyTel, Inc............................. 357,750
11,200 Frontier Corporation........................ 660,800
63,200 GTE Corporation............................. 4,787,400
196,322 Lucent Technologies, Inc.................... 13,239,465
119,982 MCI Worldcom, Inc........................... 10,348,447
39,800 Mediaone Group, Inc.*....................... 2,960,125
18,800 Nextel Communication, Inc.*................. 943,525
43,500 Nortel Networks Corporation................. 3,776,344
127,944 SBC Communications, Inc..................... 7,420,752
58,400 Sprint Corporation.......................... 3,084,250
28,750 Sprint PCS Group*........................... 1,642,344
32,854 U.S. West, Inc.............................. 1,930,172
----------------------------------------------------------
Total Telephone............................. 81,932,545
==========================================================
Tires & Rubber (0.2%)
- ---------------------
4,900 Cooper Tire & Rubber Company................ 115,763
8,700 Danaher Corporation......................... 505,688
10,200 Goodyear Tire & Rubber Company.............. 599,887
----------------------------------------------------------
Total Tires & Rubber........................ 1,221,338
==========================================================
Tobacco (1.1%)
- --------------
11,100 Fortune Brands, Inc......................... 459,263
7,500 Loews Corporation........................... 593,437
159,300 Phillip Morris Companies, Inc............... 6,401,869
12,100 UST, Inc.................................... 353,925
----------------------------------------------------------
Total Tobacco............................... 7,808,494
==========================================================
Travel & Recreation (1.0%)
- --------------------------
6,000 Brunswick Corporation....................... 167,250
40,100 Carnival Corporation........................ 1,944,850
8,200 Harrah's Entertainment*..................... 180,400
17,000 Hilton Hotels Corporation................... 241,188
15,800 Marriott International, Inc................. 590,525
12,800 Mirage Resorts, Inc.*....................... 214,400
134,447 Walt Disney Company......................... 4,142,648
----------------------------------------------------------
Total Travel & Recreation................... 7,481,261
==========================================================
Trucking & Freight (0.1%)
- -------------------------
4,600 Ryder Systems, Inc.......................... 119,600
----------------------------------------------------------
Total Trucking & Freight.................... 119,600
==========================================================
----------------------------------------------------------
Total Common Stock
(cost basis $493,241,314)................... 732,443,765
==========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 53
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Principal Short-term Interest Maturity Market
Amount Investments (0.7%) Rate Date Value
===============================================================================
<S> <C> <C> <C> <C>
$1,672,000 Alabama Power
Company.................. 5.300% 7/07/99 $ 1,670,523
1,832,000 Cargill, Inc............. 5.200 7/01/99 1,832,000
840,000 New Jersey Natural
Gas Company.............. 5.350 7/02/99 839,875
633,000 AT & T Capital Corp...... 5.080 7/01/99 663,000
------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $5,005,398).................... 5,005,398
==================================================================
------------------------------------------------------------------
Total Investments (99.4%)
(amortized cost basis $498,246,712).................. 737,449,163
==================================================================
------------------------------------------------------------------
Other Assets,
Less liabilities (0.6%).............................. 4,722,671
==================================================================
------------------------------------------------------------------
Net Assets (100.0%).................................. $742,171,834
==================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
54 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
AAL Variable Product International Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (Unaudited)
Investment Objective
....................
The portfolio strives for long-term capital growth by investing primarily in
foreign stocks.
<TABLE>
<CAPTION>
Market
Shares Common Stocks (94.4%) Industry Value
==========================================================================
<S> <C> <C> <C>
Australia (2.3%)
................
42,600 Australia & New Zealand
Banking Group Limited.................Banking......$313,240
54,618 Coca-Cola Amatil Ltd..........Food & Beverage.......220,128
-----------------------------------------------------------
Total Australia.....................................533,368
===========================================================
Canada (3.5%)
- -------------
8,900 BCE, Inc............................Telephone.......431,470
7,800 Seagram Company
Limited.......................Food & Beverage.......386,574
-----------------------------------------------------------
Total Canada........................................818,044
===========================================================
France (8.4%)
- -------------
1,230 Carrefour SA...........................Retail.......180,752
1,511 Group Danone..................Food & Beverage.......389,553
857 Equant NV..........................Technology........79,010
3,039 Suez Lyonnaise des Eaux..........Construction.......548,129
3,721 Valeo SA...........................Automotive.......306,982
5,958 Vivendi...............................Utility.......482,624
-----------------------------------------------------------
Total France......................................1,987,050
===========================================================
Germany (5.7%)
- --------------
2,280 DaimlerChrysler AG.................Automotive.......199,150
7,134 Hoechst AG....................Holding Company.......321,497
5,549 Mannesmann AG.......................Machinery.......829,747
-----------------------------------------------------------
Total Germany.....................................1,350,394
===========================================================
Greece (0.3%)
- -------------
3,096 Hellenic Telecommunication
Organization SA*....................Telephone........66,362
-----------------------------------------------------------
Total Greece.........................................66,362
===========================================================
Hong Kong (0.8%)
- ----------------
20,000 Hutchinson Whampoa
Limited.......................Holding Company.......181,089
-----------------------------------------------------------
Total Hong Kong.....................................181,089
===========================================================
Hungary (0.5%)
- --------------
2,760 Gedeon Richter...............Drugs & Medicine.......119,872
-----------------------------------------------------------
Total Hungary.......................................119,872
===========================================================
Italy (7.8%)
- ------------
132,035 Banca Nazionale del Lavoro*...........Banking.......415,290
4,630 Banca Popolare di
Bergamo Credito Varesino SpA*.........Banking.......101,701
30,850 Mediaset SpA............................Media.......274,236
76,897 Telecom Italia SpA..................Telephone.......799,342
57,500 Unicredito Italiano...................Banking.......252,604
-----------------------------------------------------------
Total Italy.......................................1,843,173
===========================================================
Japan (22.1%)
- -------------
50,000 Fuji Bank, Ltd........................Banking.......348,656
6,000 Ito-Yokado Company, Ltd................Retail.......401,533
9,000 Kao Corporation........................Retail.......252,817
17,000 Matsushita Electric Industrial
Company, Ltd............................Media.......330,067
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 55
<PAGE>
AAL Variable Product International Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Market
Shares Common Stocks (94.4%) Industry Value
================================================================================
<S> <C> <C> <C>
Japan--continued
- ----------------
3,000 Murata Manufacturing
Co., Ltd...................... Electronics......... $ 197,296
36 Nippon Telegraph & Telephone.. Telephone........... 419,379
56 NTT Mobile Communication
Network, Inc.*................ Telephone........... 758,781
34,000 Nikko Securities Company...... Banking............. 219,389
9,000 Nomura Securities Company..... Banking............. 105,365
2,000 Rohm Company, Ltd............. Electronics......... 313,129
59,000 Sakura Bank, Ltd.............. Banking............. 223,743
390 Schoholh Fund & Co., Ltd.*.... Finance............. 279,685
4,000 TDK Corporation............... Electronics......... 365,841
10,000 Takeda Chemical Industries.... Healthcare.......... 463,498
2,600 Takefuji Corporation.......... Finance............. 268,729
35,000 Toshiba Corporation........... Electronics......... 249,553
----------------------------------------------------------------
Total Japan......................................... 5,197,461
================================================================
Mexico (0.8%)
- -------------
2,300 Telefonos de Mexico SA ADR.... Telephone........... 185,869
----------------------------------------------------------------
Total Mexico........................................ 185,869
================================================================
Netherlands (8.9%)
- ------------------
2,717 Laurus, N.V.*................. Retail.............. 63,043
3,942 Libertel N.V.................. Telephone........... 77,238
5,885 Royal Dutch Petroleum
Company....................... International Oil... 344,713
17,439 Royal PTT Nederland........... Telephone........... 818,268
12,270 Verenigde Nederlands
Uitgeversbedrijven
Verenigd Bezit................ Publishing/Printing. 490,319
10,947 Vendex N.V.................... Retail.............. 292,387
----------------------------------------------------------------
Total Netherlands................................... 2,085,968
================================================================
New Zealand (1.4%)
- ------------------
77,112 Telecom Corporation of
New Zealand................... Telephone........... 330,988
----------------------------------------------------------------
Total New Zealand................................... 330,988
================================================================
Philippines (0.3%)
- ------------------
6,460 Metropolitan Bank & Trust
Company....................... Banking............. 64,517
----------------------------------------------------------------
Total Philippines................................... 64,517
================================================================
Portugal (1.2%)
- ---------------
6,758 Portugal Telecom*............. Telephone........... 274,934
----------------------------------------------------------------
Total Portugal...................................... 274,934
================================================================
Singapore (0.2%)
- ----------------
4,000 Development Bank of
Singapore, Ltd................ Banking............. 48,869
----------------------------------------------------------------
Total Singapore..................................... 48,869
================================================================
South Korea (0.9%)
- ------------------
5,200 Korea Telecom Corporation..... Telephone........... 208,000
----------------------------------------------------------------
Total South Korea................................... 208,000
================================================================
Spain (3.5%)
- ------------
14,038 Argentaria SA................. Banking............. 319,789
2,928 Banco Popular Espanol SA...... Banking............. 210,609
6,012 Telefonica de Espana.......... Telephone........... 289,590
----------------------------------------------------------------
Total Spain......................................... 819,988
================================================================
Sweden (0.9%)
- -------------
9,320 Hennes & Mauritz AB........... Retail.............. 230,213
----------------------------------------------------------------
Total Sweden........................................ 230,213
================================================================
Switzerland (2.7%)
- ------------------
227 Novartis...................... Healthcare Products. 331,462
13 Roche Holding AG.............. Drugs & Medicine.... 133,629
301 Swiss Life Bearer*............ Insurance........... 182,195
----------------------------------------------------------------
Total Switzerland................................... 647,286
================================================================
United Kingdom (20.3%)
- ----------------------
28,423 Allied Zurich plc*............ Finance............. 355,063
26,557 B.A.T. Industries, plc........ Holding Company..... 247,821
96,396 British Aerospace............. Manufacturing....... 630,205
35,495 British Sky
Broadcasting plc*............. Technology.......... 328,150
34,827 Diageo plc.................... Consumer Products... 362,873
21,300 Glaxo Wellcome plc............ Drugs............... 591,592
29,542 Imperial Chemical
Industries plc................ Chemicals........... 291,974
21,280 Railtrack Group plc........... Holding Company..... 434,053
42,518 Reed International plc........ Holding Company..... 285,844
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
56 International Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product International Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Market
Shares Common Stocks (94.4%) Industry Value
===============================================================================
<S> <C> <C> <C>
United Kingdom--continued
- -------------------------
64,623 Somerfield plc................ Retail............. $303,048
47,600 Vodafone Group plc............ Telephone.......... 940,895
----------------------------------------------------------------
Total United Kingdom............................... 4,771,518
================================================================
United States (1.9%)
- --------------------
6,485 Gucci Group NV................ Retail............. 453,950
----------------------------------------------------------------
Total United States................................ 453,950
================================================================
----------------------------------------------------------------
Total Common Stocks
(cost basis $19,849,116)........................... 22,218,913
================================================================
</TABLE>
<TABLE>
<CAPTION>
Short-Term Interest Maturity Market
Par Value Investments (4.7%) Rate Date Value
===============================================================================
<S> <C> <C> <C> <C>
$1,100,000 Four Winds Funding
Corporation............ 5.750%...... 7/1/99..... $ 1,100,000
------------------------------------------------------------
Total Commercial Paper
(amortized cost $1,100,000)..................... 1,100,000
============================================================
------------------------------------------------------------
Total Investments (99.1%)
(amortized cost basis $20,949,116).............. 23,318,913
============================================================
------------------------------------------------------------
Other Assets,
Less Liabilities (0.9%)......................... 207,425
============================================================
------------------------------------------------------------
Net Assets (100.0%)............................. $23,525,338
============================================================
</TABLE>*Non-income producing security
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 57
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
AAL Variable Product Small Company
Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (Unaudited)
Investment Objective
--------------------
The portfolio strives for capital growth that approximates the
performance of the S&P SmallCap 600 Index, by investing primarily in
common stocks of the index.
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
================================================================================
<S> <C> <C>
Aerospace (0.5%)
- -----------------
15,500 AAR Corporation................................ $ 351,656
13,900 B/E Aerospace, Inc.*........................... 259,756
13,300 Kaman Corporation.............................. 208,644
12,600 Trimble Navigation Limited*.................... 162,225
---------------------------------------------------------------
Total Aerospace................................ 982,281
===============================================================
Air Transportation (0.5%)
- -------------------------
18,900 Air Express International Corporation.......... 479,587
19,200 Mesa Air Group, Inc.*.......................... 144,300
11,700 Pittston BAX Group............................. 111,150
13,700 SkyWest, Inc................................... 341,644
---------------------------------------------------------------
Total Air Transportation....................... 1,076,681
===============================================================
Apparel (2.8%)
- --------------
7,900 Ashworth, Inc.*................................ 36,537
7,900 J. Baker, Inc.................................. 68,137
10,300 Brown Group, Inc............................... 224,025
14,300 Cone Mills Corporation*........................ 85,800
8,700 Cyrk, Inc.*.................................... 52,744
13,400 Delta Woodside Industries, Inc................. 80,400
6,400 Dixie Group, Inc............................... 54,299
6,700 Galey & Lord, Inc.*............................ 29,313
18,800 Goody's Family Clothing, Inc.*................. 215,025
12,700 Guilford Mills, Inc............................ 131,763
13,700 Gymboree Corporation*.......................... 143,850
4,000 Haggar Corporation............................. 52,500
19,400 Hartmax Corporation*........................... 81,237
16,000 Jan Bell Marketing, Inc.*...................... 56,000
10,400 Jo-Ann Stores, Inc.*........................... 156,000
17,600 Just For Feet, Inc.*........................... 113,300
6,200 K-Swiss, Inc................................... 288,300
15,700 Kellwood Company............................... 425,862
22,300 Men's Wearhouse, Inc.*......................... 568,650
19,500 Nautica Enterprises, Inc.*..................... 329,063
9,300 Oshkosh B'Gosh, Inc............................ 196,462
4,600 Oxford Industries, Inc......................... 130,238
15,400 Phillips-Van Heusen Corporation................ 152,075
8,000 Pillowtex Corporation.......................... 130,500
12,500 Quiksilver, Inc................................ 325,781
9,500 St. John Knits, Inc............................ 277,875
26,200 Stride Rite Corporation........................ 270,188
11,200 The Dress Barn Corporation*.................... 179,200
6,300 Timberland Company*............................ 428,794
23,200 Wolverine World Wide, Inc...................... 324,800
---------------------------------------------------------------
Total Apparel.................................. 5,608,718
===============================================================
Banking (6.3%)
- --------------
14,100 Anchor Bancorp Wisconsin, Inc.................. 251,156
13,100 Banknorth Group, Inc........................... 432,300
12,700 Carolina First Corporation..................... 309,562
16,100 Centura Banks, Inc............................. 907,638
15,576 Commerce Bancorp, Inc.......................... 665,874
30,300 Cullen/Frost Bankers, Inc...................... 835,144
16,500 FirstBank Puerto Rico.......................... 372,281
16,000 First Midwest Bancorp, Inc..................... 636,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
58 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.4%) Market Value
================================================================================
<S> <C> <C>
Banking-continued
- -----------------
51,600 FirstMerit Corporation......................... $ 1,448,025
22,786 Hudson United Bancorp.......................... 697,821
13,700 MAF Bancorp, Inc............................... 332,225
14,700 Premier Bancshares, Inc........................ 269,194
13,795 Provident Bankshares Corporation*.............. 320,734
12,200 Queens County Bancorp, Inc..................... 394,975
16,000 Riggs National Corporation..................... 329,000
11,700 Silicon Valley Bancshares*..................... 289,575
22,600 St. Paul Bancorp, Inc.......................... 576,300
20,900 Susquehanna Bancshares, Inc.................... 369,669
15,250 TrustCo Bank Corporation....................... 409,844
10,600 U.S. Trust Corporation......................... 980,500
24,200 UST Corporation................................ 732,050
24,500 United Bankshares, Inc......................... 649,250
13,100 Whitney Holding Corporation.................... 520,725
---------------------------------------------------------------
Total Banking.................................. 12,729,842
===============================================================
Brokerage (0.2%)
- ----------------
13,600 Jeffries Group, Inc.*.......................... 408,000
---------------------------------------------------------------
Total Brokerage................................ 408,000
===============================================================
Building Materials (0.2%)
- --------------------------
10,700 Florida Rock Industries, Inc................... 486,850
---------------------------------------------------------------
Total Building Materials....................... 486,850
===============================================================
Business Machines (2.6%)
- ------------------------
7,200 Analogic Corporation........................... 223,875
23,600 Applied Magnetics Corporation*................. 72,275
14,800 Auspex Systems, Inc.*.......................... 160,950
11,000 BancTec, Inc.*................................. 197,313
3,400 Centigram Communications Corporation*.......... 31,662
8,200 Digi International, Inc.*...................... 85,588
12,800 Exabyte Corporation*........................... 49,600
8,000 Fair, Isaac and Company, Inc................... 280,500
28,500 Input/Output, Inc.*............................ 215,531
16,300 InterVoice, Inc.*.............................. 235,331
30,500 Komag, Inc.*................................... 101,031
11,500 MicroAge, Inc.*................................ 43,844
17,900 National Computer Systems, Inc................. 604,125
22,000 Novellus Systems, Inc.*........................ 1,501,500
22,800 PictureTel Corporation*........................ 182,400
9,700 Plantronics, Inc............................... 631,712
28,100 Read-Rite Corporation*......................... 174,307
9,100 Telxon Corporation............................. 72,231
13,600 Xircom, Inc.*.................................. 408,850
---------------------------------------------------------------
Total Business Machines........................ 5,272,625
===============================================================
Business Services (11.7%)
- -------------------------
12,400 ABM Industries, Inc............................ 380,525
12,200 ADVO, Inc.*.................................... 253,150
24,100 American Management Systems, Inc.*............. 772,706
12,700 Analysts International Corporation............. 182,563
4,900 Angelica Corporation........................... 86,363
14,100 Aspen Technology, Inc.......................... 165,675
15,305 The BISYS Group, Inc.*......................... 895,343
21,000 Billing Concepts Corporation*.................. 234,937
20,800 Bowne & Company, Inc........................... 270,400
10,800 CDI Corporation*............................... 367,875
33,000 CIBER, Inc..................................... 631,125
19,000 Cerner Corporation*............................ 398,405
11,800 Computer Task Group, Inc....................... 200,600
39,300 DeVry, Inc.*................................... 879,338
9,400 Dialogic Corporation*.......................... 412,425
22,800 Epicor Software Corporation.................... 169,575
18,000 FileNET Corporation*........................... 205,875
11,500 Franklin Covey Company*........................ 84,812
11,600 G&K Services, Inc.............................. 607,550
27,450 HA-LO Industries, Inc.*........................ 271,069
21,700 Harbinger Corporation*......................... 271,250
17,380 Hyperion Solutions Corporation*................ 309,581
13,800 Immune Response Corporation*................... 74,175
25,508 InaCom Corporation............................. 322,039
4,700 Insteel Industries, Inc........................ 42,300
29,800 Integrated Health Services, Inc.*.............. 238,400
25,000 Interim Services, Inc.*........................ 515,625
17,600 John H. Harland Company........................ 350,900
7,150 Kronos, Inc.*.................................. 325,325
16,000 Labor Ready, Inc............................... 520,000
10,500 Lason, Inc.*................................... 521,063
20,200 Medquist, Inc.*................................ 883,750
13,700 Mentor Corporation............................. 255,163
12,300 NFO Worldwide, Inc.*........................... 172,200
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 59
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
================================================================================
<S> <C> <C>
Business Services--continued
- ---------------------------
3,300 Nashua Corporation*............................ $ 32,588
19,200 National Data Corporation...................... 820,800
8,100 New England Business Service, Inc.............. 250,087
15,000 Norrell Corporation............................ 282,187
12,100 Offshore Logistics, Inc.*...................... 134,613
21,100 Orbital Sciences Corporation*.................. 498,488
26,600 Paxar Corporation*............................. 239,400
13,300 Pre-Paid Legal Services, Inc.*................. 361,594
11,700 Primark Corporation*........................... 328,331
12,166 Priority Healthcare Corporation................ 419,727
9,950 Progress Software Corporation*................. 281,088
10,500 Protein Design Labs, Inc.*..................... 232,969
8,200 Rural/Metro Corporation*....................... 78,925
29,800 S3, Inc.*...................................... 270,992
6,900 SEACOR SMIT, Inc............................... 369,150
10,100 SEI Investments Company........................ 891,325
18,300 Superior Services, Inc.*....................... 488,381
27,200 System Software Associates, Inc.*.............. 45,048
12,700 TCSI Corporation*.............................. 32,544
7,600 TETRA Technologies, Inc.*...................... 69,825
23,400 Technology Solutions Company*.................. 253,012
21,225 Tetra Tech, Inc.*.............................. 350,212
15,400 The Profit Recovery Group International, Inc... 728,612
26,800 True North Communications, Inc................. 804,000
15,100 Vantive Corporation*........................... 172,706
17,100 Visio Corporation.............................. 650,869
8,500 Volt Information Sciences, Inc.*............... 194,437
5,700 Wall Data, Inc.*............................... 54,506
30,100 Whittman-Hart, Inc.*........................... 955,675
21,600 World Color Press, Inc.*....................... 594,000
17,600 Zebra Technologies Corporation*................ 676,500
---------------------------------------------------------------
Total Business Services........................ 23,834,673
===============================================================
Capital Goods (0.5%)
- --------------------
8,300 Aviation Sales Company......................... 327,850
9,800 Esterline Technologies Corporation............. 140,875
16,700 SLI, Inc....................................... 450,900
---------------------------------------------------------------
Total Capital Goods............................ 919,625
===============================================================
Consumer Durables (3.3%)
- ------------------------
7,200 Bassett Furniture Industries, Inc.............. 164,700
7,100 C&D Technologies, Inc.......................... 217,438
27,500 Champion Enterprises, Inc.*.................... 512,188
9,400 Coachmen Industries, Inc....................... 218,550
23,150 Ethan Allen Interiors, Inc..................... 873,913
8,200 Flow International Corporation*................ 88,662
17,200 Griffon Corporation*........................... 134,375
10,000 Harman International Industries, Inc........... 440,000
29,600 La-Z-Boy, Inc.................................. 680,800
22,300 Linens 'N Things, Inc.*........................ 975,625
4,200 National Presto Industries, Inc................ 160,650
10,800 Royal Appliance Manufacturing Company*......... 74,925
15,500 Shorewood Packaging Corporation*............... 285,781
5,100 Skyline Corporation............................ 149,494
15,200 Sturm, Ruger & Company, Inc.................... 162,450
4,400 Swiss Army Brands, Inc.*....................... 39,050
8,900 Thomas Industries, Inc......................... 182,450
7,300 Toro Company................................... 287,437
31,600 Williams-Sonoma, Inc.*......................... 1,100,075
---------------------------------------------------------------
Total Consumer Durables........................ 6,748,563
===============================================================
Chemicals (1.9%)
- ----------------
12,800 Brady Corporation.............................. 416,000
13,900 Cambrex Corporation............................ 364,875
10,400 Chemfirst, Inc................................. 252,850
9,000 Commonwealth Industries, Inc................... 112,500
13,300 Geon Company................................... 428,925
13,100 Lilly Industries, Inc.......................... 243,169
14,200 MacDermid, Inc................................. 660,300
5,700 McWhorter Technologies, Inc.*.................. 82,294
13,400 OM Group, Inc.................................. 462,300
5,000 Quaker Chemical Corporation.................... 81,250
20,800 Tredegar Corporation........................... 452,400
8,870 WD-40 Company.................................. 221,750
---------------------------------------------------------------
Total Chemicals................................ 3,778,613
===============================================================
Consumer Cyclical (0.9%)
- ------------------------
9,600 Action Performance Companies, Inc.............. 316,800
10,200 Department 56, Inc............................. 274,125
7,400 Elcor Corporation.............................. 323,288
25,000 MascoTech, Inc................................. 423,438
6,600 Simpson Manufacturing Company, Inc............. 313,500
11,800 Kroll-O'Gara Company........................... 260,337
---------------------------------------------------------------
Total Consumer Cyclical........................ 1,911,488
===============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
60 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio -- continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Common Stocks (99.4%) Market Value
================================================================================
<S> <C> <C>
Construction (3.4%)
- -------------------
15,500 Apogee Enterprises, Inc........................ $ 208,281
21,000 Blount International, Inc...................... 570,937
7,100 Building Materials Holding Corporation*........ 81,650
36,300 D.R. Horton, Inc............................... 603,488
14,500 Dycom Industries, Inc.*........................ 812,000
14,400 Insituform Technologies, Inc.*................. 311,400
29,800 Interface, Inc................................. 257,025
14,400 Justin Industries, Inc......................... 200,700
6,000 Lawson Products, Inc........................... 151,125
11,100 Lone Star Industries, Inc...................... 416,944
30,000 Morrison Knudsen Corporation*.................. 309,375
26,600 Oakwood Homes Corporation...................... 349,125
6,600 Republic Group, Inc............................ 118,800
8,400 Ryland Group, Inc.............................. 249,375
9,900 Service Experts, Inc.*......................... 217,181
6,800 Southern Energy Homes, Inc.*................... 36,125
16,700 Standard Pacific Corporation................... 216,056
7,400 Stone & Webster, Inc........................... 197,025
11,900 Texas Industries, Inc.......................... 461,125
8,800 Tayco Developments, Inc........................ 272,800
20,900 Toll Brothers, Inc.*........................... 448,044
8,700 URS Corporation................................ 255,019
7,500 U.S. Home Corporation*......................... 266,250
---------------------------------------------------------------
Total Construction............................. 7,009,850
===============================================================
Consumer Products (0.7%)
- ------------------------
11,900 Fossil, Inc.................................... 575,663
9,200 Libbey, Inc.................................... 266,800
26,500 Tower Automotive, Inc.......................... 674,093
---------------------------------------------------------------
Total Consumer Products........................ 1,516,556
===============================================================
Cosmetics (0.3%)
- ----------------
5,900 Chemed Corporation............................. 196,175
7,800 USA Detergents, Inc.*.......................... 47,288
9,700 Wesley Jessen Visioncare, Inc.................. 314,037
---------------------------------------------------------------
Total Cosmetics................................ 557,500
===============================================================
Drugs & Medicine (7.1%)
- -----------------------
11,400 ADAC Laboratories, Inc.*....................... 82,650
24,000 Advanced Tissue Sciences, Inc.*................ 78,000
24,100 Alliance Pharmaceutical Corporation*........... 63,262
15,600 Alpharma, Inc.................................. 554,775
17,400 Ballard Medical Products....................... 405,638
12,900 Barr Laboratories, Inc.*....................... 514,388
17,100 Bindley Western Industries, Inc................ 394,369
29,500 Bio-Technology General Corporation*............ 191,750
13,000 Biomatrix, Inc................................. 281,125
13,900 COR Therapeutics, Inc.......................... 205,025
16,300 Cephalon, Inc.*................................ 283,212
7,900 Cooper Companies, Inc.*........................ 197,006
33,300 Coventry Health Care, Inc.*.................... 364,219
5,700 Curative Health Services, Inc.*................ 31,350
12,700 Cygnus, Inc.*.................................. 165,100
7,700 Diagnostic Products Corporation................ 212,712
14,100 Enzo Biochem, Inc.*............................ 139,237
8,600 Hologic, Inc.*................................. 48,375
22,100 IDEXX Laboratories, Inc.*...................... 515,206
15,800 Incyte Pharmaceuticals, Inc.*.................. 417,712
17,000 Invacare Corporation........................... 454,750
16,300 Jones Pharma, Inc.............................. 641,813
21,800 Liposome Company, Inc.*........................ 416,925
17,900 Magellan Health Services, Inc.*................ 179,000
8,100 Maxxim Medical, Inc............................ 188,831
10,500 Molecular Biosystems, Inc.*.................... 25,594
40,500 NBTY, Inc.*.................................... 263,250
10,000 Nature's Sunshine Products, Inc................ 105,000
11,400 NCS HealthCare, Inc.*.......................... 61,987
18,200 North American Vaccine, Inc.*.................. 88,725
12,100 Noven Pharmaceuticals, Inc.*................... 73,166
17,200 Organogenesis, Inc.*........................... 161,250
27,100 Orthodontic Centers of America, Inc.*.......... 382,788
18,500 Owens & Minor, Inc............................. 203,500
14,200 PAREXEL International Corporation*............. 189,038
19,050 Patterson Dental Company*...................... 661,988
8,800 Pediatrix Medical Group, Inc.*................. 187,000
13,900 Pharmaceutical Product Development, Inc.*...... 380,513
43,100 PhyCor, Inc.*.................................. 319,207
17,700 Regeneron Pharmaceuticals, Inc.*............... 138,281
25,050 Renal Care Group, Inc.*........................ 648,169
17,300 Respironics, Inc.*............................. 261,662
17,900 Roberts Pharmaceutical Corporation*............ 434,075
15,100 Sierra Health Services, Inc.*.................. 218,006
14,000 Sola International, Inc.*...................... 272,125
5,300 Spacelabs Medical, Inc.*....................... 100,038
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 61
<PAGE>
AAL Variable Product Small Company Stock Portfolio -- continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
================================================================================
<C> <S> <C>
Drugs & Medicine--continued
- ---------------------------
24,000 Summit Technology, Inc.*....................... $ 528,000
12,500 Sunrise Medical, Inc.*......................... 89,063
6,600 Syncor International Corporation*.............. 237,600
15,300 U.S. Bioscience, Inc.*......................... 149,175
18,000 Universal Health Services, Inc.*............... 859,500
14,400 Vertex Pharmaceuticals, Inc.*.................. 347,400
---------------------------------------------------------------
Total Drugs & Medicine......................... 14,412,530
===============================================================
Electronics (10.4%)
- -------------------
44,200 Acxiom Corporation*............................ 1,102,237
8,400 Adaptive Broadband Corporation................. 183,750
15,500 Allen Telecom, Inc.*........................... 166,625
6,000 Alliant Techsystems, Inc.*..................... 519,000
20,200 Anixter International, Inc*.................... 368,650
13,500 Avid Technology, Inc.*......................... 217,687
15,400 BMC Industries, Inc.*.......................... 158,812
13,800 Belden, Inc.................................... 330,337
8,600 Benchmark Electronics, Inc.*................... 309,062
20,750 Burr-Brown Corporation*........................ 759,969
5,200 C-COR Electronics, Inc.*....................... 144,950
22,200 C-Cube Microsystems, Inc.*..................... 703,462
7,800 CTS Corporation................................ 546,000
15,900 Cable Design Technologies Corporation*......... 245,456
17,000 Checkpoint Systems, Inc.*...................... 151,938
13,500 Coherent, Inc.*................................ 251,437
28,600 CommScope, Inc.*............................... 879,450
8,700 CustomTracks Corporation*...................... 486,656
22,400 DSP Communications Inc......................... 646,800
16,300 Dallas Semiconductor Corporation............... 823,150
34,900 Digital Microwave Corporation*................. 444,975
12,700 Dionex Corporation*............................ 514,350
7,400 Electro Scientific Industries, Inc.*........... 309,181
11,100 Electroglas, Inc.*............................. 222,000
12,100 Etec Systems, Inc.*............................ 402,325
20,800 General Semiconductor, Inc.*................... 189,800
41,160 Gentex Corporation*............................ 1,152,480
12,800 Gerber Scientific, Inc.*....................... 282,400
7,700 Hadco Corporation*............................. 306,075
6,150 Harmon Industries, Inc.*....................... 121,847
14,000 Hutchinson Technology, Inc.*................... 388,500
8,300 Innovex, Inc................................... 116,200
6,938 Intermagnetics General Corporation*............ 53,770
29,200 International Rectifier Corporation*........... 388,725
8,300 Itron, Inc.*................................... 71,069
22,200 KEMET Corporation*............................. 509,213
15,800 Kent Electronics Corporation*.................. 313,037
13,300 Kulicke and Soffa Industries, Inc.*............ 356,606
23,300 Macromedia, Inc.*.............................. 821,325
9,400 Marshall Industries, Inc.*..................... 337,812
20,100 Methode Electronics, Inc....................... 459,788
11,500 Micrel, Inc.*.................................. 851,000
27,700 P-Com, Inc.*................................... 144,990
5,900 Park Electrochemical Corporation............... 169,625
13,600 Photronics, Inc.*.............................. 333,200
14,900 Pioneer-Standard Electronics, Inc.............. 178,800
8,600 Plexus Corporation*............................ 259,075
18,600 Silicon Valley Group, Inc.*.................... 312,713
16,500 SpeedFam-IPEC, Inc............................. 265,031
8,800 Standard Microsystems Corporation*............. 66,550
8,400 SymmetriCom, Inc.*............................. 68,250
9,200 Technitrol, Inc................................ 296,700
3,900 Three-Five Systems, Inc.*...................... 53,869
18,200 Unitrode Corporation*.......................... 522,113
15,100 Valence Technology, Inc.*...................... 111,363
23,400 Vicor Corporation*............................. 495,788
6,900 Vital Signs, Inc............................... 137,569
3,700 Watkins-Johnson Company........................ 109,150
10,152 Zilog, Inc.*................................... 25,278
---------------------------------------------------------------
Total Electronics.............................. 21,157,970
===============================================================
Energy & Utilities (4.7%)
- -------------------------
5,100 American States Water Company.................. 144,713
6,450 Aquarion Company............................... 224,137
17,500 Atmos Energy Corporation....................... 437,500
4,100 Bangor Hydro-Electric Company*................. 66,112
6,200 Cascade Natural Gas Corporation................ 117,800
9,600 Central Hudson Gas & Electric Company.......... 403,200
6,400 Central Vermont Public Service Corporation..... 81,600
7,700 Cilcorp, Inc................................... 481,250
12,200 Commonwealth Energy System..................... 512,400
5,900 Connecticut Energy Corporation................. 227,519
11,600 Eastern Utilities Associates................... 337,850
16,800 Energen Corporation............................ 312,900
12,600 Global Industrial Technologies, Inc.*.......... 151,987
3,000 Green Mountain Power Corporation............... 33,750
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
62 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio -- continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.4%) Market Value
================================================================================
<S> <C> <C>
Energy & Utilities--continued
- -----------------------------
10,200 New Jersey Resources Corporation............... $ 381,862
14,100 Northwest Natural Gas Company.................. 340,162
7,700 Orange & Rockland Utilities, Inc............... 449,969
6,100 Pennsylvania Enterprises, Inc.................. 187,194
23,046 Philadelphia Suburban Corporation.............. 531,498
17,500 Piedmont Natural Gas Company, Inc.............. 544,687
11,600 Public Service Company of North Carolina....... 339,300
17,600 Sierra Pacific Resources Corporation........... 640,200
17,300 Southwest Gas Corporation...................... 495,213
8,600 Stone Energy Corporation....................... 364,425
7,600 TNP Enterprises, Inc........................... 275,500
8,100 United Illuminating Company.................... 343,744
21,800 United Water Resources, Inc.................... 494,588
21,200 WICOR, Inc..................................... 592,275
---------------------------------------------------------------
Total Energy & Utilities....................... 9,513,335
===============================================================
Energy--Raw Materials (1.1%)
- ----------------------------
15,100 AMCOL International Corporation................ 217,063
14,000 Cabot Oil & Gas Corporation.................... 260,750
27,400 Devon Energy Corporation....................... 979,550
11,400 Kirby Corporation*............................. 241,538
9,500 Plains Resources, Inc.*........................ 180,500
13,400 Seitel, Inc.*.................................. 216,912
14,100 Southwestern Energy Company.................... 148,931
---------------------------------------------------------------
Total Energy--Raw Materials.................... 2,245,244
===============================================================
Financial (0.8%)
- ----------------
26,700 Community First Bankshares..................... 637,463
7,400 E. W. Blanch Holdings, Inc..................... 504,587
14,000 Hambrecht & Quist Group........................ 519,750
---------------------------------------------------------------
Total Financial................................ 1,661,800
===============================================================
Food & Agriculture (3.3%)
- -------------------------
37,200 Chiquita Brands International, Inc............. 334,800
4,800 Coca-Cola Bottling Company Consolidated........ 268,800
21,100 Corn Products International, Inc............... 642,231
25,200 DIMON, Inc..................................... 130,725
21,800 Delta & Pine Land Company...................... 686,700
24,300 Earthgrains Company............................ 627,244
21,700 Fleming Companies, Inc......................... 252,263
5,000 J & J Snack Foods Corporation*................. 120,000
15,700 Landry's Seafood Restaurants, Inc.*............ 125,600
7,250 Lindsay Manufacturing Company.................. 127,328
11,600 Michael Foods Incorporated..................... 272,600
14,700 Mississippi Chemical Corporation............... 144,244
6,400 Nash Finch Company............................. 64,599
17,600 Ralcorp Holdings, Inc.*........................ 282,700
27,000 Richfood Holdings, Inc......................... 475,875
10,400 Scotts Company*................................ 495,300
23,700 Smithfield Foods, Inc.*........................ 792,469
10,200 United Natural Foods, Inc...................... 252,450
14,800 Whole Foods Market, Inc.*...................... 711,325
---------------------------------------------------------------
Total Food & Agriculture....................... 6,807,253
===============================================================
Health Care (1.3%)
- ------------------
8,600 Datascope Corporation*......................... 276,275
24,900 Dura Pharmaceuticals, Inc...................... 297,244
10,600 Hanger Orthopedic Group, Inc................... 150,387
11,600 IDEC Pharmaceuticals Corporation............... 893,925
47,700 US Oncology, Inc............................... 572,400
17,200 Varian Medical Systems, Inc.................... 434,300
---------------------------------------------------------------
Total Health Care.............................. 2,624,531
===============================================================
Insurance (3.7%)
- ----------------
24,500 American Bankers Insurance Group, Inc.......... 1,333,719
18,100 Capital Re Corporation......................... 290,731
11,445 Delphi Financial Group, Inc.*.................. 410,596
21,500 Enhance Financial Services Group, Inc.......... 424,625
6,600 Executive Risk, Inc............................ 561,413
36,500 First American Financial Corporation........... 652,437
39,600 Fremont General Corporation.................... 747,450
19,570 Frontier Insurance Group, Inc.................. 300,889
10,200 Arthur J. Gallagher & Company.................. 504,900
19,900 Genesis Health Ventures, Inc.*................. 59,700
7,500 Hilb, Rogal and Hamilton Company............... 167,812
6,400 Insurance Auto Auctions, Inc.*................. 103,200
24,500 Mutual Risk Management Ltd..................... 817,687
15,400 Orion Capital Corporation...................... 552,475
15,800 Selective Insurance Group, Inc................. 301,188
6,000 Trenwick Group, Inc............................ 147,937
9,700 Zenith National Insurance Corporation.......... 238,863
---------------------------------------------------------------
Total Insurance................................ 7,615,622
===============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 63
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
================================================================================
<S> <C> <C>
Liquor (0.3%)
- -------------
10,200 Canandaigua Brands, Inc.*...................... $ 534,863
---------------------------------------------------------------
Total Liquor................................... 534,863
===============================================================
Manufacturing (0.1%)
- --------------------
8,400 Gardner Denver, Inc.*.......................... 135,450
---------------------------------------------------------------
Total Manufacturing............................ 135,450
===============================================================
Media (2.5%)
- ------------
6,400 Carmike Cinemas, Inc.*......................... 102,000
8,100 Consolidated Graphics,Inc.*.................... 405,000
21,400 Express Scripts, Inc.*......................... 1,288,013
4,400 GC Companies, Inc.*............................ 157,300
9,000 Merrill Corporation*........................... 130,500
9,500 Metro Networks, Inc.*.......................... 507,063
8,300 Thomas Nelson, Inc............................. 92,338
12,100 Network Equipment Technologies, Inc.*.......... 119,488
10,300 Oak Industries, Inc.*.......................... 449,981
32,350 Valassis Communications, Inc.*................. 1,184,819
16,000 Westwood One, Inc.*............................ 571,000
---------------------------------------------------------------
Total Media.................................... 5,007,502
===============================================================
Metals--Diversified (0.1%)
- --------------------------
11,700 RTI International Metals, Inc.*................ 171,844
---------------------------------------------------------------
Total Metals--Diversified...................... 171,844
===============================================================
Miscellaneous Finance (3.8%)
- ----------------------------
27,600 AMRESCO, Inc.*................................. 177,675
36,100 AmeriCredit Corporation*....................... 577,600
14,400 Cash America International, Inc................ 185,400
34,300 Commercial Federal Corporation................. 795,331
7,000 Dain Rauscher Corporation...................... 378,875
15,865 Downey Financial Corporation................... 348,038
20,400 Eaton Vance Corporation........................ 702,525
17,120 Fidelity National Financial, Inc............... 359,520
5,300 JSB Financial, Inc............................. 269,638
11,400 Jack Henry & Associates, Inc................... 447,450
31,800 Legg Mason, Inc................................ 1,224,300
12,600 M.D.C. Holdings, Inc........................... 270,900
4,200 Penford Corporation............................ 68,250
14,900 Pioneer Group, Inc............................. 257,025
20,900 Radian Group, Inc.............................. 1,020,181
26,950 Raymond James Financial, Inc................... 645,116
---------------------------------------------------------------
Total Miscellaneous Finance.................... 7,727,824
===============================================================
Motor Vehicles (1.8%)
- ---------------------
13,100 A.O. Smith Corporation......................... 366,800
15,300 Arctic Cat, Inc................................ 136,744
20,800 Breed Technologies, Inc.*...................... 46,800
9,400 Discount Auto Parts, Inc.*..................... 226,775
10,400 Myers Industries, Inc.......................... 208,000
14,000 O'Reilly Automotive, Inc.*..................... 705,250
14,300 Polaris Industries, Inc........................ 622,050
10,200 Simpson Industries, Inc........................ 104,550
7,000 Spartan Motors, Inc............................ 40,250
7,400 Standard Motor Products, Inc................... 181,300
9,100 Standard Products Corporation.................. 233,188
11,900 TBC Corporation*............................... 84,044
6,900 Thor Industries, Inc........................... 195,787
11,800 Titan International, Inc....................... 140,125
12,500 Winnebago Industries, Inc...................... 281,250
10,600 Wynn's International, Inc...................... 195,437
---------------------------------------------------------------
Total Motor Vehicles........................... 3,768,350
===============================================================
Non-Durables & Entertainment (3.5%)
- -----------------------------------
9,400 A.T. Cross Company............................. 52,288
16,700 Applebee's International, Inc.................. 503,088
10,300 CEC Entertainment, Inc.*....................... 435,175
29,270 CKE Restaurants, Inc........................... 475,638
5,600 CPI Corporation................................ 184,800
10,500 Catalina Marketing Corporation*................ 966,000
15,025 Consolidated Products, Inc.*................... 270,450
23,400 Foodmaker, Inc.*............................... 663,975
8,900 Gibson Greetings, Inc.*........................ 56,459
6,000 Huffy Corporation*............................. 84,000
11,200 IHOP Corporation............................... 269,500
12,700 Luby's, Inc.................................... 190,500
16,900 Marcus Theatres Corporation.................... 208,081
21,451 Midway Games, Inc.*............................ 277,522
6,800 Panera Bread Company........................... 43,350
21,850 Regis Corporation.............................. 419,247
18,100 Ruby Tuesday, Inc.............................. 343,900
12,000 Russ Berrie & Company.......................... 297,000
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
64 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio -- continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
================================================================================
<S> <C> <C>
Non-Durables & Entertainment--continued
- ---------------------------------------
21,700 Ryan's Family Steak Houses, Inc.*.............. $ 252,262
10,750 Sonic Corporation*............................. 350,719
12,900 TCBY Enterprises, Inc.......................... 78,206
7,500 Taco Cabana, Inc.*............................. 76,406
11,350 The Cheesecake Factory, Inc.*.................. 346,175
14,500 Triarc Companies, Inc.*........................ 308,125
---------------------------------------------------------------
Total Non-Durables & Entertainment............. 7,152,866
===============================================================
Non-Ferrous Metals (1.1%)
- --------------------------
7,900 A. M. Castle & Company......................... 134,300
9,200 Brush Wellman, Inc............................. 166,750
12,300 Coeur d' Alene Mines Corporation*.............. 56,888
8,300 Commercial Metals Company...................... 236,550
31,300 Helca Mining Company*.......................... 64,556
9,300 IMCO Recycling, Inc............................ 159,263
20,300 Mueller Industries, Inc.*...................... 688,931
19,600 Stillwater Mining Company*..................... 640,675
7,600 Wolverine Tube, Inc.*.......................... 190,950
---------------------------------------------------------------
Total Non-Ferrous Metals....................... 2,338,863
===============================================================
Domestic Oil (1.9%)
- -------------------
18,200 Barrett Resources Corporation*................. 698,425
16,700 Benton Oil & Gas Company*...................... 33,400
25,300 Cross Timbers Oil Company...................... 376,338
10,500 HS Resources, Inc.*............................ 154,875
23,200 Newfield Exploration Company*.................. 659,750
22,700 Pogo Producing Corporation..................... 422,788
12,000 Pool Energy Services Company*.................. 243,750
28,500 Pride International, Inc.*..................... 301,031
12,000 Remington Oil & Gas Corporation*............... 58,500
6,100 St. Mary Land & Exploration Company............ 125,431
25,000 Tuboscope, Inc.*............................... 342,187
35,100 Vintage Petroleum, Inc......................... 377,325
---------------------------------------------------------------
Total Domestic Oil............................. 3,793,800
===============================================================
Paper & Forest Products (0.5%)
- ------------------------------
20,000 Buckeye Technologies, Inc.*.................... 303,750
14,100 Caraustar Industries, Inc...................... 348,093
8,900 Lydall, Inc.*.................................. 102,350
7,600 Pope & Talbot, Inc............................. 91,675
11,800 Universal Forest Products, Inc................. 253,700
---------------------------------------------------------------
Total Paper & Forest Products.................. 1,099,568
===============================================================
Producers Goods (5.0%)
- ----------------------
12,000 Applied Industrial Technologies, Inc........... 228,000
21,995 Applied Power, Inc............................. 600,738
20,500 AptarGroup, Inc................................ 615,000
10,800 Astec Industries, Inc.*........................ 440,100
20,500 Baldor Electric Company........................ 407,438
11,100 Barnes Group, Inc.............................. 241,425
4,000 Butler Manufacturing Company................... 111,750
13,500 CLARCOR, Inc................................... 259,031
23,100 Cognex Corporation*............................ 729,094
20,700 Fedders Corporation............................ 138,431
11,500 Graco, Inc..................................... 337,812
12,600 Helix Technology Corporation................... 301,612
13,700 Hughes Supply, Inc............................. 406,719
9,100 Ionics, Inc.*.................................. 332,150
24,900 JLG Industries, Inc............................ 507,337
13,300 Lattice Semiconductor Corporation*............. 827,925
14,700 Manitowoc Company, Inc......................... 611,888
8,700 Material Sciences Corporation*................. 130,500
12,800 Oceaneering International, Inc.*............... 206,400
8,100 Quanex Corporation............................. 230,850
11,900 Regal-Beloit Corporation....................... 281,138
6,200 Robbins & Myers, Inc........................... 138,338
17,100 Roper Industries, Inc.......................... 547,200
7,200 SPS Technologies, Inc.......................... 270,000
10,300 Scott Technologies, Inc.*...................... 198,275
7,300 Standex International Corporation.............. 199,838
12,000 Ultratech Stepper, Inc.*....................... 180,750
13,700 Valmont Industries, Inc........................ 233,327
16,150 Watsco, Inc.................................... 264,456
6,500 Whittaker Corporation*......................... 182,000
11,900 X-Rite, Inc.................................... 76,606
---------------------------------------------------------------
Total Producer Goods........................... 10,236,128
===============================================================
Railroad & Shipping (0.1%)
- --------------------------
16,300 Halter Marine Group, Inc.*..................... 107,987
5,200 RailTex, Inc.*................................. 72,150
---------------------------------------------------------------
Total Railroad & Shipping...................... 180,137
===============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 65
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
========================================================================
<C> <S> <C>
Real Property (0.1%)
- ---------------------
14,600 Hollywood Park, Inc.*.................. $ 248,200
----------------------------------------------------
Total Real Property.................... 248,200
====================================================
Retail Stores (3.3%)
- ---------------------
16,200 Ames Department Stores, Inc............ 739,125
14,700 AnnTaylor Stores Corporation*.......... 661,500
13,000 Authentic Fitness Corporation.......... 227,500
21,100 The Bombay Company, Inc.*.............. 162,206
10,200 Books-A-Million, Inc.*................. 76,818
29,800 Casey's General Stores, Inc............ 447,000
14,900 Cato Corporation....................... 173,213
3,300 DAMARK International, Inc.*............ 27,638
12,500 Footstar, Inc.*........................ 464,844
7,100 Gottschalks, Inc.*..................... 64,787
10,800 Hancock Fabrics, Inc................... 47,250
14,450 Insight Enterprises, Inc.*............. 357,637
5,100 Lillian Vernon Corporation............. 66,300
16,200 Michaels Stores, Inc.*................. 496,125
17,450 Pacific Sunwear of California, Inc.*... 425,344
54,500 Pier 1 Imports, Inc.................... 613,125
14,800 ShopKo Stores, Inc.*................... 536,500
25,600 Stein Mart, Inc.*...................... 240,000
20,600 Zale Corporation*...................... 824,000
----------------------------------------------------
Total Retail Stores.................... 6,650,912
====================================================
Steel (0.4%)
- --------------
5,200 Amcast Industrial Corporation.......... 84,825
16,700 Birmingham Steel Corporation........... 68,887
14,300 Intermet Corporation................... 216,288
10,500 Reliance Steel & Aluminum Company...... 409,500
6,200 Steel Technologies, Inc................ 58,512
9,600 WHX Corporation*....................... 63,000
----------------------------------------------------
Total Steel............................ 901,012
====================================================
Technology (2.2%)
- ------------------
10,800 Alpha Industries, Inc.................. 514,350
10,500 DBT Online, Inc........................ 343,875
14,200 Dendrite International,
Inc.................................... 512,975
8,750 FactSet Research Systems, Inc.......... 495,469
13,900 HNC Software, Inc.*.................... 428,293
9,200 MICROS Systems, Inc.*.................. 312,800
21,000 Mercury Interactive Corporation*....... 742,875
18,800 National Instruments Corporation*...... 759,050
22,000 Security Dynamics Technologies, Inc.... 467,500
----------------------------------------------------
Total Technology....................... 4,577,187
====================================================
Telecommunications (0.2%)
- --------------------------
11,300 Powerwave Technologies, Inc............ 364,425
----------------------------------------------------
Total Telecommunications............... 364,425
====================================================
Telephone (0.6%)
- -----------------
27,000 Aspect Telecommunications Corporation*. 263,250
30,100 Brightpoint, Inc.*..................... 182,481
28,300 General Communication, Inc.*........... 192,350
14,800 Inter-Tel, Inc......................... 270,100
34,000 TALK.com, Inc.......................... 382,500
1,400 TALK.com, Inc. (Rights)................ 0
----------------------------------------------------
Total Telephone........................ 1,290,681
====================================================
Tires & Rubber (0.2%)
- ----------------------
8,800 O'Sullivan Corporation................. 107,250
31,100 Safeskin Corporation*.................. 373,200
----------------------------------------------------
Total Tires & Rubber................... 480,450
====================================================
Tobacco (0.1%)
- ---------------
9,000 Schweitzer-Mauduit International, Inc.. 135,000
----------------------------------------------------
Total Tobacco.......................... 135,000
====================================================
Travel & Recreation (1.0%)
- ---------------------------
6,700 Anchor Gaming*......................... 322,019
25,600 Aztar Corporation*..................... 235,200
20,800 Central Parking Corporation............ 712,400
14,700 Family Golf Centers, Inc.*............. 113,006
9,300 K2, Inc................................ 83,119
18,100 Players International,
Inc.*.................................. 130,093
29,000 Prime Hospitality Corporation*......... 348,000
18,000 Sports Authority, Inc.*................ 79,875
----------------------------------------------------
Total Travel & Recreation.............. 2,023,712
====================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
66 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.1%) Market Value
===============================================================================
<C> <S> <C>
Trucking & Freight (2.1%)
- --------------------------
18,000 American Freightways Corporation*............ $ 352,125
11,100 Arkansas Best Corporation*................... 110,306
28,300 Expeditors International of Washington,
Inc.......................................... 771,175
20,500 Fritz Companies, Inc.*....................... 220,375
9,200 Frozen Food Express Industries, Inc.......... 70,150
16,900 Heartland Express, Inc.*..................... 276,738
5,800 Landstar System, Inc.*....................... 209,343
7,000 MS Carriers, Inc.*........................... 207,593
32,550 Rollins Truck Leasing Corporation............ 362,119
15,000 USFreightways Corporation.................... 694,688
13,000 Wabash National Corporation.................. 251,875
26,775 Werner Enterprises, Inc...................... 555,581
14,000 Yellow Corporation*.......................... 248,500
-----------------------------------------------------------
Total Trucking & Freight..................... 4,330,568
===========================================================
-----------------------------------------------------------
Total Common Stocks
(cost basis $215,297,626).................... 202,029,492
===========================================================
</TABLE>
<TABLE>
<CAPTION>
Principal Short-Term Interest Maturity Market
Amount Investments (0.9%) Rate (a) Date Value
===============================================================================
<C> <S> <C> <C> <C>
$1,886,000 Consolidated Natural
Gas Company........... 5.750%....... 7/1/99........$ 1,886,000
---------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $1,886,000).................. 1,886,000
===============================================================
---------------------------------------------------------------
Total Investments (100.0%)
(amortized cost basis $217,183,626)................ 203,915,492
===============================================================
---------------------------------------------------------------
Other Assets,
Less Liabilities (0.0%)............................ (53,501)
===============================================================
---------------------------------------------------------------
Net Assets (100.0%)................................$203,861,991
===============================================================
</TABLE>
(a) The interest rate reflects the discount rate at the date of purchase.
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 67
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Statement of Assets and Liabilities
AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
Money
Market Bond High Yield
Portfolio Portfolio Bond Portfolio
=====================================================================================================================
<S> <C> <C> <C>
Assets
- ------
Investments, at cost............................................. $40,196,336 $52,201,011 $35,086,365
- --------------------------------------------------------------------------------------------------------------------
Investments, at value............................................ $40,196,336 $51,020,061 $30,997,655
Cash............................................................. 907 783 197
Dividends and interest receivable................................ -- 633,604 889,640
Receivable for investments sold.................................. -- -- --
Receivable for fund shares sold.................................. 746,526 29,421 84
Receivable for forward contracts................................. -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total Assets $40,943,769 $51,683,869 $31,887,576
=====================================================================================================================
Liabilities
- -----------
Payable for investments purchased................................ $-- $494,311 $--
Payable for forward contracts.................................... -- -- --
Income distributions payable..................................... 5,140 -- --
Payable for fund shares reacquired............................... 356,290 12,745 24,964
Accrued expenses................................................. 12,407 15,884 11,495
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities 373,837 522,940 36,459
=====================================================================================================================
Net Assets
- ----------
Capital stock -- par value ($0.001/share)........................ 40,569 5,188 3,764
Capital stock -- additional paid-in capital...................... 40,529,363 52,482,272 36,308,438
Undistributed net investment income.............................. -- 10,350 11,134
Undistributed net realized gain (loss)........................... -- (155,931) (383,509)
Net unrealized appreciation (depreciation) on investments........ -- (1,180,950) (4,088,710)
Net unrealized appreciation on foreign currency contracts........ -- -- --
Net unrealized appreciation on currency related transactions..... -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total Net Assets 40,569,932 51,160,929 31,851,117
====================================================================================================================
- --------------------------------------------------------------------------------------------------------------------
Total Liabilities and Net Assets $40,943,769 $51,683,869 $31,887,576
====================================================================================================================
Capital Shares Outstanding (2 billion shares authorized)......... 40,569,932 5,187,906 3,763,824
Net Asset Value Per Share........................................ $1.00 $9.86 $8.46
</TABLE>
68 Statement of Assets and Liabilities (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
Large Small
Company International Company
Balanced Stock Stock Stock
Portfolio Portfolio Portfolio Portfolio
============================================================
<S> <C> <C> <C>
$569,549,751 $498,246,712 $20,949,116 $217,183,626
- ------------------------------------------------------------
$682,588,147 $737,449,163 $23,318,913 $203,915,492
1,713 338 298,429 747
3,650,721 634,476 55,581 98,750
2,162,382 4,137,211 189,851 2,113,195
868,483 330,135 4,269 30,745
-- -- 126,886 --
- ------------------------------------------------------------
$689,271,446 $742,551,323 $23,993,929 $206,158,929
============================================================
$ 5,738,910 $ -- $ 318,053 $ 2,181,148
-- -- 128,202 --
-- -- -- --
233,172 176,672 4,869 54,094
189,878 202,817 16,467 61,696
- ------------------------------------------------------------
6,161,960 379,489 467,591 2,296,938
============================================================
40,969 29,055 1,998 15,697
563,569,310 498,225,570 21,065,011 208,858,099
128,273 165,766 161,210 24,014
6,332,538 4,548,992 (70,375) 8,232,315
113,038,396 239,202,451 2,369,797 (13,268,134)
-- -- (1,316) --
-- -- 13 --
- ------------------------------------------------------------
683,109,486 742,171,834 23,526,338 203,861,991
============================================================
- ------------------------------------------------------------
$689,271,446 $742,551,323 $23,993,929 $206,158,929
============================================================
40,968,704 29,054,462 1,997,961 15,697,231
$16.67 $25.54 $11.78 $12.99
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
Statement of Operations
FOR THE PERIOD ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Money
Market Bond High Yield
Portfolio Portfolio Bond Portfolio
=======================================================================
<S> <C> <C> <C>
Investment Income
.................
Dividends.................... $-- $-- $ 1,627,628
Interest..................... 907,079 1,535,828 15,532
Foreign dividend withholding. -- -- --
- -----------------------------------------------------------------------
Total Investment Income 907,079 1,535,828 1,643,160
=======================================================================
Expenses
........
Adviser fees................. 64,127 81,358 22,547
Sub-Advisor fees............. -- -- 37,577
Professional fees............ 5,016 7,234 6,860
Custody fees................. 2,295 3,836 1,869
Registration fees............ 50 50 50
Printing and postage expense. 3,205 4,108 2,600
Pricing of investments....... 415 5,650 2,637
Director fees................ 229 294 186
Director and officer
insurance fees.............. 252 323 204
Fidelity bond insurance fees. 51 66 42
- -----------------------------------------------------------------------
Total Expenses Before
Reimbursement 75,640 102,919 74,572
- -----------------------------------------------------------------------
Less expenses reimbursed by
Adviser (Note 3)............ (11,513) (21,561) (14,448)
- -----------------------------------------------------------------------
Net Expenses 64,127 81,358 60,124
=======================================================================
- -----------------------------------------------------------------------
Net Investment Income 842,952 1,454,470 1,583,036
=======================================================================
Realized and Unrealized Gains
(Losses) on Investments
.............................
Net realized gains (losses) on
investments................. -- (62,527) (154,612)
Net realized losses on foreign
currency transactions........ -- -- --
Change in net unrealized
appreciation/depreciation
on investments............... -- (2,287,251) (1,605,489)
Change in net unrealized
appreciation/depreciation
on foreign currency
transactions................. -- -- --
- -----------------------------------------------------------------------
Net Realized and Unrealized
Gains (Losses) on
Investments -- (2,349,778) (1,760,101)
- -----------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations $842,952 $ (895,308) $ (177,065)
=======================================================================
</TABLE>
70 Statement of Operations (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
Small
Large International Company
Balanced Company Stock Stock
Portfolio Stock Portfolio Portfolio Portfolio
===============================================================================
<S> <C> <C> <C> <C>
$ 2,215,296 $ 4,284,111 $ 193,456 $ 780,405
8,560,775 159,065 22,243 29,468
-- -- (23,507) --
- -------------------------------------------------------------------------------
10,776,071 4,443,176 192,192 809,873
===============================================================================
970,256 1,032,887 25,541 325,699
-- -- 51,880 --
15,093 15,440 7,794 9,163
24,759 29,510 19,358 13,018
50 50 50 50
53,998 57,974 1,876 16,010
17,445 5,861 8,029 7,021
3,863 4,148 134 1,145
4,242 4,555 147 1,258
862 926 30 256
- -------------------------------------------------------------------------------
1,090,568 1,151,351 114,839 373,620
- -------------------------------------------------------------------------------
(120,312) (118,464) (37,418) (47,921)
- --------------------------------------------------------------------------------
970,256 1,032,887 77,421 325,699
================================================================================
- --------------------------------------------------------------------------------
9,805,815 3,410,289 114,771 484,174
===============================================================================
1,958,698 3,243,685 312,560 7,951,901
-- -- (383) --
24,528,254 68,546,243 735,955 895,074
-- -- 65,556 --
- -------------------------------------------------------------------------------
26,486,952 71,789,928 1,113,688 8,846,975
- -------------------------------------------------------------------------------
$36,292,767 $75,200,217 $1,228,459 $9,331,149
===============================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
June 30, 1999 71
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Money Market Bond
Portfolio Portfolio
.....................................................................
Year Ended Period Ended Year Ended Period Ended
12/31/98 6/30/99 (Unaudited) 12/31/98 6/30/99 (Unaudited)
==============================================================================================================================
<S> <C> <C> <C> <C>
Operations
..........
Net investment income................................ $ 1,507,113 $ 842,952 $ 2,001,026 $ 1,454,470
Net realized gains (losses) on investments........... -- -- (50,207) (62,527)
Net realized losses on currency transactions......... -- -- -- --
Change in net unrealized appreciation/depreciation
on investments..................................... -- -- 641,462 (2,287,251)
Change in net unrealized appreciation/depreciation
on currency transactions............................ -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations 1,507,113 842,952 2,592,281 (895,308)
==============================================================================================================================
Distributions to Shareholders
...............................
From net investment income........................... (1,507,113) (842,952) (2,000,563) (1,446,066)
From net realized gains.............................. -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (1,507,113) (842,952) (2,000,563) (1,446,066)
==============================================================================================================================
Fund Share Transactions
.......................
Net proceeds from shares sold........................ 191,480,061 94,510,644 22,670,325 13,069,688
Reinvested distributions............................. 1,506,393 842,335 1,895,857 1,446,065
Cost of shares redeemed.............................. (184,875,885) (88,353,909) (9,660,392) (3,220,618)
- ------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital Share
Transactions 8,110,569 6,999,070 14,905,790 11,295,135
==============================================================================================================================
Total Increase in Net Assets 8,110,569 6,999,070 15,497,508 8,953,761
==============================================================================================================================
Net Assets Beginning of Year 25,460,293 33,570,862 26,709,660 42,207,168
==============================================================================================================================
Net Assets End of Year $ 33,570,862 $ 40,569,932 $42,207,168 $51,160,929
==============================================================================================================================
Accumulated Undistributed Net Investment Income $ -- $ -- $ 1,946 $ 10,350
==============================================================================================================================
</TABLE>
72 Statement of Changes in Net Assets
<PAGE>
<TABLE>
<CAPTION>
High Yield Balanced Large Company International
Bond Portfolio Portfolio Stock Portfolio Stock Portfolio
.....................................................................................................................
Period Ended Period Ended Period Ended Period Ended
Period Ended 6/30/99 Year Ended 6/30/99 Year Ended 6/30/99 Period Ended 6/30/99
12/31/98 (a) (Unaudited) 12/31/98 (Unaudited) 12/31/98 (Unaudited) 12/31/98 (a) (Unaudited)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,914,894 $ 1,583,036 $ 14,398,460 $ 9,805,815 $ 5,338,992 $ 3,410,289 $ 133,806 $ 114,771
(228,897) (154,612) 12,604,950 1,958,698 1,543,018 3,243,685 (382,552) 312,560
-- -- -- -- -- -- (86,325) (383)
(2,483,221) (1,605,489) 48,279,299 24,528,254 103,777,073 68,546,243 909,869 735,955
-- -- -- -- -- -- 657,114 65,556
- --------------------------------------------------------------------------------------------------------------------
(797,224) (177,065) 75,282,709 36,292,767 110,659,083 75,200,217 1,231,912 1,228,459
=====================================================================================================================
(1,912,864) (1,573,932) (14,369,203) (9,710,718) (5,336,089) (3,261,438) (1,042) --
-- -- (8,256,035) -- (346,756) -- -- --
- --------------------------------------------------------------------------------------------------------------------
(1,912,864) (1,573,932) (22,625,238) (9,710,718) (5,682,845) (3,261,438) (1,042) --
=====================================================================================================================
31,385,553 6,851,718 185,868,086 119,398,734 165,392,423 111,665,413 14,856,874 7,313,890
438,864 673,932 22,625,238 9,710,718 5,682,845 3,261,438 302 --
(1,148,875) (1,888,990) (22,315,220) (17,918,930) (22,165,710) (17,054,782) (493,395) (610,662)
- --------------------------------------------------------------------------------------------------------------------
30,675,542 5,636,660 186,178,104 111,190,522 148,909,558 97,872,069 14,363,781 6,703,228
=====================================================================================================================
27,965,454 3,885,663 238,835,575 137,772,571 253,885,796 169,810,848 15,594,651 7,931,687
=====================================================================================================================
-- 27,965,454 306,501,340 545,336,915 318,475,190 572,360,986 -- 15,954,651
=====================================================================================================================
$27,965,454 $31,851,117 $545,336,915 $683,109,486 $572,360,986 $742,171,834 $15,594,651 $23,526,338
=====================================================================================================================
$ 2,030 $ 11,134 $ 33,176 $ 128,273 $ 16,915 $ 165,766 $ 132,764 $ 161,210
=====================================================================================================================
</TABLE>
The accompanying notes to the financial statements
are an integral part of this schedule.
June 30, 1999 73
<PAGE>
Statement of Changes in Net Assets--continued
<TABLE>
<CAPTION>
Small Company
Stock Portfolio
..............................................
Year Ended Period Ended
12/31/98 6/30/99 (Unaudited)
=========================================================================================================
<S> <C> <C>
Operations
..........
Net investment income........................................... $ 993,833 $ 484,174
Net realized gains (losses) on investments...................... 31,291,369 7,951,901
Net realized losses on currency transactions.................... -- --
Change in net unrealized appreciation/depreciation
on investments................................................. (33,956,589) 895,074
Change in net unrealized appreciation/depreciation
on currency transactions....................................... -- --
- ---------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations................................................ (1,671,387) 9,331,149
=========================================================================================================
Distributions to Shareholders
.............................
From net investment income...................................... (999,834) (464,495)
From net realized gains......................................... (31,505,205) --
- ---------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders............................. (32,505,039) (464,495)
=========================================================================================================
Fund Share Transactions
.......................
Net proceeds from shares sold................................... 58,516,806 12,373,606
Reinvested distributions........................................ 32,505,039 464,495
Cost of shares redeemed......................................... (11,452,507) (16,163,328)
- ---------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Capital
Share Transactions 79,569,338 (3,325,227)
=========================================================================================================
Total Increase in Net Assets 45,392,912 5,541,427
=========================================================================================================
Net Assets Beginning of Year 152,927,652 198,320,564
=========================================================================================================
Net Assets End of Year $198,320,564 $203,861,991
=========================================================================================================
Accumulated Undistributed Net
Investment Income $ 4,335 $ 24,014
=========================================================================================================
</TABLE>
(a) Since March 2, 1998.
The accompanying notes to the financial statements are an integral part of this
schedule.
74 Statement of Changes in Net Assets
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
Notes to Financial Statements
AS OF JUNE 30, 1999 (Unaudited)
(A) Organization
................
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-ended diversified
investment management company. The Fund is a "series" fund consisting of seven
separate investment portfolios (known as the Money Market, Bond, Balanced, Large
Company Stock, Small Company Stock, International Stock and High Yield Bond
Portfolios, collectively the "Portfolios"). Shares of the Fund are currently
sold to the AAL Variable Annuity Accounts I and II, AAL Variable Life Account I
(together the "Variable Accounts") and to the Aid Association for Lutherans
Savings Plan (the "AAL Savings Plan"). Shares of the Variable Accounts are used
to fund benefits of variable annuity and life certificates. Shares of all seven
Portfolios are available to the Variable Accounts through their corresponding
subaccounts. Only shares of the Large Company Stock, High Yield Bond and
International Stock Portfolios are available to the AAL Savings Plan as
investment options.
(B) Significant Accounting Policies
...................................
Valuation of Investments Securities traded on national securities exchanges and
NASDAQ are valued at the last reported sales price. Fixed income securities are
valued at market using quotations provided by an independent pricing service.
The Money Market Portfolio, and other Portfolios which hold money market
instruments with a remaining maturity of 60 days or less, value securities at
amortized cost, which approximates market value. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith by the Investment Adviser under the supervision of the Board of
Directors.
Foreign Currency Translation The books and records of the Portfolios are
maintained in U.S. dollars. The market values of securities and other assets and
liabilities that are not traded in United States currency are recorded in the
financial statements after translation to U.S. dollars at the time net asset
value is calculated. However, for federal income tax purposes the portfolio does
treat as ordinary income the effect of changes in foreign exchange arising from
actual foreign currency transactions and the effect of changes in foreign
exchange rates from the fluctuations arising from trade date and settlement date
differences.
Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses from sales and maturities of forward foreign
currency exchange contracts, disposition of foreign currencies, and the
difference between the amount of net investment income accrued and the U.S.
dollar amount actually received. That portion of both realized and unrealized
gains and losses on investments that result from fluctuations in foreign
currency exchange rates is not separately disclosed.
Foreign Currency Contracts In connection with purchases and sales of securities
denominated in foreign currencies, the International Stock Portfolio may enter
into forward currency contracts. Additionally, the International Stock Portfolio
may enter into such contracts to hedge certain other foreign currency
denominated investments. These contracts are recorded at market values, and the
related realized and unrealized foreign exchange gains and losses are included
in the statement of operations. In the event that counter parties fail to settle
these forward contracts, the International Stock Portfolio could be exposed to
foreign currency fluctuations.
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, 1998, the Bond Portfolio has capital loss
carryforwards of $2,188 expiring in 2003; $7,782 expiring in 2004; $22,408
expiring in 2005 and $61,026 expiring in 2006. The High Yield Bond and
International Stock Portfolios have loss carryforwards of $228,897 and $468,877
expiring in 2006. It is management's intention to make no distribution of any
future realized capital gains related to these Portfolios until the federal
income tax capital loss carryforwards are exhausted.
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 Company Stock, Small Company Stock and
High Yield Bond Portfolios expect to declare and pay 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. The International Stock Portfolio expects to
declare and pay income and net realized capital gains annually. Dividends to
shareholders are recorded on the ex-dividend date.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Expenses The Funds are charged for those expenses that are directly attributed
to each Portfolio, such as advisory, custodian, and shareholder service fees.
Expenses that are not directly attributable to a Portfolio are typically
allocated among the Funds' Portfolios in proportion to their respective net
assets, number of shareholder accounts or other reasonable basis.
Other For financial statement purposes 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.
June 30 1999 75
<PAGE>
(C) Investment Advisory Fees and Transactions with Related Parties
...................................................................
The Fund has entered into an Investment Advisory Agreement with Aid Association
for Lutherans ("AAL") relating to the management of the Portfolios and pays an
investment advisory fee as compensation for its services to the Fund. The fee is
a daily charge equal to an annual rate of 0.35% of the average daily net assets
up to $250,000,000 and 0.30% of the average daily net assets in excess of that
amount for the Money Market, Bond, Balanced, Large and Small Company Stock
Portfolios; 0.80% of the average daily net assets for the International Stock
Portfolio; 0.40% of the average daily net assets for the High Yield Bond
Portfolio.
The Fund has also entered into an Investment Sub-Advisory Agreement with AAL
Capital Management Corporation ("CMC"), an affiliate of AAL, for the High Yield
Bond Portfolio. The sub-advisory fee, which is paid by AAL, is equal to an
annual fee of .25% of average daily net assets. Additionally, AAL has entered
into a Sub-Advisory Agreement with Oechsle International Advisors LLC (Sub-
Adviser) for the International Stock Portfolio. The sub-advisory fee, which is
paid by AAL, is equal to an annual fee of 0.54% of assets under management for
the first $20 million, 0.45% of assets under management for the next $30 million
and 0.36% for assets under management over $50 million. In addition, AAL has
agreed to either pay on behalf of the Fund or reimburse the Fund for
substantially all of its operating expenses, other than the aforementioned
investment advisory fees, brokerage commissions, and certain extraordinary items
such as litigation expenses or income tax liabilities. AAL may withdraw this
reimbursement agreement on 30 days written notice to the Fund.
The Investment Advisory Agreement anticipates that AAL will provide certain
administrative and accounting services to the Fund, or that AAL will arrange for
such services to be provided by a third party.
Certain officers and directors of the Fund are also officers of AAL and/or CMC.
For the period ended June 30, 1999, directors of the Fund not affiliated with
AAL or CMC received director fees in the aggregate amount of $10,000. No
remuneration has been paid by the Fund to officers or directors affiliated with
AAL or CMC. At June 30, 1999, all of the shares of each Portfolio are owned by
AAL, The Variable Accounts and the AAL Savings Plan.
(D) Line of Credit
...................
The Fund has an available line of credit of $5,000,000 and a standby line of
credit of $15,000,000. However, each Portfolio's borrowings, by investment
restriction, cannot exceed 10% of the total net assets and must be only from a
bank as a temporary measure for extraordinary or emergency purposes. The Fund
pays a facility fee related to the line of credit of 0.05% per annum of the
average amount of available line of credit, such fee to be paid quarterly in
arrears on the last day of each and every March, June, September and December.
Borrowings under this agreement bear interest prior to maturity either at a
floating rate per annum, which approximates the then current prime commercial
rate with changes in the interest rate by virtue of a change in such prime
commercial rate, or, at the Fund's request, if the bank so agrees, at a short
term fixed rate of interest.
(E) Capital Share Transactions
...............................
Transactions in Fund shares for the year and period ended December 31, 1998,
and the period ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
Money Market Portfolio
.......................................
Year Ended Period Ended
12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares sold 191,480,061 94,510,644
Reinvested distributions 1,506,393 842,335
Shares redeemed (184,875,885) (88,353,909)
- -----------------------------------------------------------------------
Net Increase 8,110,569 6,999,069
=======================================================================
Bond Portfolio
.......................................
Year Ended Period Ended
12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares sold 2,199,861 1,286,091
Reinvested distributions 184,608 143,587
Shares redeemed (941,937) (316,719)
- -----------------------------------------------------------------------
Net Increase 1,442,532 1,112,959
=======================================================================
High Yield Bond Portfolio
..........................................
Period Period Ended
3/2/98 to 12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares sold 3,199,146 776,239
Reinvested redeemed 47,812 77,505
Shares distributions (121,973) (214,905)
- -----------------------------------------------------------------------
Net Increase 3,124,985 638,839
=======================================================================
Balanced Portfolio
...........................................
Year Ended Period Ended
12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares Sold 12,360,090 7,314,555
Reinvested distributions 1,465,150 595,866
Shares redeemed (1,482,283) (1,098,995)
- -----------------------------------------------------------------------
Net Increase 12,342,957 6,811,426
=======================================================================
Large Company Stock Portfolio
...........................................
Year Ended Period Ended
12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares sold 8,178,403 4,636,654
Reinvested distributions 274,516 135,353
Shares redeemed (1,098,049) (706,202)
- -----------------------------------------------------------------------
Net Increase 7,354,870 4,065,805
=======================================================================
International Stock Portfolio
...........................................
Period Period Ended
3/2/98 to 12/31/98 6/30/99
=======================================================================
<S> <C> <C>
Shares sold 1,459,457 640,144
Reinvested distributions 27 --
Shares redeemed (48,010) (53,657)
- -----------------------------------------------------------------------
Net Increase 1,411,474 586,487
=======================================================================
</TABLE>
76 Notes to Financial Statements (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
Small Company Stock Portfolio
....................................
Year Ended Period Ended
12/31/98 6/30/99
====================================================================
<S> <C> <C>
Shares sold 3,841,755 1,032,539
Reinvested distributions 2,680,258 39,031
Shares redeemed (797,140) (1,373,923)
- --------------------------------------------------------------------
Net Increase 5,724,873 (302,353)
====================================================================
(F) Investment Transactions
............................
</TABLE>
For the period ended June 30, 1999, the cost of investment securities purchased
and the proceeds from investment securities sold (not including short-term
investments and U.S. Government Obligations) were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
====================================================================
<S> <C> <C>
Bond $ 10,794,563 $ 2,468,937
High Yield Bond 14,256,130 8,759,831
Balanced 112,341,135 18,370,047
Large Company Stock 99,809,522 9,261,111
International Stock 9,786,459 3,579,419
Small Company Stock 24,925,349 29,231,078
====================================================================
</TABLE>
For the period ended June 30, 1999, the Portfolios purchased and sold the
following in U.S. Government Obligations.
<TABLE>
<CAPTION>
Portfolio Purchases Sales
====================================================================
<S> <C> <C>
Bond $ 3,660,484 $ 1,776,496
Balanced 26,930,154 9,194,180
====================================================================
</TABLE>
The gross and net unrealized appreciation and depreciation on investments at
June 30, 1999, were as follows:
<TABLE>
<CAPTION>
6/30/99
..................................
Net Unrealized
Appreciation
Portfolio Appreciation (Depreciation) (Depreciation)
====================================================================
<S> <C> <C> <C>
Bond $ 231,424 $ (1,412,374) $ (1,180,950)
High Yield Bond 180,584 (4,269,294) (4,088,710)
Balanced 128,285,793 (15,247,397) 113,038,396
Large Company Stock 255,984,100 (16,781,649) 239,202,451
International Stock 3,419,411 (1,050,930) 2,368,481
Small Company Stock 26,893,874 (40,162,008) (13,268,134)
====================================================================
The book and federal income tax basis of securities were the same for all
Portfolios.
</TABLE>
(G) Forward Currency Contracts
...............................
As of June 30, 1999, the International Stock Portfolio had entered into forward
currency contracts, as summarized below, resulting in net unrealized
depreciation of ($1,316).
<TABLE>
<CAPTION>
Settlement Date U.S. Value at U.S. Value at
Through Currency to Be Delivered 6/30/99 Currency to Be Received 6/30/99
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
7/1/99 (135,589) U.S. Dollar $ (140,795) (140,795) Euro $ (139,825)
7/30/99 (165,475) U.S. Dollar (171,855) (171,855) Euro (170,646)
7/30/99 21,394 Euro 22,156 22,156 U.S. Dollar 22,063
7/1/99 129,333 Swiss Franc 83,835 83,836 U.S. Dollar 83,194
7/2/99 130,117 Swiss Franc 83,860 83,860 U.S. D 83,698
7/1/99 (3,406) U.S. Dollar (5,403) (5,403) British Pound Sterling (5,370)
---------- ----------
$ (128,202) $ (126,886)
========== ==========
</TABLE>
June 30,1999 77
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI ANNUAL REPORT
Financial Highlights
The following table presents per share information for each Portfolio of the AAL
Variable Product Series Fund, Inc. for the period presented, which should be
read in conjunction with the financial statements and the related notes.
<TABLE>
<CAPTION>
Money Market Portfolio
................................................................................
Period Ended Year Ended Year Ended Year Ended Period Ended
12/31/95 (a) 12/31/96 12/31/97 12/31/98 6/30/99(Unaudited)
<S> <C> <C> <C> <C> <C>
==========================================================================================================================
Net Asset Value, Beginning of Period....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================================================================
Income from Investment Operations
- ----------------------------------
Net Investment Income....................... 0.03 0.05 0.05 0.05 0.02
Net Gains (Losses) on Securities
(both realized and unrealized).............. -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations............ 0.03 0.05 0.05 0.05 0.02
==========================================================================================================================
Less Distributions
- ------------------
Dividends (from net investment income)...... (0.03) (0.05) (0.05) (0.05) (0.02)
Distributions (from capital gains).......... -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions......................... (0.03) (0.05) (0.05) (0.05) (0.02)
==========================================================================================================================
Net Asset Value: End of Period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================================================================
Total Return (c)............................ 3.02% 5.23% 5.33% 5.31% 2.31%
==========================================================================================================================
Net Assets, End of Period (in thousands).... $7,045 $17,125 $ 25,460 $ 33,571 $40,570
Ratios Supplemental Data
- ------------------------
Ratio of Expenses to Average Net Assets (d)(e) 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of Net Investment to Average
Net Assets (d)(e)........................... 5.71% 5.10% 5.24% 5.20% 4.60%
Portfolio Turnover Rate..................... N/A N/A N/A N/A N/A
===========================================================================================================================
</TABLE>
(a) From commencement of operations on June 14, 1995.
(b) Since inception on March 2, 1998.
(c) Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total return for
the periods shown. The Portfolios are reported as period-to-date cumulative
total returns.
(d) Calculated on an annualized basis.
(e) Without reimbursements the above ratios, on an annualized basis, would have
been:
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets................ 1.40% 0.65% 0.46% 0.44% 0.41%
Ratio of net investment income to average net assets... 4.66% 4.80% 5.13% 5.11% 4.54%
</TABLE>
78 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Bond Portfolio High Yield Bond Portfolio
..................................................... .........................
Period Year Year Year Period Period Period
Ended Ended Ended Ended Ended Ended Ended
12/31/95 12/31/96 12/31/97 12/31/98 6/30/99 12/31/98(b) 6/30/99
(a) (Unaudited) (Unaudited)
=========================================================================================
$10.00 $ 10.23 $ 9.90 $ 10.15 $ 10.36 $ 10.00 $ 8.95
=========================================================================================
0.34 0.63 0.64 0.64 0.31 0.74 0.45
0.23 (0.33) 0.25 0.21 (0.50) (1.05) (0.49)
- -----------------------------------------------------------------------------------------
0.57 0.30 0.89 0.85 (0.19) (0.31) (0.04)
=========================================================================================
(0.34) (0.63) (0.64) (0.64) (0.31) (0.74) (0.45)
-- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------
(0.34) (0.63) (0.64) (0.64) (0.31) (0.74) (0.45)
=========================================================================================
$10.23 $ 9.90 $ 10.15 $ 10.36 $ 9.86 $ 8.95 $ 8.46
=========================================================================================
5.80% 3.10% 9.37% 8.59% (1.89%) (3.25%) (0.49%)
=========================================================================================
$9,363 $ 17,666 $ 26,710 $ 42,207 $51,161 $27,965 $31,851
0.35% 0.35% 0.35% 0.35% 0.35% 0.40% 0.40%
6.54% 6.51% 6.55% 6.26% 6.25% 9.54% 10.53%
6.51% 11.65% 18.41% 18.29% 9.34% 25.43% 30.14%
=========================================================================================
1.25% 0.68% 0.52% 0.48% 0.44% 0.54% 0.50%
5.64% 6.18% 6.38% 6.13% 6.16% 9.40% 10.43%
</TABLE>
June 30, 1999 79
<PAGE>
Financial Highlights--continued
The following table presents per share information for each Portfolio of the AAL
Variable Product Series Fund, Inc. for the period presented and should be read
in conjunction with the financial statements and the related notes.
<TABLE>
<CAPTION>
Balanced Portfolio
..................................................................................
Period Ended Year Ended Year Ended Year Ended Period Ended
12/31/95 (a) 12/31/96 12/31/97 12/31/98 6/30/99 (Unaudited)
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period.................. $ 10.00 $ 10.92 $ 11.96 $ 14.05 $ 15.97
================================================================================================================
Income from Investment
Operations
......................
Net Investment Income....... 0.22 0.41 0.46 0.50 0.26
Net Gains (Losses) on
Securities
(both realized and
unrealized)................ 0.92 1.05 2.09 2.17 0.70
- ----------------------------------------------------------------------------------------------------------------
Total from Investment
Operations................. 1.14 1.46 2.55 2.67 0.96
================================================================================================================
Less Distributions
...................
Dividends (from net
investment income)......... (0.21) (0.41) (0.46) (0.50) (0.26)
Distributions (from
capital gains)............. (0.01) (0.01) -- (0.25) --
- ----------------------------------------------------------------------------------------------------------------
Total Distributions......... (0.22) (0.42) (0.46) (0.75) (0.26)
================================================================================================================
Net Asset Value: End of
Period..................... $ 10.92 $ 11.96 $ 14.05 $ 15.97 $ 16.67
================================================================================================================
Total return (c)............ 11.46% 13.65% 21.71% 19.27% 6.03%
================================================================================================================
Net Assets, End of Period
(in thousands)............. $28,759 $126,518 $306,501 $545,337 $683,109
Ratios Supplemental Data
........................
Ratio of Expenses to
Average Net Assets (d) (e). 0.35% 0.35% 0.35% 0.33% 0.32%
Ratio of Net Investment to
Average Net Assets (d) (e). 4.07% 3.89% 3.62% 3.38% 3.24%
Portfolio Turnover Rate..... 2.29% 5.43% 6.86% 21.39% 5.01%
================================================================================================================
(a) From commencement of operations on June 14, 1995.
(b) Since inception on March 2, 1998.
(c) Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total return for
the periods shown. The Portfolios are reported as period-to-date cumulative
total returns.
(d) Calculated on an annualized basis.
(e) Without reimbursements the above ratios, on an annualized basis, would have
been:
Ratio of expenses
to average net assets.. 1.15% 0.60% 0.43% 0.39% 0.36%
Ratio of net investment
income to average net
assets................. 3.27% 3.65% 3.53% 3.32% 3.20%
</TABLE>
80 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
Large Company Stock Portfolio
.............................................................................................
Period Ended Year Ended Year Ended Year Ended Period Ended
12/31/95 (a) 12/31/96 12/31/97 12/31/98 6/30/99 (Unaudited)
=============================================================================================
<S> <C> <C> <C> <C>
$ 10.00 $ 11.51 $ 13.83 $ 18.06 $ 22.90
=============================================================================================
0.11 0.23 0.23 0.24 0.12
1.52 2.34 4.25 4.85 2.64
- ---------------------------------------------------------------------------------------------
1.63 2.57 4.48 5.09 2.76
=============================================================================================
(0.11) (0.23) (0.22) (0.24) (0.12)
(0.01) (0.02) (0.02) (0.01) --
- ---------------------------------------------------------------------------------------------
(0.12) (0.25) (0.25) (0.25) (0.12)
=============================================================================================
$ 11.51 $ 13.83 $ 18.06 $ 22.90 $ 25.54
=============================================================================================
16.39% 22.47% 32.59% 28.36% 12.08%
=============================================================================================
$23,138 $120,089 $318,475 $572,361 $742,172
0.35% 0.35% 0.35% 0.33% 0.32%
2.27% 1.97% 1.48% 1.20% 1.05%
0.47% 1.77% 1.00% 1.49% 1.40%
=============================================================================================
1.26% 0.63% 0.43% 0.38% 0.36%
1.37% 1.69% 1.39% 1.15% 1.01%
</TABLE>
June 30, 1999 81
<PAGE>
Financial Highlights--continued
The following table presents per share information for each Portfolio of the AAL
Variable Product Series Fund, Inc. for the period presented and should be read
in conjunction with the financial statements and the related notes.
<TABLE>
<CAPTION>
International Stock Portfolio Small Company Stock Portfolio
........................................................................................................
Period Ended Period Ended Period Ended Year Ended Year Ended Year Ended Period Ended
12/31/98 (b) 6/30/99 (Unaudited) 12/31/95 (a) 12/31/96 12/31/97 12/31/98 6/30/99 (Unaudited)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $ 10.00 $ 11.05 $ 10.00 $ 10.99 $ 12.54 $ 14.88 $ 12.40
====================================================================================================================================
Income from Investment
Operations
......................
Net Investment Income...... 0.09 0.08 0.08 0.12 0.11 0.08 0.03
Net Gains (Losses) on
Securities
(both realized and
unrealized)............... 0.96 0.65 0.99 1.86 3.05 (0.13) 0.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Operations................ 1.05 0.73 1.07 1.98 3.16 (0.05) 0.62
====================================================================================================================================
Less Distributions
..................
Dividends (from net
investment income)........ -- -- (0.07) (0.12) (0.11) (0.08) (0.03)
Distributions (from
capital gains)............ -- -- (0.01) (0.31) (0.71) (2.35) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions........ 0.00 0.00 (0.08) (0.43) (0.82) (2.43) (0.03)
====================================================================================================================================
Net Asset Value: End of
Period.................... $ 11.05 $ 11.78 $ 10.99 $ 12.54 $ 14.88 $ 12.40 $ 12.99
====================================================================================================================================
Total return (c)........... 10.41% 6.70% 10.70% 18.18% 25.37% 0.14% 5.02%
====================================================================================================================================
Net Assets, End of Period
(in thousands)............ $15,595 $23,526 $ 15,666 $ 70,209 $ 152,928 $198,321 $203,862
Ratios Supplemental Data
........................
Ratio of Expenses to
Average Net Assets (d) (e) 0.80% 0.80% 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of Net Investment to
Average
Net Assets (d) (e)......... 1.25% 1.19% 1.43% 1.14% 0.81% 0.55% 0.52%
Portfolio Turnover Rate.... 32.66% 19.18% 2.85% 20.14% 29.65% 103.70% 13.20%
====================================================================================================================================
</TABLE>
(a) From commencement of operations on June 14, 1995.
(b) Since inception on March 2, 1998.
(c) Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total return for
the periods shown. The Portfolios are reported as period-to-date cumulative
total returns.
(d) Calculated on an annualized basis.
(e) Without reimbursements the above ratios, on an annualized basis, would have
been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of expenses to average net assets..... 1.30% 1.19% 1.37% 0.75% 0.45% 0.43% 0.40%
Ratio of net investment income to average
net assets.................................. 0.75% 0.80% 0.41% 0.75% 0.71% 0.47% 0.47%
</TABLE>
82 Financial Highlights
<PAGE>
A NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained in the foregoing reports on each
of the Portfolios, the matters discussed in those reports may constitute
forward-looking statements that are made pursuant to the safe harbor provisions
of the Securities Litigation Reform Act of 1995. These include discussion about
each portfolio manager's predictions, assessments, analyses and outlooks for
relevant securities and investment markets, market sectors, industries and
individual stocks or other investment securities. These statements involve
risks and uncertainties. In addition to the general risks described for each
Portfolio in its current prospectus, other factors bearing on these reports
include the accuracy of each portfolio manager's forecasts and predictions, the
appropriateness of the investment strategies designed by the portfolio managers
to capitalize on their forecasts and predictions should they prove true, and the
ability of the portfolio managers to implement their strategies efficiently and
effectively. Any one or more of these factors, as well as other risks affecting
the securities markets and investment instruments generally, could cause the
actual results of any Portfolio to differ materially from the projected results
for the Portfolio, either on an overall basis or on a relative basis as compared
to the benchmark index selected for the particular Portfolio.
A Note on Forward-Looking Statements 83
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Board of Directors
Officers
Investment Adviser & Transfer Agent
Sub-Adviser (International Stock Portfolio)
Sub-Adviser (High Yield Bond Portfolio)
& Distributor
Custodian
Legal Counsel
Independent Auditors
John O. Gilbert -- Chairman of the Board
F. Gregory Campbell
Richard L. Gady
Edward W. Smeds
Steven A. Weber
Lawrence M. Woods
Walter S. Rugland -- President
Daniel L. Shinnick -- Vice President
Jeffrey R. Kargus -- Treasurer
James H. Abitz -- Assistant Treasurer
Steven J. Fredricks -- Secretary
Woodrow E. Eno -- Assistant Secretary
Robert G. Same -- Assistant Secretary
Mark J. Mahoney -- Assistant Secretary
Aid Association for Lutherans
4321 N. Ballard Road . Appleton, WI 54919-0001
Oechsle International Advisors, LLC
One International Place . Boston, MA 02110
AAL Capital Management Corporation
222 W. College Ave. . Appleton, WI 54919-0007
Citibank, N.A.
111 Wall St. . New York, NY 10043
Quarles & Brady, LLP
411 E. Wisconsin Ave. . Milwaukee, WI 53202
Ernst & Young LLP
111 E. Kilbourn Ave. . Milwaukee, WI 53202
This report is submitted for the information of the certificate owners of the
AAL Variable Annuity Account I and the AAL Variable Life 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, Single Premium
Immediate Variable Annuity and AAL Variable Universal Life.
13017SAR 8-99
[AAL Logo Appears Here]
AID ASSOCIATION FOR LUTHERANS
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4321 N. Ballard Road, Appleton, WI 54919-0001
(800) 225-5225
www.aal.org . e-mail: [email protected]
[AAL Logo Appears Here]
AAL CAPITAL MANAGEMENT CORPORATION
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A Subsidiary of Aid Association for Lutherans
222 W. College Ave., Appleton, WI 54919-0007
(800) 553-6319
www.aal.org . e-mail: [email protected]
PRODUCTFORMS #4460, #4461, #4213, #4214, #4470
