<PAGE>
[LOGO]
Aid Association for Lutherans
A FRATERNAL BENEFIT SOCIETY
AAL VARIABLE PRODUCT SERIES FUND, INC.
Semi-Annual Report
June 30, 2000
AAL Variable Product
Small Company Stock Portfolio
AAL Variable Product
International Stock Portfolio
AAL Variable Product
Large Company Stock Portfolio
AAL Variable Product
Balanced Portfolio
AAL Variable Product
High Yield Bond Portfolio
AAL Variable Product
Bond Portfolio
AAL Variable Product
Money Market Portfolio
<PAGE>
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<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
Table of Contents
President's Letter............................................. 2
Portfolio Perspectives
AAL Variable Product Small Company Stock Portfolio........ 4
AAL Variable Product International Stock Portfolio........ 6
AAL Variable Product Large Company Stock Portfolio........ 8
AAL Variable Product Balanced Portfolio................... 10
AAL Variable Product High Yield Bond Portfolio............ 12
AAL Variable Product Bond Portfolio....................... 14
AAL Variable Product Money Market Portfolio............... 16
Schedule of Investments
AAL Variable Product Small Company Stock Portfolio........ 18
AAL Variable Product International Stock Portfolio........ 27
AAL Variable Product Large Company Stock Portfolio........ 30
AAL Variable Product Balanced Portfolio................... 37
AAL Variable Product High Yield Bond Portfolio............ 54
AAL Variable Product Bond Portfolio....................... 57
AAL Variable Product Money Market Portfolio............... 63
Statement of Assets and Liabilities............................ 64
Statement of Operations........................................ 66
Statement of Changes in Net Assets............................. 68
Notes to Financial Statements.................................. 71
Financial Highlights
AAL Variable Product Small Company Stock Portfolio........ 74
AAL Variable Product International Stock Portfolio........ 75
AAL Variable Product Large Company Stock Portfolio........ 75
AAL Variable Product Balanced Portfolio................... 76
AAL Variable Product High Yield Bond Portfolio............ 77
AAL Variable Product Bond Portfolio....................... 77
AAL Variable Product Money Market Portfolio............... 78
A Note on Forward-Looking Statements........................... 79
Glossary of Terms.............................................. 79
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Table of Contents 1
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
JUNE 30, 2000
Dear Member:
We are 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 Flexible Premium Deferred Variable Annuity, the AAL Single Premium Immediate
Variable Annuity and the AAL Variable Universal Life products.
[PHOTO OF ROBERT G. SAME]
Since you purchased a variable annuity or variable life insurance certificate
from AAL, you realize the importance of products that offer flexibility,
insurance protection and a variety of investment choices. These are important
factors when planning to meet your dreams. Variable products provide life
insurance protection and can provide long-term investment capabilities for
helping you achieve your financial goals.
Because there is an investment aspect to variable products, it is important to
annually review your financial situation and to review and reflect on the
financial information in this report.
Speaking of financial conditions, to keep inflation in check the Federal Reserve
continued to raise interest rates the first half of this year. Many experts
believe this is slowing down the economy. It will take some time before we're
sure how this will affect the financial markets.
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2 President's Letter
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
Markets will always fluctuate. That is why it is important to keep a long-term
perspective and remember that variable products help you reach your financial
goals. I encourage you to review your prospectus, which shows you how having
insurance protection can impact the performance of your variable product. It
would also be helpful to review the historical performance and contact your AAL
representative with questions.
AAL appreciates the opportunity to meet your insurance and financial needs. We
look forward to continuing our relationship and we encourage you to take full
advantage of the services we offer to Lutherans and their families. If you have
questions about your variable product, contact your AAL representative or the
AAL Variable Products Service Center at (800) 225-5225.
Best regards,
/s/ Robert G. Same
Robert G. Same
Vice President
Aid Association for Lutherans
President
AAL Variable Product Series Fund, Inc.
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June 30, 2000 3
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Small Company Stock Portfolio
As stock market volatility continues, why should investors consider small
company stocks?
Over long time periods, small-cap stocks have outperformed their large-cap
counterparts. However, over shorter time periods, small-caps can severely
underperform the larger-cap stocks. This is especially true during periods of
high volatility as small-cap stocks' lack of ~liquidity causes volatile share
price swings. These extreme price movements are often not related to underlying
company fundamentals and thus create opportunities for long-term investors.
Value of a $10,000 Investment
-----------------------------
[GRAPH]
Sm Co Port S&P 600*
6/14/1995 10000 10000
12/31/1995 11070 11510
6/30/1996 12047 12801
12/31/1996 13084 13962
6/30/1997 14779 15576
12/31/1997 16403 17533
6/30/1998 17628 18603
12/31/1998 16425 17301
6/30/1999 17250 18171
12/31/1999 18428 19455
6/30/2000 19637 20794
*An unmanaged index comprised of 600 stocks designed to represent performance of
the small-cap segment of the U.S. equity markets. "S&P SmallCap 600 Index" is a
trademark of The McGraw-Hill Companies, Inc. and has been licensed for use by
AAL. The product is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the product.
How has the small-cap market performed over the first part of the year?
[PHOTO]
Small-cap stocks had a very solid start in 2000. The S&P SmallCap 600 Index, the
benchmark for the AAL Variable Product Small Company Portfolio, was up over 6
percent for the first half of the year. The best performing small-cap sectors
for the first half of 2000 were energy, health care and financials, which
returned over 40 percent, over 25 percent and over 10 percent, respectively.
Average Annual Total Returns/1/
-------------------------------
As of June 30, 2000
From Inception
YTD 1-Year 5-Year Inception Date
---------------------------------------------------
Fund Portfolio/2/........ 6.56% 13.84% 14.20% 14.30% 6/14/95
------------------------------------------------------------------------------
Deferred Variable
Annuity Subaccount/3/.... 5.90% 12.42% 12.78% 12.80% 6/15/95
------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/.... (0.77)% 6.35% 12.37% 12.39% 6/15/95
------------------------------------------------------------------------------
Single Premium
Immediate Variable
Annuity Subaccount/4/.... 5.90% N/A N/A 14.03% 8/2/99
------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/............ 2.73% 9.07% N/A 1.06% 5/15/98
------------------------------------------------------------------------------
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. Total return
calculations assume a $10,000 initial investment.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gain distributions, but do not reflect separate
account expenses or charges; however, total returns reflect the deduction of
a 0.35% maximum annual management fee, but do not reflect Fund 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 a 30-
days' notice, these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. The SEC Deferred Variable Annuity
Subaccount total returns also reflect the maximum surrender charge of 7% for
the first contract year, declining by 1% each year through the seventh, not
to exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. For more information on how
Subaccount performance affects the amount of a periodic annuity payment,
please refer to the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.35%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased within
the first 10 years after issue or increase in coverage) or other charges and
expenses related to the certificate's insurance coverage; hence, the total
return on a certificate's cash value would be significantly lower than the
performance quoted above.
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4 Small Company Stock Portfolio Perspective
<PAGE>
[LOGO]AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Are there any trends you are excited about as you look into the future?
There are several trends unfolding that provide opportunities for small-cap
investors. First, the Internet has obviously changed the way many companies buy,
build and sell products. As the transition continues, opportunities evolve for
those companies that develop new products and/or services that help their
customers thrive in this environment.
Next, the biotechnology industry is changing the pace of research and the
development of new drugs. Many companies are providing tools to help bring drugs
to market much faster than previously possible. Other companies are using these
tools to develop new drugs that are substantial improvements over their
predecessors or for diseases that have no current therapy or cure.
Finally, as demand continues to outstrip supply in the oil and natural gas
markets, many oil-field service companies are benefiting as the exploration and
production companies increase their expenditures to meet the increased demand.
These examples are indicative of the opportunities in small-cap stocks. There
are many companies that develop new products and/or industries and offer
excellent capital appreciation potential over the long term.
/s/ Brian J. Flanagan
Brian J. Flanagan
Portfolio Manager
Small-cap funds may involve more risks because they tend to be more volatile
than other securities investments.
Sector Allocations
------------------
of the Small Company Stock Portfolio
------------------------------------
[PIE CHART]
% of Net Assets
6/30/00
-------
. Technology........................................ 22%
. Consumer Cyclicals................................ 18%
. Capital Goods..................................... 14%
. Health Care....................................... 13%
. Financials........................................ 11%
. Consumer Staples.................................. 7%
. Energy............................................ 5%
. Transportation.................................... 3%
. Basic Materials................................... 3%
. Utilities......................................... 2%
. Communication Services............................ 1%
. Short Term Obligations............................ 1%
---------------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
Security 6/30/00
-----------------------------------------------------------
International Rectifier Corporation................... 0.9%
Lattice Semiconductor Corporation..................... 0.9%
Protein Design Labs, Inc.............................. 0.8%
Vertex Pharmaceuticals, Inc........................... 0.7%
RSA Security, Inc..................................... 0.7%
Small Company Stock Portfolio
--------------------------------------------------------------------------------
June 30, 2000 5
<PAGE>
[LOGO]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?
International equity markets were modestly volatile through the first quarter of
the year, but then retreated beginning in April as investors grew increasingly
risk-averse. By the end of May, there were signs that the worst was past, and
markets rebounded. In June, markets rallied further as economic data confirmed
the U.S. economy looked to be slowing.
Has growth picked up in Europe and Japan, as you expected?
Easing financial conditions aided by a weak euro, led to very good growth
conditions in Europe. Forecasts also suggest that this growth rate can be
sustained for the coming months, with consumer spending and a strong labor
market spurring this growth. If the European Central Bank tightens interest
rates later this year, which would result in a strengthened euro, next year's
growth rate in Europe may slow modestly.
Value of a $10,000 Investment
-----------------------------
[GRAPH]
Int'l MSCI EAFE*
3/2/1998 10000 10000
12/31/1998 11041 10746
6/30/1999 11781 11208
12/31/1999 15622 13691
6/30/2000 14995 13134
* The Morgan Stanley Capital International Europe, Australasia, Far East (EAFE)
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.
[PHOTO] [PHOTO]
Average Annual Total Returns/1/
-------------------------------
As of June 30, 2000
From Inception
YTD 1-Year Inception Date
--------------------------------------
Fund Portfolio/2/................... (4.02)% 27.28% 18.98% 3/2/98
----------------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/....................... (4.61)% 25.70% 17.52% 3/3/98
----------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/............... (10.62)% 18.91% 15.22% 3/3/98
----------------------------------------------------------------------------
Single Premium
Immediate Variable
Annuity Subaccount/4/............... (4.61)% N/A 22.92% 8/2/99
----------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/....................... (7.48)% 22.02% 13.76% 5/15/98
----------------------------------------------------------------------------
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. Total return
calculations assume a $10,000 initial investment.
/2/Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gain distributions, but do not reflect separate account
expenses or charges; however, total returns reflect the deduction of a 0.35%
maximum annual management fee, but do not reflect Fund 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 a 30-days'
notice, these total returns would have been lower.
/3/Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of a
1.25% mortality and expense risk charge. The SEC Deferred Variable Annuity
Subaccount total returns also reflect the maximum surrender charge of 7% for
the first contract year, declining by 1% each year through the seventh, not
to exceed 7.5% of total gross premiums paid.
/4/Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of a
1.25% mortality and expense risk charge. For more information on how
Subaccount performance affects the amount of a periodic annuity payment,
please refer to the account prospectus.
/5/Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.35%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased within
the first 10 years after issue or increase in coverage) or other charges and
expenses related to the certificate's insurance coverage; hence, the total
return on a certificate's cash value would be significantly lower than the
performance quoted above.
--------------------------------------------------------------------------------
6 International Stock Portfolio Perspective
<PAGE>
[LOGO]AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
The question now in Japan is whether the economy is on a sustainable recovery
path after a long period of weakness. Most evidence suggests that underlying
economic activity is strengthening. In fact, it appears that deflationary fears
have faded away. Growing evidence that consumption is increasing and corporate
profit levels are rising, are other positives.
Do you see any upcoming trends in the international markets?
The world's central banks are now nearing the end of the tightening cycle. U.S.
gross domestic product growth has begun to slow, but it needs to slow further.
This outcome in the U.S. would have welcome benefits for economies and interest
rates throughout the world.
Region Allocation
-----------------
[PIE CHART]
% of Net Assets
6/30/00
-------
. Continental Europe.............................. 48%
. Japan........................................... 20%
. United Kingdom.................................. 15%
. North America................................... 7%
. Pacific Basin (excluding Japan)................. 6%
. Emerging Markets................................ 4%
------------
Total 100%
European interest rates would be nearer their peak and the economic recoveries
in Europe and Japan could continue to ride the economic engine of export growth
and consumer spending.
As confidence returns, however, we expect the market to pay increased attention
to fundamentals. The environment will be characterized by a higher cost of
capital and slower growth rates than we have seen recently. We are searching for
companies whose shares can thrive in that environment.
/s/ Kathleen M. Harris
Kathleen M. Harris
Portfolio Manager
/s/ L. Sean Roche
L. Sean Roche
Portfolio Manager
Foreign investments involve additional risks, including currency fluctuations
and greater political, economic and market instability, as compared with
domestic investments.
5 Largest Holdings
------------------
% of
Net Assets
Security Country Industry 6/30/00
-------------------------------------------------------------------------
Royal KPN NV................Netherlands Telephone 3.4%
Aventis SA..................France Pharmaceuticals 3.3%
Vodafone Air Touch plc......United Kingdom Telephone-
Cellular & Wireless 3.1%
NTT DoCoMo, Inc.............Japan Telephone 2.7%
Verenigde Nederlands
Uitgeversbedrijvan Verenigd
Bezit.......................Netherlands Publishing 2.6%
International Stock Portfolio
--------------------------------------------------------------------------------
June 30, 2000 7
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Large Company Stock Portfolio
How has the large company market performed over the first half of the year
relative to alternative equity investment opportunities?
The AAL Large Company Portfolio's market is the S&P 500(R)--the larger
capitalization stock benchmark that the Portfolio is mimicking. For the first
half of the year the return of this benchmark and the Portfolio has been
relatively flat.
Mid-cap and small-cap stocks have outperformed large-cap stocks this year after
lagging large-cap stocks the previous several years. The resurgence of small-cap
and mid-cap companies reflects the better valuations provided by these companies
after years of underperforming and a more speculative nature by investors who
have regained confidence in the economy.
Which sectors in the large company have done the best over the past six months?
[PHOTO]
The best performing sector this year has been the utility sector. This reflects
the better prospects for electric utilities, where deregulation has caused many
companies to refocus their businesses on specific elements of the broad process
of delivering power and has also enabled them to expand their unregulated
businesses.
Value of a $10,000 Investment
-----------------------------
[GRAPH]
Lg Co S&P 500*
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
12/31/99 29236 29672
6/30/00 29100 29557
* An unmanaged index comprised of 500 common stocks representative of the stock
market as a whole. "S&P 500(R)" is a trademark of The McGraw-Hill Companies,
Inc. and has been licensed for use by AAL. The product is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of investing in the product.
Average Annual Total Returns/1/
----------------------------
As of June 30, 2000
From Inception
YTD 1-Year 5-Year Inception Date
--------------------------------------------------
Fund Portfolio/2/............ (0.46)% 7.03% 23.35% 23.56% 6/14/95
--------------------------------------------------------------------------------
Deferred Variable
Annuity Subaccount/3/........ (1.08)% 5.70% 21.82% 21.97% 6/15/95
--------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/........ (7.31)% (0.01)% 21.38% 21.53% 6/15/95
--------------------------------------------------------------------------------
Single Premium
Immediate Variable
Annuity Subaccount/4/........ (1.08)% N/A N/A 9.26% 8/2/99
--------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/................ (4.06)% 2.54% N/A 11.89% 5/15/98
--------------------------------------------------------------------------------
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. Total return
calculations assume a $10,000 initial investment.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gain distributions, but do not reflect separate
account expenses or charges; however, total returns reflect the deduction of
a 0.32% maximum annual management fee, but do not reflect Fund 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 a 30-
days' notice, these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.32% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. The SEC Deferred Variable Annuity
Subaccount total returns also reflect the maximum surrender charge of 7% for
the first contract year, declining by 1% each year through the seventh, not
to exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA returns
reflect the 0.32% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. For more information on how
Subaccount performance affects the amount of a periodic annuity payment,
please refer to the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.32%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased within
the first 10 years after issue or increase in coverage) or other charges and
expenses related to the certificate's insurance coverage; hence, the total
return on a certificate's cash value would be significantly lower than the
performance quoted above.
--------------------------------------------------------------------------------
8 Large Company Stock Portfolio Perspective
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Health care has been the second best performing sector led by the drug stocks,
which have regained favor due to their ability to sustain their growth in an
environment where investors are worried about a slowdown in the economy. Energy
and financials also had above average performance.
What factors have influenced the performance of large-cap stocks during the
first half of the year?
The Federal Reserve Board (the Fed) continues to be a major stock market
influence. The Fed's raising of short-term interest rates in the past year has
been to slow economic growth and keep inflation in check. These interest-rate
increases can limit stock price appreciation as well, since concerns arise over
corporate earnings and future revenue growth. If long-term interest rates also
rise, bond yields begin to offer competitive returns to stocks and this can pull
money from stock markets.
The Fed recently reined in the growth of the money supply and it's also
influenced banks to restrict the number of loans they're giving. This reduces
liquidity in the capital markets, which means less money comes into the stock
market. The Fed's interest-rate hikes have caused the economy to slow somewhat,
buoying investors' sentiments that growth--even if it's on a more moderate
level--will continue.
/s/ David J. Schnarsky
David J. Schnarsky
Portfolio Manager
Sector Allocations
------------------
of the Large Company Stock Portfolio
------------------------------------
[PIE CHART]
% of Net Assets
6/30/00
-------
. Technology................... 32%
. Financials................... 13%
. Health Care.................. 11%
. Consumer Staples............. 10%
. Capital Goods................ 9%
. Consumer Cyclicals........... 7%
. Communication Services....... 7%
. Energy....................... 5%
. Basic Materials.............. 2%
. Utilities.................... 2%
. Short Term Obligations....... 1%
. Transportation............... 1%
-----------
Total 100%
5 Largest Holdings
------------------
% of Net Assets
Security 6/30/00
-------------------------------------------------------
General Electric Company................... 4.2%
Intel Corporation.......................... 3.6%
Cisco Systems, Inc......................... 3.5%
Microsoft Corporation...................... 3.3%
Pfizer, Inc................................ 2.4%
--------------------------------------------------------------------------------
June 30, 2000 9
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
Balanced Portfolio
What benefit do members receive by investing in this portfolio versus doing
asset allocation on their own?
Volatile market environments, such as those that we have experienced recently,
demand sticking to a disciplined investment process. Members who invest in the
AAL Variable Product Balanced Portfolio benefit from the disciplined asset
allocation process that we use. We periodically forecast the expected returns
for equities, bonds and money market instruments. In light of these forecasts,
the portfolio's asset allocation profile is reviewed, and appropriate allocation
targets are set. Through this process and the periodic rebalancing that results
from it, investors are provided with a well-diversified investment vehicle that
will provide an attractive combination of capital appreciation and income over
longer periods of time.
[PHOTO]
What is the current mix of stocks, bonds and money market instruments in the
portfolio?
Currently, the portfolio is weighted 54 percent in equities, 34 percent in bonds
and 12 percent in money market instruments. This allocation is
Value of a $10,000 Investment
-----------------------------
[GRAPH]
Bal Port. S&P 500* Lehman Bros.**
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
12/31/99 20409 29672 13002
6/30/00 20710 29557 13521
* An unmanaged index comprised of 500 common stocks representative of the stock
market as a whole. "S&P 500(R)" is a trademark of The McGraw-Hill Companies,
Inc. and has been licensed for use by AAL. The product is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes
no representation regarding the advisability of investing in the product.
** 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.
Average Annual Total Returns/1/
----------------------------
As of June 30, 2000
From Inception
YTD 1-Year 5-Year Inception Date
--------------------------------------------------
Fund Portfolio/2/........... 1.48% 6.23% 15.43% 15.51% 6/14/95
--------------------------------------------------------------------------------
Deferred Variable
Annuity Subaccount/3/....... 0.85% 4.91% 13.99% 14.06% 6/15/95
--------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/....... (5.51)% (0.75)% 13.58% 13.65% 6/15/95
--------------------------------------------------------------------------------
Single Premium
Immediate Variable
Annuity Subaccount/4/....... 0.85% N/A N/A 6.94% 8/2/99
--------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/............... (2.18)% 1.78% N/A 7.44% 5/15/98
-------------------------------------------------------------------------------
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. Total return
calculations assume a $10,000 initial investment.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gain distributions, but do not reflect separate
account expenses or charges; however, total returns reflect the deduction of
a 0.32% maximum annual management fee, but do not reflect Fund 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 a 30-
days' notice, these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.32% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. The SEC Deferred Variable Annuity
Subaccount total returns also reflect the maximum surrender charge of 7% for
the first contract year, declining by 1% each year through the seventh, not
to exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA returns
reflect the 0.32% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. For more information on how
Subaccount performance affects the amount of a periodic annuity payment,
please refer to the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.32%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased within
the first 10 years after issue or increase in coverage) or other charges and
expenses related to the certificate's insurance coverage; hence, the total
return on a certificate's cash value would be significantly lower than the
performance quoted above.
--------------------------------------------------------------------------------
10 Balanced Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
very near our long-term neutral asset allocation target of 55 percent stocks, 35
percent bonds and 10 percent money market securities.
Do you foresee adjusting this mix in the near future because of interest rate
changes?
In the near term, we anticipate staying close to our neutral target allocation.
We're cautious about stocks and bonds as the Federal Reserve Board (the Fed)
continues various aspects of a tightening monetary policy.
Economic growth at unprecedented levels, a very strong labor market,
historically high stock valuations and the potential for inflation, are areas of
concern, but we're optimistic the Fed's actions will result in a moderate
economic slowing. We think the U.S. economy has reached a point of change, and
we're positioned to move into stocks, bonds or cash when the picture becomes
clearer.
/s/ Reginald L. Pfeifer
Reginald L. Pfeifer
PORTFOLIO MANAGER
5 LARGEST BOND HOLDINGS
-----------------------
Interest Maturity % of Net Assets
Security Rate Date 6/30/00
---------------------------------------------------------------------
U.S. Treasury Notes....... 6.625% 4/30/02 0.4%
U.S. Treasury Bonds....... 8.125% 8/15/19 0.3%
U.S. Treasury Notes....... 6.125% 12/31/01 0.3%
U.S. Treasury Notes....... 6.375% 9/30/01 0.3%
U.S. Treasury Notes....... 6.750% 8/15/06 0.3%
5 LARGEST COMMON STOCK HOLDINGS
-------------------------------
% of Net Assets
Security 6/30/00
----------------------------------------------------
General Electric Company............... 2.3%
Intel Corporation...................... 2.0%
Cisco Systems, Inc..................... 1.9%
Microsoft Corporation.................. 1.8%
Pfizer, Inc............................ 1.3%
----------------------------------------------------------------------------
June 30, 2000 11
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
High Yield Bond Portfolio
How did the high yield market perform over the first half of the year, and what
factors affected performance?
The first six months of 2000 have been a difficult environment for high yield
investors. Several interest rate hikes by the Federal Reserve Board (Fed) have
led economists to adjust their economic growth forecasts downward.
The other main factor affecting the market has been investors' infatuation with
the stock market to the exclusion of most other asset classes, such as bonds. As
a result of this performance, investors have been moving their money out of
bonds into stocks. High-yield bond funds have experienced net withdrawals of
close to $7 billion this year. These redemptions have forced portfolio managers
to sell bonds into a weak market, further depressing prices.
Value of a $10,000 Investment
-----------------------------
[GRAPH]
High Yield Bond Merrill Lynch HY*
3/2/1998 10000 10000
12/31/1998 9675 10273
6/30/1999 9628 10351
12/31/1999 9245 10343
6/30/2000 9171 10221
* An unmanaged index comprised of over 900 cash-pay high yield bonds
representative of the high-yield market as a whole.
Are any changes being made to the Portfolio?
[PHOTO]
As of July 1, Pacific Investment Management Company (PIMCO) will be the sub-
adviser managing the investments of the AAL High Yield Bond Portfolio. PIMCO was
chosen because it is one of the most respected names in bond management and has
an impressive long-term performance record.
Average Annual Total Returns/1/
-------------------------------
As of June 30, 2000
<TABLE>
<CAPTION>
From Inception
YTD 1-Year Inception Date
---------------------------------------------------------
<S> <C> <C> <C> <C>
Fund Portfolio/2/................................................... (0.79)% (4.74)% (3.64)% 3/2/98
-------------------------------------------------------------------------------------------------------------------------------
Deferred Variable Annuity Subaccount/3/............................. (1.41)% (5.93)% (4.84)% 3/3/98
-------------------------------------------------------------------------------------------------------------------------------
SEC Deferred Variable Annuity Subaccount/3/......................... (7.62)% (11.01)% (6.71)% 3/3/98
-------------------------------------------------------------------------------------------------------------------------------
Single Premium Immediate Variable Annuity Subaccount/4/............. (1.41)% N/A (5.84)% 8/2/99
-------------------------------------------------------------------------------------------------------------------------------
Variable Universal Life Subaccount/5/............................... (4.37)% (8.76)% (7.18)% 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. Total return
calculations assume a $10,000 initial investment.
/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, total returns reflect the deduction
of a 0.40% maximum annual management fee, but do not reflect Fund 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 a
30-days' notice, these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.40% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. The SEC Deferred Variable
Annuity Subaccount total returns also reflect the maximum surrender charge
of 7% for the first contract year, declining by 1% each year through the
seventh, not to exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount (SPIVA)
returns reflect the 0.40% management fee of the Fund Portfolio and the
deduction of a 1.25% mortality and expense risk charge. For more
information on how Subaccount performance affects the amount of a periodic
annuity payment, please refer to the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.40%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased
within the first 10 years after issue or increase in coverage) or other
charges and expenses related to the certificate's insurance coverage; hence
the total return on a certificate's cash value would be significantly lower
than the performance quoted above.
-------------------------------------------------------------------------------
12 High Yield Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Based in Newport Beach, California, PIMCO was founded in 1971. By using
different sectors of the fixed-income market, this money- management firm looks
to add value over passive bond indexes. True to our investment objectives, PIMCO
will offer high current income as the primary thrust and secondarily, capital
appreciation.
Who will be the Portfolio manager when PIMCO takes over?
Benjamin Trosky leads PIMCO's high-yield team and will be the portfolio manager.
He oversees the firm's credit research team, and is the portfolio manager for
the PIMCO High Yield Fund. He has been with the firm for 10 years, and was
previously co-manager of high-yield mutual funds at Merrill Lynch Asset
Management.
/s/ David G. Carroll
David G. Carroll
PORTFOLIO MANAGER
High-yield bonds generally are subject to greater market fluctuations and risk
of loss of income and principal than are investments in lower-yielding fixed-
income securities.
5 Largest Holdings
------------------
% of
Interest Maturity Net Assets
Security Rate Date 6/30/00
---------------------------------------------------------------------
Allied Waste North America........... 7.625% 1/1/06 1.6%
Pioneer Natural Resources Company.... 9.625% 4/1/10 1.6%
Rogers Cantel, Inc................... 9.375% 6/1/08 1.6%
Tridad Hospitals Holdings, Inc....... 1.000% 5/15/09 1.5%
Sovereign Bancorp, Inc............... 0.500% 11/15/06 1.5%
-----------------------------------------------------------------------------
June 30, 2000 13
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Bond Portfolio
Why have interest rates been rising over the last 12 months?
If the U.S. economy slows down, the Federal Reserve Board (Fed) would usually
consider lowering interest rates to stimulate the economy. If the economy and
inflation grow too rapidly, the Fed would likely consider raising rates.
The Fed has become increasingly worried about the risks of rising inflation
resulting from demand for goods and services exceeding potential supply. Two
segments of the economy demonstrating particular strength include housing
starts, which are near record levels, and the strong demand for workers. Higher
interest rates will slow economic growth by slowing the demand for goods and
services, thus relieving pressure in these and other areas.
Value of a $10,000 Investment
-----------------------------
[GRAPH]
Bond Port. Lehman Bros Ag Bd Indx*
6/14/1995 10000 10000
12/31/1995 10580 10616
6/30/1996 10427 10486
12/31/1996 10909 10999
6/30/1997 11232 11341
12/31/1997 11930 12062
6/30/1998 12397 12537
12/31/1998 12955 13111
6/30/1999 12709 12929
12/31/1999 12779 13002
6/30/2000 13251 13251
* 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]
Average Annual Total Returns/1/
-------------------------------
As of June 30, 2000
<TABLE>
<CAPTION>
From Inception
YTD 1-Year 5-Year Inception Date
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fund Portfolio/2/............................................. 3.69% 4.26% 5.82% 5.73% 6/14/95
---------------------------------------------------------------------------------------------------------------------------------
Deferred Variable Annuity Subaccount/3/....................... 3.04% 2.96% 4.50% 4.46% 6/15/95
---------------------------------------------------------------------------------------------------------------------------------
SEC Deferred Variable Annuity Subaccount/3/................... (3.45)% (2.60)% 4.12% 4.09% 6/15/95
---------------------------------------------------------------------------------------------------------------------------------
Single Premium Immediate Variable Annuity Subaccount/4/....... 3.04% N/A N/A 3.40% 8/2/99
---------------------------------------------------------------------------------------------------------------------------------
Variable Universal Life Subaccount/5/......................... (0.04)% (0.12)% N/A 1.23% 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. Total return
calculations assume a $10,000 initial investment.
/2/ Fund Portfolio - Average annual total returns reflect reinvestment of all
dividends and capital gain distributions, but do not reflect separate
account expenses or charges; however, total returns reflect the deduction
of a 0.32% maximum annual management fee, but do not reflect Fund 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 a
30-days' notice, these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.32% management fee of the Fund Portfolio and the deduction of
a 1.25% mortality and expense risk charge. The SEC Deferred Variable
Annuity Subaccount total returns also reflect the maximum surrender charge
of 7% for the first contract year, declining by 1% each year through the
seventh, not to exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA
returns reflect the 0.32% management fee of the Fund Portfolio and the
deduction of a 1.25% mortality and expense risk charge. For more
information on how Subaccount performance affects the amount of a periodic
annuity payment, please refer to the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.32%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality
and expense risk charge, a $4.00 monthly administrative charge, and a 3%
premium charge. VUL returns do not reflect deductions for cost of insurance
charges, surrender charges (for certificates surrendered or decreased
within the first 10 years after issue or increase in coverage) or other
charges and expenses related to the certificate's insurance coverage;
hence, the total return on a certificate's cash value would be
significantly lower than the performance quoted above.
-----------------------------------------------------------------------------
14 Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. SEMI-ANNUAL REPORT
What impact do rising interest rates have on the Bond Portfolio?
As interest rates rise, the values of bonds currently in the portfolio decline.
Rising interest rates, however, provide an opportunity to purchase new, higher
yielding securities. This will add more income to the portfolio.
Rising interest rates also can put some investors on the defensive and make
bonds more attractive than they have been in the recent past. The overall result
for the first six months has been positive.
What is your outlook for the economy in the coming months?
The Fed will likely keep a close eye on employment statistics and inflation to
head off any potential problems with the economy.
We think that the economy will begin to show signs of a slowdown in the second
half of this year. When these signs become more evident, interest rates should
level off and may actually decline. In this kind of environment, bonds should
perform very well.
/s/ R. Jerry Scheel
R. Jerry Scheel
PORTFOLIO MANAGER
5 Largest Holdings
------------------
Interest Maturity % of Net Assets
Security Rate Date 6/30/00
-----------------------------------------------------------------
U.S. Treasury Notes....... 7.250% 5/15/04 1.5%
U.S. Treasury Bonds....... 7.875% 2/15/21 1.2%
U.S. Treasury Notes....... 11.875% 11/15/03 1.1%
U.S. Treasury Bonds....... 8.125% 8/15/19 1.0%
U.S. Treasury Bonds....... 5.875% 2/15/04 1.0%
----------------------------------------------------------------------------
June 30, 2000 15
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Money Market Portfolio
How has the portfolio performed so far this year?
The AAL Variable Product Money Market Portfolio has performed well over the past
six months, due to its relatively short weighted average maturity. This refers
to the length of time assets within the portfolio are invested.
In a rising interest rate environment, a shorter weighted average maturity
enables the portfolio to benefit from rising interest rates sooner.
Have the rising interest rates affected portfolio performance?
The Federal Reserve Board (Fed) has increased the federal funds rate, to keep
inflation in check, and could continue to raise rates during the second half of
the year. 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.
Value of a $10,000 Investment
[GRAPH]
MM Port. Sol. Bros. Shrt trm Indx*
6/14/95 10000.0 10000.0
6/30/95 10024.8 10026.3
7/31/95 10069.0 10071.2
8/31/95 10118.5 10117.3
9/30/95 10163.1 10161.0
10/31/95 10211.7 10205.6
11/30/95 10257.5 10247.5
12/31/95 10302.2 10295.4
1/31/96 10352.1 10332.9
2/29/96 10393.9 10371.0
3/31/96 10435.0 10412.3
4/30/96 10481.4 10456.6
5/31/96 10524.9 10499.5
6/30/96 10565.5 10542.6
7/31/96 10613.8 10584.5
8/31/96 10657.7 10628.2
9/30/96 10700.5 10672.0
10/31/96 10749.7 10717.1
11/30/96 10789.7 10760.5
12/31/96 10841.0 10805.1
1/31/97 10887.3 10849.2
2/28/97 10929.1 10889.6
3/31/97 10970.9 10933.6
4/30/97 11022.4 10980.3
5/31/97 11069.8 11025.8
6/30/97 11116.3 11063.0
7/31/97 11169.2 11110.8
8/31/97 11215.7 11158.1
9/30/97 11267.3 11195.0
10/31/97 11317.4 11239.9
11/30/97 11360.0 11285.1
12/31/97 11419.0 11328.0
1/31/98 11469.1 11376.8
2/28/98 11515.4 11418.9
3/31/98 11568.8 11465.7
4/30/98 11618.5 11515.0
5/31/98 11667.1 11560.2
6/30/98 11721.0 11601.8
7/31/98 11773.6 11648.2
8/31/98 11821.3 11694.8
9/30/98 11875.9 11739.4
10/31/98 11925.4 11769.5
11/30/98 11968.5 11803.1
12/31/98 12024.4 11847.7
1/31/99 12070.8 11890.3
2/28/99 12113.0 11929.3
3/31/99 12162.8 11970.2
4/30/99 12208.3 12016.4
5/31/99 12250.9 12061.2
6/30/99 12301.6 12105.0
7/31/99 12349.6 12147.4
8/31/99 12402.1 12192.5
9/30/99 12452.7 12237.4
10/31/99 12502.8 12282.6
11/30/99 12559.8 12326.2
12/31/99 12618.6 12373.2
1/31/00
2/29/00
3/31/00
4/30/00
5/31/00
6/30/00 12987.0 12698.0
*An unmanaged index composed of 1-month Treasury bills.
[PHOTO APPEARS HERE]
Average Annual Total Returns/1/
----------------------------
As of June 30, 2000
<TABLE>
<CAPTION>
From Inception
YTD 1-Year 5-Year Inception Date
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Fund Portfolio/2/....................... 2.92% 5.57% 5.31% 5.31% 6/14/95
------------------------------------------------------------------------------------------
Deferred Variable
Annuity Subaccount/3/................... 2.29% 4.27% 4.02% 4.02% 6/15/95
------------------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/................... (4.16)% (1.36)% 3.64% 3.65% 6/15/95
------------------------------------------------------------------------------------------
Single Premium
Immediate
Variable Annuity/4/..................... 2.29% N/A N/A 3.94% 8/2/99
------------------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/........................... (0.78)% 1.16% N/A 2.50% 5/15/98
------------------------------------------------------------------------------------------
Fund & Subaccount Yields/6/ 7-Day 30-Day
-------------------------- --------------------
Fund Portfolio Yields................................................ 6.27% 6.18%
------------------------------------------------------------------------------------------
Deferred Variable Annuity Subaccount Yields.......................... 6.13% 6.02%
------------------------------------------------------------------------------------------
Single Premium Immediate Variable Annuity Subaccount Yields.......... 6.13% 6.02%
------------------------------------------------------------------------------------------
Variable Universal Life Subaccount Yields/7/......................... 6.24% 6.14%
------------------------------------------------------------------------------------------
</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. Total return calculations
assume a $10,000 initial investment.
/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, total returns reflect the deduction of a 0.35%
maximum annual management fee, but do not reflect Fund 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 a 30-days' notice,
these total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of a
1.25% mortality and expense risk charge. The SEC Deferred Variable Annuity
Subaccount total returns also reflect the maximum surrender charge of 7% for the
first contract year, declining by 1% each year through the seventh, not to
exceed 7.5% of total gross premiums paid.
/4/ Single Premium Immediate Variable Annuity (SPIVA) Subaccount - SPIVA returns
reflect the 0.35% management fee of the Fund Portfolio and the deduction of a
1.25% mortality and expense risk charge. For more information on how Subaccount
performance affects the amount of a periodic annuity payment, please refer to
the account prospectus.
/5/ Variable Universal Life (VUL) Subaccount - VUL returns reflect the 0.35%
management fee of the Fund Portfolio and the deduction of a 0.75% mortality and
expense risk charge, a $4.00 monthly administrative charge, and a 3% premium
charge. Life returns do not reflect deductions for cost of insurance charges,
surrender charges (for certificates surrendered or decreased within the first 10
years after issue or increase in coverage) or other charges and expenses
related to the certificate's insurance coverage; hence, the total return on a
certificate's cash value would be significantly lower than the performance
quoted above.
/6/ Fund & Subaccount Yields - Yield is a measure of the net interest and
dividend income earned over a specific period, expressed as a percentage of the
value of the Fund Portfolio or Subaccount. For Subaccount yields, net investment
income is reduced by the applicable mortality and expense risk charge. Yield is
an annualized figure which assumes that the Fund/Subaccount generates the same
level of net income over a given period. For the Money Market Fund and
Subaccounts, yield is a better representation of current earnings than is the
total return quotation.
/7/ Variable Universal Life Yields - VUL yields reflect the change in the
accumulated unit value less a deduction for mortality and expense risk charges
for 7-day and 30-day periods ended December 31, 1999.The yields do not reflect
any other charges or deductions related to the certificate's insurance
coverage; had these changes been included, the quoted yields would have been
significantly lower.
The accompanying notes to be the financial statements are an integral part
of this schedule.
--------------------------------------------------------------------------------
16 Money Market Portfolio Perspective
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC. SEMI-ANNUAL REPORT
Money Market Profile
This rising interest rate environment has positively impacted the portfolio. The
portfolio is invested in short-term commercial paper, and the yields offered by
commercial paper reflect the current and anticipated interest rate environment.
The increase in the federal funds rate this year has translated into higher
yields for commercial paper investments.
What is the main benefit this Portfolio offers members?
The AAL Variable Product Money Market Portfolio provides members with a low risk
investment that offers a competitive return. When returns on stocks and bonds
become volatile, this investment vehicle provides a stable alternative.
/s/ Alan D. Onstad
Alan D. Onstad
PORTFOLIO MANAGER
Sector Allocations
-------------------
[PIE CHART]
% of Net Assets
6/30/00
-------
. Finance........................... 29%
. Utilities......................... 24%
. Industrial-Manufacturing.......... 17%
. Industrial-Consumer Goods......... 15%
. Industrial-Services............... 11%
. Industrial-Energy................. 4%
---------------
Total 100%
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.
The accompanying notes to be the financial statements are an integral part
of this schedule.
Money Market Portfolio
--------------------------------------------------------------------------------
June 30, 2000 17
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
AAL Variable Product Small Company Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (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.
Shares Common Stocks(99.4%) Market Value
=============================================================================
Basic Materials (3.3%)
----------------------
9,800 A. M. Castle & Company................................... $81,462
15,500 Arch Chemicals, Inc...................................... 339,063
21,700 Birmingham Steel Corporation*............................ 84,088
24,400 Buckeye Technologies, Inc.*.............................. 535,275
17,500 Cambrex Corporation...................................... 787,500
18,000 Caraustar Industries, Inc................................ 272,250
11,100 ChemFirst, Inc........................................... 267,787
9,900 Commercial Metals Company................................ 272,250
11,600 Commonwealth Industries, Inc............................. 68,150
24,600 Corn Products International, Inc......................... 651,900
26,900 Delta and Pine Land Company.............................. 674,181
8,600 Deltic Timber Corporation................................ 183,825
31,200 DIMON, Inc............................................... 66,300
13,000 Florida Rock Industries, Inc............................. 463,125
16,700 Geon Company............................................. 308,950
10,800 IMCO Recycling, Inc...................................... 58,725
16,300 Lilly Industries, Inc.................................... 490,019
21,800 MacDermid, Inc........................................... 512,300
10,700 Material Sciences Corporation*........................... 107,000
6,600 McWhorter Technologies, Inc.* ........................... 128,288
18,300 Mississippi Chemical Corporation......................... 86,925
16,800 OM Group, Inc............................................ 739,200
27,800 Omnova Solutions, Inc.................................... 173,750
5,200 Penford Corporation...................................... 111,800
10,200 Pope & Talbot, Inc....................................... 163,200
6,100 Quaker Chemical Corporation.............................. 105,987
9,800 Quanex Corporation....................................... 145,775
8,200 Republic Group, Inc...................................... 73,800
33,600 Steel Dynamics, Inc.*.................................... $304,500
7,500 Steel Technologies, Inc.................................. 53,437
14,700 Texas Industries, Inc.................................... 424,463
10,100 WHX Corporation*......................................... 55,550
------------------------------------------------------------------
Total Basic Materials....................................8,790,825
==================================================================
Capital Goods (13.8%)
---------------------
18,800 AAR Corporation.......................................... 225,600
6,600 Alliant Techsystems, Inc.*............................... 445,088
6,200 Amcast Industrial Corporation............................ 54,250
16,400 A.O. Smith Corporation................................... 343,375
27,495 Applied Power, Inc....................................... 921,083
25,100 AptarGroup, Inc.......................................... 677,700
26,100 Artesyn Technologies, Inc.*.............................. 725,906
13,400 Astec Industries, Inc.*.................................. 340,025
23,800 Baldor Electric Company.................................. 443,275
12,900 Barnes Group, Inc........................................ 210,431
17,400 BE Aerospace, Inc.*...................................... 119,625
17,000 Belden, Inc.............................................. 435,625
11,500 Benchmark Electronics, Inc.*............................. 420,469
13,800 Black Box Corporation*...................................1,092,571
19,200 BMC Industries, Inc...................................... 78,000
15,900 Brady Corporation........................................ 516,750
11,400 Brush Engineered Materials, Inc.......................... 178,125
4,600 Butler Manufacturing Company............................. 78,200
18,200 C&D Technologies, Inc....................................1,028,300
23,700 C-COR.net Corporation*................................... 639,900
21,100 Checkpoint Systems, Inc.*................................ 158,250
The accompanying notes to the financial statements are an
integral part of this schedule.
--------------------------------------------------------------------------------
18 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks(99.4%) Market Value
=============================================================================
Capital Goods-continued
-----------------------
16,900 CLARCOR, Inc............................................ $335,888
26,700 Coeur d'Alene Mines Corporation*........................ 65,081
30,200 Cognex Corporation*..................................... 1,562,850
14,100 Cohu, Inc............................................... 380,259
19,600 CTS Corporation......................................... 882,000
11,400 CUNO, Inc.*............................................. 263,625
15,500 Dionex Corporation*..................................... 414,625
27,400 Dycom Industries, Inc.*................................. 1,260,400
18,700 Electro Scientific Industries, Inc.*.................... 823,383
12,100 Esterline Technologies Corporation*..................... 179,987
10,300 Flow International Corporation* ........................ 103,000
28,500 Foster Wheeler Corporation.............................. 245,812
10,700 Gardner Denver, Inc.*................................... 191,262
29,300 GenCorp, Inc............................................ 234,400
14,300 Graco, Inc.............................................. 464,750
20,900 Griffon Corporation*.................................... 116,256
12,000 Harman International Industries, Inc.................... 732,000
7,950 Harmon Industries, Inc.................................. 105,338
20,800 IDEX Corporation........................................ 656,500
17,300 Insituform Technologies, Inc.*.......................... 469,263
5,900 Insteel Industries, Inc................................. 36,506
9,238 Intermagnetics General Corporation*..................... 174,945
11,300 Ionics, Inc.*........................................... 346,062
10,500 Itron, Inc.*............................................ 86,625
31,100 JLG Industries, Inc..................................... 369,313
16,200 Kaman Corporation....................................... 173,138
60,800 KEMET Corporation*...................................... 1,523,800
7,000 Lawson Products, Inc.................................... 172,375
8,550 Lindsay Manufacturing Company........................... 167,794
11,000 Lydall, Inc.*........................................... 116,875
17,400 Manitowoc Company, Inc.................................. 465,450
25,000 Milacron, Inc........................................... 362,500
36,600 Morrison Knudsen Corporation*........................... 265,350
24,100 Mueller Industries, Inc.*............................... 674,800
13,840 Myers Industries, Inc................................... 148,780
4,100 Nashua Corporation...................................... 33,825
9,400 New England Business Service, Inc....................... 152,750
26,200 Orbital Sciences Corporation*........................... 319,312
7,400 Park Electrochemical Corporation........................ 266,862
31,900 Paxar Corporation*...................................... 380,806
12,800 Plexus Corporation*..................................... 1,446,400
14,700 Regal-Beloit Corporation................................ $236,119
19,400 Reliance Steel & Aluminum Company....................... 371,025
7,600 Robbins & Myers, Inc.................................... 173,375
21,400 Roper Industries, Inc................................... 548,375
14,600 RTI International Metals, Inc.*......................... 166,075
11,800 Scott Technologies, Inc.*............................... 202,812
23,700 SLI, Inc................................................ 287,363
13,400 Speciality Equipment Companies, Inc.*................... 363,475
8,900 SPS Technologies, Inc.*................................. 365,456
8,800 Standex International Corporation....................... 139,700
26,900 Stillwater Mining Company*.............................. 749,837
11,500 Technitrol, Inc......................................... 1,114,062
18,700 Teledyne Technologies, Inc.*............................ 313,225
9,500 TETRA Technologies, Inc.*............................... 134,781
10,800 Thomas Industries, Inc.................................. 191,025
14,899 Three-Five Systems, Inc.*............................... 879,041
26,500 Tredegar Corporation.................................... 503,500
23,900 United Stationers, Inc.*................................ 773,763
11,200 URS Corporation*........................................ 170,800
24,100 Valence Technology, Inc.*............................... 444,344
16,200 Valmont Industries, Inc................................. 321,975
29,800 Vicor Corporation*...................................... 1,037,413
18,850 Watsco, Inc............................................. 235,625
18,400 Watts Industries, Inc................................... 232,300
8,500 Wolverine Tube, Inc.*................................... 144,500
11,700 ZixIt Corporation*...................................... 538,931
------------------------------------------------------------------
Total Capital Goods.....................................36,942,392
==================================================================
Communication Services (1.0%)
-----------------------------
15,100 Aeroflex, Inc.*......................................... 750,281
15,800 Aware, Inc.*............................................ 807,775
35,900 General Communication, Inc.*............................ 183,988
6,500 NVR, Inc.*.............................................. 370,500
11,800 SCP Pool Corporation*................................... 277,300
46,100 TALK.com, Inc.*......................................... 267,956
------------------------------------------------------------------
Total Communication Services............................ 2,657,800
------------------------------------------------------------------
Consumer Cyclicals (17.7%)
--------------------------
23,533 99 Cents Only Stores*................................... 938,378
13,800 Aaron Rents, Inc........................................ 173,362
15,700 ABM Industries, Inc..................................... 361,100
11,400 Action Performance Companies, Inc.*..................... 82,650
The accompanying notes to the financial statements are an
integral part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 19
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENT AS OF JUNE 30, 2000
Shares Common Stocks(99.4%) Market Value
=============================================================================
Consumer Cyclicals-continued
----------------------------
14,200 ADVO, Inc.*.............................................. $596,400
20,400 Ames Department Stores, Inc.*............................ 158,100
8,121 Anchor Gaming* .......................................... 389,300
6,000 Angelica Corporation..................................... 48,000
22,200 AnnTaylor Stores Corporation*............................ 735,375
19,400 Apogee Enterprises, Inc.................................. 68,505
16,000 Applica, Inc.*........................................... 181,000
14,200 Applied Industrial Technologies, Inc..................... 232,525
17,500 Arctic Cat, Inc.......................................... 207,812
9,400 Ashworth, Inc.*.......................................... 42,006
11,900 A. T. Cross Company*..................................... 58,756
29,100 Aztar Corporation*....................................... 451,050
8,300 Bassett Furniture Industries, Inc........................ 104,787
13,900 Beringer Wine Estates Holdings, Inc.*.................... 490,844
25,400 Bombay Company, Inc.*.................................... 74,612
12,600 Books-A-Million, Inc.*................................... 58,275
12,800 Brown Shoe Company, Inc.................................. 166,400
8,900 Building Materials Holding Corporation*.................. 78,431
12,700 Canandaigua Brands, Inc.*................................ 640,556
35,300 Casey's General Stores, Inc.............................. 366,238
12,900 Catalina Marketing Corporation*..........................1,315,800
18,500 Cato Corporation......................................... 215,063
25,500 Central Parking Corporation.............................. 604,031
23,600 Cerner Corporation*...................................... 643,100
33,100 Champion Enterprises, Inc.*.............................. 161,363
6,900 Chemed Corporation....................................... 194,494
28,135 ChoicePoint, Inc.*.......................................1,252,007
41,700 CIBER, Inc.*............................................. 552,525
10,900 Coachmen Industries, Inc................................. 125,350
17,800 Cone Mills Corporation*.................................. 110,138
37,600 Copart, Inc.*............................................ 601,600
14,300 Cost Plus, Inc.*......................................... 410,231
6,100 CPI Corporation.......................................... 128,863
11,000 Cyrk, Inc.*.............................................. 55,000
4,000 DAMARK International, Inc.*.............................. 86,000
10,100 Department 56, Inc.*..................................... 111,100
11,700 Discount Auto Parts, Inc.*............................... 117,000
8,000 Dixie Group, Inc.*....................................... 31,000
12,700 Dress Barn Corporation*.................................. 280,987
43,300 D.R. Horton, Inc......................................... 587,256
13,700 Elcor Corporation........................................ 315,100
9,400 Enesco Group, Inc........................................ $44,650
27,650 Ethan Allen Interiors, Inc............................... 663,600
24,800 Fedders Corporation...................................... 144,150
22,900 Fleetwood Enterprises, Inc............................... 326,325
13,800 Footstar, Inc.*.......................................... 458,850
22,450 Fossil, Inc.*............................................ 436,372
14,400 Franklin Covey Company*.................................. 99,900
10,600 F.Y.I., Inc.*............................................ 357,088
14,300 G & K Services, Inc...................................... 358,394
51,660 Gentex Corporation*......................................1,297,958
23,200 Goody's Family Clothing, Inc.*........................... 127,600
8,800 Gottschalks, Inc.*....................................... 55,550
15,700 Group 1 Automotive, Inc.*................................ 188,400
13,400 Guilford Mills, Inc...................................... 56,950
17,100 Gymboree Corporation*.................................... 51,300
4,600 Haggar Corporation....................................... 54,050
44,650 HA-LO Industries, Inc.*.................................. 251,156
13,000 Hancock Fabrics, Inc..................................... 55,250
20,400 Hartmarx Corporation*.................................... 52,275
7,100 Huffy Corporation........................................ 30,619
16,400 Hughes Supply, Inc....................................... 323,900
20,300 Information Resources, Inc.*............................. 79,931
18,650 Insight Enterprises, Inc.* ..............................1,106,178
8,100 Insurance Auto Auctions, Inc.*........................... 171,112
36,300 Interface, Inc........................................... 138,394
17,700 Intermet Corporation..................................... 121,687
13,200 JAKKS Pacific, Inc.*..................................... 194,700
15,700 Jan Bell Marketing, Inc.*................................ 37,287
9,800 J. Baker, Inc............................................ 56,962
12,600 Jo-Ann Stores, Inc.*..................................... 88,200
18,000 Justin Industries, Inc................................... 393,750
12,500 K2, Inc.*................................................ 103,906
16,700 Kellwood Company......................................... 352,787
15,500 Kroll-O'Gara Company*.................................... 103,656
7,200 K-Swiss, Inc............................................. 114,750
43,000 La-Z-Boy, Inc............................................ 602,000
40,236 Lennox International, Inc................................ 533,127
10,600 Libbey, Inc.............................................. 340,525
6,200 Lillian Vernon Corporation............................... 65,100
27,800 Linens `n Things, Inc.*.................................. 754,075
31,200 MascoTech, Inc........................................... 337,350
15,000 M.D.C. Holdings, Inc..................................... 279,375
29,200 Men's Wearhouse, Inc.*................................... 651,525
The accompanying notes to the financial statements are an
integral part of this schedule.
--------------------------------------------------------------------------------
20 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks(99.4%) Market Value
================================================================================
Consumer Cyclicals-continued
----------------------------
21,700 Michaels Stores, Inc.*.............................. $ 994,131
12,900 MicroAge, Inc.*..................................... 3,483
10,900 Midas, Inc.......................................... 218,000
26,351 Midway Games, Inc.*................................. 212,455
13,200 Monaco Coach Corporation*........................... 179,850
5,000 National Presto Industries, Inc..................... 153,750
24,200 Nautica Enterprises, Inc.*.......................... 258,638
33,000 Oakwood Homes Corporation........................... 59,812
35,700 O'Reilly Automotive, Inc.*.......................... 495,338
8,700 Oshkosh B'Gosh, Inc................................. 142,463
5,300 Oxford Industries, Inc.............................. 95,400
22,150 Pacific Sunwear of California, Inc.*................ 415,312
22,300 Penton Media, Inc................................... 780,500
37,200 Pep Boys-Manny, Moe, & Jack......................... 223,200
19,100 Phillips-Van Heusen Corporation..................... 181,450
66,500 Pier 1 Imports, Inc................................. 648,375
9,900 Pillowtex Corporation*.............................. 42,075
18,400 Pinnacle Entertainment, Inc.*....................... 357,650
16,800 Polaris Industries, Inc............................. 537,600
15,800 Pre-Paid Legal Services, Inc.*...................... 472,025
13,500 Primark Corporation*................................ 502,875
34,700 Profit Recovery Group International, Inc.*.......... 576,888
15,700 Quiksilver, Inc.*................................... 244,331
28,550 Regis Corporation................................... 356,875
10,900 Royal Appliance Manufacturing Company*.............. 61,994
14,300 Russ Berrie and Company, Inc........................ 275,275
9,100 Ryland Group, Inc................................... 201,338
8,000 Salton, Inc.*....................................... 295,000
19,600 Scotts Company*..................................... 715,400
10,800 Shaw Group, Inc.*................................... 508,950
20,700 ShopKo Stores, Inc.*................................ 318,263
12,500 Simpson Industries, Inc............................. 94,140
8,500 Simpson Manufacturing Company, Inc.*................ 406,406
6,000 Skyline Corporation................................. 129,000
50,300 Snyder Communications, Inc.*........................ 1,194,625
8,200 Spartan Motors, Inc................................. 34,338
8,500 Standard Motor Products, Inc........................ 72,250
20,100 Standard Pacific Corporation........................ 201,000
30,200 Stein Mart, Inc.*................................... 309,550
30,300 Stride Rite Corporation............................. 185,588
18,800 Sturm, Ruger & Company, Inc......................... 166,850
5,500 Swiss Army Brands, Inc.*............................ $ 28,188
14,800 TBC Corporation*.................................... 68,450
23,800 Tenneco Automotive, Inc............................. 124,950
27,425 Tetra Tech, Inc.*................................... 627,347
9,900 Thomas Nelson, Inc.................................. 84,769
8,400 Thor Industries, Inc................................ 176,400
14,200 Timberland Company*................................. 1,005,537
14,500 Titan International, Inc............................ 77,031
25,500 Toll Brothers, Inc.*................................ 522,750
8,900 Toro Company........................................ 293,144
32,900 Tower Automotive, Inc.*............................. 411,250
34,700 True North Communications, Inc...................... 1,526,800
14,100 Universal Forest Products, Inc...................... 193,875
16,100 Wabash National Corporation......................... 192,194
10,770 WD-40 Company....................................... 223,478
9,600 Wet Seal, Inc.*..................................... 126,000
15,100 Winnebago Industries, Inc........................... 197,244
29,100 Wolverine World Wide, Inc........................... 287,363
13,000 Wynn's International, Inc........................... 294,937
24,600 Zale Corporation*................................... 897,900
-----------------------------------------------------------------
Total Consumer Cyclicals............................ 47,345,234
=================================================================
Consumer Staples(6.9%)
---------------------
7,100 Agribrands International, Inc.*..................... 297,756
12,800 American Italian Pasta Company*..................... 264,800
18,700 Applebee's International, Inc....................... 566,844
23,900 Bindley Western Industries, Inc..................... 631,856
25,800 Bowne & Company, Inc................................ 259,612
7,900 Carmike Cinemas, Inc.*.............................. 30,612
13,300 CDI Corporation*.................................... 270,988
18,750 CEC Entertainment, Inc.*............................ 480,469
21,375 Cheesecake Factory, Inc.*........................... 587,812
46,500 Chiquita Brands International, Inc.*................ 183,094
35,370 CKE Restaurants, Inc................................ 106,110
6,200 Coca-Cola Bottling Company Consolidated............. 282,100
9,900 Consolidated Graphics, Inc.*........................ 92,812
20,417 Consolidated Products, Inc.*........................ 183,753
29,700 Earthgrains Company................................. 577,294
20,600 Edgewater Technology, Inc.*......................... 137,762
27,500 Fleming Companies, Inc.............................. 359,219
5,400 GC Companies, Inc.*................................. 120,825
20,400 Hain Celestial Group, Inc.*......................... 748,425
The accompanying notes to be the financial statements are an integral part
of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 21
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Commom Stocks(99.4%) Market Value
================================================================================
Consumer Staples-continued
--------------------------
13,500 Heidrick & Struggles International, Inc.*.......... $852,188
13,900 IHOP Corporation*.................................. 232,825
44,700 Interim Services, Inc.*............................ 793,425
6,100 J & J Snack Foods Corporation*..................... 109,038
26,800 Jack in the Box, Inc.*............................. 659,950
19,800 John H. Harland Company............................ 295,762
29,900 Labor Ready, Inc.*................................. 198,087
17,300 Landry's Seafood Restaurants, Inc.................. 147,050
15,700 Luby's, Inc........................................ 125,600
20,700 Marcus Corporation................................. 250,988
13,800 Michael Foods, Inc................................. 338,100
7,900 Nash-Finch Company................................. 65,175
11,900 Nature's Sunshine Products, Inc.................... 83,300
47,000 NBTY, Inc.*........................................ 299,625
23,000 Owens & Minor, Inc................................. 395,313
8,500 Panera Bread Company*.............................. 86,063
23,650 Patterson Dental Company*.......................... 1,206,150
9,700 Performance Food Group Company*.................... 310,400
31,400 Prime Hospitality Corporation*..................... 296,337
15,666 Priority Healthcare Corporation*................... 1,164,180
20,900 Ralcorp Holdings, Inc.*............................ 256,025
43,100 Ruby Tuesday, Inc.................................. 541,444
22,700 Ryan's Family Steak Houses, Inc.................... 191,531
10,800 Schweitzer-Mauduit International, Inc.............. 135,000
39,500 Smithfield Foods, Inc.*............................ 1,108,469
12,550 Sonic Corporation*................................. 368,656
8,100 Taco Cabana, Inc.*................................. 53,662
16,700 Triarc Companies, Inc.*............................ 342,350
12,700 United Natural Foods, Inc.*........................ 174,625
10,600 Volt Information Sciences, Inc.*................... 349,138
18,300 Whole Foods Market, Inc.*.......................... 756,019
------------------------------------------------------------------
Total Consumer Staples............................. 18,368,618
==================================================================
Energy(4.9%)
------------
9,700 Atwood Oceanics, Inc.*............................. 430,438
23,000 Barrett Resources Corporation*..................... 700,062
19,800 Cabot Oil & Gas Corporation........................ 419,513
11,100 Cal Dive International, Inc.*...................... 601,481
32,200 Cross Timbers Oil Company.......................... 712,425
12,200 Dril-Quip, Inc.*................................... 570,350
34,204 Friede Goldman Halter, Inc.*....................... 305,698
13,200 HS Resources, Inc.*................................ $396,000
35,500 Input/Output, Inc.*................................ 299,531
28,500 Louis Dreyfus Natural Gas Corporation*............. 892,406
29,700 Newfield Exploration Company....................... 1,162,013
12,300 Nuevo Energy Company*.............................. 232,163
15,900 Oceaneering International, Inc.*................... 302,100
14,700 Offshore Logistics, Inc.*.......................... 211,312
12,500 Plains Resources, Inc.*............................ 200,000
28,200 Pogo Producing Company............................. 623,925
45,600 Pride International, Inc.*......................... 1,128,600
15,000 Remington Oil & Gas Corporation*................... 112,500
11,850 SEACOR SMIT, Inc.*................................. 458,447
16,500 Seitel, Inc.*...................................... 134,063
8,000 St. Mary Land & Exploration Company................ 336,500
13,000 Stone Energy Corporation*.......................... 776,750
19,000 UGI Corporation.................................... 389,500
22,600 Unisource Energy Corporation....................... 339,000
18,100 Veritas DGC, Inc.*................................. 470,600
43,700 Vintage Petroleum, Inc............................. 985,981
------------------------------------------------------------------
Total Energy....................................... 13,191,358
==================================================================
Financials(10.9%)
-----------------
53,000 AmeriCredit Corporation*........................... 901,000
17,300 Anchor Bancorp Wisconsin, Inc...................... 264,906
26,100 Arthur J. Gallagher & Company...................... 1,096,200
18,000 Cash America International, Inc.................... 132,750
27,900 Centura Banks, Inc................................. 946,856
19,900 Chittenden Corporation............................. 486,306
21,519 Commerce Bancorp, Inc.............................. 989,874
39,500 Commercial Federal Corporation..................... 614,719
33,800 Community First Bankshares, Inc.................... 551,363
36,600 Cullen/Frost Bankers, Inc.......................... 963,037
9,000 Dain Rauscher Corporation.......................... 594,000
14,085 Delphi Financial Group, Inc.*...................... 478,010
19,765 Downey Financial Corporation....................... 573,185
24,900 Eaton Vance Corporation............................ 1,151,625
26,700 Enhance Financial Services Group, Inc.............. 383,813
9,300 E. W. Blanch Holdings, Inc......................... 188,906
46,920 Fidelity National Financial, Inc................... 859,222
44,400 First American Financial Corporation............... 635,475
18,900 First BanCorp Puerto Rico.......................... 350,831
28,750 First Midwest Bancorp, Inc......................... 668,438
The accompanying notes to be the financial statements are an integral part
of this schedule.
--------------------------------------------------------------------------------
22 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.4%) Market Value
============================================================================
Financials--continued
---------------------
49,000 Fremont General Corporation................... $ 192,938
9,200 Hilb, Rogal and Hamilton Company.............. 319,125
35,481 Hudson United Bancorp......................... 796,105
30,900 Imperial Bancorp*............................. 480,257
20,800 Investors Financial Services Corporation...... 825,500
17,100 Jefferies Group, Inc.......................... 345,206
16,200 MAF Bancorp, Inc.............................. 294,638
20,300 Morgan Keegan, Inc............................ 299,425
28,800 Mutual Risk Management, Ltd................... 498,600
12,400 National Discount Brokers Group, Inc.*........ 395,250
18,800 Pioneer Group, Inc.*.......................... 796,650
18,414 Provident Bankshares Corporation.............. 248,589
14,500 Queens County Bancorp, Inc.................... 267,344
26,400 Radian Group, Inc............................. 1,366,200
32,250 Raymond James Financial, Inc.................. 725,625
19,800 Riggs National Corporation.................... 249,975
6,900 RLI Corporation............................... 239,775
6,500 SCPIE Holdings, Inc........................... 133,250
37,200 SEI Investments Company....................... 1,481,025
18,200 Selective Insurance Group, Inc................ 345,800
32,300 Silicon Valley Bancshares*.................... 1,376,787
30,100 South Financial Group, Inc.................... 436,450
19,800 Southwest Bancorporation of Texas, Inc.*...... 410,850
10,100 Southwest Securities Group, Inc............... 376,225
25,700 Staten Island Bancorp, Inc.................... 452,963
27,500 Susquehanna Bancshares, Inc................... 391,875
13,000 Trenwick Group, Inc........................... 189,312
37,400 TrustCo Bank Corporation New York............. 467,500
29,300 United Bankshares, Inc........................ 532,894
36,600 Washington Federal, Inc....................... 667,950
15,900 Whitney Holding Corporation................... 543,581
12,000 Zenith National Insurance Corporation......... 255,000
---------------------------------------------------------
Total Financials.............................. 29,233,180
=========================================================
Health Care (13.0%)
-----------------
14,400 ADAC Laboratories*............................ 345,600
9,500 Administaff, Inc.*............................ 603,250
15,000 Advance Paradigm, Inc.*....................... 307,500
41,900 Advanced Tissue Sciences, Inc.*............... 336,507
33,000 Alliance Pharmaceutical Corporation*.......... 371,250
24,400 Alpharma, Inc................................. 1,518,900
24,150 Barr Laboratories, Inc.*...................... $1,082,222
1 Baxter International*......................... 33
16,300 Biomatrix, Inc.*.............................. 368,788
38,100 Bio-Technology General Corporation*........... 502,444
23,800 Cephalon, Inc.*............................... 1,425,025
10,700 CONMED Corporation*........................... 276,863
9,900 Cooper Companies, Inc......................... 360,112
18,600 COR Therapeutics, Inc.*....................... 1,586,812
41,000 Coventry Health Care, Inc.*................... 546,452
6,200 Curative Health Services, Inc.* .............. 37,393
18,000 Cygnus, Inc.*................................. 256,500
10,500 Datascope Corporation......................... 378,000
9,600 Diagnostic Products Corporation............... 307,200
31,000 Dura Pharmaceuticals, Inc.*................... 445,625
17,800 Enzo Biochem, Inc.*........................... 1,228,200
13,400 Hanger Orthopedic Group, Inc.*................ 66,162
10,700 Hologic, Inc.*................................ 72,225
46,300 Hooper Holmes, Inc............................ 370,400
24,800 IDEXX Laboratories, Inc.*..................... 567,300
19,100 Immune Response Corporation*.................. 207,713
21,000 Invacare Corporation.......................... 551,250
45,925 Jones Pharma, Inc............................. 1,834,130
17,700 Laser Vision Centers, Inc.*................... 109,519
14,700 MAXIMUS, Inc.*................................ 325,238
20,600 Medicis Pharmaceutical Corporation*........... 1,174,200
11,400 MemberWorks, Inc.*............................ 383,325
17,000 Mentor Corporation............................ 462,188
100 Morrison Management Specialists............... 2,819
15,200 Noven Pharmaceuticals, Inc.*.................. 456,950
15,500 On Assignment, Inc.*.......................... 472,750
23,800 Organogenesis, Inc.*.......................... 272,212
33,900 Orthodontic Centers of America, Inc.*......... 766,987
9,900 Osteotech, Inc.*.............................. 103,950
17,700 PAREXEL International Corporation*............ 169,256
11,000 Pediatrix Medical Group, Inc.*................ 127,875
17,400 Pharmaceutical Product Development, Inc.*..... 365,400
9,100 PolyMedica Corporation*....................... 393,575
13,800 Protein Design Labs, Inc.*.................... 2,276,353
24,500 Regeneron Pharmaceuticals, Inc.*.............. 730,406
31,550 Renal Care Group, Inc.*....................... 771,495
21,400 ResMed, Inc.*................................. 572,450
20,500 Respironics, Inc.*............................ 369,000
18,900 Sierra Health Services, Inc.* ................ 60,244
The accompanying notes to be the financial statements are an integral part
of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 23
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.4%) Market Value
==============================================================================
Health Care -continued
----------------------
17,400 Sola International, Inc.*.................... $ 84,825
6,600 Spacelabs Medical, Inc.*..................... 74,250
31,600 Summit Technology, Inc.*..................... 596,450
15,500 Sunrise Medical, Inc.*....................... 75,562
8,400 Syncor International Corporation*............ 604,800
14,400 Techne Corporation*.......................... 1,872,000
20,600 Theragenics Corporation*..................... 176,388
21,100 Universal Health Services, Inc. Class B*..... 1,382,050
63,700 US Oncology, Inc.*........................... 318,500
21,900 Varian Medical Systems, Inc.*................ 856,837
18,400 Vertex Pharmaceuticals, Inc.*................ 1,938,900
8,600 Vital Signs, Inc............................. 155,875
12,200 Wesley Jessen VisionCare, Inc.*.............. 458,263
----------------------------------------------------------
Total Health Care............................ 34,914,748
==========================================================
Technology (22.3%)
-----------------
16,300 Actel Corporation*............................ 743,687
26,300 Adaptive Broadband Corporation*............... 966,525
19,500 Allen Telecom, Inc.*.......................... 344,906
29,500 Alliance Semiconductor Corporation*........... 724,594
27,900 Alpha Industries, Inc.*....................... 1,229,344
29,200 American Management Systems, Inc.*............ 958,581
13,300 American Xtal Technology, Inc.*............... 575,225
9,000 Analogic Corporation.......................... 360,000
15,800 Analysts International Corporation............ 147,138
25,500 Anixter International, Inc.*.................. 675,750
36,000 Aspect Communications, Inc.*.................. 1,415,250
18,300 Aspen Technology, Inc.*....................... 704,550
15,700 Audiovox Corporation*......................... 346,381
20,800 Auspex Systems, Inc.*......................... 102,700
27,200 Avant!*....................................... 509,576
17,300 Avid Technology, Inc.*........................ 207,600
22,100 AVT Corporation*.............................. 162,988
9,900 BARRA, Inc.*.................................. 490,669
29,600 Billing Concepts Corporation*................. 131,350
19,505 BISYS Group, Inc.*............................ 1,199,558
38,900 Brightpoint, Inc.*............................ 336,726
20,000 Cable Design Technologies Corporation*........ 670,000
31,000 C-Cube Microsystems, Inc.*.................... 608,375
4,200 Centigram Communications Corporation*......... 107,362
17,700 Coherent, Inc.*............................... 1,484,588
14,600 Computer Task Group, Inc...................... $ 73,913
11,500 Concord Communications, Inc.*................. 458,562
42,200 Dallas Semiconductor Corporation.............. 1,719,650
9,500 Davox Corporation*............................ 122,906
27,400 Dendrite International, Inc.*................. 912,763
10,500 Digi International, Inc.*..................... 68,250
48,900 Digital Microwave Corporation*................ 1,864,313
14,400 Electroglas, Inc.*............................ 309,600
34,400 eLoyalty Corporation*......................... 438,600
29,000 Epicor Software Corporation*.................. 72,500
16,300 ePresence, Inc.*.............................. 118,175
29,400 ESS Technology, Inc.*......................... 426,300
16,000 Exabyte Corporation*.......................... 72,000
22,600 FactSet Research Systems, Inc................. 638,450
10,100 Fair, Isaac and Company, Inc.................. 444,400
23,900 FileNET Corporation*.......................... 439,162
26,400 General Semiconductor, Inc.*.................. 389,400
15,500 Gerber Scientific, Inc........................ 178,250
13,900 Great Plains Software, Inc.*.................. 272,788
15,900 Helix Technology Corporation.................. 620,100
18,900 HNC Software, Inc.*........................... 1,167,075
17,300 Hutchinson Technology, Inc.*.................. 246,525
22,780 Hyperion Solutions Corporation*............... 738,926
10,300 Innovex, Inc.*................................ 100,425
43,100 International Rectifier Corporation*.......... 2,413,600
18,400 Inter-Tel, Inc................................ 295,550
22,400 InterVoice-Brite, Inc.*....................... 147,000
28,600 Jack Henry & Associates, Inc.................. 1,433,575
19,800 Kent Electronics Corporation*................. 590,288
38,600 Komag, Inc.*.................................. 67,550
8,650 Kronos, Inc.*................................. 224,900
17,000 Kulicke and Soffa Industries, Inc.*........... 1,009,375
13,600 Lason, Inc.*.................................. 34,000
34,500 Lattice Semiconductor Corporation*............ 2,384,813
24,400 MedQuist, Inc.*............................... 829,600
15,000 Mercury Computer Systems, Inc.*............... 484,687
25,000 Methode Electronics, Inc...................... 965,625
12,000 MICROS Systems, Inc.*......................... 222,750
22,500 National Computer Systems, Inc................ 1,108,125
22,900 National Data Corporation..................... 526,700
35,300 National Instruments Corporation*............. 1,539,962
15,000 Network Equipment Technologies, Inc.*......... 150,937
54,000 P-Com, Inc.*.................................. 307,125
The accompanying notes to be the financial statements are an integral part
of this schedule.
--------------------------------------------------------------------------------
24 Small Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Small Company Stock Portfolio---continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks(99.4%) Market Value
=====================================================================
Technology-continued
--------------------
16,900 Pegasus Systems, Inc.*......................... $ 183,787
18,100 Phoenix Technologies, Ltd.*.................... 295,256
20,500 Photronics, Inc.*.............................. 581,687
35,000 Pinnacle Systems, Inc.*........................ 786,950
19,000 Pioneer-Standard Electronics, Inc.............. 280,250
11,400 Plantronics, Inc.*............................. 1,316,700
25,000 Progress Software Corporation*................. 448,438
15,000 Project Software & Development, Inc.*.......... 273,600
8,900 Proxim, Inc.*.................................. 880,821
10,600 QRS Corporation*............................... 260,362
11,900 RadiSys Corporation*........................... 675,325
34,900 Read-Rite Corporation*......................... 77,433
21,900 Remedy Corporation*............................ 1,220,925
27,700 RSA Security, Inc.*............................ 1,918,225
64,000 S3,Inc.*....................................... 944,000
20,300 SAGA SYSTEMS, Inc.*............................ 252,481
23,600 Silicon Valley Group, Inc.*.................... 610,650
20,700 SpeedFam-IPEC, Inc.*........................... 376,481
10,900 Standard Microsystems Corporation*............. 167,588
9,900 Star Trek, Inc.*............................... 498,712
10,500 SymmetriCom, Inc.*............................. 265,125
22,700 Systems & Computer Technology Corporation*..... 454,000
11,400 Telxon Corporation*............................ 203,775
13,350 THQ, Inc.*..................................... 162,703
16,200 Trimble Navigation, Ltd*....................... 790,762
14,700 Ultratech Stepper, Inc......................... 218,663
22,000 Verity, Inc.*.................................. 836,000
7,100 ViaSat, Inc.*.................................. 385,175
17,600 Visual Networks, Inc.*......................... 501,600
21,000 Xircom, Inc.* ................................. 997,500
14,900 X-Rite, Inc. .................................. 135,963
22,200 Zebra Technologies Corporation*................ 983,738
10,152 Zilog, Inc.*/5/................................ 25,278
----------------------------------------------------------
Total Technology............................... 59,842,571
==========================================================
Transportation (3.0%)
---------------------
22,600 American Freightways Corporation*.............. 327,700
13,800 Arkansas Best Corporation*..................... 137,137
13,200 Atlantic Coast Airlines Holdings, Inc.*........ 419,100
12,300 Circle International Group, Inc.*.............. 309,038
20,100 EGL, Inc.*..................................... 618,075
Shares Common Stocks (99.4%) Market Value
=====================================================================
35,700 Expeditors International of Washington, Inc...$ 1,695,750
25,600 Fritz Companies, Inc.*........................ 264,000
11,400 Frozen Food Express Industries, Inc.*......... 34,200
17,700 Heartland Express, Inc*....................... 295,369
17,100 Kirby Corporation*............................ 363,375
6,300 Landstar System, Inc*......................... 375,244
22,700 Mesa Air Group, Inc*.......................... 125,558
9,740 Midwest Express Holdings, Inc*................ 209,410
8,200 M.S. Carriers, Inc.*.......................... 144,525
11,700 Oshkosh Truck Corporation..................... 418,275
13,500 Roadway Express, Inc.......................... 316,406
40,850 Rollins Truck Leasing Corporation............. 283,397
17,300 SkyWest, Inc.................................. 641,181
18,600 USFreightways Corporation..................... 456,863
32,975 Werner Enterprises, Inc....................... 381,273
17,600 Yellow Corporation*........................... 259,600
----------------------------------------------------------
Total Transportation.......................... 8,075,476
==========================================================
Utilities(2.6%)
---------------
6,200 American States Water Company................. 184,450
22,100 Atmos Energy Corporation...................... 386,750
5,100 Bangor Hydro-Electric Company................. 119,531
7,700 Cascade Natural Gas Corporation............... 128,494
8,000 Central Vermont Public Service Corporation.... 88,000
11,900 CH Energy Group, Inc.......................... 403,856
20,900 Energen Corporation........................... 455,881
3,800 Green Mountain Power Corporation.............. 31,350
13,200 Laclede Gas Company........................... 254,100
12,400 New Jersey Resources Corporation.............. 471,975
17,600 Northwest Natural Gas Company................. 393,800
16,100 NorthWestern Corporation...................... 372,313
28,646 Philadelphia Suburban Corporation............. 587,243
22,000 Piedmont Natural Gas Company, Inc............. 584,375
34,600 Southern Union Company*....................... 547,109
21,900 Southwest Gas Corporation..................... 383,250
17,500 Southwestern Energy Company................... 109,375
10,100 United Illuminating Company................... 441,875
27,600 United Water Resources, Inc................... 962,550
----------------------------------------------------------
Total Utilities............................... 6,906,277
==========================================================
----------------------------------------------------------
Total Common Stocks
(cost basis $265,948,919).....................$266,268,479
==========================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 25
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Short-Term Interest Maturity Market
Amount Investments (1.0%) Rate/1/ Date Value
============================================================================
$ 2,751,000 Associates
Corporation of
North America......... 6.600% 7/3/00 $2,749,991
-------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $2,749,991)............. 2,749,991
=============================================================
-------------------------------------------------------------
Total Investments (100.4%)
(amortized cost basis $268,698,910)........... 269,018,470
=============================================================
-------------------------------------------------------------
Other Assets,
Less Liabilities (-0.4%)...................... (1,054,266)
=============================================================
-------------------------------------------------------------
Net Assets (100%)............................. $ 267,964,204
=============================================================
* Non-income producing security
----------------
/1/ The interest rate shown reflects the discount rate at the date of
purchase.
/5/ Illiquid security
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
26 Small Company Stock Protfolio Schedule of Investments (Unaudited)
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product International Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (Unaudited)
Investment Objective
--------------------
The Portfolio seeks long-term capital growth by investing primarily in
a diversified portfolio of foreign stocks.
<TABLE>
<CAPTION>
Market
Shares Common Stocks (95.0%) Industry Value
======================================================================================================
<S> <C> <C> <C>
Brazil (1.0%)
-------------
35,035 Embratel Participacoes
SA ADR.....................................................Telephone... $ 827,702
----------------------------------------------------------------------------------
Total Brazil........................................................... 827,702
==================================================================================
Canada (2.3%)
-------------
26,181 Nortell Networks
Corporation..................................Communication Equipment... 1,814,665
----------------------------------------------------------------------------------
Total Canada........................................................... 1,814,665
==================================================================================
France (12.5%)
--------------
17,066 Alcatel SA...................................Communication Equipment... 1,123,882
36,416 Aventis SA...........................................Pharmaceuticals... 2,668,696
9,930 Carrefour SA......................................Retail-Food Chains... 681,545
20,208 Rhodia SA..................................................Chemicals... 340,933
7,301 Suez Lyonnaise des Eaux SA...........................Water Utilities... 1,284,254
9,172 Total Fina Elf SA...................Oil & Gas Exploration/Production... 1,412,024
14,008 Valeo SA*.....................................Auto Parts & Equipment... 751,963
18,977 Vivendi...............................Services-Commercial & Consumer... 1,681,771
----------------------------------------------------------------------------------
Total France........................................................... 9,945,068
==================================================================================
Germany (7.2%)
--------------
3,019 Allianz AG*..................................Life & Health Insurance... 1,077,429
25,647 Bayerische Motoren Werke (BMW) AG..........Manufacturing-Specialized... 784,259
536 Celanese AG....................................Chemicals-Diversified... 10,426
19,486 Dresdner Bank AG................................Banks-Major Regional... $ 791,993
15,020 E.On AG.....................................Manufacturing-Diversified.. 727,099
20,904 MG Technologies AG........................Engineering & Construction... 288,552
6,429 SAP AG....................................Computer Software/Services... 1,206,670
5,209 Siemens AG.................................Manufacturing-Diversified... 782,948
260 United Internet AG*.................Services-Advertising & Marketing... 31,030
----------------------------------------------------------------------------------
Total Germany.......................................................... 5,700,406
==================================================================================
Greece (0.3%)
-------------
10,335 Hellenic Telecommunications.....Organization SA............Telephone... 253,215
----------------------------------------------------------------------------------
Total Greece........................................................... 253,215
==================================================================================
Hong Kong (4.6%)
----------------
182,000 China Mobile, Ltd.*....................Telephone-Cellular & Wireless... 1,605,196
370,000 China Unicom, Ltd.*....................Telephone-Cellular & Wireless... 785,568
97,700 Hutchison Whampoa, Ltd.........................Financial-Diversified... 1,228,300
----------------------------------------------------------------------------------
Total Hong Kong........................................................ 3,619,064
==================================================================================
Italy (6.7%)
------------
320,612 Banca Nazionale del Lavoro......................Banks-Major Regional... 1,134,067
142,673 ENI SpA...........................Oil & Gas-Exploration & Production... 827,427
105,668 Mediaset SpA........................................TV, Radio, Cable... 1,620,675
</TABLE>
International Stock Portfolio
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 27
<PAGE>
AAL Variable Product International Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Market
Shares Common Stocks (95.0%) Industry Value
=======================================================================================================
<S> <C> <C> <C>
Italy-continued
---------------
108,907 Telecom Italia Mobile SpA..............Telephone-Cellular & Wireless... $ 1,117,048
132,950 UniCredito Italiano SpA.........................Banks-Major Regional... 638,496
-----------------------------------------------------------------------------------
Total Italy............................................................ 5,337,713
===================================================================================
Japan (19.7%)
-------------
183,000 Fuji Bank, Ltd..................................Banks-Major Regional... 1,394,101
27,000 Fujitsu, Ltd................................Communications Equipment... 936,565
22,000 Kao Corporation........................................Personal Care... 673,715
2,900 Matsushita Communication Industrial
Company, Ltd...........................Telephone-Cellular & Wireless... 339,334
8,000 Murata Manufacturing Company, Ltd..Electronic Component Distributors... 1,150,834
85 Nippon Telegraph & Telephone Corporation...................Telephone... 1,132,782
81 NTT DoCoMo.............................Telephone-Cellular & Wireless... 2,197,228
7,000 Nikko Securities Company, Ltd..................Financial-Diversified... 69,470
33,000 Nomura Securities Company, Ltd.................Financial-Diversified... 809,393
26,000 Pioneer Corporation................................House Furnishings... 1,014,919
4,200 Rohm Company, Ltd.....................................Semiconductors... 1,230,606
164,000 Sakura Bank, Ltd................................Banks-Major Regional... 1,136,203
2,060 Shohkoh Fund & Company, Ltd.*..................Financial-Diversified... 465,343
1,500 Softbank Corporation.......................... Financial-Diversified... 204,156
21,000 Takeda Chemical Industries, Ltd......................Pharmaceuticals... 1,381,455
4,600 Takefuji Corporation...........................Financial-Diversified... 556,949
18,000 Yamanouchi Pharmaceutical Company, Ltd...............Pharmaceuticals... 985,052
-----------------------------------------------------------------------------------
Total Japan............................................................ 15,678,105
===================================================================================
Mexico (1.0%)
-------------
14,343 Telefonos de Mexico SA ADR.................................Telephone... 819,344
-----------------------------------------------------------------------------------
Total Mexico........................................................... 819,344
===================================================================================
Netherlands (14.7%)
-------------------
13,062 Gucci Group NV..............................Retail-Specialty Apparel... 1,237,625
19,778 ING Groep NV....................................Banks-Major Regional... 1,342,295
16,923 KPNQwest NV*...............................................Telephone... $ 668,355
39,080 Koninklijke Ahold NV..............................Retail-Food Chains... 1,154,943
19,389 Koninklijke (Royal) Philips Electronics NV
...................................Electronic Component Distributors... 918,152
61,180 Royal KPN NV...............................................Telephone... 2,747,587
22,040 Unilever NV....................................................Foods... 1,015,167
40,089 Verenigde Nederlands Uitgeversbedrijven Verenigd Bezit....Publishing... 2,079,002
20,361 Wolters Kluwer NV.........................................Publishing... 544,547
-----------------------------------------------------------------------------------
Total Netherlands...................................................... 11,707,673
===================================================================================
Singapore (0.9%)
----------------
54,000 DBS Group Holdings, Ltd.........................Banks-Major Regional... 693,349
-----------------------------------------------------------------------------------
Total Singapore........................................................ 693,349
===================================================================================
South Korea (2.0%)
------------------
21,369 Korea Telecom Corporation ADR*.........Telephone-Cellular & Wireless... 1,033,725
1,194 Samsung Electronics GDR/2/.........Electronic Component Distributors... 197,575
10,612 SK Telecom Company, Ltd. ADR*..........Telephone-Cellular & Wireless... 385,348
-----------------------------------------------------------------------------------
Total South Korea...................................................... 1,616,648
===================================================================================
Spain (1.6%)
------------
57,924 Telefonica SA*.............................................Telephone... 1,249,329
-----------------------------------------------------------------------------------
Total Spain............................................................ 1,249,329
===================================================================================
Sweden (2.6%)
-------------
23,141 Skandinaviska Enskil da Banken..................Banks-Major Regional... 275,717
92,101 Telefonaktiebolaget LM Ericsson AB.....Telephone-Cellular & Wireless... 1,832,422
-----------------------------------------------------------------------------------
Total Sweden........................................................... 2,108,139
===================================================================================
Switzerland (2.6%)
2,089 Clariant AG................................................Chemicals... 778,509
787 Novartis AG........................................Health Care-Drugs... 1,250,605
-----------------------------------------------------------------------------------
Total Switzerland...................................................... 2,029,114
===================================================================================
United Kingdom (15.3%)
----------------------
29,946 AstraZeneca Group plc................................Pharmaceuticals... 1,399,142
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
28 International Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product International Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Market
Shares Common Stocks (95.0%) Industry Value
=======================================================================================================
<S> <C> <C> <C>
United Kingdom-continued
------------------------
189,239 BAE SYSTEMS plc....................................Aerospace/Defense... $ 1,179,700
85,186 Cable & Wireless plc...................Telephone-Cellular & Wireless... 1,447,066
141,222 Diageo plc...................................Beverages-Non-Alcoholic... 1,264,691
5,786 Energis plc*...........................Telephone-Cellular & Wireless... 215,847
47,677 Glaxo Wellcome plc...................................Pharmaceuticals... 1,389,526
52,550 Railtrack Group plc*.......................................Railroads... 814,306
171,787 Reed International plc....................................Publishing... 1,498,097
70,162 Somerfield plc....................................Retail-Food Chains... 63,735
106,885 Telewest Commuications plc*.........................TV, Radio, Cable... 368,555
619,780 Vodafone AirTouch plc..................Telephone-Cellular & Wireless... 2,514,776
-----------------------------------------------------------------------------------
Total United Kingdom................................................... 12,155,441
===================================================================================
-----------------------------------------------------------------------------------
Total Common Stocks
(cost basis $69,513,785).............................................. $75,554,975
===================================================================================
Principal Short-Term Interest Maturity Market
Amount Investments (4.2%) Rate /1/ Date Value
=======================================================================================================
$1,200,000 PepsiCo, Inc.........................................6.950% 7/3/00 $ 1,199,536
2,100,000 Schering Corporation.................................6.900 7/5/00 2,099,356
-----------------------------------------------------------------------------------
Total Commercial Paper
(amortized cost $3,298,892)........................................... 3,298,892
===================================================================================
-----------------------------------------------------------------------------------
Total Investments (99.2%)
(amortized cost basis $72,812,677).................................... 78,853,867
===================================================================================
-----------------------------------------------------------------------------------
Other Assets,
Less Liabilities (0.8%)............................................... 652,713
===================================================================================
-----------------------------------------------------------------------------------
Net Assets (100.0%)................................................... $79,506,580
===================================================================================
</TABLE>
----------------
* Non-income producing security.
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A Security.
See page 79 for a complete discussion of Investment Terms.
International Stock Portfolio
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 29
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
AAL Variable Product Large Company Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (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.
Shares Common Stocks(99.8%) Market Value
------------------------------------------------------------------------------
Basic Materials (2.3%)
----------------------
17,400 Air Products and Chemicals, Inc......................... $536,137
16,600 Alcan Aluminium, Ltd.................................... 514,600
65,664 Alcoa, Inc.............................................. 1,904,256
6,269 Allegheny Technologies, Inc............................. 112,842
45,754 Archer-Daniels-Midland Company.......................... 448,961
2,000 Ball Corporation........................................ 64,375
3,900 Bemis Company, Inc...................................... 131,138
9,900 Bethlehem Steel Corporation*............................ 35,269
4,300 Boise Cascade Corporation............................... 111,263
9,500 Crown Cork & Seal Company, Inc.......................... 142,500
50,800 Dow Chemical Company.................................... 1,533,525
5,900 Eastman Chemical Company................................ 281,725
9,800 Ecolab, Inc............................................. 382,812
79,511 E.I. du Pont de Nemours and Company..................... 3,478,606
9,500 Engelhard Corporation................................... 162,094
2,400 FMC Corporation*........................................ 139,200
12,700 Georgia-Pacific Group................................... 333,375
4,000 Great Lakes Chemical Corporation........................ 126,000
8,000 Hercules, Inc........................................... 112,500
7,700 International Flavors & Fragrances, Inc................. 232,444
36,771 International Paper Company............................. 1,096,236
7,800 Louisiana-Pacific Corporation........................... 84,825
7,800 Mead Corporation........................................ 196,950
6,300 Nucor Corporation....................................... 209,081
11,100 Owens-Illinois, Inc.*................................... 129,731
12,700 Pactiv Corporation*..................................... 100,013
98,456 Pharmacia Corporation................................... 4,985,570
2,200 Potlatch Corporation.................................... $72,875
13,200 PPG Industries, Inc..................................... 584,925
11,800 Praxair, Inc............................................ 441,762
16,313 Rohm and Haas Company................................... 562,798
6,400 Sigma-Aldrich Corporation............................... 187,200
3,900 Temple-Inland, Inc...................................... 163,800
10,100 Union Carbide Corporation............................... 499,950
6,700 USX-U.S. Steel Group.................................... 124,369
7,600 Vulcan Materials Company................................ 324,425
7,600 Westvaco Corporation.................................... 188,575
17,800 Weyerhaeuser Company.................................... 765,400
8,400 Willamette Industries, Inc.............................. 228,900
6,400 Worthington Industries, Inc............................. 67,200
5,100 W.R. Grace & Company*................................... 61,838
-------------------------------------------------------------------
Total Basic Materials................................... 21,860,045
-------------------------------------------------------------------
Capital Goods (9.3%)
--------------------
14,300 Allied Waste Industries, Inc.*.......................... 143,000
14,600 American Power Conversion Corporation*.................. 595,862
8,600 Avery Dennison Corporation.............................. 577,275
30,000 Barrick Gold Corporation................................ 545,625
8,000 B.F. Goodrich Company................................... 272,500
68,960 Boeing Company.......................................... 2,883,390
1,700 Briggs & Stratton Corporation........................... 58,225
26,500 Caterpillar, Inc........................................ 897,687
7,100 Cooper Industries, Inc.................................. 231,194
21,100 Corning, Inc............................................ 5,694,362
4,550 Crane Company........................................... 110,622
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
30 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Large Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
--------------------------------------------------------------------------------
Capital Goods-continued
-----------------------
10,800 Danaher Corporation..................................... $ 533,925
17,800 Deere & Company......................................... 658,600
15,500 Dover Corporation....................................... 628,719
5,700 Eaton Corporation....................................... 381,900
32,400 Emerson Electric Company................................ 1,956,150
5,700 Fluor Corporation....................................... 180,262
91,600 Ford Motor Company...................................... 3,938,800
12,100 Freeport-McMoRan Copper & Gold, Inc.,
Class B*................................................ 111,925
15,400 General Dynamics Corporation............................ 804,650
752,000 General Electric Company................................ 39,856,000
40,700 General Motors Corporation.............................. 2,363,144
19,500 Homestake Mining Company*............................... 134,063
60,675 Honeywell International, Inc............................ 2,043,989
22,900 Illinois Tool Works, Inc................................ 1,305,300
13,800 Inco, Ltd.*............................................. 212,175
12,150 Ingersoll-Rand Company.................................. 489,037
6,600 ITT Industries, Inc..................................... 200,475
6,600 Johnson Controls, Inc................................... 338,662
30,400 Lockheed Martin Corporation............................. 754,300
4,500 McDermott International, Inc............................ 39,656
3,500 Millipore Corporation................................... 263,813
30,100 Minnesota Mining and Manufacturing
Company................................................. 2,483,250
14,900 Molex, Inc.............................................. 717,062
3,000 National Service Industries, Inc........................ 58,500
12,748 Newmont Mining Corporation.............................. 275,676
5,300 Northrop Grumman Corporation............................ 351,125
9,100 Pall Corporation........................................ 168,350
8,450 Parker Hannifin Corporation............................. 289,413
6,070 Phelps Dodge Corporation................................ 225,728
19,600 Pitney Bowes, Inc....................................... 784,000
24,800 Placer Dome, Inc........................................ 237,150
14,100 Rockwell International Corporation...................... 444,150
10,500 Sanmina Corporation*.................................... 897,750
6,376 Sealed Air Corporation*................................. 333,943
45,400 Solectron Corporation*.................................. 1,901,125
11,000 Textron, Inc............................................ 597,438
11,700 Thermo Electron Corporation*............................ 246,431
4,400 Thomas & Betts Corporation.............................. 84,150
4,400 Timken Company.......................................... 81,950
128,316 Tyco International, Ltd................................. 6,078,971
35,800 United Technologies Corporation......................... $ 2,107,725
47,099 Waste Management, Inc.*................................. 894,881
---------------------------------------------------------------------
Total Capital Goods..................................... 88,464,055
---------------------------------------------------------------------
Communication Services (6.8%)
-----------------------------
24,000 ALLTEL Corporation...................................... 1,486,500
287,011 AT&T Corporation........................................ 9,076,723
117,492 Bell Atlantic Corporation*.............................. 5,970,062
143,000 BellSouth Corporation................................... 6,095,375
10,600 CenturyTel, Inc......................................... 304,750
67,890 Global Crossing, Ltd.*.................................. 1,786,356
73,200 GTE Corporation......................................... 4,556,700
57,700 Nextel Communication, Inc.*............................. 3,530,519
258,560 SBC Communications, Inc.......... ...................... 11,182,720
66,700 Sprint Corporation...................................... 3,401,700
69,600 Sprint Corporation (PCS Group)*......................... 4,141,200
38,554 U S WEST, Inc........................................... 3,306,005
217,573 WorldCom, Inc.*......................................... 9,981,161
---------------------------------------------------------------------
Total Communication Services............................ 64,819,771
---------------------------------------------------------------------
Consumer Cyclicals (7.3%)
-------------------------
2,900 Adolph Coors Company.................................... 175,450
4,900 American Greetings Corporation.......................... 93,100
34,400 Anheuser-Busch Companies, Inc........................... 2,569,250
3,000 Armstrong Holdings, Inc................................. 45,937
10,100 AutoZone, Inc.*......................................... 222,200
10,600 Bed Bath & Beyond, Inc.*................................ 384,250
15,600 Best Buy Company, Inc.*................................. 986,700
6,300 Black & Decker Corporation.............................. 247,669
5,300 Brown-Forman Corporation, Class B....................... 284,875
6,600 Brunswick Corporation................................... 109,313
54,760 Cendant Corporation*.................................... 766,640
4,500 Centex Corporation...................................... 105,750
15,400 Circuit City Stores, Inc.-Circuit City Group............ 511,088
8,400 Consolidated Stores Corporation*........................ 100,800
11,600 Convergys Corporation*.................................. 601,750
5,400 Cooper Tire & Rubber Company............................ 60,075
33,800 Costco Wholesale Corporation*........................... 1,115,400
3,100 Cummins Engine Company, Inc............................. 84,475
29,500 CVS Corporation......................................... 1,180,000
11,566 Dana Corporation........................................ 245,055
42,694 Delphi Automotive Systems Corporation................... 621,731
The accompanying notes to the financial statements are
an integral part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 31
<PAGE>
AAL Variable Product Large Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
----------------------------------------------------------------------
Consumer Cyclicals-continued
----------------------------
7,100 Dillard's, Inc................................ $ 86,975
24,815 Dollar General Corporation.................... 483,893
6,900 Dow Jones & Company, Inc...................... 505,425
12,200 Dun & Bradstreet Corporation.................. 349,225
16,200 Federated Department Stores, Inc.*............ 546,750
12,000 Fortune Brands, Inc........................... 276,750
20,300 Gannett Company, Inc.......................... 1,214,194
64,462 Gap, Inc...................................... 2,014,437
13,200 Genuine Parts Company......................... 264,000
11,600 Goodyear Tire & Rubber Company................ 232,000
7,400 H&R Block, Inc................................ 239,575
5,400 Harcourt General, Inc......................... 293,625
23,000 Harley-Davidson, Inc.......................... 885,500
9,200 Harrah's Entertainment, Inc.*................. 192,625
13,050 Hasbro, Inc................................... 196,566
175,800 Home Depot, Inc............................... 8,779,012
22,500 IMS Health, Inc............................... 405,000
22,900 Interpublic Group of Companies, Inc........... 984,700
19,800 J.C. Penney Company, Inc...................... 365,062
3,600 Kaufman and Broad Home Corporation............ 71,325
36,500 Kmart Corporation*............................ 248,656
5,900 Knight Ridder, Inc............................ 313,806
24,800 Kohl's Corporation*........................... 1,379,500
14,900 Leggett & Platt, Inc.......................... 245,850
32,404 Limited, Inc.................................. 700,736
4,100 Liz Claiborne, Inc............................ 144,525
2,900 Long's Drug Stores Corporation................ 63,075
29,100 Lowe's Companies, Inc......................... 1,194,919
34,000 Masco Corporation............................. 614,125
32,350 Mattel, Inc................................... 426,616
25,000 May Department Stores Company................. 600,000
5,900 Maytag Corporation............................ 217,562
14,900 McGraw-Hill Companies, Inc.................... 804,600
3,600 Meredith Corporation.......................... 121,500
4,500 Navistar International Corporation*........... 139,781
13,000 New York Times Company........................ 513,500
20,173 Newell Rubbermaid, Inc........................ 519,455
20,700 NIKE, Inc..................................... 824,119
10,200 Nordstrom, Inc................................ 246,075
24,000 Office Depot, Inc.*........................... 150,000
13,600 Omnicom Group, Inc............................ 1,211,250
4,100 Owens Corning................................. 37,925
5,900 PACCAR, Inc................................... $ 234,156
2,900 Pulte Corporation............................. 62,712
14,200 RadioShack Corporation........................ 672,725
4,200 Reebok International, Ltd.*................... 66,938
19,400 Rite Aid Corporation*......................... 127,313
2,200 Russell Corporation........................... 44,000
26,800 Sears, Roebuck & Company...................... 874,350
12,300 Sherwin-Williams Company...................... 260,606
4,400 Snap-on, Inc.................................. 117,150
1,300 Springs Industries, Inc....................... 41,600
6,500 Stanley Works................................. 154,375
36,750 Staples, Inc.*................................ 565,031
34,700 Target Corporation............................ 2,012,600
5,600 Tiffany & Company............................. 378,000
22,800 TJX Companies, Inc............................ 427,500
16,400 Toys "R" Us, Inc.*............................ 238,825
23,400 Tribune Company............................... 819,000
9,200 TRW, Inc...................................... 399,050
4,300 Tupperware Corporation........................ 94,600
8,600 VF Corporation................................ 204,788
11,990 Visteon Corporation*.......................... 145,384
76,600 Walgreen Company.............................. 2,465,563
338,800 Wal-Mart Stores, Inc.......................... 19,523,350
5,400 Whirlpool Corporation......................... 251,775
5,600 Young & Rubicam, Inc.......................... 320,250
-----------------------------------------------------------
Total Consumer Cyclicals..................... 70,117,363
-----------------------------------------------------------
Consumer Staples (9.6%)
-----------------------
4,200 Alberto-Culver Company........................ 128,363
32,177 Albertson's, Inc.............................. 1,069,885
18,000 Avon Products, Inc............................ 801,000
20,900 Bestfoods..................................... 1,447,325
32,100 Campbell Soup Company......................... 934,912
20,950 Cardinal Health, Inc.......................... 1,550,300
45,900 Carnival Corporation.......................... 895,050
25,800 Clear Channel Communications, Inc.*........... 1,935,000
17,700 Clorox Company................................ 793,181
188,100 Coca-Cola Company............................. 10,803,994
31,900 Coca-Cola Enterprises, Inc.................... 520,369
43,800 Colgate-Palmolive Company..................... 2,622,525
68,200 Comcast Corporation*.......................... 2,762,100
37,200 ConAgra, Inc.................................. 709,125
9,400 Darden Restaurants, Inc....................... 152,750
The accompanying notes to the financial statements are an
integral part of this schedule.
--------------------------------------------------------------------------------
32 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
==============================================================================
Consumer Staples-continued
--------------------------
5,200 Deluxe Corporation................................ $ 122,525
15,600 Fort James Corporation............................ 360,750
22,100 General Mills, Inc................................ 845,325
79,300 Gillette Company.................................. 2,770,544
2,900 Great Alantic & Pacific Tea Company, Inc.......... 48,213
10,500 Hershey Foods Corporation......................... 509,250
27,700 Hilton Hotels Corporation......................... 259,687
26,700 H.J. Heinz Company................................ 1,168,125
30,800 Kellogg Company................................... 916,300
42,092 Kimberly-Clark Corporation........................ 2,415,028
63,200 Kroger Company*................................... 1,394,350
18,200 Marriott International, Inc....................... 656,337
101,500 McDonald's Corporation*........................... 3,343,156
21,142 McKesson HBOC, Inc................................ 442,661
24,800 Nabisco Group Holdings Corporation................ 643,250
109,500 PepsiCo, Inc...................................... 4,865,906
173,800 Phillip Morris Companies, Inc..................... 4,616,563
99,400 Procter & Gamble Company.......................... 5,690,650
9,900 Quaker Oats Company............................... 743,737
23,300 Ralston Purina Company............................ 464,544
9,200 R. R. Donnelley & Sons Company.................... 207,575
37,700 Safeway, Inc.*.................................... 1,701,213
66,000 Sara Lee Corporation.............................. 1,274,625
33,300 Seagram Company, Ltd.............................. 1,931,400
13,900 Starbucks Corporation*............................ 530,806
9,900 SUPERVALU, Inc.................................... 188,719
25,400 SYSCO Corporation................................. 1,069,975
100,000 Time Warner, Inc.................................. 7,600,000
11,120 Tricon Global Restaurants, Inc.*.................. 314,140
43,471 Unilever.......................................... 1,869,253
12,300 UST, Inc.......................................... 180,656
115,844 Viacom, Inc., Class B*............................ 7,899,113
157,947 Walt Disney Company*.............................. 6,130,318
8,600 Wendy's International, Inc........................ 153,188
10,800 Winn-Dixie Stores, Inc............................ 154,575
8,600 Wm. Wrigley Jr. Company........................... 689,612
-------------------------------------------------------------------
Total Consumer Staples............................ 91,297,948
===================================================================
Energy (5.4%)
-------------
7,000 Amerada Hess Corporation.......................... 432,250
9,700 Anadarko Petroleum Corporation.................... 478,331
8,700 Apache Corporation................................ 511,669
5,400 Ashland, Inc...................................... $ 189,338
25,000 Baker Hughes, Inc................................. 800,000
16,235 Burlington Resources, Inc......................... 620,989
49,600 Chevron Corporation............................... 4,206,700
47,307 Conoco, Inc., Class B............................. 1,161,978
264,604 Exxon Mobil Corporation........................... 20,771,414
33,600 Halliburton Company............................... 1,585,500
7,024 Kerr-McGee Corporation............................ 413,977
27,900 Occidental Petroleum Corporation.................. 587,644
19,300 Phillips Petroleum Company........................ 978,269
7,000 Rowan Companies, Inc.*............................ 212,625
163,000 Royal Dutch Petroleum Company..................... 10,034,687
43,300 Schlumberger, Ltd................................. 3,231,262
6,500 Sunoco, Inc....................................... 191,344
41,900 Texaco, Inc....................................... 2,231,175
10,900 Tosco Corporation................................. 308,606
15,911 Transocean Sedco Forex, Inc....................... 850,244
18,872 Union Pacific Resources Group, Inc................ 415,184
18,400 Unocal Corporation................................ 609,500
23,600 USX-Marathon Group................................ 591,475
-------------------------------------------------------------------
Total Energy...................................... 51,414,161
===================================================================
Financials (12.6%)
------------------
20,200 AFLAC, Inc........................................ 927,938
56,582 Allstate Corporation.............................. 1,258,949
101,500 American Express Company.......................... 5,290,688
18,862 American General Corporation...................... 1,150,582
117,136 American International Group, Inc................. 13,763,480
29,750 AmSouth Bancorporation............................ 468,562
19,225 Aon Corporation................................... 597,176
55,100 Associates First Capital Corporation.............. 1,229,419
125,989 Bank of America Corporation....................... 5,417,527
56,000 Bank of New York Company, Inc..................... 2,604,000
87,053 Bank One Corporation.............................. 2,312,345
26,400 BB&T Corporation.................................. 630,300
8,331 Bear Stearns Companies, Inc....................... 346,778
15,000 Capital One Financial Corporation................. 669,375
103,425 Charles Schwab Corporation........................ 3,477,666
15,700 Charter One Financial, Inc........................ 361,100
93,968 Chase Manhattan Corporation....................... 4,328,401
13,200 Chubb Corporation................................. 811,800
12,400 CIGNA Corporation................................. 1,159,400
12,100 Cincinnati Financial Corporation.................. 380,394
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 33
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
==============================================================================
Financials-continued
--------------------
256,512 Citigroup, Inc.................................... $ 15,454,848
11,850 Comerica, Inc..................................... 531,769
24,607 Conseco, Inc...................................... 239,918
8,600 Countrywide Credit Industries, Inc................ 260,688
76,600 Fannie Mae........................................ 3,997,563
23,575 Fifth Third Bancorp............................... 1,491,119
74,432 First Union Corporation........................... 1,846,844
73,664 Firstar Corporation............................... 1,551,548
68,513 FleetBoston Financial Corporation................. 2,329,442
18,500 Franklin Resources, Inc........................... 561,937
52,900 Freddie Mac....................................... 2,142,450
12,000 Golden West Financial Corporation................. 489,750
16,300 Hartford Financial Services Group, Inc............ 911,781
35,786 Household International, Inc...................... 1,487,356
16,792 Huntington Bancshares, Inc........................ 265,523
7,700 Jefferson-Pilot Corporation....................... 434,569
12,400 J.P. Morgan & Company, Inc........................ 1,365,550
33,000 KeyCorp........................................... 581,625
9,200 Lehman Brothers Holdings, Inc..................... 869,975
14,500 Lincoln National Corporation...................... 523,812
7,500 Loews Corporation................................. 450,000
20,650 Marsh & McLennan Companies, Inc................... 2,156,634
7,600 MBIA, Inc......................................... 366,225
60,768 MBNA Corporation.................................. 1,648,332
37,300 Mellon Financial Corporation...................... 1,359,119
29,500 Merrill Lynch & Company, Inc...................... 3,392,500
8,000 MGIC Investment Corporation....................... 364,000
86,050 Morgan Stanley Dean Witter & Company.............. 7,163,663
46,000 National City Corporation......................... 784,875
17,000 Northern Trust Corporation........................ 1,106,062
10,185 Old Kent Financial Corporation.................... 272,449
11,100 Paine Webber Group, Inc........................... 505,050
22,000 PNC Bank Corporation.............................. 1,031,250
5,600 Progressive Corporation........................... 414,400
10,850 Providian Financial Corporation................... 976,500
16,600 Regions Financial Corporation..................... 329,925
9,600 SAFECO Corporation................................ 190,800
11,800 SLM Holding Corporation........................... 441,763
12,700 SouthTrust Corporation............................ 287,337
16,046 St. Paul Companies, Inc........................... 547,570
12,200 State Street Corporation.......................... 1,293,962
13,300 Summit Bancorp.................................... 327,513
23,000 SunTrust Banks, Inc............................... $ 1,050,813
21,300 Synovus Financial Corporation..................... 375,412
9,034 T. Rowe Price Associates, Inc..................... 383,945
9,700 Torchmark Corporation............................. 239,469
10,200 Union Planters Corporation........................ 284,962
18,224 UNUMProvident..................................... 365,619
56,997 U.S. Bancorp...................................... 1,097,192
15,500 Wachovia Corporation.............................. 840,875
41,629 Washington Mutual, Inc............................ 1,202,037
122,400 Wells Fargo & Company............................. 4,743,000
-------------------------------------------------------------------
Total Financials.................................. 120,517,200
===================================================================
Health Care (10.9%)
-------------------
117,800 Abbott Laboratories.............................. 5,249,462
10,649 Aetna, Inc....................................... 683,533
9,800 Allergan, Inc.................................... 730,100
7,700 ALZA Corporation*................................ 455,262
99,100 American Home Products Corporation............... 5,822,125
78,200 Amgen, Inc.*..................................... 5,493,550
4,100 Bausch & Lomb, Inc............................... 317,238
22,200 Baxter International, Inc........................ 1,560,938
19,100 Becton, Dickinson and Company.................... 547,931
11,200 Biogen, Inc.*.................................... 722,400
9,000 Biomet, Inc.*.................................... 345,938
30,900 Boston Scientific Corporation*................... 677,869
149,900 Bristol-Myers Squibb Company..................... 8,731,675
3,800 C.R. Bard, Inc................................... 182,875
85,900 Eli Lilly and Company............................ 8,579,262
23,400 Guidant Corporation*............................. 1,158,300
42,300 HCA - The Healthcare Company..................... 1,284,862
29,100 HEALTHSOUTH Corporation*......................... 209,156
12,700 Humana, Inc.*.................................... 61,913
105,700 Johnson & Johnson................................ 10,768,187
4,900 Mallinckrodt, Inc................................ 212,844
7,500 Manor Care, Inc.*................................ 52,500
15,900 MedImmune, Inc.*................................. 1,176,600
90,900 Medtronic, Inc................................... 4,527,956
174,800 Merck & Company, Inc............................. 13,394,050
479,175 Pfizer, Inc...................................... 23,000,400
8,700 Quintiles Transnational Corporation*............. 122,888
111,300 Schering-Plough Corporation...................... 5,620,650
6,321 St. Jude Medical, Inc.*.......................... 289,976
23,700 Tenet Healthcare Corporation..................... 639,900
The accompanying notes to the financial statements are an integral part of this
schedule.
-------------------------------------------------------------------------------
34 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Annuity Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
------------------------------------------------------------------------------
Health Care-continued
---------------------
12,400 UnitedHealth Group, Inc.......................... $ 1,063,300
7,300 Watson Pharmaceuticals, Inc.*.................... 392,375
4,900 Wellpoint Health Networks, Inc.*................. 354,944
-------------------------------------------------------------------
Total Health Care................................ 104,430,959
-------------------------------------------------------------------
Technology (32.6%)
------------------
26,700 3Com Corporation*................................ 1,538,587
7,900 Adaptec, Inc.*................................... 179,725
25,600 ADC Telecommunications, Inc.*.................... 2,147,200
9,100 Adobe Systems, Inc............................... 1,183,000
11,700 Advanced Micro Devices, Inc.*.................... 903,825
34,315 Agilent Technologies, Inc.*...................... 2,530,731
15,200 Altera Corporation*.............................. 1,549,450
174,600 America Online, Inc.*............................ 9,210,150
27,000 Analog Devices, Inc.*............................ 2,052,000
6,075 Andrew Corporation*.............................. 203,892
24,800 Apple Computer, Inc.*............................ 1,298,900
61,400 Applied Materials, Inc.*......................... 5,564,375
4,300 Autodesk, Inc.................................... 149,156
47,700 Automatic Data Processing, Inc................... 2,554,931
18,500 BMC Software, Inc.*.............................. 674,959
16,300 Broadcom Corporation*............................ 3,568,681
13,800 Cabletron Systems, Inc.*......................... 348,450
11,000 Ceridian Corporation*............................ 264,688
528,700 Cisco Systems, Inc.*............................. 33,605,494
14,000 Citrix Systems, Inc.*............................ 265,125
128,993 Compaq Computers Corporation..................... 3,297,383
44,812 Computer Associates International, Inc........... 2,293,814
12,800 Computer Sciences Corporation*................... 956,000
27,100 Compuware Corporation*........................... 281,163
11,700 Comverse Technology, Inc.*....................... 1,088,100
16,600 Conexant Systems, Inc.*.......................... 807,175
195,700 Dell Computer Corporation*....................... 9,650,456
23,500 Eastman Kodak Company............................ 1,398,250
35,400 Electronic Data Systems Corporation.............. 1,460,250
164,986 EMC Corporation*................................. 12,693,610
10,700 Equifax, Inc..................................... 280,875
31,300 First Data Corporation........................... 1,553,263
24,500 Gateway, Inc.*................................... 1,390,375
76,000 Hewlett-Packard Company.......................... 9,490,500
254,500 Intel Corporation................................ 34,023,469
134,800 International Business Machines Corporation...... 14,769,025
14,200 KLA-Tencor Corporation*.......................... $ 831,588
9,800 Lexmark International Group, Inc.*............... 659,050
23,700 Linear Technology Corporation.................... 1,515,319
23,300 LSI Logic Corporation*........................... 1,261,113
247,522 Lucent Technologies, Inc......................... 14,665,678
21,500 Maxim Integrated Products, Inc.*................. 1,460,656
6,000 Mercury Interactive Corporation*................. 580,500
42,200 Micron Technology, Inc.*......................... 3,716,238
400,000 Microsoft Corporation*........................... 32,000,000
163,590 Motorola, Inc.................................... 4,754,334
13,400 National Semiconductor Corporation*.............. 760,450
7,300 NCR Corporation*................................. 284,244
23,200 Network Appliance, Inc.*......................... 1,867,600
225,200 Nortel Networks Corporation...................... 15,369,900
24,800 Novell, Inc.*.................................... 229,400
9,900 Novellus Systems, Inc.*.......................... 559,969
215,774 Oracle Corporation*.............................. 18,138,502
20,900 Parametric Technology Corporation*............... 229,900
28,200 Paychex, Inc..................................... 1,184,400
15,800 PE Corporation................................... 1,040,825
20,900 PeopleSoft, Inc.*................................ 350,075
3,700 PerkinElmer, Inc................................. 244,663
3,300 Polaroid Corporation............................. 59,606
56,300 QUALCOMM, Inc.*.................................. 3,378,000
25,700 Raytheon Company................................. 494,725
9,549 Sabre Holdings Corporation*...................... 272,146
4,500 Sapient Corporation*............................. 481,219
12,100 Scientific-Atlanta, Inc.......................... 901,450
17,400 Seagate Technology, Inc.*........................ 957,000
15,200 Siebel Systems, Inc.*............................ 2,486,150
120,600 Sun Microsystems, Inc.*.......................... 10,967,063
3,550 Tektronix, Inc................................... 262,700
31,100 Tellabs, Inc.*................................... 2,128,406
13,100 Teradyne, Inc.*.................................. 962,850
124,400 Texas Instruments, Inc........................... 8,544,725
23,600 Unisys Corporation*.............................. 343,675
29,700 VERITAS Software Corporation*.................... 3,356,563
7,100 W.W. Grainger, Inc............................... 218,769
50,500 Xerox Corporation................................ 1,047,875
24,500 Xilinx, Inc.*.................................... 2,022,781
41,300 Yahoo!, Inc.*.................................... 5,116,038
-------------------------------------------------------------------
Total Technology................................. 310,933,172
-------------------------------------------------------------------
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 35
<PAGE>
AAL Variable Annuity Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (99.8%) Market Value
------------------------------------------------------------------------------
Transportation (0.6%)
---------------------
11,200 AMR Corporation*................................. $ 296,100
32,492 Burlington Northern Santa Fe Corporation......... 745,285
16,600 CSX Corporation.................................. 351,712
9,300 Delta Air Lines, Inc............................. 470,231
22,060 FedEx Corporation*............................... 838,280
8,500 Kansas City Southern Industries, Inc............. 753,844
29,000 Norfolk Southern Corporation..................... 431,375
4,500 Ryder System, Inc................................ 85,219
37,700 Southwest Airlines Company....................... 713,944
18,900 Union Pacific Corporation........................ 702,844
5,000 US Airways Group, Inc.*.......................... 195,000
-------------------------------------------------------------------
Total Transportation............................. 5,583,834
-------------------------------------------------------------------
Utilities (2.4%)
----------------
32,400 AES Corporation*................................. 1,478,250
10,400 Ameren Corporation............................... 351,000
24,460 American Electric Power Company, Inc............. 724,627
12,100 Carolina Power & Light Company................... 386,444
11,800 Cinergy Corporation.............................. 300,162
8,300 CMS Energy Corporation........................... 183,637
16,300 Coastal Corporation.............................. 992,263
6,250 Columbia Energy Group............................ 410,156
16,100 Consolidated Edison, Inc......................... 476,962
11,300 Constellation Energy Group, Inc.................. 367,956
18,047 Dominion Resources, Inc.......................... 773,765
10,700 DTE Energy Company............................... 327,019
27,908 Duke Energy Corporation.......................... 1,573,314
2,100 Eastern Enterprises.............................. 132,300
25,200 Edison International............................. 516,600
17,600 El Paso Energy Corporation....................... 896,500
55,700 Enron Corporation................................ 3,592,650
17,400 Entergy Corporation.............................. 473,063
17,400 FirstEnergy Corporation.......................... 406,725
7,400 Florida Progress Corporation..................... 346,875
13,600 FPL Group, Inc................................... 673,200
9,100 GPU, Inc......................................... 246,269
8,800 New Century Energies, Inc........................ 264,000
13,100 Niagara Mohawk Holdings, Inc.*................... 182,581
3,500 Nicor, Inc....................................... 114,188
11,700 Northern States Power Company.................... 236,194
2,000 Oneok, Inc....................................... 51,875
12,900 PECO Energy Company.............................. $ 520,031
2,700 Peoples Energy Corporation....................... 87,412
29,200 PG&E Corporation................................. 719,050
6,400 Pinnacle West Capital Corporation................ 216,800
10,900 PPL Corporation.................................. 239,119
16,300 Public Service Enterprise Group, Inc............. 564,388
22,473 Reliant Energy, Inc.............................. 664,358
15,475 Sempra Energy.................................... 263,075
49,300 Southern Company................................. 1,149,306
20,017 TXU Corporation.................................. 590,502
13,500 Unicom Corporation............................... 522,281
33,600 Williams Companies, Inc.......................... 1,400,700
-------------------------------------------------------------------
Total Utilities.................................. 23,415,597
-------------------------------------------------------------------
-------------------------------------------------------------------
Total Common Stock
(cost basis $672,318,499)........................ $ 952,854,105
-------------------------------------------------------------------
Principal Short-Term Interest Maturity Market
Amount Investments (0.4%) Rate /1/ Date Value
-------------------------------------------------------------------------------
$4,218,000 Household Finance
Corporation..............6.880% 7/3/00 $4,216,388
--------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $4,216,388)................ 4,216,388
--------------------------------------------------------------------
--------------------------------------------------------------------
Total Investments (100.2%)
(amortized cost basis $676,534,887).............. 957,070,493
--------------------------------------------------------------------
--------------------------------------------------------------------
Other Assets,
Less Liabilities (-0.2%)......................... (1,946,854)
--------------------------------------------------------------------
--------------------------------------------------------------------
Net Assets (100.0%)............................. $ 955,123,639
--------------------------------------------------------------------
* Non-income producing securities
----------------
/1/ The interest rate shown reflects the discount rate at the date of
purchase.
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
36 Large Company Stock Portfolio Schedule of Investments (Unaudited)
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
AAL Variable Product Balanced Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (Unaudited)
Investment Objective
--------------------
The portfolio seeks to achieve investment results that reflect
investment in common stocks, bonds and money market instruments, each
of which will be selected consistent with the investment policies of
the Large Company Stock, Bond and Money Market Portfolios,
respectively
Shares Common Stocks (54.8%) Market Value
------------------------------------------------------------------------------
Basic Materials (1.3%)
----------------------
8,300 Air Products and Chemicals, Inc................... $255,744
7,700 Alcan Aluminium, Ltd.............................. 238,700
30,964 Alcoa, Inc........................................ 897,956
2,881 Allegheny Technologies, Inc....................... 51,858
21,499 Archer-Daniels-Midland Company.................... 210,959
1,000 Ball Corporation.................................. 32,187
1,800 Bemis Company, Inc................................ 60,525
4,500 Bethlehem Steel Corporation*...................... 16,031
2,000 Boise Cascade Corporation......................... 51,750
4,500 Crown Cork & Seal Company, Inc.................... 67,500
23,500 Dow Chemical Company.............................. 709,406
2,800 Eastman Chemical Company.......................... 133,700
4,500 Ecolab, Inc....................................... 175,781
37,519 E.I du Pont de Nemours and Company................ 1,641,456
4,350 Engelhard Corporation............................. 74,222
1,100 FMC Corportaion*.................................. 63,800
6,000 Georgia-Pacific Group............................. 157,500
1,900 Great Lakes Chemical Corporation.................. 59,850
3,700 Hercules, Inc..................................... 52,031
3,700 International Flavors & Fragrances, Inc........... 111,694
16,922 International Paper Company....................... 504,482
3,700 Louisiana-Pacific Corporation..................... 40,238
3,600 Mead Corporation.................................. 90,900
3,100 Nucor Corporation................................. 102,881
5,200 Owens-Illinois, Inc*.............................. 60,775
6,000 Pactiv Corporation*............................... 47,250
45,501 Pharmacia Corporation............................. 2,351,833
1,000 Potlatch Corporation.............................. 33,125
6,100 PPG Industries, Inc............................... $270,306
5,600 Praxair, Inc...................................... 209,650
7,711 Rohm and Haas Company............................. 266,030
3,000 Sigma-Aldrich Corporation......................... 87,750
2,000 Temple-Inland, Inc................................ 84,000
5,000 Union Carbide Corporation......................... 247,500
3,100 USX-U.S. Steel Group.............................. 57,544
3,500 Vulcan Materials Company.......................... 149,406
3,500 Westvaco Corporation.............................. 86,844
8,200 Weyerhaeuser Company.............................. 352,600
3,900 Willamette Industries, Inc........................ 106,275
2,800 Worthington Industries, Inc....................... 29,400
2,200 W.R. Grace & Company*............................. 26,675
-------------------------------------------------------------
Total Basic Materials............................. 10,268,114
=============================================================
Capital Goods (5.1%)
--------------------
6,600 Allied Waste Industries, Inc*..................... 66,000
6,900 American Power Conversion Corporation*............ 281,606
4,000 Avery Dennison Corporation........................ 268,500
14,100 Barrick Gold Corporation.......................... 256,444
3,800 B.F. Goodrich Company............................. 129,438
32,528 Boeing Company.................................... 1,360,077
800 Briggs & Stratton Corporation..................... 27,400
12,500 Caterpillar, Inc.................................. 423,438
3,300 Cooper Industries, Inc............................ 107,456
10,000 Corning, Inc...................................... 2,698,750
1,950 Crane Company..................................... 47,409
5,000 Danaher Corporation............................... 247,187
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 37
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (54.8%) Market Value
--------------------------------------------------------------------------------
Capital Goods-continued
-----------------------
8,500 Deere & Company..................................... $314,500
7,400 Dover Corporation................................... 300,162
2,600 Eaton Corporation................................... 174,200
15,400 Emerson Electric Company............................ 929,775
2,700 Fluor Corporation................................... 85,387
43,200 Ford Motor Company.................................. 1,857,600
5,700 Freeport-McMoRan Copper & Gold, Inc, Class B*....... 52,725
7,100 General Dynamics Corporation........................ 370,975
354,500 General Electric Company............................ 18,788,500
19,100 General Motors Corporation.......................... 1,108,994
9,100 Homestake Mining Company*........................... 62,562
28,637 Honeywell International, Inc........................ 964,709
10,800 Illinois Tool Works, Inc............................ 615,600
6,400 Inco, Ltd*.......................................... 98,400
5,700 Ingersoll-Rand Company.............................. 229,425
3,100 ITT Industries, Inc................................. 94,163
3,000 Johnson Controls, Inc............................... 153,937
14,300 Lockheed Martin Corporation......................... 354,819
2,000 McDermott International, Inc........................ 17,625
1,600 Millipore Corporation............................... 120,600
14,300 Minnesota Mining and Manufacturing Company.......... 1,179,750
7,150 Molex, Inc.......................................... 344,094
1,400 National Service Industries, Inc.................... 27,300
5,817 Newmont Mining Corporation.......................... 125,793
2,500 Northrop Grumman Corporation........................ 165,625
4,300 Pall Corporation.................................... 79,550
3,900 Parker Hannifin Corporation......................... 133,575
2,820 Phelps Dodge Corporation............................ 104,869
9,300 Pitney Bowes, Inc................................... 372,000
11,700 Placer Dome, Inc.................................... 111,881
6,600 Rockwell International Corporation.................. 207,900
4,800 Sanmina Corporation*................................ 410,400
2,964 Sealed Air Corporation*............................. 155,239
21,400 Solectron Corporation*.............................. 896,125
5,200 Textron, Inc........................................ 282,425
5,500 Thermo Electron Corporation*........................ 115,844
2,000 Thomas & Betts Corporation.......................... 38,250
2,100 Timken Company...................................... 39,113
60,440 Tyco International, Ltd............................. 2,863,345
17,000 United Technologies Corporation..................... 1,000,875
22,230 Waste Management, Inc*.............................. $422,370
----------------------------------------------------------------
Total Capital Goods.................................. 41,684,686
================================================================
Communication Services (3.7%)
-----------------------------
11,300 ALLTEL Corporation.................................. 699,894
135,338 AT&T Corporation.................................... 4,280,064
55,380 Bell Atlantic Corporation*.......................... 2,813,996
67,400 BellSouth Corporation............................... 2,872,925
4,850 CenturyTel, Inc..................................... 139,438
31,110 Global Crossing, Ltd*............................... 818,582
34,500 GTE Corporation..................................... 2,147,625
27,200 Nextel Communication, Inc*.......................... 1,664,300
121,862 SBC Communications, Inc............................. 5,270,531
31,400 Sprint Corporation.................................. 1,601,400
32,800 Sprint Corporation (PCS Group)*..................... 1,951,600
18,226 U S WEST, Inc....................................... 1,562,880
102,621 WorldCom, Inc*...................................... 4,707,738
---------------------------------------------------------------
Total Communication Services........................ 30,530,973
===============================================================
Consumer Cyclicals (4.0%)
-------------------------
1,300 Adolph Coors Company................................ 78,650
2,200 American Greetings Corporation...................... 41,800
16,300 Anheuser-Busch Companies, Inc....................... 1,217,406
1,400 Armstrong Holdings, Inc............................. 21,438
4,800 AutoZone, Inc*...................................... 105,600
4,900 Bed Bath & Beyond, Inc*............................. 177,625
7,500 Best Buy Company, Inc*.............................. 474,375
3,000 Black & Decker Corporation.......................... 117,938
2,400 Brown-Forman Corporation, Class B................... 129,000
2,900 Brunswick Corporation............................... 48,031
25,760 Cendant Corporation*................................ 360,640
2,000 Centex Corporation.................................. 47,000
7,100 Circuit City Stores, Inc -Circuit City Group........ 235,631
3,800 Consolidated Stores Corporation*.................... 45,600
5,500 Convergys Corporation*.............................. 285,313
2,600 Cooper Tire & Rubber Company........................ 28,925
16,000 Costco Wholesale Corporation*....................... 528,000
1,400 Cummins Engine Company, Inc......................... 38,150
14,000 CVS Corporation..................................... 560,000
5,379 Dana Corporation.................................... 113,968
20,076 Delphi Automotive Systems Corporation............... 292,357
3,300 Dillard's, Inc...................................... 40,425
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
38 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Annuity Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (54.8%) Market Value
===============================================================================
Consumer Cyclicals-continued
----------------------------
11,522 Dollar General Corporation........................... $ 224,679
3,200 Dow Jones & Company, Inc............................. 234,400
5,600 Dun & Bradstreet Corporation......................... 160,300
7,700 Federated Department Stores, Inc.*................... 259,875
5,400 Fortune Brands, Inc.................................. 124,537
9,500 Gannett Company, Inc................................. 568,219
30,500 Gap, Inc............................................. 953,125
6,200 Genuine Parts Company................................ 124,000
5,400 Goodyear Tire & Rubber Company....................... 108,000
3,400 H&R Block, Inc....................................... 110,075
2,500 Harcourt General, Inc................................ 135,937
10,900 Harley-Davidson, Inc................................. 419,650
4,200 Harrah's Entertainment, Inc.*........................ 87,938
6,100 Hasbro, Inc.......................................... 91,881
82,900 Home Depot, Inc...................................... 4,139,819
10,400 IMS Health, Inc...................................... 187,200
10,800 Interpublic Group of Companies, Inc.................. 464,400
9,100 J.C. Penney Company, Inc............................. 167,781
1,600 Kaufman and Broad Home Corporation................... 31,700
17,000 Kmart Corporation*................................... 115,813
2,700 Knight Ridder, Inc................................... 143,606
11,700 Kohl's Corporation*.................................. 650,813
6,800 Leggett & Platt, Inc................................. 112,200
15,162 Limited, Inc......................................... 327,878
1,800 Liz Claiborne, Inc................................... 63,450
1,300 Long's Drug Stores Corporation....................... 28,275
13,700 Lowe's Companies, Inc................................ 562,556
16,000 Masco Corporation.................................... 289,000
15,225 Mattel, Inc.......................................... 200,780
11,900 May Department Stores Company........................ 285,600
2,900 Maytag Corporation................................... 106,938
6,900 McGraw-Hill Companies, Inc........................... 372,600
1,800 Meredith Corporation................................. 60,750
2,200 Navistar International Corporation*.................. 68,338
6,000 New York Times Company............................... 237,000
9,526 Newell Rubbermaid, Inc............................... 245,294
9,700 NIKE, Inc............................................ 386,181
4,700 Nordstrom, Inc....................................... 113,387
11,200 Office Depot, Inc.*.................................. 70,000
6,500 Omnicom Group, Inc................................... 578,906
1,900 Owens Corning........................................ 17,575
2,700 PACCAR, Inc.......................................... 107,156
1,200 Pulte Corporation.................................... $ 25,950
6,800 RadioShack Corporation............................... 322,150
1,900 Reebok International, Ltd.*.......................... 30,281
9,000 Rite Aid Corporation*................................ 59,063
1,100 Russell Corporation.................................. 22,000
12,600 Sears, Roebuck & Company............................. 411,075
5,800 Sherwin-Williams Company............................. 122,887
2,000 Snap-on, Inc......................................... 53,250
600 Springs Industries, Inc.............................. 19,200
3,100 Stanley Works........................................ 73,625
17,300 Staples, Inc.*....................................... 265,988
16,300 Target Corporation................................... 945,400
2,500 Tiffany & Company.................................... 168,750
10,500 TJX Companies, Inc................................... 196,875
7,700 Toys "R" Us, Inc.*................................... 112,131
11,100 Tribune Company...................................... 388,500
4,300 TRW, Inc............................................. 186,512
2,000 Tupperware Corporation............................... 44,000
4,100 VF Corporation....................................... 97,631
5,655 Visteon Corporation*................................. 68,565
36,100 Walgreen Company..................................... 1,161,969
159,700 Wal-Mart Stores, Inc................................. 9,202,713
2,600 Whirlpool Corporation................................ 121,225
2,700 Young & Rubicam, Inc................................. 154,406
--------------------------------------------------------------------
Total Consumer Cyclicals............................. 32,979,630
====================================================================
Consumer Staples (5.3%)
-----------------------
1,900 Alberto-Culver Company............................... 58,069
15,122 Albertson's, Inc..................................... 502,806
8,500 Avon Products, Inc................................... 378,250
9,800 Bestfoods............................................ 678,650
15,200 Campbell Soup Company................................ 442,700
9,850 Cardinal Health, Inc................................. 728,900
21,600 Carnival Corporation................................. 421,200
12,200 Clear Channel Communications, Inc.*.................. 915,000
8,300 Clorox Company....................................... 371,944
88,700 Coca-Cola Company.................................... 5,094,706
14,900 Coca-Cola Enterprises, Inc........................... 243,056
20,700 Colgate-Palmolive Company............................ 1,239,413
32,200 Comcast Corporation*................................. 1,304,100
17,600 ConAgra, Inc......................................... 335,500
4,400 Darden Restaurants, Inc.............................. 71,500
2,500 Deluxe Corporation................................... 58,906
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 39
<PAGE>
AAL Variable Annuity Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks (54.8%) Market Value
================================================================================
Consumer Staples-continued
--------------------------
7,200 Fort James Corporation................................ $ 166,500
10,500 General Mills, Inc.................................... 401,625
37,300 Gillette Company...................................... 1,303,169
1,300 Great Alantic & Pacific Tea Company, Inc.............. 21,612
4,900 Hershey Foods Corporation............................. 237,650
12,900 Hilton Hotels Corporation............................. 120,937
12,750 H.J. Heinz Company.................................... 557,813
14,500 Kellogg Company....................................... 431,375
19,880 Kimberly-Clark Corporation............................ 1,140,615
29,900 Kroger Company* ...................................... 659,669
8,400 Marriott International, Inc........................... 302,925
47,900 McDonald's Corporation*............................... 1,577,706
10,080 McKesson HBOC, Inc.................................... 211,050
11,700 Nabisco Group Holdings Corporation.................... 303,469
51,600 PepsiCo, Inc.......................................... 2,292,975
81,900 Phillip Morris Companies, Inc......................... 2,175,469
46,900 Procter & Gamble Company.............................. 2,685,025
4,700 Quaker Oats Company................................... 353,087
10,900 Ralston Purina Company................................ 217,319
4,100 R. R. Donnelley & Sons Company........................ 92,506
17,800 Safeway, Inc.*........................................ 803,225
31,100 Sara Lee Corporation.................................. 600,619
15,700 Seagram Company, Ltd.................................. 910,600
6,600 Starbucks Corporation*................................ 252,037
4,500 SUPERVALU, Inc........................................ 85,781
11,900 SYSCO Corporation..................................... 501,288
47,200 Time Warner, Inc...................................... 3,587,200
5,230 Tricon Global Restaurants, Inc.*...................... 147,748
20,482 Unilever.............................................. 880,726
5,600 UST, Inc.............................................. 82,250
54,625 Viacom, Inc., Class B*................................ 3,724,742
74,487 Walt Disney Company*.................................. 2,891,027
3,800 Wendy's International, Inc............................ 67,687
5,100 Winn-Dixie Stores, Inc................................ 72,994
4,100 Wm. Wrigley Jr. Company............................... 328,769
---------------------------------------------------------------------
Total Consumer Staples................................ 43,033,889
=====================================================================
Energy (3.0%)
------------
3,200 Amerada Hess Corporation.............................. 197,600
4,500 Anadarko Petroleum Corporation........................ 221,906
4,000 Apache Corporation.................................... 235,250
2,500 Ashland, Inc.......................................... 87,656
11,820 Baker Hughes, Inc..................................... $ 378,240
7,667 Burlington Resources, Inc............................. 293,263
23,400 Chevron Corporation................................... 1,984,613
22,328 Conoco, Inc., Class B................................. 548,431
124,736 Exxon Mobil Corporation............................... 9,791,776
15,900 Halliburton Company................................... 750,281
3,380 Kerr-McGee Corporation................................ 199,209
13,200 Occidental Petroleum Corporation...................... 278,025
9,200 Phillips Petroleum Company............................ 466,325
3,200 Rowan Companies, Inc.*................................ 97,200
76,900 Royal Dutch Petroleum Company......................... 4,734,156
20,400 Schlumberger, Ltd..................................... 1,522,350
3,100 Sunoco, Inc........................................... 91,256
19,800 Texaco, Inc........................................... 1,054,350
5,000 Tosco Corporation..................................... 141,563
7,636 Transocean Sedco Forex, Inc........................... 408,049
8,832 Union Pacific Resources Group, Inc.................... 194,304
8,800 Unocal Corporation.................................... 291,500
11,200 USX-Marathon Group.................................... 280,700
---------------------------------------------------------------------
Total Energy.......................................... 24,248,003
=====================================================================
Financials (6.9%)
----------------
9,600 AFLAC, Inc............................................ 441,000
26,596 Allstate Corporation.................................. 591,761
47,900 American Express Company.............................. 2,496,787
9,008 American General Corporation.......................... 549,488
55,260 American International Group, Inc..................... 6,493,050
14,000 AmSouth Bancorporation................................ 220,500
9,250 Aon Corporation....................................... 287,328
26,090 Associates First Capital Corporation.................. 582,133
59,385 Bank of America Corporation........................... 2,553,555
26,400 Bank of New York Company, Inc......................... 1,227,600
41,032 Bank One Corporation.................................. 1,089,912
12,500 BB&T Corporation...................................... 298,438
3,978 Bear Stearns Companies, Inc........................... 165,584
6,900 Capital One Financial Corporation..................... 307,913
48,725 Charles Schwab Corporation............................ 1,638,378
7,300 Charter One Financial, Inc............................ 167,900
44,320 Chase Manhattan Corporation........................... 2,041,490
6,200 Chubb Corporation..................................... 381,300
5,900 CIGNA Corporation..................................... 551,650
5,700 Cincinnati Financial Corporation...................... 179,194
120,972 Citigroup, Inc........................................ 7,288,563
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, 2000
Shares Common Stocks(54.8%) Market Value
===============================================================================
Financials--continued
---------------------
5,500 Comerica, Inc................................... $ 246,813
11,399 Conseco, Inc.................................... 111,140
4,000 Countrywide Credit Industries, Inc.............. 121,250
36,200 Fannie Mae...................................... 1,889,188
11,100 Fifth Third Bancorp............................. 702,075
35,110 First Union Corporation......................... 871,167
34,709 Firstar Corporation............................. 731,058
32,129 FleetBoston Financial Corporation............... 1,092,386
8,700 Franklin Resources, Inc......................... 264,263
24,900 Freddie Mac..................................... 1,008,450
5,700 Golden West Financial Corporation............... 232,631
7,800 Hartford Financial Services Group, Inc.......... 436,313
16,999 Household International, Inc.................... 706,521
7,924 Huntington Bancshares, Inc...................... 125,298
3,700 Jefferson-Pilot Corporation..................... 208,819
5,800 J.P. Morgan & Company, Inc...................... 638,725
15,300 KeyCorp......................................... 269,662
4,500 Lehman Brothers Holdings, Inc................... 425,531
6,800 Lincoln National Corporation.................... 245,650
3,700 Loews Corporation............................... 222,000
9,650 Marsh & McLennan Companies, Inc................. 1,007,822
3,500 MBIA, Inc....................................... 168,656
28,737 MBNA Corporation................................ 779,491
17,500 Mellon Financial Corporation.................... 637,656
13,900 Merrill Lynch & Company, Inc.................... 1,598,500
3,700 MGIC Investment Corporation..................... 168,350
40,590 Morgan Stanley Dean Witter & Company............ 3,379,117
21,600 National City Corporation....................... 368,550
8,100 Northern Trust Corporation...................... 527,006
4,830 Old Kent Financial Corporation.................. 129,203
5,300 Paine Webber Group, Inc......................... 241,150
10,300 PNC Bank Corporation............................ 482,812
2,600 Progressive Corporation......................... 192,400
5,050 Providian Financial Corporation................. 454,500
7,900 Regions Financial Corporation................... 157,013
4,500 SAFECO Corporation.............................. 89,438
5,600 SLM Holding Corporation......................... 209,650
5,800 SouthTrust Corporation.......................... 131,225
7,622 St. Paul Companies, Inc......................... 260,101
5,900 State Street Corporation........................ 625,769
6,100 Summit Bancorp.................................. 150,212
10,800 SunTrust Banks, Inc............................. 493,425
10,050 Synovus Financial Corporation................... $ 177,131
4,200 T. Rowe Price Associates, Inc................... 178,500
4,600 Torchmark Corporation........................... 113,563
4,900 Union Planters Corporation...................... 136,894
8,358 UNUMProvident................................... 167,682
26,889 U.S. Bancorp.................................... 517,613
7,400 Wachovia Corporation............................ 401,450
19,617 Washington Mutual, Inc.......................... 566,441
57,560 Wells Fargo & Company........................... 2,230,450
----------------------------------------------------------------
Total Financials................................ 56,844,234
================================================================
Health Care (6.0%)
------------------
55,500 Abbott Laboratories............................ 2,473,219
5,014 Aetna, Inc..................................... 321,836
4,600 Allergan, Inc.................................. 342,700
3,600 ALZA Corporation*.............................. 212,850
46,700 American Home Products Corporation ............ 2,743,625
36,800 Amgen, Inc.*................................... 2,585,200
1,900 Bausch & Lomb, Inc............................. 147,013
10,500 Baxter International, Inc...................... 738,281
8,800 Becton, Dickinson and Company.................. 252,450
5,300 Biogen, Inc.*.................................. 341,850
4,200 Biomet, Inc.*.................................. 161,437
14,500 Boston Scientific Corporation*................. 318,094
70,700 Bristol-Myers Squibb Company................... 4,118,275
1,800 C.R. Bard, Inc................................. 86,625
40,500 Eli Lilly and Company.......................... 4,044,937
11,100 Guidant Corporation*........................... 549,450
19,750 HCA - The Healthcare Company................... 599,906
13,800 HEALTHSOUTH Corporation*....................... 99,188
5,800 Humana, Inc.*.................................. 28,275
49,900 Johnson & Johnson.............................. 5,083,563
2,400 Mallinckrodt, Inc.............................. 104,250
3,600 Manor Care, Inc.*.............................. 25,200
7,600 MedImmune, Inc.*............................... 562,400
42,900 Medtronic, Inc................................. 2,136,956
82,400 Merck & Company, Inc........................... 6,313,900
225,750 Pfizer, Inc.................................... 10,836,000
4,000 Quintiles Transnational Corporation*........... 56,500
52,500 Schering-Plough Corporation.................... 2,651,250
2,895 St. Jude Medical, Inc.*........................ 132,808
11,200 Tenet Healthcare Corporation................... 302,400
6,000 UnitedHealth Group, Inc........................ 514,500
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 41
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Commom Stocks(54.8%) Market Value
============================================================================
Health Care--continued
----------------------
3,400 Watson Pharmaceuticals, Inc.*.................... $ 182,750
2,300 Wellpoint Health Networks, Inc.*................. 166,606
-----------------------------------------------------------------
Total Health Care................................ 49,234,294
=================================================================
Technology (17.9%)
------------------
12,600 3Com Corporation*................................ 726,075
3,600 Adaptec, Inc.*................................... 81,900
12,000 ADC Telecommunications, Inc.*.................... 1,006,500
4,500 Adobe Systems, Inc............................... 585,000
5,500 Advanced Micro Devices, Inc.*.................... 424,875
16,163 Agilent Technologies, Inc.*...................... 1,192,021
7,300 Altera Corporation*.............................. 744,144
82,300 America Online, Inc.*............................ 4,341,325
12,700 Analog Devices, Inc.* ........................... 965,200
2,800 Andrew Corporation*.............................. 93,975
12,000 Apple Computer, Inc.*............................ 628,500
29,000 Applied Materials, Inc.*......................... 2,628,125
2,100 Autodesk, Inc.................................... 72,844
22,500 Automatic Data Processing, Inc................... 1,205,156
8,600 BMC Software, Inc.*.............................. 313,765
7,600 Broadcom Corporation* ........................... 1,663,925
6,300 Cabletron Systems, Inc.*......................... 159,075
5,000 Ceridian Corporation* ........................... 120,312
249,300 Cisco Systems, Inc.*............................. 15,846,131
6,600 Citrix Systems, Inc.* ........................... 124,988
60,800 Compaq Computers Corporation..................... 1,554,200
21,075 Computer Associates International, Inc........... 1,078,777
6,200 Computer Sciences Corporation*................... 463,062
12,900 Compuware Corporation*........................... 133,838
5,400 Comverse Technology, Inc.*....................... 502,200
7,800 Conexant Systems, Inc.*.......................... 379,275
92,300 Dell Computer Corporation*....................... 4,551,544
11,100 Eastman Kodak Company............................ 660,450
16,800 Electronic Data Systems Corporation.............. 693,000
77,824 EMC Corporation*................................. 5,987,584
4,900 Equifax, Inc..................................... 128,625
14,700 First Data Corporation........................... 729,487
11,500 Gateway, Inc.*................................... 652,625
35,900 Hewlett-Packard Company.......................... 4,483,013
120,000 Intel Corporation................................ 16,042,500
63,600 International Business Machines Corporation...... 6,968,175
6,700 KLA-Tencor Corporation*.......................... $ 392,369
4,800 Lexmark International Group, Inc.*............... 322,800
11,200 Linear Technology Corporation.................... 716,100
11,000 LSI Logic Corporation*........................... 595,375
116,675 Lucent Technologies, Inc......................... 6,912,994
10,100 Maxim Integrated Products, Inc.*................. 686,169
2,800 Mercury Interactive Corporation*................. 270,900
19,900 Micron Technology, Inc.*......................... 1,752,444
188,600 Microsoft Corporation*........................... 15,088,000
77,121 Motorola, Inc.................................... 2,241,329
6,300 National Semiconductor Corporation*.............. 357,525
3,400 NCR Corporation*................................. 132,387
11,000 Network Appliance, Inc.*......................... 885,500
106,160 Nortel Networks Corporation...................... 7,245,420
11,800 Novell, Inc.*.................................... 109,150
4,700 Novellus Systems, Inc.*.......................... 265,844
101,750 Oracle Corporation*.............................. 8,553,359
9,600 Parametric Technology Corporation*............... 105,600
13,250 Paychex, Inc..................................... 556,500
7,500 PE Corporation................................... 494,062
9,800 PeopleSoft, Inc.*................................ 164,150
1,700 PerkinElmer, Inc................................. 112,412
1,500 Polaroid Corporation............................. 27,094
26,600 QUALCOMM, Inc.* ................................. 1,596,000
12,100 Raytheon Company................................. 232,925
4,485 Sabre Holdings Corporation*...................... 127,823
2,100 Sapient Corporation*............................. 224,569
5,900 Scientific-Atlanta, Inc.......................... 439,550
8,300 Seagate Technology, Inc.*........................ 456,500
7,200 Siebel Systems, Inc.* ........................... 1,177,650
56,900 Sun Microsystems, Inc.*.......................... 5,174,344
1,650 Tektronix, Inc................................... 122,100
14,700 Tellabs, Inc.*................................... 1,006,031
6,300 Teradyne, Inc.* ................................. 463,050
58,700 Texas Instruments, Inc........................... 4,031,956
11,100 Unisys Corporation*.............................. 161,644
14,000 VERITAS Software Corporation*.................... 1,582,218
3,300 W.W. Grainger, Inc............................... 101,681
23,800 Xerox Corporation................................ 493,850
11,600 Xilinx, Inc.*.................................... 957,725
19,500 Yahoo!, Inc.*.................................... 2,415,563
-----------------------------------------------------------------
Total Technology................................. 146,684,853
=================================================================
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 Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Shares Common Stocks(54.8%) Market Value
==============================================================================
Transportation (0.3%)
---------------------
5,200 AMR Corporation*................................ $137,475
15,292 Burlington Northern Santa Fe Corporation........ 350,760
7,600 CSX Corporation................................. 161,025
4,500 Delta Air Lines, Inc............................ 227,531
10,440 FedEx Corporation*.............................. 396,720
4,200 Kansas City Southern Industries, Inc............ 372,488
13,700 Norfolk Southern Corporation.................... 203,787
2,000 Ryder System, Inc............................... 37,875
17,587 Southwest Airlines Company...................... 333,054
9,000 Union Pacific Corporation....................... 334,688
2,500 US Airways Group, Inc.*......................... 97,500
_______________________________________________________________
Total Transportation............................ 2,652,903
===============================================================
Utilities (1.3%)
----------------
15,200 AES Corporation*................................ 693,500
4,800 Ameren Corporation.............................. 162,000
11,540 American Electric Power Company, Inc............ 341,873
5,600 Carolina Power & Light Company.................. 178,850
5,500 Cinergy Corporation............................. 139,906
3,700 CMS Energy Corporation.......................... 81,862
7,800 Coastal Corporation............................. 474,825
2,850 Columbia Energy Group........................... 187,031
7,400 Consolidated Edison, Inc........................ 219,225
5,200 Constellation Energy Group, Inc................. 169,325
8,615 Dominion Resources, Inc......................... 369,368
5,100 DTE Energy Company.............................. 155,869
13,211 Duke Energy Corporation......................... 744,770
1,000 Eastern Enterprises............................. 63,000
11,800 Edison International............................ 241,900
8,300 El Paso Energy Corporation...................... 422,781
26,200 Enron Corporation............................... 1,689,900
8,200 Entergy Corporation............................. 222,938
8,100 FirstEnergy Corporation......................... 189,337
3,400 Florida Progress Corporation.................... 159,375
6,300 FPL Group, Inc.................................. 311,850
4,300 GPU, Inc........................................ 116,369
4,000 New Century Energies, Inc....................... 120,000
5,900 Niagara Mohawk Holdings, Inc.*.................. 82,231
1,600 Nicor, Inc...................................... 52,200
5,400 Northern States Power Company................... 109,013
800 Oneok, Inc...................................... 20,750
6,100 PECO Energy Company............................. 245,906
1,200 Peoples Energy Corporation...................... $38,850
13,800 PG&E Corporation................................ 339,825
3,000 Pinnacle West Capital Corporation............... 101,625
5,000 PPL Corporation................................. 109,687
7,700 Public Service Enterprise Group, Inc............ 266,613
10,624 Reliant Energy, Inc............................. 314,072
7,087 Sempra Energy................................... 120,479
23,200 Southern Company................................ 540,850
9,370 TXU Corporation................................. 276,415
6,400 Unicom Corporation.............................. 247,600
15,800 Williams Companies, Inc......................... 658,663
_______________________________________________________________
Total Utilities................................. 10,980,633
===============================================================
_______________________________________________________________
Total Common Stock
(cost basis $345,079,074)....................... $449,142,212
===============================================================
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
=============================================================================
Asset Backed Securities (0.5%)
------------------------------
$ 1,000,000 California Infrastructure
PG&E-1 Series 1997-1
Class A8.................... 6.480% 12/26/09 $958,450
2,000,000 Chase Manhattan Auto
Owner Trust Series
1998-A...................... 5.800 12/16/02 1,975,540
250,000 Chemical Mastercard
Trust Series 1996-1
Class A..................... 5.550 9/15/03 247,987
1,100,000 Green Tree Financial
Corporation Series
1993-2 Class A4............. 6.900 7/15/18 1,088,868
200,000 NationsBank Credit
Card Master Trust Series
1993-2 Class A.............. 6.000 12/15/05 193,104
_______________________________________________________________
Total Asset Backed Securities................... 4,463,949
===============================================================
Finance (1.9%)
--------------
1,000,000 Allstate Corporation ....... 6.750 5/15/18 862,041
250,000 American Express
Credit Corporation ......... 6.125 11/15/01 245,931
250,000 Associates Corporation
of North America ........... 6.250 11/1/08 224,117
375,000 Associates Corporation
of North America ........... 6.000 12/1/02 364,168
500,000 Avco Financial Services,
Inc. ....................... 6.000 8/15/02 487,593
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 43
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
================================================================================
Finance-continued
-----------------
$ 500,000 Bank of America
Corporation ..................... 6.625% 8/1/07 $ 470,128
750,000 Bank of America
Corporation ..................... 6.625 6/15/04 728,449
1,000,000 Bank of America
Corporation ..................... 5.875 2/15/09 883,210
500,000 CIT Group, Inc. ................. 6.375 10/1/02 486,697
2,000,000 Citicorp ........................ 6.375 11/15/08 1,850,112
1,250,000 Countrywide Home
Loans, Inc. ..................... 6.935 7/16/07 1,163,694
500,000 General Electric Capital
Corporation ..................... 8.090 4/1/04 513,154
250,000 Household Finance
Corporation ..................... 7.250 7/15/03 246,796
1,500,000 Household Finance
Corporation ..................... 6.400 6/17/08 1,358,067
340,000 J.P. Morgan & Company, Inc....... 6.250 12/15/05 319,725
1,000,000 Lehman Brothers
Holdings, Inc. .................. 7.000 5/15/03 976,092
1,500,000 Merrill Lynch & Company, Inc..... 6.000 2/17/09 1,327,158
750,000 Morgan Stanley Dean
Witter & Company ................ 6.875 3/1/03 742,072
500,000 Northern Trust
Company ......................... 6.700 9/15/05 486,176
250,000 Norwest Financial, Inc. ......... 7.000 1/15/03 247,690
1,000,000 U.S. Bancorp .................... 7.625 5/1/05 1,002,678
750,000 U.S. Bancorp .................... 6.000 5/15/04 710,512
________________________________________________________________
Total Finance...................................... 15,696,260
================================================================
Industrial-Consumer Goods (0.3%)
--------------------------------
2,000,000 Coca-Cola Enterprises, Inc. ..... 6.750 9/15/23 1,738,986
250,000 Devon Energy
Corporation ..................... 10.125 11/15/09 284,290
________________________________________________________________
Total Industrial-Consumer Goods..................... 2,023,276
================================================================
Industrial-Energy (0.6%)
------------------------
325,000 Baker Hughes, Inc. .............. 8.000 5/15/04 329,347
250,000 Columbia Energy Group ........... 7.320 11/28/10 241,265
650,000 Enron Corporation ............... 7.125 5/15/07 627,946
1,000,000 Enterprise Oil plc .............. 6.500 5/1/05 943,912
250,000 Petro-Canada, Ltd. .............. 8.600 1/15/10 270,648
1,400,000 Texaco Capital, Inc. ............ 8.500 2/15/03 1,439,462
$1,000,000 Tosco Corporation ............... 9.625% 3/15/02 $1,034,528
________________________________________________________________
Total Industrial-Energy............................. 4,887,108
================================================================
Industrial-Manufacturing (1.5%)
-------------------------------
500,000 Boeing Company................... 8.100 11/15/06 517,303
500,000 Crown Cork & Seal
Company, Inc. ................... 6.750 4/15/03 465,270
1,500,000 DaimlerChrysler North
American Holdings
Corporation ..................... 7.200 9/1/09 1,449,088
1,000,000 Ford Motor Credit
Company ......................... 7.750 11/15/02 1,006,471
2,000,000 Ford Motor Credit
Company ......................... 7.450 7/16/31 1,874,458
500,000 General Motors
Acceptance Corporation ......... 9.625 12/15/01 515,554
250,000 Honeywell International,
Inc. ........................... 8.625 4/15/06 263,861
500,000 International Business
Machines Corporation ............ 7.500 6/15/13 509,355
500,000 Johnson Controls,
Inc. ............................ 7.125 7/15/17 473,248
2,000,000 Matsushita Electric
Industries, Ltd. ................ 7.250 8/1/02 1,999,502
250,000 Noranda, Inc. ................... 8.000 6/1/03 249,397
1,000,000 Raytheon Company ................ 6.750 3/15/18 852,223
1,000,000 Temple-Inland,
Inc. ............................ 7.250 9/15/04 986,282
1,500,000 Thermo Electron
Corporation .................... 7.625 10/30/08 1,418,583
________________________________________________________________
Total Industrial-Manufacturing..................... 12,580,595
================================================================
Industrial-Services (0.6%)
--------------------------
200,000 Abbott Laboratories ............. 6.800 5/15/05 200,683
250,000 Aventis SA ...................... 7.750 1/15/02 250,348
1,000,000 Cox Communications, Inc. ........ 6.400 8/1/08 917,282
510,000 Eli Lilly and Company ........... 6.570 1/1/16 486,183
500,000 Hertz Corporation ............... 7.000 7/1/04 488,350
2,500,000 Wal-Mart Stores, Inc. ........... 6.875 8/10/09 2,444,648
________________________________________________________________
Total Industrial-Services........................... 4,787,494
================================================================
Industrial-Transportation (0.4%)
--------------------------------
1,000,000 Burlington Northern
Santa Fe Corporation ............ 6.050 3/15/01 992,493
2,000,000 Union Pacific
Corporation ..................... 6.340 11/25/03 1,914,076
________________________________________________________________
Total Industrial-Transportation..................... 2,906,569
================================================================
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 Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value%
-------------------------------------------------------------------
Sovereign/Provincial (1.0)%
---------------------------
$1,500,000 Export-Import Bank of
Korea....................6.500% 11/15/06 $1,427,226
1,200,000 Inter-American
Development Bank.........5.375 11/18/08 1,064,351
1,000,000 International Bank for
Reconstruction and
Development..............5.625 3/17/03 966,973
1,000,000 Ontario Hydro............7.450 3/31/13 1,004,154
500,000 Province of British
Columbia.................7.250 9/1/36 480,470
500,000 Province of
Newfoundland.............8.650 10/22/22 554,960
500,000 Province of
Saskatchewan.............8.000 7/15/04 508,238
1,000,000 Resolution Funding
Corporation..............8.625 1/15/21 1,199,893
1,000,000 United Mexican States....9.875 1/15/07 1,030,000
-------------------------------------------------------
Total Sovereign/Provincial....................8,236,265
=======================================================
Commercial Mortgage Backed Securities (0.5%)
--------------------------------------------
1,000,000 First Union-Lehman
Brothers - Bank of
America Series
1998-C2 Class A2.........6.560 11/18/08 949,118
1,146,204 Morgan Stanley Capital,
Inc. Series 1998-WF1
Class A1.................6.250 7/15/07 1,109,049
1,900,000 Nationslink Funding
Corporation Series
1999-1 Class A2..........6.316 11/20/08 1,770,222
-------------------------------------------------------
Total Commercial Mortgage
Backed Securities.............................3,828,389
=======================================================
Federal Home Loan Mortgage Corporation (4.1%)
---------------------------------------------
895,191 Federal Home Loan
Mortgage Corporation
Gold 7-Yr.Balloon........6.000 4/1/06 859,223
945,895 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..7.500 9/1/14 943,928
77,936 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..7.500 8/1/10 77,965
255,190 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..7.000 8/1/12 250,797
91,458 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..7.000 11/1/10 90,101
954,200 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.500 6/1/14 921,001
590,138 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.500 8/1/13 569,743
331,408 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.500 11/1/12 320,482
127,585 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.500 4/1/09 124,326
974,293 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.000 4/1/14 923,864
912,061 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.000 4/1/14 865,031
908,444 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.000 2/1/14 861,423
381,340 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..6.000 5/1/12 362,342
882,393 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.Pass Through..5.500 4/1/14 819,221
40,263 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..9.000 4/1/25 41,568
598,680 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..9.000 11/1/24 618,551
169,975 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.500 7/1/27 173,406
55,792 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.500 9/1/25 56,993
191,633 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000 10/1/27 192,840
487,553 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000 6/1/27 490,623
132,606 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000 3/1/27 133,572
Balanced Portfolio
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 45
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
-------------------------------------------------------------------
Federal Home Loan Mortgage Corporation-continued)
-------------------------------------------------
$ 78,324 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000% 11/1/26 $ 78,895
92,247 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000 1/1/26 92,938
194,040 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..8.000 6/1/12 196,201
994,782 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 1/1/30 981,345
993,766 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 11/1/29 980,779
301,179 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 5/1/28 297,812
291,655 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 12/1/27 288,395
262,115 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 11/1/27 259,185
224,560 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 4/1/27 222,049
104,783 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 1/1/27 103,758
77,519 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 8/1/26 76,760
61,523 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 7/1/26 60,921
102,924 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.500 11/1/25 101,957
994,995 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 1/1/30 961,234
991,173 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 10/1/29 957,851
974,965 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 9/1/29 942,188
912,436 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 5/1/29 881,760
$ 547,361 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000% 10/1/28 $529,143
626,412 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 7/1/28 605,562
425,793 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 3/1/28 411,621
298,460 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 9/1/27 288,833
329,520 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 5/1/27 318,892
297,909 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 2/1/27 288,301
149,521 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 5/1/26 144,725
121,882 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 9/1/25 117,983
753,556 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..7.000 2/1/11 742,380
996,948 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 8/1/29 941,339
973,211 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 7/1/29 918,926
966,862 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 7/1/29 912,931
968,887 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 4/1/29 914,843
932,217 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 3/1/29 880,583
989,841 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through..6.500 1/1/29 935,015
923,443 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through 6.500 1/1/29 872,294
980,796 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.Pass Through 6.500 11/1/28 926,471
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
46 Balanced Portfolio Schedule of Investments(Unlimited)
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(33.6%) Rate Date Value
---------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation-continued)
-------------------------------------------------
$ 889,329 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500% 6/1/28 $ 840,070
413,714 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500 12/1/27 391,218
372,847 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500 2/1/27 352,573
164,512 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500 11/1/26 155,711
144,941 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500 4/1/24 137,906
971,429 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 7/1/29 890,524
962,744 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 5/1/29 882,100
948,225 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 3/1/29 868,797
847,348 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 5/1/28 776,777
188,190 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 7/1/26 173,189
------------------------------------------------------------
Total Federal Home Loan
Mortgage Corporation........................... 33,399,735
============================================================
Federal National Mortgage Association (4.5%)
--------------------------------------------
168,080 Federal National
Mortgage Association
Conventional
7-Yr. Balloon................ 7.000 6/1/04 166,416
123,166 Federal National
Mortgage Association
Conventional
7-Yr. Balloon................ 6.500 10/1/03 121,139
244,363 Federal National
Mortgage Association
Conventional
7-Yr. Balloon................ 6.000 12/1/03 237,099
33,307 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 9.000 4/1/10 34,540
$ 27,218 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 9.000% 4/1/10 $ 28,226
110,578 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 8.000 5/1/11 111,868
992,902 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.500 4/1/15 989,309
95,192 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.500 7/1/11 95,152
355,410 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 12/1/12 349,075
624,651 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 10/1/12 613,517
134,746 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 6/1/11 132,502
857,667 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 6/1/13 827,571
296,291 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 7/1/12 286,369
809,812 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 5/1/12 782,692
113,628 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 7/1/11 110,029
898,443 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000 12/1/13 852,340
823,897 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000 3/1/13 780,203
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 47
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(33.6%) Rate Date Value
---------------------------------------------------------------------------
Federal National Mortgage Association-continued
-----------------------------------------------
$ 120,887 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000% 2/1/11 $ 115,134
866,137 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 5.500 12/1/13 802,887
69,753 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 10.500 8/1/20 74,738
46,064 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 9.500 4/1/25 47,830
91,770 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 9.000 9/1/26 94,490
1,000,001 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.500 4/1/30 1,018,972
182,427 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.500 10/1/29 185,888
35,927 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.500 5/1/26 36,621
74,361 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.500 11/1/25 75,803
510,975 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000 12/1/27 513,662
839,114 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000 9/1/27 843,528
105,225 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000 7/1/27 105,779
81,736 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000 11/1/26 82,203
$ 65,219 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000% 8/1/26 $ 65,591
80,789 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 8.000 1/1/26 81,274
997,906 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 3/1/30 983,491
845,237 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 3/1/29 835,044
352,980 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 12/1/27 348,723
504,928 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 8/1/27 498,838
157,299 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 5/1/27 155,402
92,435 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 2/1/27 91,452
72,048 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 12/1/26 71,282
63,952 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 9/1/26 63,272
702,522 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 8/1/26 695,054
104,768 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 7/1/26 103,654
109,480 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 7.500 9/1/25 108,348
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
48 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(33.6%) Rate Date Value
================================================================================
Federal National Mortgage Association-continued
-----------------------------------------------
$ 104,037 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.500% 10/1/24 $103,127
972,353 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 11/1/29 938,755
971,516 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 11/1/29 937,947
948,345 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 7/1/29 15,577
957,015 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 3/1/29 924,281
658,591 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 12/1/28 636,064
142,865 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 11/1/28 137,979
867,132 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 8/1/28 837,472
612,625 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 2/1/28 592,236
292,073 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 10/1/27 282,353
345,336 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 7/1/27 333,843
278,377 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 3/1/27 269,147
226,068 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 1/1/27 218,573
$ 132,921 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000% 11/1/26 $128,514
115,181 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 3/1/26 111,362
105,113 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 7.000 1/1/26 101,662
993,242 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 8/1/29 936,812
961,999 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 7/1/29 907,344
982,832 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 6/1/29 926,994
965,021 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 6/1/29 910,194
918,521 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 11/1/28 866,719
800,578 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 11/1/28 755,428
907,675 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 10/1/28 856,485
941,129 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 8/1/28 888,052
732,525 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 6.500 7/1/28 691,213
844,774 Federal National
Mortgage Association
Conventional 30-Yr.
PassThrough................. 6.500 3/1/28 797,131
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 49
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(33.6%) Rate Date Value
===============================================================================
Federal National Mortgage Association-continued
-----------------------------------------------
$ 848,548 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.500% 2/1/28 $801,505
361,928 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.500 7/1/27 341,864
163,963 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.500 3/1/26 155,033
152,434 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.500 2/1/26 144,132
997,553 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 11/1/29 913,271
960,523 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 7/1/29 879,370
929,454 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 4/1/29 850,925
823,505 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 12/1/28 754,782
891,515 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 7/1/28 817,116
159,992 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 5/1/26 146,995
915,924 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through.............. 6.000 11/1/13 867,349
----------------------------------------------------------------
Total Federal National
Mortgage Association................................ 37,294,613
================================================================
Government National Mortgage Association.(3.0%)
-----------------------------------------------
111,831 Government National
Mortgage Association
15-Yr. Pass Through....... 7.500 7/15/11 112,701
$ 273,526 Government National
Mortgage Association
15-Yr. Pass Through....... 7.000% 4/15/12 $271,251
167,368 Government National
Mortgage Association
15-Yr. Pass Through....... 6.500 6/15/11 163,720
79,646 Government National
Mortgage Association
15-Yr. Pass Through....... 6.500 5/15/09 78,058
039,688 Government National
Mortgage Association
15-Yr. Pass Through....... 6.000 7/15/14 989,617
147,469 Government National
Mortgage Association
15-Yr. Pass Through....... 6.000 4/15/11 141,550
151,390 Government National
Mortgage Association
30-Yr. Pass Through....... 9.500 2/15/28 157,659
31,271 Government National
Mortgage Association
30-Yr. Pass Through....... 9.500 12/15/24 32,592
115,489 Government National
Mortgage Association
30-Yr. Pass Through....... 9.000 12/15/26 119,379
41,458 Government National
Mortgage Association
30-Yr. Pass Through....... 9.000 8/15/26 42,854
237,332 Government National
Mortgage Association
30-Yr. Pass Through....... 9.000 3/15/25 245,426
994,633 Government National
Mortgage Association
30-Yr. Pass Through....... 8.500 9/15/29 1,018,760
37,290 Government National
Mortgage Association
30-Yr. Pass Through....... 8.500 11/15/26 38,241
66,706 Government National
Mortgage Association
30-Yr. Pass Through....... 8.500 7/15/26 68,407
128,814 Government National
Mortgage Association
30-Yr. Pass Through....... 8.500 6/15/26 132,099
999,424 Government National
Mortgage Association
30-Yr. Pass Through....... 8.000 5/15/30 1,010,507
597,944 Government National
Mortgage Association
30-Yr. Pass Through....... 8.000 11/15/28 605,961
517,470 Government National
Mortgage Association
30-Yr. Pass Through....... 8.000 3/15/28 523,549
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
50 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
-------------------------------------------------------------------------
Government National Mortgage Association-continued
$ 209,582 Government National
Mortgage Association
30-Yr. Pass Through.........8.000% 8/15/27 $212,206
188,811 Government National
Mortgage Association
30-Yr. Pass Through.........8.000 6/20/27 189,985
217,527 Government National
Mortgage Association
30-Yr. Pass Through.........8.000 11/15/26 220,443
49,453 Government National
Mortgage Association
30-Yr. Pass Through.........8.000 4/15/26 50,117
69,020 Government National
Mortgage Association
30-Yr. Pass Through.........8.000 6/15/25 70,010
996,659 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 1/15/30 989,736
963,654 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 8/15/29 957,483
887,942 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 7/15/28 882,614
392,369 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 11/15/27 390,149
534,230 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 4/15/27 531,207
148,683 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 1/15/27 147,842
201,955 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 10/15/26 200,879
125,605 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 10/15/26 124,936
142,129 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 5/15/26 141,372
98,242 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 4/15/26 97,719
113,417 Government National
Mortgage Association
30-Yr. Pass Through.........7.500 8/15/25 112,869
994,016 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 6/15/29 966,810
$ 958,196 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 4/15/29 $931,970
899,907 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 7/15/28 875,456
742,420 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 11/15/27 722,676
167,281 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 11/15/27 162,832
741,457 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 10/15/27 721,739
21,933 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 10/15/27 21,350
699,079 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 6/15/26 681,006
137,866 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 5/15/26 134,302
361,587 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 4/15/26 352,239
329,444 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 1/15/26 320,927
159,846 Government National
Mortgage Association
30-Yr. Pass Through.........7.000 1/15/26 155,713
979,179 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 4/15/29 929,321
948,716 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 3/15/29 900,409
960,752 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 1/15/29 911,833
958,662 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 9/15/28 909,993
939,396 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 7/15/28 891,704
426,231 Government National
Mortgage Association
30-Yr. Pass Through.........6.500 10/15/27 405,193
Balanced Portfolio
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 51
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
-------------------------------------------------------------------------
Government National Mortgage Association--continued
---------------------------------------------------
$ 182,679 Government National
Mortgage Association
30-Yr. Pass Through....6.500% 3/15/26 $ 173,910
986,086 Government National
Mortgage Association
30-Yr. Pass Through....6.000 6/15/29 908,215
955,025 Government National
Mortgage Association
30-Yr. Pass Through....6.000 12/15/28 880,127
207,662 Government National
Mortgage Association
30-Yr. Pass Through....6.000 5/15/26 192,477
-------------------------------------------------------------
Total Government National
Mortgage Association..............................24,222,100
=============================================================
U.S. Government Agency (3.3%)
-----------------------------
2,020,000 Federal Home Loan
Bank...................6.625 8/27/07 1,967,490
500,000 Federal Home Loan
Bank...................5.865 6/2/03 485,184
765,000 Federal Home Loan
Mortgage Corporation...7.750 11/7/01 772,887
500,000 Federal Home Loan
Mortgage Corporation...7.375 5/15/03 504,755
2,000,000 Federal Home Loan
Mortgage Corporation...6.250 7/15/04 1,944,610
1,725,000 Federal Home Loan
Mortgage Corporation...6.220 3/24/03 1,692,639
1,330,000 Federal Home Loan
Mortgage Corporation...5.990 12/1/03 1,288,148
2,000,000 Federal National
Mortgage Association...7.125 1/15/30 2,004,942
2,000,000 Federal National
Mortgage Association...7.120 7/3/06 1,998,056
250,000 Federal National
Mortgage Association...6.700 11/10/05 242,192
2,500,000 Federal National
Mortgage Association...6.625 1/15/02 2,489,693
2,000,000 Federal National
Mortgage Association...6.000 5/15/08 1,861,460
2,250,000 Federal National
Mortgage Association...5.750 6/15/05 2,132,062
1,500,000 Federal National
Mortgage Association...5.625 4/17/28 1,229,280
$1,750,000 Federal National
Mortgage Association...5.125% 2/13/04 $1,644,120
845,000 Private Export Funding
Corporation............8.400% 7/31/01 857,738
150,000 Private Export Funding
Corporation............6.240 5/15/02 148,259
1,500,000 Student Loan Marketing
Association............7.300 8/1/12 1,516,684
2,000,000 Tennesee Valley
Authority..............6.375 6/15/05 1,944,124
-------------------------------------------------------------
Total U.S. Government Agency......................26,724,323
=============================================================
U.S. Treasury Securities (10.2%)
--------------------------------
200,000 U.S. Treasury Bonds...10.375 11/15/12 246,125
1,275,000 U.S. Treasury Bonds....9.875 11/15/15 1,727,625
1,925,000 U.S. Treasury Bonds....8.875 2/15/19 2,472,422
1,500,000 U.S. Treasury Bonds....8.750 5/15/17 1,885,313
1,225,000 U.S. Treasury Bonds....8.250 2/15/20 1,533,163
700,000 U.S. Treasury Bonds....8.125 8/15/21 853,563
2,350,000 U.S. Treasury Bonds....8.125 8/15/19 2,834,688
1,200,000 U.S. Treasury Bonds....7.875 2/15/21 1,425,000
1,500,000 U.S. Treasury Bonds....7.625 2/15/25 1,769,063
250,000 U.S. Treasury Bonds....7.625 11/15/22 291,953
1,100,000 U.S. Treasury Bonds....7.500 11/15/24 1,279,437
400,000 U.S. Treasury Bonds....7.250 8/15/22 448,750
1,750,000 U.S. Treasury Bonds....7.250 5/15/16 1,925,546
625,000 U.S. Treasury Bonds....7.125 2/15/23 693,359
1,500,000 U.S. Treasury Bonds....6.875 8/15/25 1,630,781
2,475,000 U.S. Treasury Bonds....6.750 8/15/26 2,659,850
1,500,000 U.S. Treasury Bonds....6.250 8/15/23 1,509,375
2,325,000 U.S. Treasury Bonds....6.125 11/15/27 2,317,734
1,250,000 U.S. Treasury Bonds....5.500 8/15/28 1,146,484
1,600,000 U.S. Treasury Notes...11.875 11/15/03 1,863,499
1,575,000 U.S. Treasury Notes...10.750 5/15/03 1,752,188
1,500,000 U.S. Treasury Notes...10.750 2/15/03 1,653,750
1,100,000 U.S. Treasury Notes....9.375 2/15/06 1,257,781
300,000 U.S. Treasury Notes....8.000 11/15/21 362,062
2,225,000 U.S. Treasury Notes....7.875 8/15/01 2,257,679
2,400,000 U.S. Treasury Notes....7.500 2/15/05 2,517,000
1,225,000 U.S. Treasury Notes....7.500 5/15/02 1,247,585
2,205,000 U.S. Treasury Notes....7.500 11/15/01 2,233,250
2,550,000 U.S. Treasury Notes....7.250 8/15/04 2,635,264
2,125,000 U.S. Treasury Notes....7.250 5/15/04 2,190,741
375,000 U.S. Treasury Notes....7.000 7/15/06 388,476
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
52 Balanced Portfolio Schedule of Investments (Unaudited)
<PAGE>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (33.6%) Rate Date Value
-------------------------------------------------------------------------
U.S. Treasury Securities--continued
-----------------------------------
$2,875,000 U.S. Treasury Notes.....6.625% 4/30/02 $2,882,188
2,200,000 U.S. Treasury Notes.....6.625 7/31/01 2,203,436
875,000 U.S. Treasury Notes.....6.500 10/15/06 884,844
1,000,000 U.S. Treasury Notes.....6.500 5/15/05 1,010,937
2,000,000 U.S. Treasury Notes.....6.500 5/31/02 2,001,250
2,750,000 U.S. Treasury Notes.....6.375 9/30/01 2,744,844
2,500,000 U.S. Treasury Notes.....6.250 6/30/02 2,491,405
1,225,000 U.S. Treasury Notes.....6.250 1/31/02 1,220,406
700,000 U.S. Treasury Notes.....6.125 8/15/07 695,843
2,850,000 U.S. Treasury Notes.....6.125 12/31/01 2,833,969
925,000 U.S. Treasury Notes.....6.000 8/15/09 917,484
2,400,000 U.S. Treasury Notes.....5.875 11/15/05 2,358,749
2,400,000 U.S. Treasury Notes.....5.875 2/15/04 2,367,000
2,650,000 U.S. Treasury Notes.....5.750 8/15/03 2,604,452
2,600,000 U.S. Treasury Notes.....5.750 11/30/02 2,561,811
1,000,000 U.S. Treasury Notes.....5.625 6/30/01 1,001,562
2,150,000 U.S. Treasury Notes.....5.500 2/15/08 2,058,625
2,400,000 U.S. Treasury Notes.....4.750 11/15/08 2,179,500
-------------------------------------------------------------
Total U.S. Treasury Securities.....................84,027,811
=============================================================
Utility Bonds (1.2%)
--------------------
2,000,000 AT&T Corporation........6.000 3/15/09 1,783,276
500,000 Baltimore Gas &
Electric Company........7.500 1/15/07 500,580
2,000,000 Compania de
Telecomunicaciones de
Chile S.A...............8.375 1/1/06 1,974,448
1,000,000 Public Service Electric
and Gas Company.........6.375 5/1/08 932,698
500,000 Reliant Energy, Inc.....9.375 6/1/01 508,634
250,000 PacifiCorp..............6.750 4/1/05 241,871
506,000 Sprint Capital
Corporation ............5.875 5/1/04 476,689
500,000 Texas Utilities Electric
Company.................8.250 4/1/04 513,196
1,000,000 Virginia Electric and
Power Company...........6.625 4/1/03 979,891
2,000,000 WorldCom, Inc...........6.950 8/15/28 1,767,026
-------------------------------------------------------------
Total Utility Bonds.................................9,678,309
=============================================================
-------------------------------------------------------------
Total Long-Term Fixed Income
Securities Investments
(amortized cost basis $284,674,459................274,756,796
=============================================================
$20,117,000 Countrywide Home
Loans, Inc.............6.650- 7/11-
6.820% 7/18/00 $ 20,069,354
9,689,000 Ford Motor Credit
Company................6.540- 7/7-
6.550 7/11/00 9,676,592
1,000,000 General Electric Capital
Corporation............6.560 7/3/00 999,636
17,986,000 Goldman Sachs
Group, L.P. ...........6.540- 7/10-
6.600 7/19/00 17,946,097
6,384,000 GTE Corporation .......6.570 7/13/00 6,370,019
3,595,000 Merrill Lynch &
Company, Inc. .........6.560 7/14/00 3,586,484
4,657,000 Toyota Motor
Corporation /4/........6.540 7/20/00 4,640,926
7,164,000 Transamerica Finance
Corporation............6.570 7/26/00 7,131,314
8,726,000 Wisconsin Energy
Corporation ...........6.580 7/21/00 8,694,102
13,746,000 Xerox Credit 7/5-
Corporation ...........6.700 7/6/00 13,734,836
-------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $92,849,360).................92,849,360
=============================================================
-------------------------------------------------------------
Total Investments (99.7%)
(amortized cost basis $722,602,893)...............816,748,368
=============================================================
-------------------------------------------------------------
Other Assets,
Less Liabilities (0.3%).............................2,499,709
=============================================================
-------------------------------------------------------------
Net Assets (100.0%)..............................$819,248,077
=============================================================
* Non-income producing securities
----------------
/1/ The interest rate shown reflects the discount rate at the date of purchase.
/4/ 4(2) Commercial paper
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 53
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (Unaudited)
Investment Objective
--------------------
The portfolio seeks high current income and secondarily capital
growth by investing primarily in a diversified portfolio of high
risk, high yield bonds commonly referred to as junk bonds.
Principal Long-Term Interest Maturity Market
Amount Obligations (89.5%) Rate Date Value
---------------------------------------------------------------------
Finance (3.1%)
--------------
$ 400,000 AMRESCO, Inc.............10.000% 3/15/04 $202,000
500,000 Imperial Credit
Industries, Inc...........9.875 1/15/07 348,750
500,000 Sovereign Bancorp, Inc...10.500 11/15/06 493,750
---------------------------------------------------------
Total Finance...................................1,044,500
=========================================================
Industrial-Consumer Goods (4.9%)
--------------------------------
400,000 Doskocil Manufacturing
Company, Inc.............10.125 9/15/07 120,000
350,000 Fresh Foods, Inc.........10.750 6/1/06 217,000
350,000 O'Sullivan Industries,
Inc......................13.375 10/15/09 337,750
350 O'Sullivan Industries,
Inc. (Warrants Junior
Preferred)*.............. 5,250
350 O'Sullivan Industries,
Inc. (Warrants)*......... 3,500
350,000 Salton, Inc..............10.750 12/15/05 344,750
23,947 SFC New Holdings,
Inc. Subordinated Notes...0.000 12/15/09 0
350,000 Smithfield Foods, Inc.....7.625 2/15/08 313,250
500,000 Viskase Companies,
Inc......................10.250 12/1/01 275,000
---------------------------------------------------------
Total Industrial-Consumer Goods.................1,616,500
=========================================================
Industrial-Energy (4.2%)
------------------------
29,809 Abraxas Petroleum
Corporation (Warrants)*..... 14,904
250,000 Crown Central
Petroleum Corporation....10.875 2/1/05 216,875
$ 250,000 KCS Energy, Inc. /3/.....11.000% 1/15/03 $237,500
500,000 Pioneer Natural
Resources Company.........9.625 4/1/10 516,314
400,000 RBF Finance Company......11.000 3/15/06 428,500
2,491 TransTexas Gas
Corporation..............15.000 3/15/05 1,694
---------------------------------------------------------
Total Industrial-Energy.........................1,415,787
=========================================================
Industrial-Manufacturing (26.9%)
--------------------------------
500,000 Algoma Steel
Corporation..............12.375 7/15/05 435,000
500,000 American Standard, Inc....7.625 2/15/10 457,500
500,000 Anchor Glass
Containers Corporation...11.250 4/1/05 380,000
350,000 Anvil Knitwear, Inc......10.875 3/15/07 307,125
250,000 APP China Group,
Ltd. (2).................14.000 3/15/10 157,500
350,000 Breed Technologies,
Inc. (3)..................9.250 4/15/08 2,188
350,000 Building Materials
Corporation...............7.750 7/15/05 287,875
500,000 Envirosource, Inc.........9.750 6/15/03 200,000
500,000 Federal-Mogul
Corporation...............7.875 7/1/10 348,443
250,000 Four M Corporation.......12.000 6/1/06 230,000
350,000 Galey & Lord, Inc.........9.125 3/1/08 155,750
350,000 Global Imaging
Systems, Inc.............10.750 2/15/07 297,500
350,000 High Voltage Engineering
Corporation..............10.500 8/15/04 241,500
The accompanying notes to the financial statements are an integral part of
this schedule.
--------------------------------------------------------------------------------
54 High Yield Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Principal Long-Terme Interest Maturity Market
Amount Obligations (89.5%) Rate Date Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Industrial-Manufacturing--continued
----------------------------------
$ 500,000 HydroChem Industrial Services, Inc............... 10.375% 8/1/07 $ 382,500
350,000 IMPAC Group, Inc................................. 10.125 3/15/08 379,750
350,000 Indah Kiat Fiat Mauritius, Ltd................... 10.000 7/1/07 213,500
500,000 Indesco International, Inc....................... 9.750 4/15/08 185,000
500,000 LaRoche Industries, Inc. /3/..................... 9.500 9/15/07 105,000
500,000 Lear Corporation................................. 8.110 5/15/09 455,410
350,000 Lyondell Chemical Company........................ 9.625 5/1/07 344,750
350,000 Metromedia Fiber Network, Inc.................... 10.000 11/15/08 344,750
400,000 Morris Material Handling Corporation /3/......... 9.500 4/1/08 52,000
200,000 Ntex, Inc........................................ 11.500 6/1/06 67,750
250,000 Omega Cabinets, Ltd.............................. 10.500 6/15/07 230,000
500,000 PCI Chemicals Canada, Inc........................ 9.250 10/15/07 310,000
250,000 RBX Corporation.................................. 12.000 1/15/03 137,500
350,000 Royster-Clark, Inc............................... 10.250 4/1/09 285,250
250,000 Russell-Stanley Holdings, Inc.................... 10.875 2/15/09 162,500
350,000 Sheffield Steel Corporation...................... 11.500 12/1/05 245,000
350,000 Stone Container Corporation...................... 10.750 10/1/02 354,812
500,000 Sweetheart Cup Company, Inc...................... 10.500 9/1/03 455,000
250,000 Talon Automotive Group LLC....................... 9.625 5/1/08 110,000
500,000 Viasystems Group, Inc............................ 9.750 6/1/07 432,500
250,000 Westpoint Stevens, Inc........................... 7.875 6/15/05 208,750
------------------------------------------------------------------------------------------
Total Industrial-Manufacturing............................................ 8,962,103
==========================================================================================
Industrial-Services (23.4%)
---------------------------
600,000 Allied Waste, Inc. North America................. 7.625 1/1/06 525,000
500,000 AmeriServe Food Distribution, Inc./3/............ 8.875 10/15/06 23,750
300,000 Brown Shoe Company, Inc.......................... 9.500 10/15/06 276,750
250,000 Carmike Cinemas, Inc............................. 9.375 2/1/09 136,875
500,000 Century Communications Corporation............... 8.750 10/1/07 453,750
$ 500,000 Charter Communication Holdings LLC............... 8.625% 4/1/09 $ 439,375
350,000 Classic Cable, Inc............................... 10.500 3/1/10 322,875
500,000 Comcast Cable Communications, Inc................ 6.200 11/15/08 450,504
500,000 CSC Holdings, Inc................................ 7.875 2/15/18 459,907
500,000 Fleming Companies, Inc........................... 10.500 12/1/04 447,500
350,000 Harrahs Operating Company, Inc................... 7.500 1/15/09 324,628
350,000 Healthcare Company............................... 6.910 6/15/05 319,727
500,000 HMH Properties, Inc.............................. 7.875 8/1/05 462,500
350,000 International Game Technology.................... 7.875 5/15/04 336,000
350,000 Mandalay Resort Group............................ 7.625 7/15/13 287,000
250,000 Mariner Post-Acute Network, Inc. /3/............. 9.500 11/1/07 2,500
250,000 Pathmark Stores, Inc............................. 9.625 5/1/03 175,000
250,000 Regal Cinemas, Inc............................... 9.500 6/1/08 60,000
500,000 Riviera Holdings Corporation..................... 10.000 8/15/04 450,000
500,000 Tenet Healthcare Corporation..................... 8.000 1/15/05 480,000
500,000 Triad Hospitals Holdings, Inc.................... 11.000 5/15/09 511,250
350,000 Trump Atlantic City Associates................... 11.250 5/1/06 246,750
230,585 United Artists Theatre Circuit, Inc.............. 9.300 7/1/15 153,715
500,000 United Pan-Europe Communications NV.............. 10.875 11/1/07 450,000
------------------------------------------------------------------------------------------
Total Industrial-Services................................................ 7,795,356
==========================================================================================
Industrial Transportation (2.8%)
-------------------------------
500,000 Allied Holdings, Inc............................. 8.625 10/1/07 443,125
350,000 Petro Stopping Centers, L.P...................... 10.500 2/1/07 311,500
250,000 Transportation Maritima Mexicana S.A. de C.V..... 10.000 11/15/06 170,000
------------------------------------------------------------------------------------------
Total Industrial-Transportation........................................... 924,625
==========================================================================================
Utilities (24.2%)
----------------
500,000 Call-Net Enterprises, Inc........................ 9.375 5/15/09 307,500
500,000 Calpine Corporation.............................. 7.625 4/15/06 470,000
500,000 CMS Energy Corporation........................... 7.500 1/15/09 447,268
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 55
<PAGE>
AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Principal Long-Term Interest Maturity Market
Amount Obligations (89.5%) Rate Date Value
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Utilities--continued
--------------------
$ 750,000 Energy Corporation of America.................. 9.500% 5/15/07 $ 480,000
500,000 FLAG Telecom Holdings, Ltd..................... 11.625 3/30/10 485,000
500,000 Global Crossing Holdings, Ltd.................. 9.125 11/15/06 478,750
500,000 ICG Holdings, Inc.............................. 0.000 5/1/06 413,750
500,000 Level 3 Communications, Inc.................... 9.125 5/1/08 448,750
500,000 McLeod USA, Inc................................ 0.000 3/1/07 410,000
250,000 Metricom, Inc.................................. 13.000 2/15/10 171,250
250 Metricom, Inc. (Warrants)*..................... 5,000
500,000 Metrocall, Inc................................. 11.875 6/15/05 380,000
500,000 Nextel Communications, Inc..................... 9.375 11/15/09 477,500
350,000 Nextlink Communications, Inc................... 10.750 6/1/09 344,750
500,000 Primus Telecommunications Group, Inc........... 11.250 1/15/09 390,000
500,000 PSINet, Inc.................................... 10.000 2/15/05 460,000
500,000 Rogers Cantel, Inc............................. 9.375 6/1/08 515,000
500,000 Spectrasite Holdings, Inc...................... 0.000 4/15/09 292,500
350,000 USA Mobile Communications Holdings, Inc........ 9.500 2/1/04 266,000
500,000 Williams Communications Group, Inc............. 10.875 10/1/09 488,750
350,000 Worldwide Fiber, Inc........................... 12.000 8/1/09 330,750
------------------------------------------------------------------------------------------
Total Utilities........................................................... 8,062,518
==========================================================================================
------------------------------------------------------------------------------------------
Total Long-Term Fixed Income Obligations
(amortized cost basis $35,913,977)........................................ $29,821,389
==========================================================================================
Market
Shares Common Stocks (0.1%) Value
=====================================================================================================
Energy (0.1%)
------------
29,809 Abraxas Petroleum Corporation*............................................ $ 44,714
308 TransTexas Gas Corporation*............................................... 1,655
------------------------------------------------------------------------------------------
Total Common Stocks
(amortized cost basis $56,238)............................................ $ 46,369
==========================================================================================
Energy (0.0%)
------------
2,677 TransTexas Gas Corporation*.............................................. $ 54
------------------------------------------------------------------------------------------
Total Preferred Stocks
(amortized cost basis $1,596)............................................ $ 54
==========================================================================================
Principal Short-Term Interest Maturity Market
Amount Obligations (3.5%) Rate(1) Date Value
-----------------------------------------------------------------------------------------------------
$1,166,000 Federal Home Loan
Mortgage
Corporation................................... 6.480% 7/3/00 $ 1,165,580
------------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $1,165,580)........................................ 1,165,580
==========================================================================================
------------------------------------------------------------------------------------------
Total Investments (93.1%)
(amortized cost basis $37,137,391)....................................... 31,033,392
==========================================================================================
------------------------------------------------------------------------------------------
Other Assets,
Less Liabilities (6.9%).................................................. 2,289,008
==========================================================================================
------------------------------------------------------------------------------------------
Net Assets (100.0%)...................................................... $33,322,400
==========================================================================================
</TABLE>
* Non income-producing security
----------------
/1/ The interest rate reflects the discount rate at the date of purchase.
/2/ 144A Security
/3/ Security in default
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
56 High Yield Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
[LOGO] AAL VARIABLE PRODUT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (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 debt securities included in the index.
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
------------------------------------------------------------------------------
Asset Backed Securities (1.7%)
------------------------------
$ 250,000 American Express
Master Trust Series
1998-1 Class A............ 5.900% 4/15/04 $242,415
250,000 Chase Credit Card
Master Trust Series
1997-5 Class A............ 6.194 8/15/05 245,007
250,000 NationsBank Credit
Card Master Trust Series
1993-2 Class A............ 6.000 12/15/05 241,380
250,000 PECO Energy Transition
Trust Series 1999-A
Class A6.................. 6.050 3/1/09 233,448
-----------------------------------------------------------------
Total Asset Backed Securities......................... 962,250
=================================================================
Finance (6.7%)
--------------
300,000 ABN Amro Bank
New York.................. 8.250 8/1/09 300,694
250,000 Allstate Corporation...... 7.875 5/1/05 252,026
250,000 American Express
Credit Corporation........ 6.750 6/1/01 248,604
250,000 Associates Corporation
of North America.......... 6.250 11/1/08 224,117
500,000 Bank of America
Corporation............... 5.875 2/15/09 441,605
250,000 Chase Manhattan
Corporation............... 6.000 2/15/09 221,302
250,000 Commercial Credit
Company................... 6.625 11/15/06 237,710
468,000 Countrywide Home
Loans, Inc................ 7.450 9/16/03 462,103
250,000 General Electric Capital
Corporation............... 8.750 5/21/07 268,604
$ 250,000 Lehman Brothers
Holdings, Inc............. 6.625% 4/1/04 $ 238,632
100,000 Mack-Cali Realty LLP...... 7.000 3/15/04 95,853
500,000 Merrill Lynch &
Company, Inc.............. 6.000 2/17/09 442,386
250,000 U.S. BancorP.............. 7.625 5/1/05 250,669
-----------------------------------------------------------------
Total Finance......................................... 3,684,305
=================================================================
Industrial-Consumer Goods (0.8%)
--------------------------------
250,000 Kimberly-Clark
Corporation............... 6.375 1/1/28 215,744
250,000 PepsiCo, Inc.............. 5.700 11/1/08 223,708
-----------------------------------------------------------------
Total Industrial-Consumer Goods....................... 439,452
=================================================================
Industrial-Energy (3.0%)
------------------------
250,000 Columbia Energy
Group..................... 7.320 11/28/10 241,265
250,000 Conoco, Inc............... 6.950 4/15/29 227,843
250,000 Enron Corporation......... 6.875 10/15/07 238,311
500,000 Enterprise Oil plc........ 6.500 5/1/05 471,956
250,000 PG&E Corporation.......... 7.100 6/1/05 248,930
200,000 Tosco Corporation......... 9.625 3/15/02 206,906
-----------------------------------------------------------------
Total Industrial-Energy............................... 1,635,211
=================================================================
Industrial-Manufacturing (4.8%)
-------------------------------
250,000 Caterpillar, Inc.......... 9.000 4/15/06 266,656
250,000 E.I. du Pont de Nemours
& Company.............. 6.875 10/15/09 243,132
250,000 E.I. du Pont de Nemours
& Company.............. 6.750 10/15/04 246,870
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 57
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
------------------------------------------------------------------------------
Industrial-Manufacturing-continued
----------------------------------
$ 465,000 Ford Motor Credit
Company................... 8.875% 4/1/06 $ 493,257
250,000 Ford Motor Credit
Company................... 8.200 2/15/02 252,902
250,000 Hanson Overseas BV........ 6.750 9/15/05 238,591
250,000 Honeywell International,
Inc....................... 7.500 3/1/10 250,501
300,000 International Business
Machines Corporation...... 7.250 11/1/02 300,233
350,000 Thermo Electron
Corporation............... 7.625 10/30/08 331,003
-----------------------------------------------------------------
Total Industrial-Manufacturing........................ 2,623,145
=================================================================
Industrial-Services (2.1%)
--------------------------
225,000 Abbott Laboratories....... 6.800 5/15/05 225,769
250,000 Foster Wheeler
Corporation............... 6.750 11/15/05 209,117
250,000 TCI Communications,
Inc....................... 6.375 5/1/03 243,877
500,000 Wal-Mart Stores, Inc...... 6.875 8/10/09 488,930
-----------------------------------------------------------------
Total Industrial-Services............................. 1,167,693
=================================================================
Industrial-Transportation (0.8%)
--------------------------------
500,000 Union Pacific
Corporation............... 7.000 2/1/06 449,775
-----------------------------------------------------------------
Total Industrial-Transportation....................... 449,775
=================================================================
Commercial Mortgage Backed Securities(1.2%)
-------------------------------------------
264,509 Morgan Stanley Capital,
Inc. Series 1998-WF1
Class A1.................. 6.250 7/15/07 255,934
450,000 Nationslink Funding
Corporation Series
1999-1 Class A2........... 6.316 11/20/08 419,263
-----------------------------------------------------------------
Total Commercial Mortgage Backed Securities........... 675,197
=================================================================
Federal Home Loan Mortgage Corporation (10.6)
---------------------------------------------
142,393 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 7.500 12/1/09 142,545
77,014 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 7.000 1/1/11 75,872
$ 182,601 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 6.500% 1/1/13 $ 176,291
198,685 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 6.500 10/1/12 192,135
469,322 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 6.000 4/1/14 445,121
222,195 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 6.000 9/1/13 210,737
457,993 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through.. 5.500 3/1/14 425,204
160,549 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 8.500 11/1/25 164,006
65,852 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 8.000 1/1/26 66,345
120,597 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.500 10/1/27 119,249
131,872 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.500 7/1/27 130,582
76,749 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.500 8/1/25 76,027
495,485 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 7/1/29 478,827
179,854 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 5/1/28 173,867
400,724 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 8/1/27 387,800
154,405 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 4/1/27 149,425
112,553 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 6/1/26 108,942
184,522 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 7.000 5/1/24 178,769
481,889 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through.. 6.500 7/1/29 455,010
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
58 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principle Long-Term Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
--------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation-continued
------------------------------------------------
$230,855 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.500% 2/1/29 $ 218,068
231,449 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.500 12/1/28 218,630
244,617 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.500 10/1/28 231,068
221,518 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.500 7/1/28 209,248
117,407 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.500 4/1/24 111,526
466,127 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.000 3/1/29 427,082
232,030 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through................6.000 8/1/28 212,706
----------------------------------------------------------------------
Total Federal Home Loan
Mortgage Corporation........................................ 5,785,082
======================================================================
Federal National Mortgage Association (14.6%)
---------------------------------------------
128,403 Federal National
Mortgage Association
Conventional 7-Yr.
Balloon Pass Through....................6.500 10/1/03 126,290
102,298 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................8.000 7/1/12 103,455
107,259 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................7.500 7/1/11 107,145
59,735 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................7.000 9/1/12 58,671
199,539 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................6.500 6/1/13 192,537
187,420 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................6.500 12/1/12 181,144
$445,833 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................6.000% 12/1/13 $ 422,189
132,203 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through............................6.000 4/1/11 125,912
69,753 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through...........................10.500 8/1/20 74,739
154,704 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................9.000 11/1/27 159,334
42,816 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................9.000 2/1/25 44,097
51,163 Federal National
Mortgage Association
Conventional 30-Yr
Pass Through............................8.500 12/1/25 52,155
80,019 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................8.000 9/1/26 80,477
133,443 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................8.000 12/1/24 134,490
483,336 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.500 12/1/29 476,737
142,803 Federal National
Mortgage Association
Conventional 30-Yr
Pass Through............................7.500 11/1/27 141,080
84,436 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.500 2/1/27 83,539
117,202 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.500 1/1/26 115,990
487,922 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 9/1/29 471,062
Bond Portfolio
The accompanying notes to the financial statements are an integral part of
this schedule
--------------------------------------------------------------------------------
June 30, 2000 59
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principle Long-Term Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
================================================================================
Federal National Mortgage Association--continued
-----------------------------------------------
$498,000 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000% 3/1/29 $ 480,792
179,145 Federal National
Mortgage Association
Conventional 30-Yr.
PassThrough.............................7.000 12/1/28 173,017
227,433 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 10/1/28 219,653
135,281 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 1/1/28 130,779
124,062 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 3/1/27 119,949
142,400 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 2/1/26 137,678
174,305 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................7.000 10/1/25 168,581
485,799 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 8/1/29 458,199
493,475 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 7/1/29 465,439
224,825 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 2/1/29 212,146
224,734 Federal National
Mortgage Association
Conventional 30-Yr.
PassThrough.............................6.500 9/1/28 212,059
191,037 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 9/1/28 180,263
206,228 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 8/1/27 194,795
$161,836 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500% 5/1/26 $ 153,022
489,277 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.500 11/1/25 464,888
472,986 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.000 3/1/29 433,515
486,683 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.000 12/1/28 446,068
221,708 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through............................6.000 5/1/28 203,206
----------------------------------------------------------------------
Total Federal National
Mortgage Association........................................ 8,005,092
======================================================================
Government National Mortgage Association (8.8%)
-----------------------------------------------
226,782 Government National
Mortgage Association
15-Yr Pass Through......................7.000 1/15/14 224,752
122,694 Government National
Mortgage Association
15-Yr Pass Through......................6.500 6/15/09 120,246
70,745 Government National
Mortgage Association
30-Yr Pass Through......................9.000 9/15/24 73,183
63,459 Government National
Mortgage Association
30-Yr Pass Through......................8.500 12/15/26 65,077
443,061 Government National
Mortgage Association
30-Yr Pass Through......................8.000 12/15/29 448,266
124,698 Government National
Mortgage Association
30-Yr Pass Through......................8.000 10/15/26 126,369
105,124 Government National
Mortgage Association
30-Yr Pass Through......................8.000 9/15/26 106,534
81,882 Government National
Mortgage Association
30-Yr Pass Through......................8.000 6/15/25 83,057
455,039 Government National
Mortgage Association
30-Yr Pass Through......................7.500 11/15/28 452,308
The accompanying notes to the financial statements are an integral part of this
schedule
--------------------------------------------------------------------------------
60 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
--------------------------------------------------------------------------------
Government National Mortgage Association-continued
--------------------------------------------------
$ 169,138 Government National
Mortgage Association
30-Yr Pass Through.......... 7.500% 10/15/27 $ 168,181
121,922 Government National
Mortgage Association
30-Yr Pass Through.......... 7.500 3/15/27 121,232
125,502 Government National
Mortgage Association
30-Yr Pass Through.......... 7.500 3/15/23 125,210
493,352 Government National
Mortgage Association
30-Yr Pass Through.......... 7.000 3/15/29 480,232
217,302 Government National
Mortgage Association
30-Yr Pass Through.......... 7.000 8/15/28 211,398
195,952 Government National
Mortgage Association
30-Yr Pass Through.......... 7.000 1/15/28 190,628
211,038 Government National
Mortgage Association
30-Yr Pass Through.......... 7.000 11/15/27 205,426
114,809 Government National
Mortgage Association
30-Yr Pass Through.......... 7.000 1/15/24 112,041
485,301 Government National
Mortgage Association
30-Yr Pass Through.......... 6.500 4/15/29 460,591
493,215 Government National
Mortgage Association
30-Yr Pass Through.......... 6.500 3/15/29 468,102
233,475 Government National
Mortgage Association
30-Yr Pass Through.......... 6.500 12/15/28 221,622
224,628 Government National
Mortgage Association
30-Yr Pass Through.......... 6.500 7/15/28 213,224
163,388 Government National
Mortgage Association
30-Yr Pass Through.......... 6.000 5/15/26 151,440
--------------------------------------------------------------------
Total Government National
Mortgage Association.................................... 4,829,119
====================================================================
Sovereign/Provincial (2.6%)
---------------------------
250,000 African Development
Bank........................ 6.875 10/15/15 234,235
500,000 Export-Import Bank
of Korea.................... 6.500 11/15/06 475,742
250,000 Province of Manitoba........ 6.125 1/19/04 242,356
250,000 Province of Nova Scotia..... 7.250 7/27/13 242,275
200,000 Resolution Funding
Corporation................. 8.125 10/15/09 228,054
--------------------------------------------------------------------
Total Sovereign/Provincial............................... 1,422,662
====================================================================
U.S. Government Agency (9.1%)
----------------------------
500,000 Federal Home Loan
Bank........................ 6.750 5/1/02 498,614
250,000 Federal Home Loan
Bank........................ 6.500 11/29/05 243,973
495,000 Federal Home Loan
Bank........................ 5.440 10/15/03 472,155
255,000 Federal Home Loan
Mortgage Corporation........ 6.520 1/2/02 253,598
300,000 Federal Home Loan
Mortgage Corporation........ 6.250 10/15/02 295,697
500,000 Federal Home Loan
Mortgage Corporation........ 5.750 7/15/03 482,980
475,000 Federal Home Loan
Mortgage Corporation........ 5.125 10/15/08 413,607
450,000 Federal National
Mortgage Association........ 7.500 2/11/02 453,934
100,000 Federal National
Mortgage Association........ 6.250 5/15/29 89,531
500,000 Federal National
Mortgage Association........ 6.000 5/15/08 465,365
500,000 Federal National
Mortgage Association........ 5.960 9/11/28 429,714
225,000 Federal National
Mortgage Association........ 5.750 4/15/03 218,023
200,000 Federal National
Mortgage Association........ 5.625 5/14/04 190,463
250,000 Private Export Funding
Corporation................. 6.240 5/15/02 247,099
250,000 Tennessee Valley
Authority................... 6.000 3/15/13 224,550
--------------------------------------------------------------------
Total U.S. Government Agency............................. 4,979,303
====================================================================
U.S. Treasury Securities (29.4%)
-------------------------------
250,000 U.S. Treasury Bonds.......... 10.375 11/15/12 307,656
250,000 U.S. Treasury Bonds.......... 9.875 11/15/15 338,750
350,000 U.S. Treasury Bonds.......... 8.750 5/15/17 439,906
350,000 U.S. Treasury Bonds.......... 8.250 2/15/20 438,047
Bond Portfolio
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 61
<PAGE>
AAL Variable Product Bond Portfolio--Continued
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (98.2%) Rate Date Value
----------------------------------------------------------------------------
U.S. Treasury Securities--continued
-----------------------------------
$ 100,000 U.S. Treasury Bonds......... 8.125% 8/15/21 $ 121,938
445,000 U.S. Treasury Bonds......... 8.125 5/15/21 541,787
475,000 U.S. Treasury Bonds......... 8.125 8/15/19 572,969
575,000 U.S. Treasury Bonds......... 7.875 2/15/21 682,813
290,000 U.S. Treasury Bonds......... 7.625 11/15/22 338,665
260,000 U.S. Treasury Bonds......... 7.500 11/15/24 302,413
250,000 U.S. Treasury Bonds......... 6.875 8/15/25 271,797
300,000 U.S. Treasury Bonds......... 6.750 8/15/26 322,406
465,000 U.S. Treasury Bonds......... 6.625 2/15/27 493,045
500,000 U.S. Treasury Bonds......... 6.375 8/15/27 514,219
500,000 U.S. Treasury Notes......... 11.875 11/15/03 582,343
475,000 U.S. Treasury Notes......... 7.875 11/15/04 502,758
500,000 U.S. Treasury Notes......... 7.875 8/15/01 507,344
460,000 U.S. Treasury Notes......... 7.500 2/15/05 482,425
500,000 U.S. Treasury Notes......... 7.250 8/15/04 516,718
775,000 U.S. Treasury Notes......... 7.250 5/15/04 798,976
280,000 U.S. Treasury Notes......... 7.000 7/15/06 290,062
480,000 U.S. Treasury Notes......... 6.625 4/30/02 481,200
400,000 U.S. Treasury Notes......... 6.625 7/31/01 400,625
350,000 U.S. Treasury Notes......... 6.500 10/15/06 353,937
265,000 U.S. Treasury Notes......... 6.500 8/15/05 267,816
275,000 U.S. Treasury Notes......... 6.500 5/31/02 275,172
500,000 U.S. Treasury Notes......... 6.375 9/30/01 499,062
200,000 U.S. Treasury Notes......... 6.250 2/15/07 200,187
370,000 U.S. Treasury Notes......... 6.250 2/15/03 368,959
300,000 U.S. Treasury Notes......... 6.250 8/31/02 298,875
445,000 U.S. Treasury Notes......... 6.250 10/31/01 443,470
250,000 U.S. Treasury Notes......... 6.125 8/15/07 248,516
500,000 U.S. Treasury Notes......... 6.000 7/31/02 495,625
550,000 U.S. Treasury Notes......... 5.875 2/15/04 542,438
450,000 U.S. Treasury Notes......... 5.875 11/30/01 446,063
325,000 U.S. Treasury Notes......... 5.750 10/31/02 320,226
450,000 U.S. Treasury Notes......... 5.500 5/31/03 439,875
330,000 U.S. Treasury Notes......... 5.250 1/31/03 323,090
375,000 U.S. Treasury Notes......... 4.750 11/15/08 340,547
----------------------------------------------------------------
Total U.S. Treasury Securities...................... 16,112,720
================================================================
Utilities (2.0%)
----------------
$ 250,000 AT&T Corporation............ 6.000% 3/15/09 $ 222,910
200,000 Baltimore Gas &
Electric Company............ 7.500 1/15/07 200,232
250,000 Sprint Capital
Corporation................. 6.375 5/1/09 225,588
250,000 Texas Utilities Electric
Company..................... 7.375 8/1/01 250,113
250,000 Worldcom, Inc............... 6.950 8/15/28 220,878
----------------------------------------------------------------
Total Utilities..................................... 1,119,721
================================================================
----------------------------------------------------------------
Total Long-Term Fixed Income Securities
(amortized cost basis $55,797,224).................. 53,890,727
================================================================
Principal Short-Term Interest Maturity Market
Amount Investments (0.6%) Rate /1/ Date Value
----------------------------------------------------------------------------
$ 313,000 Household Finance
Corporation................. 6.880% 7/3/00 312,880
----------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $312,880)..................... 312,880
================================================================
----------------------------------------------------------------
Total Investments (98.8%)
(amortized cost basis $56,110,104).................. 54,203,607
================================================================
----------------------------------------------------------------
Other Assets, less Liabilities (1.2%)............... 647,267
================================================================
----------------------------------------------------------------
Net Assets (100.0%)................................. $54,850,874
================================================================
(1) The interest rate reflects the discount rate at the date of purchase.
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
62 Bond Portfolio Schedule of Investments (Unaudited)
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
AAL Variable Product Money Market Portfolio
SCHEDULE OF INVESTMENTS AS OF JUNE 30, 2000 (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.
Principal Commercial Interest Maturity Market
Amount Paper (100.7%) Rate/1/ Date Value
-----------------------------------------------------------------------------
$1,448,000 Alabama Power
Company......... 6.540-6.800% 7/14-7/18/00 $1,443,790
1,588,000 American General
Finance Corporation... 6.530 7/20/00 1,582,527
1,600,000 AT&T Corporation...... 6.600 7/24/00 1,593,253
1,631,000 Bell Atlantic Network
Funding Corporation... 6.500 7/3/00 1,630,411
845,000 CIT Group, Inc........ 6.530 7/17/00 842,547
1,500,000 Coca-Cola Company..... 6.540 8/3/00 1,491,008
1,441,000 Countrywide Home
Loans, Inc...... 6.570-6.700 7/10-7/25/00 1,437,334
1,500,000 Duke Energy
Corporation........... 6.550 9/6/00 1,481,715
1,490,000 E.I. Dupont Nemours
& Company............. 6.540 7/27/00 1,482,962
1,631,000 Exxon Imperial
U.S., Inc./4/......... 6.500 7/6/00 1,629,528
1,507,000 General Electric Capital
Corporation..... 6.540-6.600 7/17-7/25/00 1,500,967
806,000 General Motors Acceptance
Corporation..... 6.540-6.570 7/17-7/26/00 802,679
1,701,000 Goldman Sachs
Group, L.P............ 6.540 7/13/00 1,697,292
1,700,000 GTE Corporation/4/.... 6.590 7/19/00 1,694,398
1,411,000 Hershey Foods
Corporation........... 6.520 7/31/00 1,403,334
1,628,000 H.J. Heinz Company.... 6.520 8/1/00 1,618,860
1,500,000 Household Finance
Corporation........... 6.510 7/14/00 1,496,474
1,335,000 IBM Credit
Corporation........... 6.460 7/11/00 1,332,604
1,400,000 Lucent
Technologies, Inc..... 6.540 7/21/00 1,394,913
1,534,000 McGraw-Hill
Companies, Inc........ 6.530 8/16/00 1,521,200
1,367,000 Merrill Lynch &
Company, Inc.... 6.530-6.570 7/18-7/31/00 1,360,737
1,500,000 Proctor & Gamble
Company............... 6.570 8/2/00 1,491,240
1,600,000 R.R. Donnelley & Sons
Company /4/........... 6.400 7/5/00 1,598,862
1,600,000 SBC Communications,
Inc. /4/.............. 6.400 7/7/00 1,598,293
1,261,000 Schering Corporation.. 6.050 7/12/00 1,258,669
1,500,000 Toyota Motor
Corporation /4/....... 6.550 7/28/00 1,492,631
1,597,000 Transamerica Finance
Corporation..... 6.550-6.560 7/10-7/21/00 1,592,678
-----------------------------------------------------------------
Total Commercial Paper (100.7%)
(amortized cost $39,470,906)....................... 39,470,906
=================================================================
-----------------------------------------------------------------
Other Assets, Less Liabilities (-0.7%)............. 270,184
=================================================================
-----------------------------------------------------------------
Net Assets (100.0%)................................ $39,200,722
=================================================================
----------------
/1/ The interest rate shown reflects the discount rate at the date of purchase.
/4/ 4(2) Commercial Paper
See page 79 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 63
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Assets and Liabilities
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Small International Large
Company Stock Stock Company Stock
Portfolio Portfolio Portfolio
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
------
Investments at cost.......................................................... $268,698,910 $72,812,677 $676,534,887
Investments at value......................................................... $269,018,470 $78,853,867 $957,070,493
Cash ........................................................................ 251 2,271,066 (12,453)
Dividends and interest receivable............................................ 128,281 112,824 756,956
Receivable for investments sold.............................................. 6,913,252 232,579 1,781,108
Receivable fund shares sold.................................................. 327,241 246,761 639,452
Receivable for forward contracts............................................. -- 229,650 --
-----------------------------------------------------------------------------------------------------------------------------------
Total Assets $276,387,495 $81,946,747 $960,235,556
===================================================================================================================================
Liabilities:
------------
Payable for forward contracts................................................ $ -- $ 231,897 $ --
Payable for investments purchased............................................ 8,220,903 2,099,195 4,303,725
Income distributions payable................................................. -- -- --
Payable for fund shares redeemed............................................. 127,672 58,109 563,141
Investment advisory fees payable............................................. 74,716 50,966 245,051
-----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 8,423,291 2,440,167 5,111,917
===================================================================================================================================
Net Assets:
-----------
Capital stock................................................................ 254,232,310 71,176,495 666,626,168
Undistributed net investment income.......................................... 47,377 1,715,651 184,130
Undistributed net realized gain (loss)....................................... 13,364,957 572,493 7,777,735
Net unrealized appreciation/depreciation on investments...................... 319,560 6,041,190 280,535,606
Net unrealized appreciation/depreciation on foreign currency contracts....... -- (2,247) --
Net unrealized appreciation/depreciation on currency related transactions.... -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets 267,964,204 79,506,580 955,123,639
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities & Capital $276,387,495 $81,946,747 $960,235,556
===================================================================================================================================
Capital Shares Outstanding (2 billion shares authorized) 19,091,720 5,363,678 35,560,424
Net Asset Value Per Share $ 14.04 $ 14.82 $ 26.86
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
64 Statement of Assets and Liabilities (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
High Yield Money
Balanced Bond Bond Market
Portfolio Portfolio Portfolio Portfolio
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$722,602,893 $37,137,391 $56,110,104 $39,470,906
$816,748,368 $31,033,392 $54,203,607 $39,470,906
332 405 829 929
4,131,874 937,624 723,210 --
821,113 1,319,415 -- --
139,866 55,505 7,526 500,573
-- -- -- --
------------------------------------------------------------------------------------------
$821,841,553 $33,346,341 $54,935,172 $39,972,408
==========================================================================================
$ -- $ -- $ -- $ --
2,000,826 -- -- --
-- -- -- 6,801
381,479 13,067 68,619 753,815
211,171 10,874 15,679 11,070
------------------------------------------------------------------------------------------
2,593,476 23,941 84,298 771,686
==========================================================================================
698,450,330 42,954,751 57,461,555 39,200,722
153,758 5,133 10,845 --
26,498,514 (3,533,485) (715,029) --
94,145,475 (6,103,999) (1,906,497) --
-- -- -- --
-- -- -- --
------------------------------------------------------------------------------------------
819,248,077 33,322,400 54,850,874 39,200,722
==========================================================================================
------------------------------------------------------------------------------------------
$821,841,553 $33,346,341 $54,935,172 $39,972,408
==========================================================================================
49,123,796 4,613,904 5,695,074 39,200,722
$ 16.68 $ 7.22 $ 9.63 $ 1.00
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 65
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Operations
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Small International Large
Company Stock Stock Company Stock
Portfolio Portfolio Portfolio
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
-----------------
Dividends................................................................ $ 835,778 $ 1,905,355 $ 5,119,897
Interest................................................................. 100,745 129,871 282,882
Foreign dividend withholding............................................. -- (63,463) --
-----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 936,523 1,971,763 5,402,779
===================================================================================================================================
Expenses
--------
Adviser fee.............................................................. 426,269 109,220 1,408,450
Sub-Adviser fees......................................................... -- 145,181 --
Administrative service and pricing fees.................................. 7,030 8,029 5,869
Audit and legal fees..................................................... 14,966 11,503 30,494
Custody fees............................................................. 33,352 34,026 32,143
Director fees............................................................ 2,346 695 8,532
Printing and Postage expense............................................. 20,637 6,121 75,051
SEC and state registration expense....................................... 50 50 50
Other Expenses........................................................... 352 105 1,281
-----------------------------------------------------------------------------------------------------------------------------------
Total Expenses Before Reimbursement 505,002 314,930 1,561,870
===================================================================================================================================
Less Reimbursement from Advisor.......................................... (78,733) (60,529) (153,420)
-----------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses 426,269 254,401 1,408,450
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 510,254 1,717,362 3,994,329
===================================================================================================================================
Realized and Unrealized Gains (Losses) on Investments and Foreign Currency
--------------------------------------------------------------------------
Net realized gains (losses) on investments............................... 14,266,623 (360,663) 6,998,653
Net realized gains (losses) on foreign currency transactions............. -- (21,449) --
Change in net unrealized appreciation/depreciation on investments........ 698,583 (4,528,505) (13,238,133)
Change in net unrealized appreciation/depreciation on foreign
currency transactions............................................... -- 2,350 --
-----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (Losses) on
Investments and Foreign Currency 14,965,206 (4,908,267) (6,239,480)
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations $15,475,460 $ (3,190,905) $ (2,245,151)
===================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
66 Statement of Operations (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
High Yield Money
Balanced Bond Bond Market
Portfolio Portfolio Portfolio Portfolio
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,426,878 $ -- $ -- $ --
12,347,443 1,891,413 1,900,432 1,271,334
-- -- -- --
---------------------------------------------------------------------------------------------------------------------
14,774,321 1,891,413 1,900,432 1,271,334
=====================================================================================================================
1,238,076 66,139 95,127 72,690
-- -- -- --
14,533 4,742 6,440 420
27,595 10,483 9,979 7,872
38,409 2,681 5,177 2,729
7,298 296 488 345
64,197 2,604 4,293 3,033
50 50 50 50
1,096 44 73 52
---------------------------------------------------------------------------------------------------------------------
1,391,254 87,039 121,627 87,191
=====================================================================================================================
(153,178) (20,900) (26,500) (14,501)
---------------------------------------------------------------------------------------------------------------------
1,238,076 66,139 95,127 72,690
=====================================================================================================================
---------------------------------------------------------------------------------------------------------------------
13,536,245 1,825,274 1,805,305 1,198,644
=====================================================================================================================
17,717,821 (2,589,794) (403,295) --
-- -- -- --
(19,402,826) 497,898 605,474 --
-- -- -- --
---------------------------------------------------------------------------------------------------------------------
(1,685,005) (2,091,896) 202,179 --
=====================================================================================================================
---------------------------------------------------------------------------------------------------------------------
$ 11,851,240 $ (266,622) $ 2,007,484 $ 1,198,644
=====================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 67
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND. INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Small Company International
Stock Portfolio Stock Portfolio
--------------------------- ----------------------------
Year Ended Period Ended Year Ended Period Ended
12/31/99 6/30/00 12/31/99 6/30/00
---------------------------------------------------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Operations
----------
Net investment income.................................................. $ 962,376 $ 510,254 $ 185,186 $ 1,717,362
Net realized gains (losses) on investments............................. 9,143,735 14,266,623 1,592,722 (360,663)
Net realized gains (losses) on foreign currency transactions........... -- -- 18,132 (21,449)
Change in net unrealized appreciation/depreciation on investments...... 13,784,185 698,583 8,935,853 (4,528,505)
Change in net unrealized appreciation/depreciation on
currency transactions.............................................. -- -- 65,260 2,35
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations.................................................... 23,890,296 15,475,460 10,797,153 (3,190,905)
===================================================================================================================================
Distributions to Shareholders
-----------------------------
From net investment income............................................. (963,974) (465,614) (251,468) --
From net realized gains................................................ (10,325,815) -- (255,565) --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders.................................... (11,289,789) (465,614) (507,033) --
===================================================================================================================================
Fund Share Transactions
-----------------------
Purchases of fund shares............................................... 26,941,433 35,169,364 19,515,711 42,198,615
Income dividends reinvested............................................ 963,974 465,614 161,668 --
Capital gains reinvested............................................... 10,325,815 -- 164,302 --
Redemption of fund shares.............................................. (23,200,366) (8,632,547) (1,709,135) (3,518,447)
-----------------------------------------------------------------------------------------------------------------------------------
Net increase in Net Assets from Fund
Share Transactions 15,030,856 27,002,431 18,132,546 38,680,168
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets 27,631,363 42,012,277 28,422,666 35,489,263
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets Beginning of Period 198,320,564 225,951,927 15,594,651 44,017,317
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Net Assets End of Period $225,951,927 $267,964,204 $44,017,317 $79,506,580
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------------------------
Accumulated Undistributed Net Investment Income $ 2,737 $ 47,377 $ (1,711) $ 1,715,651
===================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
68 Statement of Changes in Net Assets (Unaudited)
<PAGE>
<TABLE>
<CAPTION>
Large Company Balanced High Yield Bond
Stock Portfolio Portfolio Bond Portfolio Portfolio
------------------------------- ------------------------------- ------------------------------ ------------------------------
Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
12/31/99 6/30/00 12/31/99 6/30/00 12/31/99 6/30/00 12/31/99 6/30/00
------------------------------- ------------------------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 7,206,165 $ 3,994,329 $ 21,659,535 $ 13,536,245 $ 3,352,233 $ 1,825,274 $ 3,194,530 $ 1,805,305
6,634,331 6,998,653 24,466,362 17,717,821 (714,794) (2,589,794) (218,330) (403,295)
-- -- -- -- -- -- -- --
123,117,531 (13,238,133) 25,038,159 (19,402,826) (4,118,676) 497,898 (3,618,272) 605,474
-- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
136,958,027 (2,245,151) 71,164,056 11,851,240 (1,481,237) (266,622) (642,072) 2,007,484
====================================================================================================================================
(7,204,678) (3,828,601) (21,651,007) (13,424,191) (3,349,981) (1,824,423) (3,192,127) (1,798,809)
(7,160,556) -- (20,059,509) -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
(14,365,234) (3,828,601) (41,710,516) (13,424,191) (3,349,981) (1,824,423) (3,192,127) (1,798,809)
====================================================================================================================================
202,498,001 115,379,981 201,101,016 63,462,416 12,496,944 3,667,471 21,644,488 3,802,798
7,204,678 3,828,601 21,651,007 13,424,191 1,573,980 1,006,423 3,192,127 1,798,809
7,160,556 -- 20,059,509 -- -- -- -- --
(38,055,406) (31,772,799) (39,956,363) (33,711,203) (4,042,333) (2,423,276) (6,848,722) (7,320,270)
------------------------------------------------------------------------------------------------------------------------------------
178,807,829 87,435,783 202,855,169 43,175,404 10,028,591 2,250,618 17,987,893 (1,718,663)
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
301,400,622 81,362,031 232,308,709 41,602,453 5,197,373 159,573 14,153,694 (1,509,988)
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
572,360,986 873,761,608 545,336,915 777,645,624 27,965,454 33,162,827 42,207,168 56,360,862
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
$ 873,761,608 $ 955,123,639 $ 777,645,624 $ 819,248,077 $ 33,162,827 $ 33,322,400 $ 56,360,862 $ 54,850,874
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
$ 18,402 $ 184,130 $ 41,704 $ 153,758 $ 4,282 $ 5,133 $ 4,349 $ 10,845
====================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
June 30, 2000 69
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets--continued
<TABLE>
<CAPTION>
Money Market
Portfolio
------------------------------
Year Ended Period
12/31/99 6/30/00
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
----------
Net investment income.................................................................. $ 1,924,491 $ 1,198,644
Net realized gains (losses) on investments............................................. -- --
Net realized gains (losses) on foreign currency transactions........................... -- --
Change in net unrealized appreciation/depreciation on investments...................... -- --
Change in net unrealized appreciation/depreciation on currency transactions............ -- --
-----------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations 1,924,491 1,198,644
=======================================================================================================================
Distributions to Shareholders
-----------------------------
From net investment income............................................................. (1,924,491) (1,198,644)
From net realized gains................................................................ -- --
-----------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders (1,924,491) (1,198,644)
=======================================================================================================================
Fund Share Transactions
-----------------------
Purchases of fund shares............................................................... 183,896,728 94,112,581
Income dividends reinvested............................................................ 1,921,848 1,199,009
Capital gains reinvested............................................................... -- --
Redemption of fund shares.............................................................. (172,895,894) (102,604,412)
-----------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Fund Share Transactions 12,922,682 (7,292,822)
=======================================================================================================================
Net Increase in Net Assets 12,922,682 (7,292,822)
=======================================================================================================================
Net Assets Beginning of Period 33,570,862 46,493,544
=======================================================================================================================
Net Assets End of Period $ 46,493,544 $ 39,200,722
=======================================================================================================================
Accumulated Undistributed Net Investment Income $ -- $ --
=======================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
--------------------------------------------------------------------------------
70 Statement of Changes in Net Assets (Unaudited)
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Notes to Financial Statements
AS OF JUNE 30, 2000 (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
management company. The Fund is a "series" fund consisting of seven separate
investment portfolios (known as the Small Company Stock, International Stock,
Large Company Stock, Balanced, High Yield Bond, Bond, and Money Market
Portfolios, collectively the "Portfolios"). Shares of the Fund are currently
sold only to the AAL Variable Annuity Account I, the AAL Variable Annuity
Account II, and the AAL Variable Life Account I (the "Variable Accounts") to
fund benefits under certificates of membership related to the flexible premium
deferred variable annuity issued by Aid Association for Lutherans ("AAL") and as
investment options in the AAL Employee Savings Plan in the International Stock,
Large Company Stock, and High Yield Bond Portfolios.
(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, 1999, the High Yield Bond Portfolio has
capital loss carryforwards of $228,897 expiring in 2006 and $714,794 expiring in
2007. The Bond Portfolio has loss carryforwards of $2,188 expiring in 2003;
$7,782 expiring in 2004; $22,408 expiring in 2005; $61,026 expiring in 2006 and
$218,330 expiring in 2007. 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 Small Company Stock, Large Company Stock, Balanced, High Yield
Bond and 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 accretion of
discounts. Realized gains and losses from investment transactions are determined
on a specific cost identification basis.
(C) Investment Advisory Fees and Transactions with Related Parties
-------------------------------------------------------------------
Effective January 1, 2000, the Board of Directors approved the transfer of the
Investment Advisory responsibilities from AAL to AAL Capital Management
Corporation (AALCMC), an affiliate of AAL. Therefore all advisory and sub-
advisory agreements with AAL, AALCMC and
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 71
<PAGE>
Oechsle International were terminated as of December 31, 1999. The Fund has
since entered into an investment advisory agreement with AALCMC relating to the
management of the Portfolios and will be paid an investment advisory fee as
compensation for 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 Small
Company Stock, Large Company Stock, Balanced, Bond and Money Market Portfolios;
0.80% of the daily net assets for the International Portfolio; 0.40% of the
daily net assets for the High Yield Bond Portfolio. Additionally, AALCMC has
entered into a sub-advisory agreement with Oechsle International Advisors L.L.C.
(Sub-Advisor) for the International Stock Portfolio. The sub-advisory fee, which
is paid by AALCMC, 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.
On June 21, 2000 at a special meeting of shareholders, the shareholders of the
High Yield Bond Portfolio approved a sub-advisory agreement with Pacific
Investment Management Company (PIMCO) effective July 1, 2000. The sub advisory
fee will be 0.25% of average daily net assets and will be paid by AALCMC out of
the existing advisory fee.
Certain officers and directors of the Fund are also officers of AAL and AALCMC.
Each director who is not affiliated with AAL or AALCMC receives an annual fee
for services as a director and is eligible to participate in a deferred
compensation plan with respect to these fees. Participants in the plan may
designate their deferred Director's fees as if invested in any one of the AAL
Mutual Funds. The value of each Director's deferred compensation account will
increase or decrease as if it were invested in shares of the selected Funds. For
the period ended June 30, 2000, directors of the Fund not affiliated with AAL or
AALCMC received director fees in the aggregate amount of $20,000. No
remuneration has been paid by the Fund to officers or directors affiliated with
AAL or AALCMC. At June 30, 2000, all of the shares of each Portfolio are owned
by AAL, the AAL Variable Annuity Account I, the AAL Variable Annuity Account II,
the AAL Variable Life Account I, and the AAL Employee Savings Plan.
(D) Capital Share Transactions
------------------------------
Transactions in Fund shares for the period ended June 30, 2000 and the year
ended December 31, 1999, were as follows:
Small Company Stock Portfolio
---------------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 2,568,022 2,179,850
Reinvested distributions 33,989 874,191
Shares redeemed (633,724) (1,930,192)
_________________________________________________________
Net Increase 1,968,287 1,123,849
_________________________________________________________
International Portfolio
---------------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 2,745,394 1,557,451
Reinvested distributions -- 21,126
Shares redeemed (232,054) (139,713)
_________________________________________________________
Net Increase 2,513,340 1,438,864
_________________________________________________________
Large Company Stock Portfolio
---------------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 4,378,355 8,226,938
Reinvested distributions 146,048 556,094
Shares redeemed (1,202,542) (1,533,126)
_________________________________________________________
Net Increase 3,321,861 7,249,906
_________________________________________________________
Balanced Portfolio
------------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 3,848,124 12,249,850
Reinvested distributions 818,272 2,523,068
Shares redeemed (2,044,310) (2,428,486)
_________________________________________________________
Net Increase 2,622,086 12,344,432
_________________________________________________________
High Yield Bond Portfolio
---------------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 490,012 1,478,180
Reinvested distributions 136,295 190,956
Shares redeemed (323,769) (482,755)
_________________________________________________________
Net Increase 302,538 1,186,381
_________________________________________________________
Bond Portfolio
---------------------------
Period Ended Year Ended
6/30/00 12/31/99
_________________________________________________________
Shares sold 397,369 2,162,923
Reinvested distributions 188,382 323,358
Shares redeemed (764,242) (687,663)
_________________________________________________________
Net Increase (178,491) 1,798,618
_________________________________________________________
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
72 Notes to Financial Statements
<PAGE>
(D) Capital Share Transactions-continued
----------------------------------------
Money Market Portfolio
------------------------------
Period Ended Year Ended
6/30/00 12/31/99
____________________________________________________________
Shares sold 94,112,581 183,896,729
Reinvested distributions 1,199,009 1,921,847
Shares redeemed (102,604,412) (172,895,894)
____________________________________________________________
Net Increase (7,292,822) 12,922,682
____________________________________________________________
(E) Investment Transactions
---------------------------
For the period ended June 30, 2000, 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:
Portfolio Purchases Sales
---------------------------------------------------------
Small Company Stock $72,923,585 $46,231,081
International Stock 47,771,853 8,242,748
Large Company Stock 106,676,264 17,823,717
Balanced 86,895,203 54,831,929
High Yield Bond 12,505,511 11,759,348
Bond 3,780,043 3,549,417
_________________________________________________________
For the period ended June 30, 2000, the Portfolios purchased and sold the
following in U.S. Government Obligations
Portfolio Purchases Sales
---------------------------------------------------------
Balanced $14,013,277 $16,819,444
Bond 2,546,956 4,238,753
_________________________________________________________
The gross and net unrealized appreciation and depreciation on investments at
June 30, 2000, were as follows:
Net Unrealized
Appreciation
Portfolio Appreciation (Depreciation) (Depreciation)
-----------------------------------------------------------------------------
Small Company Stock $58,230,758 $(57,911,198) $319,560
International Stock 11,676,646 (5,635,456) 6,041,190
Large Company Stock 352,726,115 (72,190,509) 280,535,606
Balanced 142,629,911 (48,484,436) 94,145,475
High Yield 264,654 (6,368,653) (6,103,999)
Bond 166,458 (2,072,955) (1,906,497)
_____________________________________________________________________________
(F) Forward Currency Contracts
------------------------------
As of June 30, 2000, the International Stock Portfolio had entered into forward
currency contracts, as summarized below, resulting in net unrealized
depreciation of ($2,247).
<TABLE>
<CAPTION>
Settlement
Date Currency to U.S. Value Currency to U.S. Value
Through be delivered at 6/30/00 be received at 6/30/00
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
7/3/00 131,145 EURO $125,714 123,460 U.S. Dollar $123,460
7/3/00 6,637 British Pound Sterling 10,049 9,950 U.S. Dollar 9,950
7/4/00 10,922 British Pound Sterling 16,535 16,415 U.S. Dollar 16,415
7/3/00 2,076,728 Japanese Yen 19,629 19,634 U.S. Dollar 19,634
7/5/00 6,344,952 Japanese Yen 59,970 60,191 U.S. Dollar 60,191
______________________________________________________________________________________________________________
$231,897 $229,650
______________________________________________________________________________________________________________
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 73
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND INC.
SEMI- ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Financial Highlights
The following table presents per share information for each Portfolio
of the AAL Variable Product Series Fund, Inc. for the period
presented, which should be read in conjunction with the financial
statements and the related notes.
<TABLE>
<CAPTION>
Small Company Stock Portfolio
-------------------------------------------------------------
Period Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95/c/
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.20 $ 12.40 $ 14.88 $ 12.54 $ 10.99 $ 10.00
===================================================================================================================================
Income from Investment Operations
---------------------------------
Net investment income............................................ 0.03 0.06 0.08 0.11 0.12 0.08
Net realized and unrealized gain (loss) on investments........... 0.84 1.43 (0.13) 3.05 1.86 0.99
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations................................. 0.87 1.49 (0.05) 3.16 1.98 1.07
===================================================================================================================================
Less Distributions from:
------------------------
Net investment income............................................ (0.03) (0.06) (0.08) (0.11) (0.12) (0.07)
Net realized capital gains....................................... 0.00 (0.63) (2.35) (0.71) (0.31) (0.01)
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions.............................................. (0.03) (0.69) (2.43) (0.82) (0.43) (0.08)
===================================================================================================================================
Net increase (decrease) in new asset value....................... 0.84 0.80 (2.48) 2.34 1.55 0.99
Net asset value: End of period................................... 14.04 $ 13.20 $ 12.40 $ 14.88 $12.54 $ 10.99
===================================================================================================================================
Total return /a/................................................. 6.56% 12.19% 0.14% 25.37% 18.19% 10.70%
Net assets, end of period (in thousands)......................... $267,964 $225,952 $198,321 $152,928 $ 70,209 $ 15,666
Ratio of expenses to average net assets /b/...................... 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of net investment income (loss) to
average net assets /b/......................................... 0.42% 0.49% 0.55% 0.81% 1.14% 1.43%
Portfolio turnover rate.......................................... 18.97% 30.51% 103.70% 29.65% 20.14% 2.85%
===================================================================================================================================
Without reimbursements the above ratios would have been:
Ratio of expenses to average net assets /b/...................... 0.41% 0.41% 0.43% 0.45% 0.75% 1.37%
Ratio of net investment income (loss)
to average net assets /b/...................................... 0.35% 0.44% 0.47% 0.71% 0.74% 0.41%
</TABLE>
-------------
/a/ Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total_return for the
periods shown. The Portfolios are reported as year-to-date total returns.
/b/ Calculated on an annualized basis.
/c/ From commencement of operations on June 14, 1995.
/d/ Since inception on March 2, 1998.
Effective January 1, 2000, the Board of Directors approved the transfer of the
Investment Advisory responsibilities from AAL, to AAL Capital Management
Corporation, an Affiliate of AAL.
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
74 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
International Stock Portfolio Large Company Stock Portfolio
---------------------------------------- ---------------------------------------------------------------------------
Period Ended Year Ended Period Ended Period Ended Year Ended Year Ended Year Ended Year Ended Period Ended
6/30/00 12/31/99 12/31/98/d/ 6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95/c/
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 15.44 $ 11.05 $ 10.00 $ 27.10 $ 22.90 $ 18.06 $ 13.83 $ 11.51 $ 10.00
==================================================================================================================================
0.03 0.06 0.09 0.12 0.25 0.24 0.23 0.23 0.11
(0.65) 4.51 0.96 (0.25) 4.42 4.85 4.25 2.34 1.52
----------------------------------------------------------------------------------------------------------------------------------
(0.62) 4.57 1.05 (0.13) 4.67 5.09 4.48 2.57 1.63
==================================================================================================================================
-- (0.09) -- (0.11) (0.25) (0.24) (0.23) (0.23) (0.11)
-- (0.09) -- -- (0.22) (0.01) (0.02) (0.02) (0.01)
----------------------------------------------------------------------------------------------------------------------------------
-- (0.18) -- (0.11) (0.47) (0.25) (0.25) (0.25) (0.12)
==================================================================================================================================
(0.62) 4.39 1.05 (0.24) 4.20 4.84 4.23 2.32 1.51
14.82 $ 15.44 $ 11.05 26.86 $ 27.10 $ 22.90 $ 18.06 $ 13.83 $ 11.51
==================================================================================================================================
(4.02%) 41.50% 10.41% (0.46%) 20.52% 28.36% 32.59% 22.47% 16.39%
$79,507 $44,017 $15,595 $955,124 $873,762 $572,361 $318,475 $120,089 $23,138
0.92% 0.80% 0.80% 0.31% 0.32% 0.33% 0.35% 0.35% 0.35%
6.20% 0.74% 1.25% 0.89% 1.01% 1.20% 1.48% 1.97% 2.27%
13.77% 45.08% 32.66% 1.99% 2.69% 1.49% 1.00% 1.77% 0.47%
==================================================================================================================================
1.14% 1.13% 1.30% 0.35% 0.35% 0.38% 0.43% 0.63% 1.26%
5.98% 0.41% 0.75% 0.85% 0.98% 1.15% 1.39% 1.69% 1.37%
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 75
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC.
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
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 Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95/c/
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.72 $ 15.97 $ 14.05 $ 11.96 $ 10.92 $ 10.00
====================================================================================================================================
Income from Investment Operations
---------------------------------
Net investment income........................................... 0.28 0.53 0.50 0.46 0.41 0.22
Net realized and unrealized gain (loss) on investments.......... (0.04) 1.19 2.17 2.09 1.05 0.29
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.24 1.72 2.67 2.55 1.46 1.14
====================================================================================================================================
Less Distributions from:
------------------------
Net investment income........................................... (0.28) (0.53) (0.50) (0.46) (0.41) (0.21)
Net realized capital gains...................................... -- (0.44) (0.25) -- (0.01) (0.01)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.28) (0.97) (0.75) (0.46) (0.42) (0.22)
====================================================================================================================================
Net increase (decrease) in new asset value...................... (0.04) 0.75 1.92 2.09 1.04 0.92
Net Asset Value: End of Period 16.68 $ 16.72 $ 15.97 $ 14.05 $ 11.96 $ 10.92
====================================================================================================================================
Total return /a/................................................ 1.48% 11.00% 19.27% 21.71% 13.65% 11.46%
Net assets, end of period (in thousands)........................ $819,248 $777,646 $545,337 $306,501 $126,518 $28,759
Ratio of expenses to average net assets /b/..................... 0.32% 0.32% 0.33% 0.35% 0.35% 0.35%
Ratio of net investment income (loss) to average net assets/b/.. 3.44% 3.26% 3.38% 3.62% 3.89% 4.07%
Portfolio turnover rate......................................... 10.27% 16.91% 21.39% 6.86% 5.43% 2.29%
====================================================================================================================================
Without reimbursements the above ratios would have been:
Ratio of expenses to average net assets /b/..................... 0.35% 0.36% 0.39% 0.43% 0.60% 1.15%
Ratio of net investment income (loss) to average net assets/b/.. 3.40% 3.22% 3.32% 3.53% 3.65% 3.27%
</TABLE>
---------------
/a/ Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total return for the
periods shown. The Portfolios are reported as year-to-date total returns.
/b/ Calculated on an annualized basis.
/c/ From commencement of operations on June 14, 1995.
/d/ Since inception on March 2, 1998.
Effective January 1, 2000, the Board of Directors approved the transfer of the
Investment Advisory responsibilities from AAL, to AAL Capital Management
Corporation, an Affiliate of AAL.
The accompanying notes to the financial statements are an integral
part of this schedule.
-------------------------------------------------------------------------------
76 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
High Yield Bond Portfolio Bond Portfolio
--------------------------------------- --------------------------------------------------------------------------
Period Ended Year Ended Period Ended Period Ended Year Ended Year Ended Year Ended Year Ended Period Ended
6/30/0 12/31/99 12/31/98/d/ 6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95/c/
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7.69 $ 8.95 $ 10.00 $ 9.60 $ 10.36 $ 10.15 $ 9.90 $ 10.23 $ 10.00
===============================================================================================================================
0.41 0.89 0.74 0.32 0.62 0.64 0.64 0.63 0.34
(0.47) (1.26) (1.05) 0.03 (0.76) 0.21 0.25 (0.33) 0.23
-------------------------------------------------------------------------------------------------------------------------------
(0.06) (0.37) (0.31) 0.35 (0.14) 0.85 0.89 0.30 0.57
===============================================================================================================================
(0.41) (0.89) (0.74) (0.32) (0.62) (0.64) (0.64) (0.63) (0.34)
-- -- -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------------
(0.41) (0.89) (0.74) (0.32) (0.62) (0.64) (0.64) (0.63) (0.34)
===============================================================================================================================
(0.47) (1.26) (1.05) 0.03 (0.76) 0.21 0.25 (0.33) 0.23
7.22 $ 7.69 $ 8.95 9.63 $ 9.60 $ 10.36 $ 10.15 $ 9.90 $ 10.23
===============================================================================================================================
(0.79%) (4.45%) (3.25%) 3.69% (1.35%) 8.59% 9.37% 3.10% 5.80%
$ 33,322 $ 33,163 $ 27,965 $ 54,851 $ 56,361 $42,207 $ 26,710 $ 17,666 $ 9,363
0.40% 0.40% 0.40% 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
11.01% 10.70% 9.54% 6.62% 6.33% 6.26% 6.55% 6.51% 6.54%
35.58% 44.33% 25.43% 11.78% 19.50% 18.29% 18.41% 11.65% 6.51%
===============================================================================================================================
0.53% 0.50% 0.54% 0.45% 0.44% 0.48% 0.52% 0.68% 1.25%
10.88% 10.61% 9.40% 6.53% 6.23% 6.13% 6.38% 6.18% 5.64%
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 77
<PAGE>
[LOGO] AAL VARIABLE PRODUCT SERIES FUND, INC
SEMI-ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
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>
Money Market Portfolio
--------------------------------------------------------------
Period Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95/c/
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 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 0.05 0.03
Net realized and unrealized gain (loss) on investments............. -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.03 0.05 0.05 0.05 0.05 0.03
===================================================================================================================================
Less Distributions from
-----------------------
Net investment income.............................................. (0.03) (0.05) (0.05) (0.05) (0.05) (0.03)
Net realized capital gains......................................... -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.03) (0.05) (0.05) (0.05) (0.05) (0.03)
===================================================================================================================================
Net increase (decrease) in new asset value......................... -- -- -- -- -- --
Net Asset Value: End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===================================================================================================================================
Total return /a/................................................... 2.92% 4.94% 5.31% 5.33% 5.23% 3.02%
Net assets, end of period (in thousands)........................... $39,201 $46,494 $33,571 $25,460 $17,125 $ 7,045
Ratio of expenses to average net assets /b/........................ 0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
Ratio of net investment income (loss) to average net assets /b/.... 5.77% 4.85% 5.20% 5.24% 5.10% 5.71%
Portfolio turnover rate............................................ N/A N/A N/A N/A N/A N/A
===================================================================================================================================
Without reimbursements the above ratios would have been:
Ratio of expenses to average net assets /b/........................ 0.42% 0.41% 0.44% 0.46% 0.65% 1.40%
Ratio of net investment income (loss) to average net assets /b/.... 5.70% 4.79% 5.11% 5.13% 4.80% 4.66%
</TABLE>
----------------
/a/ Total return does not reflect expenses that apply at the Variable Account
level. Inclusion of these expenses would reduce the total~return for the
periods shown. The Portfolios are reported as year-to-date total returns.
/b/ Calculated on an annualized basis.
/c/ From commencement of operations on June 14, 1995.
Effective January 1, 2000, the Board of Directors approved the transfer of the
Investment Advisory responsibilities from AAL, to AAL Capital Management
Corporation, an Affiliate of AAL.
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
78 Financial Highlights
<PAGE>
[LOGO] 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.
Glossary of Terms
* Non income-producing security -- A non income-producing security is a
security which has not paid a dividend or interest payment in the past
calendar year.
(2) 144A security -- A 144A security is a security that is exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers.
(3) Security in default -- A security in default is a security that has missed
its last interest payment.
(4) 4(2) Commercial paper -- 4(2) commercial paper is a security that has not
been fully registered with the SEC. Because the security has not been fully
registered it is considered an illiquid or restricted security. Once the
security is registered, it loses its 4(2) classification and is no longer
restricted. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(5) Illiquid security -- A security that is not traded actively.
The accompanying notes to the financial statements are an integral
part of this schedule.
--------------------------------------------------------------------------------
June 30, 2000 79
<PAGE>
[LOGO OF AID ASSOCIATION FOR LUTHERANS]
[LOGO OF AAL CAPITAL MANAGEMENT CORPORATION]
<TABLE>
<S> <C>
Board of Directors John O. Gilbert - Chairman of the Board
F. Gregory Campbell
Woodrow E. Eno
Richard L. Gady
John H. Pender
Edward W. Smeds
Lawrence M. Woods
Officers Robert G. Same - President
James H. Abitz - Vice President
Woodrow E. Eno - Vice President
Charles D. Gariboldi - Treasurer
Frederick D. Kelsven - Secretary
Transfer Agent Aid Association for Lutherans
4321 North Ballard Road . Appleton, WI 54919-0001
Sub-Adviser (International Stock Portfolio) Oechsle International Advisors, LLC
One International Place . Boston, MA 02110
Sub-Adviser (High Yield Bond Portfolio) Pacific Investment Management Company (PIMCO)
840 Newport Center Drive
Newport Beach, CA 92660
(On July 1, 2000 PIMCO become Sub-Adviser to the
High Yield Bond Portfolio)
Investment Adviser & Distributor AAL Capital Management Corporation
222 West College Avenue . Appleton, WI 54919-0007
Custodian Citibank, N. A.
111 Wall Street . New York, NY 10043
Legal Counsel Quarles & Brady, LLP
411 East Wisconsin Avenue . Milwaukee, WI 53202
Independent Accountants PricewaterhouseCoopers, LLP
Suite 1500
100 East Wisconsin Avenue . Milwaukee, WI 53202
</TABLE>
This report is submitted for the information of the certificate owners of the
AAL Variable Annuity Account I, AAL Variable Annuity Account II and 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 Account I, AAL Variable Account II, AAL Variable Life Account I
and the AAL Variable Product Series Fund, Inc.
13017SAR 8-00 PRODUCTFORMS #4460, #4461, #4213, #4214, #4470
