<PAGE>
[AAL LOGO APPEARS HERE]
AID ASSOCIATION FOR LUTHERAN
A FRATERNAL BENEFIT SOCIETY
AAL VARIABLE PRODUCT SERIES FUND, INC.
AAL VARIABLE ANNUITY ACCOUNT I
AAL VARIABLE ANNUITY ACCOUNT II
AAL VARIABLE LIFE ACCOUNT I
Annual Report
DECEMBER 31, 1999
AAL Variable Product
Small Company Stock Portfolio
AAL Variable Product
International Stock Portfolio
AAL Variable Product
[AAL LOGO APPEARS HERE] (R) 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>
YOUR LINK TO AID ASSOCIATION FOR LUTHERANS
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<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
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................... 28
AAL Variable Product Large Company Stock Portfolio................... 31
AAL Variable Product Balanced Portfolio.............................. 40
AAL Variable Product High Yield Bond Portfolio....................... 58
AAL Variable Product Bond Portfolio.................................. 62
AAL Variable Product Money Market Portfolio.......................... 67
Statement of Assets and Liabilities
AAL Variable Product Series Fund, Inc................................ 68
AAL Variable Annuity Account I....................................... 84
AAL Variable Annuity Account II...................................... 95
AAL Variable Life Account I.......................................... 105
Statement of Operations
AAL Variable Product Series Fund, Inc................................ 70
AAL Variable Annuity Account I....................................... 86
AAL Variable Annuity Account II...................................... 96
AAL Variable Life Account I.......................................... 106
Statement of Changes in Net Assets
AAL Variable Product Series Fund, Inc................................ 72
AAL Variable Annuity Account I....................................... 88
AAL Variable Annuity Account II...................................... 98
AAL Variable Life Account I.......................................... 108
Notes to Financial Statements
AAL Variable Product Series Fund, Inc................................ 75
AAL Variable Annuity Account I....................................... 90
AAL Variable Annuity Account II...................................... 100
AAL Variable Life Account I.......................................... 110
Financial Highlights...................................................... 78
Report of Independent Auditors
AAL Variable Product Series Fund, Inc................................ 83
AAL Variable Annuity Account I....................................... 94
AAL Variable Annuity Account II...................................... 104
AAL Variable Life Account I.......................................... 114
A Note on Forward-Looking Statements...................................... 115
Glossary of Terms......................................................... 115
</TABLE>
- -----------------------------------------------------------------------------
Table of Contents 1
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
DECEMBER 31, 1999
[BOB SAME PHOTO APPEARS HERE]
Dear Member:
We are pleased to provide you with the annual report for the AAL Variable
Product Series Fund, Inc., the underlying investment for the AAL Flexible
Premium Deferred Variable Annuity, the AAL Single Premium Immediate Variable
Annuity and the AAL Variable Universal Life products. Specific details on the
performance, holdings and financial information for each Portfolio are outlined
on the following pages.
Stock market volatility seen early in the year continued into the second half of
the year. After hitting a record high of 11,326 on August 25, the Dow Jones
Industrial Average (Dow) dropped slightly and remained volatile until year-end,
bouncing back for a new high of 11,497 on December 31, 1999.
The Federal Reserve Board (The Fed) raised short-term interest rates three times
in 1999 to slow U.S. economic growth and keep inflation from spiking. Many
experts feel that the combination of strong growth and low unemployment leave
the economy vulnerable to a rise in inflation. The Fed said that the effect of
all of the increases this year should considerably decrease the risk of
inflation going forward.
However, equities have had a positive reaction to the Fed tightening and people
are continuing to invest. They are putting their money into stocks, which are
gaining momentum.
------------------------------------------------------------------------------
2 President's Letter
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
This continued strength of stocks and a strong job market are helping put
consumers at ease, leading to more spending and expectations of higher income.
This consumer consumption and optimism about the future is helping drive the
economic expansion that is about to become the longest in U.S. history.
Even in times of continued expansion it is important to take a long-term
approach to investing and remember to diversify your assets. If you are not
diversified within your AAL Flexible Premium Deferred Variable Annuity, AAL
Variable Universal Life or AAL Single Premium Immediate Variable Annuity, you
may want to rethink your mix of investments.
We would like to thank you for your continued confidence in AAL. We look forward
to serving you and encourage you to take advantage of all the products and
services we offer Lutherans and their families. If you have questions regarding
your variable annuity or variable universal life certificate, please contact
your AAL representative or call the AAL Customer Service Center at (800) 225-
5225.
Best regards,
/s/ Bob Same
Bob Same
Vice President
Aid Association for Lutherans
President
AAL Variable Product Series Fund, Inc.
- -----------------------------------------------------------------------------
December 31, 1999 3
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Small Company Stock Portfolio
Q How did the Portfolio perform in 1999? How did it compare to the index it
tracks?
A The Portfolio was up approximately 12.19 percent in 1999. The divergence in
sector performance during 1999 was extraordinary. As investors clamored for
growth stocks, the technology sector was up over 40 percent. However, as much
as investors sought after growth stocks, they shunned value stocks. This was
evident in the consumer staples and health-care services sectors, which were
both down over 10 percent. Our Portfolio, as represented by the Standard &
Poor's SmallCap 600 Index, was weighted toward the consumer staples and
healthcare sectors, resulting in lower performance.
On a gross return basis, the Portfolio returned 12.54 percent in 1999,
comparing favorably to the S&P SmallCap 600 Index, which returned 12.40
percent during that same time period. Gross return represents the Portfolio
return before deduction of the management fee.
Value of a $10,000 Investment
[SMALL COMPANY MOUNTAIN CHART APPEARS HERE]
Small Company S & P
Stock Portfolio Small cap 600 Index*
6/14/95 10000 10000
12/31/95 11070 11510
6/30/96 12047 12801
12/31/96 13084 13962
6/30/97 14779 15576
12/31/97 16403 17533
6/30/98 17628 18603
12/31/98 16425 17301
6/30/99 17250 18171
12/31/99 18428 19455
* 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.
[BRIAN J. FLANAGAN PHOTO APPEARS HERE]
Q What kind of environment do you see for small caps in 2000?
A The small-cap environment in 2000 depends significantly on two factors:
profit growth and interest rates. As worldwide competition has eroded pricing
power over the last three years, many companies have had a difficult time
growing their revenues and, therefore, their earnings. This is especially
true for small-cap companies.
The second factor that will affect small-cap performance in 2000 is interest
rates. While worldwide growth has picked up throughout 1999, the Federal
Reserve has also begun to increase interest rates. If the economy can
Average Annual Total Returns/1/
-------------------------------
As of December 31, 1999
From Inception
1-Year Inception Date
-------------------------------
Fund Portfolio/2/................ 12.19% 14.38% 6/14/95
- -----------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/.................... 10.80% 12.87% 6/15/95
- -----------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/............ 4.82% 12.19% 6/15/95
- -----------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount/4/... N/A 7.68% 8/2/99
- -----------------------------------------------------------------
Variable Universal Life
Subaccount/5/.................... 7.47% (2.12%) 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%
sales 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.
-----------------------------------------------------------------------------
4 Small Company Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
continue to grow with a small increase in inflation, the Fed should not need
to increase rates dramatically. This scenario will help more companies
increase their bottom line and should lead to more small-cap participation in
the current market rally. However, if the economy grows too fast and inflation
accelerates beyond the Fed's comfort zone, interest rates probably will be
raised to a level that could significantly slow the economy. This scenario
would lead to another profits recession that would once again favor large-
caps.
Q What strategy do you use to try to match the performance of the S&P SmallCap
600 Index, and what factors affect that strategy?
A The goal of the portfolio is to track the performance of the S&P SmallCap 600
Index. We use a full replication strategy to match the performance of the S&P
SmallCap 600 Index. In other words, all 600 securities are purchased in
approximately the same weight as in the Index, and the Portfolio remains
essentially fully invested. However, the yearly Portfolio performance will
usually be somewhat below that of the Index after transaction fees and
expenses are deducted.
The two most important factors to effectively implement our strategy are
Portfolio size and cash flows into the Portfolio. The larger the Portfolio
size, the easier it is to match its characteristics to that of the Index. Now
that the Portfolio is over $200 million, replicating the Index characteristics
can be done very effectively.
Cash flows in and out of the Portfolio are another important factor in
matching the performance of the Index. Consistent cash inflows actually make
managing the Portfolio easier, as investing the new money helps keep the
weightings up-to-date with changes in the market. We have been fortunate that
our certificateholders have kept a long-term view, and we have seen consistent
cash inflows into the Portfolio.
/s/ Brian J. Flanagan
Brian J. Flanagan
PORTFOLIO MANAGER
Sector Allocations
of the Small Company Stock Portfolio
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
12/31/99
--------
<S> <C>
Consumer Non-Durables....................... 24%
Technology.................................. 24%
Materials & Services........................ 17%
Finance..................................... 10%
Capital Goods............................... 8%
Utilities................................... 5%
Consumer Durables........................... 5%
Energy...................................... 3%
Transportation.............................. 3%
Cash & Cash Equivalents..................... 1%
-----------------------
Total 100%
</TABLE>
5 Largest Holdings
<TABLE>
<CAPTION>
% of Net Assets
Security 12/31/99
-----------------------------------------------------------
<S> <C>
IDEC Pharmaceuticals
Corporation................................. 1.1%
Mecury Interactive
Corporation................................. 1.1%
Macromedia, Inc............................. 1.0%
Whittman-Hart, Inc.......................... 0.8%
RSA Security, Inc........................... 0.8%
</TABLE>
- -------------------------------------------------------------------------
December 31, 1999 5
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
International Stock Portfolio
Q How did the Portfolio perform overall in 1999?
A Performance for the year has been satisfactory, with the Portfolio up 41.50
percent. This compares favorably to the net EAFE (Europe, Australasia and
Far East) Index, which is up 26.96 percent, and the Lipper International
Fund universe, which is up 40.80 percent for the year. Strong stock
performance in Japan and Europe were key drivers to performance for 1999.
The Portfolio also benefited from a higher weighting in Japan compared to
the beginning of the year.
Q How would you characterize the 1999 international investing environment?
A It is interesting to compare 1999 with 1998. In 1998, the global financial
crisis broadened beyond the boarders of Asia. When the Thai baht was
devalued in July 1997, market participants initially assumed the effects
would be felt only in Asia. In fact, as 1998 rolled on, the effects were
felt globally, including in the U.S. By the end of 1998, markets were
preparing for a worse case scenario of spreading debt defaults,
deflationary spirals and global recession.
Value of a $10,000 Investment
[INTERNATIONAL MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
INT'L MSCI EAFE
<S> <C> <C>
3/2/98 10000 10000
6/30/98 10950 10417
12/31/98 11041 10783
6/30/99 11781 11211
12/31/99 15622 13691
</TABLE>
* 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.
[KATHLEEN M. HARRIS PHOTO APPEARS HERE]
In 1999, after aggressive monetary easing by central banks around the world,
markets experienced a sharp reversal in sentiment as the global growth outlook
changed dramatically. Additionally, demand improved in the emerging markets as
investors returned, searching for bargains after liquidity conditions pushed
many emerging markets into oversold levels.
[L. SEAN ROCHE PHOTO APPEARS HERE]
Average Annual Total Returns /1/
--------------------------------
As of December 31, 1999
From Inception
1-Year Inception Date
------------------------------
Fund Portfolio /2/............... 41.50% 27.56% 3/2/98
- ----------------------------------------------------------------
Deferred Variable Annuity
Subaccount /3/................... 39.74% 26.02% 3/3/98
- ----------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount /3/........... 32.24% 22.60% 3/3/98
- ----------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount /4/.. N/A 28.86% 8/2/99
- ----------------------------------------------------------------
Variable Universal Life
Subaccount /5/................... 35.60% 21.77% 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 0.80%
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 30-days' notice, these
total returns would have been lower.
/3/ Deferred Variable Annuity Subaccount - Deferred Variable Annuity returns
reflect the 0.80% 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 0.80% 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 0.80%
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% sales
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.
-----------------------------------------------------------------------------
6 International Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Q Which foreign markets look good right now?
A We expect that growth will pick up in both Europe and Japan over the next
year and begin to moderate in the U.S. On balance, economic indicators are
steadily improving in Europe, and Japan is emerging from a decade of
stagnant growth. More importantly, however, companies outside the U.S. are
increasingly managing their affairs more aligned with shareholder
interests. Examples are plentiful of companies shaping their assets to be
more productive, with the objective of value creation and productivity. The
outcome, and one of the key reasons we are optimistic about international
equities, is companies will raise the returns they generate over their cost
of capital. As the spread widens, we expect companies' share prices to rise
as well. We believe these improvements, long evident in the U.S. equity
market, will continue to become apparent in Asian and European markets as
well.
/s/ Kathleen M. Harris
Kathleen M. Harris
PORTFOLIO MANAGER
/s/ Sean Roche
L. Sean Roche
PORTFOLIO MANAGER
5 Largest Holdings
<TABLE>
<CAPTION>
% of Net Assets
Security Country Industry 12/31/99
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Royal KPN NV.................. Netherlands Technology 5.0%
NTT Mobile Communication
Network, Inc............... Japan Technology 4.6%
Mannesmann AG................. Germany Machinery 4.0%
Mediaset SpA.................. Italy Media 2.5%
Rohm Company, Ltd............. Japan Electronics 2.4%
</TABLE>
Region Allocation
-----------------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
12/31/99
--------
<S> <C>
Continental Europe....................... 43%
Japan.................................... 24%
United Kingdom........................... 13%
North America............................ 11%
Pacific Basin (excluding Japan).......... 6%
Emerging Markets......................... 3%
----------
Total 100%
</TABLE>
Asset Mix
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
12/31/99
--------
<S> <C>
Common Stocks.......................... . 93%
Cash & Cash Equivalents................ . 7%
----------
Total 100%
</TABLE>
- ----------------------------------------------------------------------------
December 31, 1999 7
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Large Company Stock Portfolio
Q Did the 1999 performance of the Portfolio differ much from 1998's? How did it
compare to the Standard & Poor's 500 Index?
A With another double-digit return in 1999, the performance of the Portfolio
continued the direction set in 1998 when the market was up 28.6 percent for
the year as measured by the S&P 500 Index. Indeed, a string of double-digit
returns, which began about mid-1995 with the inception of the Portfolio,
continued throughout 1999.
The performance of the Portfolio resulted from an investment climate that was
similar to that of 1998's. Investors have been benefiting from what I call a
"Goldilocks" economy (one that's "just right") where corporate profit growth
is reasonably strong but inflation and interest rates are reasonably subdued.
While 1999 started out with a continuation of this ideal environment, the
second half of the year brought some strain. Instead of ideal growth in the
Gross Domestic Product (GDP) of two to three percent, the estimate of third
quarter GDP was in excess of five percent and the fourth quarter looked
strong as well. Also, interest rates rose throughout the year. Inflation,
while subdued when measured in terms of wages or the core Consumer Price
Index (CPI), looked onerous if oil and other commodity costs are included.
Stock market investors have taken these strains in stride thus far, but the
trend in these factors will be critical to the performance going forward.
[DAVID J. SCHNARSKY PHOTO APPEARS HERE]
On a gross return basis, the Portfolio returned 20.84 percent in 1999. This
compares to a return of 21.04 percent for the S&P 500 Index. Gross return
represents the Portfolio return before deduction of the management fee.
Value of a $10,000 Investment
[LARGE COMPANY MOUNTAIN CHART APPEARS HERE]
LARGE COMPANY 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
* 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 December 31, 1999
From Inception
1-Year Inception Date
-----------------------------------------
Fund Portfolio/2/.................. 20.52% 26.59% 6/14/95
- ----------------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/...................... 19.02% 24.95% 6/15/95
- ----------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/.............. 12.59% 24.20% 6/15/95
- ----------------------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount/4/..... N/A 10.46% 8/2/99
- ----------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/...................... 15.49% 16.53% 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 gains 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 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%
sales 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.
-----------------------------------------------------------------------------
8 Large Company Stock Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
The gross return of the Portfolio lagged somewhat behind that of the index
because of timing. We try to invest cash flows into the Portfolio after a drop
in the index. Some years we have been more success than others in doing so.
Also, we hesitated to add an Internet stock to the Portfolio (Yahoo) after it
was added to the index. The stock price had increased so dramatically we thought
we could buy it for less by waiting. Unfortunately, it continued to increase and
our late purchase cost us 8 to 9 basis points of performance for the year.
Q. Should certificateholders be worried that the unprecedented run of the bull
market will end anytime soon?
A. The length of this bull market should not be a cause for concern. The bull
will continue to roar if the economic conditions warrant it. The economic
backdrop has been conducive to a good stock market, and the trends in those
variables will be major influences on its future course.
Q. Which sectors have done particularly well in the large-cap stock universe?
A. In 1999, technology was the sector which garnered the most investor interest
and the best investment performance. Much of the fervor for the group
resulted from the emergence of the Internet as a critical tool for conducting
business by both individuals and corporations. Companies who were directly
involved with Internet applications received unbelievable valuations upon the
issuance of new stock. Companies that supply infrastructure, such as
computers or telecommunications equipment, saw their earnings surge and stock
prices soar. Semiconductors for a variety of applications experienced a
continued recovery from a previous two to three year downturn and were a
strong group.
Another product area that had robust growth in 1999 was wireless communications,
making communications services the next strongest sector. Oil prices that were
greater than double during the year also benefited the energy sector. In
addition, the improvement in the manufacturing portion of the economy, as
measured by the rise in the National Association of Purchasing Managers Index,
translated into good performance for the capital goods sector.
/s/ David J. Schnarsky
David J. Schnarsky
PORTFOLIO MANAGER
Sector Allocations
------------------
of the Large Company Stock Portfolio
------------------------------------
[PIE CHART APPEARS HERE]
Large Company Stock Portfolio
% of Net Assets
12/31/99
--------
Consumer Non-Durables................................. 27%
Technology............................................ 26%
Utilities............................................. 13%
Finance............................................... 13%
Materials & Services.................................. 7%
Energy................................................ 6%
Capital Goods......................................... 6%
Consumer Durables..................................... 1%
Transportation........................................ 1%
--------------------------------------------
Total 100%
5 Largest Holdings
%of Net Assets
Security 12/31/99
- -----------------------------------------------------------------------
Microsoft Corporation................................. 4.9%
General Electric Company.............................. 4.1%
Cisco Systems, Inc.................................... 2.8%
Wal-Mart Stores, Inc.................................. 2.5%
Exxon Mobil Corporation............................... 2.3%
- ----------------------------------------------------------------------------
December 31, 1999 9
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Balanced Portfolio
Q. Where did the Portfolio see the best performance this year, in its stock or
bond holdings?
A. Stocks dramatically outperformed bonds in 1999. The Standard & Poor's 500
Index was up 21.04 percent, and the Lehman Aggregate Bond Index returned
-0.82 percent in 1999. The Portfolio maintained an exposure of 55 percent
stocks, 35 percent bonds, and 10 percent money market instruments through
most of 1999.
The return of the Balanced Portfolio in 1999 was enhanced by its equity
exposure, and hurt by its bond exposure due to rising interest rates.
However, we plan to maintain a similar mix of assets in 2000 because the
investment objective of this Portfolio is to own a balance of stocks, bonds,
and money market securities.
Value of a $10,000 Investment
- -----------------------------
[BALANCED MOUNTAIN CHART APPEARS HERE]
Balanced S&P 500 Lehman
6/14/95 10000 10000 10000
12/31/95 11146 11630 10616
6/30/95 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
* 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.
[REGINALD L. PFEIFER PHOTO APPEARS HERE]
Q. What is your outlook for economic growth and inflation in 2000?
A. We expect economic growth to continue in the year 2000, with real Gross
Domestic Product advancing in the range of 3 to 4 percent. Our outlook for
inflation is that it will remain subdued because of a vigilant Federal
Average Annual Total Returns/1/
-------------------------------
As of December 31, 1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
------------------------------
<S> <C> <C> <C>
Fund Portfolio/2/..................................... 11.00% 16.97% 6/14/95
- --------------------------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/......................................... 9.62% 15.51% 6/15/95
- --------------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/................................. 3.70% 14.81% 6/15/95
- --------------------------------------------------------------------------------------
Single Premium Immediate Variable
Annuity Subaccount/4/................................. N/A 6.05% 8/2/99
- --------------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/......................................... 6.35% 9.23% 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%
sales 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.
----------------------------------------------------------------------------
10 Balanced Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Open Market Committee, led by Chairman Greenspan, managing the risk of an
increase in the inflation rate. In addition, we expect strong productivity
growth to continue, which helps to partially offset the increase in labor costs
and maintain moderate rates of inflation. Our forecast is that the Consumer
Price Index (CPI) will increase by 2 to 2.5 percent in 2000.
Q. What types of members might find the subaccount of the Balanced Portfolio
appropriate?
A. Individuals who desire greater diversity in their investments and don't want
to have to own several subaccounts of different portfolios to obtain it are
best suited for the Balanced Portfolio's subaccount. The equity component
provides the opportunity for growth, while the bond and money market
components provide interest income to the Portfolio. The balanced mix of
assets results in less risk than an all-equity portfolio, more risk than a
pure-bond portfolio, but moderate risk overall and the opportunity for growth
over time.
/s/ Reginald L. Pfeifer
Reginald L. Pfeifer
PORTFOLIO MANAGER
Asset Mix
---------
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
% of Net Assets
12/31/99
--------
<S> <C>
Common Stocks................................ 56%
Long-Term Obligations........................ 34%
Cash & Cash Equivalents...................... 10%
---------------------------------
Total 100%
</TABLE>
5 Largest Bond Holdings
-----------------------
<TABLE>
<CAPTION>
Interest Maturity % of Net Assets
Security Rate Date 12/31/99
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury Notes.......................... 6.125% 12/31/01 0.4%
U.S. Treasury Bonds.......................... 8.125% 8/15/19 0.3%
U.S. Treasury Notes.......................... 7.250% 8/15/04 0.3%
U.S. Treasury Notes.......................... 5.750% 8/15/03 0.3%
U.S. Treasury Notes.......................... 6.375% 3/31/01 0.3%
</TABLE>
5 Largest Common Stock Holdings
-------------------------------
<TABLE>
<CAPTION>
%of Net Assets
Security 12/31/99
- --------------------------------------------------------------------------------------
<S> <C>
Microsoft Corporation................................................. 2.7%
General Electric Company.............................................. 2.3%
Cisco Systems, Inc.................................................... 1.6%
Wal-Mart Stores, Inc.................................................. 1.4%
Exxon Mobil Corporation............................................... 1.3%
</TABLE>
- ----------------------------------------------------------------------------
December 31, 1999 11
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
High Yield Bond Portfolio
Q. How did the Portfolio perform in 1999. What factors affected performance?
A. The high yield bond market, as measured by the Merrill Lynch High Yield Bond
Index, posted a total return of 1.57 percent in 1999. The return for the
Portfolio during 1999 was -4.45 percent.
Rising interest rates and higher defaults were the two main factors which
affected performance. Interest rates increased steadily throughout the year in
response to strong economic growth and reduced the value of all fixed income
investments.
Of more importance, however, was the increased rate of defaults in the market.
The market default rate over the last 12 months has increased to almost 7
percent versus 2.8 percent last year. The defaults were concentrated in the
energy and healthcare sectors. Lower oil and gas prices early in the year led to
defaults by several small exploration and production companies. In the
healthcare sector, a change in Medicare reimbursement rates led to several
defaults of nursing home operators. The Portfolio experienced six defaults last
year, after experiencing only one in 1998. The decline in the price of the bonds
had a negative effect on the performance of the Portfolio, which caused it to
lag the overall market.
Value of a $10,000 Investment
{HIGH YIELD BOND MOUNTAIN CHART APPEARS HERE]
High Yield Merrill Lynch
3/2/98 10000 10000
6/30/98 10219 10266.2
12/31/98 9675 10183.2
6/30/99 9627.9 10362.3
12/31/99 9244.8 10343.3
* An unmanaged index comprised of over 900 "cash-pay" high yield bonds
representative of the high-yield market as a whole.
[DAVID G. CARROLL PHOTO APPEARS HERE]
The outlook for the high-yield bond maket is mixed. While a healthier world
economy has helped some sectors, a lack of liquidity has
Average Annual Total Returns/1/
-------------------------------
As of December 31, 1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
--------------------------------
<S> <C> <C> <C>
Fund Portfolio/2/.................................... (4.45%) (4.19%) 3/2/98
- ----------------------------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/........................................ (5.63%) (5.39%) 3/3/98
- ----------------------------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/................................ (10.73%) (8.22%) 3/3/98
- ----------------------------------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount/4/....................... N/A (4.49%) 8/2/99
- ----------------------------------------------------------------------------------------
Variable Universal Life
Subaccount/5/........................................ (8.47%) (8.46%) 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 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 - SPIVAreturns
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%
sales 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.
----------------------------------------------------------------------------
12 High Yield Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
dampened that effect. I don't foresee much change in this scenario anytime in
the near future.
Q Have any bonds done particularly well for you during the year?
A The best performing part of the Portfolio during the year was the bonds in
the basic industry sector (paper, metals and chemicals). As an economic
recovery in Asia began to unfold during the year, the demand for these
products increased which, in turn, lead to higher prices. Two bonds in
particular stand out. The Algoma Steel 12.375 percent bonds increased in
value by 20 percent which, when added to the coupon payment, resulted in a
total return of 36 percent to the Portfolio. Similarly, the Four M
Corporation (a maker of containerboard boxes) 12 percent bonds increased in
value by 27 percent, which resulted in a total return of 43 percent.
Unfortunately, most bonds in the Portfolio declined in value for the reasons
outlined earlier.
/s/ David G. Carroll
David G. Carroll
PORTFOLIO MANAGER
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
% of
Interest Maturity Net Assets
Security Rate Date 12/31/99
- --------------------------------------------------------------------
<S> <C> <C> <C>
Sweetheart Cup Company, Inc.......... 9.625% 9/1/00 1.8%
Energy Corporation of America........ 9.500% 5/15/07 1.6%
United Pan-Europe Communications,
NV 144A.............................. 10.875% 11/1/07 1.5%
Alestra SAde R.L. de C.V............. 12.125% 5/15/06 1.5%
Chancellor Media Corporation......... 8.000% 11/1/08 1.5%
</TABLE>
Asset Mix
---------
[PIE CHART APPEARS HERE]
% of Net Assets
12/31/99
--------
Long-Term Obligations.................... 94%
Cash & Cash Equivalents.................. 6%
----------
Total 100%
Credit Quality
--------------
Average Quality: B
[PIE CHART APPEARS HERE]
% of Net Assets
12/31/99
--------
BB...................................... 61%
B....................................... 27%
CCC..................................... 11%
D....................................... 1%
----------
Total 100%
Maturity
Average Maturity: 7.3 Years
- ---------------------------------------------------------------------------
December 31, 1999 13
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Bond Portfolio
Q What was the most significant development in the bond market during 1999?
A The bond market was negatively impacted by higher-than-expected economic
growth. As a result of this rapidly expanding economy, the Federal Reserve
raised interest rates three times during the year despite the lack of
evidence of rising inflation. As we enter 2000, worries over what the Fed
plans to do with interest rates during the first quarter of the year could
put some investors on the defensive, making bonds more attractive than they
have been in the recent past. If this happens, it will provide positive
outlook for this Portfolio in 2000.
Q If there was no evidence of higher inflation in 1999, what caused the Federal
Reserve to raise interest rates?
A During the early part of the year, there were several areas of concern for
the Fed: Russia had defaulted on its debt; Asia was still in a recession; and
some U.S. financial institutions were having significant financial
difficulties. Each of these problems was expected to contribute to a slowing
of the U.S. economy. However, no such slowing occurred. The stock market
continued to move upward, consumers continued to spend aggressively, jobs
were plentiful and the Asian economy began to recover. All of these factors
contributed to the Federal Reserve's mid-year decision to raise interest
rates in an attempt to keep the economy from overheating and increasing
inflation.
Value of a $10,000 Investment
[BOND MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE
BOND PORT BOND INDEX*
<S> <C> <C>
6/14/95 10000 10000
12/31/95 10580 10616
6/30/96 10427 10486
12/31/96 10909 10999
6/30/97 11232 11341
12/31/97 11930 12062
6/30/98 12397 12537
12/31/98 12855 13111
6/30/99 12709 12929
12/31/99 12799.5 13001.9
</TABLE>
*An unmanaged index that encompasses four major classes of fixed-income
securities in the United States:U.S. Treasury and U.S. government agency
securities, corporate debt obligations, mortgaged-backed securities and asset-
backed securities.
[R. JERRY SCHEEL PHOTO APPEARS HERE]
Average Annual Total Returns/1/
-------------------------------
As of December 31, 1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
--------------------------------
<S> <C> <C> <C>
Fund Portfolio/2/............... (1.35%) 5.54% 6/14/95
- ------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/................... (2.57%) 4.28% 6/15/95
- ------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/........... (7.84%) 3.65% 6/15/95
- ------------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount/4/.. N/A 0.34% 8/2/99
- ------------------------------------------------------------------
Variable Universal Life
Subaccount/5/................... (5.50%) (0.25%) 5/15/98
- ------------------------------------------------------------------
</TABLE>
Past performance is not an indication of future results.
/1/ Total Returns - Total returns and unit values are subject to fluctuation.
Accumulation units, when redeemed, may be worth more or less than their
original value. Periods less than one year are not annualized. 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 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%
sales 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.
----------------------------------------------------------------------------
14 Bond Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Q The Lehman Brothers Aggregate Bond Index contains more than 5,000 securities.
How do you decide which ones to include in the Bond Portfolio?
A While we try to approximate the total return of the Index, we cannot invest
in all of the issues the Index includes because of the prohibitive cost to
acquire and maintain such a large number of issues. Instead, we select
securities that represent a sample of the securities included in the Index to
create a portfolio with nearly identical characteristics to those of the
Index. The object is to "match" the Bond Portfolio with the Index as closely
as possible in terms of average maturity, coupon rate, yield-to-maturity,
sector distribution, credit quality and duration.
How did the Portfolio perform in comparison to the index?
For 1999, the Portfolio had a gross return of -1.00 percent, compared to the
Index, which had a return of -0.82 percent for the year. Because the
Portfolio does not hold every security contained in the Index, as mentioned
previously, it is very difficult to match the performance of the Index
exactly.
/s/ R. Jerry Scheel
R. Jerry Scheel
PORTFOLIO MANAGER
Maturity
--------
Average Maturity: 8.3 Years
5 Largest Holdings
------------------
<TABLE>
<CAPTION>
Interest Maturity % of Net Assets
Security Rate Date 12/31/99
- ------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury Bonds 7.875% 2/15/21 1.1%
U.S. Treasury Bonds 8.125% 8/15/19 1.0%
U.S. Treasury Notes 7.250% 5/15/04 1.0%
U.S. Treasury Notes 5.875% 2/15/04 1.0%
U.S. Treasury Notes 5.625% 6/30/01 0.9%
</TABLE>
Asset Mix
---------
[PIE CHART APPEARS HERE]
% of Net Assets
12/31/99
--------
U.S. Government Obligations............... 39%
Mortgage Backed Securities................ 35%
Corporate Obligations..................... 20%
Yankee Bonds.............................. 3%
Cash &Cash Equivalents.................... 2%
Asset-Backed Securities................... 1%
---------
Total 100%
Credit Quality
--------------
[PIE CHART APPEARS HERE]
Average Quality: AAA
% of Net Assets
12/31/99
--------
AAA....................................... 78%
AA........................................ 7%
A......................................... 10%
BBB....................................... 5%
----------
Total 100%
- ---------------------------------------------------------------------------
December 31, 1999 15
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
Money Market Portfolio
Q How did the Portfolio perform during 1999?
A The return on the Portfolio for 1999 was 4.94 percent. Money market returns
increased during the second half of the year as the Federal Reserve raised
the Federal Funds rate three times. As a result, returns on commercial paper
investments have increased about 0.75 percent since the beginning of the
year. The Federal Funds rate is the most sensitive indicator of the direction
of interest rates, since it is set daily by banks which may lend funds to
each other on an overnight basis.
Q How are individual commercial paper issuers selected for inclusion in the
Portfolio?
A All issuers in the Portfolio are of the highest quality and are monitored
regularly to ensure safety of principal. We engage in extensive financial
analysis on each issuer before adding its securities to the Portfolio, and
continually monitor the issuer thereafter. This analysis includes
investigation and consideration of the
Value of a $10,000 Investment
[MONEY MARKET MOUNTAIN CHART APPEARS HERE]
<TABLE>
<CAPTION>
The AAL Money Salomon Brothers
Market Portfolio Short-Term Index*
<S> <C> <C>
6/14/1995 10000 10000
10024.8 10026.3
10069 10071.2
10118.5 10117.3
10163.1 10161
10211.7 10205.6
10257.5 10247.5
12/31/1995 10302.2 10295.4
10352.1 10332.9
10393.9 10371
10435 10412.3
10481.4 10456.6
10524.9 10499.5
6/30/1996 10565.5 10542.6
10613.8 10584.5
10657.7 10628.2
10700.5 10672
10749.7 10717.1
10789.7 10760.5
12/31/1996 10840.5 10805.1
10887.3 10849.2
10929.1 10889.6
10970.9 10933.6
11022.4 10980.3
11069.8 11025.8
6/30/1997 11116.3 11063.6
11169.2 11110.8
11215.7 11158.1
11267.3 11195
11317.4 11239.9
11360 11285.1
12/31/1997 11418.5 11332.6
11469.1 11376.8
11515.4 11418.9
11568.8 11465.7
11618.5 11515
11667.1 11560.2
6/30/1998 11721 11601.8
11773.6 11648.2
11821.3 11694.8
11875.9 11739.4
11925.4 11769.5
11968.5 11803.1
12/31/1998 12024.4 11847.7
12070.8 11890.3
12113 11929.3
12162.8 11970.2
12208.3 12016.4
12250.9 12061.2
6/30/1999 12301.6 12104.5
12349.6 12147.4
12402.1 12192.5
12452.7 12237.4
12502.8 12282.6
12559.8 12326.2
12/31/1999 12618.6 12373.2
</TABLE>
*An unmanaged index composed of I-month Treasury bills.
[ALAN D. ONSTAD PHOTO APPEARS HERE]
Average Annual Total Returns/1/
-------------------------------
As of December 31, 1999
<TABLE>
<CAPTION>
From Inception
1-Year Inception Date
-------------------------------
<S> <C> <C> <C>
Fund Portfolio/2/.................... 4.94% 5.24% 6/14/95
- ---------------------------------------------------------------------
Deferred Variable Annuity
Subaccount/3/........................ 3.65% 3.95% 6/15/95
- ---------------------------------------------------------------------
SEC Deferred Variable
Annuity Subaccount/3/................ (1.95%) 3.33% 6/15/95
- ---------------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount/4/....... N/A 1.62% 8/2/99
- ---------------------------------------------------------------------
Variable Universal Life
Subaccount/5/........................ 0.55% 1.84% 5/15/98
- ---------------------------------------------------------------------
<CAPTION>
Portfolio & Subaccount Yields/6/ 7-Day 30-Day
- ------------------------------- -------------------
<S> <C> <C>
Fund Portfolio Yields....................... 5.66% 5.45%
- ---------------------------------------------------------------------
Deferred Variable Annuity
Subaccount Yields........................... 5.26% 5.02%
- ---------------------------------------------------------------------
Single Premium Immediate
Variable Annuity Subaccount Yields.......... 5.26% 5.02%
- ---------------------------------------------------------------------
Variable Universal Life
Subaccount Yields/7/........................ 5.38% 5.23%
- ---------------------------------------------------------------------
</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
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%
sales 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.
/6/ Portfolio & 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. Yield is an annualized
figure which assumes that the subaccount generates the same level of net
income over a given period. The yield quotation more closely reflects the
current earnings of the Money Market Fund and subaccounts than the total
return quotation.
/7/ Variable Universal Life Subaccount 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.
---------------------------------------------------------------------------
16 Money Market Portfolio Perspective
<PAGE>
AAL VARIABLE PRODUCT SERIES FUND, INC. ANNUAL REPORT
issuer's profitability, leverage and liquidity ratios. Issuers deemed
appropriate for the Portfolio are placed on an approved list from which
investments can be made. The Portfolio will purchase securities only from the
issuers on the approved list.
Q What factors do you see affecting performance in 2000?
A The greatest impact on performance in 2000 will be the actions of the Federal
Reserve Board. Any move by the Fed to raise rates will positively affect the
performance of the Portfolio. In that regard it is likely that the Fed will
continue to keep a close eye on employment costs and inflation statistics in
order to head off any potential inflation in the economy. While we are not
currently looking for a decrease in the Fed Funds rate, any perceived
slowdown in the economy could lead to stable interest rates during the course
of the year.
/s/ Alan D. Onstad
Alan D. Onstad
PORTFOLIO MANAGER
Sector Allocations
------------------
[PIE CHART APPEARS HERE]
% of Net Assets
12/31/99
--------
Utilities........................................ 36%
Consumer Non-Durables............................ 27%
Finance.......................................... 21%
Consumer Durables................................ 9%
Technology....................................... 4%
Energy 3%
----------
Total 100%
Credit Quality
--------------
Average Quality: First Tier
Maturity
--------
Average Maturity: 20 Days
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.
- ---------------------------------------------------------------------------
December 31, 1999 17
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Small Company Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Investment Objective
--------------------
The Portfolio strives for capital growth that approximates the
performance of the S&P Small Cap 600 Index, by investing primarily
in common stocks included in the index.
Shares Common Stocks (99.4%) Market Value
======================================================================
Aerospace (0.6%)
- ----------------
16,400 AAR Corporation.......................... $294,175
14,800 B/E Aerospace, Inc.*..................... 124,875
25,000 GenCorp, Inc............................. 246,875
13,900 Kaman Corporation........................ 178,963
17,000 Teledyne Technologies, Inc.*............. 160,438
13,500 Trimble Navigation, Ltd.*................ 291,937
-----------------------------------------------------
Total Aerospace.......................... 1,297,263
=====================================================
Air Transportation (1.1%)
- -------------------------
20,000 Air Express International Corporation.... 646,250
11,100 Atlantic Coast Airlines Holdings, Inc.*.. 263,625
17,100 Eagle USA Airfreight, Inc.*.............. 737,438
20,200 Mesa Air Group, Inc.*.................... 95,950
8,440 Midwest Express Holdings, Inc.*.......... 269,025
12,400 Pittston BAX Group....................... 131,750
14,700 SkyWest, Inc............................. 411,600
-----------------------------------------------------
Total Air Transportation................. 2,555,638
=====================================================
Apparel (1.9%)
- --------------
8,400 Ashworth, Inc.*.......................... 34,650
10,900 Brown Shoe Company, Inc.................. 153,962
15,200 Cone Mills Corporation*.................. 68,400
9,400 Cyrk, Inc.*.............................. 111,625
6,900 Dixie Group, Inc......................... 50,887
12,000 Dress Barn Corporation*.................. 199,500
19,800 Goody's Family Clothing, Inc.*........... 106,425
13,200 Guilford Mills, Inc...................... 95,700
14,500 Gymboree Corporation*.................... $81,562
4,300 Haggar Corporation....................... 48,913
18,300 Hartmarx Corporation*.................... 74,344
14,700 Jan Bell Marketing, Inc.*................ 42,262
8,400 J. Baker, Inc............................ 50,400
10,700 Jo-Ann Stores, Inc.*..................... 120,375
16,600 Kellwood Company......................... 322,663
6,400 K-Swiss, Inc............................. 118,900
25,100 Men's Wearhouse, Inc.*................... 737,313
20,700 Nautica Enterprises, Inc.*............... 234,169
7,700 Oshkosh B'Gosh, Inc...................... 162,181
4,600 Oxford Industries, Inc................... 91,137
16,300 Phillips-Van Heusen Corporation.......... 135,494
8,500 Pillowtex Corporation.................... 52,594
27,500 Stride Rite Corporation.................. 178,750
12,600 Timberland Company*...................... 666,225
24,700 Wolverine World Wide, Inc................ 270,156
-----------------------------------------------------
Total Apparel............................ 4,208,587
=====================================================
Auto Manufacturers (1.6%)
- -------------------------
14,000 A.O. Smith Corporation................... 306,250
15,300 Arctic Cat, Inc.......................... 153,000
10,000 Discount Auto Parts, Inc................. 180,625
12,700 Group 1 Automotive, Inc.................. 177,006
11,300 Monaco Coach Corporation................. 288,856
11,940 Myers Industries, Inc.................... 188,055
30,400 O'Reilly Automotive, Inc................. 653,600
14,600 Polaris Industries, Inc.................. 529,250
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
18 Small Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Small Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
========================================================================
Auto Manufacturers--continued
- -----------------------------
10,700 Simpson Industries, Inc.................. $120,375
7,500 Spartan Motors, Inc...................... 32,813
7,800 Standard Motor Products, Inc............. 125,775
12,600 TBC Corporation.......................... 78,750
20,100 Tenneco Automotive, Inc.................. 187,181
7,300 Thor Industries, Inc..................... 222,194
12,300 Titan International, Inc................. 79,950
13,300 Winnebago Industries, Inc................ 266,831
11,100 Wynn's International, Inc................ 156,787
-------------------------------------------------------
Total Auto Manufacturers................. 3,747,298
=======================================================
Banking (4.9%)
- --------------
15,100 Anchor Bancorp Wisconsin, Inc............ 228,387
14,000 Banknorth Group, Inc..................... 374,500
15,400 Carolina First Corporation............... 281,050
16,800 Centura Banks, Inc....................... 741,300
17,000 Chittenden Corporation................... 503,625
16,876 Commerce Bancorp, Inc.................... 682,423
31,800 Cullen/Frost Bankers, Inc................ 818,850
17,100 First BanCorp Puerto Rico................ 354,825
24,650 First Midwest Bancorp, Inc............... 653,225
30,281 Hudson United Bancorp.................... 774,058
14,400 MAF Bancorp, Inc......................... 301,500
19,100 Premier Bancorp, Inc..................... 260,237
15,295 Provident Bankshares Corporation......... 264,795
12,700 Queens County Bancorp, Inc............... 344,488
16,900 Riggs National Corporation............... 222,869
13,400 Silicon Valley Bancshares*............... 663,300
22,100 Susquehanna Bancshares, Inc.............. 350,837
32,100 TrustCo Bank Corporation New York........ 425,325
25,600 United Bankshares, Inc................... 611,200
11,200 U.S. Trust Corporation................... 898,100
25,700 UST Corporation.......................... 815,975
13,500 Whitney Holding Corporation.............. 500,344
-------------------------------------------------------
Total Banking............................ 11,071,213
=======================================================
Building Products (2.5%)
- ------------------------
16,600 Apogee Enterprises, Inc.................. 84,038
7,500 Building Materials Holding Corporation*.. 76,875
38,400 D.R. Horton, Inc......................... 530,400
15,400 Dycom Industries, Inc.*.................. 678,562
11,300 Florida Rock Industries, Inc............. $389,144
15,100 Insituform Technologies, Inc.*........... 426,575
31,500 Interface, Inc.*......................... 181,125
15,200 Justin Industries, Inc................... 226,100
6,200 Lawson Products, Inc..................... 143,375
31,300 Morrison Knudsen Corporation*............ 244,531
28,200 Oakwood Homes Corporation................ 89,887
7,100 Republic Group, Inc...................... 107,387
8,500 Ryland Group, Inc........................ 196,031
10,800 Service Experts, Inc.*................... 62,775
7,200 Southern Energy Homes, Inc.*............. 16,875
17,600 Standard Pacific Corporation............. 193,600
7,800 Stone & Webster, Inc..................... 131,137
12,600 Texas Industries, Inc.................... 536,288
9,300 TJ International, Inc.................... 390,600
21,800 Toll Brothers, Inc.*..................... 406,025
9,400 URS Corporation*......................... 203,863
8,200 U.S. Home Corporation*................... 209,613
15,800 Watts Industries, Inc.................... 233,050
-------------------------------------------------------
Total Building Products 5,757,856
=======================================================
Business Machines (2.4%)
- ------------------------
7,600 Analogic Corporation..................... 250,800
12,500 Apex, Inc.*.............................. 403,125
16,400 Auspex Systems, Inc...................... 168,100
3,600 Centigram Communications Corporation*.... 60,300
8,900 Digi International, Inc.*................ 92,894
13,600 Exabyte Corporation*..................... 102,000
8,400 Fair, Isaac and Company, Inc............. 445,200
30,300 Input/Output, Inc.*...................... 153,394
19,200 InterVoice-Brite, Inc.*.................. 446,400
32,700 Komag, Inc.*............................. 102,188
12,200 MicroAge, Inc.*.......................... 42,700
19,100 National Computer Systems, Inc........... 718,637
24,200 PictureTel Corporation*.................. 104,362
10,000 Plantronics, Inc.*....................... 715,625
29,700 Read-Rite Corporation*................... 141,075
9,700 Telxon Corporation....................... 155,200
16,900 Xircom, Inc.*............................ 1,267,500
-------------------------------------------------------
Total Business Machines.................. 5,369,500
=======================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 19
<PAGE>
AAL Variable Product Small Company Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
==============================================================================
Business Services (13.3%)
- -------------------------
11,900 Aaron Rents, Inc............................ $ 211,225
13,400 ABM Industries, Inc......................... 273,025
12,700 ADVO, Inc.*................................. 301,625
24,500 American Management Systems, Inc.*.......... 768,688
13,500 Analysts International Corporation.......... 168,750
5,100 Angelica Corporation........................ 49,725
15,100 Aspen Technology, Inc.*..................... 399,206
8,400 BARRA, Inc.*................................ 266,700
22,300 Billing Concepts Corporation*............... 144,950
16,405 BISYS Group, Inc.*.......................... 1,070,426
22,100 Bowne & Company, Inc........................ 298,350
11,400 CDI Corporation*............................ 275,025
20,100 Cerner Corporation*......................... 395,719
17,700 ChoicePoint, Inc.*.......................... 732,338
35,500 CIBER, Inc.*................................ 976,250
14,200 Clarify, Inc.*.............................. 1,789,200
12,500 Computer Task Group, Inc.................... 185,156
24,400 Epicor Software Corporation*................ 123,525
19,400 FileNET Corporation*........................ 494,700
12,200 Franklin Covey Company*..................... 91,500
12,300 G & K Services, Inc......................... 398,213
29,150 HA-LO Industries, Inc.*..................... 218,625
23,200 Harbinger Corporation*...................... 738,050
18,680 Hyperion Solutions Corporation*............. 812,580
15,500 Immune Response Corporation*................ 67,327
27,308 InaCom Corporation*......................... 199,690
16,800 Information Resources, Inc.*................ 155,400
5,000 Insteel Industries, Inc..................... 45,313
38,100 Interim Services, Inc.*..................... 942,975
18,100 John H. Harland Company..................... 331,456
7,550 Kronos, Inc.*............................... 453,000
25,600 Labor Ready, Inc.*.......................... 310,400
11,300 Lason, Inc.*................................ 124,300
12,600 MAXIMUS, Inc.*.............................. 427,613
21,500 MedQuist, Inc.*............................. 554,969
14,600 Mentor Corporation.......................... 376,863
3,500 Nashua Corporation*......................... 26,250
20,300 National Data Corporation................... 688,931
8,300 New England Business Service, Inc........... 202,831
13,400 NFO Worldwide, Inc.*........................ 299,825
12,600 Offshore Logistics, Inc.*................... 118,125
22,400 Orbital Sciences Corporation*............... $ 415,800
27,900 Paxar Corporation*.......................... 235,406
13,500 Pre-Paid Legal Services, Inc.*.............. 324,000
12,000 Primark Corporation*........................ 333,750
13,066 Priority Healthcare Corporation*............ 378,097
29,200 Profit Recovery Group International, Inc.*.. 775,625
10,450 Progress Software Corporation*.............. 593,037
11,200 Protein Design Labs, Inc.*.................. 784,000
8,700 Rural/Metro Corporation*.................... 37,246
45,600 S3, Inc.*................................... 527,250
6,800 SEACOR SMIT, Inc.*.......................... 351,900
10,700 SEI Investments Company..................... 1,273,467
42,800 Snyder Communications, Inc.*................ 823,900
17,600 StaffMark, Inc.*............................ 133,100
25,700 Technology Solutions Company*............... 841,675
22,825 Tetra Tech, Inc.*........................... 350,934
8,100 TETRA Technologies, Inc.*................... 58,725
28,900 True North Communications, Inc.............. 1,291,469
18,100 Visio Corporation*.......................... 859,750
9,000 Volt Information Sciences, Inc.*............ 214,875
33,900 Whittman-Hart, Inc.*........................ 1,817,887
18,800 Zebra Technologies Corporation*............. 1,099,800
------------------------------------------------------------
Total Business Services..................... 30,030,512
============================================================
Capital Goods (0.2%)
- --------------------
9,000 Aviation Sales Company*..................... 148,500
10,300 Esterline Technologies Corporation*......... 119,094
21,400 SLI, Inc.*.................................. 290,237
------------------------------------------------------------
Total Capital Goods 557,831
============================================================
Chemicals (1.9%)
- ----------------
13,600 Brady Corporation........................... 461,550
14,800 Cambrex Corporation......................... 509,675
10,900 Chemfirst, Inc.............................. 238,438
9,900 Commonwealth Industries, Inc................ 128,700
14,200 Geon Company................................ 461,500
13,900 Lilly Industries, Inc....................... 186,781
19,300 MacDermid, Inc.............................. 792,506
6,000 McWhorter Technologies, Inc.*............... 96,000
14,300 OM Group, Inc............................... 492,456
25,000 Omnova Solutions, Inc....................... 193,750
5,300 Quaker Chemical Corporation................. 75,525
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
20 Small Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
================================================================================
Chemicals--continued
- --------------------
22,300 Tredegar Corporation............................ $461,331
9,370 WD-40 Company................................... 207,312
--------------------------------------------------------------
Total Chemicals................................. 4,305,524
==============================================================
Consumer Cyclical (1.0%)
- ------------------------
10,100 Action Performance Companies, Inc.*............. 116,150
17,500 Ames Department Stores, Inc.*................... 504,219
10,400 Department 56, Inc.*............................ 235,300
11,700 Elcor Corporation............................... 352,463
13,300 Kroll-O'Gara Company*........................... 219,450
26,700 Masco Tech, Inc................................. 338,756
13,600 Quiksilver, Inc................................. 210,800
7,200 Simpson Manufacturing Company, Inc.*............ 315,000
--------------------------------------------------------------
Total Consumer Cyclical......................... 2,292,138
==============================================================
Consumer Durables (2.2%)
- ------------------------
7,300 Bassett Furniture Industries, Inc............... 116,800
7,700 C&D Technologies, Inc........................... 327,250
28,500 Champion Enterprises, Inc.*..................... 244,031
9,400 Coachmen Industries, Inc........................ 142,175
24,450 Ethan Allen Interiors, Inc...................... 783,928
8,800 Flow International Corporation*................. 100,100
18,200 Griffon Corporation*............................ 142,188
10,400 Harman International Industries, Inc............ 583,700
31,300 La-Z-Boy, Inc................................... 526,231
23,600 Linens 'N Things, Inc.*......................... 699,150
4,400 National Presto Industries, Inc................. 156,200
10,300 Royal Appliance Manufacturing Company*.......... 50,212
16,500 Shorewood Packaging Corporation*................ 312,469
5,400 Skyline Corporation............................. 126,900
16,100 Sturm, Ruger & Company, Inc..................... 142,888
4,700 Swiss Army Brands, Inc.*........................ 33,488
9,500 Thomas Industries, Inc.......................... 194,156
7,600 Toro Company.................................... 283,575
--------------------------------------------------------------
Total Consumer Durables......................... 4,965,441
==============================================================
Consumer Products (0.6%)
- ------------------------
8,000 Enesco Group, Inc............................... 88,500
19,150 Fossil, Inc.*................................... 442,844
9,600 Libbey, Inc..................................... 276,000
28,100 Tower Automotive, Inc.*......................... $433,794
--------------------------------------------------------------
Total Consumer Products......................... 1,241,138
==============================================================
Cosmetics (0.3%)
- ----------------
6,300 Chemed Corporation.............................. 180,338
8,200 USA Detergents, Inc.*........................... 22,550
10,500 Wesley Jessen VisionCare, Inc.*................. 397,687
--------------------------------------------------------------
Total Cosmetics................................. 600,575
==============================================================
Electric Utilities (3.5%)
- -------------------------
5,400 American States Water Company................... 194,400
6,950 Aquarion Company................................ 257,150
18,600 Atmos Energy Corporation........................ 380,137
4,400 Bangor Hydro-Electric Company................... 71,775
6,600 Cascade Natural Gas Corporation................. 106,425
6,800 Central Vermont Public Service Corporation...... 72,250
10,100 CH Energy Group, Inc............................ 333,300
6,200 Connecticut Energy Corporation.................. 241,025
12,300 Eastern Utilities Associates.................... 372,844
17,800 Energen Corporation............................. 321,512
3,200 Green Mountain Power Corporation................ 23,800
10,700 New Jersey Resources Corporation................ 417,969
15,000 Northwest Natural Gas Company................... 329,063
13,800 NorthWestern Corporation........................ 303,600
24,546 Philadelphia Suburban Corporation............... 507,795
18,700 Piedmont Natural Gas Company, Inc............... 565,675
12,300 Public Service Company of North Carolina, Inc... 397,444
16,400 Selective Insurance Group, Inc.................. 281,875
18,500 Southwest Gas Corporation....................... 425,500
8,100 TNP Enterprises, Inc............................ 334,125
8,600 United Illuminating Company..................... 441,825
23,300 United Water Resources, Inc..................... 796,569
22,600 WICOR, Inc...................................... 659,637
--------------------------------------------------------------
Total Electric Utilities........................ 7,835,695
==============================================================
Electronics (13.3%)
- -------------------
9,700 Adaptive Broadband Corporation*................. 715,981
16,500 Allen Telecom, Inc.*............................ 190,781
6,000 Alliant Techsystems, Inc.*...................... 373,875
11,200 American Xtal Technology, Inc.*................. 195,300
21,700 Anixter International, Inc.*.................... 447,563
22,300 Artesyn Technologies, Inc.*..................... 468,300
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 21
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
===========================================================================
Electronics--continued
- ----------------------
14,200 Avid Technology, Inc.*..................... $185,488
14,600 Belden, Inc................................ 306,600
9,700 Benchmark Electronics, Inc.*............... 222,494
16,400 BMC Industries, Inc........................ 79,950
33,275 Burr-Brown Corporation*.................... 1,202,059
16,900 Cable Design Technologies Corporation*..... 388,700
9,100 C-COR.net Corporation*..................... 697,288
24,300 C-Cube Microsystems, Inc.*................. 1,512,675
18,000 Checkpoint Systems, Inc.*.................. 183,375
14,400 Coherent, Inc.*............................ 385,200
30,500 CommScope, Inc.*........................... 1,229,531
16,500 CTS Corporation............................ 1,243,688
17,300 Dallas Semiconductor Corporation........... 1,114,769
40,700 Digital Microwave Corporation*............. 953,906
13,400 Dionex Corporation*........................ 551,913
7,900 Electro Scientific Industries, Inc.*....... 576,700
11,900 Electroglas, Inc.*......................... 301,963
13,000 Etec Systems, Inc.*........................ 583,375
22,000 General Semiconductor, Inc.*............... 312,125
43,960 Gentex Corporation*........................ 1,219,890
13,300 Gerber Scientific, Inc..................... 291,769
8,200 Hadco Corporation*......................... 418,200
6,750 Harmon Industries, Inc..................... 81,844
14,800 Hutchinson Technology, Inc.*............... 314,500
8,800 Innovex, Inc............................... 82,500
7,338 Intermagnetics General Corporation*........ 64,208
31,200 International Rectifier Corporation*....... 811,200
8,900 Itron, Inc.*............................... 54,512
23,800 KEMET Corporation*......................... 1,072,487
16,800 Kent Electronics Corporation*.............. 382,200
14,100 Kulicke and Soffa Industries, Inc.*........ 600,131
29,800 Macromedia, Inc.*.......................... 2,179,125
21,300 Methode Electronics, Inc................... 684,263
24,700 Micrel, Inc.*.............................. 1,406,356
6,300 Park Electrochemical Corporation........... 167,344
38,600 P-Com, Inc.*............................... 341,367
14,300 Photronics, Inc.*.......................... 409,338
16,200 Pioneer-Standard Electronics, Inc.......... 233,887
10,500 Plexus Corporation*........................ 462,000
8,100 QRS Corporation............................ 844,931
19,800 Silicon Valley Group, Inc.*................ 351,450
17,600 SpeedFam-IPEC, Inc.*....................... 227,700
9,300 Standard Microsystems Corporation*......... $100,556
9,000 SymmetriCom, Inc.*......................... 89,437
9,800 Technitrol, Inc............................ 436,100
7,233 Three-Five Systems, Inc.*.................. 296,567
18,900 Valence Technology, Inc.*.................. 359,100
24,700 Vicor Corporation*......................... 1,000,350
7,300 Vital Signs, Inc........................... 166,987
4,000 Watkins-Johnson Company.................... 160,000
10,152 Zilog, Inc.*............................... 25,277
9,200 ZixIt Corporation*......................... 364,550
---------------------------------------------------------
Total Electronics.......................... 30,123,725
=========================================================
Energy (0.9%)
- -------------
16,000 AMCOL International Corporation............ 258,000
15,000 Cabot Oil & Gas Corporation................ 240,938
14,700 Kirby Corporation*......................... 301,350
10,700 Plains Resources, Inc.*.................... 133,750
14,500 Seitel, Inc.*.............................. 97,875
29,076 Southern Union Company*.................... 556,079
14,900 Southwestern Energy Company................ 97,781
11,000 Stone Energy Corporation*.................. 391,875
---------------------------------------------------------
Total Energy............................... 2,077,648
=========================================================
Financial (0.7%)
- ----------------
29,900 Community First Bankshares, Inc............ 470,925
7,900 E.W. Blanch Holdings, Inc.................. 483,875
8,800 Investors Financial Services Corporation*.. 404,800
14,300 Jeffries Group, Inc........................ 314,600
---------------------------------------------------------
Total Financial............................ 1,674,200
=========================================================
Food Processors (2.9%)
- ----------------------
6,200 Agribrands International, Inc.*............ 285,200
39,400 Chiquita Brands International, Inc......... 187,150
5,300 Coca-Cola Bottling Company Consolidated.... 251,088
22,300 Corn Products International, Inc........... 730,325
23,000 Delta & Pine Land Company.................. 399,625
26,600 DIMON, Inc................................. 86,450
25,500 Earthgrains Company........................ 411,188
23,200 Fleming Companies, Inc..................... 237,800
5,400 J & J Snack Foods Corporation*............. 110,700
14,800 Landry's Seafood Restaurants, Inc.*........ 128,575
7,450 Lindsay Manufacturing Company.............. 135,963
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
22 Small Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
===================================================================
Food Processors--continued
- --------------------------
12,200 Michael Foods, Inc...................... $300,425
15,600 Mississippi Chemical Corporation........ 96,525
6,700 Nash-Finch Company...................... 42,712
8,500 Performance Food Group Company*......... 207,187
18,300 Ralcorp Holdings, Inc.*................. 364,856
17,200 Scotts Company*......................... 692,300
27,200 Smithfield Foods, Inc.*................. 652,800
11,500 Specialty Equipment Companies, Inc.*.... 275,281
10,900 United Natural Foods, Inc.*............. 130,800
15,800 Whole Foods Market, Inc.*............... 732,725
------------------------------------------------------
Total Food Processors................... 6,459,675
======================================================
Health Care (2.5%)
- ------------------
9,600 CONMED Corporation*..................... 248,400
9,000 Datascope Corporation................... 360,000
26,500 Dura Pharmaceuticals, Inc.*............. 369,344
11,400 Hanger Orthopedic Group, Inc.*.......... 114,000
25,400 IDEC Pharmaceuticals Corporation*....... 2,495,550
8,900 ResMed, Inc.*........................... 371,575
12,100 Techne Corporation*..................... 666,256
17,600 Theragenics Corporation*................ 159,500
51,400 US Oncology, Inc.*...................... 253,787
18,300 Varian Medical Systems, Inc.*........... 545,569
------------------------------------------------------
Total Health Care....................... 5,583,981
======================================================
Independent Finance (2.9%)
- --------------------------
44,100 AmeriCredit Corporation*................ 815,850
29,200 AMRESCO, Inc.*.......................... 41,061
15,200 Cash America International, Inc......... 148,200
35,300 Commercial Federal Corporation.......... 628,781
7,500 Dain Rauscher Corporation............... 348,750
16,865 Downey Financial Corporation............ 340,462
21,500 Eaton Vance Corporation................. 817,000
17,020 Fidelity National Financial, Inc........ 244,662
12,100 Jack Henry & Associates, Inc............ 649,619
5,600 JSB Financial, Inc...................... 290,500
13,300 M.D.C. Holdings, Inc.................... 208,644
4,400 Penford Corporation..................... 75,900
15,900 Pioneer Group, Inc...................... 250,425
22,300 Radian Group, Inc....................... 1,064,825
28,350 Raymond James Financial, Inc............ $529,791
------------------------------------------------------
Total Independent Finance............... 6,454,470
======================================================
Insurance (1.8%)
- ----------------
11,000 Arthur J. Gallagher & Company........... 712,250
12,386 Delphi Financial Group, Inc.*........... 371,577
22,800 Enhance Financial Services Group, Inc... 370,500
39,000 First American Financial Corporation.... 485,063
41,900 Fremont General Corporation............. 309,013
20,770 Frontier Insurance Group, Inc........... 71,397
29,100 Genesis Health Ventures, Inc.*.......... 60,019
7,900 Hilb, Rogal and Hamilton Company........ 223,175
17,400 Hooper Holmes, Inc...................... 448,050
6,900 Insurance Auto Auctions, Inc.*.......... 108,675
26,200 Mutual Risk Management, Ltd............. 440,487
11,100 Trenwick Group, Inc..................... 188,006
10,300 Zenith National Insurance Corporation... 212,437
------------------------------------------------------
Total Insurance......................... 4,000,649
======================================================
Liquor (0.2%)
- -------------
10,800 Canandaigua Brands, Inc.*............... 550,800
------------------------------------------------------
Total Liquor............................ 550,800
======================================================
Manufacturing (0.3%)
- --------------------
9,000 Gardner Denver, Inc.*................... 150,187
17,800 IDEX Corporation........................ 540,675
------------------------------------------------------
Total Manufacturing..................... 690,862
======================================================
Media (1.4%)
- ------------
6,800 Carmike Cinemas, Inc.*.................. 53,125
9,400 Consolidated Graphics, Inc.*............ 140,412
4,700 GC Companies, Inc.*..................... 121,613
12,800 Network Equipment Technologies, Inc.*... 151,200
10,400 Oak Industries, Inc.*................... 1,103,700
8,500 Thomas Nelson, Inc...................... 78,625
33,750 Valassis Communications, Inc.*.......... 1,425,938
------------------------------------------------------
Total Media............................. 3,074,613
======================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 23
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
===================================================================
Metals-Diversified (0.1%)
- -------------------------
12,400 RTI International Metals, Inc.*........... $93,000
----------------------------------------------------
Total Metals-Diversified.................. 93,000
====================================================
Non-Durables & Entertainment (3.1%)
- -----------------------------------
16,300 Applebee's International, Inc............. 480,850
10,200 A.T. Cross Company*....................... 45,900
11,000 Catalina Marketing Corporation*........... 1,273,250
16,250 CEC Entertainment, Inc.*.................. 461,094
12,050 Cheesecake Factory, Inc.*................. 421,750
31,170 CKE Restaurants, Inc...................... 183,124
17,518 Consolidated Products, Inc.*.............. 177,365
5,900 CPI Corporation........................... 133,119
9,400 Gibson Greetings, Inc.*................... 84,306
6,000 Huffy Corporation......................... 31,500
12,000 IHOP Corporation*......................... 200,250
22,900 Jack in the Box, Inc.*.................... 473,744
13,400 Luby's, Inc............................... 152,425
17,900 Marcus Corporation........................ 240,531
22,751 Midway Games, Inc.*....................... 544,602
7,200 Panera Bread Company*..................... 55,800
23,150 Regis Corporation......................... 436,956
18,600 Ruby Tuesday, Inc......................... 338,287
12,300 Russ Berrie and Company, Inc.............. 322,875
21,600 Ryan's Family Steak Houses, Inc.*......... 183,600
11,250 Sonic Corporation*........................ 320,625
7,800 Taco Cabana, Inc.*........................ 63,375
13,700 TCBY Enterprises, Inc..................... 52,231
14,200 Triarc Companies, Inc.*................... 260,925
----------------------------------------------------
Total Non-Durables & Entertainment........ 6,938,484
====================================================
Non-Ferrous Metals (1.0%)
- -------------------------
8,400 A. M. Castle & Company.................... 98,700
9,800 Brush Wellman, Inc........................ 164,762
17,400 Coeur d' Alene Mines Corporation*......... 59,813
8,600 Commercial Metals Company................. 291,863
9,900 IMCO Recycling, Inc....................... 124,987
21,000 Mueller Industries, Inc.*................. 761,250
22,700 Stillwater Mining Company*................ 723,563
7,600 Wolverine Tube, Inc.*..................... 107,350
----------------------------------------------------
Total Non-Ferrous Metals.................. 2,332,288
====================================================
Oil & Gas (2.2%)
- ----------------
9,100 Atwood Oceanics, Inc.*.................... $351,487
19,500 Barrett Resources Corporation*............ 574,031
17,700 Benton Oil and Gas Company*............... 34,294
9,300 Cal Dive International, Inc.*............. 308,063
29,200 Cross Timbers Oil Company................. 264,625
10,300 Dril-Quip, Inc.*.......................... 312,863
23,804 Friede Goldman Halter, Inc.*.............. 165,140
11,200 HS Resources, Inc.*....................... 193,200
24,900 Newfield Exploration Company*............. 666,075
24,100 Pogo Producing Company.................... 494,050
36,200 Pride International, Inc.*................ 529,425
12,700 Remington Oil & Gas Corporation*.......... 49,212
6,600 St. Mary Land & Exploration Company....... 163,350
26,500 Tuboscope, Inc.*.......................... 420,688
37,300 Vintage Petroleum, Inc.................... 449,931
----------------------------------------------------
Total Oil & Gas........................... 4,976,434
====================================================
Paper & Forest Products (0.5%)
- ------------------------------
21,100 Buckeye Technologies, Inc.*............... 313,862
15,300 Caraustar Industries, Inc................. 367,200
9,300 Lydall, Inc.*............................. 61,613
8,900 Pope & Talbot, Inc........................ 142,400
12,100 Universal Forest Products, Inc............ 178,475
----------------------------------------------------
Total Paper & Forest Products............. 1,063,550
====================================================
Pharmaceuticals (7.0%)
- ----------------------
12,300 ADAC Laboratories*........................ 132,225
12,700 Advance Paradigm, Inc.*................... 273,844
33,900 Advanced Tissue Sciences, Inc.*........... 84,750
26,700 Alliance Pharmaceutical Corporation*...... 196,913
17,700 Alpharma, Inc............................. 544,275
13,700 Barr Laboratories, Inc.*.................. 429,838
20,200 Bindley Western Industries, Inc........... 304,263
31,700 Bio-Technology General Corporation*....... 483,425
13,800 Biomatrix, Inc.*.......................... 265,650
19,400 Cephalon, Inc.*........................... 670,513
8,400 Cooper Companies, Inc..................... 253,050
15,100 COR Therapeutics, Inc.*................... 405,813
35,400 Coventry Health Care, Inc.*............... 238,950
6,000 Curative Health Services, Inc.*........... 46,500
14,800 Cygnus, Inc.*............................. 270,100
The accompanying notes to the financial statements are an integral part of this
schedule.
---------------------------------------------------------------------------
24 Small Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
==========================================================================
Pharmaceuticals--continued
- --------------------------
8,200 Diagnostic Products Corporation................. $200,900
15,000 Enzo Biochem, Inc.*............................. 675,938
9,100 Hologic, Inc.*.................................. 52,325
21,900 IDEXX Laboratories, Inc.*....................... 353,138
17,100 Incyte Pharmaceuticals, Inc.*................... 1,026,000
17,900 Invacare Corporation............................ 359,119
25,950 Jones Pharma, Inc............................... 1,127,203
15,000 Laser Vision Centers, Inc.*..................... 158,438
23,400 Liposome Company, Inc.*......................... 285,553
19,000 Magellan Health Services, Inc.*................. 119,938
17,300 Medicis Pharmaceutical Corporation*............. 736,331
10,200 Nature's Sunshine Products, Inc................. 81,600
40,100 NBTY, Inc.*..................................... 463,656
12,200 NCS HealthCare, Inc.*........................... 29,356
19,600 North American Vaccine, Inc.*................... 88,200
12,900 Noven Pharmaceuticals, Inc.*.................... 233,813
18,200 Organogenesis, Inc.*............................ 158,113
28,800 Orthodontic Centers of America, Inc.*........... 343,800
8,500 Osteotech, Inc.*................................ 113,687
19,600 Owens & Minor, Inc.............................. 175,175
15,100 PAREXEL International Corporation*.............. 178,369
20,250 Patterson Dental Company*....................... 863,156
9,300 Pediatrix Medical Group, Inc.*.................. 65,100
14,700 Pharmaceutical Product Development, Inc.*....... 174,563
18,700 Regeneron Pharmaceuticals, Inc.*................ 238,425
26,750 Renal Care Group, Inc.*......................... 625,281
17,800 Respironics, Inc.*.............................. 141,842
16,100 Sierra Health Services, Inc.*................... 107,669
14,900 Sola International, Inc.*....................... 206,738
5,700 Spacelabs Medical, Inc.*........................ 105,806
28,000 Summit Technology, Inc.*........................ 327,250
13,300 Sunrise Medical, Inc.*.......................... 82,294
7,100 Syncor International Corporation*............... 206,787
18,400 Universal Health Services, Inc. Class B*........ 662,400
15,400 Vertex Pharmaceuticals, Inc.*................... 539,000
-----------------------------------------------------------
Total Pharmaceuticals........................... 15,907,072
===========================================================
Producers Goods (4.7%)
- ----------------------
12,500 Applied Industrial Technologies, Inc............ 207,813
23,395 Applied Power, Inc.............................. 859,766
21,800 AptarGroup, Inc................................. 547,725
Shares Common Stocks (99.4%) Market Value
- --------------------------------------------------------------------------
11,400 Astec Industries, Inc.*......................... $214,462
21,500 Baldor Electric Company......................... 389,688
11,400 Barnes Group, Inc............................... 185,963
4,200 Butler Manufacturing Company.................... 93,713
14,400 CLARCOR, Inc.................................... 259,200
24,800 Cognex Corporation*............................. 967,200
21,500 Fedders Corporation............................. 118,250
12,200 Graco, Inc...................................... 437,675
13,400 Helix Technology Corporation.................... 600,487
14,000 Hughes Supply, Inc.............................. 301,875
9,700 Ionics, Inc.*................................... 272,812
26,500 JLG Industries, Inc............................. 422,344
28,700 Lattice Semiconductor Corporation*.............. 1,352,487
15,600 Manitowoc Company, Inc.......................... 530,400
9,300 Material Sciences Corporation*.................. 94,744
13,900 Oceaneering International, Inc.*................ 207,631
8,500 Quanex Corporation.............................. 216,750
12,600 Regal-Beloit Corporation........................ 259,875
6,600 Robbins & Myers, Inc............................ 149,325
18,200 Roper Industries, Inc........................... 688,187
10,700 Scott Technologies, Inc.*....................... 201,962
7,600 SPS Technologies, Inc.*......................... 242,725
7,700 Standex International Corporation............... 161,219
12,800 Ultratech Stepper, Inc.*........................ 206,400
14,000 Valmont Industries, Inc......................... 224,875
17,450 Watsco, Inc..................................... 201,766
12,700 X-Rite, Inc..................................... 79,375
-----------------------------------------------------------
Total Producers Goods........................... 10,696,694
===========================================================
Real Property (0.1%)
- --------------------
15,600 Hollywood Park, Inc.*........................... 350,025
-----------------------------------------------------------
Total Real Property............................. 350,025
===========================================================
Retail Stores (3.5%)
- --------------------
15,100 99 Cents Only Stores*........................... 577,575
18,900 AnnTaylor Stores Corporation*................... 650,869
21,700 Bombay Company, Inc.*........................... 97,650
10,700 Books-A-Million, Inc.*.......................... 88,944
31,600 Casey's General Stores, Inc..................... 329,825
15,800 Cato Corporation................................ 199,475
16,100 Copart, Inc.*................................... 700,350
12,200 Cost Plus, Inc.*................................ 434,625
The accompanying notes to the financial statements are an integral part of this
schedule.
- -----------------------------------------------------------------------------
December 31, 1999 25
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
=============================================================================
Retail Stores--continued
- ------------------------
3,300 DAMARK International, Inc.*....................... $51,975
12,500 Footstar, Inc.*................................... 381,250
7,500 Gottschalks, Inc.*................................ 55,781
11,400 Hancock Fabrics, Inc.............................. 35,625
15,550 Insight Enterprises, Inc.*........................ 631,719
5,400 Lillian Vernon Corporation........................ 60,075
17,400 Michaels Stores, Inc.*............................ 495,900
18,650 Pacific Sunwear of California, Inc.*.............. 594,469
57,900 Pier 1 Imports, Inc............................... 369,112
18,200 ShopKo Stores, Inc.*.............................. 418,600
26,600 Stein Mart, Inc.*................................. 151,287
21,400 United Stationers, Inc.*.......................... 611,238
8,200 Wet Seal, Inc.*................................... 100,450
21,100 Zale Corporation*................................. 1,020,712
--------------------------------------------------------------
Total Retail Stores............................... 8,057,506
==============================================================
Steel (0.4%)
- ------------
5,300 Amcast Industrial Corporation..................... 86,787
17,800 Birmingham Steel Corporation...................... 94,562
15,100 Intermet Corporation.............................. 175,538
16,600 Reliance Steel & Aluminum Company................. 389,063
6,600 Steel Technologies, Inc........................... 95,700
8,600 WHX Corporation*.................................. 77,400
--------------------------------------------------------------
Total Steel....................................... 919,050
==============================================================
Technology (6.7%)
- -----------------
11,700 Alpha Industries, Inc.*........................... 670,556
7,700 Cybex Computer Products Corporation*.............. 311,850
11,400 DBT Online, Inc.*................................. 277,875
23,500 Dendrite International, Inc.*..................... 796,062
9,550 FactSet Research Systems, Inc..................... 760,419
9,400 Great Plains Software, Inc.*...................... 702,650
14,800 HNC Software, Inc.*............................... 1,565,100
23,000 Mercury Interactive Corporation*.................. 2,482,563
9,900 MICROS Systems, Inc.*............................. 732,600
30,000 National Instruments Corporation*................. 1,147,500
14,300 Pinnacle Systems, Inc.*........................... 581,831
12,800 Project Software & Development, Inc.*............. 710,400
7,100 Proxim, Inc.*..................................... 781,000
17,400 Remedy Corporation*............................... 824,325
23,100 RSA Security, Inc.*............................... 1,790,250
11,050 THQ, Inc.*........................................ $256,222
17,900 Verity, Inc.*..................................... 761,869
--------------------------------------------------------------
Total Technology.................................. 15,153,072
==============================================================
Telecommunications (0.8%)
- -------------------------
11,500 Black Box Corporation*............................ 770,500
8,600 Concord Communications, Inc.*..................... 381,625
12,100 Powerwave Technologies, Inc.*..................... 706,337
--------------------------------------------------------------
Total............................................. 1,858,462
==============================================================
Telephone (1.2%)
- ----------------
29,200 Aspect Communications, Inc.*...................... 1,142,450
31,900 Brightpoint, Inc.*................................ 418,688
30,300 General Communication, Inc.*...................... 132,562
15,500 Inter-Tel, Inc.................................... 387,500
38,700 TALK.com, Inc.*................................... 686,925
--------------------------------------------------------------
Total Telephone................................... 2,768,125
==============================================================
Tires & Rubber (0.2%)
- ---------------------
34,400 Safeskin Corporation*............................. 417,100
--------------------------------------------------------------
Total Tires & Rubber.............................. 417,100
==============================================================
Tobacco (0.1%)
- --------------
9,400 Schweitzer-Mauduit International, Inc............. 126,312
--------------------------------------------------------------
Total Tobacco..................................... 126,312
==============================================================
Travel & Recreation (0.7%)
- --------------------------
7,200 Anchor Gaming*.................................... 312,750
26,100 Aztar Corporation*................................ 283,837
22,000 Central Parking Corporation....................... 420,750
10,700 K2, Inc........................................... 81,588
19,200 Players International, Inc.*...................... 157,799
29,200 Prime Hospitality Corporation*.................... 257,325
19,100 Sports Authority, Inc.*........................... 38,200
--------------------------------------------------------------
Total Travel & Recreation......................... 1,552,249
==============================================================
Transportation (2.2%)
- ---------------------
19,200 American Freightways Corporation*................. 310,800
11,800 Arkansas Best Corporation*........................ 141,600
30,300 Expeditors International of Washington, Inc....... 1,327,519
21,900 Fritz Companies, Inc.*............................ 229,950
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
26 Small Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Small Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.4%) Market Value
===================================================================
Transportation-continued
- ------------------------
9,700 Frozen Food Express Industries, Inc.... $37,588
17,900 Heartland Express, Inc.*............... 281,925
5,700 Landstar System, Inc.*................. 244,031
7,400 M.S. Carriers, Inc.*................... 176,675
5,500 RailTex, Inc.*......................... 98,312
34,350 Rollins Truck Leasing Corporation...... 410,053
15,900 USFreightways Corporation.............. 761,213
13,700 Wabash National Corporation............ 205,500
28,375 Werner Enterprises, Inc................ 399,023
14,900 Yellow Corporation*.................... 250,506
----------------------------------------------------
Total Transportation................... 4,874,695
====================================================
----------------------------------------------------
Total Common Stocks
(cost basis $224,989,973).............. $224,610,950
====================================================
Principal Short-Term Interest Maturity Market
Amount Investments (1.0%) Rate(1) Date Value
===================================================================
$ 286,000 Countrywide Home
Loans, Inc....... 6.180% 1/4/00 $285,853
2,035,000 IBM Credit
Corporation...... 4.000 1/4/00 2,034,322
----------------------------------------------------
Total Short-Term Investments
(amortized cost basis $2,320,175)...... 2,320,175
====================================================
----------------------------------------------------
Total Investments (100.4%)
(amortized cost basis $227,310,148).... 226,931,125
====================================================
----------------------------------------------------
Other Assets,
Less Liabilities (-0.4%)............... (979,198)
====================================================
----------------------------------------------------
Net Assets (100.0%).................... $225,951,927
====================================================
* Non-income producing security
(1) The interest rate shown reflects the discount rate at the date of
purchase.
See page 115 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
- -----------------------------------------------------------------------------
December 31, 1999 27
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product International Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Investment Objective:
--------------------
The Portfolio strives for long-term capital growth by investing
primarily in a foreign stocks.
<TABLE>
<CAPTION>
Market
Shares Common Stocks (93.0%) Industry Value
==============================================================================================
<S> <C> <C> <C>
Australia (0.7%)
- ----------------
42,600 Australia & New Zealand Banking Group,
Ltd.................................. Banking & Finance...... $308,873
--------------------------------------------------------------------------
Total Australia................................................. 308,873
==========================================================================
Brazil (0.6%)
- -------------
10,115 Embratel Participacoes SA............ Technology...... 275,634
--------------------------------------------------------------------------
Total Brazil.................................................... 275,634
==========================================================================
Canada (3.1%)
- -------------
10,100 BCE, Inc............................. Technology...... 912,709
9,600 Seagram Company, Ltd................. Food & Beverage...... 427,975
--------------------------------------------------------------------------
Total Canada.................................................... 1,340,684
==========================================================================
Finland (0.1%)
- --------------
141 Comptel plc*......................... Technology...... 9,870
--------------------------------------------------------------------------
Total Finland................................................... 9,870
==========================================================================
France (6.7%)
- -------------
2,780 Carrefour SA......................... Retail Stores...... 510,191
2,648 Equant NV*........................... Technology...... 299,117
13,289 Rhoia SA............................. Drugs & Medicine...... 298,893
4,795 Suez Lyonnaise des Eaux.............. Construction...... 764,643
4,821 Valeo SA............................. Automotive...... 370,140
7,768 Vivendi.............................. Utilities...... 698,007
--------------------------------------------------------------------------
Total France.................................................... 2,940,991
==========================================================================
Germany (12.7%)
- ---------------
8,911 Aventis SA*.......................... Chemicals...... $510,870
20,396 Bayerische Motoren Werke AG.......... Transportation...... 622,490
1,188 Celanese AG*......................... Chemicals...... 21,906
7,165 Mannesmann AG........................ Machinery...... 1,726,437
19,717 Metallgesellshaft AG................. Basic Materials...... 393,273
9,061 Rhone-Poulenc SA*.................... Technology...... 524,025
1,348 SAP Aktiengesellschaft............... Business Services...... 818,095
5,150 Siemens AG........................... Consumer Products...... 655,558
6,807 Veba AG Diversified.................. Manufacturing...... 330,900
--------------------------------------------------------------------------
Total Germany................................................... 5,603,554
==========================================================================
Greece (0.3%)
- -------------
5,886 Hellenic Telecommunication Organization
SA................................... Technology...... 139,241
--------------------------------------------------------------------------
Total Greece.................................................... 139,241
==========================================================================
Hong Kong (2.8%)
- ----------------
116,000 China Telecom, Ltd.*................. Technology...... 725,233
35,000 Hutchinson Whampoa, Ltd.............. Holding Company...... 508,780
--------------------------------------------------------------------------
Total Hong Kong................................................. 1,234,013
==========================================================================
Hungary (0.4%)
- --------------
2,760 Gedeon Richter Rt.................... Drugs & Medicine...... 180,364
--------------------------------------------------------------------------
Total Hungary................................................... 180,364
==========================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
28 International Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product International Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Market
Shares Common Stocks (93.0%) Industry Value
==================================================================================================================
<S> <C> <C> <C>
Italy (6.1%)
- ------------
179,965 Banca Nazionale del Lavoro*..................... Banking & Finance........... $ 597,058
9,530 Banca Popolare di Bergamo Credito Varesino
SpA............................................. Banking & Finance........... 219,313
69,939 Mediaset SpA.................................... Media........... 1,082,348
38,949 Telecom Italia SpA.............................. Technology........... 432,940
73,800 Unicredito Italiano SpA......................... Banking & Finance........... 360,974
--------------------------------------------------------------------------------------------
Total Italy...................................................................... 2,692,633
============================================================================================
Japan (23.7%)
- -------------
68,000 Fuji Bank, Ltd.................................. Banking & Finance........... 659,704
16,000 Fujitsu, Ltd.................................... Technology........... 728,445
16,000 Kao Corporation................................. Retail Stores........... 455,669
900 Matsushita Communication Industrial Company,
Ltd............................................. Technology........... 237,409
4,000 Murata Manufacturing Company, Ltd............... Electronics........... 937,912
45,000 Nikko Securities Company, Ltd................... Banking & Finance........... 568,463
35 Nippon Telegraph & Telephone Corporation........ Technology........... 598,407
9,000 Nomura Securities Company, Ltd.................. Banking & Finance........... 162,230
52 NTT Mobile Communication Network, Inc........... Technology........... 1,996,581
15,000 Pioneer Corporation............................. Technology........... 395,682
2,600 Rohm Company, Ltd............................... Electronics........... 1,066,875
89,000 Sakura Bank, Ltd................................ Banking & Finance........... 514,757
20,000 Sanwa Bank, Ltd................................. Banking & Finance........... 242,880
1,080 Shohkoh Fund & Company, Ltd..................... Banking & Finance........... 426,809
300 Softbank Corporation............................ Technology........... 286,649
12,000 Takeda Chemical Industries, Ltd................. Health Care........... 592,057
2,600 Takefuji Corporation............................ Banking & Finance........... 324,889
7,000 Yamanouchi Pharmaceutical Company, Ltd.......... Health Care........... 244,150
--------------------------------------------------------------------------------------------
Total Japan...................................................................... 10,439,568
============================================================================================
Netherlands (12.5%)
- -------------------
6,485 Gucci Group NV.................................. Retail Stores........... 742,533
9,329 ING Groep NV.................................... Banking & Finance........... 560,469
4,796 KPNQwest NV*.................................... Technology........... 317,747
2,717 Laurus NV....................................... Retail Stores........... 48,746
8,515 Royal Dutch Petroleum Company................... Oil-International........... $ 519,332
22,319 Royal Kpn NV.................................... Technology........... 2,167,697
9,775 Vendex Kbb NV.................................. Retail Stores........... 258,655
17,220 Verenigde Nederlands Uitgeversbedrijven
Verenigd Bezit.................................. Publishing/Printing........... 900,611
--------------------------------------------------------------------------------------------
Total Netherlands................................................................ 5,515,790
============================================================================================
New Zealand (0.8%)
- ------------------
77,112 Telecom Corporation of New Zealand, Ltd......... Technology........... 361,934
--------------------------------------------------------------------------------------------
Total New Zealand................................................................ 361,934
============================================================================================
Philippines (0.1%)
- ------------------
7,106 Metropolitan Bank &
Trust Company................................... Banking & Finance........... 51,135
--------------------------------------------------------------------------------------------
Total Philippines................................................................ 51,135
============================================================================================
Portugal (0.1%)
- ---------------
296 PT Mulitmedia - Servicos de Telecomunicavoese
Multimedia SGPS SA*............................. Technology........... 16,754
--------------------------------------------------------------------------------------------
Total Portugal................................................................... 16,754
============================================================================================
Singapore (1.1%)
- ----------------
28,000 DBS Group Holdings, Ltd......................... Real Estate........... 458,823
--------------------------------------------------------------------------------------------
Total Singapore.................................................................. 458,823
============================================================================================
South Korea (1.3%)
- ------------------
5,500 Korea Telecom Corporation....................... Technology........... 411,125
4,016 SK Telecom Company, Ltd......................... Technology........... 154,114
--------------------------------------------------------------------------------------------
Total South Korea................................................................ 565,239
============================================================================================
Spain (2.1%)
- ------------
3,208 Banco Popular Espanol SA........................ Banking & Finance............ 208,197
136 Jazztel plc ADR*................................ Technology............ 8,857
28,073 Telefonica SA*.................................. Technology............ 697,827
106 Terra Networks SA*.............................. Technology............ 5,763
--------------------------------------------------------------------------------------------
Total Spain...................................................................... 920,644
============================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- -----------------------------------------------------------------------------
December 31,1999 29
<PAGE>
AAL Variable Product International Stock Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Market
Shares Common Stocks (93.0%) Industry Value
======================================================================================================================
<S> <C> <C> <C>
Sweden (2.9%)
- -------------
17,257 Hennes & Mauritz AB........................... Retail Stores..... $575,705
11,052 Telefonaktiebolaget LM Ericsson............... Technology..... 707,649
-----------------------------------------------------------------------------------------
Total Sweden................................................................ 1,283,354
=========================================================================================
Switzerland (2.2%)
- ------------------
986 Clariant AG................................... Chemicals..... 467,529
342 Novartis AG................................... Health Care..... 499,529
-----------------------------------------------------------------------------------------
Total Switzerland........................................................... 967,058
=========================================================================================
United Kingdom (12.7%)
- ----------------------
11,195 AstraZeneca plc............................... Medical Supplies..... 463,316
150,303 British Aerospace plc......................... Aerospace/Defense..... 991,927
59,697 British American Tobacco plc.................. Holding Company..... 333,120
69,277 Diageo plc.................................... Consumer Products..... 555,444
23,195 Glaxo Wellcome plc............................ Drugs & Medicine..... 655,665
29,542 Imperial Chemical Industries plc.............. Chemicals..... 312,322
216 NDS Group plc ADR*............................ Technology..... 6,588
27,330 Railtrack Group plc........................... Holding Company..... 447,058
89,320 Reed International plc........................ Holding Company..... 664,322
64,623 Somerfield plc................................ Retail Stores..... 93,211
53,182 Telewest Commuications plc*................... Technology..... 282,837
163,245 Vodafone AirTouch plc......................... Technology..... 803,071
-----------------------------------------------------------------------------------------
Total United Kingdom........................................................ 5,608,881
=========================================================================================
-----------------------------------------------------------------------------------------
Total Common Stocks
(cost basis $30,345,342).................................................... $40,915,037
=========================================================================================
Principal Short-Term Interest Maturity Market
Amount Investments (27%) Rate (1) Date Value
======================================================================================================================
<S> <C> <C> <C> <C>
$1,200,000 American Home Products Corporation (4)........ 4.000% 1/5/00 $1,199,467
-----------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $1,199,467)........................................... 1,199,467
=========================================================================================
-----------------------------------------------------------------------------------------
Total Investments (95.7%)
(amortized cost basis $31,544,809).......................................... 42,114,504
=========================================================================================
-----------------------------------------------------------------------------------------
Other Assets, Less Liabilities (4.3%)....................................... 1,902,813
=========================================================================================
-----------------------------------------------------------------------------------------
Net Assets (100.0%)......................................................... $44,017,317
=========================================================================================
</TABLE>
* Non-income producing security
(1) The interest rate reflects the discount rate at the date of purchase.
(4) 4(2) Commercial Paper
See page 115 for a complete discussion of Investment Terms.
<TABLE>
<CAPTION>
% of Net Assets 12/31/99
======================================================================================================================
<S> <C>
AAL International Stock Portfolio Sector Allocations
- ----------------------------------------------------
Technology....................................................................... 30.7
Banking & Finance................................................................ 11.8
Cash & Equivalents............................................................... 7.0
Retail Stores.................................................................... 6.1
Electronics...................................................................... 4.5
Holding Company.................................................................. 4.4
Machinery........................................................................ 3.9
Chemicals........................................................................ 3.0
Health Care...................................................................... 3.0
Consumer Products................................................................ 2.8
Drugs & Medicine................................................................. 2.6
Media............................................................................ 2.5
Aerospace/Defense................................................................ 2.3
Publishing/Printing.............................................................. 2.0
Business Services................................................................ 1.9
Construction..................................................................... 1.7
Utilities........................................................................ 1.6
Transportation................................................................... 1.4
Oil-International................................................................ 1.2
Medical Supplies................................................................. 1.1
Food & Beverage.................................................................. 1.0
Real Estate...................................................................... 1.0
Basic Materials.................................................................. 0.9
Automotive....................................................................... 0.8
Diversified Manufacturing........................................................ 0.8
-----------------------------------------------------------------------------------------
Total............................................................................ 100.0%
=========================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
-----------------------------------------------------------------------------
30 International Stock Portfolio Schedule of Investments
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Large Company
Stock Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
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 in the index.
Shares Common Stocks (99.9%) Market Value
======================================================================
Aerospace (1.1%)
- ----------------
7,800 BFGoodrich Company..................... $214,500
66,160 Boeing Company......................... 2,749,775
14,200 General Dynamics Corporation........... 749,050
28,000 Lockheed Martin Corporation............ 612,500
4,900 Northrop Grumman Corporation........... 264,906
23,900 Raytheon Company Class B............... 634,844
13,400 Rockwell International Corporation..... 641,525
10,600 Textron, Inc........................... 812,888
8,600 TRW, Inc............................... 446,662
34,000 United Technologies Corporation........ 2,210,000
----------------------------------------------------
Total Aerospace........................ 9,336,650
====================================================
Air Transportation (0.3%)
- -------------------------
10,500 AMR Corporation*....................... 703,500
9,400 Delta Air Lines, Inc................... 468,237
21,060 FDX Corporation*....................... 862,144
35,700 Southwest Airlines Company............. 577,894
5,000 US Airways Group, Inc.*................ 160,312
----------------------------------------------------
Total Air Transportation............... 2,772,087
====================================================
Apparel (0.2%)
- --------------
4,100 Liz Claiborne, Inc..................... 154,262
19,800 NIKE, Inc., Class B.................... 981,338
3,900 Reebok International, Ltd.*............ 31,931
2,300 Russell Corporation.................... $38,525
1,200 Springs Industries, Inc................ 47,925
8,300 VF Corporation......................... 249,000
----------------------------------------------------
Total Apparel.......................... 1,502,981
====================================================
Auto Manufacturers (1.2%)
- -------------------------
2,900 Cummins Engine Company, Inc............ 140,106
11,566 Dana Corporation....................... 346,257
39,994 Delphi Automotive Systems Corporation.. 629,906
5,300 Eaton Corporation...................... 384,913
2,300 Fleetwood Enterprises, Inc............. 47,438
85,500 Ford Motor Company..................... 4,568,906
45,400 General Motors Corporation............. 3,300,013
12,500 Genuine Parts Company.................. 310,156
6,200 ITT Industries, Inc.................... 207,312
4,500 Navistar International Corporation*.... 213,187
5,500 PACCAR, Inc............................ 243,719
----------------------------------------------------
Total Auto Manufacturers............... 10,391,913
====================================================
Banking (6.9%)
- --------------
27,650 AmSouth Bancorporation................. 533,991
51,500 Associates First Capital Corporation... 1,413,031
120,889 Bank of America Corporation............ 6,067,117
52,100 Bank of New York Company, Inc.......... 2,084,000
81,153 Bank One Corporation................... 2,601,968
The accompanying notes to the financial statements are an integral part of
this schedule.
- --------------------------------------------------------------------------
December 31, 1999 31
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.9%) Market Value
=============================================================================
Banking-continued
- -----------------
23,400 BB&T Corporation............................. $640,575
58,512 Chase Manhattan Corporation.................. 4,545,651
238,812 Citigroup, Inc............................... 13,268,992
11,050 Comerica, Inc................................ 515,897
8,000 Countrywide Credit Industries, Inc........... 202,000
21,875 Fifth Third Bancorp.......................... 1,605,078
69,932 First Union Corporation...................... 2,294,644
69,364 Firstar Corporation.......................... 1,465,314
64,813 Fleet Boston Corporation..................... 2,256,303
17,800 Franklin Resources, Inc...................... 570,713
16,192 Huntington Bancshares, Inc................... 386,584
12,300 J.P. Morgan & Company, Inc................... 1,557,488
31,600 Keycorp...................................... 699,150
36,000 Mellon Financial Corporation................. 1,226,250
43,600 National City Corporation.................... 1,032,775
15,700 Northern Trust Corporation................... 832,100
8,300 Old Kent Financial Corporation............... 293,613
20,800 PNC Bank Corporation......................... 925,600
10,150 Providian Financial Corporation.............. 924,284
15,400 Regions Financial Corporation................ 386,925
7,400 Republic New York Corporation................ 532,800
11,800 SouthTrust Corporation....................... 446,187
12,300 Summit Bancorp............................... 376,686
22,700 SunTrust Banks, Inc.......................... 1,562,044
19,800 Synovus Financial Corporation................ 393,525
9,900 Union Planters Corporation................... 390,431
51,497 U.S. Bancorp................................. 1,226,272
14,400 Wachovia Corporation......................... 979,200
40,829 Washington Mutual, Inc....................... 1,061,554
116,300 Wells Fargo & Company........................ 4,702,881
-----------------------------------------------------------
Total Banking................................ 60,001,623
===========================================================
Brokerage (1.3%)
- ----------------
8,431 Bear Stearns Companies, Inc.................. 360,425
58,050 Charles Schwab Corporation................... 2,227,669
8,600 Lehman Brothers Holdings, Inc................ 728,312
26,300 Merrill Lynch & Company, Inc................. 2,196,050
39,525 Morgan Stanley Dean Witter & Company......... 5,642,194
10,100 Paine Webber Group, Inc...................... 392,006
-----------------------------------------------------------
Total Brokerage.............................. 11,546,656
===========================================================
Building Products (0.3%)
- ------------------------
2,800 Armstrong World Industries, Inc.............. $93,450
4,100 Centex Corporation........................... 101,219
4,650 Crane Company................................ 92,419
5,300 Fluor Corporation............................ 243,138
3,300 Kaufman and Broad Home Corporation........... 79,819
31,600 Masco Corporation............................ 801,850
3,800 Owens Corning................................ 73,388
3,000 Pulte Corporation............................ 67,500
11,700 Sherwin-Williams Company..................... 245,700
6,300 Stanley Works................................ 189,788
7,000 Vulcan Materials Company..................... 279,562
-----------------------------------------------------------
Total Building Products...................... 2,267,833
===========================================================
Business Machines (14.2%)
- -------------------------
24,400 3Com Corporation*............................ 1,146,800
11,400 Apple Computer, Inc.*........................ 1,172,062
4,300 Autodesk, Inc................................ 145,125
12,700 Cabletron Systems, Inc.*..................... 330,200
10,200 Ceridian Corporation*........................ 219,938
231,800 Cisco Systems, Inc.*......................... 24,831,575
120,393 Compaq Computers Corporation................. 3,258,136
5,100 Comverse Technology, Inc.*................... 738,225
180,000 Dell Computer Corporation*................... 9,180,000
22,500 Gateway, Inc.*............................... 1,621,406
10,500 IKON Office Solutions, Inc................... 71,531
127,800 International Business Machines Corporation.. 13,802,400
365,600 Microsoft Corporation*....................... 42,683,800
23,500 Novell, Inc.*................................ 938,531
100,887 Oracle Corporation*.......................... 11,305,649
19,000 Parametric Technology Corporation*........... 514,188
18,700 Pitney Bowes, Inc............................ 903,444
14,700 Seagate Technology, Inc.*.................... 684,469
13,000 Silicon Graphics, Inc.*...................... 127,562
110,700 Sun Microsystems, Inc.*...................... 8,572,331
21,900 Unisys Corporation*.......................... 699,431
47,000 Xerox Corporation............................ 1,066,313
-----------------------------------------------------------
Total Business Machines...................... 124,013,116
===========================================================
Business Services (3.3%)
- ------------------------
158,400 America Online, Inc.*........................ 11,949,300
44,200 Automatic Data Processing, Inc............... 2,381,275
The accompanying notes to the financial statements are an integral part of
this schedule.
-----------------------------------------------------------------------------
32 Large Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.9%) Market Value
=============================================================================
Business Services-continued
- ---------------------------
6,400 Citrix Systems, Inc.*........................ $787,200
38,212 Computer Associates International, Inc....... 2,672,452
11,800 Computer Sciences Corporation*............... 1,116,575
25,300 Compuware Corporation*....................... 942,425
5,200 Deluxe Corporation........................... 142,675
11,300 Dun & Bradstreet Corporation................. 333,350
9,100 Ecolab, Inc.................................. 356,038
29,600 First Data Corporation....................... 1,459,650
12,400 General Instrument Corporation*.............. 1,054,000
6,900 H&R Block, Inc............................... 301,875
19,800 Interpublic Group of Companies, Inc.......... 1,142,213
19,942 Mckesson HBOC, Inc........................... 449,941
2,800 National Service Industries, Inc............. 82,600
12,600 Omnicom Group, Inc........................... 1,260,000
17,400 Paychex, Inc................................. 696,000
1,900 Shared Medical Systems Corporation........... 96,781
11,400 State Street Corporation..................... 832,912
43,799 Waste Management Inc......................... 752,795
-----------------------------------------------------------
Total Business Services...................... 28,810,057
===========================================================
Chemicals (1.9%)
- ----------------
16,200 Air Products & Chemicals, Inc................ 543,713
44,307 Conoco, Inc., Class B........................ 1,102,137
15,600 Dow Chemical Company......................... 2,084,550
5,500 Eastman Chemical Company..................... 262,281
74,011 E.I. du Pont de Nemours and Company.......... 4,875,475
4,000 Great Lakes Chemical Corporation............. 152,750
7,500 Hercules, Inc................................ 209,062
28,500 Minnesota Mining and Manufacturing
Company...................................... 2,789,438
44,900 Monsanto Company............................. 1,599,562
12,400 PPG Industries, Inc.......................... 775,775
11,200 Praxair, Inc................................. 563,500
15,413 Rohm and Haas Company........................ 627,116
5,876 Sealed Air Corporation*...................... 304,450
7,100 Sigma-Aldrich Corporation.................... 213,444
9,500 Union Carbide Corporation.................... 634,125
5,000 W.R. Grace & Company*........................ 69,375
-----------------------------------------------------------
Total Chemicals.............................. 16,806,753
===========================================================
Consumer Durables (0.2 %)
- -------------------------
6,100 Black & Decker Corporation................... $318,725
13,900 Leggett & Platt, Inc......................... 297,981
5,900 Maytag Corporation........................... 283,200
19,973 Newell Rubbermaid, Inc....................... 579,217
12,100 Pactiv Corporation*.......................... 128,563
4,000 Tupperware Corporation....................... 67,750
5,300 Whirlpool Corporation........................ 344,831
-----------------------------------------------------------
Total Consumer Durables...................... 2,020,267
===========================================================
Containers (0.1%)
- -----------------
2,100 Ball Corporation............................. 82,688
3,700 Bemis Company, Inc........................... 129,038
8,600 Crown Cork & Seal Company, Inc............... 192,425
10,600 Owens-Illinois, Inc.*........................ 265,662
-----------------------------------------------------------
Total Containers............................. 669,813
===========================================================
Cosmetics (2.0%)
- ----------------
3,900 Alberto-Culver Company, Class B.............. 100,669
17,100 Avon Products, Inc........................... 564,300
16,700 Clorox Company............................... 841,263
41,300 Colgate-Palmolive Company.................... 2,684,500
75,900 Gillette Company............................. 3,126,131
7,400 International Flavors and Fragrances, Inc.... 279,350
93,200 Procter & Gamble Company..................... 10,211,225
-----------------------------------------------------------
Total Cosmetics.............................. 17,807,438
===========================================================
Credit Cards (0.3%)
- -------------------
13,900 Capital One Financial Corporation............ 669,806
10,000 Equifax, Inc................................. 235,625
56,768 MBNA Corporation............................. 1,546,928
-----------------------------------------------------------
Total Credit Cards........................... 2,452,359
===========================================================
Electric Utilities (2.2%)
- -------------------------
14,700 AES Corporation*............................. 1,098,825
9,700 Ameren Corporation........................... 317,675
13,700 American Electric Power Company, Inc......... 440,113
11,300 Carolina Power & Light Company............... 343,944
15,000 Central and South West Corporation........... 300,000
11,200 Cinergy Corporation.......................... 270,200
8,200 CMS Energy Corporation....................... 255,738
The accompanying notes to the financial statements are an integral part
of this schedule.
- -----------------------------------------------------------------------------
December 31, 1999 33
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (99.9%) Market Value
======================================================================
Electric Utilities--continued
- -----------------------------
15,100 Coastal Corporation.................... $535,106
5,850 Columbia Energy Group.................. 370,013
15,600 Consolidated Edison, Inc............... 538,200
6,800 Consolidated Natural Gas Company....... 441,575
10,500 Constellation Energy Group, Inc........ 304,500
13,500 Dominion Resources, Inc................ 529,875
10,200 DTE Energy Company..................... 320,025
25,808 Duke Energy Corporation................ 1,293,626
24,500 Edison International................... 641,594
50,600 Enron Corporation...................... 2,245,375
17,400 Entergy Corporation.................... 448,050
16,500 FirstEnergy Corporation................ 374,344
6,900 Florida Progress Corporation........... 291,956
12,600 FPL Group, Inc......................... 539,438
8,700 GPU, Inc............................... 260,456
8,100 New Century Energies, Inc.............. 246,037
13,200 Niagara Mohawk Holdings, Inc.*......... 183,975
3,300 NICOR, Inc............................. 107,250
10,900 Northern States Power Company.......... 212,550
2,200 ONEOK, Inc............................. 55,275
13,100 PECO Energy Company.................... 455,225
2,500 Peoples Energy Corporation............. 83,750
27,200 PG&E Corporation....................... 557,600
6,000 Pinnacle West Capital Corporation...... 183,375
10,100 PP&L Resources, Inc.................... 231,037
15,400 Public Service Enterprise Group, Inc... 536,112
20,873 Reliant Energy, Inc.................... 477,470
16,966 Sempra Energy.......................... 294,784
47,600 Southern Company....................... 1,118,600
19,517 Texas Utilities Company................ 694,073
15,400 Unicom Corporation..................... 515,900
30,700 Williams Companies, Inc................ 938,269
-------------------------------------------------------
Total Electric Utilities............... 19,051,910
=======================================================
Electronics (7.2%)
- ------------------
8,600 Adobe Systems, Inc..................... 578,350
10,400 Advanced Micro Devices, Inc.*.......... 300,950
12,400 Analog Devices, Inc.*.................. 1,153,200
26,900 Applied Materials, Inc.*............... 3,407,894
72,093 EMC Corporation*....................... 7,876,160
72,200 Hewlett-Packard Company................ 8,226,288
236,700 Intel Corporation...................... $19,483,369
10,600 LSI Logic Corporation*................. 715,500
19,200 Micron Technology, Inc.*............... 1,492,800
11,200 Molex, Inc............................. 634,900
43,200 Motorola, Inc.......................... 6,361,200
12,100 National Semiconductor Corporation*.... 518,031
7,400 PE Corporation......................... 890,313
3,200 PerkinElmer, Inc....................... 133,400
5,600 Scientific-Atlanta, Inc................ 311,500
20,800 Solectron Corporation.................. 1,978,600
3,350 Tektronix, Inc......................... 130,231
28,500 Tellabs, Inc.*......................... 1,829,344
12,200 Teradyne, Inc.*........................ 805,200
56,900 Texas Instruments, Inc................. 5,512,187
11,200 Thermo Electron Corporation*........... 168,000
4,000 Thomas & Betts Corporation............. 127,500
-------------------------------------------------------
Total Electronics...................... 62,634,917
=======================================================
Energy (0.7%)
- -------------
23,300 Baker Hughes, Inc...................... 490,756
15,335 Burlington Resources, Inc.............. 507,013
2,000 Eastern Enterprises.................... 114,875
31,200 Halliburton Company.................... 1,255,800
4,200 McDermott International, Inc........... 38,063
26,000 Occidental Petroleum Corporation....... 562,250
39,000 Schlumberger, Ltd...................... 2,193,750
10,100 Tosco Corporation...................... 274,594
22,412 Transocean Sedco Forex, Inc............ 754,993
17,772 Union Pacific Resources Group Inc...... 226,593
-------------------------------------------------------
Total Energy........................... 6,418,687
=======================================================
Food & Beverages (1.6%)
- -----------------------
175,000 Coca-Cola Company...................... 10,193,750
30,100 Coca-Cola Enterprises, Inc............. 605,763
103,100 PepsiCo, Inc........................... 3,634,275
-------------------------------------------------------
Total Food & Beverages................. 14,433,788
=======================================================
Food Processors (1.5%)
- ----------------------
43,054 Archer Daniels Midland Company......... 524,721
19,700 Bestfoods.............................. 1,035,481
30,300 Campbell Soup Company.................. 1,172,231
34,800 ConAgra, Inc........................... 785,175
The accompanying notes to the financial statements are an integral part of
this schedule.
-----------------------------------------------------------------------------
34 Large Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.9%) Market Value
===========================================================================
<S> <C> <C>
Food Processors--continued
- --------------------------
21,500 General Mills, Inc....................... $768,625
9,800 Hershey Foods Corporation................ 465,500
25,300 H.J. Heinz Company....................... 1,007,256
28,700 Kellogg Company.......................... 884,319
23,100 Nabisco Group Holdings Corporation....... 245,438
9,500 Quaker Oats Company...................... 623,438
22,900 Ralston-Ralston Purina Group............. 638,337
64,300 Sara Lee Corporation..................... 1,418,619
9,800 SUPERVALU, Inc........................... 196,000
23,300 SYSCO Corporation........................ 921,806
40,471 Unilever NV.............................. 2,203,140
8,300 Wm. Wrigley Jr. Company.................. 688,381
---------------------------------------------------------
Total Food Processors.................... 13,578,467
=========================================================
Gold (0.1%)
- -----------
27,900 Barrick Gold Corporation................. 493,481
18,400 Homestake Mining Company................. 143,750
11,848 Newmont Mining Corporation............... 290,276
23,000 Placer Dome, Inc......................... 247,250
---------------------------------------------------------
Total Gold............................... 1,174,757
=========================================================
Health Care (0.3%)
- ------------------
27,300 HEALTHSOUTH Corporation*................. 146,737
11,800 Humana, Inc.*............................ 96,613
21,800 IMS Health, Inc.......................... 592,688
7,200 Manor Care, Inc.*........................ 115,200
22,000 Tenet Healthcare Corporation*............ 517,000
12,000 United Healthcare Corporation............ 637,500
4,600 Wellpoint Health Networks, Inc.*......... 303,312
---------------------------------------------------------
Total Health Care........................ 2,409,050
=========================================================
Independent Finance (1.7%)
- --------------------------
31,800 American Express Company................. 5,286,750
72,700 Fannie Mae............................... 4,539,206
49,200 Freddie Mac.............................. 2,315,475
11,400 Golden West Financial Corporation........ 381,900
33,286 Household International, Inc............. 1,239,904
11,200 SLM Holding Corporation.................. 473,200
8,434 T. Rowe Price Associates, Inc............ 311,531
---------------------------------------------------------
Total Independent Finance 14,547,966
=========================================================
Insurance (2.9%)
- ----------------
10,549 Aetna, Inc............................... $588,766
18,800 AFLAC, Inc............................... 887,125
56,982 Allstate Corporation..................... 1,367,568
17,562 American General Corporation............. 1,332,517
109,736 American International Group, Inc........ 11,865,205
18,125 Aon Corporation.......................... 725,000
12,400 Chubb Corporation........................ 698,275
13,200 CIGNA Corporation........................ 1,063,425
11,600 Cincinnati Financial Corporation......... 361,775
23,107 Conseco, Inc............................. 413,038
15,700 Hartford Financial Services Group, Inc... 743,787
7,500 Jefferson-Pilot Corporation.............. 511,875
13,800 Lincoln National Corporation............. 552,000
18,950 Marsh & McLennan Companies, Inc.......... 1,813,278
7,000 MBIA, Inc................................ 369,687
7,500 MGIC Investment Corporation.............. 451,406
5,200 Progressive Corporation.................. 380,250
9,200 SAFECO Corporation....................... 228,850
16,046 St. Paul Companies, Inc.................. 540,550
9,300 Torchmark Corporation.................... 270,281
16,924 UNUMProvident Corporation................ 542,626
---------------------------------------------------------
Total Insurance.......................... 25,707,284
=========================================================
Liquor (0.5%)
- -------------
2,600 Adolph Coors Company, Class B............ 136,500
33,000 Anheuser-Busch Companies, Inc............ 2,338,875
4,800 Brown-Foreman Corporation, Class B....... 274,800
30,700 Seagram Company, Ltd..................... 1,379,581
---------------------------------------------------------
Total Liquor............................. 4,129,756
=========================================================
Media (2.7%)
- ------------
54,107 CBS Corporation*......................... 3,459,466
24,000 Clear Channel Communications, Inc.*...... 2,142,000
53,200 Comcast Corporation...................... 2,689,925
6,400 Dow Jones & Company, Inc................. 435,200
19,800 Gannett Company, Inc..................... 1,614,938
6,000 Knight Ridder, Inc....................... 357,000
13,900 McGraw-Hill Companies, Inc............... 856,588
3,600 Meredith Corporation..................... 150,075
12,100 New York Times Company................... 594,413
8,900 R. R. Donnelly & Sons Company............ 220,831
</TABLE>
The accompanying notes to the financial statements are an integral part of
this schedule.
- ----------------------------------------------------------------------------
December 31, 1999 35
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.9%) Market Value
=====================================================================
<S> <C> <C>
Media--continued
- ----------------
91,200 Time Warner, Inc..................... $6,606,300
4,300 Times Mirror Company................. 288,100
16,800 Tribune Company...................... 925,050
49,400 Viacom, Inc., Class B*............... 2,985,612
---------------------------------------------------
Total Media.......................... 23,325,498
===================================================
Non-Durables & Entertainment (0.1%)
- -----------------------------------
4,500 American Greetings Corporation....... 106,312
5,000 Harcourt General, Inc................ 201,250
13,650 Hasbro, Inc.......................... 260,203
2,300 Jostens, Inc......................... 55,919
29,750 Mattel, Inc.......................... 390,469
19,200 Service Corporation International.... 133,200
---------------------------------------------------
Total Non-Durables &
Entertainment........................ 1,147,353
===================================================
Non-Ferrous Metals (0.5%)
- -------------------------
15,500 Alcan Aluminium, Ltd................. 638,406
26,000 Alcoa, Inc........................... 2,158,000
8,900 Engelhard Corporation................ 167,988
11,500 Freeport-McMoran Copper & Gold, Inc.,
Class B.............................. 242,938
13,500 Inco, Ltd............................ 317,250
5,770 Phelps Dodge Corporation............. 387,311
4,500 Reynolds Metals Company.............. 344,812
---------------------------------------------------
Total Non-Ferrous Metals 4,256,705
===================================================
Oil & Gas (4.7%)
- ----------------
6,400 Amerada Hess Corporation............. 363,200
9,000 Anadarko Petroleum Corporation....... 307,125
8,000 Apache Corporation................... 295,500
5,100 Ashland, Inc......................... 167,981
22,900 Atlantic Richfield Company........... 1,980,850
46,500 Chevron Corporation.................. 4,028,063
16,100 El Paso Energy Corporation........... 624,881
244,704 Exxon Mobil Corporation.............. 19,713,966
6,224 Kerr-McGee Corporation............... 385,888
17,900 Phillips Petroleum Company........... 841,300
5,800 Rowan Companies, Inc.*............... 125,787
152,000 Royal Dutch Petroleum Company........ 9,186,500
6,300 Sunoco, Inc.......................... 148,050
39,100 Texaco, Inc.......................... 2,123,619
17,100 Unocal Corporation................... $573,919
22,000 USX-Marathon Group................... 543,125
---------------------------------------------------
Total Oil &Gas....................... 41,409,754
===================================================
Optical & Photo (0.4%)
- ----------------------
17,400 Corning, Inc......................... 2,243,512
22,400 Eastman Kodak Company................ 1,484,000
3,100 Polaroid Corporation................. 58,319
---------------------------------------------------
Total Optical & Photo................ 3,785,831
===================================================
Paper & Forest Products (1.0%)
- ------------------------------
4,000 Boise Cascade Corporation............ 162,000
6,900 Champion International Corporation... 427,369
15,300 Fort James Corporation............... 418,838
12,100 Georgia-Pacific Corporation.......... 614,075
29,237 International Paper Company.......... 1,650,063
38,592 Kimberly-Clark Corporation........... 2,518,128
7,500 Louisiana-Pacific Corporation........ 106,875
7,200 Mead Corporation..................... 312,750
2,000 Potlatch Corporation................. 89,250
4,000 Temple-Inland, Inc................... 263,750
7,100 Westvaco Corporation................. 231,637
16,700 Weyerhaeuser Company................. 1,199,269
7,900 Willamette Industries, Inc........... 366,856
---------------------------------------------------
Total Paper & Forest Products 8,360,860
===================================================
Pharmaceuticals (8.8%)
- ----------------------
108,900 Abbott Laboratories.................. 3,954,431
9,300 Allergan, Inc........................ 462,674
7,200 ALZA Corporation*.................... 249,300
92,500 American Home Products Corporation... 3,647,969
72,400 Amgen, Inc.*......................... 4,348,525
4,100 Bausch & Lomb, Inc................... 280,594
20,700 Baxter International, Inc............ 1,300,219
17,700 Becton, Dickinson and Company........ 473,475
7,900 Biomet, Inc.......................... 316,000
29,300 Boston Scientific Corporation*....... 640,937
140,600 Bristol-Myers Squibb Company......... 9,024,762
19,850 Cardinal Health, Inc................. 950,319
39,900 Columbia/HCA Healthcare Corporation.. 1,169,569
3,600 C.R. Bard , Inc...................... 190,800
77,300 Eli Lilly & Company.................. 5,140,450
</TABLE>
The accompanying notes to the financial statements are an integral part of
this schedule.
----------------------------------------------------------------------------
36 Large Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.9%) Market Value
============================================================================
<S> <C> <C>
Pharmaceuticals--continued
- --------------------------
21,700 Guidant Corporation........................... $1,019,900
98,600 Johnson & Johnson............................. 9,182,125
4,900 Mallinckrodt, Inc............................. 155,881
84,600 Medtronic, Inc................................ 3,082,613
165,600 Merck & Company, Inc.......................... 11,105,550
274,200 Pfizer, Inc................................... 8,894,362
36,715 Phamacia & Upjohn, Inc........................ 1,652,175
8,100 Quintiles Transnational Corporation*.......... 151,369
104,000 Schering-Plough Corporation................... 4,387,500
5,921 St. Jude Medical, Inc.*....................... 181,701
60,900 Warner-Lambert Company........................ 4,989,994
6,700 Watson Pharmaceuticals, Inc.*................. 239,944
--------------------------------------------------------------
Total Pharmaceuticals......................... 77,193,138
==============================================================
Pollution Control (0.1%)
- -----------------------
13,300 Allied Waste Industries, Inc.*................ 117,206
--------------------------------------------------------------
Total Pollution Control....................... 117,206
==============================================================
Producers Goods (6.1%)
- ---------------------
8,000 Avery Dennison Corporation.................... 583,000
1,600 Briggs & Stratton Corporation................. 85,800
25,100 Caterpillar, Inc.............................. 1,181,269
6,600 Cooper Industries, Inc........................ 266,888
16,500 Deere & Company............................... 715,688
14,400 Dover Corporation............................. 653,400
30,800 Emerson Electric Company...................... 1,767,150
2,200 FMC Corporation*.............................. 126,088
2,800 Foster Wheeler Corporation.................... 24,850
232,500 General Electric Company...................... 35,979,375
56,175 Honeywell International, Inc.................. 3,240,595
21,300 Illinois Tool Works, Inc...................... 1,439,081
11,550 Ingersoll-Rand Company........................ 635,972
6,000 Johnson Controls, Inc......................... 341,250
6,400 KLA-Tencor Corporation*....................... 712,800
2,600 Milacron, Inc................................. 39,975
3,200 Millipore Corporation......................... 123,600
610 NACCO Industries, Inc......................... 33,893
8,700 Pall Corporation.............................. 187,594
7,850 Parker Hannifin Corporation................... 402,803
4,100 Snap-On, Inc.................................. 108,906
4,300 Timken Company................................ 87,881
119,616 Tyco International, Ltd....................... $4,650,072
6,600 W.W. Grainger, Inc............................ 315,562
--------------------------------------------------------------
Total Producers Goods......................... 53,703,492
==============================================================
Restaurants/Food Services (0.5%)
- -------------------------------
9,300 Darden Restaurants, Inc....................... 168,563
95,900 McDonald's Corporation........................ 3,865,969
10,820 Tricon Global Restaurants, Inc.*.............. 417,922
8,400 Wendy's International, Inc.................... 173,250
--------------------------------------------------------------
Total Restaurants/Food Services............... 4,625,704
==============================================================
Retail Stores (6.8%)
- -------------------
29,977 Albertson's, Inc.............................. 966,758
10,200 AutoZone, Inc.*............................... 329,588
9,900 Bed, Bath, & Beyond, Inc.*.................... 344,025
14,500 Best Buy Company, Inc.*....................... 727,719
50,360 Cendant Corporation*.......................... 1,337,688
14,400 Circuit City Stores, Inc.-Circuit City Group.. 648,900
7,800 Consolidated Stores Corporation*.............. 126,750
15,800 Costco Wholesale Corporation*................. 1,441,750
27,700 CVS Corporation............................... 1,106,269
31,300 Dayton Hudson Corporation..................... 2,298,594
7,600 Dillard's, Inc................................ 153,425
18,812 Dollar General Corporation.................... 427,973
14,800 Federated Department Stores, Inc.*............ 748,325
60,562 Gap, Inc...................................... 2,785,852
2,700 Great Alantic & Pacific Tea Company, Inc...... 75,263
162,900 Home Depot, Inc............................... 11,168,831
18,400 J.C. Penney Company, Inc...................... 366,850
34,900 Kmart Corporation*............................ 351,181
11,600 Kohl's Corporation*........................... 837,375
58,900 Kroger Company*............................... 1,111,738
15,152 Limited, Inc.................................. 656,271
2,700 Long's Drug Stores Corporation................ 69,694
27,100 Lowe's Companies, Inc......................... 1,619,225
23,600 May Department Stores Company................. 761,100
9,800 Nordstrom, Inc................................ 256,637
23,300 Office Depot, Inc.*........................... 254,844
3,697 Pep Boys-Manny, Moe, & Jack................... 33,735
18,300 Rite Aid Corporation.......................... 204,731
36,000 Safeway, Inc.*................................ 1,280,250
26,700 Sears, Roebuck and Company.................... 812,681
</TABLE>
The accompanying notes to the financial statements are an integral part of
this schedule.
- -------------------------------------------------------------------------
December 31, 1999 37
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.9%) Market Value
=============================================================================
<S> <C> <C>
Retail Stores--continued
- ------------------------
32,850 Staples, Inc.*............................ $681,637
13,600 Tandy Corporation......................... 668,950
21,900 TJX Companies, Inc........................ 447,581
17,300 Toys "R" Us, Inc.*........................ 247,606
315,300 Wal-Mart Stores, Inc...................... 21,795,112
71,000 Walgreen Company.......................... 2,076,750
10,500 Winn-Dixie Stores, Inc.................... 251,344
----------------------------------------------------------
Total Retail Stores....................... 59,473,002
==========================================================
Steel (0.1%)
- -----------
6,569 Allegheny Technologies, Inc............... 147,392
9,200 Bethlehem Steel Corporation*.............. 77,050
6,100 Nucor Corporation......................... 334,356
6,200 USX-U.S. Steel Group...................... 204,600
6,300 Worthington Industries, Inc............... 104,344
----------------------------------------------------------
Total Steel............................... 867,742
==========================================================
Technology (3.1%)
- ----------------
7,200 Adaptec, Inc.*............................ 359,100
10,600 ADC Telecommunications, Inc.*............. 769,163
17,200 BMC Software, Inc.*....................... 1,374,925
33,400 Electronic Data Systems Corporation....... 2,235,713
53,690 Global Crossing, Ltd.*.................... 2,684,500
9,100 Lexmark International Group, Inc.*........ 823,550
10,600 Network Appliance, Inc.*.................. 880,462
19,000 PeopleSoft, Inc.*......................... 404,937
46,800 QUALCOMM, Inc.*........................... 8,242,650
22,600 Xilinx, Inc.*............................. 1,027,593
18,700 Yahoo!, Inc.*............................. 8,091,256
----------------------------------------------------------
Total Technology.......................... 26,893,849
==========================================================
Telephone (11.0%)
- ----------------
22,300 ALLTEL Corporation........................ 1,843,931
5,775 Andrew Corporation*....................... 109,364
226,346 AT&T Corporation.......................... 11,487,059
110,092 Bell Atlantic Corporation................. 6,777,539
133,300 BellSouth Corporation..................... 6,240,106
9,800 CenturyTel, Inc........................... 464,275
68,900 GTE Corporation........................... 4,861,756
222,022 Lucent Technologies, Inc.................. 16,610,021
200,773 MCI WorldCom, Inc.*....................... 10,653,517
43,400 MediaOne Group, Inc.*..................... $3,333,663
25,800 Nextel Communication, Inc.*............... 2,660,625
94,700 Nortel Networks Corporation............... 9,564,700
241,660 SBC Communications, Inc................... 11,780,925
61,800 Sprint Corporation........................ 4,159,913
30,550 Sprint Corporation PCS Group*............. 3,131,375
35,854 U S West, Inc............................ 2,581,488
----------------------------------------------------------
Total Telephone........................... 96,260,257
==========================================================
Tires & Rubber (0.1%)
- ---------------------
5,300 Cooper Tire & Rubber Company.............. 82,481
10,000 Danaher Corporation....................... 482,500
11,000 Goodyear Tire & Rubber Company............ 310,063
----------------------------------------------------------
Total Tires & Rubber...................... 875,044
==========================================================
Tobacco (0.6%)
- -------------
11,600 Fortune Brands, Inc....................... 383,525
7,600 Loews Corporation......................... 461,225
167,600 Phillip Morris Companies, Inc............. 3,886,225
12,100 UST, Inc.................................. 304,769
----------------------------------------------------------
Total Tobacco............................. 5,035,744
==========================================================
Transportation (0.4%)
- --------------------
32,292 Burlington Northern Santa Fe Corporation.. 783,081
15,400 CSX Corporation........................... 483,175
7,900 Kansas City Southern Industries, Inc...... 589,538
26,900 Norfolk Southern Corporation.............. 551,450
4,500 Ryder Systems, Inc........................ 109,969
17,600 Union Pacific Corporation................. 767,800
----------------------------------------------------------
Total Transportation...................... 3,285,013
==========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
38 Large Company Stock Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Large Company Stock Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (99.9%) Market Value
=============================================================================
<S> <C> <C>
Travel & Recreation (0.9%)
- -------------------------
6,500 Brunswick Corporation........ $144,625
43,700 Carnival Corporation......... 2,089,406
9,100 Harrah's Entertainment, Inc.* 240,581
26,100 Hilton Hotels Corporation.... 251,213
17,600 Marriott International, Inc.. 555,500
13,600 Mirage Resorts, Inc.*........ 208,250
146,047 Walt Disney Company.......... 4,271,875
----------------------------------------------------------
Total Travel & Recreation.... 7,761,450
==========================================================
----------------------------------------------------------
Total Common Stocks
(cost basis $579,090,031).... $872,863,770
==========================================================
Principal Short-Term Interest Maturity Market
Amount Investments (0.5%) Rate (1) Date Value
- -----------------------------------------------------------------------------
$4,810,000 IBM Credit
Corporation.......... 4.000% 1/4/00 $4,808,396
----------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $4,808,396) 4,808,396
==========================================================
----------------------------------------------------------
Total Investments (100.4%)
(amortized cost basis $583,898,427) 877,672,166
==========================================================
----------------------------------------------------------
Other Assets,
Less Liabilities (-0.4%)..... (3,910,558)
==========================================================
----------------------------------------------------------
Net Assets (100.0%).......... $873,761,608
==========================================================
</TABLE>
* Non-income producing security
(1) The interest rate reflects the discount rate at the time of purchase.
See page 115 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------
December 31, 1999 39
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Balanced Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Investment Objective
--------------------
The Portfolio seeks capital growth and income by investing in a mix of
common stocks, bonds and money market instruments. Securities are selected
consistent with the investment policies of the Large Company Stock, Bond
and Money Market Portfolios.
Shares Common Stocks (55.5%) Market Value
==================================================================
Aerospace (0.6%)
- ----------------
3,800 BFGoodrich Company..................... $104,500
32,728 Boeing Company......................... 1,360,258
7,000 General Dynamics Corporation........... 369,250
13,800 Lockheed Martin Corporation............ 301,875
2,400 Northrop Grumman Corporation........... 129,750
11,800 Raytheon Company Class B............... 313,438
6,700 Rockwell International Corporation..... 320,762
5,200 Textron, Inc........................... 398,775
4,300 TRW, Inc............................... 223,331
16,800 United Technologies Corporation........ 1,092,000
---------------------------------------------------
Total Aerospace........................ 4,613,939
===================================================
Air Transportation (0.2%)
- -------------------------
5,200 AMR Corporation*....................... 348,400
4,700 Delta Air Lines, Inc................... 234,119
10,440 FDX Corporation*....................... 427,387
17,587 Southwest Airlines Company............. 284,690
2,500 US Airways Group, Inc.*................ 80,156
---------------------------------------------------
Total Air Transportation............... 1,374,752
===================================================
Apparel (0.1%)
- --------------
2,100 Liz Claiborne, Inc..................... 79,013
9,800 NIKE, Inc., Class B.................... 485,713
1,900 Reebok International, Ltd.*............ 15,556
1,100 Russell Corporation.................... 18,425
600 Springs Industries, Inc................ 23,962
4,100 VF Corporation......................... 123,000
---------------------------------------------------
Total Apparel.......................... 745,669
---------------------------------------------------
Auto Manufacturers (0.7%)
- -------------------------
1,400 Cummins Engine Company, Inc............ $67,638
5,779 Dana Corporation....................... 173,009
19,776 Delphi Automotive Systems Corporation.. 311,472
2,600 Eaton Corporation...................... 188,825
1,100 Fleetwood Enterprises, Inc............. 22,687
42,400 Ford Motor Company..................... 2,265,750
22,500 General Motors Corporation............. 1,635,469
6,200 Genuine Parts Company.................. 153,837
3,100 ITT Industries, Inc.................... 103,656
2,200 Navistar International Corporation*.... 104,225
2,700 PACCAR, Inc............................ 119,644
---------------------------------------------------
Total Auto Manufacturers............... 5,146,212
===================================================
Banking (3.8%)
- --------------
13,700 AmSouth Bancorporation................. 264,581
25,490 Associates First Capital Corporation... 699,382
59,885 Bank of America Corporation............ 3,005,478
25,800 Bank of New York Company, Inc.......... 1,032,000
40,232 Bank One Corporation................... 1,289,939
11,600 BB&T Corporation....................... 317,550
28,980 Chase Manhattan Corporation............ 2,251,384
118,272 Citigroup, Inc......................... 6,571,488
5,500 Comerica, Inc.......................... 256,781
3,900 Countrywide Credit Industries, Inc..... 98,475
10,800 Fifth Third Bancorp.................... 792,450
34,610 First Union Corporation................ 1,135,641
34,309 Firstar Corporation.................... 724,778
32,129 Fleet Boston Corporation............... 1,118,491
8,800 Franklin Resources, Inc................ 282,150
8,024 Huntington Bancshares, Inc............. 191,573
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
10 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (55.5%) Market Value
=========================================================================
Banking--continued
- ------------------
15,600 J.P. Morgan & Company, Inc.................... $345,150
17,800 Keycorp....................................... 606,313
6,100 Mellon Financial Corporation.................. 772,413
21,600 National City Corporation..................... 511,650
7,800 Northern Trust Corporation.................... 413,400
4,100 Old Kent Financial Corporation................ 145,037
10,300 PNC Bank Corporation.......................... 458,350
4,950 Providian Financial Corporation............... 450,759
7,600 Regions Financial Corporation................. 190,950
3,700 Republic New York Corporation................. 266,400
5,900 SouthTrust Corporation........................ 223,094
6,100 Summit Bancorp................................ 186,812
11,200 SunTrust Banks, Inc........................... 770,700
9,750 Synovus Financial Corporation................. 193,781
4,900 Union Planters Corporation.................... 193,244
25,489 U.S. Bancorp.................................. 606,957
7,100 Wachovia Corporation.......................... 482,800
20,217 Washington Mutual, Inc........................ 525,642
57,560 Wells Fargo & Company......................... 2,327,582
----------------------------------------------------------
Total Banking................................. 29,703,175
==========================================================
Brokerage (0.7%)
- ----------------
4,178 Bear Stearns Companies, Inc................... 178,610
28,750 Charles Schwab Corporation.................... 1,103,281
4,200 Lehman Brothers Holdings, Inc................. 355,687
13,000 Merrill Lynch & Company, Inc.................. 1,085,500
19,595 Morgan Stanley Dean Witter & Company.......... 2,797,186
5,000 Paine Webber Group, Inc....................... 194,063
----------------------------------------------------------
Total Brokerage............................... 5,714,327
==========================================================
Building Products (0.1%)
- ------------------------
1,400 Armstrong World Industries, Inc............... 46,725
2,000 Centex Corporation............................ 49,375
2,250 Crane Company................................. 44,719
2,700 Fluor Corporation............................. 123,863
1,600 Kaufman and Broad Home Corporation............ 38,700
15,600 Masco Corporation............................. 395,850
1,900 Owens Corning................................. 36,694
1,500 Pulte Corporation............................. 33,750
5,800 Sherwin-Williams Company...................... 121,800
3,100 Stanley Works................................. 93,388
3,500 Vulcan Materials Company...................... $139,781
----------------------------------------------------------
Total Building Products....................... 1,124,645
==========================================================
Business Machines (7.9%)
- ------------------------
12,100 3Com Corporation*............................. 568,700
5,700 Apple Computer, Inc.*......................... 586,031
2,100 Autodesk, Inc................................. 70,875
6,300 Cabletron Systems, Inc.*...................... 163,800
5,000 Ceridian Corporation*......................... 107,813
114,750 Cisco Systems, Inc.*.......................... 12,292,594
59,600 Compaq Computers Corporation.................. 1,612,925
2,500 Comverse Technology, Inc.*.................... 361,875
89,100 Dell Computer Corporation*.................... 4,544,100
11,100 Gateway, Inc.*................................ 799,894
5,200 IKON Office Solutions, Inc.................... 35,425
63,200 International Business Machines Corporation... 6,825,600
181,000 Microsoft Corporation*........................ 21,131,750
11,600 Novell, Inc.*................................. 463,275
49,925 Oracle Corporation*........................... 5,594,720
9,400 Parametric Technology Corporation*............ 254,388
9,300 Pitney Bowes, Inc............................. 449,306
7,300 Seagate Technology, Inc.*..................... 339,906
6,400 Silicon Graphics, Inc.*....................... 62,800
54,800 Sun Microsystems, Inc.*....................... 4,243,575
10,800 Unisys Corporation*........................... 344,925
23,200 Xerox Corporation............................. 526,350
----------------------------------------------------------
Total Business Machines....................... 61,380,627
==========================================================
Business Services (1.8%)
- ------------------------
78,400 America Online, Inc.*......................... 5,914,300
21,900 Automatic Data Processing, Inc................ 1,179,863
3,200 Citrix Systems, Inc.*......................... 393,600
18,875 Computer Associates International, Inc........ 1,320,070
5,900 Computer Sciences Corporation*................ 558,287
12,500 Compuware Corporation*........................ 465,625
2,500 Deluxe Corporation............................ 68,594
5,600 Dun & Bradstreet Corporation.................. 165,200
4,500 Ecolab, Inc................................... 176,062
14,700 First Data Corporation........................ 724,894
6,100 General Instrument Corporation*............... 518,500
3,400 H&R Block, Inc................................ 148,750
10,000 Interpublic Group of Companies, Inc........... 576,875
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 11
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (55.5%) Market Value
==========================================================================
Business Services--continued
- ----------------------------
9,780 Mckesson HBOC, Inc.............................. $220,661
1,400 National Service Industries, Inc................ 41,300
6,200 Omnicom Group, Inc.............................. 620,000
8,600 Paychex, Inc.................................... 344,000
900 Shared Medical Systems Corporation.............. 45,844
5,600 State Street Corporation........................ 409,150
21,630 Waste Management Inc............................ 371,766
-----------------------------------------------------------
Total Business Services......................... 14,263,341
===========================================================
Chemicals (1.1%)
- ----------------
8,000 Air Products & Chemicals, Inc................... 268,500
21,928 Conoco, Inc., Class B........................... 545,459
7,700 Dow Chemical Company............................ 1,028,912
2,700 Eastman Chemical Company........................ 128,756
36,619 E.I. du Pont de Nemours and Company............. 2,412,277
2,000 Great Lakes Chemical Corporation................ 76,375
3,700 Hercules, Inc................................... 103,138
14,100 Minnesota Mining and Manufacturing Company...... 1,380,038
22,200 Monsanto Company................................ 790,875
6,100 PPG Industries, Inc............................. 381,631
5,600 Praxair, Inc.................................... 281,750
7,611 Rohm and Haas Company........................... 309,673
2,964 Sealed Air Corporation*......................... 153,572
3,500 Sigma-Aldrich Corporation....................... 105,219
4,700 Union Carbide Corporation....................... 313,725
2,500 W.R. Grace & Company*........................... 34,687
-----------------------------------------------------------
Total Chemicals................................. 8,314,587
===========================================================
Consumer Durables (0.1%)
- ------------------------
3,000 Black & Decker Corporation...................... 156,750
6,800 Leggett & Platt, Inc............................ 145,775
3,000 Maytag Corporation.............................. 144,000
9,826 Newell Rubbermaid, Inc.......................... 284,954
6,000 Pactiv Corporation*............................. 63,750
2,000 Tupperware Corporation.......................... 33,875
2,600 Whirlpool Corporation........................... 169,163
-----------------------------------------------------------
Total Consumer Durables......................... 998,267
===========================================================
Containers (0.1%)
- -----------------
1,000 Ball Corporation................................ 39,375
1,800 Bemis Company, Inc.............................. $62,775
4,200 Crown Cork & Seal Company, Inc.................. 93,975
5,200 Owens-Illinois, Inc.*........................... 130,325
-----------------------------------------------------------
Total Containers................................ 326,450
===========================================================
Cosmetics (1.1%)
- ----------------
1,900 Alberto-Culver Company, Class B................. 49,044
8,500 Avon Products, Inc.............................. 280,500
8,300 Clorox Company.................................. 418,112
20,400 Colgate-Palmolive Company....................... 1,326,000
37,600 Gillette Company................................ 1,548,650
3,700 International Flavors and Fragrances, Inc....... 139,675
46,100 Procter & Gamble Company........................ 5,050,831
-----------------------------------------------------------
Total Cosmetics................................. 8,812,812
===========================================================
Credit Cards (0.2%)
- -------------------
6,900 Capital One Financial Corporation............... 332,494
4,900 Equifax, Inc.................................... 115,456
28,037 MBNA Corporation................................ 764,008
-----------------------------------------------------------
Total Credit Cards.............................. 1,211,958
===========================================================
Electric Utilities (1.2%)
- -------------------------
7,200 AES Corporation*................................ 538,200
4,800 Ameren Corporation.............................. 157,200
6,800 American Electric Power Company, Inc............ 218,450
5,600 Carolina Power & Light Company.................. 170,450
7,400 Central and South West Corporation.............. 148,000
5,500 Cinergy Corporation............................. 132,688
4,000 CMS Energy Corporation.......................... 124,750
7,500 Coastal Corporation............................. 265,781
2,950 Columbia Energy Group........................... 186,587
7,700 Consolidated Edison, Inc........................ 265,650
3,400 Consolidated Natural Gas Company................ 220,788
5,200 Constellation Energy Group, Inc................. 150,800
6,700 Dominion Resources, Inc......................... 262,975
5,100 DTE Energy Company.............................. 160,012
12,811 Duke Energy Corporation......................... 642,151
12,100 Edison International............................ 316,869
25,100 Enron Corporation............................... 1,113,812
8,600 Entergy Corporation............................. 221,450
8,100 FirstEnergy Corporation......................... 183,769
3,400 Florida Progress Corporation.................... 143,863
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
12 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Shares Common Stocks (55.5%) Market Value
=====================================================================
Electric Utilities--continued
- -----------------------------
6,300 FPL Group, Inc............................. $269,719
4,300 GPU, Inc................................... 128,731
4,000 New Century Energies, Inc.................. 121,500
6,500 Niagara Mohawk Holdings, Inc.*............. 90,594
1,600 NICOR, Inc................................. 52,000
5,400 Northern States Power Company.............. 105,300
1,100 ONEOK, Inc................................. 27,637
6,500 PECO Energy Company........................ 225,875
1,200 Peoples Energy Corporation................. 40,200
13,400 PG&E Corporation........................... 274,700
2,900 Pinnacle West Capital Corporation.......... 88,631
5,000 PP&L Resources, Inc........................ 114,375
7,600 Public Service Enterprise Group, Inc....... 264,575
10,324 Reliant Energy, Inc........................ 236,162
8,408 Sempra Energy.............................. 146,089
23,600 Southern Company........................... 554,600
9,670 Texas Utilities Company.................... 343,889
7,600 Unicom Corporation......................... 254,600
15,200 Williams Companies, Inc.................... 464,550
------------------------------------------------------
Total Electric Utilities................... 9,427,972
======================================================
Electronics (4.0%)
- ------------------
4,200 Adobe Systems, Inc......................... 282,450
5,100 Advanced Micro Devices, Inc.*.............. 147,581
6,100 Analog Devices, Inc.*...................... 567,300
13,300 Applied Materials, Inc.*................... 1,684,944
35,662 EMC Corporation*........................... 3,896,074
35,800 Hewlett-Packard Company.................... 4,078,963
117,200 Intel Corporation.......................... 9,647,025
5,200 LSI Logic Corporation*..................... 351,000
9,500 Micron Technology, Inc.*................... 738,625
5,500 Molex, Inc................................. 311,781
21,400 Motorola, Inc.............................. 3,151,150
6,000 National Semiconductor Corporation*........ 256,875
3,600 PE Corporation............................. 433,125
1,600 PerkinElmer, Inc........................... 66,700
2,800 Scientific-Atlanta, Inc.................... 155,750
10,300 Solectron Corporation...................... 979,787
1,650 Tektronix, Inc............................. 64,144
14,100 Tellabs, Inc.*............................. 905,044
6,000 Teradyne, Inc.*............................ 396,000
28,100 Texas Instruments, Inc..................... 2,722,187
5,500 Thermo Electron Corporation*............... $82,500
2,000 Thomas & Betts Corporation................. 63,750
------------------------------------------------------
Total Electronics.......................... 30,982,755
======================================================
Energy (0.4%)
- -------------
11,520 Baker Hughes, Inc.......................... 242,640
7,567 Burlington Resources, Inc.................. 250,184
1,000 Eastern Enterprises........................ 57,437
15,500 Halliburton Company........................ 623,875
2,000 McDermott International, Inc............... 18,125
12,800 Occidental Petroleum Corporation........... 276,800
19,300 Schlumberger, Ltd.......................... 1,085,625
5,000 Tosco Corporation.......................... 135,938
3,736 Transocean Sedco Forex, Inc................ 125,873
8,832 Union Pacific Resources Group Inc.......... 112,608
------------------------------------------------------
Total Energy............................... 2,929,105
======================================================
Food & Beverages (0.9%)
- -----------------------
14,900 Coca-Cola Company.......................... 299,862
86,600 Coca-Cola Enterprises, Inc................. 5,044,450
51,000 PepsiCo, Inc............................... 1,797,750
------------------------------------------------------
Total Food & Beverages..................... 7,142,062
======================================================
Food Processors (0.9%)
- ----------------------
21,299 Archer Daniels Midland Company............. 259,582
9,800 Bestfoods.................................. 515,113
15,000 Campbell Soup Company...................... 580,313
17,200 ConAgra, Inc............................... 388,075
10,600 General Mills, Inc......................... 378,950
4,900 Hershey Foods Corporation.................. 232,750
12,550 H.J. Heinz Company......................... 499,647
14,200 Kellogg Company............................ 437,537
11,400 Nabisco Group Holdings Corporation......... 121,125
4,700 Quaker Oats Company........................ 308,437
11,300 Ralston-Ralston Purina Group............... 314,987
31,800 Sara Lee Corporation....................... 701,587
4,800 SUPERVALU, Inc............................. 96,000
11,500 SYSCO Corporation.......................... 454,969
20,082 Unilever NV................................ 1,093,214
4,100 Wm. Wrigley Jr. Company.................... 340,044
------------------------------------------------------
Total Food Processors...................... 6,722,330
======================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 13
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (55.5%) Market Value
==========================================================================
<S> <C> <C>
Gold (0.1%)
- -----------
13,800 Barrick Gold Corporation................. $244,088
9,100 Homestake Mining Company................. 71,094
5,817 Newmont Mining Corporation............... 142,516
11,400 Placer Dome, Inc......................... 122,550
--------------------------------------------------------
Total Gold............................... 580,248
========================================================
Health Care (0.1%)
- ------------------
13,500 HEALTHSOUTH Corporation*................. 72,562
5,800 Humana, Inc.*............................ 47,488
10,800 IMS Health, Inc.......................... 293,625
3,600 Manor Care, Inc.*........................ 57,600
10,900 Tenet Healthcare Corporation*............ 256,150
6,000 United Healthcare Corporation............ 318,750
2,200 Wellpoint Health Networks, Inc.*......... 145,062
--------------------------------------------------------
Total Health Care........................ 1,191,237
========================================================
Independent Finance (0.9%)
- --------------------------
15,700 American Express Company................. 2,610,125
35,900 Fannie Mae............................... 2,241,506
24,400 Freddie Mac.............................. 1,148,325
5,600 Golden West Financial Corporation........ 187,600
16,499 Household International, Inc............. 614,588
5,600 SLM Holding Corporation.................. 236,600
4,200 T. Rowe Price Associates, Inc............ 155,138
--------------------------------------------------------
Total Independent Finance................ 7,193,882
--------------------------------------------------------
Insurance (1.6%)
- ----------------
5,214 Aetna, Inc............................... 291,006
9,300 AFLAC, Inc............................... 438,844
28,196 Allstate Corporation..................... 676,704
8,708 American General Corporation............. 660,720
54,360 American International Group, Inc........ 5,877,675
8,950 Aon Corporation.......................... 358,000
6,200 Chubb Corporation........................ 349,138
6,500 CIGNA Corporation........................ 523,656
5,700 Cincinnati Financial Corporation......... 177,769
11,399 Conseco, Inc............................. 203,757
7,800 Hartford Financial Services Group, Inc... 369,525
3,700 Jefferson-Pilot Corporation.............. 252,525
6,800 Lincoln National Corporation............. 272,000
9,350 Marsh & McLennan Companies, Inc.......... 894,678
3,500 MBIA, Inc................................ $184,844
3,700 MGIC Investment Corporation.............. 222,694
2,600 Progressive Corporation.................. 190,125
4,500 SAFECO Corporation....................... 111,938
7,922 St. Paul Companies, Inc.................. 266,872
4,600 Torchmark Corporation.................... 133,687
8,358 UNUMProvident Corporation................ 267,978
--------------------------------------------------------
Total Insurance.......................... 12,724,135
========================================================
Liquor ( 0.2%)
- --------------
1,300 Adolph Coors Company, Class B............ 68,250
16,300 Anheuser-Busch Companies, Inc............ 1,155,262
2,400 Brown-Foreman Corporation, Class B....... 137,400
15,200 Seagram Company, Ltd..................... 683,050
--------------------------------------------------------
Total Liquor............................. 2,043,962
========================================================
Media (1.5%)
- ------------
26,744 CBS Corporation*......................... 1,709,945
11,900 Clear Channel Communications, Inc.*...... 1,062,075
26,400 Comcast Corporation...................... 1,334,850
3,200 Dow Jones & Company, Inc................. 217,600
9,800 Gannett Company, Inc..................... 799,313
3,000 Knight Ridder, Inc....................... 178,500
6,900 McGraw-Hill Companies, Inc............... 425,212
1,800 Meredith Corporation..................... 75,037
6,000 New York Times Company................... 294,750
4,400 R. R. Donnelley & Sons Company........... 109,175
45,100 Time Warner, Inc......................... 3,266,931
2,100 Times Mirror Company..................... 140,700
8,300 Tribune Company.......................... 457,019
24,400 Viacom, Inc., Class B*................... 1,474,675
--------------------------------------------------------
Total Media.............................. 11,545,782
========================================================
Non-Durables & Entertainment (0.1%)
- -----------------------------------
2,200 American Greetings Corporation........... 51,975
2,500 Harcourt General, Inc.................... 100,625
6,700 Hasbro, Inc.............................. 127,719
1,100 Jostens, Inc............................. 26,744
14,725 Mattel, Inc.............................. 193,265
9,500 Service Corporation International........ 65,906
--------------------------------------------------------
Total Non-Durables & Entertainment....... 566,234
========================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
44 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (55.5%) Market Value
=====================================================================
<S> <C> <C>
Non-Ferrous Metals (0.3%)
- -------------------------
7,700 Alcan Aluminium, Ltd.................. $317,144
12,900 Alcoa, Inc............................ 1,070,700
4,350 Engelhard Corporation................. 82,106
5,700 Freeport-McMoran Copper & Gold, Inc.,
Class B 120,413
6,700 Inco, Ltd............................. 157,450
2,820 Phelps Dodge Corporation.............. 189,292
2,200 Reynolds Metals Company............... 168,575
---------------------------------------------------
Total Non-Ferrous Metals.............. 2,105,680
===================================================
Oil & Gas (2.6%)
- ----------------
3,200 Amerada Hess Corporation.............. 181,600
4,400 Anadarko Petroleum Corporation........ 150,150
4,000 Apache Corporation.................... 147,750
2,500 Ashland, Inc.......................... 82,344
11,300 Atlantic Richfield Company............ 977,450
23,000 Chevron Corporation................... 1,992,375
8,000 El Paso Energy Corporation............ 310,500
121,136 Exxon Mobil Corporation............... 9,759,019
1,700 Helmerich & Payne, Inc................ 37,081
3,080 Kerr-McGee Corporation................ 190,960
8,900 Phillips Petroleum Company............ 418,300
2,900 Rowan Companies, Inc.*................ 62,894
75,200 Royal Dutch Petroleum Company......... 4,544,900
3,100 Sunoco, Inc........................... 72,850
19,400 Texaco, Inc........................... 1,053,662
8,500 Unocal Corporation.................... 285,281
10,900 USX-Marathon Group.................... 269,094
---------------------------------------------------
Total Oil & Gas....................... 20,536,210
===================================================
Optical & Photo (0.2%)
- ----------------------
8,600 Corning, Inc.......................... 1,108,862
11,100 Eastman Kodak Company................. 735,375
1,500 Polaroid Corporation.................. 28,219
---------------------------------------------------
Total Optical & Photo................. 1,872,456
===================================================
Paper & Forest Products (0.5%)
- ------------------------------
2,000 Boise Cascade Corporation............. 81,000
3,400 Champion International Corporation.... 210,588
7,500 Fort James Corporation................ 205,313
6,000 Georgia-Pacific Corporation........... 304,500
14,517 International Paper Company........... $819,303
19,080 Kimberly-Clark Corporation............ 1,244,970
3,700 Louisiana-Pacific Corporation......... 52,725
3,600 Mead Corporation...................... 156,375
1,000 Potlatch Corporation.................. 44,625
2,000 Temple-Inland, Inc.................... 131,875
3,500 Westvaco Corporation.................. 114,187
8,200 Weyerhaeuser Company.................. 588,862
3,900 Willamette Industries, Inc............ 181,106
---------------------------------------------------
Total Paper & Forest Products......... 4,135,429
===================================================
Pharmaceuticals (4.9%)
- ----------------------
53,900 Abbott Laboratories................... 1,957,244
4,600 Allergan, Inc......................... 228,850
3,600 ALZA Corporation*..................... 124,650
45,800 American Home Products Corporation.... 1,806,238
35,800 Amgen, Inc.*.......................... 2,150,238
2,000 Bausch & Lomb, Inc.................... 136,875
10,200 Baxter International, Inc............. 640,687
8,700 Becton, Dickinson and Company......... 232,725
3,900 Biomet, Inc........................... 156,000
14,500 Boston Scientific Corporation*........ 317,187
69,600 Bristol-Myers Squibb Company.......... 4,467,450
9,850 Cardinal Health, Inc.................. 471,569
19,750 Columbia/HCA Healthcare Corporation... 578,922
1,800 C.R. Bard, Inc........................ 95,400
38,300 Eli Lilly & Company................... 2,546,950
10,800 Guidant Corporation................... 507,600
48,800 Johnson & Johnson..................... 4,544,500
2,400 Mallinckrodt, Inc..................... 76,350
41,900 Medtronic, Inc........................ 1,526,731
82,000 Merck & Company, Inc.................. 5,499,125
135,700 Pfizer, Inc........................... 4,401,769
18,180 Phamacia & Upjohn, Inc................ 818,100
4,000 Quintiles Transnational Corporation*.. 74,750
51,500 Schering-Plough Corporation........... 2,172,656
2,895 St. Jude Medical, Inc.*............... 88,840
30,100 Warner-Lambert Company................ 2,466,319
3,300 Watson Pharmaceuticals, Inc.*......... 118,181
---------------------------------------------------
Total Pharmaceuticals................. 38,205,906
===================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
December 31, 1999 45
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (55.5%) Market Value
===========================================================================
<S> <C> <C>
Pollution Control (0.1%)
- ------------------------
6,600 Allied Waste Industries, Inc.*.................. $58,162
-------------------------------------------------------------
Total Pollution Control......................... 58,162
=============================================================
Producers Goods (3.4%)
- ----------------------
4,000 Avery Dennison Corporation...................... 291,500
800 Briggs & Stratton Corporation................... 42,900
12,500 Caterpillar, Inc................................ 588,281
3,300 Cooper Industries, Inc.......................... 133,444
8,200 Deere & Company................................. 355,675
7,100 Dover Corporation............................... 322,163
15,200 Emerson Electric Company........................ 872,100
1,100 FMC Corporation*................................ 63,044
1,400 Foster Wheeler Corporation...................... 12,425
115,100 General Electric Company........................ 17,811,725
27,737 Honeywell International, Inc.................... 1,600,078
10,500 Illinois Tool Works, Inc........................ 709,406
5,700 Ingersoll-Rand Company.......................... 313,856
3,000 Johnson Controls, Inc........................... 170,625
3,200 KLA-Tencor Corporation*......................... 356,400
1,200 Milacron, Inc................................... 18,450
1,600 Millipore Corporation........................... 61,800
305 NACCO Industries, Inc........................... 16,946
4,300 Pall Corporation................................ 92,719
3,900 Parker Hannifin Corporation..................... 200,119
2,000 Snap-On, Inc.................................... 53,125
2,100 Timken Company.................................. 42,919
59,140 Tyco International, Ltd......................... 2,299,067
3,300 W.W. Grainger, Inc.............................. 157,781
-------------------------------------------------------------
Total Producers Goods........................... 26,586,548
=============================================================
Restaurants/Food Services (0.3%)
- --------------------------------
4,600 Darden Restaurants, Inc......................... 83,375
47,500 McDonald's Corporation.......................... 1,914,844
5,330 Tricon Global Restaurants, Inc.*................ 205,871
4,100 Wendy's International, Inc...................... 84,562
-------------------------------------------------------------
Total Restaurant/Food Services.................. 2,288,652
=============================================================
Retail Stores (3.8%)
- --------------------
14,822 Albertson's, Inc................................ 478,010
5,000 AutoZone, Inc.*................................. 161,563
4,900 Bed, Bath, & Beyond, Inc.*...................... 170,275
7,200 Best Buy Company, Inc.*......................... $361,350
24,860 Cendant Corporation*............................ 660,344
7,100 Circuit City Stores, Inc. - Circuit City Group.. 319,944
3,800 Consolidated Stores Corporation*................ 61,750
7,800 Costco Wholesale Corporation*................... 711,750
13,700 CVS Corporation................................. 547,144
15,500 Dayton Hudson Corporation....................... 1,138,281
3,700 Dillard's, Inc.................................. 74,694
9,318 Dollar General Corporation...................... 211,985
7,400 Federated Department Stores, Inc.*.............. 374,163
30,000 Gap, Inc........................................ 1,380,000
1,300 Great Alantic & Pacific Tea Company, Inc........ 36,237
80,700 Home Depot, Inc................................. 5,532,994
9,100 J.C. Penney Company, Inc........................ 181,431
17,300 Kmart Corporation*.............................. 174,081
5,700 Kohl's Corporation*............................. 411,469
29,100 Kroger Company*................................. 549,262
7,481 Limited, Inc.................................... 324,021
1,300 Long's Drug Stores Corporation.................. 33,556
13,400 Lowe's Companies, Inc........................... 800,650
11,700 May Department Stores Company................... 377,325
4,800 Nordstrom, Inc.................................. 125,700
11,500 Office Depot, Inc.*............................. 125,781
1,751 Pep Boys-Manny, Moe, & Jack..................... 15,978
9,000 Rite Aid Corporation............................ 100,687
17,800 Safeway, Inc.*.................................. 633,012
13,200 Sears, Roebuck and Company...................... 401,775
16,200 Staples, Inc.*.................................. 336,150
6,800 Tandy Corporation............................... 334,475
10,800 TJX Companies, Inc.............................. 220,725
8,500 Toys "R" Us, Inc.*.............................. 121,656
156,000 Wal-Mart Stores, Inc............................ 10,783,500
35,200 Walgreen Company................................ 1,029,600
5,200 Winn-Dixie Stores, Inc.......................... 124,475
-------------------------------------------------------------
Total Retail Stores............................. 29,425,793
=============================================================
Steel (0.1%)
- ------------
3,181 Allegheny Technologies, Inc..................... 71,374
4,500 Bethlehem Steel Corporation*.................... 37,687
3,100 Nucor Corporation............................... 169,919
3,100 USX-U.S. Steel Group............................ 102,300
3,100 Worthington Industries, Inc..................... 51,344
-------------------------------------------------------------
Total Steel..................................... 432,624
=============================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
47 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares Common Stocks (55.5%) Market Value
======================================================================
<S> <C> <C>
Technology (1.7%)
- -----------------
3,600 Adaptec, Inc.*............................ $179,550
5,300 ADC Telecommunications, Inc.*............. 384,581
8,500 BMC Software, Inc.*....................... 679,469
16,500 Electronic Data Systems Corporation....... 1,104,469
26,610 Global Crossing, Ltd.*.................... 1,330,500
4,500 Lexmark International Group, Inc.*........ 407,250
5,400 Network Appliance, Inc.*.................. 448,537
8,600 PeopleSoft, Inc.*......................... 183,288
23,200 QUALCOMM, Inc.*........................... 4,086,100
11,200 Xilinx, Inc.*............................. 509,249
9,300 Yahoo!, Inc.*............................. 4,023,994
--------------------------------------------------------
Total Technology.......................... 13,336,987
========================================================
Telephone (6.1%)
- ----------------
11,000 ALLTEL Corporation........................ 909,563
2,800 Andrew Corporation*....................... 53,025
112,013 AT&T Corporation.......................... 5,684,660
54,480 Bell Atlantic Corporation................. 3,353,925
66,000 BellSouth Corporation..................... 3,089,625
4,850 CenturyTel, Inc........................... 229,769
34,100 GTE Corporation........................... 2,406,181
109,875 Lucent Technologies, Inc.................. 8,220,023
99,621 MCI WorldCom, Inc.*....................... 5,286,139
21,500 MediaOne Group, Inc.*..................... 1,651,469
12,800 Nextel Communication, Inc.*............... 1,320,000
46,880 Nortel Networks Corporation............... 4,734,880
119,662 SBC Communications, Inc................... 5,833,523
30,600 Sprint Corporation........................ 2,059,762
15,150 Sprint Corporation PCS Group*............. 1,552,875
17,726 U S West, Inc............................. 1,276,272
--------------------------------------------------------
Total Telephone........................... 47,661,691
========================================================
Tires & Rubber (0.1%)
- ---------------------
2,600 Cooper Tire & Rubber Company.............. 40,463
5,000 Danaher Corporation....................... 241,250
5,400 Goodyear Tire & Rubber Company............ 152,212
--------------------------------------------------------
Total Tires & Rubber...................... 433,925
========================================================
Tobacco (0.3%)
- --------------
5,700 Fortune Brands, Inc....................... 188,456
3,700 Loews Corporation......................... 224,544
82,900 Phillip Morris Companies, Inc............. $1,922,244
6,000 UST, Inc.................................. 151,125
--------------------------------------------------------
Total Tobacco............................. 2,486,369
========================================================
Transportation (0.2%)
- ---------------------
15,992 Burlington Northern Santa Fe Corporation.. 387,806
7,600 CSX Corporation........................... 238,450
3,900 Kansas City Southern Industries, Inc...... 291,038
13,300 Norfolk Southern Corporation.............. 272,650
2,200 Ryder Systems, Inc........................ 53,762
8,700 Union Pacific Corporation................. 379,537
--------------------------------------------------------
Total Transportation...................... 1,623,243
========================================================
Travel & Recreation (0.5%)
- --------------------------
3,200 Brunswick Corporation..................... 71,200
21,600 Carnival Corporation...................... 1,032,750
4,500 Harrah's Entertainment, Inc.*............. 118,969
12,900 Hilton Hotels Corporation................. 124,162
8,700 Marriott International, Inc............... 274,594
6,700 Mirage Resorts, Inc.*..................... 102,594
72,287 Walt Disney Company....................... 2,114,395
--------------------------------------------------------
TotalTravel & Recreation.................. 3,838,664
========================================================
--------------------------------------------------------
Total Common Stocks
(cost basis $305,811,561)................. $431,808,804
========================================================
</TABLE>
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (34.2%) Rate Date Value
===============================================================================
<S> <C> <C> <C> <C>
Asset Backed Securities (0.3%)
- ------------------------------
$2,000,000 Chase Manhattan Auto
Owner Trust Series
1998-A Class A..................... 5.800% 12/16/02 $1,974,740
250,000 Chemical Mastercard
Trust Series 1996-1
Class A............................ 5.550 9/15/03 246,998
200,000 NationsBank Credit
Card Trust Series
1993-2 Class A..................... 6.000 12/15/05 193,666
171,903 Premier Auto Trust
Series 1996-3 Class A.............. 6.750 11/6/00 172,035
-------------------------------------------------------------------
Total Asset Backed Securities...... 2,587,439
===================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- --------------------------------------------------------------------------------
December 31, 1999 47
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (34.2%) Rate Date Value
==============================================================================
Corporate Obligations (6.4%)
- ----------------------------
$ 200,000 Abbott Laboratories.......... 6.800% 5/15/05 $198,372
1,000,000 Allstate Corporation......... 6.750 5/15/18 893,723
250,000 American Express
Credit Corporation........... 6.125 11/15/01 246,440
250,000 Associates Corporation
of North America............. 6.250 11/1/08 230,336
375,000 Associates Corporation
of North America............. 6.000 12/1/02 364,718
2,000,000 AT&T Corporation............. 6.000 3/15/09 1,821,742
500,000 Avco Financial
Services, Inc................ 6.000 8/15/02 485,258
250,000 Aventis SA................... 7.750 1/15/02 251,262
325,000 Baker Hughes, Inc............ 8.000 5/15/04 331,048
500,000 Baltimore Gas & Electric
Company...................... 7.500 1/15/07 498,960
500,000 Bank of America
Corporation.................. 6.625 8/1/07 472,926
750,000 Bank of America
Corporation.................. 6.625 6/15/04 732,920
1,000,000 Bank of America
Corporation.................. 5.875 2/15/09 890,707
1,000,000 Bank One Corporation......... 8.000 4/29/27 996,705
500,000 Boeing Company............... 8.100 11/15/06 511,964
1,000,000 Browning-Ferris
Industries, Inc.............. 6.375 1/15/08 803,477
1,000,000 Burlington Northern
Santa Fe Corporation......... 6.050 3/15/01 990,780
2,000,000 Cia de Telecom
de Chile..................... 8.375 1/1/06 1,980,884
500,000 CIT Group, Inc............... 6.375 10/1/02 489,995
2,000,000 Coca-Cola
Enterprises, Inc............. 6.750 9/15/23 1,762,508
250,000 Columbia Energy
Group........................ 7.320 11/28/10 238,924
1,250,000 Countrywide Home
Loans, Inc................... 6.935 7/16/07 1,190,512
1,000,000 Cox Communications,
Inc.......................... 6.400 8/1/08 920,790
500,000 Crown Cork & Seal............ 6.750 4/15/03 486,295
1,500,000 DaimlerChrysler
North American
Holdings Corporation......... 7.200 9/1/09 1,472,708
250,000 Devon Energy
Corporation.................. 10.125 11/15/09 283,375
550,000 E.I. Dupont de
Nemours & Company............ 8.125 3/15/04 569,485
510,000 Eli Lilly & Company.......... 6.570 1/1/16 468,720
$ 650,000 Enron Corporation............ 7.125% 5/15/07 $627,753
1,000,000 Enterprise Oil plc........... 6.500 5/1/05 934,030
1,000,000 Ford Motor Credit
Company...................... 7.750 11/15/02 1,017,391
500,000 General Electric Capital
Corporation.................. 8.090 4/1/04 515,845
500,000 General Motors
Acceptance
Corporation.................. 9.625 12/15/01 522,829
500,000 Hertz Corporation............ 7.000 7/1/04 493,739
250,000 Honeywell International,
Inc.......................... 8.625 4/15/06 264,030
250,000 Household Finance
Corporation.................. 7.250 7/15/03 249,083
1,500,000 Household Finance
Corporation.................. 6.400 6/17/08 1,381,887
500,000 International Business
Machines Corporation......... 7.500 6/15/13 504,197
500,000 Johnson Controls,
Inc.......................... 7.125 7/15/17 463,562
340,000 J.P. Morgan & Company,
Inc.......................... 6.250 12/15/05 323,541
1,000,000 Lehman Brothers
Holdings, Inc................ 7.000 5/15/03 985,882
2,000,000 MCI Worldcom, Inc............ 6.950 8/15/28 1,824,250
1,500,000 Merrill Lynch &
Company, Inc................. 6.000 2/17/09 1,344,522
750,000 Morgan Stanley Dean
Witter & Company............. 6.875 3/1/03 740,201
250,000 Noranda, Inc................. 8.000 6/1/03 250,146
500,000 Northern Trust
Company...................... 6.700 9/15/05 483,070
250,000 Norwest Financial, Inc....... 7.000 1/15/03 248,391
845,000 Private Export Funding
Corporation.................. 8.400 7/31/01 868,140
150,000 Private Export Funding
Corporation.................. 6.240 5/15/02 148,764
1,000,000 Raytheon Company............. 6.750 3/15/28 866,577
500,000 Reliant Energy, Inc.......... 9.375 6/1/01 514,730
420,000 Service Corporation
International................ 6.875 10/1/07 310,433
506,000 Sprint Capital
Corporation.................. 5.875 5/1/04 479,833
1,000,000 Temple-Inland, Inc........... 7.250 9/15/04 982,639
1,400,000 Texaco Capital, Inc.......... 8.500 2/15/03 1,461,505
500,000 Texas Utilities Electric
Company...................... 8.250 4/1/04 513,113
1,500,000 Thermo Electron
Corporation.................. 7.625 10/30/08 1,398,052
The accompanying notes to the financial statements are an integral part of
this schedule.
---------------------------------------------------------------------------
48 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (34.2%) Rate Date Value
=============================================================================
Corporate Obligations-continued
- -------------------------------
$1,000,000 Tosco Corporation........... 9.625% 3/15/02 $1,040,109
2,000,000 Union Pacific
Corporation................. 6.340 11/25/03 1,924,182
1,000,000 U.S. Bancorp................ 7.625 5/1/05 1,016,909
750,000 U.S. Bancorp................ 6.000 5/15/04 717,340
1,000,000 Virginia Electric &
Power Company............... 6.625 4/1/03 982,873
2,500,000 Wal-Mart Stores, Inc........ 6.875 8/10/09 2,433,642
----------------------------------------------------------------
Total Corporate Obligations......................... 49,418,724
================================================================
Mortgage Backed Securities (12.2%)
- ----------------------------------
Commercial Mortgage Backed Securities (0.5%)
- --------------------------------------------
1,000,000 First Union-Lehman
Brothers-Bank of
America Commercial
Mortgage Trust Series
1988 Class A................ 6.560 11/18/08 945,845
1,189,007 Morgan Stanley Capital,
Inc. Series 1998-WF1
Class A1.................... 6.250 7/15/07 1,151,938
1,900,000 Nationslink Funding
Corporation Series
1999-1 Class A2............. 6.316 11/20/08 1,764,374
----------------------------------------------------------------
Total Commercial Mortgage
Backed Securities................................... 3,862,157
================================================================
Federal Home Loan Mortgage
- --------------------------
Corporation (4.1%)
27,465 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon
Pass Through................ 7.000 7/1/02 27,480
919,011 Federal Home Loan
Mortgage Corporation
Gold 7-Yr. Balloon
Pass Through................ 6.000 4/1/06 885,793
988,563 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 7.500 9/1/14 996,286
80,760 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 7.500 8/1/10 81,549
275,966 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 7.000 8/1/12 273,603
95,463 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 7.000 11/1/10 94,743
$ 977,696 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.500% 6/1/14 $949,281
624,941 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.500 8/1/13 607,828
356,641 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.500 11/1/12 347,287
142,201 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.500 4/1/09 139,321
999,900 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.000 4/1/14 950,425
952,194 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.000 4/1/14 906,149
958,010 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.000 2/1/14 910,608
392,819 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 6.000 5/1/12 375,071
906,633 Federal Home Loan
Mortgage Corporation
Gold 15-Yr.
Pass Through................ 5.500 4/1/14 843,112
45,292 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 9.000 4/1/25 47,208
671,806 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 9.000 11/1/24 700,687
184,116 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.500 7/1/27 189,055
63,166 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.500 9/1/25 64,843
210,919 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.000 10/1/27 212,737
529,594 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.000 6/1/27 534,160
196,841 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.000 3/1/27 198,567
84,061 Federal Home Loan
Mortgage Corporation
Gold 30-Yr.
Pass Through................ 8.000 11/1/26 84,798
The accompanying notes to the financial statements are an integral part of
this schedule.
- -----------------------------------------------------------------------------
December 31, 1999 49
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (34.2%) Rate Date Value
=============================================================================
Federal Home Loan Mortgage Corporation-continued
- ------------------------------------------------
$ 92,738 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 8.000% 1/1/26 $93,555
240,041 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 8.000 6/1/12 245,201
999,406 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 11/1/29 990,243
386,352 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 5/1/28 382,932
318,239 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 1/15/28 315,422
277,488 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 11/1/27 275,031
237,531 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 4/1/27 235,428
111,984 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 1/1/27 111,018
97,926 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 8/1/26 97,081
61,920 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 7/1/26 61,386
127,025 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 11/1/25 125,968
1,000,000 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 12/15/29 967,811
995,048 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 9/1/29 963,434
973,033 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 5/1/29 942,119
592,843 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 10/1/28 574,154
710,446 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 7/1/28 688,049
428,346 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 3/1/28 414,842
$ 313,612 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000% 9/1/27 $304,003
332,479 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 5/1/27 322,292
311,031 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 2/1/27 301,501
162,976 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 5/1/26 158,018
128,901 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 9/1/25 125,074
827,677 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 2/1/11 821,431
996,463 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 8/1/29 940,100
986,443 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 7/1/29 930,647
990,297 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 4/1/29 934,282
962,760 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 3/1/29 909,843
997,546 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 1/1/29 942,717
955,132 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 1/1/29 902,634
987,434 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 10/15/28 933,161
928,751 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 6/1/28 877,703
430,363 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 12/1/27 407,215
388,843 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 2/1/27 367,928
170,247 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 11/1/26 161,42
The accompanying notes to the financial statements are an integral part
of this schedule.
-----------------------------------------------------------------------
50 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (34.2%) Rate Date Value
===========================================================================================
<S> <C> <C> <C> <C>
Federal Home Loan Mortgage Corporation-continued
- ------------------------------------------------
$ 153,796 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.500% 4/1/24 $ 146,700
993,925 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 7/1/29 911,455
983,241 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 5/1/29 901,098
972,289 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 3/1/29 891,061
910,873 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 5/1/28 835,294
193,799 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 7/1/26 178,061
----------------------------------------------------------------------
Total Federal Home Loan
Mortgage Corporation....................................... 32,107,905
======================================================================
Federal National Mortgage Association (4.8%)
- --------------------------------------------
186,668 Federal National
Mortgage Association
Conventional 7-Yr.
Balloon Pass Through......... 7.000 6/1/04 186,425
129,521 Federal National
Mortgage Association
Conventional 7-Yr.
Balloon Pass Through......... 6.500 10/1/03 128,053
248,995 Federal National
Mortgage Association
Conventional 7-Yr.
Balloon Pass Through......... 6.000 12/1/03 242,697
34,839 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 9.000 4/1/10 36,035
28,151 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 9.000 4/1/10 29,118
129,170 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 8.000 5/1/11 131,951
105,501 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.500 6/1/11 106,370
376,513 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 12/1/12 372,994
671,856 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 10/1/12 665,576
145,398 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 7.000 6/1/11 144,083
899,902 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 6/1/13 874,318
328,454 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 7/1/12 319,557
864,074 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.500 5/1/12 840,667
126,069 Federal National
Mortgage Association
Conventional 15-Yr.
Pass......................... 6.500 7/1/11 122,818
928,436 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000 12/1/13 883,439
905,464 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000 3/1/13 860,445
131,516 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 6.000 2/1/11 125,430
891,371 Federal National
Mortgage Association
Conventional 15-Yr.
Pass Through................. 5.500 12/1/13 827,759
86,041 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................ 10.500 8/1/20 92,033
46,430 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through................. 9.500 4/1/25 48,993
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 51
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
=============================================================================
<S> <C> <C> <C> <C>
Federal National Mortgage Association-continued
- -----------------------------------------------
$ 106,835 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 9.000% 9/1/26 $111,318
1,000,000 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.500 12/15/29 1,025,000
36,235 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.500 5/1/26 37,150
79,577 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.500 11/1/25 81,575
564,173 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 12/1/27 567,986
883,540 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 9/1/27 889,512
105,749 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 7/1/27 106,464
88,995 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 11/1/26 89,605
70,325 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 8/1/26 70,807
90,332 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 8.000 1/1/26 90,960
1,061,184 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 3/1/29 1,050,326
355,374 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 12/1/27 351,738
543,048 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 8/1/27 537,491
172,577 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 5/1/27 170,811
98,947 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 2/1/27 97,952
74,697 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 12/1/26 73,946
64,652 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 9/1/26 64,002
749,094 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 8/1/26 741,565
110,767 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 7/1/26 109,654
119,395 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 9/1/25 118,238
104,758 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.500 10/1/24 103,842
1,000,000 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 12/15/29 966,875
998,917 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 11/1/29 966,244
970,785 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 7/1/29 939,032
983,022 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 3/1/29 951,416
149,905 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 11/1/28 145,085
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
52 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
==========================================================================
<S> <C> <C> <C> <C>
Federal National Mortgage Association--continued
$ 687,104 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000% 11/1/28 $665,012
895,246 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 8/1/28 866,462
643,868 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 2/1/28 623,684
301,349 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 10/1/27 291,902
365,000 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 7/1/27 353,558
295,486 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 3/1/27 286,481
236,035 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 1/1/27 228,842
154,074 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 11/1/26 149,378
124,048 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 3/1/26 120,267
110,299 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 7.000 1/1/26 107,124
1,000,000 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 12/15/29 942,500
999,043 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 8/1/29 941,910
978,882 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 7/1/29 922,902
988,229 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 6/1/29 931,714
853,073 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 11/1/28 805,673
947,567 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 11/1/28 894,917
884,107 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 10/15/28 836,587
923,822 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 10/1/28 872,491
965,301 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 8/1/28 911,665
775,265 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 7/1/28 732,188
890,556 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 3/1/28 841,073
377,596 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 7/1/27 357,301
172,673 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 3/1/26 163,924
161,098 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.500 2/1/26 152,936
986,601 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.000 7/1/29 903,253
991,916 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through........... 6.000 4/1/29 908,119
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 53
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
================================================================================
Federal National Mortgage Association--continued
$ 970,702 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through..................... 6.000% 4/1/29 $888,697
943,210 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through..................... 6.000 12/1/28 864,044
898,429 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through..................... 6.000 7/1/28 823,021
224,410 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through..................... 6.000 5/1/26 205,955
970,061 Federal National
Mortgage Association
Conventional 30-Yr.
Pass Through..................... 6.000 11/1/13 921,831
---------------------------------------------------------------------
Total Federal National
Mortgage Association.................................... 37,012,766
=====================================================================
Government National Mortgage Association (2.8%)
- -----------------------------------------------
125,078 Government National
Mortgage Association
15-Yr. Pass Through.............. 7.500 7/15/11 126,287
299,584 Government National
Mortgage Association
15-Yr. Pass Through.............. 7.000 4/15/12 297,177
172,936 Government National
Mortgage Association
15-Yr. Pass Through.............. 6.500 6/15/11 168,553
86,697 Government National
Mortgage Association
15-Yr. Pass Through.............. 6.500 5/15/09 84,952
166,769 Government National
Mortgage Association
15-Yr. Pass Through.............. 6.000 4/15/11 159,581
187,758 Government National
Mortgage Association
30-Yr. Pass Through.............. 9.500 2/15/28 200,053
31,434 Government National
Mortgage Association
30-Yr. Pass Through.............. 9.500 12/15/24 33,480
145,143 Government National
Mortgage Association
30-Yr. Pass Through.............. 9.000 12/15/26 151,991
41,639 Government National
Mortgage Association
30-Yr. Pass Through.............. 9.000 8/15/26 43,604
$ 274,581 Government National
Mortgage Association
30-Yr. Pass Through.............. 9.000% 3/15/25 $287,608
998,509 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.500 9/15/29 1,027,320
42,686 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.500 11/15/26 43,939
81,634 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.500 7/15/26 84,030
129,690 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.500 6/15/26 133,497
655,221 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 11/15/28 663,059
519,785 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 3/15/28 525,533
220,640 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 8/15/27 223,145
206,071 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 6/20/27 207,441
223,225 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 11/15/26 225,895
49,910 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 4/15/26 50,507
69,434 Government National
Mortgage Association
30-Yr. Pass Through.............. 8.000 6/1/25 70,285
990,789 Government National
Mortgage Association
30-Yr. Pass Through.............. 7.500 8/15/29 980,467
902,827 Government National
Mortgage Association
30-Yr. Pass Through.............. 7.500 7/15/28 893,658
395,760 Government National
Mortgage Association
30-Yr. Pass Through.............. 7.500 11/15/27 391,914
571,066 Government National
Mortgage Association
30-Yr. Pass Through.............. 7.500 4/15/27 565,517
149,526 Government National
Mortgage Association
30-Yr. Pass Through.............. 7.500 1/15/27 148,073
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
54 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
==================================================================================================
<S> <C> <C> <C> <C>
Government National Mortgage Association--continued
$ 137,506 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.500% 10/15/26 $136,253
210,076 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.500 10/15/26 208,162
146,870 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.500 5/15/26 145,532
98,833 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.500 4/15/26 97,933
126,656 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.500 8/15/25 125,593
999,075 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 6/15/29 965,460
985,048 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 4/15/29 951,905
935,531 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 7/15/28 904,448
176,280 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 11/15/27 170,638
782,909 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 11/15/27 757,851
26,074 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 10/15/27 25,239
777,862 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 10/15/27 752,965
729,894 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 6/15/26 706,804
153,918 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 5/15/26 149,049
364,421 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 4/15/26 352,892
166,441 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 1/15/26 161,176
355,465 Government National
Mortgage Association
30-Yr. Pass Through........................ 7.000 1/15/26 344,220
$ 989,641 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500% 4/15/29 $929,644
991,028 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 3/15/29 930,947
985,024 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 1/15/29 925,307
986,200 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 11/1/28 926,887
963,943 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 7/15/28 905,968
433,030 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 10/15/27 407,394
185,581 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.500 3/15/26 175,056
993,081 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.000 6/15/29 904,220
992,691 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.000 12/15/28 904,488
217,191 Government National
Mortgage Association
30-Yr. Pass Through........................ 6.000 5/15/26 199,013
--------------------------------------------------------------------------------------
Total Government National Mortgage
Association............................................................ 21,952,610
======================================================================================
--------------------------------------------------------------------------------------
Total Mortgage Backed Securities....................................... 94,935,438
======================================================================================
U.S. Government Obligations (13.9%)
- -----------------------------------
U.S. Government Agency (2.9%)
- -----------------------------
550,000 Federal Home Loan
Bank..................................... 7.260 9/6/01 555,950
2,020,000 Federal Home Loan
Bank..................................... 6.625 8/27/07 1,967,270
500,000 Federal Home Loan
Bank..................................... 5.865 6/2/03 486,295
765,000 Federal Home Loan
Mortgage Corporation..................... 7.750 11/7/01 780,210
2,000,000 Federal Home Loan
Mortgage Corporation..................... 6.250 7/15/04 1,952,106
1,725,000 Federal Home Loan
Mortgage Corporation..................... 6.220 3/24/03 1,699,437
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 55
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
=====================================================================================
<S> <C> <C> <C> <C>
U.S. Government Agency-continued
- --------------------------------
$1,330,000 Federal Home Loan
Mortgage Corporation........ 5.990% 12/1/03 $1,290,999
1,700,000 Federal National
Mortgage Association........ 8.250 12/18/00 1,728,383
1,000,000 Federal National
Mortgage Association........ 6.000 9/24/01 991,506
2,000,000 Federal National
Mortgage Association........ 7.120 7/3/06 1,995,266
250,000 Federal National
Mortgage Association........ 6.700 11/10/05 242,058
2,000,000 Federal National
Mortgage Association........ 6.000 5/15/08 1,869,244
1,500,000 Federal National
Mortgage Association........ 5.625 4/17/28 1,201,698
1,750,000 Federal National
Mortgage Association........ 5.125 2/13/04 1,641,987
1,000,000 Resolution Funding
Corporation................. 8.625 1/15/21 1,143,239
1,500,000 Student Loan Marketing
Association................. 7.300 8/1/12 1,511,001
2,000,000 Tennesee Valley
Authority................... 6.375 6/15/05 1,927,334
----------------------------------------------------------------------
Total U.S. Government Agency.............................. 22,983,983
======================================================================
U.S. Treasury Securities (11.0%)
- --------------------------------
1,200,000 U.S. Treasury Notes......... 11.875 11/15/03 1,416,750
1,250,000 U.S. Treasury Notes......... 10.750 5/15/03 1,410,546
1,500,000 U.S. Treasury Notes......... 10.750 2/15/03 1,680,468
1,100,000 U.S. Treasury Notes......... 9.375 2/15/06 1,255,375
2,130,000 U.S. Treasury Notes......... 8.000 5/15/01 2,178,590
2,225,000 U.S. Treasury Notes......... 7.875 8/15/01 2,279,234
2,200,000 U.S. Treasury Notes......... 7.750 2/15/01 2,237,811
1,400,000 U.S. Treasury Notes......... 7.500 2/15/05 1,460,375
1,225,000 U.S. Treasury Notes......... 7.500 5/15/02 1,257,538
2,205,000 U.S. Treasury Notes......... 7.500 11/15/01 2,253,234
2,550,000 U.S. Treasury Notes......... 7.250 8/15/04 2,631,281
2,125,000 U.S. Treasury Notes......... 7.250 5/15/04 2,190,078
375,000 U.S. Treasury Notes......... 7.000 7/15/06 384,141
2,475,000 U.S. Treasury Notes......... 6.750 8/15/26 2,485,828
1,525,000 U.S. Treasury Notes......... 6.625 4/30/02 1,535,960
2,200,000 U.S. Treasury Notes......... 6.625 7/31/01 2,214,436
875,000 U.S. Treasury Notes......... 6.500 10/15/06 872,539
2,000,000 U.S. Treasury Notes......... 6.500 5/31/02 2,010,000
2,500,000 U.S. Treasury Notes......... 6.375 3/31/01 2,505,468
650,000 U.S. Treasury Notes......... 6.250 6/30/02 649,594
$1,225,000 U.S. Treasury Notes......... 6.250% 1/31/02 $1,225,000
1,975,000 U.S. Treasury Notes......... 6.250 4/30/01 1,976,851
1,200,000 U.S. Treasury Notes......... 6.125 8/15/07 1,169,624
2,850,000 U.S. Treasury Notes......... 6.125 12/31/01 2,843,764
1,650,000 U.S. Treasury Notes......... 5.875 11/15/05 1,602,046
2,400,000 U.S. Treasury Notes......... 5.875 2/15/04 2,360,249
2,650,000 U.S. Treasury Notes......... 5.750 8/15/03 2,594,514
2,350,000 U.S. Treasury Notes......... 5.750 11/30/02 2,314,014
2,000,000 U.S. Treasury Notes......... 5.625 6/30/01 2,011,874
2,150,000 U.S. Treasury Notes......... 5.500 2/15/08 2,014,281
2,500,000 U.S. Treasury Notes......... 5.500 12/31/00 2,485,155
2,275,000 U.S. Treasury Notes......... 5.250 1/31/01 2,255,804
2,400,000 U.S. Treasury Notes......... 4.750 11/15/08 2,117,249
200,000 U.S. Treasury Bonds......... 10.375 11/15/12 243,000
1,275,000 U.S. Treasury Bonds......... 9.875 11/15/15 1,648,335
1,925,000 U.S. Treasury Bonds......... 8.875 2/15/19 2,341,281
1,500,000 U.S. Treasury Bonds......... 8.750 5/15/17 1,790,625
1,225,000 U.S. Treasury Bonds......... 8.250 2/15/20 1,447,797
700,000 U.S. Treasury Bonds......... 8.125 8/15/21 803,250
2,350,000 U.S. Treasury Bonds......... 8.125 8/15/19 2,677,531
300,000 U.S. Treasury Bonds......... 8.000 11/15/21 340,313
1,200,000 U.S. Treasury Bonds......... 7.875 2/15/21 1,341,000
1,500,000 U.S. Treasury Bonds......... 7.625 2/15/25 1,662,188
250,000 U.S. Treasury Bonds......... 7.625 11/15/22 274,219
1,100,000 U.S. Treasury Bonds......... 7.500 11/15/24 1,200,375
400,000 U.S. Treasury Bonds......... 7.250 8/15/22 421,750
625,000 U.S. Treasury Bonds......... 7.125 2/15/23 650,781
1,500,000 U.S. Treasury Bonds......... 6.875 8/15/25 1,527,188
1,500,000 U.S. Treasury Bonds......... 6.250 8/15/23 1,414,688
2,325,000 U.S. Treasury Bonds......... 6.125 11/15/27 2,162,250
1,500,000 U.S. Treasury Bonds......... 6.000 2/15/26 1,372,031
----------------------------------------------------------------------
Total U.S. Treasury Securities......................... 85,198,273
======================================================================
----------------------------------------------------------------------
Total U.S. Government
Obligations............................................ 108,182,256
======================================================================
Yankee Bonds (1.1%)
- -------------------
1,000,000 Cable & Wireless
Communications plc.......... 6.375 3/6/03 989,801
1,500,000 Export-Import Bank of
Korea....................... 6.500 11/15/06 1,420,500
1,200,000 Inter-American
Development Bank............ 5.375 11/18/08 1,065,709
2,000,000 Matsushita Electric
Industries, Ltd............. 7.250 8/1/02 2,007,710
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
54 Balanced Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Balanced Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities(34.2%) Rate Date Value
==================================================================================================
<S> <C> <C> <C> <C>
Yankee Bonds--continued
- -----------------------
$1,000,000 Ontario Hydro............................... 7.450% 3/31/13 $992,369
250,000 Petro-Canada, Ltd........................... 8.600 1/15/10 274,873
500,000 Province of British
Columbia.................................... 7.250 9/1/36 478,040
500,000 Province of
Newfoundland................................ 8.650 10/22/22 538,359
500,000 Province of Quebec.......................... 7.500 7/15/02 504,994
500,000 Province of
Saskatchewan................................ 8.000 7/15/04 514,430
--------------------------------------------------------------------------------------
Total Yankee Bonds................................................... 8,786,785
======================================================================================
Utility Bonds (0.3%)
- --------------------
1,000,000 California Infrastructure
PG&E Bonds.................................. 6.480 12/26/09 962,680
1,000,000 Public Service Electric &
Gas Mortgage Bonds.......................... 6.375 5/1/08 925,262
250,000 Scottish Power plc.......................... 6.750 4/1/05 243,163
--------------------------------------------------------------------------------------
Total Utility Bonds.................................................. 2,131,105
======================================================================================
--------------------------------------------------------------------------------------
Total Long-Term Fixed Income
Securities
(amortized cost basis $278,490,689).................................. $266,041,747
======================================================================================
<CAPTION>
Principal Short-Term Interest Maturity Market
Amount Investments (10.2%) Rate (1) Date Value
==================================================================================================
<S> <C> <C> <C> <C>
$3,367,000 Bell Atlantic Network
Funding Corporation......................... 6.220% 1/19/00 $3,356,529
7,012,000 CIT Group, Inc.............................. 5.850 1/5/00 7,007,442
14,835,000 Countrywide Home
Loans, Inc.................................. 5.500- 1/3-
6.570 1/19/00 14,806,441
$6,551,000 Exxon Asset Management
Company (4)................................. 5.880% 1/6/00 $6,545,650
12,600,000 Ford Motor Credit
Company..................................... 6.020- 1/4-
6.280 1/11/00 12,583,720
3,799,000 General Motors
Acceptance Corporation...................... 6.360 1/12/00 3,791,617
14,571,000 Goldman Sachs
Group, L.P.................................. 6.500- 1/13-
6.550 1/20/00 14,533,538
2,552,000 MDU Resources
Group, Inc.................................. 6.700 1/5/00 2,550,100
5,765,000 Toyota Motor
Corporation................................. 5.930 1/10/00 5,756,454
8,900,000 Transamerica Finance
Corporation................................. 5.500 2/18/00 8,834,733
--------------------------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $79,766,224)................................... 79,766,224
======================================================================================
--------------------------------------------------------------------------------------
Total Investments (99.9%)
(amortized cost basis $664,068,474).................................. 777,616,775
======================================================================================
--------------------------------------------------------------------------------------
Other Assets,
Less Liabilities (0.1%).............................................. 28,849
======================================================================================
--------------------------------------------------------------------------------------
Net Assets (100.0%).................................................. $777,645,624
======================================================================================
</TABLE>
* 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 115 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 57
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
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 Fixed Income Interest Maturity Market
Amount Securities (93.6%) Rate Date Value
===============================================================================
Automotive Manufacturing (1.4%)
- -------------------------------
$ 350,000 Breed Technologies,
Inc. (3)....................... 9.250% 4/15/08 $3,937
350,000 Federal-Mogul
Corporation.................... 7.875 7/1/10 311,267
250,000 Talon Automotive
Group LLC...................... 9.625 5/1/08 155,625
-----------------------------------------------------------------
Total Automotive Manufacturing........................ 470,829
=================================================================
Chemicals (2.5%)
- ----------------
500,000 LaRoche Industries, Inc........ 9.500 9/15/07 135,000
500,000 PCI Chemicals Canada,
Inc............................ 9.250 10/15/07 385,000
350,000 Royster-Clark, Inc. (2)........ 10.250 4/1/09 316,750
-----------------------------------------------------------------
Total Chemicals....................................... 836,750
=================================================================
Consumer Products (2.9%)
- ------------------------
400,000 Doskocil Manufacturing
Company, Inc................... 10.125 9/15/07 128,000
350,000 O'Sullivan Industries,
Inc. (2)....................... 13.375 10/15/09 347,375
250,000 Salton, Inc.................... 10.750 12/15/05 255,625
250,000 Samsonite Corporation.......... 10.750 6/15/08 215,000
-----------------------------------------------------------------
Total Consumer Products............................... 946,000
=================================================================
Construction (5.5%)
- -------------------
250,000 Amatek Industries
Property, Ltd.................. 12.000 2/15/08 230,000
500,000 American Standard, Inc......... 7.625 2/15/10 456,250
$ 350,000 Building One Services
Corporation.................... 10.500% 5/1/09 $336,000
350,000 ISG Resources, Inc............. 10.000 4/15/08 297,500
250,000 Omega Cabinets, Ltd............ 10.500 6/15/07 247,500
250,000 Penhall International
Corporation.................... 12.000 8/1/06 253,750
-----------------------------------------------------------------
Total Construction.................................... 1,821,000
=================================================================
Containers (1.3%)
- -----------------
500,000 Anchor Glass Containers
Corporation.................... 11.250 4/1/05 440,000
-----------------------------------------------------------------
Total Containers...................................... 440,000
=================================================================
Energy (5.8%)
- -------------
350,000 Abraxas Petroleum
Corporation.................... 11.500 11/1/04 318,500
29,809 Abraxas Petroleum Corporation
Warrants....................... 298
500,000 Clark Refining & Marketing
Corporation.................... 8.375 11/15/07 310,000
250,000 Crown Central Petroleum
Corporation.................... 10.875 2/1/05 188,750
750,000 Energy Corporation
of America..................... 9.500 5/15/07 532,500
250,000 KCS Energy, Inc. (3)........... 11.000 1/15/03 200,000
500,000 Northern Offshore
ASA............................ 10.000 5/15/05 305,000
500,000 Transamerican Energy
Corporation (3)................ 11.500 6/15/02 52,500
-----------------------------------------------------------------
Total Energy.......................................... 1,907,548
=================================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
58 High Yield Bond Portfolio Schedule of Investments
<PAGE>
The AAL Variable Product High Yield Bond Portfolio-continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (93.6%) Rate Date Value
- -------------------------------------------------------------------------------
Financial (3.0%)
- ----------------
$ 400,000 AMRESCO, Inc................... 10.000% 3/15/04 $252,000
500,000 Imperial Credit
Industries, Inc................ 9.875 1/15/07 390,000
350,000 Sovereign Bancorp, Inc......... 10.500 11/15/06 357,000
-----------------------------------------------------------------
Total Financial....................................... 999,000
=================================================================
Food & Beverages (4.5%)
- -----------------------
350,000 Fresh Foods, Inc............... 10.750 6/1/06 332,500
500,000 SFC New Holdings, Inc.......... 12.125 10/1/02 492,500
23,947 SFC New Holdings, Inc.
Subordinated Notes............. .0.000 12/15/09 0
350,000 Smithfield Foods, Inc.......... .7.625 2/15/08 315,000
500,000 Viskase Companies, Inc......... 10.250 12/1/01 350,000
-----------------------------------------------------------------
Total Food & Beverages................................ 1,490,000
=================================================================
Food Retailers (2.0%)
- ---------------------
500,000 Fleming Companies,
Inc............................ 10.500 12/1/04 458,750
250,000 Pathmark Stores, Inc........... 9.625 5/1/03 187,500
-----------------------------------------------------------------
Total Food Retailers................................. 646,250
=================================================================
Forest Products & Paper (4.7%)
- ------------------------------
250,000 American Tissue, Inc. (2)...... 12.500 7/15/06 257,500
250,000 Four M Corporation............. 12.000 6/1/06 240,000
250,000 Gaylord Container
Corporation.................... 9.375 6/15/07 231,250
250,000 Sweetheart Cup
Company, Inc................... 10.500 9/1/03 242,500
600,000 Sweetheart Cup
Company, Inc................... 9.625 9/1/00 594,000
-----------------------------------------------------------------
Total Forest Products & Paper........................ 1,565,250
=================================================================
Health Care (3.7%)
- ------------------
500,000 ICN Pharmaceuticals,
Inc............................ 9.250 8/15/05 492,500
250,000 Mariner Post-Acute
Network, Inc. (3).............. 9.500 11/1/07 5,000
500,000 Tenet Healthcare
Corporation.................... 8.000 1/15/05 478,750
250,000 Triad Hospitals
Holdings, Inc.................. 11.000 5/15/09 258,750
-----------------------------------------------------------------
Total Health Care.................................... 1,235,000
=================================================================
Leisure (6.3%)
- --------------
$ 250,000 Carmike Cinemas, Inc........... 9.375% 2/1/09 $216,875
250,000 Harrahs Operating
Company, Inc................... 7.875 12/15/05 241,563
500,000 HMH Properties, Inc............ 7.875 8/1/05 462,500
250,000 Livent, Inc. (3)............... 9.375 10/15/04 57,500
350,000 Mandalay Resort Group.......... 7.625 7/15/13 304,500
250,000 Regal Cinemas, Inc............. 9.500 6/1/08 188,750
500,000 Riviera Holdings
Corporation.................... 10.000 8/15/04 461,250
233,415 United Artists
Theatre Circuit, Inc........... 9.300 7/1/15 167,101
-----------------------------------------------------------------
Total Leisure......................................... 2,100,039
=================================================================
Manufacturing (6.5%)
- --------------------
350,000 BGF Industries, Inc............ 10.250 1/15/09 308,000
350,000 Global Imaging
Systems, Inc................... 10.750 2/15/07 336,000
250,000 High Voltage Engineering
Corporation.................... 10.500 8/15/04 213,750
250,000 IMPAC Group, Inc............... 10.125 3/15/08 227,500
500,000 Indesco International,
Inc............................ 9.750 4/15/08 225,000
400,000 Morris Material Handling
Corporation.................... 9.500 4/1/08 132,000
500,000 Paragon Corporate
Holdings, Inc.................. 9.625 4/1/08 150,000
250,000 RBX Corporation................ 12.000 1/15/03 192,500
250,000 Russell-Stanley
Holdings, Inc.................. 10.875 2/15/09 217,500
250,000 W.R. Carpenter North
America, Inc................... 10.625 6/15/07 142,500
-----------------------------------------------------------------
Total Manufacturing................................... 2,144,750
=================================================================
Media-Broadcasting (2.3%)
- -------------------------
500,000 Chancellor Media
Corporation..................... 8.000 11/1/08 500,000
250,000 Spanish Broadcasting
System, Inc..................... 9.625 11/1/09 251,250
-----------------------------------------------------------------
Total Media-Broadcasting.............................. 751,250
=================================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 59
<PAGE>
The AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (93.6%) Rate Date Value
================================================================================
Media-Cable (7.6%)
- ------------------
$ 500,000 Century Communications
Corporation.................... 8.750% 10/1/07 $481,250
500,000 Charter Communication
Holdings LLC .................. 8.625 4/1/09 461,875
350,000 Comcast Cable
Communications, Inc............ 6.200 11/15/08 317,263
250,000 Comcast Corporation............ 9.500 1/15/08 257,500
500,000 CSC Holdings, Inc.............. 7.875 2/15/18 476,250
500,000 United Pan-Europe
Communications NV (2).......... 10.875 11/1/07 507,500
-----------------------------------------------------------------
Total Media-Cable..................................... 2,501,638
=================================================================
Metals-Diversified (3.3%)
- -------------------------
500,000 Algoma Steel
Corporation.................... 12.375 7/15/05 470,000
350,000 Oglebay Norton
Company........................ 10.000 2/1/09 339,500
350,000 Sheffield Steel
Corporation.................... 11.500 12/1/05 297,500
-----------------------------------------------------------------
Total Metals-Diversified.............................. 1,107,000
=================================================================
Pollution Control (3.3%)
- ------------------------
500,000 Allied Waste, Inc.
North America.................. 7.875 1/1/09 441,875
500,000 Envirosource, Inc.............. 9.750 6/15/03 315,000
400,000 HydroChem Industrial
Services, Inc.................. 10.375 8/1/07 343,000
-----------------------------------------------------------------
Total Pollution Control............................... 1,099,875
=================================================================
Restaurants/Food Service (2.8%)
- -------------------------------
250,000 American Restaurant
Group, Inc..................... 11.500 2/15/03 192,500
500,000 AmeriServe Food
Distribution, Inc.............. 8.875 10/15/06 275,000
500,000 Tricon Global
Restaurants, Inc............... 7.650 5/15/08 473,395
-----------------------------------------------------------------
Total Restaurants/Food Service........................ 940,895
=================================================================
Retail Stores (1.8%)
- --------------------
400,000 Just For Feet, Inc. (2)(3)..... 11.000 5/1/09 20,000
500,000 Pantry, Inc.................... 10.250 10/15/07 485,000
250,000 Vista Eyecare, Inc............. 12.750 10/15/05 100,000
-----------------------------------------------------------------
Total Retail Stores................................... 605,000
=================================================================
Technology (2.6%)
- -----------------
$ 350,000 Amkor Technologies,
Inc. (2)....................... 10.500% 5/1/09 $348,250
250,000 Amkor Technologies,
Inc. (2)....................... 9.250 5/1/06 243,750
500,000 Viasystems Group, Inc.......... 9.750 6/1/07 265,000
-----------------------------------------------------------------
Total Technology..................................... 857,000
=================================================================
Telecommunications (12.6%)
- --------------------------
500,000 Alestra SA de R.L.
de C.V......................... 12.125 5/15/06 502,500
500,000 Call-Net Enterprises, Inc...... 9.375 5/15/09 411,250
350,000 Global Crossing
Holdings, Ltd. (2)............. 9.125 11/15/06 346,063
250,000 GlobeNet Communications
Group, Ltd. (2)................ 13.000 7/15/07 254,687
250,000 Iridium Capital
Corporation (3)................ 11.250 7/15/05 10,000
350,000 Level 3
Communications, Inc............ 9.125 5/1/08 329,875
500,000 Metrocall, Inc. ............... 11.000 9/15/08 300,000
350,000 Nextel Communications,
Inc. (2)....................... 9.375 11/15/09 343,000
250,000 Pac-West Telecommunications,
Inc............................ 13.500 2/1/09 258,750
250,000 Paging Network, Inc............ 10.000 10/15/08 72,500
500,000 Primus Telecommunications
Group, Inc. ................... 11.250 1/15/09 477,500
350,000 PSINet, Inc.................... 10.000 2/15/05 346,063
500,000 Spectrasite Holdings,
Inc............................ 0.000 4/15/09 266,250
250,000 Worldwide Fiber,
Inc. (2)....................... 12.000 8/1/09 257,500
-----------------------------------------------------------------
Total Telecommunications.............................. 4,175,938
=================================================================
Textile (1.5%)
- -------------
350,000 Anvil Knitwear, Inc............ 10.875 3/15/07 291,375
350,000 Galey & Lord, Inc.............. 9.125 3/1/08 82,250
350,000 Ntex, Inc...................... 11.500 6/1/06 122,500
-----------------------------------------------------------------
Total Textile......................................... 496,125
=================================================================
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
60 High Yield Bond Portfolio Schedule of Investments
<PAGE>
The AAL Variable Product High Yield Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (93.6%) Rate Date Value
===============================================================================
Transportation (2.9%)
- ---------------------
$ 500,000 Allied Holdings, Inc....... 8.625% 10/1/07 $440,000
350,000 Petro Stopping
Centers, L.P............... 0.500 2/1/07 324,625
250,000 Transportation Maritima
Mexicana S.A. de C.V....... 10.000 11/15/06 201,875
-----------------------------------------------------------------
Total Transportation.................................... 966,500
=================================================================
Utilities (2.8%)
- ----------------
500,000 Calpine Corporation........ 7.625 4/15/06 476,250
500,000 CMS Energy
Corporation................ 7.500 1/15/09 451,365
-----------------------------------------------------------------
Total Utilities..................................... 927,615
=================================================================
Total Long-Term Fixed Income Securities
(amortized cost basis $37,614,970).................. $31,031,252
=================================================================
Market
Shares Common Stocks (0.1%) Value
================================================================================
29,809 Abraxas Petroleum Corporation* $27,946
-----------------------------------------------------------------
Total Common Stocks
(cost basis $46,125)................................ $27,946
=================================================================
Principal Short-Term Interest Maturity Market
Amount Investments (93.6%) Rate Date Value
================================================================================
$1,057,000 Countrywide Home
Loans, Inc................. 5.200% 1/3/00 $1,056,695
-----------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $1,056,695)................... 1,056,695
=================================================================
-----------------------------------------------------------------
Total Investments (96.9%)
(amortized cost basis $38,717,790).................. 32,115,893
=================================================================
-----------------------------------------------------------------
Other Assets, Less Liabilities (3.1%)............... 1,046,934
=================================================================
-----------------------------------------------------------------
Net Assets (100.0%)................................. $33,162,827
=================================================================
*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 115 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of
this schedule.
- ----------------------------------------------------------------------------
December 31, 1999 61
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Bond Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
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 (97.8%) Rate Date Value
================================================================================
Asset Backed Securities (1.3%)
- ------------------------------
$ 250,000 Chase Credit Card
Master Trust Series
1997-5 Class A............... 6.194% 8/15/05 $245,625
250,000 NationsBank Credit Card
Master Trust Series
1993-2 Class A............... 6.000 12/15/05 242,082
250,000 PECO Energy Transition
Trust Series 1999-A
Class A6..................... 6.050 3/1/09 233,495
-------------------------------------------------------------------
Total Asset Backed Securities........................... 721,202
===================================================================
Corporate Obligations (19.6%)
- -----------------------------
225,000 Abbott Laboratories.......... 6.800 5/15/05 223,169
300,000 ABN Amro Bank
New York..................... 8.250 8/1/09 305,888
250,000 American Express Credit
Corporation.................. 6.750 6/1/01 249,505
250,000 Associates Corporation
of North America............. 6.250 11/1/08 230,336
250,000 AT&T Corporation ............ 6.000 3/15/09 227,717
200,000 Baltimore Gas & Electric
Company...................... 7.500 1/15/07 199,584
500,000 Bank of America
Corporation.................. 5.875 2/15/09 445,354
250,000 Browning-Ferris Industries,
Inc.......................... 6.375 1/15/08 200,869
250,000 Caterpillar, Inc. ........... 9.000 4/15/06 268,683
250,000 Chase Manhattan
Corporation.................. 6.000 2/15/09 224,860
250,000 Columbia Energy Group........ 7.320 11/28/10 238,924
250,000 Commercial Credit
Company...................... 6.625 11/15/06 239,853
468,000 Countrywide Home
Loans, Inc................... 7.450 9/16/03 468,645
250,000 E.I. du Pont de Nemours
& Company.................... 6.875 10/15/09 241,801
250,000 Enron Corporation............ 6.875 10/15/07 236,991
500,000 Enterprise Oil plc........... 6.500 5/1/05 467,015
465,000 Ford Motor Credit
Company...................... 8.875 4/1/06 497,971
250,000 Ford Motor Credit
Company...................... 8.200 2/15/02 255,687
250,000 Foster Wheeler
Corporation.................. 6.750 11/15/05 209,907
250,000 General Electric Capital
Corporation.................. 8.750 5/21/07 268,932
250,000 Hanson Overseas BV........... 6.750 9/15/05 239,277
250,000 Household Finance
Corporation.................. 6.875 3/1/03 246,527
300,000 International Business
Machines Corporation......... 7.250 11/1/02 303,983
250,000 Kimberly-Clark
Corporation.................. 6.375 1/1/28 216,676
250,000 MCI WorldCom, Inc. .......... 6.950 8/15/28 228,031
500,000 Merrill Lynch &
Company, Inc. ............... 6.000 2/17/09 448,174
250,000 PepsiCo, Inc................. 5.700 11/1/08 222,569
250,000 PG&E Corporation............. 7.100 6/1/05 247,476
250,000 Private Export Funding
Corporation.................. 6.240 5/15/02 247,941
250,000 Republic New York
Corporation.................. 8.250 11/1/01 253,683
250,000 Service Corporation
International................ 6.300 3/15/03 212,412
250,000 Sprint Capital
Corporation.................. 6.375 5/1/09 230,021
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
62 Bond Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (97.8%) Rate Date Value
================================================================================
Corporate Obligations--continued
- --------------------------------
$ 250,000 TCI Communications, Inc...... 6.375% 5/1/03 $244,771
250,000 Texas Utilities Electric
Company...................... 7.375 8/1/01 251,182
350,000 Thermo Electron
Corporation.................. 7.625 10/30/08 326,212
200,000 Tosco Corporation ........... 9.625 3/15/02 208,022
500,000 Union Pacific Corp........... 7.000 2/1/06 456,290
250,000 U.S. Bancorp................. 7.625 5/1/05 254,227
500,000 Wal-Mart Stores, Inc......... 6.875 8/10/09 486,729
------------------------------------------------------------------
Total Corporate Obligations......................... 11,025,894
==================================================================
Mortgage Backed Securities (35.1%)
- ----------------------------------
Commercial Mortgage Backed Securities (1.2%)
- --------------------------------------------
274,386 Morgan Stanley Capital, Inc.
Series 1998-WF1 Class A1...... 6.250 7/15/07 265,832
450,000 Nationslink Funding
Corporation Series
1999-1 Class A2............... 6.316 11/20/08 417,878
-------------------------------------------------------------------
Total Commercial
Mortgage Backed Securities........................... 683,710
===================================================================
Federal Home Loan Mortgage Corporation (11.6%)
- ----------------------------------------------
34,331 Federal Home Loan Mortgage
Corporation Gold 7-Yr.
Balloon Pass Through.......... 7.000 7/1/02 34,350
156,439 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 7.500 8/15/13 158,033
88,114 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 7.000 1/1/11 87,449
209,381 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 6.500 1/15/14 203,889
191,094 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 6.500 1/1/13 185,861
489,973 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 6.000 4/1/14 466,280
228,129 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 6.000 9/1/13 217,097
469,562 Federal Home Loan
Mortgage Corporation
Gold 15-Yr. Pass Through...... 5.500 3/1/14 436,662
9,153 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 9.000 3/15/28 9,543
161,375 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 8.500 11/1/25 165,661
71,115 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 8.000 1/1/26 71,742
127,402 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 10/1/27 126,274
141,206 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 7/1/27 139,989
81,903 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.500 8/1/25 81,221
498,003 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 7/1/29 482,181
424,997 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 2/15/29 411,976
188,263 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 5/1/28 182,328
162,354 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 4/1/27 157,379
121,351 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 6/1/26 117,659
194,115 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 7.000 5/1/24 188,705
496,593 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 7/1/29 468,504
239,495 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 1/15/29 226,332
238,462 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 12/1/28 225,355
246,432 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 10/1/28 232,887
246,424 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 7/1/28 232,879
125,956 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.500 4/1/24 119,943
488,842 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.000 3/1/29 448,002
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 63
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (97.8%) Rate Date Value
================================================================================
Federal Home Loan Mortgage Corporation--continued
- -------------------------------------------------
$490,221 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through...... 6.000% 3/1/29 $449,267
235,537 Federal Home Loan
Mortgage Corporation
Gold 30-Yr. Pass Through..... 6.000 8/1/28 215,994
------------------------------------------------------------------
Total Federal Home Loan
Mortgage Corporation .............................. 6,543,442
==================================================================
Federal National Mortgage Association (13.2%)
- ---------------------------------------------
163,454 Federal National Mortgage
Association Conventional
7-Yr. Balloon Pass Through... 6.500 10/1/03 161,601
109,368 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 8.000 7/1/12 111,665
118,255 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 7.500 7/1/11 119,196
61,212 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 7.000 9/1/12 60,640
205,693 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 6.500 6/1/13 199,845
201,303 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 6.500 12/1/12 195,850
469,579 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 6.000 12/1/13 446,232
141,691 Federal National Mortgage
Association Conventional
15-Yr. Pass Through.......... 6.000 4/1/11 135,134
86,041 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 10.500 8/1/20 92,033
178,441 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 9.000 11/1/27 185,895
43,275 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 9.000 2/1/25 45,083
56,748 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 8.500 12/1/25 58,173
88,951 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 8.000 9/1/26 89,560
143,197 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 8.000 12/1/24 144,303
499,950 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.500 12/1/29 494,742
159,182 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.500 11/1/27 157,553
85,602 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.500 2/1/27 84,741
123,903 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.500 1/1/26 122,703
499,050 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 9/1/29 482,727
183,744 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 1/15/29 178,455
184,500 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 12/1/28 178,568
238,988 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 10/1/28 231,304
141,032 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 1/1/28 136,611
140,130 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 3/1/27 135,859
143,622 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 7.000 2/1/26 139,245
496,049 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 8/1/29 467,681
496,948 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 7/1/29 468,528
232,954 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 2/1/29 220,010
229,867 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 9/1/28 217,096
208,337 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 9/1/28 196,761
207,830 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 8/1/27 196,659
172,666 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.500 5/1/26 163,917
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
64 Bond Portfolio Schedule of Investments
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (97.8%) Rate Date Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal National Mortgage Association-continued
- -----------------------------------------------
$487,186 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.000% 3/1/29 $446,295
499,495 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.000 12/1/28 457,571
229,979 Federal National Mortgage
Association Conventional
30-Yr. Pass Through.......... 6.000 5/1/28 210,676
------------------------------------------------------------------
Total Federal National
Mortgage Association ................................ 7,432,912
------------------------------------------------------------------
Government National Mortgage Association (9.1%)
- ----------------------------------------------
232,293 Government National
Mortgage Association
15-Yr Pass Through........... 7.000 1/15/14 230,191
135,967 Government National
Mortgage Association
15-Yr Pass Through........... 6.500 6/15/09 133,230
85,707 Government National
Mortgage Association
30-Yr Pass Through........... 9.000 9/15/24 89,796
82,748 Government National
Mortgage Association
30-Yr Pass Through........... 8.500 12/15/26 85,177
500,049 Government National
Mortgage Association
30-Yr Pass Through........... 8.000 12/15/29 505,579
131,059 Government National
Mortgage Association
30-Yr Pass Through........... 8.000 10/15/26 132,627
111,340 Government National
Mortgage Association
30-Yr Pass Through........... 8.000 9/15/26 112,672
83,394 Government National
Mortgage Association
30-Yr Pass Through........... 8.000 6/15/25 84,417
499,251 Government National
Mortgage Association
30-Yr Pass Through........... 7.500 11/15/28 494,181
178,447 Government National
Mortgage Association
30-Yr Pass Through........... 7.500 10/15/27 176,712
122,595 Government National
Mortgage Association
30-Yr Pass Through........... 7.500 3/15/27 121,404
126,615 Government National
Mortgage Association
30-Yr Pass Through........... 7.500 3/15/23 125,951
496,056 Government National
Mortgage Association
30-Yr Pass Through........... 7.000 3/15/29 480,179
$231,142 Government National
Mortgage Association
30-Yr Pass Through........... 7.000% 8/15/28 $223,462
214,942 Government National
Mortgage Association
30-Yr Pass Through........... 7.000 1/15/28 207,800
219,174 Government National
Mortgage Association
30-Yr Pass Through........... 7.000 11/15/27 212,159
132,874 Government National
Mortgage Association
30-Yr Pass Through........... 7.000 1/15/24 129,342
494,949 Government National
Mortgage Association
30-Yr Pass Through........... 6.500 4/15/29 464,943
496,285 Government National
Mortgage Association
30-Yr Pass Through........... 6.500 3/15/29 466,198
245,223 Government National
Mortgage Association
30-Yr Pass Through........... 6.500 12/15/28 230,474
232,486 Government National
Mortgage Association
30-Yr Pass Through........... 6.500 7/15/28 218,504
192,695 Government National
Mortgage Association
30-Yr Pass Through........... 6.000 5/15/26 176,567
------------------------------------------------------------------
Total Government National Mortgage
Association.......................................... 5,101,565
------------------------------------------------------------------
Total Mortgage Backed Securities..................... 19,761,629
------------------------------------------------------------------
U.S. Government Obligations (39.3%)
- -----------------------------------
U.S. Government Agency (8.3%)
- -----------------------------
250,000 Federal Home Loan Bank....... 6.500 11/29/05 244,451
300,000 Federal Home Loan Bank....... 5.750 4/30/01 297,127
250,000 Federal Home Loan Bank....... 5.625 3/19/01 247,750
495,000 Federal Home Loan Bank....... 5.440 10/15/03 472,157
255,000 Federal Home Loan
Mortgage Corporation......... 6.520 1/2/02 254,672
500,000 Federal Home Loan
Mortgage Corporation......... 5.750 7/15/03 483,766
475,000 Federal Home Loan
Mortgage Corporation......... 5.125 10/15/00 415,178
450,000 Federal National
Mortgage Association......... 7.500 2/11/02 457,818
250,000 Federal National
Mortgage Association......... 6.450 4/23/01 249,970
500,000 Federal National
Mortgage Association......... 6.000 5/15/08 467,311
500,000 Federal National
Mortgage Association......... 5.960 9/11/28 420,225
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
- ---------------------------------------------------------------------------
December 31, 1999 65
<PAGE>
AAL Variable Product Bond Portfolio--continued
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Long-Term Fixed Income Interest Maturity Market
Amount Securities (97.8%) Rate Date Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Agency-continued
- --------------------------------
$250,000 Federal National
Mortgage Association........... 4.720% 12/11/00 $246,253
200,000 Resolution Funding
Corporation.................... 8.125 10/15/09 217,653
250,000 Tennessee Valley Authority..... 6.000 3/15/13 224,764
------------------------------------------------------------------
Total U.S. Government Agency.......................... 4,699,095
------------------------------------------------------------------
U.S. Treasury Securities (31.0%)
- --------------------------------
250,000 U.S. Treasury Bonds ........... 10.375 11/15/12 303,750
250,000 U.S. Treasury Bonds ........... 9.875 11/15/15 323,203
350,000 U.S. Treasury Bonds ........... 8.750 5/15/17 417,813
350,000 U.S. Treasury Bonds ........... 8.250 2/15/20 413,656
100,000 U.S. Treasury Bonds ........... 8.125 8/15/21 114,750
280,000 U.S. Treasury Bonds ........... 8.125 5/15/21 321,037
475,000 U.S. Treasury Bonds ........... 8.125 8/15/19 541,203
575,000 U.S. Treasury Bonds ........... 7.875 2/15/21 642,563
290,000 U.S. Treasury Bonds ........... 7.625 11/15/22 318,094
260,000 U.S. Treasury Bonds ........... 7.500 11/15/24 283,725
275,000 U.S. Treasury Bonds ........... 7.500 11/15/16 294,164
250,000 U.S. Treasury Bonds ........... 7.250 5/15/16 261,328
250,000 U.S. Treasury Bonds ........... 7.125 2/15/23 260,313
250,000 U.S. Treasury Bonds ........... 6.875 8/15/25 254,531
300,000 U.S. Treasury Bonds ........... 6.625 2/15/27 297,094
300,000 U.S. Treasury Bonds ........... 6.375 8/15/27 288,000
250,000 U.S. Treasury Bonds ........... 6.250 8/15/23 235,781
200,000 U.S. Treasury Notes............ 11.875 11/15/03 236,125
385,000 U.S. Treasury Notes............ 8.000 5/15/01 393,782
475,000 U.S. Treasury Notes............ 7.875 11/15/04 502,461
500,000 U.S. Treasury Notes............ 7.875 8/15/01 512,187
440,000 U.S. Treasury Notes............ 7.750 2/15/01 447,562
460,000 U.S. Treasury Notes............ 7.500 2/15/05 479,838
500,000 U.S. Treasury Notes............ 7.250 8/15/04 515,938
525,000 U.S. Treasury Notes............ 7.250 5/15/04 541,078
280,000 U.S. Treasury Notes............ 7.000 7/15/06 286,825
300,000 U.S. Treasury Notes............ 6.750 8/15/26 301,313
380,000 U.S. Treasury Notes............ 6.625 4/30/02 382,731
300,000 U.S. Treasury Notes............ 6.625 7/31/01 301,969
350,000 U.S. Treasury Notes............ 6.500 10/15/06 349,015
175,000 U.S. Treasury Notes............ 6.500 5/31/02 175,875
450,000 U.S. Treasury Notes............ 6.375 3/31/01 450,984
200,000 U.S. Treasury Notes............ 6.250 2/15/07 196,812
250,000 U.S. Treasury Notes............ 6.250 2/15/03 249,219
300,000 U.S. Treasury Notes............ 6.250 8/31/02 299,813
325,000 U.S. Treasury Notes............ 6.250 10/31/01 325,000
$250,000 U.S. Treasury Notes............ 6.125% 8/15/07 $243,672
500,000 U.S. Treasury Notes............ 6.000 7/31/02 497,031
550,000 U.S. Treasury Notes............ 5.875 2/15/04 540,890
450,000 U.S. Treasury Notes............ 5.875 11/30/01 447,187
50,000 U.S. Treasury Notes............ 5.875 6/30/00 50,062
450,000 U.S. Treasury Notes............ 5.750 8/15/03 440,578
250,000 U.S. Treasury Notes............ 5.750 10/31/02 246,484
520,000 U.S. Treasury Notes............ 5.625 6/30/01 523,087
450,000 U.S. Treasury Notes............ 5.500 5/31/03 437,906
450,000 U.S. Treasury Notes............ 5.500 12/31/00 447,328
330,000 U.S. Treasury Notes............ 5.250 1/31/03 322,163
425,000 U.S. Treasury Notes............ 5.250 1/31/01 421,414
375,000 U.S. Treasury Notes............ 4.750 11/15/08 330,820
------------------------------------------------------------------
Total U.S. Treasury Securities........................ 17,468,154
------------------------------------------------------------------
Total U.S. Government Obligations..................... 22,167,249
------------------------------------------------------------------
Yankee Bonds (2.5%)
- -------------------
250,000 African Development
Bank........................... 6.875 10/15/15 236,087
500,000 Export-Import Bank of
Korea ......................... 6.500 11/15/06 473,500
250,000 Province of Manitoba........... 6.125 1/19/04 241,222
250,000 Province of Nova Scotia........ 7.250 7/27/13 239,805
250,000 Province of Quebec............. 11.000 6/15/15 263,563
------------------------------------------------------------------
Total Yankee Bonds.................................... 1,454,177
------------------------------------------------------------------
Total Long-Term Fixed Income Securities
(amortized cost basis $57,642,122).................... $55,130,151
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Short-Term Interest Maturity Market
Amount Investments (1.0%) Rate (1) Date Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Investments (1.0%) (1)
- ---------------------------------
$541,000 Bell Atlantic Network
Funding Corporation............ 4.250% 1/6/00 $540,681
------------------------------------------------------------------
Total Short-Term Investments
(amortized cost basis $540,681)....................... 540,681
------------------------------------------------------------------
Total Investments (98.8%)
(amortized cost basis $58,182,803).................... 55,670,832
------------------------------------------------------------------
Other Assets, Less
Liabilities (1.2%).................................... 690,030
------------------------------------------------------------------
Net Assets (100.0%)................................... $56,360,862
------------------------------------------------------------------
</TABLE>
(1) The interest rate reflects the discount rate at the date of purchase
See page 115 for a complete discussion of Investment Terms.
The accompanying notes to the financial statements are an integral part of this
schedule.
----------------------------------------------------------------------------
66 Bond Portfolio Schedule of Investments
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Money Market Portfolio
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1999
Investment Objective
--------------------
The Portfolio strives for maximum current income, while maintaining
liquidity and a constant net asset value of $1.00 per share, by
investing in high-quality, short-term money market instruments.
<TABLE>
<CAPTION>
Principal Commercial Interest Maturity Market
Amount Paper (99.9% ) Rate(1) Date Value
==================================================================================================================
<S> <C> <C> <C> <C>
$ 308,000 Abbott Laboratories,
Inc................................. 4.000% 1/13/00 $307,589
1,800,000 American Express
Company............................. 5.940 1/7/00 1,798,218
1,489,000 American General
Corporation......................... 6.280 2/3/00 1,480,428
1,621,000 AT&T Corporation.................... 5.900 2/7/00 1,611,170
1,801,000 Baltimore Gas &
Electric Company.................... 5.880 1/13/00 1,797,470
1,834,000 Bell Atlantic Network Funding
Corporation......................... 4.250-6.100 1/6-1/25/00 1,829,407
1,700,000 BellSouth Telecommunications,
Inc................................. 6.030 2/4/00 1,690,319
800,000 CIT Group, Inc...................... 5.950 1/4/00 799,603
1,386,000 Coca-Cola
Company (4)......................... 5.880-6.100 1/6-2/10/00 1,381,734
1,600,000 Countrywide Home
Loans, Inc.......................... 6.050 1/3/00 1,599,462
1,347,000 Duke Energy
Corporation......................... 5.000-6.100 1/3-1/6/00 1,346,108
1,009,000 Ford Motor Credit
Company............................. 6.500 1/5/00 1,008,271
1,600,000 Gannett Company (4)................. 5.950 1/14/00 1,596,562
1,712,000 General Electric Capital
Corporation......................... 6.000 2/8/00 1,701,157
1,534,000 General Motors Acceptance
Corporation......................... 5.820-5.870 1/19/00 1,529,517
1,212,000 Gillette Company (4)................ 5.870 1/28/00 1,206,664
1,434,000 Goldman Sachs
Group, L.P.......................... 6.150 2/2/00 1,426,161
1,600,000 GTE Corporation..................... 5.980 1/20/00 1,594,950
1,700,000 Hershey Foods
Corporation......................... 6.030 1/31/00 1,691,458
$1,695,000 Household Finance
Corporation......................... 5.960% 1/18/00 $1,690,230
1,800,000 IBM Credit Corporation.............. 4.000 1/4/00 1,799,400
1,402,000 McGraw-Hill
Companies, Inc...................... 6.400 1/21/00 1,397,015
1,572,000 Mobil Corporation (4)............... 6.000 1/27/00 1,565,188
1,600,000 New Jersey Natural
Gas Company......................... 5.930 1/10/00 1,597,628
1,900,000 Proctor & Gamble
Company............................. 6.020 2/1/00 1,890,151
1,701,000 R.R. Donnelley & Sons
Company (4)......................... 5.830 1/24/00 1,694,664
1,453,000 SBC Communications,
Inc. (4)............................ 5.830 1/24/00 1,447,588
1,721,000 Toyota Motor
Corporation......................... 5.800-5.920 1/11-1/12/00 1,717,992
1,051,000 Transamerica Finance
Corporation......................... 5.900 1/21/00 1,047,555
1,444,000 Walt Disney Company................. 5.900 1/25/00 1,438,321
1,800,000 Wisconsin Electric Power
Company............................. 6.050 1/26/00 1,792,438
------------------------------------------------------------------------------------------
Total Commercial Paper (99.9%)
(amortized cost $46,474,418)............................................... 46,474,418
==========================================================================================
------------------------------------------------------------------------------------------
Other Assets, Less Liabilities (0.1%)..................................... 19,126
==========================================================================================
------------------------------------------------------------------------------------------
Net Assets (100.0%)....................................................... $46,493,544
==========================================================================================
</TABLE>
(1) The interest rate shown reflects the discount rate at the date of purchase.
(4) 4(2) Commercial Paper
See page 115 for a complete discussion of Investment Terms
The accompanying notes to the financial statements are an integral part of this
schedule.
- ----------------------------------------------------------------------------
December 31, 1999 67
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Assets and Liabilities
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small International Large
Company Stock Stock Company Stock
Portfolio Portfolio Portfolio
===================================================================================================================================
<S> <C> <C> <C>
Assets
- ------
Investments, at cost....................................................... $227,310,148 $31,544,809 $583,898,427
- -----------------------------------------------------------------------------------------------------------------------------------
Investments, at value...................................................... $226,931,125 $42,114,504 $877,672,166
Cash....................................................................... 17 1,613,953 397
Dividends and interest receivable.......................................... 113,431 40,843 775,178
Receivable for investments sold............................................ 847,532 -- 71,687
Receivable fund shares sold................................................ 122,380 288,123 684,075
Receivable for forward contracts........................................... -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets............................................................... $228,014,485 $44,057,423 $879,203,503
===================================================================================================================================
Liabilities
- -----------
Payable for forward contracts.............................................. $-- $-- $--
Payable for investments purchased.......................................... 1,889,689 -- 4,650,206
Income distributions payable............................................... -- -- --
Payable for fund shares redeemed........................................... 109,601 13,296 566,273
Investment advisory fees payable........................................... 63,268 26,810 225,416
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities.......................................................... 2,062,558 40,106 5,441,895
===================================================================================================================================
Net Assets:
- ----------
Capital stock-- par value ($0.001/share)................................. 17,124 2,851 32,239
Capital stock-- additional paid-in capital................................. 227,212,755 32,493,476 579,158,146
Undistributed net investment income (loss)................................. 2,737 (1,711) 18,402
Undistributed net realized gain (loss)..................................... (901,666) 954,605 779,082
Net unrealized appreciation (depreciation) on investments.................. (379,023) 10,569,695 293,773,739
Net unrealized appreciation/depreciation on foreign currency contracts..... -- -- --
Net unrealized appreciation/depreciation on currency related transactions.. -- (1,599) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets........................................................... 225,951,927 44,017,317 873,761,608
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Capital.............................................. $228,014,485 $44,057,423 $879,203,503
===================================================================================================================================
Capital Shares Outstanding (2 billion shares authorized)................... 17,123,433 2,850,338 32,238,563
Net Asset Value Per Share.................................................. $13.20 $15.44 $27.10
</TABLE>
----------------------------------------------------------------------------
68 Statement of Assets and Liabilities
<PAGE>
<TABLE>
<CAPTION>
High Yield Money
Balanced Bond Bond Market
Portfolio Portfolio Portfolio Portfolio
=====================================================================================
<S> <C> <C> <C> <C>
$664,068,474 $38,717,790 $58,182,803 $46,474,418
- -------------------------------------------------------------------------------------
$777,616,775 $32,115,893 $55,670,832 $46,474,418
15 648 272 660
4,035,049 1,064,823 741,678 --
-- -- -- --
660,040 182,235 70,089 909,160
-- -- -- --
- -------------------------------------------------------------------------------------
$782,311,879 $33,363,599 $56,482,871 $47,384,238
=====================================================================================
$-- $-- $-- $--
3,918,906 181,358 -- --
-- -- -- 7,166
542,670 8,228 105,332 869,990
204,679 11,186 16,677 13,538
- -------------------------------------------------------------------------------------
4,666,255 200,772 122,009 890,694
=====================================================================================
46,503 4,312 5,873 46,493
655,228,423 40,699,821 59,174,345 46,447,051
41,704 4,282 4,349 --
8,780,693 (943,691) (311,734) --
113,548,301 (6,601,897) (2,511,971) --
-- -- -- --
-- -- -- --
- -------------------------------------------------------------------------------------
777,645,624 33,162,827 56,360,862 46,493,544
=====================================================================================
- -------------------------------------------------------------------------------------
$782,311,879 $33,363,599 $56,482,871 $47,384,238
=====================================================================================
46,501,710 4,311,366 5,873,565 46,493,544
$16.72 $7.69 $9.60 $1.00
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
- ----------------------------------------------------------------------------
December 31, 1999 69
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small International Large
Company Stock Stock Company Stock
Portfolio Portfolio Portfolio
===================================================================================================================================
<S> <C> <C> <C>
Investment Income
- -----------------
Dividends.................................................................. $1,538,522 $365,623 $9,097,656
Interest................................................................... 107,946 60,601 372,977
Foreign dividend withholding............................................... -- (41,956) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income.................................................... 1,646,468 384,268 9,470,633
===================================================================================================================================
Expenses
- --------
Adviser fee................................................................ 684,092 69,694 2,264,468
Sub-adviser fees........................................................... -- 129,388 --
Administrative service and pricing fees.................................... 15,222 17,397 12,708
Audit and legal fees....................................................... 19,805 16,295 38,014
Custody fees............................................................... 39,505 42,764 62,352
Director fees.............................................................. 3,164 589 12,527
Printing and postage expense............................................... 30,995 5,767 122,692
SEC and state registration expense......................................... 50 50 50
Other expenses............................................................. 481 89 1,906
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses Before Reimbursement........................................ 793,314 282,033 2,514,717
===================================================================================================================================
Less Reimbursement from Adviser............................................ (109,222) (82,951) (250,249)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Expenses......................................................... 684,092 199,082 2,264,468
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income...................................................... 962,376 185,186 7,206,165
===================================================================================================================================
Realized and Unrealized Gains (Losses) on Investments and Foreign Currency
- --------------------------------------------------------------------------
Net realized gains (losses) on investments................................. 9,143,735 1,592,722 6,634,331
Net realized gains (losses) on foreign currency transactions............... -- 18,132 --
Change in net unrealized appreciation/depreciation
on investments........................................................ 13,784,185 8,935,853 123,117,531
Change in net unrealized appreciation/depreciation
on foreign currency transactions...................................... -- 65,260 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (Losses) on Investments
and Foreign Currency................................................ 22,927,920 10,611,967 129,751,862
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from Operations...................... $23,890,296 $10,797,153 $136,958,027
===================================================================================================================================
</TABLE>
----------------------------------------------------------------------------
70 Statement of Operations
<PAGE>
<TABLE>
<CAPTION>
High Yield Money
Balanced Bond Bond Market
Portfolio Portfolio Portfolio Portfolio
=====================================================================================
<S> <C> <C> <C> <C>
$4,687,550 $-- $-- $--
19,087,983 3,477,516 3,371,244 2,063,181
-- -- -- --
- -------------------------------------------------------------------------------------
23,775,533 3,477,516 3,371,244 2,063,181
=====================================================================================
2,115,998 46,981 176,714 138,690
-- 78,302 -- --
37,930 5,573 12,229 835
36,143 14,000 14,969 10,466
73,923 4,783 9,516 5,555
11,308 488 833 677
110,753 4,784 8,152 6,627
50 50 50 50
1,720 74 127 103
- -------------------------------------------------------------------------------------
2,387,825 155,035 222,590 163,003
=====================================================================================
(271,827) (29,752) (45,876) (24,313)
- -------------------------------------------------------------------------------------
2,115,998 125,283 176,714 138,690
=====================================================================================
- -------------------------------------------------------------------------------------
21,659,535 3,352,233 3,194,530 1,924,491
=====================================================================================
24,466,362 (714,794) (218,330) --
-- -- -- --
25,038,159 (4,118,676) (3,618,272) --
-- -- -- --
- -------------------------------------------------------------------------------------
49,504,521 (4,833,470) (3,836,602) --
=====================================================================================
- -------------------------------------------------------------------------------------
$71,164,056 $(1,481,237) $(642,072) $1,924,491
=====================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral
part of this schedule.
- ----------------------------------------------------------------------------
December 31, 1999 71
<PAGE>
AAL VARIABLE PRODUCT ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Small Company International
Stock Portfolio Stock Portfolio
----------------------------- -------------------------------
Year Ended Year Ended Period Ended (a) Year Ended
12/31/98 12/31/99 12/31/98 12/31/99
================================================================================================= ===============================
<S> <C> <C> <C> <C>
Operations
- ----------
Net investment income............................................. $993,833 $962,376 $133,806 $185,186
Net realized gains (losses) on investments........................ 31,291,369 9,143,735 (382,552) 1,592,722
Net realized gains (losses) on foreign currency transactions...... -- -- (86,325) 18,132
Change in net unrealized appreciation/depreciation on investments. (33,956,589) 13,784,185 909,869 8,935,853
Change in net unrealized appreciation/depreciation on
foreign currency transactions............................. -- -- 657,114 65,260
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations... (1,671,387) 23,890,296 1,231,912 10,797,153
==================================================================================================================================
Distributions to Shareholders
- -----------------------------
From net investment income........................................ (999,834) (963,974) (1,042) (251,468)
From net realized gains........................................... (31,505,205) (10,325,815) -- (255,565)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders............................... (32,505,039) (11,289,789) (1,042) (507,033)
==================================================================================================================================
Fund Share Transactions
- -----------------------
Purchases of fund shares.......................................... 58,516,806 26,941,433 14,856,874 19,515,711
Income dividends reinvested....................................... 999,834 963,974 302 161,668
Capital gains reinvested.......................................... 31,505,205 10,325,815 -- 164,302
Redemption of fund shares......................................... (11,452,507) (23,200,366) (493,395) (1,709,135)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Fund Share Transactions 79,569,338 15,030,856 14,363,781 18,132,546
==================================================================================================================================
Net Increase in Net Assets 45,392,912 27,631,363 15,594,651 28,422,666
==================================================================================================================================
Net Assets Beginning of Period 152,927,652 198,320,564 -- 15,594,651
==================================================================================================================================
Net Assets End of Period $198,320,564 $225,951,927 $15,594,651 $44,017,317
==================================================================================================================================
Accumulated Undistributed Net Investment Income $4,335 $2,737 $132,764 $(1,711)
==================================================================================================================================
</TABLE>
(a) Since March 2, 1998.
----------------------------------------------------------------------------
72 Statement of Changes in Net Assets
<PAGE>
<TABLE>
<CAPTION>
Large Company Balanced High Yield Bond
Stock Portfolio Portfolio Bond Portfolio Portfolio
- ------------------------------ ------------------------------ ------------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended(a) Year Ended Year Ended Year Ended
12/31/98 12/31/99 12/31/98 12/31/99 12/31/98 12/31/99 12/31/98 12/31/99
- ------------------------------ ------------------------------ ------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$5,338,992 $7,206,165 $14,398,460 $21,659,535 $1,914,894 $3,352,233 $2,001,026 $3,194,530
1,543,018 6,634,331 12,604,950 24,466,362 (228,897) (714,794) (50,207) (218,330)
-- -- -- -- -- -- -- --
103,777,073 123,117,531 48,279,299 25,038,159 (2,483,221) (4,118,676) 641,462 (3,618,272)
-- -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
110,659,083 136,958,027 75,282,709 71,164,056 (797,224) (1,481,237) 2,592,281 (642,072)
===============================================================================================================================
(5,336,089) (7,204,678) (14,369,203) (21,651,007) (1,912,864) (3,349,981) (2,000,563) (3,192,127)
(346,756) (7,160,556) (8,256,035) (20,059,509) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
(5,682,845) (14,365,234) (22,625,238) (41,710,516) (1,912,864) (3,349,981) (2,000,563) (3,192,127)
===============================================================================================================================
165,392,423 202,498,001 185,868,086 201,101,016 31,385,553 12,496,944 22,670,325 21,644,488
5,336,089 7,204,678 14,369,203 21,651,007 438,864 1,573,980 1,895,857 3,192,127
346,756 7,160,556 8,256,035 20,059,509 -- -- -- --
(22,165,710) (38,055,406) (22,315,220) (39,956,363) (1,148,875) (4,042,333) (9,660,392) (6,848,722)
- -------------------------------------------------------------------------------------------------------------------------------
148,909,558 178,807,829 186,178,104 202,855,169 30,675,542 10,028,591 14,905,790 17,987,893
===============================================================================================================================
253,885,796 301,400,622 238,835,575 232,308,709 27,965,454 5,197,373 15,497,508 14,153,694
===============================================================================================================================
318,475,190 572,360,986 306,501,340 545,336,915 -- 27,965,454 26,709,660 42,207,168
===============================================================================================================================
$572,360,986 $873,761,608 $545,336,915 $777,645,624 $27,965,454 $33,162,827 $42,207,168 $56,360,862
===============================================================================================================================
$16,915 $18,402 $33,176 $41,704 $2,030 $4,282 $1,946 $4,349
===============================================================================================================================
</TABLE>
(a) Since March 2, 1998.
The accompanying notes to the financial statements are an integral part of
this schedule.
- ---------------------------------------------------------------------------
December 31, 1999 73
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Statement of Changes in Net Assets - continued
<TABLE>
<CAPTION>
Money Market
Portfolio
------------------------------
Year Ended Year Ended
12/31/98 12/31/99
====================================================================================================================
<S> <C> <C>
Operations
- ----------
Net investment income................................................................ $1,507,113 $1,924,491
Net realized gains (losses) on investments........................................... -- --
Net realized gains (losses) on currency transactions................................. -- --
Change in net unrealized appreciation/depreciation on investments.................... -- --
Change in net unrealized appreciation/depreciation on foreign currency transactions.. -- --
- --------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Operations...................... 1,507,113 1,924,491
====================================================================================================================
Distributions to Shareholders
- -----------------------------
From net investment income........................................................... (1,507,113) (1,924,491)
From net realized gains.............................................................. -- --
- --------------------------------------------------------------------------------------------------------------------
Total Distributions to Shareholders.................................................. (1,507,113) (1,924,491)
====================================================================================================================
Fund Share Transactions
- -----------------------
Purchases of fund shares............................................................. 191,480,061 183,896,728
Income dividends reinvested.......................................................... 1,506,393 1,921,848
Capital gains reinvested............................................................. -- --
Redemption of fund shares............................................................ (184,875,885) (172,895,894)
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets from Fund Share Transactions.............................. 8,110,569 12,922,682
====================================================================================================================
Net Increase in Net Assets........................................................... 8,110,569 12,922,682
====================================================================================================================
Net Assets Beginning of Period....................................................... 25,460,293 33,570,862
====================================================================================================================
Net Assets End of Period............................................................. $33,570,862 $46,493,544
====================================================================================================================
Accumulated Undistributed Net Investment Income...................................... $-- $--
====================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
schedule.
---------------------------------------------------------------------------
74 Statement of Changes in Net Assets
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Product Series Fund, Inc.
Notes to Financial Statements
AS OF DECEMBER 31, 1999
(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 variable insurance
contracts 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 Small Company stock portfolio has
capital loss carry forwards of $901,666 expiring in 2007. 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 Fund's 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.
- ----------------------------------------------------------------------------
December 31, 1999 75
<PAGE>
(C) Investment Advisory Fees and Transactions with Related Parties
- -------------------------------------------------------------------
For the year ended December 31, 1999, the Fund was entered into an investment
advisory agreement with AAL relating to the management of the Portfolios and
paid an investment advisory fee as compensation for services to the Fund. The
fee was a daily charge equal to an annual rate of 0.35% of the average daily net
assets up to $250 million 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; and 0.40% of the average daily net assets for the High Yield Bond
Portfolio.
The Fund had also entered into an investment Sub-Advisory Agreement with AAL
Capital Management Corporation (AAL CMC) for the High Yield Bond Portfolio. The
sub-advisory fee, which was paid by AAL, was equal to an annual fee of 0.25% of
average daily net assets. Additionally, the Fund had 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 was paid by AAL, was
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.
Effective January 1, 2000, the Board of Directors approved the transfer of the
Investment Advisory responsibilities from AAL to AAL CMC, an affiliate of AAL.
Therefore, the sub-advisory agreement with AAL CMC was terminated as of December
31, 1999. The Fund has since entered into an amended and restated investment
advisory agreement with AAL CMC 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 million 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, AAL CMC has entered into an amended and restated
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
AAL CMC, 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.
Certain officers and directors of the Fund are also officers of AAL and AAL CMC.
For the period ended December 31, 1999, directors of the Fund not affiliated
with AAL or AAL CMC received director fees in the aggregate amount of $30,000.
No remuneration has been paid by the Fund to officers or directors affiliated
with AAL or AAL CMC. At December 31, 1999, 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) Line of Credit
- -------------------
The Fund has an available line of credit of $5 million and a standby line of
credit of $15 million. However, each Portfolio's borrowings, by investment
restriction, cannot exceed 10% of the total net assets of the portfolio and must
be only from a bank as a temporary measure for extraordinary or emergency
purposes. The Fund pays a facility fee related to the line of credit of 0.05%
per annum of the average amount of available line of credit, such fee to be paid
quarterly in arrears on the last day of each and every March, June, September
and December. Borrowings under this agreement bear interest prior to maturity
either at a floating rate per annum, which approximates the then current prime
commercial rate with changes in the interest rate by virtue of a change in such
prime commercial rate, or, at the Fund's request, if the Bank so agrees, at a
short term fixed rate of interest.
(E) Capital Share Transactions
- -------------------------------
Transactions in Fund shares for the years ended December 31, 1998 and December
31, 1999, were as follows:
Small Company Stock Portfolio
--------------------------------
Year Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 3,841,755 2,179,850
Reinvested distributions 2,680,258 874,191
Shares redeemed (797,140) (1,930,192)
- --------------------------------------------------------------------------------
Net Increase 5,724,873 1,123,849
================================================================================
International Portfolio
--------------------------------
Period Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 1,459,457 1,557,451
Reinvested distributions 27 21,126
Shares redeemed (48,010) (139,713)
- --------------------------------------------------------------------------------
Net Increase 1,411,474 1,438,864
================================================================================
Large Company Stock Portfolio
--------------------------------
Year Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 8,178,403 8,226,938
Reinvested distributions 274,516 556,094
Shares redeemed (1,098,049) (1,533,126)
- --------------------------------------------------------------------------------
Net Increase 7,354,870 7,249,906
================================================================================
Balanced Portfolio
--------------------------------
Year Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 12,360,090 12,249,850
Reinvested distributions 1,465,150 2,523,068
Shares redeemed (1,482,283) (2,428,486)
- --------------------------------------------------------------------------------
Net Increase 12,342,957 12,344,432
================================================================================
----------------------------------------------------------------------------
76 Notes to Financial Statements
<PAGE>
High Yield Bond Portfolio
--------------------------------
Period Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 3,199,146 1,478,180
Reinvested distributions 47,812 190,956
Shares redeemed (121,973) (482,755)
- --------------------------------------------------------------------------------
Net Increase 3,124,985 1,186,381
================================================================================
Bond Portfolio
--------------------------------
Year Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 2,199,861 2,162,923
Reinvested distributions 184,608 323,358
Shares redeemed (941,937) (687,663)
- --------------------------------------------------------------------------------
Net Increase 1,442,532 1,798,618
================================================================================
Money Market Portfolio
--------------------------------
Year Ended Year Ended
12/31/98 12/31/99
================================================================================
Shares sold 191,480,061 183,896,729
Reinvested distributions 1,506,393 1,921,847
Shares redeemed (184,875,885) (172,895,894)
- --------------------------------------------------------------------------------
Net Increase 8,110,569 12,922,682
================================================================================
(F) Investment Transactions
- ----------------------------
For the year ended December 31, 1999, the cost of investment securities
purchased and the proceeds from investment securities sold (not including short-
term investments and U.S. Government Obligations) were as follows:
Portfolio Purchases Sales
================================================================================
Small Company Stock $ 63,676,437 $59,476,584
International Stock 26,383,678 10,981,171
Large Company Stock 192,323,372 19,316,743
Balanced 210,877,708 77,992,271
High Yield Bond 21,902,377 13,041,797
Bond 18,192,458 5,638,568
- --------------------------------------------------------------------------------
For the year ended December 31, 1999, the Portfolios purchased and sold the
following in U.S. Government Obligations:
Portfolio Purchases Sales
================================================================================
Balanced $ 46,339,980 $22,290,566
Bond 8,886,777 3,891,324
- --------------------------------------------------------------------------------
The gross and net unrealized appreciation and depreciation on investments at
December 31, 1999, were as follows:
Net Unrealized
Appreciation
Portfolio Appreciation (Depreciation) (Depreciation)
================================================================================
Small Company Stock $ 49,948,884 $(50,731,011) $ (782,127)
International Stock 12,381,424 (1,814,096) 10,567,328
Large Company Stock 338,473,640 (44,761,121) 293,712,519
Balanced 150,305,233 (36,990,230) 113,315,003
High Yield 253,406 (6,867,787) (6,614,381)
Bond 36,937 (2,548,908) (2,511,971)
- --------------------------------------------------------------------------------
As of December 31, 1999, the cost of investments for federal tax purposes for
each of the Portfolios was as follows:
================================================================================
Small Company Stock $227,713,252
International Stock 31,547,176
Large Company Stock 583,959,647
Balanced 664,301,772
High Yield Bond 38,730,274
Bond 58,182,803
Money Market 46,474,418
- --------------------------------------------------------------------------------
Any differences between book and tax are due to wash sale losses.
- ----------------------------------------------------------------------------
December 31, 1999 77
<PAGE>
AAL VARIABLE PRODUCTS 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
------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 (c)
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value: Beginning of Period $12.40 $14.88 $12.54 $10.99 $ 10.00
==============================================================================================================================
Income from Investment Operations
- ---------------------------------
Net investment income 0.06 0.08 0.11 0.12 0.08
Net realized and unrealized gain (loss) on investments 1.43 (0.13) 3.05 1.86 0.99
- ------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.49 (0.05) 3.16 1.98 1.07
==============================================================================================================================
Less Distributions from
- -----------------------
Net investment income (0.06) (0.08) (0.11) (0.12) (0.07)
Net realized capital gains (0.63) (2.35) (0.71) (0.31) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.69) (2.43) (0.82) (0.43) (0.08)
==============================================================================================================================
Net increase (decrease) in net asset value 0.80 (2.48) 2.34 1.55 0.99
Net Asset Value: End of Period $13.20 $12.40 $14.88 $12.54 $ 10.99
==============================================================================================================================
Total return (a) 12.19% 0.14% 25.37% 18.19% 10.70%
Net assets, end of period (in thousands) $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%
Ratio of net investment income (loss) to average net assets (b) 0.49% 0.55% 0.81% 1.14% 1.43%
Portfolio turnover rate 30.51% 103.70% 29.65% 20.14% 2.85%
==============================================================================================================================
If the Portfolio had paid all of their expenses without the adviser's voluntary expense reimbursement, the ratios would have
been as follows:
Ratio of expenses to average net assets (b) 0.41% 0.43% 0.45% 0.75% 1.37%
Ratio of net investment income (loss) to average net assets (b) 0.44% 0.47% 0.71% 0.74% 1.41%
</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.
----------------------------------------------------------------------------
78 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
International Stock Portfolio Large Company Stock Portfolio
- ------------------------------- ----------------------------------------------------------------
Year Ended Period Ended Year Ended Year Ended Year Ended Year Ended Period Ended
12/31/99 2/31/98 (d) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 (c)
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$11.05 $10.00 $22.90 $18.06 $13.83 $11.51 $10.00
=====================================================================================================
0.06 0.09 0.25 0.24 0.23 0.23 0.11
4.51 0.96 4.42 4.85 4.25 2.34 1.52
- -----------------------------------------------------------------------------------------------------
4.57 1.05 4.67 5.09 4.48 2.57 1.63
=====================================================================================================
(0.09) -- (0.25) (0.24) (0.23) (0.23) (0.11)
(0.09) -- (0.22) (0.01) (0.02) (0.02) (0.01)
- -----------------------------------------------------------------------------------------------------
(0.18) -- (0.47) (0.25) (0.25) (0.25) (0.12)
=====================================================================================================
4.39 1.05 4.20 4.84 4.23 2.32 1.51
$15.44 $11.05 $27.10 $22.90 $18.06 $13.83 $11.51
=====================================================================================================
41.50% 10.41% 20.52% 28.36% 32.59% 22.47% 16.39%
$44,017 $15,595 $873,762 $572,361 $318,475 $120,089 $23,138
0.80% 0.80% 0.32% 0.33% 0.35% 0.35% 0.35%
0.74% 1.25% 1.01% 1.20% 1.48% 1.97% 2.27%
45.08% 32.66% 2.74% 1.49% 1.00% 1.77% 0.47%
======================================================================================================
1.13% 1.30% 0.35% 0.38% 0.43% 0.63% 1.26%
0.41% 0.75% 0.98% 1.15% 1.39% 1.69% 1.37%
</TABLE>
- ----------------------------------------------------------------------------
December 31, 1999 79
<PAGE>
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
------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 (c)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value: Beginning of Period $15.97 $14.05 $11.96 $10.92 $10.00
=================================================================================================================================
Income from Investment Operations
- ---------------------------------
Net investment income 0.53 0.50 0.46 0.41 0.22
Net realized and unrealized gain (loss) on investments 1.19 2.17 2.09 1.05 0.92
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.72 2.67 2.55 1.46 1.14
=================================================================================================================================
Less Distributions from
- -----------------------
Net investment income (0.53) (0.50) (0.46) (0.41) (0.21)
Net realized capital gains (0.44) (0.25) -- (0.01) (0.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.97) (0.75) (0.46) (0.42) (0.22)
=================================================================================================================================
Net increase (decrease) in net asset value 0.75 1.92 2.09 1.04 0.92
Net Asset Value: End of Period $16.72 $15.97 $14.05 $11.96 $10.92
=================================================================================================================================
Total return (a) 11.00% 19.27% 21.71% 13.65% 11.46%
Net assets, end of period (in thousands) $777,646 $545,337 $306,501 $126,518 $28,759
Ratio of expenses to average net assets (b) 0.32% 0.33% 0.35% 0.35% 0.35%
Ratio of net investment income (loss) to average net assets (b) 3.26% 3.38% 3.62% 3.89% 4.07%
Portfolio turnover rate 16.91% 21.39% 6.86% 5.43% 2.29%
=================================================================================================================================
If the Portfolio had paid all of their expenses without the adviser's voluntary expense reimbursement, the ratios would have
been as follows:
Ratio of expenses to average net assets (b) 0.36% 0.39% 0.43% 0.60% 1.15%
Ratio of net investment income (loss) to average net assets (b) 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.
----------------------------------------------------------------------------
80 Financial Highlights
<PAGE>
<TABLE>
<CAPTION>
High Yield Bond Portfolio Bond Portfolio
- --------------------------- ------------------------------------------------------------
Year Ended Period Ended Year Ended Year Ended Year Ended Year Ended Period Ended
12/31/99 12/31/98 (d) 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 (c)
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
$8.95 $10.00 $10.36 $10.15 $9.90 $10.23 $10.00
===========================================================================================
0.89 0.74 0.62 0.64 0.64 0.63 0.34
(1.26) (1.05) (0.76) 0.21 0.25 (0.33) 0.23
- -------------------------------------------------------------------------------------------
(0.37) (0.31) (0.14) 0.85 0.89 0.30 0.57
===========================================================================================
(0.89) (0.74) (0.62) (0.64) (0.64) (0.63) (0.34)
-- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------
(0.89) (0.74) (0.62) (0.64) (0.64) (0.63) (0.34)
===========================================================================================
(1.26) (1.05) (0.76) 0.21 0.25 (0.33) 0.23
$7.69 $8.95 $9.60 $10.36 $10.15 $9.90 $10.23
===========================================================================================
(4.45%) (3.25%) (1.35%) 8.59% 9.37% 3.10% 5.80%
$33,163 $27,965 $56,361 $42,207 $26,710 $17,666 $9,363
0.40% 0.40% 0.35% 0.35% 0.35% 0.35% 0.35%
10.70% 9.54% 6.33% 6.26% 6.55% 6.51% 6.54%
44.33% 25.43% 19.50% 18.29% 18.41% 11.65% 6.51%
===========================================================================================
0.50% 0.54% 0.44% 0.48% 0.52% 0.68% 1.25%
10.61% 9.40% 6.23% 6.13% 6.38% 6.18% 5.64%
</TABLE>
- ----------------------------------------------------------------------------
December 31, 1999 81
<PAGE>
AAL VARIABLE PRODUCTS 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
------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Period Ended
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 (c)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value: Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- ---------------------------------
Net investment income 0.05 0.05 0.05 0.05 0.03
Net realized and unrealized gains (losses) on investments -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.05 0.05 0.05 0.05 0.03
===================================================================================================================================
Less Distributions from
- -----------------------
Net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
Net realized capital gains -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.05) (0.05) (0.05) (0.05) (0.03)
===================================================================================================================================
Net increase (decrease) in net asset value -- -- -- -- --
Net Asset Value: End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===================================================================================================================================
Total return (a) 4.94% 5.31% 5.33% 5.23% 3.02%
Net assets, end of period (in thousands) $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%
Ratio of net investment income (loss) to average net assets (b) 4.85% 5.20% 5.24% 5.10% 5.71%
Portfolio turnover rate N/A N/A N/A N/A N/A
===================================================================================================================================
If the Portfolio had paid all of their expenses without the adviser's voluntary expense reimbursement, the ratios would
have been as follows:
Ratio of expenses to average net assets (b) 0.41% 0.44% 0.46% 0.65% 1.40%
Ratio of net investment income (loss) to average net assets (b) 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.
----------------------------------------------------------------------------
82 Financial Highlights
<PAGE>
AAL Variable Product Series Fund, Inc.
Report of Independent Auditors
To the Directors and Shareholders
The AAL Variable Product Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The AAL Variable Products Series Fund, Inc.
(comprised of the Small Company Stock Portfolio, International Stock Portfolio,
Large Company Stock Portfolio, Balanced Portfolio, High Yield Bond Portfolio,
Bond Portfolio and Money Market Portfolio) as of December 31, 1999, and the
related statements of operations, statements of changes in net assets and
financial highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
AAL Variable Product Series Fund, Inc. as of December 31, 1999, and the results
of its operations, changes in net assets and financial highlights for each of
the periods indicated therein, in conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
Milwaukee, Wisconsin
January 25, 2000
- ----------------------------------------------------------------------------
December 31, 1999 83
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account I
Statement of Net Assets
AS OF DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
Assets
- ------
<S> <C>
Investments, in AAL Variable Product Series Fund, Inc.:
Small Company Stock Subaccount:
Small Company Stock Portfolio, 16,946,710 shares at net asset value of $13.20 per share (cost $227,514,953).. $ 223,613,738
International Stock Subaccount:
International Stock Portfolio, 1,401,360 shares at net asset value of $15.44 per share (cost $17,035,412).... 21,641,121
Large Company Stock Subaccount:
Large Company Stock Portfolio, 31,176,419 shares at net asset value of $27.10 per share (cost $558,420,420).. 844,974,977
Balanced Subaccount:
Balanced Portfolio, 46,162,029 shares at net asset value of $16.72 per share (cost $653,433,007)............. 771,962,035
High Yield Bond Subaccount:
High Yield Bond Portfolio, 2,013,503 shares at net asset value of $7.69 per share (cost $17,770,424)......... 15,487,660
Bond Subaccount:
Bond Portfolio, 5,843,358 shares at net asset value of $9.60 per share (cost $58,954,472).................... 56,071,288
Money Market Subaccount:
Money Market Portfolio, 44,134,066 shares at net asset value of $1.00 per share (cost $44,134,066)........... 44,134,066
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,577,262,754) 1,977,884,885
===================================================================================================================================
Liabilities --
- -----------
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $1,977,884,885
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Unit Units Extended
Value Value
===================================================================================================================================
<S> <C> <C> <C>
Net Assets are represented by:
Small Company Stock Subaccount............................................. 12,901,178 $17.34 $ 223,613,738
International Stock Subaccount............................................. 1,416,941 15.27 21,641,121
Large Company Stock Subaccount............................................. 30,677,434 27.54 844,974,977
Balanced Subaccount........................................................ 40,066,882 19.26 771,962,035
High Yield Bond Subaccount................................................. 1,713,656 9.04 15,487,660
Bond Subaccount............................................................ 4,636,639 12.10 56,071,288
Money Market Subaccount.................................................... 37,007,522 1.19 44,134,066
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $1,977,884,885
===================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
----------------------------------------------------------------------------
84 Statement of Net Assets
<PAGE>
This Page Intentionally Left Blank
- ----------------------------------------------------------------------------
December 31, 1999 85
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account I
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
========================================================================================================================
<S> <C> <C> <C>
Investment Income
- -----------------
Dividends............................................................. $ 36,147,903 $ 958,192 $ 123,100
Capital gain distributions............................................ 37,192,202 10,221,672 125,093
- ------------------------------------------------------------------------------------------------------------------------
Total Investment Income 73,340,105 11,179,864 248,193
========================================================================================================================
Expenses-mortality and expense risk charges........................... 21,132,247 2,495,149 123,061
- ------------------------------------------------------------------------------------------------------------------------
Net Investment Income 52,207,858 8,684,715 125,132
========================================================================================================================
Net Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------
Net realized gain (loss) from investment transactions................. 1,550,706 872,095 68,477
Change in unrealized appreciation/depreciation of investments......... 158,538,141 11,603,317 4,439,435
- ------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments 160,088,847 12,475,412 4,507,912
- ------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations $212,296,705 $21,160,127 $4,633,044
========================================================================================================================
</TABLE>
-----------------------------------------------------------------------------
86 Statement of Operations
<PAGE>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
===========================================================================
$ 7,021,760 $21,586,713 $ 1,377,729 $ 3,185,206 $1,895,203
6,926,084 19,919,353 -- -- --
---------------------------------------------------------------------------
13,947,844 41,506,066 1,377,729 3,185,206 1,895,203
===========================================================================
8,872,062 8,356,925 160,377 633,517 491,156
---------------------------------------------------------------------------
5,075,782 33,149,141 1,217,352 2,551,689 1,404,047
===========================================================================
393,418 570,262 (303,031) (50,515) --
119,150,763 28,823,575 (1,704,175) (3,774,774) --
---------------------------------------------------------------------------
119,544,181 29,393,837 (2,007,206) (3,825,289) --
----------------------------------------------------------------------------
$124,619,963 $62,542,978 $ (789,854) $(1,273,600) $1,404,047
===========================================================================
The accompanying notes to the financial statements are an integral part of this
statement.
- ----------------------------------------------------------------------------
December 31, 1999 87
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account I
Statement of Changes in Net Assets
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
===================================================================================================================
<S> <C> <C> <C>
Net Assets at January 1, 1998..................................... $ 824,995,246 $152,921,460 $ --
===================================================================================================================
Increase (Decrease) in Net Assets
- ---------------------------------
Net investment income (loss)...................................... 50,354,150 30,112,329 (24,966)
Net realized gain (loss) from investment transactions............. 1,515,394 323,308 5,756
Change in unrealized appreciation/depreciation of investments..... 121,795,866 (34,473,969) 166,275
- -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from
Operations...................................................... 173,665,410 (4,038,332) 147,065
===================================================================================================================
Capital Share Transactions
- --------------------------
Transfers of net premiums......................................... 446,760,777 36,097,357 2,316,310
Transfers of death benefits....................................... (7,628,131) (679,754) (3,264)
Transfers of surrenders........................................... (28,535,620) (4,204,730) (67,246)
Transfers between subaccounts..................................... (6,667,442) 17,726,566 2,038,022
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Capital Share Transactions...................................... 403,929,584 48,939,439 4,263,822
===================================================================================================================
Total Increase in Net Assets...................................... 577,594,994 44,901,107 4,430,887
===================================================================================================================
Net Assets at December 31, 1998................................... 1,402,590,240 197,822,567 4,430,887
===================================================================================================================
Increase (Decrease) in Net Assets
- ---------------------------------
Net investment income............................................. 52,207,858 8,684,715 125,132
Net realized gain (loss) from investment transactions............. 1,550,706 872,095 68,477
Change in unrealized appreciation/depreciation of investments..... 158,538,141 11,603,317 4,439,435
- -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations................................................. 212,296,705 21,160,127 4,633,044
===================================================================================================================
Capital Share Transactions
- --------------------------
Transfers of net premiums......................................... 435,244,449 18,054,575 6,036,067
Transfers of death benefits....................................... (12,423,414) (819,611) (16,590)
Transfers of surrenders........................................... (50,522,977) (5,679,928) (223,557)
Transfers between subaccounts..................................... (9,300,118) (6,923,992) 6,781,270
- -------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Capital Share Transactions...................................... 362,997,940 4,631,044 12,577,190
===================================================================================================================
Total Increase in Net Assets...................................... 575,294,645 25,791,171 17,210,234
===================================================================================================================
Net Assets at December 31, 1999................................... $1,977,884,885 $223,613,738 $21,641,121
===================================================================================================================
</TABLE>
88 Statement of Changes in Net Assets
<PAGE>
<TABLE>
<CAPTION>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
=========================================================================================================
<S> <C> <C> <C> <C> <C>
$318,474,657 $306,498,548 $ -- $21,636,485 $ 25,464,096
=========================================================================================================
7,425 17,218,897 385,244 1,516,881 1,138,340
781,967 410,315 (29,023) 23,071 --
103,931,509 52,220,247 (578,590) 530,394 --
- ---------------------------------------------------------------------------------------------------------
104,720,901 69,849,459 (222,369) 2,070,346 1,138,340
=========================================================================================================
96,013,937 109,087,355 5,915,724 9,671,632 187,658,462
(2,616,157) (3,041,335) (135,787) (717,906) (433,928)
(9,700,141) (11,852,374) (186,188) (1,120.954) (1,403,987)
63,304,559 74,187,172 4,626,832 10,641,929 (179,192,522)
- ---------------------------------------------------------------------------------------------------------
147,002,198 168,380,818 10,220,581 18,474,701 6,628,025
=========================================================================================================
251,723,099 238,230,277 9,998,212 20,545,047 7,766,365
=========================================================================================================
570,197,756 544,728,825 9,998,212 42,181,532 33,230,461
=========================================================================================================
5,075,782 33,149,141 1,217,352 2,551,689 1,404,047
393,418 570,262 (303,031) (50,515) --
119,150,763 28,823,575 (1,704,175) (3,774,774) --
- ---------------------------------------------------------------------------------------------------------
124,619,963 62,542,978 (789,854) (1,273,600) 1,404,047
=========================================================================================================
104,121,690 119,968,776 4,715,743 12,240,979 170,106,619
(3,310,953) (7,311,640) (87,823) (598,806) (277,991)
(18,492,496) (20,824,575) (570,420) (1,875,901) (2,856,100)
67,839,017 72,857,671 2,221,802 5,397,084 (157,472,970)
- ---------------------------------------------------------------------------------------------------------
150,157,258 164,690,232 6,279,302 15,163,356 9,499,558
=========================================================================================================
274,777,221 227,233,210 5,489,448 13,889,756 10,903,605
=========================================================================================================
$844,974,977 $771,962,035 $15,487,660 $56,071,288 $ 44,134,066
=========================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
December 31, 1999 89
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account I
Notes to Financial Statements
AS OF DECEMBER 31, 1999
Note 1. Summary of Significant Accounting Policies
- ----------------------------------------------------
The AAL Variable Annuity Account I (the Account) is a unit investment trust
registered under the Investment Company Act of 1940. The Account was
established as a separate investment account within Aid Association for
Lutherans (AAL) to fund flexible premium deferred variable annuity certificates.
The Account has seven separate subaccounts, each of which invests solely, as
directed by certificate owners, in a different portfolio of AAL Variable Product
Series Fund, Inc. (the Fund), an open-end, diversified management investment
company sponsored by AAL. Certificate owners also may direct investments to a
guaranteed interest subaccount held in the general account of AAL.
Investments in shares of the Fund are stated at market value, which is the
closing net asset value per share as determined by the Fund. The first-in,
first-out basis has been used in determining the net realized gain or loss from
investment transactions and unrealized appreciation or depreciation of
investments. Dividends and capital gain distributions paid to the Account are
automatically reinvested in shares of the Fund on the payment date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Note 2. Expense Charges
- -------------------------
The Account pays AAL certain amounts relating to the distribution and
administration of the certificates funded by the Account and as reimbursement
for certain mortality and other risks assumed by AAL. The following summarizes
those amounts.
Mortality and expense risks assumed by AAL are compensated for by a charge
equivalent to an annual rate of approximately 1.25% of the average daily net
asset value of the Account. A certificate maintenance charge of $25 per
certificate year is deducted to reimburse AAL for administrative expenses
related to the contract. This fee is waived if the sum of premiums received by
AAL less the sum of any withdrawals and withdrawal charges from the certificate
is $5,000 or more at the time the deduction would be made. In addition, a
surrender charge is imposed in the event of a full or partial surrender in
excess of 10% of the accumulated value during the first seven contract years.
The amount charged is 7% of the amount surrendered during the first contract
year and declines by 1% in each of the next six contract years. The certificate
owner may make two transfers from one or more subaccounts to other subaccounts
or the fixed account in each certificate year, but thereafter, each transfer is
subject to a $10 transfer charge.
Note 3. Federal Income Taxes
- ------------------------------
The operations of the Account form a part of the operations of AAL. AAL, a
fraternal benefit society, qualifies as a tax-exempt organization under the
Internal Revenue Code. Under current law, no federal income taxes are payable
with respect to the Account's net investment income and net realized gains on
investments. Accordingly, no charge for income taxes is currently being made to
the Account. If such taxes are incurred by AAL in the future, a charge to the
Account may be assessed.
Note 4. Investment Transactions
- ---------------------------------
The aggregate cost of investment securities purchased and proceeds from
investment securities sold by subaccount are as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1999
Purchases Sales
- ------------------------------------------------------------------------------------
<S> <C> <C>
Small Company Stock Subaccount................ $ 23,649,930 $10,334,171
International Stock Subaccount................ 13,358,551 656,230
Large Company Stock Subaccount................ 155,912,979 679,939
Balanced Subaccount........................... 199,336,940 1,497,567
High Yield Bond Subaccount.................... 9,130,531 1,633,878
Bond Subaccount............................... 20,688,756 2,973,712
Money Market Subaccount....................... 54,975,789 44,067,709
- ------------------------------------------------------------------------------------
Combined...................................... $477,053,476 $61,843,206
====================================================================================
<CAPTION>
Year ended December 31, 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
Small Company Stock Subaccount................ $ 80,794,911 $ 1,743,142
International Stock Subaccount................ 4,521,028 262,171
Large Company Stock Subaccount................ 148,687,401 1,677,778
Balanced Subaccount........................... 186,914,944 1,315,229
High Yield Bond Subaccount.................... 11,283,057 677,232
Bond Subaccount............................... 21,910,913 1,919,329
Money Market Subaccount....................... 58,441,701 50,676,008
- ------------------------------------------------------------------------------------
Combined...................................... $512,553,955 $58,270,889
====================================================================================
</TABLE>
90 Notes to Financial Statements
<PAGE>
Note 5. Summary of Changes from Unit Transactions
- ---------------------------------------------------
Transactions in units of each subaccount were as follows:
<TABLE>
<CAPTION>
Units Sold Units Redeemed Net Increase
-------------------------- -------------------------- --------------------------
Units Amount Units Amount Units Amount
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1999
Small Company Stock Subaccount... 1,166,367 $ 18,054,575 911,654 $ 13,423,531 254,713 $ 4,631,044
International Stock Subaccount... 1,031,240 12,817,336 19,657 240,146 1,011,583 12,577,190
Large Company Stock Subaccount... 6,920,531 171,960,708 880,318 21,803,450 6,040,213 150,157,258
Balanced Subaccount.............. 10,604,229 192,826,447 1,545,063 28,136,215 9,059,166 164,690,232
High Yield Bond Subaccount....... 739,641 6,937,545 70,308 658,243 669,333 6,279,302
Bond Subaccount.................. 1,442,135 17,638,062 202,922 2,474,706 1,239,213 15,163,356
Money Market Subaccount.......... 145,438,322 170,106,619 137,311,199 160,607,061 8,127,123 9,499,558
- ----------------------------------------------------------- -------------------------- --------------------------
Combined......................... 167,342,465 $590,341,292 140,941,121 $227,343,352 26,401,344 $362,997,940
=========================================================== ========================== ==========================
Year ended December 31, 1998
Small Company Stock Subaccount... 3,304,007 $ 53,823,923 317,688 $ 4,884,484 2,986,319 $ 48,939,439
International Stock Subaccount... 412,234 4,354,332 6,877 70,510 405,357 4,283,822
Large Company Stock Subaccount... 7,797,598 159,318,496 606,251 12,316,298 7,191,347 147,002,198
Balanced Subaccount.............. 11,388,627 183,274,527 925,222 14,893,709 10,463,405 168,380,818
High Yield Bond Subaccount....... 1,078,107 10,542,556 33,784 321,975 1,044,323 10,220,581
Bond Subaccount.................. 1,682,099 20,313,561 153,730 1,838,860 1,528,369 18,474,701
Money Market Subaccount.......... 166,630,005 187,658,462 160,769,420 181,030,437 5,860,585 6,628,025
- ----------------------------------------------------------- -------------------------- --------------------------
Combined......................... 192,292,677 $619,285,857 162,812,972 $215,356,273 29,479,705 $403,929,584
=========================================================== ========================== ==========================
</TABLE>
December 31, 1999 91
<PAGE>
Note 6. Net Assets
- --------------------
The Account has an unlimited number of accumulation units authorized with no par
value. Net assets as of December 31, 1999, consisted of:
<TABLE>
<CAPTION>
Small
Company
Stock
Combined Subaccount
--------------- --------------
<S> <C> <C>
Paid-in capital.............................. $1,452,968,940 $179,575,258
Accumulated undistributed net investment
income..................................... 121,148,969 46,713,402
Accumulated undistributed net realized gain
(loss) from investment transactions........ 3,144,845 1,226,293
Net unrealized appreciation (depreciation)
of investments............................. 400,622,131 (3,901,215)
--------------- -------------
Net Assets................................... $1,977,884,885 $223,613,738
=============== =============
</TABLE>
92 Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Large High
International Company Yield Money
Stock Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
--------------- ------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital.............................. $16,861,013 $550,840,094 $595,351,621 $16,499,882 $53,545,264 $40,295,808
Accumulated undistributed net investment
income..................................... 100,165 6,389,772 57,056,879 1,602,596 5,447,897 3,838,258
Accumulated undistributed net realized gain
(loss) from investment transactions........ 74,234 1,190,554 1,024,507 (332,054) (38,689) --
Net unrealized appreciation (depreciation)
of investments............................. 4,605,709 286,554,557 118,529,028 (2,282,764) (2,883,184) --
--------------- ------------ ------------- ------------- ------------ -------------
Net Assets................................... $21,641,121 $844,974,977 $771,962,035 $15,487,660 $56,071,288 $44,134,066
=============== ============ ============= ============= ============ =============
</TABLE>
December 31, 1999 93
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account I
Report of Independent Auditors
The Board of Directors and Certificate Owners
Aid Association for Lutherans
We have audited the accompanying statement of net assets of the AAL Variable
Annuity Account I (the account) (comprising, respectively, the Small Company
Stock, International Stock, Large Company Stock, Balanced, High Yield Bond,
Bond, and Money Market Subaccounts) as of December 31, 1999, and the related
statements of operations for the year then ended and changes in net assets for
each of the two years in the period then ended. These financial statements are
the responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the transfer agent. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the AAL Variable Annuity Account I at December 31,
1999, and the results of their operations for the year then ended, and changes
in their net assets for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Milwaukee, Wisconsin
January 26, 2000
94 Report of Independent Auditors
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account II
Statement of Net Assets
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
==================================================================================================================================
Assets
- ------
<S> <C>
Investments in AAL Variable Product Series Fund, Inc.:
Small Company Stock Subaccount:
Small Company Stock Portfolio, 47,340 shares at net asset value of $13.20 per share (cost $612,248)............ $ 624,734
International Stock Subaccount:
International Stock Portfolio, 25,494 shares at net asset value of $15.44 per share (cost $362,983)............ 393,701
Large Company Stock Subaccount:
Large Company Stock Portfolio, 152,202 shares at net asset value of $27.10 per share (cost $4,003,460)......... 4,124,971
Balanced Subaccount:
Balanced Portfolio, 189,914 shares at net asset value of $16.72 per share (cost $3,180,292).................... 3,175,732
High Yield Bond Subaccount:
High Yield Bond Portfolio, 25,903 shares at net asset value of $7.69 per share (cost $200,715)................. 199,235
Bond Subaccount:
Bond Portfolio, 16,327 shares at net asset value of $9.60 per share (cost $159,483)............................ 156,696
Money Market Subaccount:
Money Market Portfolio, 1,798,099 shares at net asset value of $1.00 per share (cost $1,798,099)............... 1,798,099
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $10,317,280) 10,473,168
==================================================================================================================================
Liabilities --
- -----------
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets $10,473,168
==================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Unit Extended
Units Value Value
==================================================================================================================================
<S> <C> <C> <C>
Net Assets are represented by:
Small Company Stock Subaccount............................................................. 36,036 $17.34 $ 624,734
International Stock Subaccount............................................................. 25,778 15.27 393,701
Large Company Stock Subaccount............................................................. 149,769 27.54 4,124,971
Balanced Subaccount........................................................................ 164,845 19.26 3,175,732
High Yield Bond Subaccount................................................................. 22,046 9.04 199,235
Bond Subaccount............................................................................ 12,956 12.10 156,696
Money Market Subaccount.................................................................... 1,507,483 1.19 1,798,099
- ----------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $10,473,168
==================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
- ----------------------------------------------------------------------------
December 31, 1999 95
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account II
Statement of Operations
FOR THE PERIOD AUGUST 2, 1999/(1)/ TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
===================================================================================================================
Investment Income
- -----------------
<S> <C> <C> <C>
Dividends............................................................ $ 42,153 $ 442 $ 2,225
Capital gain distributions........................................... 138,304 27,964 2,262
- -------------------------------------------------------------------------------------------------------------------
Total Investment Income 180,457 28,406 4,487
===================================================================================================================
Expenses-mortality and expense risk charges........................... 12,673 609 374
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income 167,784 27,797 4,113
===================================================================================================================
Net Realized and Unrealized Gain (Loss) on Investments
- ------------------------------------------------------
Net realized gain (loss) from investment transactions................. 7,165 16 47
Change in unrealized appreciation/depreciation of investments......... 155,888 12,486 30,718
- -------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments 163,053 12,502 30,765
- -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting
from Operations $330,837 $40,299 $34,878
===================================================================================================================
</TABLE>
/(1)/ Commencement of operations
----------------------------------------------------------------------------
96 Statement of Operations
<PAGE>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
============================================================================
$ 5,211 $14,509 $ 3,002 $ 1,435 $15,329
31,823 76,255 -- -- --
- ----------------------------------------------------------------------------
37,034 90,764 3,002 1,435 15,329
============================================================================
3,996 3,740 225 179 3,550
- ----------------------------------------------------------------------------
33,038 87,024 2,777 1,256 11,779
============================================================================
6,507 1,316 (697) (24) --
121,511 (4,560) (1,480) (2,787) --
- ----------------------------------------------------------------------------
128,018 (3,244) (2,177) (2,811) --
- ----------------------------------------------------------------------------
$161,056 $83,780 $ 600 $(1,555) $11,779
============================================================================
The accompanying notes to the financial statements are an integral part of this
statement
- ---------------------------------------------------------------------------
December 31, 1999 97
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account II
Statement of Changes in Net Assets
FOR THE PERIOD AUGUST 2, 1999/(1)/ TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
====================================================================================================================
<S> <C> <C> <C>
Net Assets at July 26, 1999 $ -- $ -- $ --
====================================================================================================================
Increase (Decrease) in Net Assets
- ---------------------------------
Net investment income................................................. 167,784 27,797 4,113
Net realized gain (loss) from investment transactions................. 7,165 16 47
Change in unrealized appreciation (depreciation) of investments....... 155,888 12,486 30,718
- --------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from
Operations 330,837 40,299 34,878
====================================================================================================================
Capital Share Transactions
- --------------------------
Transfers of net premiums............................................. 10,709,656 294,345 298,661
Transfers of death benefits........................................... -- -- --
Transfers of surrenders............................................... (145,857) (6,554) (3,591)
Transfers between subaccounts......................................... (421,468) 296,644 63,753
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Capital Share Transactions 10,142,331 584,435 358,823
====================================================================================================================
- --------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 10,473,168 624,734 393,701
====================================================================================================================
Net Assets at December 31, 1999 $10,473,168 $624,734 $393,701
====================================================================================================================
</TABLE>
/(1)/ Commencement of operations
----------------------------------------------------------------------------
98 Statement of Changes in Net Assets
<PAGE>
<TABLE>
<CAPTION>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
===========================================================================
<S> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ --
===========================================================================
33,038 87,024 2,777 1,256 11,779
6,507 1,316 (697) (24) --
121,511 (4,560) (1,480) (2,787) --
- ---------------------------------------------------------------------------
161,056 83,780 600 (1,555) 11,779
===========================================================================
2,372,827 1,750,753 164,758 97,758 5,730,554
-- -- -- -- --
(32,076) (19,042) (3,025) (1,013) (80,556)
1,623,164 1,360,241 36,902 61,506 (3,863,678)
- ---------------------------------------------------------------------------
3,963,915 3,091,952 198,635 158,251 1,786,320
===========================================================================
- ---------------------------------------------------------------------------
4,124,971 3,175,732 199,235 156,696 1,798,099
===========================================================================
$4,124,971 $3,175,732 $199,235 $156,696 $ 1,798,099
===========================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
- ----------------------------------------------------------------------------
December 31, 1999 99
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account II
Notes to Financial Statements
AS OF DECEMBER 31, 1999
Note 1. Summary of Significant Accounting Policies
- --------------------------------------------------
The AAL Variable Annuity Account II (the Account) is a unit investment trust
registered under the Investment Company Act of 1940. The Account was established
as a separate investment account within Aid Association for Lutherans (AAL) to
fund single premium immediate variable annuity certificates. The Account
commenced operations on August 2, 1999.
The Account has seven separate subaccounts, each of which invests solely, as
directed by certificate owners, in a different portfolio of AAL Variable Product
Series Fund, Inc. (the Fund), an open-end, diversified management investment
company sponsored by AAL. Certificate owners also may direct investments to a
guaranteed interest subaccount held in the general account of AAL.
Investments in shares of the Fund are stated at market value, which is the
closing net asset value per share as determined by the Fund. The first-in,
first-out basis has been used in determining the net realized gain or loss from
investment transactions and unrealized appreciation or depreciation of
investments. Dividends and capital gain distributions paid to the Account are
automatically reinvested in shares of the Fund on the payment date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Note 2. Expense Charges
- -----------------------
The Account pays AAL certain amounts relating to the distribution and
administration of the certificates funded by the Account and as reimbursement
for certain mortality and other risks assumed by AAL. The following summarizes
those amounts.
Mortality and expense risks assumed by AAL are compensated for by a charge
equivalent to an annual rate of approximately 1.25% of the average daily net
asset value of the Account. There is a daily charge based on a percentage of
each portfolio's average daily net asset value that is payable to the
portfolio's investment advisor. The certificate owner may make up to twelve
transfers between investment options per certificate year, but thereafter, each
transfer is subject to a $25 transfer charge. Transfers from the fixed account
are not allowed. In addition, each certificate has an indirect withdrawal and
surrender charge. The net amount received upon surrender is the commuted value,
which for the fixed account is calculated using a maximum interest rate of 2%
higher than the maximum valuation interest rate for single premium immediate
annuities for the year and state in which the certificate was issued. For the
variable subaccounts, the commuted value is calculated using an interest rate of
1% greater than the assumed investment return selected.
Note 3. Federal Income Taxes
- ----------------------------
The operations of the Account form a part of the operations of AAL. AAL, a
fraternal benefit society, qualifies as a tax-exempt organization under the
Internal Revenue Code. Under current law, no federal income taxes are payable
with respect to the Account's net investment income and net realized gains on
investments. Accordingly, no charge for income taxes is currently being made to
the Account. If such taxes are incurred by AAL in the future, a charge to the
Account may be assessed.
Note 4. Investment Transactions
- -------------------------------
The aggregate cost of investment securities purchased and proceeds from
investment securities sold by subaccount are as follows:
Period July 26, 1999 to
December 31, 1999
---------------------------
Year ended December 31, 1999 Purchases Sales
- -----------------------------------------------------------
Small Company Stock Subaccount.. $ 613,064 $ 832
International Stock Subaccount.. 363,671 734
Large Company Stock Subaccount.. 4,100,556 103,604
Balanced Subaccount............. 3,223,466 44,490
High Yield Bond Subaccount...... 215,142 13,729
Bond Subaccount................. 177,983 18,475
Money Market Subaccount......... 3,891,629 2,093,529
- -----------------------------------------------------------
Combined........................ $12,585,511 $2,275,393
===========================================================
----------------------------------------------------------------------------
100 Notes to Financial Statements
<PAGE>
Note 5. Summary of Changes from Unit Transactions
- -------------------------------------------------
Transactions in units of each subaccount were as follows:
<TABLE>
<CAPTION>
Units Sold Units Redeemed Net Increase
=================================================================================
Units Amount Units Amount Units Amount
========================== ========================= ==========================
<S> <C> <C> <C> <C> <C> <C>
Period August 2, 1999 to
December 31, 1999
Small Company Stock Subaccount...... 37,021 $ 595,208 985 $ 10,773 36,036 $ 584,435
International Stock Subaccount...... 26,688 366,211 910 7,388 25,778 358,823
Large Company Stock Subaccount...... 153,745 4,054,856 3,976 90,941 149,769 3,963,915
Balanced Subaccount................. 171,938 3,188,458 7,093 96,506 164,845 3,091,952
High Yield Bond Subaccount.......... 22,427 202,120 381 3,485 22,046 198,635
Bond Subaccount..................... 13,104 160,068 148 1,817 12,956 158,251
Money Market Subaccount............. 4,880,394 5,730,535 3,372,911 3,944,215 1,507,483 1,786,320
- -------------------------------------------------------------- ------------------------- --------------------------
Combined............................ 5,305,317 $14,297,456 3,386,404 $4,155,125 1,918,913 $10,142,331
============================================================== ========================= ==========================
</TABLE>
- ---------------------------------------------------------------------------
December 31, 1999 101
<PAGE>
Note 6. Net Assets
- ------------------
The Account has an unlimited number of annuity units authorized with no par
value. Net assets as of December 31, 1999, consisted of:
<TABLE>
<CAPTION>
Small
Company
Stock
Combined Subaccount
============= ===========
<S> <C> <C>
Paid-in capital.................................................. $10,142,331 $584,435
Accumulated undistributed net investment income (loss)........... 167,784 27,797
Accumulated undistributed net realized gain (loss)
from investment transactions.................................... 7,165 16
Net unrealized appreciation (depreciation) of investments........ 155,888 12,486
------------- -----------
Net Assets....................................................... $10,473,168 $624,734
============= ===========
</TABLE>
----------------------------------------------------------------------------
102 Notes to Financial Statements
<PAGE>
Large High
International Company Yield Money
Stock Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
============== =========== =========== =========== =========== ===========
$358,823 $3,963,915 $3,091,952 $198,635 $158,251 $1,786,320
4,113 33,038 87,024 2,777 1,256 11,779
47 6,507 1,316 (697) (24) --
30,718 121,511 (4,560) (1,480) (2,787) --
-------------- ----------- ----------- ----------- ----------- -----------
$393,701 $4,124,971 $3,175,732 $199,235 $156,696 $1,798,099
============== =========== =========== =========== =========== ===========
- ---------------------------------------------------------------------------
December 31, 1999 103
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Annuity Account II
Report of Independent Auditors
The Board of Directors and Certificate Owners
Aid Association for Lutherans
We have audited the accompanying statement of net assets of the AAL Variable
Annuity Account II (the Account) (comprising, respectively, the Small Company
Stock, International Stock, Large Company Stock, Balanced, High Yield Bond,
Bond, and Money Market Subaccounts) as of December 31, 1999, and the related
statements of operations and changes in net assets for the period August 2, 1999
(date operations commenced) to December 31, 1999. These financial statements are
the responsibility of the Account's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the transfer agent. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the AAL Variable Annuity Account II at December 31,
1999, and the results of their operations and changes in their net assets for
the period August 2, 1999 (date operations commenced) to December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Milwaukee, Wisconsin
January 26, 2000
----------------------------------------------------------------------------
104 Report of Independent Auditors
<PAGE>
AAL VARIABLE ANNUAL PROPERTY REPORT
AAL Variable Life Account I
Statement of Net Assets
AS OF DECEMBER 31, 1999
<TABLE>
===================================================================================================================================
<S> <C>
Assets
- ------
Investments in AAL Variable Product Series Fund, Inc.:
Small Company Stock Subaccount:
Small Company Stock Portfolio, 129,383 shares at net asset value of $13.20 per share (cost $1,607,082)....... $1,707,261
International Stock Subaccount:
International Stock Portfolio, 38,781 shares at net asset value of $15.44 per share (cost $468,787).......... 598,889
Large Company Stock Subaccount:
Large Company Stock Portfolio, 294,706 shares at net asset value of $27.10 per share (cost $6,886,614)....... 7,987,516
Balanced Subaccount:
Balanced Portfolio, 149,767 shares at net asset value of $16.72 per share (cost $2,418,463).................. 2,504,497
High Yield Bond Subaccount:
High Yield Bond Portfolio, 35,966 shares at net asset value of $7.69 per share (cost $306,556)............... 276,622
Bond Subaccount:
Bond Portfolio, 13,880 shares at net asset value of $9.60 per share (cost $139,013).......................... 133,185
Money Market Subaccount:
Money Market Portfolio, 568,546 shares at net asset value of $1.00 per share (cost $568,546)................. 568,546
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $12,395,061) 13,776,516
====================================================================================================================================
Liabilities --
- -----------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets $13,776,516
- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Unit Extended
Units Value Value
====================================================================================================================================
<S> <C> <C> <C>
Net Assets are represented by:
Small Company Stock Subaccount........................................... 167,815 $10.17 $1,707,261
International Stock Subaccount........................................... 41,283 14.50 598,889
Large Company Stock Subaccount........................................... 591,677 13.49 7,987,516
Balanced Subaccount...................................................... 206,124 12.15 2,504,497
High Yield Bond Subaccount............................................... 30,335 9.11 276,622
Bond Subaccount.......................................................... 12,715 10.47 133,185
Money Market Subaccount.................................................. 524,426 1.08 568,546
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $13,776,516
====================================================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
- ----------------------------------------------------------------------------
Statement of Net Assets December 31, 1999 105
<PAGE>
AAL VARIABLE ANNUAL PROPERTY REPORT
AAL Variable Life Account I
Statement of Operations
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
=================================================================================================================================
<S> <C> <C> <C>
Investment Income
- -----------------
Dividends..................................................... $149,782 $5,339 $4,546
Capital gain distributions.................................... 207,012 76,179 2,180
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 356,794 81,518 6,726
=================================================================================================================================
Expenses--mortality and expense risk charges.................. 61,066 7,642 2,006
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 295,728 73,876 4,720
=================================================================================================================================
Net Realized and Unrealized Gain (Loss) on Investments:
- ------------------------------------------------------
Net realized gain (loss) from investment transactions......... 18,674 (10,167) 673
Change in unrealized appreciation/depreciation
of investments................................................ 1,106,202 122,760 121,948
- ---------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments 1,124,876 112,593 122,621
=================================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations $1,420,604 $186,469 $127,341
=================================================================================================================================
</TABLE>
----------------------------------------------------------------------------
106 Statement of Net Assets
<PAGE>
<TABLE>
<CAPTION>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
================================================================================================
<S> <C> <C> <C> <C>
$49,411 $49,785 $21,256 $5,486 $13, 959
64,752 63,901 -- -- --
- ------------------------------------------------------------------------------------------------
114,163 113,686 21,256 5,486 13,959
================================================================================================
35,287 11,023 1,456 639 3,013
- ------------------------------------------------------------------------------------------------
78,876 102,663 19,800 4,847 10,946
================================================================================================
26,751 4,239 (2,374) (448) --
838,100 58,709 (29,663) (5,652) --
- ------------------------------------------------------------------------------------------------
864,851 62,948 (32,037) (6,100) --
================================================================================================
- ------------------------------------------------------------------------------------------------
$943,727 $165,611 $(12,237) $(1,253) $10,946
================================================================================================
</TABLE>
The accompanying notes to the financial statements are an integral part of this
statement.
- ---------------------------------------------------------------------------
December 31, 1999 107
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Life Account I
Statement of Changes in Net Assets
FOR THE PERIOD MAY 15, 1998/(1)/ TO DECEMBER 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Small
Company International
Stock Stock
Combined Subaccount Subaccount
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets at May 15, 1998 $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets
- ----------------------
Net investment income (loss).................................. 99,827 77,099 (176)
Net realized (loss) gain from investment transactions......... (4,662) (3,185) (123)
Change in unrealized appreciation/depreciation of investments. 275,254 (22,581) 8,154
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations 370,419 51,333 7,855
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions
- --------------------------
Transfers of net premiums..................................... 3,640,935 290,822 77,057
Transfers of surrenders and terminations...................... (1,720) (662) (60)
Transfers of policy loans..................................... (2,000) -- --
Cost of insurance and administrative charges.................. (187,962) (32,944) (6,043)
Transfers between subaccounts................................ (7,508) 183,254 34,151
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Capital
Share Transactions 3,441,745 440,470 105,105
- ---------------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 3,812,164 491,803 112,960
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets at December 31, 1998 3,812,164 491,803 112,960
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets
- ----------------------
Net investment income......................................... 295,728 73,876 4,720
Net realized (loss) gain from investment transactions......... 18,674 (10,167) 673
Change in unrealized appreciation/depreciation of investments. 1,106,202 122,760 121,948
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations 1,420,604 186,469 127,341
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions
- --------------------------
Transfers of net premiums..................................... 10,280,205 886,595 259,456
Transfers of maturities....................................... (6,563) (1,328) (461)
Transfers of surrenders and terminations...................... (4,906) (1,000) (298)
Transfers of policy loans..................................... (56,725) (17,699) (1,552)
Cost of insurance and administrative charges.................. (1,607,932) (255,086) (61,749)
Transfers between subaccounts................................. (60,331) 417,507 163,192
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from Capital
Share Transactions 8,543,748 1,028,989 358,588
- ---------------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets 9,964,352 1,215,458 485,929
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets at December 31, 1999 $13,776,516 $1,707,261 $598,889
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Commencement of operations
---------------------------------------------------------------------------
108 Statement of Changes in Net Assets
<PAGE>
<TABLE>
<CAPTION>
Large High
Company Yield Money
Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------
4,585 12,601 1,306 319 4,093
(41) (987) (330) 4 --
262,802 27,325 (271) (175) --
- ------------------------------------------------------------------------
267,346 38,939 705 148 4,093
- ------------------------------------------------------------------------
1,046,253 297,821 34,981 5,477 1,888,524
(808) -- (185) -- (5)
-- (2,000) -- -- --
(79,926) (26,503) (2,647) (701) (39,198)
929,832 296,472 36,256 21,018 (1,508,491)
- ------------------------------------------------------------------------
1,895,351 565,790 68,405 25,794 340,830
- ------------------------------------------------------------------------
2,162,697 604,729 69,110 25,942 344,923
- ------------------------------------------------------------------------
2,162,697 604,729 69,110 25,942 344,923
- ------------------------------------------------------------------------
78,876 102,663 19,800 4,847 10,946
26,751 4,239 (2,374) (448) --
838,100 58,709 (29,663) (5,652) --
- ------------------------------------------------------------------------
943,727 165,611 (12,237) (1,253) 10,946
- ------------------------------------------------------------------------
3,393,404 1,397,983 158,002 79,922 4,104,843
(2,887) (1,740) (147) -- --
(1,815) (1,301) (291) (101) (100)
(34,857) (1,278) (1,167) (172) --
(833,652) (300,884) (23,802) (14,663) (118,096)
2,360,899 641,377 87,154 43,510 (3,773,970)
- ------------------------------------------------------------------------
4,881,092 1,734,157 219,749 108,496 212,677
- ------------------------------------------------------------------------
5,824,819 1,899,768 207,512 107,243 223,623
- ------------------------------------------------------------------------
$7,987,516 $2,504,497 $ 276,622 $133,185 $568,546
- ------------------------------------------------------------------------
</TABLE>
The accompanying notes to the financial statements are an integral
part of this statement.
- --------------------------------------------------------------------------
December 31, 1999 109
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Life Account I
Notes to Financial Statements
AS OF DECEMBER 31, 1999
Note 1. Summary of Significant Accounting Policies
- ---------------------------------------------------
The AAL Variable Life Account I (the Account) is a unit investment trust
registered under the Investment Company Act of 1940. The Account was established
as a separate investment account within Aid Association for Lutherans (AAL) to
fund flexible premium variable universal life insurance certificates. The
Account commenced operations on May 15, 1998.
The Account has seven separate subaccounts, each of which invests solely, as
directed by certificate owners, in a different portfolio of the AAL Variable
Product Series Fund, Inc. (the Fund), an open-end, diversified management
investment company sponsored by AAL. Certificate owners also may direct
investments to a guaranteed interest subaccount held in the general account of
AAL.
Investments in shares of the Fund are stated at market value, which is the
closing net asset value per share as determined by the Fund. The first-in,
first-out basis has been used in determining the net realized gain or loss from
investment transactions and unrealized appreciation or depreciation of
investments. Dividends and capital gain distributions paid to the Account are
automatically reinvested in shares of the Fund on the payment date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Note 2. Expense Charges
- ------------------------
The Account pays AAL certain amounts relating to the distribution and
administration of the certificates funded by the Account and as reimbursement
for certain mortality and other risks assumed by AAL. The following summarizes
those amounts.
Mortality and expense risks assumed by AAL are compensated for by a charge
equivalent to an annual rate of approximately 0.75% of the total subaccount cash
value during the first 15 years dropping to approximately 0.25% thereafter. A
per policy monthly administration charge of $4 and a cost of insurance charge,
which varies by risk class, sex, amount at risk, and age, is deducted as
compensation for administrative and insurance expenses, respectively. A sales
charge of 3.0% is deducted from each participant payment to cover sales and
other expenses and to provide support for AAL's fraternal activities. In
addition, a surrender charge is imposed in the event the certificate is
surrendered or the specified amount is reduced. The initial surrender charge is
based on an amount per thousand of specified coverage for which the certificate
is issued. The amount per thousand varies by risk class, sex, and issue age.
The cash value is reduced by the surrender charge. The charge decreases over
the first 10 certificate years to zero in the 11th certificate year.
Note 3. Federal Income Taxes
- -----------------------------
The operations of the Account form a part of the operations of AAL. AAL, a
fraternal benefit society, qualifies as a tax-exempt organization under the
Internal Revenue Code. Under current law, no federal income taxes are payable
with respect to the Account's net investment income and net realized gains on
investments. Accordingly, no charge for income taxes is currently being made to
the Account. If such taxes are incurred by AAL in the future, a charge to the
Account may be assessed.
Note 4. Investment Transactions
- --------------------------------
The aggregate cost of investment securities purchased and proceeds from
investment securities sold by subaccount are as follows:
Year ended December 31, 1999
-----------------------------------
Purchases Sales
================================================================================
Small Company Stock Subaccount..... $ 1,178,696 $ 75,833
International Stock Subaccount..... 371,193 7,884
Large Company Stock Subaccount..... 5,103,390 143,422
Balanced Subaccount................ 1,876,892 40,071
High Yield Bond Subaccount......... 259,485 19,936
Bond Subaccount.................... 120,606 7,263
Money Market Subaccount............ 2,609,988 2,386,318
- --------------------------------------------------------------------------------
Combined........................... $11,520,250 $2,680,727
================================================================================
Period May 15, 1998
to December 31, 1998
-----------------------------------
Purchases Sales
================================================================================
Small Company Stock Subaccount..... $ 530,246 $ 12,675
International Stock Subaccount..... 105,905 976
Large Company Stock Subaccount..... 1,902,143 2,206
Balanced Subaccount................ 641,271 62,882
High Yield Bond Subaccount......... 74,579 4,869
Bond Subaccount.................... 26,411 298
Money Market Subaccount............ 1,259,772 914,896
- --------------------------------------------------------------------------------
Combined........................... $4,540,327 $998,802
================================================================================
---------------------------------------------------------------------------
110 Notes to Financial Statements
<PAGE>
Note 5. Summary of Changes from Unit Transactions
- --------------------------------------------------
Transactions in units of each subaccount were as follows:
<TABLE>
<CAPTION>
Units Sold Units Redeemed Net Increase
========================= ========================= =========================
Units Amount Units Amount Units Amount
========================= ========================= =========================
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1999
Small Company Stock Subaccount.... 145,382 $1,309,175 31,807 $280,186 113,575 $1,028,989
International Stock Subaccount.... 36,215 426,046 5,948 67,458 30,267 358,588
Large Company Stock Subaccount.... 473,725 5,764,329 75,101 883,237 398,624 4,881,092
Balanced Subaccount............... 179,038 2,047,769 28,186 313,612 150,852 1,734,157
High Yield Bond Subaccount........ 26,076 246,172 2,985 26,423 23,091 219,749
Bond Subaccount................... 11,757 123,426 1,485 14,930 10,272 108,496
Money Market Subaccount........... 3,870,816 4,104,843 3,680,326 3,892,166 190,490 212,677
- -------------------------------------------------------------- ------------------------- -------------------------
Combined.......................... 4,743,009 $14,021,760 3,825,838 $5,478,012 917,171 $8,543,748
============================================================== ========================= =========================
<CAPTION>
Units Sold Units Redeemed Net Increase
========================= ========================= =========================
Units Amount Units Amount Units Amount
========================= ========================= =========================
<S> <C> <C> <C> <C> <C> <C>
Period May 15, 1998 to
December 31, 1998
Small Company Stock Subaccount....... 58,402 $474,076 4,162 $33,606 54,240 $440,470
International Stock Subaccount....... 11,681 111,208 665 6,103 11,016 105,105
Large Company Stock Subaccount....... 201,345 1,976,085 8,292 80,734 193,053 1,895,351
Balanced Subaccount.................. 58,110 594,293 2,838 28,503 55,272 565,790
High Yield Bond Subaccount........... 7,555 71,237 311 2,832 7,244 68,405
Bond Subaccount...................... 2,512 26,495 69 701 2,443 25,794
Money Market Subaccount.............. 1,848,895 1,888,524 1,514,959 1,547,694 333,936 340,830
- -------------------------------------------------------------- ------------------------- -------------------------
Combined 2,188,500 $5,141,918 1,531,296 $1,700,173 657,204 $3,441,745
============================================================== ========================= =========================
</TABLE>
- ---------------------------------------------------------------------------
December 31, 1999 111
<PAGE>
Note 6. Net Assets
- ------------------
The Account has an unlimited number of accumulation units authorized with no par
value. Net assets as of December 31, 1999, consisted of:
Small
Company
Stock
Combined Subaccount
================================================================================
Paid-in capital.................................... $13,781,388 $1,757,489
Accumulated undistributed net investment income.... (1,400,340) (137,055)
Accumulated undistributed net realized gain
(loss) from investment transactions................ 14,013 (13,352)
Net unrealized appreciation (depreciation) of
investments...................................... 1,381,455 100,179
----------- ----------
Net assets......................................... $13,776,516 $1,707,261
=========== ==========
---------------------------------------------------------------------------
112 Notes to Financial Statements
<PAGE>
Large High
International Company Yield Money
Stock Stock Balanced Bond Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
================================================================================
$531,485 $7,690,022 $2,627,334 $314,603 $149,654 $ 710,801
(63,248) (830,118) (212,123) (5,343) (10,198) (142,255)
550 26,710 3,252 (2,704) (443) --
130,102 1,100,902 86,034 (29,934) (5,828) --
-------- ---------- ---------- -------- -------- ---------
$598,889 $7,987,516 $2,504,497 $276,622 $133,185 $ 568,546
======== ========== ========== ======== ======== =========
- ---------------------------------------------------------------------------
December 31, 1999 113
<PAGE>
AAL VARIABLE PRODUCTS ANNUAL REPORT
AAL Variable Life Account I
Report of Independent Auditors
The Board of Directors and Certificate Owners
Aid Association for Lutherans
We have audited the accompanying statement of net assets of the AAL Variable
Life Account I (the Account) (comprising, respectively, the Small Company Stock,
International Stock, Large Company Stock, Balanced, High Yield Bond, Bond, and
Money Market Subaccounts) as of December 31, 1999, and the related statements of
operations for the year then ended and changes in net assets for the period May
15, 1998 (date operations commenced) to December 31, 1998 and for the year ended
December 31, 1999. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of December 31,
1999, by correspondence with the transfer agent. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting the AAL Variable Life Account I at December 31, 1999,
and the results of their operations for the year then ended, and changes in
their net assets for the period May 15, 1998 (date operations commenced) to
December 31, 1998 and for the year ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Milwaukee, Wisconsin
January 26, 2000
---------------------------------------------------------------------------
114 Report of Independent Auditors
<PAGE>
A NOTE ON FORWARD-LOOKING STATEMENTS
Except for the historical information contained in the foregoing reports on each
of the Portfolios, the matters discussed in those reports may constitute
forward-looking statements that are made pursuant to the safe harbor provisions
of the Securities Litigation Reform Act of 1995. These include discussion about
each portfolio manager's predictions, assessments, analyses and outlooks for
relevant securities and investment markets, market sectors, industries and
individual stocks or other investment securities. These statements involve risks
and uncertainties. In addition to the general risks described for each Portfolio
in its current prospectus, other factors bearing on these reports include the
accuracy of each portfolio manager's forecasts and predictions, the
appropriateness of the investment strategies designed by the portfolio managers
to capitalize on their forecasts and predictions should they prove true, and the
ability of the portfolio managers to implement their strategies efficiently and
effectively. Any one or more of these factors, as well as other risks affecting
the securities markets and investment instruments generally, could cause the
actual results of any Portfolio to differ materially from the projected results
for the Portfolio, either on an overall basis or on a relative basis as compared
to the benchmark index selected for the particular Portfolio.
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.
- ---------------------------------------------------------------------------
December 31, 1999 115
<PAGE>
This Page Intentionally Left Blank
<PAGE>
<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
Investment Adviser & Transfer Agent Aid Association for Lutherans
4321 North Ballard Road.
Appleton, WI 54919-0001
Sub-Adviser (International Stock Portfolio) Oechsle International Advisors, L.P.
One International Place . Boston, MA 02110
Sub-Adviser (High Yield Bond Portfolio) AAL Capital Management Corporation
& Distributor 222 West College Avenue . Appleton, WI 54919-0007
Custodian Citibank, N. A.
111 Wall Street . New York, NY 10043
Legal Counsel Quarles & Brady
411 East Wisconsin Avenue . Milwaukee, WI 53202
Independent Auditors Ernst & Young LLP
111 East Kilbourn Avenue . Milwaukee, WI 53202
</TABLE>
This report is submitted for the information of the certificate owners of the
AAL Variable Annuity Account I, the 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, the AAL Variable Annuity Account II, AAL
Variable Life Account I and the AAL Variable Product Series Fund, Inc.
<TABLE>
<S> <C>
[AAL LOGO APPEARS HERE] [AAL LOGO APPEARS HERE]
Aid Association for Lutherans All Capital Management Corporation
----------------------------- ----------------------------------
4321 N Ballard Road, Appleton, WI 54919-0001 A Subsidiary of Aid Association for Lutherans
(800) 225 5225 222 W. College Ave., Appleton, WI 54919-0007
www.aal.org - email: [email protected] (800) 523-6319
www.aalcmc.org - email: [email protected]
Member NASD
</TABLE>
