SCHEDULE 14A INFORMATION

                    Proxy Statement Pursuant to Section 14(a)
                     of the Securities Exchange Act of 1934
                               (Amendment No. N/A)

Filed by the Registrant [X]

Filed by a Party other than the Registrant [  ]

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential,  for  Use  of the  Commission  only  (as  permitted  by  Rule
    14a-6(e)(2))
[ ] Definitive Proxy Statement 
[ ] Definitive  Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

                           THE AAL MUTUAL FUNDS, INC.
                (Name of Registrant as Specified in Its Charter)

                                 Not Applicable
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]      No fee required.
[ ]     Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

         1)       Title of each class of securities to which transaction 
                  applies:


         2)       Aggregate number of securities to which transaction applies:


         3)       Per  unit  price  or other  underlying  value  of  transaction
                  computed  pursuant to Exchange Rule 0-11 (Set forth the amount
                  on which the  filing  fee is  calculated  and state how it was
                  determined):


         4)       Proposed maximum aggregate value of transaction:


         5)       Total fee paid:


[  ]     Fee paid previously with preliminary materials.

[  ]     Check box if any part of the fee is offset as  provided  by  Exchange
         Act Rule  0-11(a)(2)  and identify the filing for which the  offsetting
         fee was paid  previously.  Identify the previous filing by registration
         statement number, or the Form or Schedule and the date of its filing.

         1)       Amount Previously Paid:


         2)       Form, Schedule or Registration Statement No.:


         3)       Filing Party:


         4)       Date Filed:


<PAGE>



                                      Logo
                              THE AAL MUTUAL FUNDS
                222 West College Avenue, Appleton, WI 54919-0007


                                                                   June __, 1997


          Re:  Special  Meeting  of the  Class  A and the  Class B  Shareholders
          ("shareholders") of The AAL Utilities Fund

Dear Shareholder:

         Enclosed  is a notice of a Special  Meeting  of the Class A and Class B
Shareholders of The AAL Utilities Fund (the "Fund"),  a series of The AAL Mutual
Funds, a  Massachusetts  business trust, to be held on August 15, 1997 ("Special
Meeting"),  together with a Proxy  Statement  and Form of Proxy  relating to the
business to be transacted at the meeting.

         The Special  Meeting is being called for the purpose of considering and
acting upon a change to the fundamental  investment  objective and policy of the
Fund.  The Fund's  present  objective  is to seek current  income,  long-term of
income and capital growth by investing  primarily in a diversified  portfolio of
public utilities  securities.  Deregulation and  consolidation  trends presently
sweeping   the   utilities   industry   have   changed  the   fundamentals   and
characteristics  traditionally  associated  with  the  securities  of  utilities
companies.  As a result,  the  number  of  utility  stocks  meeting  the  Fund's
investment criteria is dwindling.  Management of the Fund anticipates this trend
will continue. In response,  the Board of Trustees is recommending that the Fund
eliminate its policy of concentrating its investments in the utilities  industry
and,  instead,  permit the  Fund's  investment  adviser  to look  outside of the
utilities  industry  for  securities  appropriate  to achieve the  objective  of
current  income,  long-term  income  growth and capital  growth.  In addition to
expanding  the universe of stocks  available  for  investment  by the Fund,  the
proposed  changes  will help enable the Fund to reduce its exposure to the risks
and uncertainties  that the Trustees believe are developing within the utilities
industry.  Those risks and uncertainties  include,  among others,  volatility in
stock prices and less favorable prospects for long-term income growth.

         If the proposed changes are approved by the  shareholders,  the revised
investment  objective and policy would be  implemented  on September 1, 1997. On
that date,  the name of the Fund  would be  changed  to "The AAL  Equity  Income
Fund." The investment  objective would remain  fundamental,  meaning it could be
further changed only with the approval of the Fund's shareholders.


<PAGE>





         Thank you for your continued  confidence in The AAL Mutual Funds.  Your
cooperation  and  participation  in completing  and returning the enclosed proxy
will ensure that your vote is counted.

                                                  Very truly yours,
                                                  THE AAL MUTUAL FUNDS

                                                  /s/ Ronald G. Anderson

                                                  Ronald G. Anderson, President


<PAGE>




                              THE AAL MUTUAL FUNDS
                              222 West College Ave.
                            Appleton, Wisconsin 54919
                          800-553-6319 or 414-734-7633
                             ----------------------

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                             ---------------------

                          To Be Held on August 15, 1997

To Shareholders of The AAL Utilities Fund:

         The AAL Mutual Funds, a Massachusetts business Trust (the "AAL Trust"),
is holding the Special Meeting of the  Shareholders  ("Special  Meeting") of The
AAL  Utilities  Fund  ("Fund"),  a series of the AAL Trust,  at 222 West College
Avenue, Appleton, Wisconsin, on Friday, August 15, 1997, beginning at 10:00 a.m.
Central time for the following purposes:

     1. To approve or  disapprove  a proposed  change to the Fund's  fundamental
     investment  objective and policy,  as described in the  accompanying  Proxy
     Statement; and

     2. To transact such other  business as properly may come before the meeting
     or adjournment thereof.

         The Board of Trustees  has fixed the close of business on Friday,  June
15, 1997, as the record date for determining shareholders entitled to notice of,
and  to  vote  at,  the  Special  Meeting  and  any  adjournment  thereof.  Only
shareholders of record at the close of business on that date will be entitled to
vote. Your attention is invited to the Proxy Statement  accompanying this Notice
for a more  complete  statement  regarding  the  matters to be acted upon at the
Special Meeting.

                                            The AAL Mutual Funds By Order of the
                                            Board of Trustees

                                            /s/ Robert G. Same

                                            Robert G. Same, Secretary

Appleton, Wisconsin
June __, 1997


YOUR VOTE IS IMPORTANT.  PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE PROVIDED FOR THAT PURPOSE.


<PAGE>



                              THE AAL MUTUAL FUNDS
                             The AAL Utilities Fund
             222 West College Avenue, Appleton, Wisconsin 54919-0007
                          800-553-6319 or 414-734-7633
                             ----------------------

                                 PROXY STATEMENT
                             ----------------------

                     The Proxy Statement was first mailed to
                     shareholders on or about June __, 1997.


                             SOLICITATION AND VOTING

         This Proxy Statement is furnished in connection  with the  solicitation
of proxies by the Board of Trustees (the  "Trustees")  from the  shareholders of
The AAL  Utilities  Fund (the  "Fund"),  a series  of The AAL  Mutual  Funds,  a
Massachusetts  business trust (the "AAL Trust"), for use at a Special Meeting of
Shareholders  (the  "Special  Meeting") to be held Friday,  August 15, 1997,  at
10:00 a.m.  Central time at 222 West College Avenue,  Appleton,  Wisconsin.  The
purpose of the Special  Meeting and the matter to be acted upon are set forth in
the accompanying  Notice of Special Meeting of Shareholders.  You are encouraged
to read this  Proxy  Statement  carefully  and to mark and  return  the proxy or
proxies accompanying this Proxy Statement.

Quorum and Voting

         The  presence  at the  Special  Meeting,  in  person  or by  proxy,  of
shareholders  representing  one-third of all shares  outstanding and entitled to
vote on the matter constitutes a quorum for the transaction of business. Holders
of the Fund's Class A and Class B shares will be counted and will vote  together
on this matter.  Abstentions  are counted for purposes of determining  whether a
quorum is present, but do not represent votes cast with respect to any proposal.
"Broker  non-votes" (as described below), if any, will not be counted for quorum
purposes or as votes  cast.  "Broker  non-votes"  are shares held by a broker or
nominee for which an executed  proxy is received by the Fund,  but are not voted
as to one or more proposals because instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not
have discretionary voting power.

         Shares  represented by properly  executed proxies received by AAL Trust
will be voted at the Special Meeting and any  adjournment  thereof in accordance
with the terms of such proxies. If no instructions are specified, shares will be
voted "FOR"  proposal 1, and in the  discretion of the person named in the proxy
on  proposal 2. A  shareholder  may revoke his or her proxy at any time prior to
the vote at the Special Meeting by filing a written  revocation  notice with the
Secretary  of AAL Trust prior to the  Special  Meeting or by  delivering  a duly
executed proxy bearing a later date.



<PAGE>



         Approval of the proposed  change to the Fund's  fundamental  investment
objective  and  policy  requires  an  affirmative  vote  of "a  majority  of the
outstanding  voting  securities"  of the Fund,  including  shares of Class A and
Class B common stock voting together.  Under the 1940 Act the phrase "a majority
of the outstanding  voting securities" is defined to mean at least a majority of
the outstanding  voting shares of the Fund or, if less, 67% of the voting shares
represented at a meeting at which the holders of 50% or more of the  outstanding
voting  shares of the Fund are  present or  represented  by proxy.  Accordingly,
abstentions and broker non-votes will have the same effect as votes cast against
approval of the proposed change in the fundamental  investment  objective of the
Fund.


         The Fund's  shareholders of record at the close of business on June 15,
1997,  will be entitled to one vote on the Proposal  presented for each share so
held.  On that date,  there were,  in the  aggregate,  __________  shares of the
Fund's Class A and Class B common stock.


         UPON REQUEST AND AT NO COST TO A REQUESTING SHAREHOLDER, AAL TRUST WILL
MAIL,  BY FIRST CLASS MAIL,  COPIES OF ITS ANNUAL  REPORT  DATED APRIL 30, 1997.
REQUESTS SHOULD BE DIRECTED TO THE ATTENTION OF ROBERT G. SAME,  SECRETARY,  THE
AAL MUTUAL  FUNDS,  222 WEST COLLEGE  AVENUE,  APPLETON,  WISCONSIN  54919-0007,
TELEPHONE 800-553- 6319.

                    PROPOSAL ON THE FUND'S INVESTMENT PROGRAM

General

         The Fund's current fundamental  investment objective is to seek current
income,  long-term income growth and capital growth by investing  primarily in a
diversified  portfolio of public utilities securities (the "Present Objective").
The Fund has a fundamental industry concentration policy to invest, under normal
circumstances,  at least 65% of its total assets in the  securities  (stocks and
bonds) of public  utilities  companies.  The Board of Trustees is  proposing  to
amend the Present Objective to seek current income,  long-term income growth and
capital  growth by investing  in a  diversified  portfolio  of  income-producing
equity  securities  (the  "Proposed  Objective"),  and to  eliminate  the Fund's
fundamental industry concentration policy.  "Income-producing equity securities"
are equity  securities,  including  securities  exchangeable or convertible into
equity securities,  that offer dividend yields which exceed the average dividend
yields on stocks  comprising  the S&P 500(R)  Composite  Stock Price Index ("S&P
500"). If these changes are approved, the investment policy of the Fund would be
to  invest  at  least  65% of  the  Fund's  assets  in  income-producing  equity
securities.  In selecting  securities  for the Fund,  the Adviser would look for
income-producing  equity  securities  that have  favorable  prospects for future
growth  and  dividends,   without  limitation  to  any  particular  industry  or
industries,  thereby  diversifying the Fund's  investments across many different
industries.  However,  as a matter of fundamental  policy, the Fund would not be
permitted to invest more than 25% of its net assets in  securities of issuers in
any single industry.



<PAGE>



         Like  the  Present   Objective,   the  Proposed   Objective   would  be
fundamental,  meaning  it  could  not be  further  changed  without  shareholder
approval. If the changes are approved, the Proposed Objective and elimination of
the industry  concentration  policy would be implemented  beginning September 1,
1997, and the Fund's name would be changed to The AAL Equity Income Fund on that
date.

         If the  shareholders do not approve  Proposal 1, the Fund will continue
to be managed as a utilities fund in accordance with its Present Objective,  its
utilities industry  concentration  policy and its other investment  policies and
program described in the Fund's current prospectus.

Reasons for the Proposed Change

         When the Fund originally was introduced,  the Trustees intended for the
Fund to provide a "bridge"  between the income  aspects of the AAL Trust's  bond
funds and the capital  appreciation  characteristics  of its stock funds. At the
time,  utilities  companies  operated  in  a  somewhat  monopolistic  and  fully
regulated environment.  Their equity securities tended to offer a combination of
greater  dividends,  dividend  growth  potential and capital growth  relative to
securities in other industries.  The regulated nature of the utilities  industry
facilitated stability and shareholder  confidence,  and helped insulate the Fund
from volatility in the market value of its portfolio  securities and other risks
generally associated with the public securities markets.

         However,  the utilities industry now is undergoing  dramatic change. In
particular,  the  utilities  industry  is  facing  extensive  de-regulation  and
consolidation trends. Competition, including global competition, has changed the
value and earnings potential of these securities.

         Management  of the Fund has  observed  a decline in  opportunities  for
favorable  dividend  levels and dividend growth  potential  offered by utilities
securities.  Moreover,  utilities stocks have demonstrated increased sensitivity
to market forces resulting in price volatility. In many cases, the market prices
of  utilities  stocks  have  declined.  As a result of these  developments,  the
Trustees have  determined  that the Fund's  fundamental  industry  concentration
policy is  impeding  the  capability  of the Fund to achieve  its  objective  of
current income,  long-term  income growth and capital growth.  Accordingly,  the
Board of Trustees recommends the elimination of the Fund's fundamental  industry
concentration  policy and the adoption of the Proposed  Objective.  The Trustees
believe  these  changes  will help to broaden  the  universe of stocks and other
securities appropriate to achieve the Fund's investment objective.

          If  these  changes  are  approved,   the  Fund  would,   under  normal
circumstances,  invest at least 65% of its  assets  in  income-producing  equity
securities,    including    securities    exchangeable   or   convertible   into
income-producing equity securities. The Fund would be able to invest the balance
of its assets in additional  income-producing equity securities,  or other fixed
income  securities  and/or  short-term  securities  consistent  with the  Fund's
investment policies.


<PAGE>


         The Fund would expect to realize  income from  dividends paid on equity
investments and interest paid on debt securities. In selecting  income-producing
equity   securities   and   securities    exchangeable   or   convertible   into
income-producing  equity securities,  the Fund would seek securities with higher
than average  dividend  yields and/or  favorable  prospects for future growth in
dividends. The Adviser would seek stocks fitting these criteria that it believes
are   under-priced   relative  to  securities  of  companies   with   comparable
fundamentals,  and therefore also offer the opportunity for capital growth. This
investment  program would be non- fundamental,  meaning that it could be changed
or refined by the Board of Trustees without shareholder approval.

Certain Effects of the Proposed Changes

         If the  proposed  changes  are  approved,  the  Adviser  does  not plan
immediately  to make  drastic  shifts in the  Fund's  present  concentration  in
utilities  securities.  Rather, the Adviser would identify securities outside of
the utilities industry that meet the Fund's investment criteria,  and would draw
from  those  selections  to  meet  the  Fund's  needs  for  new  and  additional
investments  and to achieve  compliance  with the new investment  policies.  The
Adviser would sell some utilities positions in favor of non-utilities  positions
that it feels  would  enable  the Fund to better  achieve  the  Fund's  Proposed
Objective.  Over time, this strategy would reduce the Fund's  concentration  in,
and exposure to, the utilities  industry.  At the same time, this strategy would
minimize the recognition of capital gains that  potentially  would be associated
with an immediate shift in the Fund's  investments.  It is anticipated  that the
process of  restructuring  the Fund's  investment  portfolio  to  eliminate  its
concentration in public utilities securities would take six months to one year.

         Although   the   elimination   of  the  Fund's   fundamental   industry
concentration policy would help reduce its exposure to risks associated with the
utilities  industry,  shareholders  should bear in mind that stocks  meeting the
Fund's  investment  criteria tend to be associated more with certain  industries
than with others. For example,  stocks offering above-average dividend yields as
represented   by  the  S&P  500  tend  to  be   concentrated   in  the  services
(communications  and retail),  energy,  utilities,  financial  institutions  and
consumer  non-cyclical  industries,  and occur only rarely in such industries as
technology  and health  services.  Accordingly,  it is  anticipated  that,  even
following the  implementation  of the new investment  policy,  the Fund's assets
potentially  may be  concentrated  from time to time in  certain  industries  or
market sectors more than others,  although  significantly less so as compared to
the  Fund's  present  concentration  policy  in  a  single  industry.  Moreover,
following  the  transitional  restructuring  period  described in the  preceding
paragraph,  the Fund would  comply  with a  fundamental  restriction  that would
prohibit  it from  investing  more than 25% of its net assets in  securities  of
issuers within any single industry.



<PAGE>



         Also,  although  dividend yields in the public utilities  industry have
declined over the past several years due to changes within the industry, such as
deregulation,  companies in the  utilities  industry  still tend to offer higher
dividends on their equity  securities than companies in other  industries.  As a
result,  lowering  the  concentration  in this  industry may reduce the dividend
yield on the Fund,  and  therefore  current  income in the short term.  However,
lowering the concentration in public utilities securities should enable the Fund
to better achieve long-term income growth and capital growth.

          The  proposed  changes  will  have no  effect  on the  Fund's  current
advisory fees.

Trustees' Recommendation

         For the  reasons  and  considerations  discussed  above,  the  Trustees
unanimously  recommend  that you vote  "FOR" the  proposed  change to the Fund's
fundamental investment objective and industry concentration policy.

                                 OTHER BUSINESS

         The Trustees know of no business other than that  mentioned  above that
will be presented for consideration at the Special Meeting. If any other matters
are properly presented, it is the intention of the persons named on the enclosed
proxy to vote proxies in accordance with their best judgment.

                             ADDITIONAL INFORMATION

Adviser, Administrator and Distributor

         AAL Capital Management  Corporation has served as Adviser for AAL Trust
since its  inception in 1987.  In addition to serving as Adviser to the Fund and
to each of the other  series of AAL Trust,  AAL Capital  Management  Corporation
also provides necessary  administrative  services to the Fund and to each of the
other series of AAL Trust under an Administrative  Services Agreement dated July
1, 1990, as amended, and serves as the distributor of the Fund's shares and each
other series pursuant to its Distribution  Agreement with AAL Trust,  dated June
15, 1987,  as amended.  AAL Capital  Management  Corporation  has its  principal
executive  offices  located  at 222 West  College  Avenue,  Appleton,  Wisconsin
54919-0007.

Principal Shareholders and Certain Beneficial Owners

         As of the record date,  the officers and Trustees of AAL Trust owned in
the aggregate less than one percent (1%) of all outstanding  shares of the Fund,
including  both Class A and Class B shares taken  together,  and no other person
was known to own of  record or  beneficially  five  percent  (5%) or more of the
Fund's outstanding shares.

         The following  table shows the number of shares of the Fund as to which
each  Trustee  and  executive  officer  of AAL  Trust  had or  shared  voting or
disposition power for the Fund as of the record date.


<PAGE>




        Ownership Interests of the Trustees and                 Number of Shares
      Executive Officers in The AAL Utilities Fund                   Owned

John H. Pender                                                        -0-
F. Gregory Campbell                                                   -0-
Richard L. Gady                                                       -0-
Lawrence M. Woods                                                     -0-
D.W. Russler                                                        764.965
Richard L. Gunderson                                                  -0-
Ronald G. Anderson                                                    -0-
Robert G. Same                                                        -0-
Terrance P. Gallagher                                                 -0-


Costs of Solicitation

         In addition to soliciting  proxies  through the mails,  officers of AAL
Trust and the officers and employees of the Adviser may solicit proxies, without
special compensation, by telephone,  telegraph, facsimile, personal interview or
other electronic  means as provided for according to the Funds' by-laws.  If AAL
Trust management determines that a professional proxy solicitation service would
be advisable,  such a service also may solicit  proxies in the same manner.  AAL
Capital  Management  Corporation will bear the cost of preparing and mailing the
proxy  materials  for the Special  Meeting  (including  any  adjourned  sessions
thereof) and of soliciting proxies for the Special Meeting.

Adjournment

         In the event a quorum is not  present at the Special  Meeting,  or if a
quorum is present but  sufficient  votes to approve the Proposed  Objective  and
related  elimination of the Fund's  concentration  policy are not received,  the
persons  named as proxies may propose one or more  adjournments  of such Special
Meeting to permit further solicitation of proxies. The persons named as proxies,
however,  must  determine such an adjournment  and  additional  solicitation  is
reasonable and in the best interests of shareholders based on a consideration of
all  relevant  factors,  including:  the nature of the relevant  proposals;  the
percentage  of  votes  then  cast;  the  nature  of  the  proposed  solicitation
activities;  and the nature of and the  reasons for such  further  solicitation.
Adjournment with respect to any proposal would require the affirmative vote of a
majority of the votes cast on the  question in person or by proxy at the session
of the Special Meeting to be adjourned. The persons named as proxy would vote in
favor  of such  adjournment  where  they  are  entitled  to vote in favor of the
relevant  proposal,  and would vote against any such adjournment where they have
been directed to vote against the proposal.


<PAGE>




Shareholder Meetings

         AAL Trust is organized as a Massachusetts  business trust,  and as such
is subject to Massachusetts  law.  Pursuant to Massachusetts law and AAL Trust's
Declaration of Trust, it is not required to hold a shareholders'  meeting in any
year in which  the  shareholders  do not need to act  upon the  approval  of the
Investment  Advisory  Agreement  (or any  Sub-Advisory  Agreement) or ratify the
selection of  independent  public  accountants  under the 1940 Act. The Trustees
hold AAL Trust shareholders' meetings when they are necessary in accordance with
the 1940 Act.  Other than the  Special  Meeting  to which  this Proxy  Statement
relates, the Trustees currently do not anticipate holding another meeting of the
Fund's shareholders in 1997.

          Shareholders  who wish to  present a  proposal  for action at the next
meeting should submit the proposal or suggestions to the following address:  The
AAL Mutual  Funds,  222 West College  Avenue,  Appleton,  Wisconsin  54919-0007,
Attention: Robert G. Same, Secretary.


<PAGE>







            Please fold and detach card at perforation before mailing

--------------------------------------------------------------------------------


THE AAL MUTUAL FUNDS      Revocable Proxy for Special Meeting of Shareholders of
                          The AAL Utilities Fund
                          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
                          OF TRUSTEES




          The undersigned hereby appoints Ronald G. Anderson and Robert G. Same,
or either of them,  proxy,  with full power of  substitution,  to represent  and
vote, as designated on the reverse side, all shares of stock the  undersigned is
entitled to vote at the Special  Meeting of  Shareholders  of The AAL  Utilities
Fund to be held at 222  West  College  Avenue,  Appleton,  Wisconsin  54919-0007
beginning  at 10:00 a.m.  Central  time on Friday,  August 15,  1997,  or at any
adjournment thereof,  with respect to the matters set forth and described in the
accompanying Notice of Special Meeting and Proxy Statement,  receipt of which is
hereby acknowledged.



                                    Date:_____________, 1997
                                    (If stock is owned by more than one  person,
                                    all  owners  must sign.  Persons  signing as
                                    executors,  administrators,  trustees  or in
                                    similar capacities must so indicate.)



                                   --------------------------------------------
                                   (Please sign exactly as name appears at left)




<PAGE>



                         PLEASE RETURN THIS PROXY TODAY!
                         YOUR PROMPT RESPONSE IS NEEDED
                             AND WILL BE APPRECIATED



            Please fold and detach card at perforation before mailing

--------------------------------------------------------------------------------


Please indicate your voting  preference by FILLING    FOR    AGAINST    ABSTAIN
IN the  appropriate  box below using blue or black
ink or dark  pencil,  do not use red  ink.  Shares
represented   by  this  Proxy  will  be  voted  as
directed by the  shareholder.  IF NO  DIRECTION IS
SUPPLIED, THE PROXY WILL BE VOTED FOR PROPOSAL 1.

1.   Proposal to change The AAL  Utilities  Fund's    ___      ___        ___
     fundamental  investment  objective and policy
     as  described  in  the   accompanying   Proxy
     Statement.

2.   To transact  such other  business as properly
     may   come   before   the   meeting   or  any
     adjournment thereof.

PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD